The EU-UK negotiations – clash of the titans?

With the end of the transition period fast approaching, there seems to be no positive outcome from the EU-UK negotiations; showing that the ‘no deal’ option is rather inevitable. The sixth round of negotiations between the European Union and the United Kingdom took place Monday 20 July through to Thursday 23 July 2020 in London. You can find the agenda of this round here. During the press conference following the negotiations, Michel Barnier (Head of Task Force for Relations with the United Kingdom) stated that it is the parties’ duty “to act responsibly, and to work for an agreement to limit the negative consequences of Brexit”. 

In June, Prime Minister Boris Johnson announced that his aim was to reach political agreement quickly. This statement was a double-edged sword, as he shortly after mentioned three red lines, namely: no role to the European Court of Justice in the UK; the UK’s ability to establish future rights without any constraints; and for the potential agreement on fisheries to show that Brexit might do a real difference to the existing regulations. Michel Barnier reminded that the above mentioned terms do not correspond with the Political Declaration, signed by PM Johnson on 17th October 2019; and that the EU genuinely tried to understand the changes, as well as the Prime Minister’s lack of adherence to his own Political Declaration.

According to the EU’s Chief Negotiator, “UK did not show the same level of commitment in finding the solution respecting the EU fundamental principles and interests”, and despite the positive atmosphere of negotiation and professional approach from David Frost and his team, the conclusion of trade agreements is unlikely. What does this entail for the UK? On 1 January 2021, the UK will leave the single market and custom union. Thus, subjecting it to new customs, tariffs and quotas in less than 5 months. In order to avoid that, David Frost and his negotiating team must come to an agreement with the EU in October (at the latest); allowing the new treaty to enter into force with the new year.

A disagreement is still visible with regards to level-playing-field provisions. A level playing field is a trade policy term that refers to a set of common rules and standards; they are used primarily to prevent businesses from undercutting their rivals in other countries. This includes areas such as workers’ rights and environmental protection. Brussels wants the common standard to be EU-specific, and tied to sanctions. London wants a looser interpretation. Additionally, there is still no progress in two areas – state aid (subsidies) and fisheries. According to Bernier, the UK still refuses “to commit to the condition of open and fair competition”. Nevertheless, Brussels is still open to negotiations and conceivably a conclusion of a complex trade agreement.

PM Boris Johnson has been recently warned via letter by more than 100 UK company chiefs, entrepreneurs and business groups that it would be “hugely damaging” to the economy if Britain leaves the EU without a deal at the end of this year. IMO, the companies are not wrong to suggest that the impact on the national economy will be enormous, strengthening the crisis started by the pandemic.

The next round of the EU-UK negotiation will take place mid-August.

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