As spring turns to summer, the Brexit trade deal talks move from Phase Three to Phase Four. Observing the negotiations from a distance, there’s the distinct impression that we’ve been here before. Four weeks away from a ‘make or break’ summit to reflect on any progress made, both the UK and the EU are reporting significant points of disagreement in how to proceed and are blaming each other for the impasse. Sounds familiar? Absolutely, but the window to secure consensus is tighter than ever before at a time when the crisis created by COVID-19 pandemic is understandably diverting attention and resources elsewhere.
This week, nevertheless, negotiators have resumed their task of identifying the contentious issues and figuring out ways to work through them. As the UK and EU inevitably diverge, the big question is the extent to which the UK should be permitted to shift from collaborator to competitor? The EU is deeply concerned that, by allowing the UK to operate under different standards and regulatory frameworks to those followed by member states, the existing level playing field will be ripped apart. The UK’s stance is that this autonomy is precisely what Brexit is intended to achieve and should be honoured. The role of state aid (the extent to which governments can intervene to support businesses) will form a large part of this debate.
Again, echoing the pattern of the Withdrawal Agreement negotiations, the EU has repeatedly asked the UK to provide concrete proposals for a new trading arrangement, arguing that progress cannot be achieved without this. In recent weeks, the UK has responded to some degree by reiterating that it wants a free trade agreement based on zero tariffs and zero quotas, with separate agreements concerning fisheries, law enforcement and judicial cooperation.
The UK has also provided some further clarification of how it wishes to progress on the subject of the Irish border, an issue which dogged the Withdrawal Agreement process for so long. It wants the new arrangement to involve no additional administration which could affect the movement of goods between Northern Ireland and the rest of the UK. It also believes that tariffs should only be levied on goods passing between the Republic of Ireland and Northern Ireland. Finally, and fundamentally, the UK is adamant that no physical infrastructure should be installed on the Irish border, but it accepts that some limited additional process may have to be implemented to police goods crossing the border.
It’s increasingly apparent that there is little confidence of consensus being achieved on any of these issues any time soon. Many may shrug at this prospect, in anticipation of a last-minute deal being struck instead, as has happened before. But the timeframe involved, when taking into account the complexity and scale of the arrangements concerned, and the need to address the economic impact of the pandemic make such an achievement much less certain.
And it’s certainty that businesses, in current climate, are craving but not getting. Some are therefore urging the UK government to request an extension to the current transition period beyond the current end date of 31 December 2020. The deadline for such a request to be made coincides with the summit scheduled for the end of June. However, the UK government remains adamant that it will not do this.
As summer turns to autumn, the anxiety created by this reluctance to create more breathing space is likely to increase across sectors if the prospect of ‘no trade deal’ continues to grow.
