United Kingdom and European Union negotiators have come to an agreement on the first set of Brexit-related issues, but now move on to the thorniest problems surrounding trade and access to markets.
British Prime Minister Theresa May has agreed to pay the European Union between 35 billion and 39 billion pounds to settle the remaining obligations Britain has to the E.U. The two sides also reached an agreement on the rights of British citizens living and working in the E.U. and vice versa after Britain leaves the bloc. Currently, 3 million E.U. citizens are in the U.K., while a million British citizens are living in the E.U. Those living in foreign countries, either in Britain or on the continent, will continue to have their current rights maintained, while free immigration will cease in 2019 when Britain is expected to complete its separation.
Among the most complicated of border issues, was the border with Ireland – the only land border between the U.K. and the E.U. That border will be treated somewhat different and remain an “open” border to trade and travel. The Republic of Ireland is an E.U. member, while Northern Ireland remains a part of the U.K.
“I’ll be very frank. Brexit, by its nature, has strained relations between Ireland and the UK. Of course it has. How could it not?” said Irish Prime Minister Leo Varadkar. “Our role now is to get through that. I actually think because of this agreement that we have today, because we have the guarantees and the assurances that we sought, Britain will have no closer friend than Ireland.”
Now tough negotiations must take place place regarding the nature of trade between the two. Britain would obviously love to see an agreement that preserves duty-free trade while not subjecting Britain to other requirements of the union, such as free immigration. E.U. officials have so far said that such a deal would be out of the question.
One E.U. official speaking to the Manchester newspaper The Guardian said,
“First and foremost we need to stick to this balance of rights and obligations, otherwise we will be undermining our own customs union and single market. Second, we cannot upset relations with other third countries. If we were to give the UK a very lopsided deal, then the other partners with whom we have been engaging and who entered into balanced agreements would come back and question those agreements.”
The biggest leverage that Theresa May and British negotiators have is the large trade deficit the country has with continental Europe. The loss of British consumers has already worried French agricultural interests as well as German industry.
Outside of the United States, Germany is Britain’s largest trading partner, with about 70 billion pounds of German exports purchased by the U.K. each year. Half of U.K. trade is with E.U. member countries.
The chart below displays U.K. trade with each country in the world.