Brexit deal paves the way for trade talks to begin

Talks on establishing trade deals with Europe after Brexit could finally get underway next year after Prime Minister Theresa May confirmed she had reached an agreement with European Commission president Jean-Claude Juncker over the UK’s exit from the EU.

The phase one deal paves the way for trade talks to begin

This morning, after a long night of negotiations, the pair confirmed that a deal had been agreed, after a previous version was thrown off course when the DUP raised concern over concessions made over the Irish border.

May said the settlement was “in the best interests of the whole of the UK”, and that the prospect of an estimated £40billion divorce payment was “fair to the British taxpayer”.

It means that the path has finally been cleared for the UK government to begin talks on trade, with a view to giving companies that both import and export from and into the UK greater clarity on their position going forward.

While talks on trade agreements will rumble on for months, if not years, it will come as some relief to the drinks trade, which relies on the freedom of movement of goods and benefit from the freedom of movement of people and capital within the EU, that talks can at least now get underway.

Wine and spirits traded between the EU and UK are not currently subject to tariffs, and unless the UK remains in the Customs Union, or a Free Trade Agreement is negotiated between EU and UK, this tariff-free environment will change post-Brexit.

The Wine and Spirit Trade Association has been among the most vocal trade bodies calling for greater clarity and cooperation to ensure a smooth transition after the UK leaves the European Union.

In October, the WSTA partnered with the Scotch Whisky Association (SWA), spiritsEUROPE and the Comité Européen des Entreprises Vins to produce a document that set out its shared requests and mapped out how to overcome issues affecting the industry.

“We have been calling for transitional arrangements to give us as much time as possible to adapt to Brexit, with the aim of securing an agreement between the EU and UK that ensures frictionless trade, preserves fair competition and maintains consumers’ confidence in our products,” said Miles Beale, chief executive of the WSTA at the time of its publication.

“We, like our partners in the wine and spirit trade across Europe, strongly support the UK and EU securing a comprehensive trade agreement that enables us to continue to do business and provide our products to consumers across the continent,” he added.

The paper also seeks to preserve the convergence of legislation found in both the EU and UK markets, outlining 46 spirit categories, including whisky and vodka, and 240 registered GIs that offer protection to Cognac, Scotch Whisky and Irish Whiskey.

Aside from enabling talks on trade to begin, the phase one deal agreed by May last night also states that the millions of EU citizens in the UK and UK citizens living in the EU will be able to stay for their “lifetime”, while EU citizens in Britain and Northern Ireland will continue to have access to free healthcare and the benefits system after the UK cuts its ties with Brussels.

May has also guaranteed that there will be no hard border between the Republic of Ireland and Northern Ireland when Britain leaves the EU, and no border in the Irish Sea.

May is believed to have agreed to pay the EU around £40billion as part of the divorce package, which will be paid in euros by December 2020. In addition, Britain will be paid 12 installments of €300m by the European Investment Bank from 2020.

Following news of the deal, the pound rallied against the Euro, rising by 1.5%, and a six month high, to €1.151, up from yesterday’s €1.131.