Stephen Booth is Head of the Britain in the World Project at Policy Exchange.
The next round of UK-EU negotiations begins on June 1, the final talks before a “high-level conference” attended by the Prime Minister to assess progress before the end-of-year deadline. The previous negotiating round, two weeks ago, concluded with an exchange of letters between David Frost and Michel Barnier, which suggested that either or both sides are preparing the ground to blame the other for causing a stalemate in the talks.
Nothing is certain in these times but it still looks likely that we will pass the June 30 deadline without an extension to the transition period. This would leave just six months to settle the future UK-EU relationship in an increasingly febrile atmosphere, in which a row appears to be brewing. The timing of yesterday’s letter from Barnier to the leaders of the SNP, Lib Dems, Plaid Cymru, SDLP, Green Party and Alliance Party, stating the option of an extension to the transition period is still available, if the UK wants it, will not have lowered the temperature.
Frost has accused the EU of offering “not a fair free trade relationship between close economic partners, but a relatively low-quality trade agreement coming with unprecedented EU oversight of our laws and institutions.” Meanwhile, Barnier responded by stating that, “I would not like the tone that you have taken to impact the mutual trust and constructive attitude that is essential between us.”
If next month’s UK-EU summit is indeed a disappointment, the UK has rightly said it will turn its attention to domestic preparation for an EU relationship on World Trade Organisation (WTO) terms. But what will happen over the next six months will remain difficult to gauge because it is in neither side’s interests to advertise whether they might be prepared to compromise until the very last moment.
At this stage, the chances of reaching an agreement are probably no more than 50/50 and there are a number of potential scenarios that do not necessarily point to a simple “deal” or “no deal” outcome on January 1, 2021.
The June 30 deadline for an extension is theoretically the final legal opportunity to buy more time. However, if a deal looks close come the end of the year, a legal means will no doubt be found to provide the time to dot the i’s and cross the t’s. Equally, if a deal is reached at the very last minute, an adjustment period could be included so that businesses have a phase to prepare for the new trading regime. There are countless historical examples of the EU finding procedural ruses when the political needs must.
There may also be ways to ensure that a no deal outcome is not as stark as it would have been in 2019. Then, the EU scotched the idea of a “managed” no deal Brexit on WTO terms, supported by various reciprocal easements on border or regulatory issues. This made some sense when Brexit counter-revolutionaries were strong in Parliament and the Irish border issue remained unresolved.
However, Boris Johnson’s government now has the mandate to deliver an “Australian-style” relationship, even if it is not his preferred outcome. Meanwhile, the Withdrawal Agreement and Northern Irish Protocol provides the EU with some security over issues such as citizens’ rights and the Irish land border. In these circumstances, the EU might, or might not, be willing to soften a transition to WTO terms.
It is still possible, though, for a deal to be reached and ratified before the end of the year. As I have argued before, the outstanding barriers to a UK-EU trade agreement are well known to both sides and should not be insurmountable. But they require political choices to be made.
Reports this week suggest there are signs that the EU might be prepared to recognise that its demands to maintain its present fishing rights in UK waters are unattainable. An EU official was quoted as saying: “We would be looking to shift on demands to keep everything as is now, a somewhat maximalist opening position, if the UK also moved from its position of coastal attachment. That’s where the room for compromise lies.”
However, Amelie de Montchalin, France’s EU Affairs Minister, has said there is currently no reason for the EU to change its position on fisheries. The so-called “level-playing field” and the governance arrangements of any agreement are also barriers to a deal.
Ironically, in all of these areas the EU hankers for the type of UK “associate status” that Theresa May’s government envisioned under its Chequers proposals. EU leaders are now reaping the consequences of their decision to so publicly rebuff May’s offer at Salzburg in September 2018.
Everything Johnson’s government has said and done to date suggests that an associate status, and the alignment to EU rules it would require, is not something it will ever agree to. Frost yesterday reiterated this point of principle to the House of Commons’ Future Relationship with the European Union Committee.
Therefore, the political reality is that, if a deal is to be done, the landing zone on the key issue of alignment will need to be closer to the UK’s current negotiating position than the EU’s. To put it mildly, this is not how the EU sees the situation or what it is used to. In a traditional trade negotiation, the EU’s size would give it an upper hand. But, ultimately, this is not a traditional trade negotiation.
The future relationship negotiations are a proxy for what has become a wider geopolitical rupture. The question now is the degree of the rift. Some in UK officialdom favour a deal under which the UK and the EU become economic competitors but remain strategic partners on issues such as climate change, Russia and China. The alternative may be greater strategic rivalry. Britain has the option of seeking closer relationships with the Anglosphere and in Asia in order to establish a counterweight.
Arguably, Johnson’s government can endure some economic disruption in 2021, if indeed it is distinguishable from the wider Covid-19 fallout, because the primary objective is taking back control of British sovereignty. Predictions that economic interests, such as the German car industry, will eventually soften the EU’s approach have been wrong before and may be wrong again. However, Johnson may find it easier to explain the political imperative of national independence to his 2019 electoral constituency than it will be for Brussels to explain why trade with Britain has been sacrificed for the sake of the rather abstract concept of the integrity of the single market.