The Brexit trade deal was over 95% done for weeks before negotiators’ ‘white smoke’ reports in Brussels on Wednesday evening.
Disagreements over the three main sticking points of fishing rights, guarantees of a level playing field and the application of the agreement have proved much more difficult for both sides to accept.
And with “nothing agreed until everything is agreed”, that meant the deal was not done at all.
The problems were vital for both parties. The EU wanted guarantees that UK businesses would not undermine its standards in what it saw as unfair competition with its businesses.
Britain could not sign any agreement binding the ability of a future government to walk away from EU rules.
The governance, the application of the agreement, was delicate. The EU has insisted on robust enforcement after being enraged by the UK proposing clauses that violate the Withdrawal Agreement in the Home Market Bill.
Ultimately, the fishery – which has long been predicted by many in Brussels as the easiest to resolve – was the last of three familiar hurdles to stay on course for a deal.
Parties were divided on the length of the transition period before the annual fishing opportunities negotiations and on how much of the value of fish caught in UK waters should be repatriated to UK fishermen.
So if a deal is announced, what would it contain?
Britain wants to be able to continue to trade with the EU without tariffs or quotas in an agreement that would be more generous than that offered by Brussels to another country.
If Boris Johnson manages such an agreement, it would mean that neither party would impose tariffs on traded goods, and a zero quota deal would mean no limit on the amount of any kind of goods that could be traded.
It would be similar to the ‘Canada plus plus’ deal that the Brexiteers wanted from the start, as it would enjoy the benefits of the EU’s deal with Canada, but without the quotas and tariffs imposed on certain Canadian products. .
The aim would be that Britain could not only be able to trade freely with the EU, but also be free to enter into free trade agreements with other countries, meaning that consumers would see, with time, a drop in the prices of certain products.
The fact that the UK left the customs union on January 1 means there will be more friction for businesses, who will have to deal with more paperwork when exporting goods and going through customs checks .
The deal is also expected to cover financial services – 80% of UK exports – by recognizing professional qualifications, although the City of London’s access to the EU market is judged on the basis of ‘equivalence’ – a sort of regulatory clearance that can be unilaterally withdrawn with 30 days notice in some cases.
Read more: A deal looks imminent – but can Johnson sell it to the Tories?
Britain offered the EU a three-year transition period, but demanded that it surrender 80 percent of its fish catch quotas in UK waters. The EU retaliated by demanding unfettered access to UK waters for 14 years in exchange for relinquishing just 15% of its quotas.
During months of talks, Brussels fell to 10, then eight, leaving the parties to argue over the five-year gap between them, as well as the division of the grappling between Britain and the EU in the years. preceding the full takeover of the UK. control of its waters.
Mr Johnson agreed that the EU would only repatriate 25% of the value of fish caught in its waters during a five-and-a-half-year transition period, sources in Brussels said. The UK initially demanded a three-year period with 80 percent of the value, while the EU wanted a ten-year period with only 15-18 percent. However, the EU remained firm at 25 percent, while the UK asked for 35 percent.
Mr Johnson was forced to drop his demands in exchange for a six-month reduction in the six-year transition period the EU was offering to five-and-a-half years.
After the fishing transition period, the UK will conduct annual fishing opportunities negotiations with the EU, which was a key UK request.
The EU has dropped its demand for a link between the fisheries agreement and the trade agreement. London feared Brussels would retaliate by freezing UK companies in the single market in retaliation for the fish disputes.
If an agreement is reached, Britain will begin cutting off access to its waters on an annual basis after the transition period.
British negotiators agree that British fishermen need time to increase the size of their fleet, as Britain cannot currently catch all the fish in its waters, even if it wishes, while leaving it to the EU time to adapt.
The EU is also keenly aware that if it does not agree to a trade deal, Britain will be entitled to 100% of the fish in its waters and, as one Conservative MP memorably said, if the countries of the EU are trying to fish in our waters. after December 31, “all they will have is a visit from the Royal Navy.”
Fair rules of the game
Britain has already agreed to accept the principle of a “rebalancing mechanism” in a concession that helped unblock negotiations after months of stalemate.
The UK has accepted the idea that the EU could strike back with tariffs if Britain strayed too far from EU subsidy law.
In return, Brussels abandoned its request that these remedies be unilateral and accepted the need for arbitration through an independent panel.
Another major issue to be addressed is the EU’s last-minute demand that funding for Brussels, including a € 750 billion coronavirus stimulus package, be exempt from subsidy rules.
This would allow EU countries to receive as much state aid as they want, provided the money is channeled through Brussels, a situation unacceptable to the UK. An agreement will only be reached if the EU withdraws this request.
A new dispute settlement body, similar to those used in trade agreements around the world, will settle future disputes over whether either party has broken the terms of the agreement. The body will be made up of equal representation, with an independent arbitrator holding the balance of power so that it remains politically neutral.
An EU demand that it should be able to impose lightning tariffs in the UK without arbitration was dropped at the last minute, meaning the tariffs can only be imposed by the arbitrator.
Britain has accepted the trade and security agreement, as well as the fisheries agreement, as part of a comprehensive treaty.
London feared it would face cross-industry retaliation and that, for example, parts of the trade deal could be frozen in response to a dispute over fish.
European Court of Justice
Britain has insisted that the European Court of Justice has no future role in British affairs. Boris Johnson – and Theresa May before him – has vowed that Britain will take back control of its money, borders and laws, which means ending the jurisdiction of the ECJ was an absolute red line.
The EU wanted the ECJ to play a role in interpreting EU laws that were transposed into UK law when Britain left the EU, but any deal reached would require that role to fall to a body independent arbitration, which would not have representation from the ECJ.
Borders and security
Britain wants to retain access to Europol and other European security databases in exchange for allowing the EU access to the UK’s world-class criminal intelligence.
Britain also hopes to have full control of its borders, having ended free movement and no further concessions on migration.
Read more: Brexit deal: what was agreed and what happens next?