The writer is a former EU trade spokesman and co-founder of Shearwater Global
With the Brexit deadline looming on December 31, I recall a former chief EU trade negotiator saying, one day before the end of a major world trade round that had dragged on for a dozen years: “There’s plenty of time. We have 24 hours left. What are you worrying about? This is when the EU starts negotiating.” The deal was struck that very night.
I have little doubt there will be a Brexit deal, although the EU’s skill at playing things down to the wire is legendary. Together with Britain’s apparent unpreparedness, this is causing widespread jitters in the press and on social media, and uncertainty in the economy and among businesses. Yet for Brussels this is a normal day at the office. The EU Commission’s job is to broker deals between forces bigger than itself, within Europe and outside. It has nerves of steel, the hide of an ox and no fear of cliff edges.
The stakes in that former negotiation — the so-called Uruguay Round — were higher than those of Brexit: more countries were involved, there were more sticking points and a less united EU, not to mention entrenched opposition from European and US farmers to a deal at all. Brexit should be easy by comparison, as Britain is merely adjusting the trading arrangement it has had with the EU for almost 50 years.
My optimism stems from two factors. The first is that there is no powerful actor in the Brexit arena that opposes a deal. Noisy yes, but powerful no.
British fishermen can kick up a stink in the tabloids, especially in Scotland given renewed sensitivities about Scottish independence. But Whitehall knows that fishing overall matters little to the economy. The same is true of the hardline Brexiters in Westminster who drive much of the anti-EU rhetoric. Boris Johnson’s parliamentary majority means this tail no longer wags the Tory dog. Dominic Cummings’ departure from Downing Street will further dilute the revolutionary streak within the Brexit camp.
Meanwhile on the EU side, no member state opposes a deal. The one constituency that could cause deadlock — fish, again — is divided between several EU countries and controls none of them. In short, there is no single emotive issue — like, say, agriculture — causing a big country to dig in its heels, as there often were in the major trade negotiations of old.
The EU is steamed up about Britain undercutting its state aid regime, but this will hardly bring French, Germans, Italians or Spaniards on to the streets. And on this, as on other outstanding issues, the poison can always be drawn by setting up vague “principles” or creating another technical committee. The EU has a drawerful of creative solutions for kicking an issue down the road and out of the headlines.
My second reason for optimism is geopolitical. With Donald Trump set to leave the White House, Brussels and London will work hard to restore transatlantic ties. Britain knows the EU matters to US president-elect Joe Biden, while the EU knows London’s ties with Washington run deeper than its own. A Brexit deal is the best gift they could make jointly to the incoming president, assuming his fears over the Irish border and the Good Friday peace agreement are allayed. Moreover, the perceived threat from China dwarfs any disagreements over Brexit. Britain, Europe and the US need each other like never before.
My confidence that there will be a deal wavers only when I consider the psychology of Brexit. The EU is driven by the head, but Brexit comes from the heart. It is a case of economic self-interest meets identity politics, and the EU is not accustomed to this.
EU negotiating positions are typically a mixture of logic and tactics: explore the economic needs of its key countries (Germany, France, Spain, Italy and Poland, in that order); weave a compromise between them; then throw in a few morsels to buy off smaller EU countries, while building in some negotiating slack for the end-game. If the result looks good for the European economy as a whole, it becomes the basis for a negotiation.
Finally, the commission must prepare for “hostage-taking”: any last-minute demand by an EU country, possibly unrelated to Brexit, in return for its support. EU cash usually does the trick. But if it is a bigger issue — such as Spain and Gibraltar’s sovereignty — things could get messy. But the commission will have planned ahead for such crises too.
The problem with Brexit is that the referendum was seen in EU circles as a reaction to grievances largely unrelated to EU membership. The EU assumes that, even down to the wire, London does not know what it wants — but needs to make voters feel sovereignty has been restored. So, when the commission finally puts its negotiating steamroller into top gear, it could face some surprises. Here too though, ever-prepared, it will have done its crisis planning.
Source: Economy - ft.com
