PM has asked firms to be ready to do business with the European Union, which is based on the simple principles of global free trade.
What has
Boris Johnson said?
The Prime
Minister claimed that the EU's stubborn intentions led him to conclude that the
"Canada-style" trade deal he was seeking was not going to be
successfully negotiated without a "fundamental" change in the
situation in Brussels. He said it was therefore important to prepare for doing
business with the EU "more like Australia based on the simple principles
of global free trade".
What is a
Canada-style trade deal?
The European
Union has a trade agreement with Canada called the Comprehensive Economic and
Trade Agreement (Ceta). It is the arrangement that Michel Barnier said would be
possible at the start of Brexit negotiations four years ago if the UK wants to
leave the single market and the customs union.
There will
be checks on imports and exports and there will be a great deal of more red
tape for businesses as Britain will be outside the EU rule book. But such a
deal involves reducing tariffs or taxes, on imports and quotas - the amount of
a product that can be exported without additional duties.
The effort
that Britain and the European Union have attempted to negotiate is somewhat
more than that of Canada. Both sides say they want a "zero fee, zero
quota" agreement by the end of the year.
The Ceta
deal has come close to doing so - 98% of products are tariff-free, but they
live on poultry, meat and eggs, for example. There is also a quota on some
goods.
"If
they really wanted a Canada-style deal, they should have extended the
transition period and then we could go through all the products and get tariffs
in exchange for lower demand to maintain EU standards and Quota could have been
put, ”a European Union official said.
Why does
Boris Johnson say it's now off the table?
Because
Downing Street says that the European Union is offering less lenient terms than
it would have been involved in the CITA deal. There are many examples,
including length of stay for short-term business visitors and lack of
sector-specific provisions for key industries, such as automotive, medicinal
products, organics, and chemicals.
The UK
rightly states that the demand for level playing provisions is also beyond
anything contained in the Sita deal. These include non-regression from EU
standards, with increasing that baseline over time, and the UK's commitment to
comply with the Bloc's aid, or domestic subsidy, regulations. The European
Union has stated that the sheer level of trade between Britain and the European
Union means that it needs to be cautious to maintain fair competition. It has
also met its basic demands on standards and state aid, but not enough, as far
as Downing Street is concerned.
Downing
Street used the term at the beginning of the year as more synergy without any
dealings. The European Union does not have a free-trade deal with Australia,
although they are in talks. Both sides operate primarily on World Trade
Organization (WTO) regulations, with heavy tariffs on imports and exports.
Given the
lack of formal cooperation in that business relationship, it would be more
accurate to describe the outcome that would be secured without a deal as an
Afghanistan-style arrangement. This is because the EU has made some agreements
with Australia that will not be with Britain in the event of failure of trade
and security negotiations.
These
include an agreement on the transfer of EU passenger name records to Australian
border authorities to help combat crime and terrorism, and an agreement on
mutual recognition of conformity assessments, in order to test EU standards in
Australia. Considered as product compliance, the need for repeat testing when
finished imports occur.
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