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New Year brings final UK-EU Brexit split

Antony Phillipson, Her Majesty’s Trade Commissioner (HMTC) for North America and Consul-General in New York joins the Yahoo Finance Live panel to discuss the UK-EU Brexit split.

Video Transcript

AKIKO FIJUTA: Welcome back to Yahoo Finance Live. The 11 months of Brexit transition period officially comes to an end at midnight in the UK tonight. Come tomorrow, the UK will officially be out of the European Union's single market and customs union, ushering in a new era.

Let's bring in Anthony Phillipson. He is UK's trade commissioner for North America. It's great to have you on today. 2016 is when this all began. It feels like it has been a very long and often rocky road to get here. For those who haven't been following every step of the way, help us understand what changes fundamentally from a trade standpoint come midnight tonight?

ANTONY PHILLIPSON: Well, thank you very much indeed for having me on. As you say, it's-- it's a historic moment. Technically, just to be slightly pedantic, it happens at 11 o'clock UK time, midnight Brussels time. So that will be the official moment. And indeed, I think even Big Ben will sound to mark the moment.

As you say, it's been a long process since the referendum in June 2016. It's been an intense process. I mean, separating the UK from the European Union, from the single market, from the customs union was never going to be a simple enterprise. Of course, the most significant moment really was the 31st of January this year when we formally left the EU, or that we remained, as you say, within the transition period that ends in a few hours.

And we will move into, as the prime minister has said, the next chapter in our own national story, but also our relationship with our prosperity and security partners in the European Union. This is still going to be a very close relationship, governed by a free trade agreement, governed by other agreements affecting our engagement. Of course governed by a hugely important joint committee within the Northern Ireland Protocol, within the withdrawal agreement to make sure there's no risk to the Good Friday Agreement, et cetera.

This is going to be a deeply engaged relationship as we both now start, as I say, the next chapters in our national stories.

- And as Akiko highlighted there, I mean, 2016, you think about how many things change in four years. And it was obviously a pretty close margin in terms of the 52- 48 vote. And we've been hearing stories from a lot of business owners out there who might not be happy with the way things are going, maybe seeing unforeseen business implications to their own businesses because of this.

What's your estimation, or what are you hearing from a lot of people who may have voted for it and may be thinking twice about that now as we see this deal going forward?

ANTONY PHILLIPSON: Well, I think there's a couple of points I'd make. First of all, in a way Brexit is done. Although the transition period ends in a few hours, it was done on the 31st of January this year when we left the EU. So I think we've-- we've already moved past some of those more significant moments.

And then I guess the other point I'd make is the incredible amount of work that is being done in partnership with business to prepare for what is a very significant change. As I say, we will be outside the single market and the customs union that has been the-- the underpinning of our economic relationship for the last few decades.

But we will move forward into this new trade agreement, tariff-free and quota-free which the EU hasn't done with anyone else, certainly not at this scale. Separate processes on equivalence in financial services, adequacy governing our data relationship, security relationships. It's-- as I say, we move forward not on the basis of no contact and engagement between us, but as part of a deeply engaged relationship.

We will continue to put information out there to help businesses prepare. Many of them have already prepared intensively for this. And we'll see what happens as we go through the next few months, as we put in place the rest of the agreements, the rest of the new relationship and continue to look for opportunities to work together in a global context. Including, just to highlight a couple key issues around climate next year, Covid recovery, economic resilience. The UK and the EU are going to be very firm partners and friends as we go forward.

- And now that you've got the agreement in place with the EU, certainly there's going to be a lot of attention that focuses to that discussion that you've been having with the US on any kind of trade deal. We heard from the trade Representative Robert Lighthizer talking about a mini trade deal with the UK he'd like to get done at least in the early parts of the year. Of course he's exiting with the Trump administration. Where do the discussions stand right now on that front? And what are some of those key sticking points?

ANTONY PHILLIPSON: So I think there's two things that actually, if you're referring to the piece he did-- TV interview just before Christmas, I don't think he actually himself used the term "mini deal." I think that got used by the sub-editor when they wrote up the headline. And what he was actually referring to was the talks that are ongoing between the UK and the US. And indeed between the UK and the EU, and the EU and US to resolve the Boeing Airbus disputes, which is a huge priority for us. We think we need to get those disputes resolved. We need to move forward in a way that we can support these strategically important companies, but without hurting other industries who are being affected by the tariff retaliation.

On the FTA itself, just before the US election back on the third of November, the UK and US negotiating teams wrapped up the fifth formal round of negotiation. Five rounds over the previous few months since we launched them in May. We've made a huge amount of progress. We haven't quite got there. Now we're just waiting to see how we can pick this up with the incoming presidential team under Joe Biden. We're looking forward to working with him and his team once they are confirmed. Including, of course, Kathy Tai as the US Trade Representative, who we know very well from her time in Congress.

And we will aim to position that FTA as an important part of the UK and US's approach to Covid recovery, coming back, building back better, building back stronger from this pandemic and economic crisis that of course, is not over yet. So that's where we see the FTA now. And we will look to pick that up as quickly as we can with the new administration after the inauguration and 20 or so days.

AKIKO FIJUTA: What are some areas you anticipate, or potential areas for discussion at least as it relates to Covid relief as both sides really look to try to bounce back, at least economically?

ANTONY PHILLIPSON: So I think we will look to find ways to free up trade and investment flows between us wherever we can. We will also want to make sure and continue to really focus in on how this agreement can support small and medium sized enterprises in particular. I think they're the lifeblood of our economies and our communities, and of course, have been severely hurt by the economic crisis and the pandemic.

We will obviously I think want to make sure there's a strong focus on services, collaboration, lowering market access barriers where we can in key sectors of our economy. I think we'll also want to continue with a really strong focus on digital trade, making sure that as the UK and US move forward together we can set some of the global standards in e-commerce and digital trade together, working through other organizations, such as the G7 and the OECD.

I think there's a real opportunity here for both economies, which is why we're so very excited to have the chance to push on with this and to pick up the conversation with the new administration when we can.

- Yeah, it was a long road, but to new beginnings here, a fitting story here as we celebrate the new year. Anthony Phillipson her Majesty's Trade Commissioner for North America. I appreciate you taking the time, and Happy New Year.

ANTONY PHILLIPSON: Thank you. Happy New Year to you both.