What the BREXIT trade deal is?

In a way, BREXIT trade deal restores the status quo with respect to special status that the UK and the EU enjoyed as trade partners. The trade in goods will continue without any tariffs or any quota restrictions. The UK-EU trade is worth £670 billion and it could have had larger repercussions if the deal had not been signed on time. The sense of relief was evident from the way the global markets reacted positively and the GBP also strengthened versus the dollar. But there are some genuine gaps in the deal that cannot really be ignored. 

Gaps in the BREXIT trade deal

We will only talk about the gaps in the trade of goods and not of services at this point. While tariffs and quotas will not exist, the trade restrictions in the form of customs clearances and other formalities will kick in from Jan-21. For example, all goods moving to and from the UK and EU will have to go through a number of customs clearances. Food items and livestock will have to go via multiple levels of health checks as well as local certifications. All this will surely add to the challenges in goods trade. 

Some open ended areas too

The secession applies to everything other than physical trade. For example, services trade will be subject to a set of restrictions and local laws. UK is free from EU interference but it also means that it does not have the backing of the ECB and EU any longer. Immigration is going to be the big issue. There will be no more free movement of people between UK and the EU and there is likely to be an elaborate points-based grading system based on which visas will be issued either ways. Above all, it means that the current system of global companies being headquartered in UK and operating seamlessly across the EU will not be possible any longer. And then there is the big dispute over fishing in common waters, which is unresolved. 

India must fancy its chances

The BREXIT comes as a big opportunity for India to deepen and broaden its trade relations with the UK and EU. The eventual goal must be an FTA with the UK but that may still take some time. The exit of UK from the EU will open the trade doors as UK will no longer be bound by EU rules. Tatas are already the largest employer in the UK and UK will now be hungry for capital. This is a big opportunity for Indian companies to make their presence felt. Above all, the BREXIT opens up the services trade with the UK and EU for India. That could be the real icing on the cake for India!