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Need for a trade agreement to save EU, UK from future mayhem post Brexit

"Uncertainty prevails in Great Britain as the country exited from the European Union. Though negotiators have been trying to strike a deal to govern Britain’s future commercial relationship with the EU, if they fail to achieve this by December 31, 2020, UK would lose its duty-free access to EU markets. As a result, both sides would revert to commercial rules negotiated in 1995 by the WTO. Additionally, British exports to the EU will have to face tariffs."

Need for a trade agreement to save EU UK from future mayhem postUncertainty prevails in Great Britain as the country exited from the European Union. Though negotiators have been trying to strike a deal to govern Britain’s future commercial relationship with the EU, if they fail to achieve this by December 31, 2020, UK would lose its duty-free access to EU markets. As a result, both sides would revert to commercial rules negotiated in 1995 by the WTO. Additionally, British exports to the EU will have to face tariffs.

The absence of a trade deal would also result in trade in both directions reverting to WTO norms. This is likely to decimate the British industry and destroy jobs in the country. However, it could also provide the country with an opportunity to pursue better trade terms with other nations.

Import prices hike to impact trade relations

Another implication of Brexit is the increase in prices for certain European imports, including food, cars andNeed for a trade agreement to save EU UK from future mayhem post Brexit textiles. As UK proposes to replicate the EU’s tariff commitments and quotas at the WTO, tariff rates on imports of certain European goods like cars, cod and Haddock, suits, clothing and other apparels would increase from the current zero rates. This would lead to the UK losing continuity of trade relations with around 72 nations that have forged preferential trade agreements with the EU. So far, the British government has secured continuity agreements with over a dozen countries, including Israel, South Korea and Switzerland. If the UK fails to roll over new EU agreements, WTO tariffs would also apply to British goods and services exported to these nations.

Increase in delays and red-tapism

For next six months or more there would be massive border queues and persistent delays. France had planned to implement post-Brexit border controls, and the UK government estimated 50 to 85 per cent freight truckers wouldn’t have the correct paperwork to enter the EU via France. That would delay cross-border shipments by up to 2 1 to 22 days and disrupt the EU and UK’s tightly integrated supply chains.

Service industries in the UK such as finance, law and accounting could lose preferred access to the lone market which provides freedom of establishment and free movement of people within the EU trading bloc. This would lead to more red tape and headaches for Britain’s services providers.

The WTO’s ability to fully settle trade disputes was dealt a major blow when the US paralyzed the organisation’s appellate body in 2019. This means the WTO can’t fully settle trade disputes however, it won’t have an immediate impact on the rules that govern UK-EU trade. Countries are developing an interim appeal-arbitration mechanism to help resolve their disputes and the WTO still has the ability to negotiate new trade deals and monitor how nations implement their trade accords.

 
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