December 3, 2020

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Brexit update: Work still needs to be done, US elections can be important NOW

Brexit update: Work still needs to be done, US elections can be important NOW

Brexit is back. The British have now left the European Union, but the two parties are still arguing about their future relationship. Time is running out and the news is piling up quickly so we have a quick update on what happened this week.

This week both power blocs have made steady progress in the strenuous negotiations. On Friday, EU negotiator Michel Barnier announced that an agreement is currently underway, but that much remains to be done.

After a week of intensive talks in London, the talks between Barnier and his British colleague David Frost will continue in Brussels. While steps have been taken in the right direction, several outcomes are still possible. And time is running out in two months.

Two more months, different scenarios possible

It seems that three more scenarios are possible. The first scenario means a Brexit deal in which the EU single market remains open to the British and the British market remains accessible to the member states. There will be much less cooperation in many areas such as regulation, security and defense.

The second scenario is the much discussed no-deal Brexit. In such a case, the UK would leave the EU without a trade deal and henceforth act on an “Australian model”. The EU does not currently have a free trade agreement with Australia, but there are small agreements on certain issues.

According to insiders, the third scenario is a partial deal. This option will certainly be relevant when time is running out and the power supply blocks want to reach an agreement at the last minute. The parties can then temporarily reach agreements on items they can agree on without the EU possibly ratifying them.

In practice, this would mean that negotiations on various topics still need to be held in 2021. In such a case, the new trade rules the UK wants to enforce become important. Less stringent food safety requirements would then make trade with the EU more difficult, while this in turn could benefit a trade agreement with the US.

US elections can be a crucial factor in negotiations

The US presidential election, which will take place on Tuesday, could also be a decisive factor in the ongoing Brexit negotiations. Prime Minister Boris Johnson therefore views the November 3 results with suspicion. Presidential candidate Joe Biden stated in September that he is not a fan of Johnson’s Brexit bill, which could repeal parts of the withdrawal agreement. Biden sees no hard border between Ireland and Northern Ireland and believes that the British should simply stick to the agreements previously made with the EU.

This could have a negative impact on a new US-UK trade deal. Many members of the House of Lords considering Johnson’s Brexit bill next month may be voting en masse against the controversial clauses in the UK Prime Minister’s proposal for a democratic victory.

However, if current President Donald Trump wins the presidential election, Johnson would feel empowered to pursue a no-deal Brexit. The American president is a supporter of Brexit and would prefer to see a new trade deal with London as soon as possible. The winner of the US presidential election could therefore be a forerunner to the Brexit scenario that will emerge later this year.