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Is A Brexit Trade Deal About To Be Announced?

November 19, 2020 By Mircea Vasiu

The Brexit saga appears to come to an end. Four years after the referendum that sealed the United Kingdom’s exit from the European Union, the negotiations for a trade deal are still ongoing. 

December 2020 marks the end of the transition period, and, starting with January, both the UK and the EU start a new road. A separate – life is a friendship, rather than a marriage.

Friday Morning Early Briefing

Yesterday, the EU chief negotiator, Michel Barnier, announced that it would brief the representatives of the 27 member states about the state of the discussions. Scheduled at 07:00 GMT, the briefing may hint to a deal in the offing.

The thing is that the discussions stalled at some important points – competition rules, governance, fisheries, to mention a few. While the agreement does exist on many other points, a compromise is needed to move forward.

In any negotiation, it is about a compromise. Both parties agree that their intention is to have a fair deal for the citizens of both the UK and the EU. However, some things need something in return. For instance, it is very clear that the EU will need to compromise on the rights to fish in UK water, but the question is – what will it get in return?

We will not go into negotiation strategies, and so on. Or into the details of a future deal. However, at the end of this unprecedented divorce, both sides will have to be able to “sell” to their citizens the fact that they won the negotiation. As such, a win-win outcome is likely to be promoted.

What is interesting here is what comes next? It may sound as little, but the fact that the UK leaves the EU is a major blowout to the union. The four years that passed were marked by costly negotiations, but in the end the decision is here to stay.

How about the UK? What will it do next? Will it be isolated from the rest of the world? How about trade policies?

All these are questions to be answered after January 2021. It has been difficult enough in 2020 due to the pandemic – but not even a pandemic can stop the Brexit train from moving.  As for the UK, it will find its place in the world. The EU will also learn to live without the traditional British friends.

Yet, in some parts of the world, the breaking up of a strong relationship is cheered. Think of China, Russia, and even the U.S. World dominance means polarization. The top three free trade areas in the world are the RCEP in Asia (the largest), the United States, Mexico, Canada (the 2nd largest), and the European Economic Area (the third).

Where will the UK fill in the grand scheme of things? That is something investors need to figure out for the years and decades ahead.