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UK and EU Announce Post Brexit Trade Deal
As 2020 drew to a close, so too did the United Kingdom’s multi decade membership in the European Union. When the United Kingdom joined what was then the European Community, the country joined forces with other member countries to create a single market for goods. Over the years, the relationship deepened to include a more expansive integration of markets for goods and services, the free movement of people, and harmonization of laws. Speaking as a single voice representing the citizens of 28 countries, the European Union played a powerful voice in global affairs, one that was likely unachievable by any single member country. The United Kingdom however, chafing at the loss of sovereignty membership in the European Union required, strived to keep one foot in the bloc whilst maintaining its independence in other ways, choosing for example, to continue to circulate its own currency rather than adopt the euro. It was this loss of sovereignty that ultimately played an important role in the decision by many UK citizens to vote in 2016, to leave the European Union, a vote that became known as Brexit.
In the lead up to Brexit, many UK citizens expressed concern that decisions made in Brussels were not necessarily in the best interests of the United Kingdom. This sentiment, along with unease over immigration and fishing rights resulted in a sharply divided Britain and the call for a vote on whether the country should remain a part of the economic bloc it had helped to create, or leave, and be in total control of its own destiny. The sharp division in the country was reflected in the very close vote with the outcome, of course, to leave, setting up what became a multi-year negotiation between the United Kingdom and its former partners. As a member of the European Union, the United Kingdom had free access to European markets. UK businesses relied on European markets for a significant share of their revenues and so, post-Brexit wanted to ensure continued access to those markets. Similarly, because many EU companies exported a sizeable share of their products and services to the United Kingdom, it was important that the market remained accessible post-Brexit. With both sides relying on the other, the stage was set for an epic four-year negotiation. Overriding the withdrawal negotiations was the desire by European Union leaders to prevent other countries from also leaving the European Union potentially further weakening the bloc. Accordingly, European Union officials wanted to present a perspective that leaving the bloc was undesirable, while at the same time, UK Prime Minister Boris Johnson, one of Brexit’s biggest cheerleaders, wanted to present a deal to UK citizens validating the value of leaving the trading bloc. The United Kingdom officially left the bloc in January 2020 but maintained EU status for a further 11 months while the two sides negotiated just their future relationship. For months, negotiators failed to come to terms, and with time running out, the prospect of a no-deal became a very real concern, a situation that most companies wanted to avoid. Finally, just a few days before what would have been a hard Brexit, or an exit without any sort of defined withdrawal agreement, the new deal was announced. Both sides asserted victory. Under the new arrangement, both sides will maintain free access to the other market, however, companies will now have to complete extensive paperwork for customs officials. In addition, new limits on the free flow of people between the United Kingdom and the European Union will be imposed as will new regulations on fishing rights. Perhaps in recognition that there is no blueprint for Brexit, the two sides have agreed to take future disputes to an independent panel. For many companies, the new deal is a welcome end to the uncertainty that has prevailed for the past four years and an understanding that 2021 will be yet another year of adjustment as they learn the new rules for doing business with their former trade bloc partners.
Based on the case study above, please write a 1500-word essay analyzing the UK and
European Union Post Brexit trade deal. The new agreement between the European Union and United Kingdom was announced as time was running out on the transition period. Consider the implications of a no-deal Brexit. Please analyze why did many economists feel that having a deal was important for both sides? How would a hard Brexit have affected companies? How a post trade deal announcement can impact the UK’s fiscal, monetary or trade policy initiatives in the short run and long run?
(Due date: 23:59 PM (Sydney time: AEDT) April 23 2021)