Is it desirable to be cunning?

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The EU and the British government finally agreed on a trade agreement on Christmas Eve 2020. Since the beginning of the year, the agreement has been provisionally applied thanks to a parforcer ride by the institutions. The final ratification is still pending. However, the VCI is relieved that both sides were able to come to an understanding. Nevertheless, it is clear: trade is now more difficult compared to the British membership in the EU. In addition, the United Kingdom is leaving the internal market for chemicals and is building its own system with UK REACH.

VCI General Manager Wolfgang Große Entrup: “The agreement in the photo finish prevented the worst. The economic consequences would have been devastating in times of corona and dramatically changing world markets. Even if there are still many unanswered questions: Brussels and London have made an important pact for the future. It is important that the foundation for a future close cooperation could be laid, instead of widening the gap in Europe further. "

Last minute agreement

The agreement for free trade agreements was preceded by short but tough and, from October 2020, incredibly intense negotiations. Deadlines were repeatedly torn, postponed and publicly threatened with failure. But the effort was crowned with success - albeit shortly before the end.

Immediately after the breakthrough on December 24th, Große Entrup emphasized: “The deadline for the start of the contract has now become extremely tight. It is hardly possible to adapt company processes to the new rules. In this respect, pragmatism is the order of the day for the transition. We rely on both sides to be aware of this. "

So far, these hopes seem to have been fulfilled: provisional application has been in effect since the turn of the year. Ratification has already taken place in the United Kingdom and the European Parliament and the Council of the EU still have to give their final approval.

Free trade, but more administrative costs

A first look at the text of the contract shows light, but also shadow. Free trade is guaranteed to a very large extent, there are no tariffs. The rules of origin for chemicals, which are decisive for customs treatment, are flexible and therefore enable extensive freedom from customs duties.

However, it is now also becoming apparent that Great Britain is leaving the EU internal market and that the agreements will not reduce all costs to the desired extent. Inevitably, the procedures at the border will be more complex and costly than before.

Particularly regrettable from a chemical point of view: The UK is leaving the internal market for chemicals with the EU chemicals regulation REACH and the EU chemicals agency ECHA and is building its own system. Contrary to what chemistry had hoped, no specific and extensive provisions on data sharing between the two systems were found. Additional cooperation approaches would be desirable here.

The VCI will publish a more detailed assessment of the Brexit agreement after reviewing the more than 1,200 pages of the text of the agreement.