This analysis of recent developments was written and posted on Monday, May 18th, 2020
“Fog in the English Channel, Continent Cut Off” may or may not be an actual UK newspaper headline, but could easily sum up the remarks of the UK’s Brexit negotiator, David Frost, last Friday after another round of discussions between the EU and the UK.
“We made very little progress towards agreement on the most significant outstanding issues between us,” Frost said, adding it was “…hard to understand why the EU insists on an ideological approach which makes it more difficult to reach a mutually beneficial agreement”. Frost’s comments were repeated on a Sunday TV show by Cabinet Office Minister Michael Gove who said “…there’s a philosophical difference” in the UK-EU negotiations
In reply, the EU’s chief negotiator, Michael Barnier, commented:
“This makes me believe that there is still a real lack of understanding in the United Kingdom about the objective, and sometimes mechanical, consequences of the British choice to leave the Single Market and the Customs Union.”
Unless things change dramatically, and there is absolutely no evidence that they will, the UK will exit the transition arrangement on December 31 next and leave the EU’s single market and customs union with no agreement in place on future trading arrangements. But never say never (see later).
While trying to cope with the fallout from the economic devastation of Covid-19, businesses will also have to cope with a sever disruption to trade in goods and services, barriers to data flows, and new regulations governing business and personal travel between the UK and the EU from January 1 next. A nightmare to be avoided, if at all possible.
Frost was speaking after a week of video-based negotiations on the future relationship between the UK and the EU when the UK leaves the transition arrangement on December 31 next. He believed that:
“The major obstacle to this is the EU’s insistence on including a set of novel and unbalanced proposals on the so-called ‘level playing field’ which would bind this country to EU law or standards, or determine our domestic legal regimes, in a way that is unprecedented in Free Trade Agreements and not envisaged in the Political Declaration.”
The fact that there are four references to a ‘level playing field’ (LPF) in the political declaration including a whole section on it (XIV on page 14) no longer appears to be relevant as far as the UK is concerned. The suggestion would appear to be that the Conservative election manifesto washed away the original sins of the political declaration. The UK was born again in the 2019 election.
Frost went on to say that “… we very much need a change in EU approach for the next Round beginning on June 1.”
Barnier saw things very differently: “… with the exception of some modest overtures”, he said, “we failed to make any progress on any of the other more difficult topics.” Barnier noted:
- Despite its claims, the United Kingdom did not engage in a real discussion on the question of the level playing field – those economic and commercial “fair play” rules that we agreed to, with Boris Johnson, in the Political Declaration. On this topic, this was a round of divergence, with no progress.
- We were unable to make progress on the issue of the single governance framework that we believe is necessary to build a close and comprehensive partnership with this great neighbouring country, and thus guarantee its efficient and transparent implementation.
- It insists on lowering current standards and deviating from agreed mechanisms of data protection – to the point that it is even asking the Union to ignore its own law and the jurisprudence of the European Court of Justice on passenger data (“PNR rules”).That is of course impossible.
Barnier made it clear that the EU would not be bound by the “precedents of the past” and would not “copy-paste a “best-of” from our existing free trade agreements with Canada, South Korea or Japan.” In this negotiation, he said, the Union is looking to the future. Any agreement:
- …must be underpinned by fair competition conditions, namely when it comes to state aid, social standards, or taxation.
- …must also contribute to achieving common goals. The agreement between the EU and the United Kingdom must bring about positive change when it comes to protecting our environment and combatting climate change.
Barnier went on to say that he had heard UK cabinet minister Michael Gove suggest that the UK might no longer look for a ‘zero tariffs, zero quotas’, deal in the hope of being freed from level playing field obligations. This, he said “would amount to reinstating tariffs and quotas between us – something that hasn’t been seen in decades. The Union does not want such an anachronism.”
“What’s more, this approach would entail a detailed – and highly sensitive – negotiation of each tariff line. We saw recently, with Japan and with Canada, that this takes years. Such a negotiation would only be possible with extension of the transition period. Is this what we are to understand from Mr Gove’s statement?”
But there would be no deal on offer from the EU to the UK, he stressed, without level playing field conditions.
- Because it is a core part of our modern trade policy;
- because it is part of our requirements to address the big challenges that lie ahead, to protect certain common goods and to protect consumers;
- and because we refuse to compromise on our European values to benefit the British economy.
- Economic and commercial fair play is not for sale! Open and fair competition is not a “nice-to-have”. It is a “must-have”.
Barnier underscored that EU Member States have been very clear that, “without a level playing field, and without an agreement on fisheries, there will be no economic and trade partnership agreement.” Any deal required such conditions. For example,
…reaching an agreement on road transport will require us to agree on drivers’ working conditions, including driving and rest times, as well as on guarantees relating to the businesses that employ them.
In any event, said Barnier, despite its constant references to “precedents” and its oft-repeated statement that all it wanted was a “Canada-style” deal, the UK was looking for a lot more than any other country had. “It is even looking to maintain the benefits of being a Member State, without the obligations.”
He went on to list some of the UK’s demands:
- To maintain for UK service providers almost complete freedom of movement for short-term stays;
- To obtain electricity interconnection mechanisms equivalent to the Single Market – “existing arrangements” as the UK says.
- To continue to assimilate British auditors to European ones for the purpose of controls on audit firms;
- To maintain a system for the recognition of professional qualifications that is as complete and broad as the one we have in the European Union;
- To be able to co-decide with the Union on decisions relating to the withdrawal of equivalences for financial services
Barnier emphasised that there would be no deal that did not meet EU conditions. He asked:
- Why would we seek to give favourable market access conditions to certain British professionals when our European fishermen would be excluded from British waters and risk losing their livelihoods?
- Why would we help British enterprises to provide their services in the EU without any guarantees of economic fair play?
- And, beyond our economic partnership, why would we be ambitious on questions of extradition or the exchange of personal data if we have no firm commitments from the UK on the protection of European citizens’ fundamental rights?
- And lastly, how would we guarantee that our future partnership would be coherent on all of these important topics in the absence of a single institutional framework? We need this to enable the United Kingdom and the EU to jointly implement the full range of our commitments.
Wrapping it up he said:
We are negotiating a trade agreement with a third country here – one that chose to become a third country. This is not an opportunity for the United Kingdom to “pick and choose” the most attractive elements of the Single Market.
This makes me believe that there is still a real lack of understanding in the United Kingdom about the objective, and sometimes mechanical, consequences of the British choice to leave the Single Market and the Customs Union.
To make progress in this negotiation – if it is still the United Kingdom’s intention to strike a deal with the EU – the United Kingdom will have to be more realistic; it will have to overcome this incomprehension and, no doubt, it will have to change strategy.
You cannot have the best of both worlds!
In writing these Brexit Briefings over the past four years we have more than once used the words of the Irish poet, W.B. Yeats from The Lake Isle of Innisfree
And I shall have some peace there, for peace comes dropping slow
We have watched, time and again, as the realisation of what it means to walk away from close on 50 years of deep economic and institutional integration has come “dropping slow” to UK politicians. The “simplism” of “it could all be done in an afternoon” and “we hold all the cards” gave way, time and again, to hard realities. Theresa May’s “red, white and blue Brexit” dissolved into, first, a request for a transition period and then the complexities of the “Chequers proposals”.
But for every Gironde there is a Jacobin only too ready to cry betrayal of the pure ideals of the revolution. Johnson and his Jacobins cut down May, seized power and proclaimed, “Brexit Reborn”. No more shabby compromises.
No more shabby compromises? The first thing Johnson did was to ditch the deal May had done with the EU to safeguard the UK economy in the event of no trade agreement being in place by the end of transition by keeping the UK temporarily in the EU’s customs union. May’s customs deal was wrapped in the language of the Irish “backstop”. Johnson “binned the backstop” and agreed instead to an Irish “frontstop”, leaving Northern Ireland in the EU’s customs union and in the single market for goods.
This means that the UK was free to cut its own trade deals with other countries, given that it was on the way out of the EU’s custom union. Unsurprisingly, to all but the most ardent Brexiteers, there has been no queue, orderly or otherwise, of countries forming to do deals. No country with any sense is going to do a deal with the UK until such time as they see what deal the UK has done with the EU.
Certainly, trade talks have opened with the US but the first thing the US put on the table was a notification that it could walk away from any deal with the UK if the UK did a deal with a country of which the US disapproved. Read China.
When people are thinking of quitting a job there is a common psychological mistake they make. They think of all the options they believe will be open to them and conflate all those options into one. No need to nail any of them down in advance. Then when they do quit they find that not only do many of the options fail to materialise but of the few that do materialise some are in conflict with others. You end up having to make uncomfortable choices, all of which leaves you worse off than you were in the old job. But, at least, you have taken back control. At a cost.
Maybe, just maybe, halfway out the door of the EU with its hat in its hand, the UK government is beginning to realise that there are few, if any, options on the outside. Or none that can be delivered on anytime soon. A realisation that “comes dropping slow”.
If the UK was confident that it could live with “no deal” why is Frost complaining that the EU will not offer it the deal it demands and why is Gove asking for “flexibility”? If the “sovereign UK” does not like the deal on offer from its “sovereign equal”, the EU it can always just walk away.
From reading the UK’s weekend newspapers here, you could well believe that the impasse in the EU/UK negotiations is nothing more than a communications problem. “If only the EU fully understood our position, all would be well”. Well, for a start, it is a bit difficult for the other party to understand your position when you refuse to publish your proposals.
- Why won’t you instruct your negotiator to give me what I am asking for?
- Because you won’t tell me what you are asking for.
- That’s no reason for your negotiator being unreasonable.
- Tell me what you want.
- OK, I will and if I do will you give me what I want?
- I can’t say anything until I know what you are asking for.
- Now, you are being unreasonable too.
Brexit is not a communications problem. Brexit is about a conflict of interests. The UK is leaving the EU, its single market and customs union while still wanting to hold on to as many of the benefits for trade in goods and services is enjoys as a member. The EU will simply not accept that the UK can have many of the benefits without the obligations.
That fundamental “philosophical difference” is not going to go away anytime soon.