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Picture Credit: The Mercury News
On December 24 2020, a trade deal was struck between UK Prime Minister Boris Johnson and Ursula von der Leyen, the EU Commission President. The transition is finally over, and Britain is entirely out of Europe. However, the deal does not embrace all of Britain's trade, nor provides stability. But still, it is better than no trade deal.
What's In the Deal for Britain?
For goods trade, the deal proposes no tariffs or quotes. Carmakers and the agriculture industry were satisfied, though the fishing industry was baffled, gathering only 25% of the EU's catch in British waters. For the EU, the free movement of people is an integral part of its economy. So Britain was bound to lose free access to that market. Those who support Brexit will not view it as a significant loss. However, it is indeed, incomplete. Digital and e-commerce providers will encounter new obstacles. It has yet to be determined whether rulings in Britain's civil courts will be valid in the EU; if not, lawyers may lose lucrative business.
In Tony Blair's words, Britain could act as a connecting bridge between the United States and Europe, with influence on both ends. But now, they have to think of a new strategy. With estranged continents, Boris Johnson will face a tough challenge: what role will Britain play in the world after a trade deal with the EU?
The conservative government talks about the idea of achieving goals beyond Europe. Being a member of the G7, NATO, Commonwealth and a seat in the UN security council, Britain has a chance to impress and influence. It has nuclear weapons and a capable army providing soft power—for example, its heavy spending technological sector and qualified scientists developing covid 19 vaccines.
Nevertheless, if Britain needs to make a mark on the global stage, Boris and his successors need to resolve domestic issues, which may obstruct Britain to accomplish its goals beyond Europe.
The first challenge is the economy. Britain's handling of the covid crisis and its economic performance is not being cherished. With Brexit, its economy is likely to perform more inadequate in the coming months.
Second is politics; people not familiar with the political scenario will not know that Britain has estranged continents at its back. With Brexit, the calls for Scottish Independence and United Ireland have been promoted. Unless these domestic issues are not encountered, the world will not take Britain seriously.
Outside of the EU, Britain still has a lot to offer, like imposing sanctions on Berlus and providing covid 19 vaccines. In the past, it has proven its critics wrong by agreeing to trade deals with nations like Japan and teaming up with like-minded countries such as Canada, Australia, India and South Korea in G7 to promote democracy. Even banning Huawei from its 5G infrastructure and robust response to China's crackdown in Hong Kong. As Britain ministers and diplomats will not have to attend the European meetings, it gives them an excellent opportunity to go beyond Europe, including "Indo-Pacific", a region that is developing significantly in trade and security.
For Britain, the trade deal still raises a few questions that Boris Johnson will have to counter soon.
First, to what extent Brexit is done and its impact on the relationship with the EU. The answer to this can be a bit complicated, with all loose ends on financial services and data, there is still room for negotiations. However, the reality is that it might be difficult to escape a process of continuous negotiations. Similar to what happened with Switzerland since it has rejected EU membership in the 1990s.
Second, what will Boris Johnson do differently with freedom? Ask every economist, and the answer is the same. The impact of the new trade deal will have negative consequences on Britain's economy. However, Boris Johnson vanishes these facts. There is no little sign of any new trade deal struck with a big nation like the United States, India or China giving a different route for economic growth.
By Kabir Kalia