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After the Brexit agreement was reached, Britain is now scrambling to understand how it works

LONDON-For the tired Brexit negotiators on both sides of the English Channel, a Christmas Eve trade agreement sealed 11 months of painstaking deliberations on the withdrawal of the United Kingdom from the European Union, including mysterious details such as the two sides on board The types of fish that may be caught. British waters.

But for many others (including bankers, traders, truck drivers, architects, and millions of immigrants), Christmas is just the beginning and the first day of a high-risk and unpredictable experiment involving how to cancel the entire Close business relationship network in Europe.

This agreement does not end the book on the turbulent partnership between Britain and Europe, but opens a new page from the first page of the book.

In the four years since the British voted to cancel ties with Europe for half a century, many immigrants have stopped emigrating to the UK to work, and British companies have sent employees to Paris and Frankfurt to establish strongholds on the European continent. However, after all these preparations, there are now only 7 days between the company and the new trade barrier that appeared on January 1.

“We will have to keep learning how to do this,” said Shane Brennan, chief executive of the Cold Chain Federation, which represents logistics companies in the UK. “We hope it will eventually get better, but it will become slow, complicated and expensive.”

However, despite the disaster of separation without agreement, British distributors are still scrambling to prepare the first of thousands of new export certificates to sell their meat, fish and dairy products to the EU. British food that was exempt from this cumbersome inspection now faces the same inspections as European food imported from Chile or Australia.

Although the service industry accounts for 80% of the UK’s economic activity, the service industry in the UK-including not only London’s strong financial industry, but also lawyers, architects, consultants and others-is basically excluded from 1,246 pages of transactions.

The agreement also failed to ease European immigration, some of whom left the UK during the pandemic and are now working to determine whether they need the right to settle in the UK before their final breakup on December 31.

“Millionaire” co-founder Mike Bohn (Maike Bohn) said: “Since January 1, the landscape has changed, and the safety blanket of the transition period has also disappeared.” Due to the confusion of the rules, unjustly Refused to work and rent an apartment. “There is worry and numbness.”

Although both parties have provided summaries, the negotiators have not officially announced this huge trade agreement. Although British and European lawmakers are preparing to vote on the agreement within a few days, analysts and ordinary citizens are still uncertain about certain issues. detail.

But it has been clear for a long time that the agreement will make the City of London a hub for international banks, asset management companies, insurance companies, and hedge funds, with little guarantee of future trade across the English Channel. The United Kingdom sells approximately 30 billion pounds (about 40 billion US dollars) of financial services to the EU each year, thanks to an integrated market, which in some cases is easier to sell from one member state than from one member state To another member state the United States to another state.

This new trade agreement does make the flow of goods across the British border smoother. But this prevents financial companies from gaining the greatest benefit of EU membership: the ability to easily provide services to customers in the region from one base. For a long time, this allowed a bank in London to provide loans to a company in Venice, or to provide trade bonds for a company in Madrid.

For Britain, this loss is particularly painful. The UK had a surplus of 18 billion pounds (US$24 billion) in financial and other services trade with the European Union in 2019, but its trade deficit with the UK was 97 billion pounds (US$129 billion). product.

Tom Kibasi, the former director of the Institute, said: “The result of the transaction is that the EU retains all its current advantages in trade, especially in goods, while the UK has lost its trade in services. All the current advantages in the.” Research Institute Public Policy Research Center. “The outcome of this trade negotiation is exactly what happens in most trade transactions: the larger party gets what it needs, and the smaller party transitions.”

The agreement to allow goods to cross the border without increasing tariffs ensures that the most important supply of food and medicine is available throughout Europe. Goods transactions are also easier to accomplish; given the complex financial regulations of countries/regions (such as how much currency banks must hold), most trade agreements will separate the service industry.

But Brexit is not most trade agreements: it creates barriers in an unusually closely connected European market, not eliminates them.

After January 1, once a guarantee is obtained, service sales will depend on the decision of European regulators on whether the new UK financial regulations are sufficiently close to their own credit standards. Although London’s expertise is difficult to match, its financial and service companies are in a strong position to weather the storm, but they will inevitably encounter some obstacles. It has been told that British people living in Europe have bank accounts in the UK and their accounts will be closed.

“Imagine if you took over the UK and then moved it to Canada or Australia,” said Davide Serra, chief executive of Algebris Investments, an asset management company that has offices in Europe. This is the purpose of the service. Britain has become a third country. “

When British Prime Minister Boris Johnson announced the trade agreement this week, he acknowledged that it “is not what we hoped” to provide financial companies with “not so many” opportunities. The analyst said that he was not so straightforward about the deal and even the difficulties faced by British retailers.

When he promised that there would be no “non-tariff barriers” to sell goods after Brexit, he ignored the tens of millions of customs declarations, health assessments and other inspections that companies will now be responsible for.

Industry experts say that the UK lacks the customs agents needed to process these documents and even the veterinarians to conduct health checks. In recent days, due to travel bans related to the mutation of the new coronavirus, European truck drivers have been stuck in British ports for several days or even days of transportation delays, which has brought shocking harbingers to European truck drivers.

“This is a huge problem that will cost the entire industry millions of pounds and euros,” said Alex Altmann, a partner in charge of Brexit-related issues at Blick Rothenberg, the accounting and tax business unit. “In the final analysis, this will be passed on to consumers.”

For European citizens living in the UK, the completion of the Brexit agreement will not help alleviate concerns about how the country’s new immigration rules will complicate their lives. In the UK, immigrants are allowed to apply for so-called “settlement status.” However, there are hardly any regulations for people who cannot complete this procedure online, and far fewer people who do not realize that they need a permit to live in a country that has been living for decades.

Robert Ford, a professor of political science, said: “Next year or one or two years, there may be a crisis concerning EU immigration. These immigrants have been here and have lived here for a long time, but they have fallen into the registration system. Gap.” At the University of Manchester.

David Henig, an analyst at the European Center for International Political Economy, said that the limitations of the Brexit deal reflect the fact that although financial and other regulations have become more complex in recent years, trade agreements Still trying to keep up.

According to analysts, the UK has also restricted the content sought in the transaction to a few key areas, which makes the emergence of quasi-agreements almost inevitable.

In addition to the no-deal split, the huge stalemate on the border and the huge uncertainty of the company, the agreement is a major move. But even if such an agreement is reached, the way forward is still uncertain.

Analyst Gibba said: “Brexit has always been a long-term blow to the competitiveness of the UK.” “However, its role is to disrupt investment in the UK, so this is a slow breakthrough, not a rapid collapse. “

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