After a dinner in Brussels on Wednesday night, British Prime Minister Boris Johnson and Ursula von der Leyen, the president of the European Commission, both indicated that the likelihood of “no deal” between the U.K. and the European Union has increased. Von der Leyden said that a final decision will probably be reached on Sunday. It’s not clear whether either party is bluffing.
Without a trade agreement, the U.K.’s future relations with the European Union will be governed by World Trade Organization (WTO) rules, which would include the imposition of import duties. In view of that, British companies have been stocking heavily on products imported from the EU, as witnessed by huge lines of trucks piling up at French border points. “It is looking very, very likely that we will have to go for a solution that I think would be wonderful for the U.K.” based on WTO rules, Johnson said.
The U.K. officially left the EU on Jan. 31, with a transition period running until Dec. 31. In their efforts to reach a trade agreement by then, the two parties have been working on compromise solutions on three negotiating points: market access, fishing and the way to address eventual disputes over the implementation of the agreement. The U.K. seems to have given in to requests for a more open border between the two parts of Ireland.
Meanwhile, the U.K. is negotiating trade deals as it leaves the European single market, and it has now finalized a bilateral free trade agreement with Vietnam, which is scheduled to become effective from Jan. 1. It is the third bilateral trade agreement to have been reached by the U.K. with an Asian country, after those with Singapore and Japan. The U.K. has also reached a preliminary trade agreement with Canada.
The latest accord will reduce U.K. tariffs on Vietnamese imports by £114 million (€124.2m-$150.5m) and by £36 million (€39.2m-$47.5m) for British exports to that country. The two governments expect the deal to further stimulate trade between the two countries. Bilateral trade has tripled between 2010 and 2019 up to a level of about $7.5 billion.
For the U.K., the new bilateral agreement replaces the existing EU-Vietnam Free Trade Agreement, which came into effect in August, with a goal to cut or eliminate 99 percent of tariffs on goods traded between Vietnam and the EU.
The British International Trade Secretary, Liz Truss, said the U.K. government’s deal with Vietnam would take her country a step closer to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which comprises 11 Pacific Rim nations including Vietnam, Japan and Canada. It would help British companies to diversify their supply chains more broadly, making them ”more resilient,” she said.
