The prime minister has ruled out extending a post-Brexit transition period beyond December 2020.
This article originally published in November 2019 has been updated following the UK general election in December.
A key slogan for the UK’s ruling Conservatives in their victorious December general election campaign was the promise to “Get Brexit done”.
Boris Johnson’s thumping 80-seat majority means parliament is certain to pass his divorce deal to take the UK out of the EU on January 31. The prime minister appealed to voters by arguing that the country can then move onto other issues.
But all that has been agreed so far are the terms of the UK’s departure – the financial settlement, safeguarding citizens' rights, arrangements for Northern Ireland – which will have the force of an international treaty once the exit deal is ratified.
However, the process to determine future UK-EU relations will only just be starting. Johnson’s many critics point out that the next stage risks being far more complicated.
They accuse the government of being disingenuous in arguing that a trade deal with the EU is attainable next year. If no deal is agreed by then, the UK and the EU will trade on World Trade Organisation (WTO) terms.
This would bring an abrupt change to EU-UK trading relations which many business organisations and trade experts argue would likely cause cross-border disruption, price rises, job losses and an economic shock on both sides of the Channel.
The stakes have been further raised by the government’s move to rule out by law an extension of the post-Brexit transition period, due to expire at the end of December 2020.
An agreement will have to be ratified by all EU countries, some of whom may want to have their own particular interests – for example over fishing rights – taken into account.
What sort of EU trade deal is Boris Johnson aiming for?
In a video posted on Twitter on November 10, Johnson reiterated the government’s aim: “to do a big free trade deal with our EU friends and partners… not based on any kind of political alignment”.
Johnson says the deal the UK will aim for will be “on the model of a super Canada plus arrangement”.
Canada’s free trade deal with the European Union (known as CETA), which came into provisional effect in 2017, took seven years to negotiate and runs to almost 1,600 pages. It will take several more years to implement fully.
The CETA agreement eliminates most tariffs on goods but does not remove regulatory barriers. Canada is not in the EU’s single market so its products still undergo border checks, although the use of technology is encouraged to speed up customs procedures.
There are provisions for mutual recognition in services, a sector representing most of the UK economy. However, Canada’s financial services do not get “passporting” rights to operate across the EU.
Boris Johnson set out his “Super Canada” Brexit plan in September 2018 – saying it would involve zero tariffs and quotas on all imports and exports, mutual recognition of standards, technological solutions, and would cover goods and services.
His supporters argue that a UK-EU trade deal should be made easier by the fact that the two sides are starting from a position of alignment – but this is disputed. Johnson wants the UK to be free to diverge from EU rules. Wary of allowing Britain a competitive advantage, Brussels will be keen to hold London to its commitment to maintain a "level playing field", as set out in the non-binding part of the divorce deal.
What is the time frame for the UK-EU trade negotiations?
Under the terms of the divorce deal, once the UK leaves the EU a transition period will run until December 31, 2020, keeping UK-EU arrangements largely as they are now.
After January 31, the UK will have only 11 months to negotiate a free trade deal with the EU – compared to the seven years it took Canada to strike its agreement.
Assuming the UK does leave the EU with a divorce deal in January, another "cliff-edge" will soon loom over the horizon. A transition period can be extended for up to two years, but under the divorce terms a decision will have to be taken by July 1.
Boris Johnson insists that a trade deal can be done during the transition and has ruled out an extension. This was a key factor in Nigel Farage’s decision to stand down his Brexit Party candidates in Conservative-held seats, to avoid splitting the pro-Brexit vote at the election.
“We can get a fantastic new free trade agreement with the EU by the end of 2020. And we will not extend the transition period beyond the end of 2020. There’s absolutely no need for that,” Boris Johnson said in his campaign video.
The European Union’s guidelines on negotiating trade agreements say “reaching an agreement usually takes several years”, and involves over 30 stages.
These include interaction in the negotiating and decision-making process between the European Commission (the EU’s executive or civil service), the European Council (representing national governments), and the European Parliament (elected MEPs).
As well as trade, future UK-EU relations on other matters will also have to be negotiated – including security, data sharing, science and education.
What's the likely impact of the UK’s decision to rule out a transition extension?
The move by Boris Johnson’s re-elected government to prevent an extension by law could be overturned – but underlined its determination to force the December 2020 deadline.
The reaction in Brussels indicated that the prime minister’s message had been received loud and clear.
“Given all the signals… we are well advised to take seriously that the UK does not intend to go for an extension of the transition and we need to be prepared for that,” said Sabine Weyand, director-general of the EU’s trade department.
But officials add that the effect may be to scale down the ambition of the future trade deal, to avoid “another cliff-edge situation” in the event of failure to strike a deal by the end of 2020.
A shortened timetable may leave room to negotiate only a “bare bones” trade accord on goods, perhaps sidelining other areas such as services – which make up 80% of the UK economy.
Temporary measures introduced to safeguard key sectors such as aviation. But agreement on other matters may have to be put back until a later date.
Johnson and his supporters highlight the speed with which the government agreed a new EU withdrawal agreement. This was struck with EU leaders in October – but only after the prime minister abandoned a key part of his earlier strategy over Northern Ireland.
However, trade experts point out that the UK-EU negotiations will be unprecedented: trade deals normally involve nations or economic blocs coming together, whereas in this case the UK is seeking to detach itself from a position of alignment.
What do the politicians say?
"We will not be extending the Brexit transition period beyond 2020. The British people have waited long enough for Brexit. We will be able to negotiate a good free trade deal with the EU and other partners in that timeframe" – Liz Truss, UK Trade Secretary on Twitter.
“Given the refusal to extend the Implementation (transition) Period beyond 2020 and the obvious lack of time to negotiate a Free Trade Agreement before then, this means we will be on WTO terms by January 2021. Leaving the IP on WTO terms would be devastating to many sectors of our economy. It’s a thoroughly irresponsible policy” – David Gauke, via Twitter. The ex-justice minister under Theresa May’s government was expelled from Boris Johnson’s ruling party for opposing his Brexit strategy. He stood as an independent candidate in the December election but lost his seat.
“(On the prospect of no trade deal being struck) It’s a hypothesis which has been put by people… who have consistently sought to raise bogeys and to make people’s flesh creep, when the reality has been our prime minister has managed to secure a (withdrawal) deal which puts us on a path towards – not just free trade and friendly cooperation with the EU – but also good trade deals with other countries and other regional trade blocs” – Michael Gove, UK minister with responsibility for a no-deal Brexit, speaking on BBC Radio.
“This negotiation will be difficult and demanding. For one reason. The time will be extremely short, 11 months if the UK withdraws effectively at the end of January next year and if the transition period ends as currently foreseen at the end of 2020. The UK might want to be able to diverge from EU rules in a pick-and-mixed approach by economic sector, and – on our side – the EU will require strong guarantees for level-playing field across the board. There will be more economic competition, ok, between the EU and the UK and that is normal. But the EU will not tolerate unfair competitive advantage” – Michel Barnier, the EU’s Chief Brexit negotiator, at the 2019 Web Summit.
"It is impossible to do (a free trade deal) in one year. It will need an extension of the transition period, and I think that to achieve and conclude a free trade agreement between the UK and the European Union will last more or less three years, and not the one year that some optimists in the British government are thinking for the moment" – Guy Verhofstadt, European Parliament Brexit Coodinator, at the FERMA Forum 2019.
What do the experts say?
Lionel Barber, the outgoing editor of the Financial Times, told Sky News the idea that the UK could complete a detailed free trade deal next year, rather than a bare-bones agreement, was “fantasy”.
Peter Ungphakorn, a trade policy expert formerly with the World Trade Organisation, questions the idea of a UK-EU free trade deal “with no alignment”, and says the term “Super-Canada” – as vaunted by Boris Johnson – implies a more comprehensive agreement than the Canada-EU (CETA) deal.
“How many people know what that actually means? How many have looked at CETA’s table of contents let alone read the agreement?” he asked via Twitter.
David Henig, director of the European Centre for International Political Economy (ECIPE), argues in a Twitter thread that the details of a trade deal are highly important and “any UK exporter to or importer from the EU could be adversely affected if you get this wrong”.
Both sides, he says, have yet to consult widely or establish negotiating arrangements. Even if timescales can be managed, he argues “it is… highly inadvisable for the UK to attempt to complete negotiating a trade agreement in 2020 – without proper consultation or negotiating structure how do we know what we want to achieve?”.
Anand Menon of King's College London and Catherine Barnard of Cambridge University – both of the think-tank the UK in a Changing Europe – wrote in the Guardian that the UK faces a long wait for a trade deal, highlighting several factors including tariffs and standards, services and security, that will have to be negotiated. "All of this points to the UK wanting a much more substantial and wider-ranging trade deal than the basic model. And this will take time – maybe years."
Many commentators have said the UK government is failing to address fundamental questions over the country’s eventual destination as a trading nation. Some experts say the UK faces a key choice over regulatory alignment: whether to stay close to EU rules to access the European market, or follow American regulation.