Context: After it formally exited the European Union on January 31 this year, the United Kingdom entered a 11-month transition period during which it continued to follow EU rules.

• The two sides are attempting to strike a deal to define the terms of their future relationship ahead of a December-31 deadline, when the UK’s post-Brexit transition period officially ends.
• There is a lot riding on a successful Brexit deal for both the EU and the UK.
• By striking a zero-tariff and zero-quota deal, they will be able to safeguard the trade of goods between the UK and the EU, which amounts to around $1 trillion annually.

What is the Brexit deal and why is it needed?

• After it formally exited the European Union on January 31 this year, the United Kingdom entered a 11-month transition period during which it continued to follow EU rules.
• This was when the country began negotiating a deal with the bloc to determine key aspects of their relationship — including a viable trade agreement, defence, security and immigration once the transition phase ended.
• However, talks stretched on as both sides were unable to agree on major points — fishing rights, governance, and guaranteeing a ‘level playing field’ on government subsidies and regulations.
• A level playing field essentially means that in order to trade with the EU’s single market, the UK will have to follow the same rules and regulations to ensure that it does not have an unfair advantage over other EU businesses.
• But with or without a Brexit deal, the UK will be exiting the EU’s single market and customs union by the end of the year.
• The deal is also likely to lay down rules of governance, which will dictate how any deal is enforced as well as the penalties that will be imposed if one party violates the terms of a mutually-approved agreement.
• The UK will also have to agree on how it will cooperate with the bloc on issues pertaining to security and law enforcement once it officially withdraws from the European Arrest Warrant on January 1, next year.
• Further, the two parties will have to finalise agreements on issues like airline safety and information sharing.

Why is fishing such a big deal?

• While fishing is a relatively small part of the economy on both sides of the English Channel (fishing was just 0.02 per cent of the overall economy both in the UK and in the EU), the issue is extremely emotive and its political consequences far outweigh the economic impact on both sides.
• For the EU, access for its boats is an important precondition for a trade agreement, while in Britain, the Brexit cheerleaders peddled it as a symbol of sovereignty that needed to be regained.
• Even though Britain formally left the EU on January 31, 2020, the country still has to adhere to the EU’s rules until the end of the year, including the bloc’s Common Fisheries Policy.
• So, till then, the fishing fleets of every country involved have full access to each other’s waters, going well beyond the territorial water that covers the first 12 nautical miles (22km) from the coast.

What is at stake?

• Failure to strike a deal before the December 31 deadline would result in a no-deal Brexit, which could have far- reaching ramifications both domestically and internationally.
• No deal is also likely to sever the already-tense relations between the UK and EU for some time.

https://indianexpress.com/article/explained/brexit-deal-explained-what-is-at-stake-for-uk-and-eu-7118673/

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