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EU and UK declare post-Brexit trade deal is done – but what will the impact be on Wales?

24 Dec 2020 5 minute read
EU Commission President Ursula von der Leyen. Picture by Unión Europea en Perú (CC BY 2.0). UK Prime Minister Boris Johnson. Picture by Annika Haas (CC BY 2.0).

The European Union Commission and UK Government have announced that they have finally struck a free trade deal, just days before the end of the Brexit transition period.

The 2016 Leave vote, won by 52.5% in Wales, has after over four years of wrangling boiled down to a 2000 page agreement which will be pored over in the coming days.

The UK left the EU at the end of January, but remains under its trading rules until 31 December and was quickly running out of road to agree and alternative arrangement.

The two sides now have one week to get any deal formally approved at Westminster and Brussels.

“We have finally found an agreement,” EU Commission President Ursula von der Leyen said. “It was a long and winding road, but we have got a good deal to show for it.”

But she noted that “no deal in the world can change the economic reality of today’s word.”

The UK Government said the deal was “fantastic news for families and businesses in every part of the UK”.

Scotland’s First Minister Nicola Sturgeon also weighed in, saying:  “Before the spin starts, it’s worth remembering that Brexit is happening against Scotland’s will.

“And there is no deal that will ever make up for what Brexit takes away from us,” she said. “It’s time to chart our own future as an independent, European nation.”

One of the sticking points of the deal was access to fishing, despite it only accounting for 0.02% of the UK economy. Negotiations also stumbled over what rights the EU will have to impose retaliatory tariffs should the UK limit that access in the future.

Ireland was also an issue, with the danger than any kind of visible border between the North and Republic inflaming tensions there.

The UK and EU have agreed that checks will not take place at the border between Northern Ireland and the Republic of Ireland, meaning that Northern Ireland will continue to follow many of the EU’s rules.


What will the impact be on Wales?

It will take a few days to fully digest the 2000 page report, and the work may not begin until everyone has first digested their Christmas dinner.

But the Welsh Government is likely to be critical of parts of the deal, having been concerned throughout that Wales’ interests weren’t being heard as part of negotiations.

Last month Jeremy Miles, the Welsh government’s Brexit minister, mentioned a “lack of transparency and collaboration that the UK government”.

But the trade deal is likely to have a bigger impact on Wales than the UK as a whole, with exports to the EU accounting for 61.2% of Welsh exports compared with 49.9% for the UK.

Wales also received substantially more EU funding per head than other UK countries, at £628 per head compared with £102 in England. Between 2014 and 2020, Wales qualified for almost £2 billion of EU structural funding.

Welsh farmers also have concerns – as part of the EU they received around £250m a year in direct payments. The EU also makes up three-quarters of the market for Welsh food and drink exports, and farmers expect non-tariff barrier costs expected to rise by 4 to 8 per cent.

There will also be new red tape for anyone that wants to trade with the EU. HMRC has said the extra form filling and the like could cost British business over £7bn – and the same for those in Europe.

Another issue is that because there will be no border between Northern Ireland and the Republic, there will need to be a ‘regulatory border’ between Ireland and Wales. So far however little has been done to update the infrastructure at Holyhead, the UK’s second-largest port that carries freight, to get ready for these changes.

Full UK Government statement

The UK Government said that “everything that the British public was promised during the 2016 referendum and in the general election last year is delivered by this deal”.

“We have taken back control of our money, borders, laws, trade and our fishing waters,” they said.

“The deal is fantastic news for families and businesses in every part of the UK.

“We have signed the first free trade agreement based on zero tariffs and zero quotas that has ever been achieved with the EU.

“The deal is the biggest bilateral trade deal signed by either side, covering trade worth £668bn in 2019.

“The deal also guarantees that we are no longer in the lunar pull of the EU, we are not bound by EU rules, there is no role for the European Court of Justice and all of our key red lines about returning sovereignty have been achieved.

“It means that we will have full political and economic independence on 1st January 2021.”

“A points-based immigration system will put us in full control of who enters the UK and free movement will end.

“We have delivered this great deal for the entire United Kingdom in record time, and under extremely challenging conditions, which protects the integrity of our internal market and Northern Ireland’s place within it.

“We have got Brexit done and we can now take full advantage of the fantastic opportunities available to us as an independent trading nation, striking trade deals with other partners around the world.”

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