As trade talks open between post-Brexit Britain and the European Union, Boris Johnson’s government has ruled out sticking to EU rules, regulations and laws, emphasising to the 27-nation bloc that the UK is prepared to walk away if offered an unfair deal.
The UK’s tough talk is the clearest sign yet of the magnitude of the challenges to reaching a trade agreement between London and Brussels.
The EU has said that to maintain close trade relations the UK will need to adhere to EU rules, while London made it clear that setting its own rules clearly outweighs a deal.
The UK top negotiator David Frost said that the EU has totally missed the point of Brexit if it thinks it will retain some supervision over British actions and decisions.
“To think that we might accept EU supervision on so-called level playing field issues simply fails to see the point of what we are doing,” underlined Frost in a speech he gave during a visit to Brussels this week.
“It is central to our vision that we must have the ability to set laws that suit us — to claim the right that every other non-EU country in the world has,” he added.
THE POINT OF BREXIT
The EU has said it wants the best possible trade relationship with the UK, but only if there is a level playing field for businesses on anything from state subsidies to environmental standards, and is insisting on clear checks to enforce it.
“The point of the whole project” of Brexit is to reject any EU meddling on rules and regulations, Frost said during his speech, given at Université Libre de Bruxelles.
He added that there was no way that Britain would seek a longer transition period than 11 months to reach a deal, despite this timespan being considered next to impossible for a trade agreement between the UK and the EU.
On 1 January 2021, he said, the UK will “recover [its] political and economic independence in full”. “Why would we want to postpone it?” he asked.
Frost revived the threat of a no-deal crash-out at the end of the Brexit transition period, saying that the UK wants a Canada-type free trade agreement with the EU and if this cannot be agreed, then Britain will trade on the basic international terms it currently follows with Australia if Brussels continues to insist on “level playing field” rules.
He said the UK will set out more details of its vision for the future relationship with the EU next week.
Frost’s comments indicate that the UK is considering a “no-deal Brexit” outcome, in which the country reaches the end of the transition and leaves the bloc without a trade deal, rather than compromise on key issues.
Cabinet Minister Michael Gove also raised concerns among manufacturers and retailers, warning that a new EU trade relationship would involve increased costs and extra bureaucracy at borders. He admitted that a new “smart” border to cut trade friction would not be ready until 2025.
Boris Johnson’s government maintains that it will accede only to loose demands on alignment with EU rules and standards in areas such as workers’ rights and the environment, and yet will benefit from virtual tariff-free access to Europe. Closer alignment would be tantamount to “Brexit in name only”, it says.
But Brussels is going to take a tough stance on interpreting the commitment to maintain a “level playing field” over future competition. It argues that the UK’s proximity and degree of integration to Europe means special circumstances apply, meaning alignment will be necessary in return for a zero-tariff, zero-quotas deal.
The prospect of leaving by the end of 2020 with no deal is worrying to many sectors in the UK.
The British Retail Consortium warned consumers will face higher costs and fewer goods without efforts to reduce the burden at borders. Almost 80 per cent of food that British retailers import comes from the EU, mostly through the ports of Dover and Folkestone, which handle almost 7,000 lorries every day. The British retail industry body renewed its call for Britain to strike a deal with the bloc which cuts red tape and border friction.
London will suffer more than any other part in the UK. As the heart of the service economy in Britain, the capital needs access to the EU financial sector and the flow of the European workforce. Mayor of London Sadiq Khan said Londoners who are “heartbroken” over Brexit should be allowed to keep their EU citizenship, claiming “associate” citizenship could give them the right to move freely between EU member states.
BRACING FOR DIFFICULT TIMES
The European Union has been bracing for difficult times ahead. Over the weekend, French Foreign Minister Jean-Yves Le Drian warned that the EU and the UK will “be seriously at each other’s throats” during the negotiations.
“I think that on trade matters or on the measures for future relations, which we’re going to engage in, we’re going to rip ourselves apart pretty badly,” he told the annual Munich Security Conference.
“But that’s part of the negotiations; each side is going to defend its interests,” he added.
France’s chief diplomat singled out the issue of fishing, a subject on which he warned recently that the French “will not compromise”.
The EU wants to keep access to British waters for European fishing boats, and leaders have suggested the issue will be linked to other matters, such as financial services, in upcoming talks.
The EU’s Chief Negotiator Michel Barnier has insisted that the bloc will not agree to any British trade deal just to avoid a costly, chaotic “no-deal” at the start of 2021.
Both sides have indicated that they are willing to walk away from the talks if the gap cannot be bridged.
The United Kingdom left the European Union on 31 January. Both sides face a race against the clock to seal a trade deal and agreement on future relations before the end of the transition period 31 December.
ANOTHER NO-DEAL SCENARIO?
Throughout 2019, the fear for many on both sides of the English Channel was that the UK could “crash out” of the EU without an agreed deal on either the terms of the divorce or the future relationship. Had that happened, legal arrangements covering many aspects of everyday life would have abruptly ceased to apply.
The formidable challenge of securing a trade deal with the EU in a few months during the transition period — a task that usually takes the bloc several years — means the UK could be staring at another economic “cliff-edge” in 2020.
Failure to secure a trade deal would hit the UK’s economy but also those of its closest continental neighbours, including Ireland. It would bring an immediate change in the trading relationship between the UK and the EU.
But the economic implications of Britain leaving without a trade deal are not the most serious threat to the United Kingdom. Leaving without a deal will open a Pandora’s Box regarding the future of the UK. Nationalism in Scotland and Northern Ireland is on the rise. For Johnson’s government, political and security, rather than economic risks, are what may ultimately drive him to accept some EU rules and regulations.
*A version of this article appears in print in the 20 February, 2020 edition of Al-Ahram Weekly.