World Politics

Brexit trade talks: What is the difference between a deal and a no deal?

Boris Johnson’s threat to pull the UK out of trade talks with the EU has heightened tension still further in the already-flagging process.

Regardless of whether or not a deal is struck on future ties, acute changes are in store once the transition period expires on December 31. The UK will leave the EU’s Single Market and Customs Union and is seeking a free trade deal with maximum independence from EU rules.

However, failure to strike an accord would mean a rupture in relations. There would be a greater degree of trade friction, weaker security ties, and many other mutual arrangements would cease.

Here is a look at some of the main differences between “deal” and a “no-deal scenario” regarding the future relationship.

Trade in goods

Big changes are afoot given the UK’s departure from the Single Market and Customs Union, even in the event of a trade deal. There will be two different customs and regulatory regimes, bringing extra bureaucracy and border checks for standards and legal compliance.

If there is no deal then the EU and the UK will trade on World Trade Organization (WTO) terms.

Tariffs and quotas may apply even if there’s a trade deal, though both sides are seeking to avoid them. But a no-deal outcome is likely to be more costly for traders in terms of tariffs. The EU rate for third countries is 10% for car imports, and 90% for some lamb imports.

Customs declarations will be costly even with a deal but failure to strike an agreement could eliminate possibilities to simplify procedures, for instance via trusted trader schemes. The EU is planning full customs checks from January, while the UK plans to phase them in over six months.

Rules of origin would mean more red tape and checks under a no-deal scenario.

Full regulatory controls are in store, deal or no deal. The EU and the UK will implement two different systems for standards, involving more red tape and costs. But an agreement could reduce physical checks for agri-food imports: particularly important for Northern Ireland, a major importer from GB.

The UK chemicals industry says failure to reach a data-sharing agreement with the EU will bring an extra £1 billion (€1.11 billion) in administration costs. A mutual recognition deal would reduce costs, but the UK is seeking to diverge in regulations covering medicines, chemicals, and industrial goods.

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