Boris Johnson and Ursula van der Leyen announced this afternoon that the UK and the EU have reached agreement on the text of a trade deal. The ratification process is now to be fast-tracked, with a view to bringing the agreement into force by 11pm on New Year's Eve. The UK Parliament is anticipated to vote on 30th December.
Trading businesses will be relieved that zero tariffs and quotas will apply to goods moving between the EU and the UK. The initial communication could be taken to suggest, however, that the trading relationship between the UK and the EU is likely to continue to evolve. Having adjusted to the changes set out in the deal therefore (which it is hoped businesses will be given time to do), those trading in goods may need to monitor developments in EU-UK relations on an ongoing basis. Whether there could also be more to come for companies providing cross-border services, including financial services remains unclear. The deal was described by the Prime Minister as "Canada-style", but based on the scant details we have so far, we do not know whether the deal moves the dial on market access for the services sector.
The UK's announcement made much of what commentators are calling a "freedom" clause, as the bedrock of the UK "retaining control". This appears to permit the UK to diverge from EU standards in particular areas and re-negotiate the agreement over time. This perhaps suggests a pragmatic approach has been taken by negotiators - enabling a deal to be announced in the nick of time, and leaving some of the thornier aspects to be thrashed out in the coming months and years.
The real implications of the agreement will depend on the detailed text and importantly, a determination of what has been omitted. We will be reviewing the text of the trade agreement and related communications as soon as they are available. In the meantime, please speak to your usual contact at Slaughter and May if you would like to discuss issues relating to the deal or the broader implications of the UK's effective exit from the EU in a few days' time.
The full “agreement in principle” will be available shortly. The link will appear on the Europa webpage (and no doubt also on the UK government website, although that is not apparent yet).
Merry Christmas all.