Post Brexit: As time runs out to reach a ‘deal’, no shift in UK’s approach despite “significant areas of disagreement”
The next – and ninth – negotiating round on the future relationship resumes in Brussels between 28 September and 2 October. The results feed directly into the 27 European Heads of State – meeting as the ‘European Council’ on 15-16 October – when they are scheduled to decide whether a ‘deal’ has been reached in time for implementation at the end of the ‘transition period’ midnight (CET) 31 December. ‘No-deal’ remains the default if there is no agreement on all negotiating points or the EU Council, each of the 27 EU states, the European Parliament – and not forgetting Parliament in the UK.
After eight negotiating rounds between March and September 2020, both sides acknowledge that whilst progress has been made, “significant areas of disagreement remain”. The three key areas are: ‘Level playing field and state aid’; ‘fisheries’; and ‘governance’. These are further detailed, below.
At the end of ‘Round 8’, the EU’s chief negotiator Michel Barnier accused the UK of “refusing to include indispensable guarantees of fair competition in our future agreement, while requesting access to our market”. He said the UK had “not engaged in a reciprocal way on fundamental EU principles and interests”.
Lord Frost, the UK’s chief negotiator, said the UK had “consistently made proposals which provide for open and fair competition, on the basis of high standards, in a way which is appropriate to a modern free trade agreement between sovereign and autonomous equals”.
The EU has stated that an agreement needs to be reached by the end of October 2020 to allow time for ratification before the end of the transition period on 31 December 2020. Boris Johnson has said that if agreement is not reached by the time of the European Council meeting on 15 to 16 October 2020, both sides should accept there will be no agreement and “move on”.
If there is no agreement, the UK Government has stated that their trading relationship with the EU would rest on the withdrawal agreement and “would look similar to Australia’s.” Australia has no free trade agreement with the EU – although negotiations for one have been ongoing since July 2018. An ‘Australia-style’ arrangement would mean the UK would trade with the EU on WTO terms.
Johnson says that a trading arrangement like Australia’s would be a “good outcome” for the UK – although the Government would “continue to work hard throughout September to reach a deal with the EU.”
This was within days of the Government laying the ‘UK Internal Market Bill’ before Parliament – which has instantly and dramatically affected the atmosphere of negotiations. The bill contains measures that would enable ministers to disapply or reinterpret aspects of the Northern Ireland Protocol that was agreed between the UK and the EU as part of the Withdrawal Agreement – enshrined into an EU-UK Treaty in October 2019. Ministers may involve these measures “notwithstanding any relevant or international or domestic law with which they may be incompatible or inconsistent”. The Northern Ireland Secretary has acknowledged that “this does break international law in a very specific and limited way”.
Some aspects the protocol are still to be agreed by the Joint Committee established under the Withdrawal Agreement. Boris Johnson has argued that the controversial provisions in the bill are needed because negotiations in the Joint Committee “risk coming unstuck”. He said: “We are now hearing that unless we agree to the EU’s terms, the EU will use an extreme interpretation of the Northern Ireland Protocol to impose a full-scale trade border down the Irish Sea”. Mr Johnson told the Commons Liaison Committee he did not believe the EU was negotiating in good faith.
Ursula von der Leyen, President of the European Commission, spoke about trust between the UK and the EU in her State of the Union address this week. She said it was: “a matter of law, trust and good faith” that the Withdrawal Agreement could not be “unilaterally changed, disregarded, disapplied”.
Maroš Šefčovič, the EU co-chair of the Joint Committee, said the Government had “seriously damaged” trust between the UK and the EU by putting forward the bill – calling on the UK Government to withdraw the measures from the bill by the end of September at the latest. He said that the EU would “not be shy in using” mechanisms and legal remedies in the withdrawal agreement to address any violations of its provisions.
Our view is that unless the bill it is withdrawn from Parliament, the EU will take the UK to court. We see no sign that the Government is considering such a withdrawal.
The UK and the EU set the framework for the future relationship negotiations in a political declaration that set the parameters of: “an ambitious, broad, deep and flexible partnership across trade and economic cooperation with a comprehensive and balanced free trade agreement at its core, law enforcement and criminal justice, foreign policy, security and defence and wider areas of cooperation”.
The ”significant areas of disagreement” in more detail
Level playing field and state aid: The EU is seeking level playing field commitments to ensure common standards in areas such as state aid, workers’ rights and the environment. It says these are necessary to prevent trade distortions and unfair competition, particularly given the proximity and interconnectedness of the UK and EU economies. The UK maintains it will not accept provisions that bind it to EU laws and standards. It says the proposals it has put forward are closely modelled on arrangements the EU has already agreed with similar countries such as Canada.
Fisheries: The EU wants to maintain its access to UK waters on the basis of historic fishing patterns. The UK emphasises its sovereign control over its own waters, and wants fishing quotas to be negotiated on an annual basis.
Governance: The UK has proposed separate governance arrangements for the various draft agreements it tabled. The EU is seeking an overarching governance structure for the future relationship with “horizontal dispute mechanisms” that would allow cooperation to be suspended in one sector in response to an unresolved dispute in another area.
What the UK and the EU each wanted from a ‘deal’
The UK negotiating brief was to achieve a Canada-style free trade agreement – with other areas of cooperation covered in separate treaties:
“As [the political declaration] makes clear, a Comprehensive Free Trade Agreement (CFTA) should be at its core. This Agreement should be on the lines of the FTAs already agreed by the EU in recent years with Canada and with other friendly countries […] The CFTA should be supplemented by a range of other international agreements covering, principally, fisheries, law enforcement and judicial cooperation in criminal matters, transport, and energy […] All these agreements should have their own appropriate and precedented governance arrangements, with no role for the Court of Justice.”
In written statements, Boris Johnson set out the UK’s red lines: “Any agreement must respect the sovereignty of both parties and the autonomy of our legal orders. It cannot therefore include any regulatory alignment, any jurisdiction for the CJEU [Court of Justice of the European Union] over the UK’s laws, or any supranational control in any area, including the UK’s borders and immigration policy.”
He also said some areas of future cooperation would not need to be managed through an international treaty. The UK would develop its own separate and independent policies in areas such as immigration, competition and subsidy, the environment, social policy, procurement and data protection.
The EU explained it intended to negotiate the future partnership as a package covering general arrangements (values, principles and governance), economic arrangements (trade, level playing field guarantees and fisheries) and security arrangements (law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence).