Euractiv | 28 April 2020
Divided and running out of time: Why the EU-UK trade talks have stalled, again
By Benjamin Fox
23 June will mark the fourth anniversary of the UK’s decision to leave the EU. But while the UK has officially been out of the bloc since 31 January, the talks on future relations underscore how little has changed in those years.
After a week of 40 different videoconferences broke up on Friday (24 April), a frustrated Michel Barnier accused London of running down the clock on talks.
With just two more full negotiating rounds before a crunch summit in June, long-running disagreements on the European Court of Justice, and whether the UK should be bound by EU legislation have stalled talks, leaving the UK as close as ever to trading with the EU on WTO terms in 2021 – even with the social and economic damage of the coronavirus pandemic looming large.
Barnier’s exasperation is matched by UK officials. From the start of the Brexit process over three years ago, UK officials have talked about the negotiations being between “sovereign equals”.
The EU does not see it that way, with Barnier’s remarks on Friday giving a nod to the EU’s sense that it is the more powerful player: “UK negotiators keep repeating that we are negotiating as sovereign equals. The reality is to find the best relationship possible between a market of 66 million and a market of 456 million.”
In turn, Cabinet Office minister Michael Gove told UK lawmakers on Monday (27 April) that the EU’s “behaviour suggests that they regard the UK not as a fully sovereign independent state but as a state which is in an association agreement-style relationship with the EU”.
UK officials insist that “constructive discussion” took place between the two sides, but their basic lines remain unchanged: it will not agree to alignment with EU law and to jurisdiction of the ECJ.
With time, once again, appearing to run out, can the gap be bridged?
The extension question
At the June “high level’ meeting, Prime Minister Boris Johnson says that he will decide whether a deal can be reached or if the UK will walk away from the table and trade on WTO terms.
The UK has made clear that the post-Brexit transition period will end on 31 December and that it will not agree to an extension under any circumstances.
Extending UK membership of the EU single market beyond December 2020 would “prolong business uncertainty, and delay the moment of control of our borders. It would also keep us bound by EU legislation at a point when we need legislative and economic flexibility to manage the UK response to the coronavirus pandemic,” a Downing Street spokesman told reporters earlier this month.
That mindset baffles the EU, which cannot understand why the UK would allow the economic damage to be increased when both sides are on the brink of a major recession caused by the coronavirus pandemic.
The tight deadline “should concentrate minds” on getting a deal, says UK Cabinet Office minister Michael Gove.
“The consequence of this decision is that the clock is ticking,” Barnier replied.
However, the trade talks do not carry the only deadline. The rules to implement the withdrawal agreement also have to be in place and operational by 31 December.
The two sides are probably closest when it comes to trade in goods. Officials on both sides say there is convergence on core provisions related to market access, trade remedies, customs, technical barriers to trade, and sanitary and phytosanitary rules. But UK officials are frustrated their proposals to remove unnecessary technical barriers to trade have been rejected.
The UK also complains that the EU has refused to engage on product-specific rules of origin.
The EU’s main frustrations on trade policy are on the so-called ‘level-playing field’, where it insists that London agree to stick to EU single market standards now and in the future, and to state aid rules.
The Johnson government retorts that it has no plans to lower labour and environmental standards but that a free trade agreement should not require one side to be bound by the others rules and that the EU’s position goes far beyond precedent.
On services, meanwhile, there is a high degree of convergence between the two sides, including on cross-border trade in services, and on aviation and aviation safety. However, there are disagreements on financial services and professional qualifications.
Regarding the politically sensitive topic of fisheries, both sides acknowledge that little progress has been made because of differences over fundamental principles. The UK wants a separate fisheries framework agreement involving annual negotiations over access and sharing opportunities modelled on the EU’s fisheries agreement with Norway.
However, the EU insists that a fisheries deal is an “inseparable part” of the overall trade pact and is frustrated that, with the two rounds remaining before the June summit, the UK is yet to table a text on what Barnier describes as an “essential topic”.
On fisheries, “we have made no tangible progress,” said Barnier, adding that “the EU will not agree to any future partnership that does not include a balanced and long-term agreement on fisheries. That should be crystal clear to the UK.”
Police and judicial co-operation
The main sticking point on criminal justice and law enforcement is that the EU insists on a direct role for the ECJ in dispute settlement – breaching a long-standing UK red line.
That, as well as the UK’s newfound third country status, threaten to derail an agreement on criminal records exchange or support for Europol. The EU insists that a non-Schengen third country cannot be part of, or exchange Schengen Information System data.
The EU also insists that criminal justice cooperation requires a UK commitment not to change its domestic laws implementing the European Convention on Human Rights, which UK officials say is unacceptable.
Elsewhere, EU officials say that the UK is refusing to provide firm guarantees on fundamental rights, and insists on the right to lower standards on data protection, which Barnier’s team says would severely restrict future police and judicial co-operation.
On governance, the main dividing line is, again, the European Court of Justice. The UK states that it will not be required to accept EU law either in terms of concepts or specific provisions, or give the ECJ a role in deciding disputes.
Officials on both sides could be forgiven for having a distinct sense of déjà vu since many of these disagreements have been present ever since the so-called Article 50 withdrawal process began in early 2017.
Against the backdrop of the coronavirus pandemic, observers might be hard-pressed to understand why the UK would genuinely run the clock down. Yet the Johnson government appears to believe that since the pandemic will leave all European governments facing a leap into the economic unknown, the economic risks posed by a ‘no deal’ and the hardest of Brexits are worth taking.
Either way, neither side appears prepared to compromise on either time or policy.