by Alessandro Belluzzo and Manuela Travaglini.
The Queen has given Royal Assent and the European Parliament has ratified the Withdrawal Agreement (WA). Does this mean that Boris Johnson managed to Get Brexit done? And what will change for businesses and citizens on both sides of the English Channel?
After so many bumps in the road there’s an agreement signed and a Brexit date set in stone, but January 31st is not the end of the Brexit process: if anything, it marks the end of the beginning. Little to nothing will change at least until December 2020, the end of the 11-months “transition period”, a safety net during which the four European freedoms will prevail (free movement of goods, services, capital and people) while the British Government and the European Union will have some time to redesign their future relations.
A ratified divorce deal, means that the provisions in the WA will have the force of an international treaty in areas as important as financial settlement and citizens’ rights – those of EU nationals living in the UK, who need to register under the “EU Settlement scheme” and those of Britons in the EU, who will have to comply with their host country’s provisions.
However, having an agreement in place doesn’t mean the possibility of no deal is removed entirely—it just means a different kind of no deal, as the new “smooth” Brexit could unveil yet another no-deal scenario at the end of the transition period.
The first priority over the following 11 months will be in fact that of negotiating a trade deal between the UK and the EU and it is here that another “cliff-edge” could soon loom over the horizon: the “no trade agreement”. Striking a trade deal is not an easy task, it takes time when there’s not enough time, and while the EU has already suggested that it would be almost impossible to make the kind of trade deal Boris Johnson wants, – leave the customs union and the single market – happen within the December deadline, the Tory Government has ruled out extending once again the end of the transition period.
From no Withdrawal Agreement deal to no trade deal?
The immediate effects of a “no trade deal Brexit” will, somehow, be more structured and organised than would have been the scenario under a “no withdrawal agreement Brexit”, as the WA contains provision for continuity of on-going procedures at the end of the transition period.
However, unless and until a new trade deal is agreed and ratified by the end of the interim arrangements, then future trades between the UK and the EU will be done on World Trade Organisation terms (WTO) which means that the EU and the UK will become “third countries”, tariffs would be applied to goods and, even more importantly, non-tariff barriers would affect trades from the EU to the UK and vice versa.
And this is why Brexit is not yet done after all: the impact on goods and services will have a domino effect on the economy and the people behind it as the clock ticks down to the end of this year and beyond.
Business players need to stay vigilant on the progress of negotiations, maintaining in place their preparations for a “no trade deal Brexit”, while forward thinking with new investment strategies, and where necessary reassessing their corporate structure, contractual arrangements, supply chains and workforces to meet their customer expectations: to transform the Brexit challenges into opportunities, and yes, get Brexit done, their own way.