Boris Johnson warned last year that a no-deal Brexit would represent “a failure of statecraft for which we would all be responsible”. On Wednesday, over dinner in Brussels, that statecraft will be put to the ultimate test.
Mr Johnson’s dinner meeting with Ursula von der Leyen, European Commission president, is seen as a last chance to salvage trade talks and put the UK’s post-Brexit relationship with the EU on a solid footing. The political and economic stakes could hardly be higher.
Ahead of the talks, both sides circled the wagons. Mr Johnson’s cabinet was said by Downing Street to be “united” behind the prime minister and his threat, if necessary, to take Britain out of its post-Brexit transition period without a trade deal on January 1.
Meanwhile, Germany, a huge exporter of goods to the UK, put on a show of unity with France, whose president Emmanuel Macron was resuming his familiar role as the tough man of Brexit.
Detlef Seif, chief Brexit spokesman of Angela Merkel’s CDU party, said: “It’s certainly true that France is more affected by the fisheries issue than Germany, so obviously they have a different view.
“But the idea that there are differences between Merkel and Macron on this is just a figment of the Brits’ imagination.”
The German and French leaders have agreed not to speak individually to Mr Johnson — an idea discussed in Downing Street — but to leave the endgame to Michel Barnier, EU chief negotiator, and Ms von der Leyen.
British attempts to drive a wedge into the unity of the EU27 have been a consistent but unsuccessful feature of the Brexit saga.
Katja Leikert, chief CDU spokeswoman on Europe, said: “We have to show the UK the red card whenever they try to bilateralise the talks.” A senior French official said: “There is a negotiating team. Full stop.”
Mr Johnson on Tuesday night met David Frost, his chief negotiator, in London to see whether a “landing zone” for a deal could be identified — if both sides were prepared to move.
Mr Frost spent Tuesday morning with Mr Barnier identifying the outstanding areas of disagreement before finally elevating them to the political level with Mr Johnson and Ms von der Leyen on Wednesday.
British officials insisted the talks in Brussels over dinner would be a “real negotiation”, while EU diplomats said they were intended to unblock the talks with details to be hammered out later by Mr Barnier and Lord Frost.
Downing Street insisted that the detailed negotiations could not drag into 2021, although EU officials maintained that substance rather than timing was key.
While the question of fisheries remains unresolved, both sides agree that a deal over access and quotas is possible. It is the question of the fair competition “level playing field” — and its enforcement — that remains the biggest problem.
Brussels wants to make sure it will be able to react to any large gap in ambition between the EU and UK’s environmental or labour standards by reducing market access for British goods.
It has proposed an “evolution mechanism” under which the two sides would hold consultations if one side was worried that its businesses were being put at a competitive disadvantage.
What would a no deal mean?
Tariffs on UK exports to the EU of as much as 40 per cent. Agriculture and fisheries would be hit especially hard: (EU duties on UK scallops would be 20 per cent for example, and 15 per cent on sausages).
Disruption to co-operation in the fight against terrorism and organised crime because existing arrangements for information sharing would lapse.
The EU would lose fishing rights in UK waters, with future access hinging on annual negotiations with the UK under the United Nations Convention on the Law of the Sea.
Trade would be hit by the full force of new customs and veterinary checks at the border and at company premises.
Cross-border workers would face increased bureaucracy in securing access to benefits and pension rights.
Disruption to trade in civil nuclear materials and to the cross-border energy market.
Lost opportunities for UK scientific researchers to work together with European counterparts.
Should it be established that there is a real problem but talks fail, the disadvantaged party could impose tariffs or other measures to re-level the playing field.
The UK insists that, while it is ready to agree not to weaken existing regulatory standards — a principle known as non-regression — the EU plans go far beyond this.
“What the EU has proposed is not non-regression but de facto alignment,” said a UK official.
Linked to this are EU demands — also resisted by the UK — for either side to be able to punish the other if it violates its commitments. Under such a system, the EU could hit imports from one sector to counterbalance British rule-breaking that affects another.
The UK sees the cross-retaliation idea as disproportionate, arguing that it would lead to an unstable and unpredictable trading relationship.
The two sides are also at loggerheads over attempts by Brussels to exclude EU-level spending from joint commitments on state aid. EU negotiators argue that, within the union, EU level funds such as its regional aid money are exempt from state-aid restrictions.
The level playing field issue cuts to the heart of Mr Johnson’s dilemma — the one he used to claim Britain would never have to face — that full sovereignty over UK rules means less access to the EU single market.
The economic risks of failing to compromise were laid bare last month by the independent Office for Budget Responsibility, which estimated that there would be a 2 per cent hit to the British economy next year if no free trade deal was signed, equivalent to £40bn, on top of earlier Brexit and coronavirus-related losses.
Businesses have become increasingly alarmed as the days tick by without a deal, causing panic among companies that still lack the necessary details to plan for UK-EU border controls.
The British Chambers of Commerce said that businesses still had insufficient official information available in 24 critical areas, which has undermined their ability to prepare for January 1.
James Sibley, head of international affairs of the Federation of Small Businesses, said it was “deeply concerning that, more than four years on from the referendum, small firms still have so little clarity around what our trading relationship with the EU will look like when the transition period ends in 25 days’ time”.
Reporting team: George Parker, Daniel Thomas and Chris Giles in London; Jim Brunsden and Sam Fleming in Brussels; Guy Chazan in Berlin and Victor Mallet in Paris
Source: Economy - ft.com
