Face-to-face Brexit talks restarted in Brussels on Monday for the first time since the start of this pandemic. And on Tuesday, with media attention focused on Covid-19, an important milestone quietly passed.
The end of June deadline for the UK to apply for “transition” period extension has gone. So we will fully leave the European Union at the end of December, deal or no deal.
The Government’s refusal to prolong negotiations is a victory for common sense. Any prospect of an extension meant the chances of striking a deal were slim – that’s how serious deal-making works.
Now we’re definitely leaving, in six months’ time, minds will focus and the haggling can begin in earnest.Boris Johnson has set an end of September deadline to conclude any UK/EU free trade agreement – so businesses have time to prepare for life beyond the EU’s single market and customs union.
There’s three months to get this done, not six.Since the Covid lockdown, talks have been held via video link – which David Frost, UK chief negotiator, believes has hindered progress. He now warns “some of the EU’s unrealistic positions will have to change” if any FTA is to be struck. “UK sovereignty, over our laws, courts, or our fishing waters, is not up for discussion,” he says.
While obviously staking out ground, many will agree Frost has a point.In 2017, Michel Barnier said that, if Brexit went ahead, “Britain would be treated like any other third country with no special favours”. The default option, he insisted, was a plain old FTA like those the EU has with Canada and South Korea.
Back then, when Downing Street was at the whim of a pro-Remain Parliament, and Brexit looked reversible, Barnier’s words were presented as a warning. Now Johnson has a chunky majority, and we’re definitely leaving, Britain is asking precisely for an FTA like that already signed by the EU with Canada.
Yet the large green tick next to the maple leaf flag which once adorned Barnier’s famous “staircase” diagram is now a big red cross.
Despite Frost asking for “no special favours”, presenting detailed draft protocols based on FTAs the EU has already struck elsewhere, Barnier says “non”. It seems Brussels is now guilty of the very “cherry-picking” it has long said the UK must avoid.
Continued insistence on a “level playing field” means Britain would have to comply automatically with EU rules on labour, environmental protection and state aid, contrary to standard international FTA practice.
Some FTAs have “non-regression clauses”, so neither country can dilute existing standards, including the EU’s deal with Canada. But that’s way short of being forced to align with any future changes in EU law – which amounts to one-sided regulatory diktat, with inevitable disputes resolved by the European Court of Justice.
This quasi-judicial body is notoriously political, its raison d’être to serve EU interests.Barnier also wants Britain kept in the Common Fisheries Policy – with automatic EU access to UK waters, on unchanged quotas, in perpetuity.
This makes no sense, not least because the CFP encourages disastrous overfishing. The British fleet currently gets less than a third of the quota across UK fishing grounds, a reality which has decimated a once proud industry – which, while relatively small, has historically brought moderate economic relief to some of Britain’s most marginal regions.
There’s no precedent for making an FTA contingent on access to natural resources, as Barnier insists. This is less a grown-up agreement between sovereign nations than a colonial-style relationship which a large power imposes on a much weaker one, typically at the point of a gun.
Norway holds annual EU fishing quota negotiations, so why not the UK?If we do leave with no FTA, then the UK and EU will revert to trading under World Trade Organisation rules, which is no disaster.
Most trade in the world is under such arrangements and standard WTO tariffs are generally low and falling.The UK trades using WTO rules with the US, our single biggest country trading partner. Britain’s non-EU trade, largely under WTO rules, has grown fast in recent years, already forms the majority of our trade and generates a large surplus. Our EU trade share has, at the same time, shrank – and such trade has long been in deficit. That’s despite the much-vaunted “single market”, under which many of our service exports are, in practice, blocked.
Some thought this corona crisis would have provoked a UK transition extension. But while “No Deal” once looked scary, the post-Covid shift toward “supply chain security” means global trade will anyway be reconfigured.
Additional cross-Channel customs procedures can now be part of a worldwide system of additional corona-related checks. Plus, taking back state aid powers now may prove invaluable as the UK thinks about how to reconstruct its economy.
It was never likely Johnson would opt for a longer transition period. That would have broken his December 2019 manifesto commitment. An extension would also have seen Britain incur more than £15bn gross annual EU payments, while remaining on the hook to help rescue eurozone members which seem, once again, on the verge of financial crisis.
The Prime Minister wants an EU trade deal, but not badly enough to accept anything like Barnier’s conditions. And the September deadline is real, not least as any FTA will need ratification by the European Parliament and countless EU regional assemblies which could pull stunts.
Never underestimate the determination of Belgium’s tiny Walloon Assembly to hold an entire continent to ransom.
--- Liam Halligan is a columnist for The Telegraph