In many ways, Brexit has similarities to a blockbuster movie – the big budget, the twists and turns, the rise and fall of central characters. And, like any box office hit, it’s inevitably followed by a sequel…
Brexit II: ‘The Search for a Trade Deal’ began on Monday with a meeting between David Frost and Michel Barnier, the chief negotiators for the UK and EU respectively. Unlike the epic that was Brexit I, the second instalment promises to be a much shorter affair, will the final credits expected to roll on 31 December 2020.
The UK’s reluctance to extend the transition period into 2021, partly driven by an unwillingness to continue contributing to EU coffers beyond the £39bn already pledged in the Withdrawal Agreement, creates a very tight timeframe for fruitful negotiations to take place.
So, will it be as dramatic this time around and what are the chances of a happy conclusion?
A zero tariff/zero quota outcome is desirable for both the UK and the EU, but not at any cost. The UK, eager to make a clean break following Brexit, wants to diverge from EU regulations and points to the EU’s deals with Canada and Japan as precedents where divergence has been permitted. However, the EU points to the simple matter of geography and that the UK, as its near neighbour with entrenched economic ties, cannot expect to operate on the same terms as those more remote nations.
That’s because the EU is equally keen to preserve a level playing field for member states. In return for ‘zero-zero’, and to ensure that the UK doesn’t gain an unfair competitive advantage from Brexit, the EU insists that the UK should continue to abide by state aid rules that prevent governments from subsiding businesses too heavily, and also pay heed to EU standards in areas such as workers’ rights and the environment. On this point, both sides appear to be drawing ‘red lines’ reminiscent of those made famous by Theresa May and there could be a serious clash in the making.
Boris Johnson has vowed to walk away from trade talks if the EU refuses to allow the UK to diverge from its standards and regulations. He’s hinted that if the Canada option is a no-go then a relationship with the EU in the Australian mould will be a satisfactory alternative. However, Australia doesn’t have a single overarching deal with the EU, but rather a series of ‘side’ deals.
There’s also potential for reduced cohesion among the EU27 over its priorities in the trade talks which could present barriers to striking a satisfactory deal. The negotiations are likely, therefore, to be multi-faceted and the challenge will be for officials to weave these storyline threads into a script that can hang together.
Whether its proximity in terms of geography, deadlines, or the approaches of the EU27 to the talks, there’s a multitude of challenges that could yet scupper a deal before the popcorn is eaten and the lights go up.
