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Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

We are approaching the anniversary of the UK-EU Trade and Cooperation Agreement (TCA), which was hurriedly finalised on Christmas Eve 2020 and came into force on 1 January 2021. The way the pandemic seems to have warped time, it feels a lifetime ago.

The agreement prioritised British independence from the EU’s legal and regulatory system over access to the EU’s Single Market. Compared with other traditional trade agreements across the globe, the TCA is nevertheless a comprehensive agreement, providing tariff and quota free access for goods and building on World Trade Organisation rules for services. 

There remain unresolved issues. The licensing of fishing vessels has been contentious and has contributed to the ongoing rancour between London and Paris. What erupted as a major political row last month appears to have been defused for now via technical negotiations. The UK has issued a limited number of further licenses where “evidence has been provided that demonstrates that a vessel qualifies for access.” French authorities continue to hold out for more.

The Northern Ireland Protocol remains the most significant running sore between the UK and the EU. As an extensive Policy Exchange analysis has documented, UK negotiating failures and Brussels’ approach throughout the Theresa May era resulted in a fundamentally unbalanced Protocol, which the Boris Johnson Government has had some success in redressing. 

The EU has now conceded that the Protocol is causing problems that need to be addressed but the devil is in the detail. The UK maintains its position that the threshold for triggering Article 16 has been met but would prefer a negotiated resolution to ease the trade and political disruption the Protocol is causing. 

Last week, a “senior official” appeared to brief to European media that the Government was prepared to lower some of its demands in search of an agreement, in particular with regard to the role of the European Court of Justice (ECJ) in overseeing the Protocol.

However, Lord Frost has subsequently made it clear that a “durable solution” would need to deal with the ECJ. Negotiations are continuing this week, with some signs of progress on medicines, but it is unclear how hard the Government will decide to push the envelope on all the issues it has identified.

Leaving aside these ongoing challenges, the UK-EU deal has taken much of the heat out of the domestic politics of Brexit. Understandably, minds have been preoccupied with the pandemic. But, while Brexit divisions continue to influence our political debate, there is no sign of a credible campaign to either re-join the EU or demand another referendum. A recent poll found that a significant minority (21 per cent) of voters who opted to Remain in 2016 would now vote to stay out. 

The EU has also changed in important ways since the UK’s departure. The creation of an EU-wide, as opposed to Eurozone-only, collective borrowing facility would have been unthinkable under a pre-Brexit UK government of any colour. Meanwhile, stuttering movements towards a greater EU role in defence and foreign policy, would have also been anathema to British sensibilities under previous governments. 

Taking the domestic and wider European context together, Brexit is indeed “done”.

A new German Chancellor, Olaf Scholz, has been elected and if Emmanuel Macron is successful in his bid for a second presidential term, does this offer the chance of a fresh start for the UK-EU relationship in 2022? A ‘warm’ UK-EU relationship is probably unlikely in the medium-term, until a new generation of leaders on both sides of the Channel are free of the recent Brexit baggage. 

The near-term ambition should however be for a more cordial and workable relationship, subject to a satisfactory resolution on Northern Ireland, which might see greater coordination on some international issues, such as climate policy. A better relationship might also smooth some practical issues, such as customs and border processes for traders.

However, short-term economic adaptation costs were inevitable given the scale of the change Brexit has brought about. Some sectors have faced supply chain disruption and labour shortages, but these effects are difficult to disentangle from the deeper impact of Covid, which has caused similar issues elsewhere across the world. 

The long-term political and economic success of the Brexit project has always had much less to do with the new relationship with the EU and much more to do with future UK domestic policies, and the potential for deeper international engagement with old and new partners.

As Policy Exchange has argued, the UK should seek to use its new regulatory freedoms to lean into its strengths. The UK is the second largest exporter of services in the world. It has the potential to be world-leading in areas such as life sciences, fintech and other digital technologies, such as Artificial Intelligence – and to move with more agility and creativity than the EU in the decade ahead. Enacting smarter regulation of these sectors will be key to the UK’s long-term competitive advantage. The success of the UK’s vaccine rollout has provided an early illustration of the benefits of being nimble and flexible. 

Of course, other levers that were little affected by EU membership, such as investment in skills and infrastructure, will also be essential to the UK’s long-term success. Ultimately, Brexit offers clearer lines of democratic accountability and UK governments can no longer blame their failings on Brussels.

Further afield, the Indo-Pacific “tilt” illustrates that the slogan Global Britain is given substance when international policies are coordinated and deployed strategically. Throughout 2022, the UK will continue with the accession process to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – the most advanced trade agreement in the region. 

Meanwhile, the new “AUKUS” defence and technology alliance between the UK, Australia, and the United States, highlights the UK’s wider strategic commitment to the region in the face of growing concerns over China’s influence. Trade and foreign policy are increasingly two sides of the same coin.

It is true that the dozens of trade deals the UK has signed to date have largely been rollovers of EU agreements, and therefore low-hanging fruit. But genuinely new agreements are starting to emerge. Deals with Australia and New Zealand are agreed in principle. These new agreements have been more controversial because they push in a more liberal direction than the EU has done in areas such as agriculture. These debates could become more vocal throughout 2022 in negotiations with bigger partners, such as Canada and Mexico.

All of which is to note that much water has flowed under the bridge. After almost five years of domestic political wrangling over Brexit and fraught UK-EU negotiations, last year’s deal marked the end of an important first chapter of the Brexit process, following the 2016 referendum. The UK must now use the relative stability that the deal has provided as a platform to carve out a long-term course independently of the EU.