News | Published December 28 2019

11-month timeframe to agree free-trade agreement with EU in 2020

After Boris Johnson successfully secured a Conservative majority in the national poll dubbed “the Brexit election” by Sky News, it is unsurprising that the prime minister will enact his manifesto pledge to get Brexit “done” by January 31, 2020.

That date will be when the UK officially leaves the EU, with the cut-off point for the post-Brexit transitional period set for December 31, 2020, after which the UK’s access to the single market will cease. The prime minister has insisted that despite repeated Brexit delays up to this point, the transitional period will not be extended beyond then and has taken steps to enshrine this in law.

There will, therefore, be an 11-month window in which the Conservatives must negotiate a trade deal with the EU.

The new Withdrawal Agreement will see the UK outside of the single market and customs union come the end of the transitional period, but the impact on trade is entirely dependent on the new UK-EU relationship and what the free-trade agreement will look like, if any agreement is indeed reached within that timeframe.

Should a deal not be agreed in the timeframe, as far as trade is concerned it will be akin to a no-deal, with the fallback being World Trade Organisation terms.

Until this agreement has been finalised in its entirety, or the transitional period has elapsed with no trade deal forthcoming, Brexit remains improperly finalised.

This begs the question now as to whether a deal can be done in 11 months.

The Chancellor of the Duchy of Lancaster, Michael Gove, told Sky News that trade negotiations “will be concluded next year”, which will include all “conversations with the EU about the new framework of free trade and friendly co-operation that we will have with them.”

However, European Commission president Ursula von der Leyen has said that the 11-month window will be a “very challenging” timeframe to avoid the economic “cliff edge” of the transitional cut-off point.

Von der Leyen added: “Our focus is on having the negotiations as mature as possible, to close as many negotiation points at the end of the year as possible.”

The talks will have to cover a comprehensive range of issues, including co-operation over security, defence and fishing, while businesses and the government will be looking to ensure that the free trade deal guarantees frictionless trade of goods, free of duty and tariffs.

However, given the short 11-month window, there is a likelihood according to the EU that both sides will be left with no choice but to “prioritise” certain issues, leaving some negotiation points unresolved until after the free-trade agreement has been agreed.

It also leaves little time to negotiate co-operation agreements that could help smooth border arrangements for the benefit of trading goods.

A “bare-bones” free trade agreement could be sealed by the end of the year to outline the economic relationship by the deadline, but trade experts believe that such an agreement will do little good for large sectors of the UK economy, particularly in the dominant services industry, where the UK enjoys a trade surplus with the rest of the EU.

Avoiding friction at the border and disruption to supply chains will nonetheless be a priority for the prime minister, particularly given the large concentration of new Conservative MPs representing known industrial constituencies in the Midlands and North of England, which may limit his ability to deviate from EU regulations too greatly. On the other hand, however, he will have more flexibility to negotiate a deal without having to garner the support of the ERG.

Brexit will unquestionably be delivered in 2020, but in what capacity remains to be seen.

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Authored by

Scott Challinor
Business Editor
December 28 2019

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