Wednesday, December 04, 2019

As Britain goes to the polls, the EU is preparing a brand new list of 'Brexit Unicorns'

Published in The Daily Telegraph

As Britain prepares to take to the polls next week, the European Union is gearing up towards its own negotiations on the future EU-UK relationship. If, as the polls currently suggest, Boris Johnson gains an absolute majority and Brexit happens at the end of January, these will begin right away. But what will the EU will be demanding? Statements and leaks from Brussels suggest the following.
Their first demand will be that Boris Johnson breaks his promise not to extend the eleven months transition period if he wants a proper trade deal. As one EU diplomat put it, “the choice is either no deal Brexit 2.0 or to extend the transition period.” Another senior EU diplomat added that “not in my wildest dreams would I imagine" the possibility of the EU agreeing a zero-tariff, zero-quota deal by 2020, which would permit divergence from EU rules on workers’ rights and environmental protections.
The EU's chief Brexit negotiator Michel Barnier has said that trade and security will be prioritisedbut “we cannot do everything in 11 months, we will need more time.” It would be possible, he conceded,  to negotiate “the principle elements” of a free-trade agreement to avoid an economic cliff edge before the end of 2020. Only covering part of cross-Channel trade, however, this would be expected to hurt UK services access.
Even if the UK did request a transition extension, it would be on the extra condition of paying a “proportional” contribution to the EU budget. Though there are potential ways to fudge this, for example, by amending the Withdrawal Agreement itself by retroactively changing the provisions for transition extension, the EU’s cooperation will still be needed.
A second EU demand is that the UK agrees to grant the EU access to British fishing waters before the end of June, and it sees this as a pre-condition for any trade deal. An EU diplomat adds that the fisheries issue, where the UK is seen by many to have a strong negotiation position, “needs to be resolved by June, so in four months.” According to the withdrawal agreement, the decision on whether or not to extend the transition is also due by then.
Thirdly, the EU will demand so-called level playing field commitments to guarantee that the UK will not undercut European social, tax and environmental standards to gain competitive advantage after Brexit. If not, the UK should expect a response in kind; Barnier has warned that “access to our markets will be proportional to the commitments taken to the common rules”. He even redefined a refusal to copy the EU's failing model of excessive regulation when exporting to continental Europe as "dumping".
And what of finance? The EU’s Commissioner for financial services has specifically warned that the bloc will restrict market access if the UK diverges too much from EU financial regulations. This threat isn’t as straightforward as it may seem - the City of London is just too important to the EU. Moreover the use of similar tactics against Switzerland has so far failed to deliver a result, with the Swiss able to contain the effects by reciprocal protectionism. 
Fourthly, security cooperation will be a further condition of an EU-UK trade agreement, specifically, finding an alternative to the European arrest warrant and providing access to crime-fighting databases.  
In this regard, EU officials have pointed out that if the UK becomes a competitor and diverges, this will not only result in reduced EU market access, but it will also hurt cooperation in other areas. One official explains “We want leverage in these areas", “to keep the UK in the continental Europe's orbit”. In the past, the EU and the UK have cited aviation, carbon pricing, anti-money laundering, illegal migration, data protection and sanctions on rogue states as areas of post-Brexit cooperation.
A fifth demand is that the new relationship should be governed by a single overarching deal, instead of a patchwork of bilateral agreements, which is for example the case in the EU-Swiss relationship. The latter has been rocky lately, due to EU attempts to push a single framework onto the Swiss, which would force them to accept the power of the European Court of Justice and to align with EU rules in return for market access.
The EU does consider there to be separate areas of cooperation and roughly sees three key ones: trade, security and research. It however wants everything to depend on everything else. They will likely demand some kind of permanent framework in place to govern the relationship, with a coordinating body and two EU-UK summits per year.
There's more. The European Union will also attempt to make the UK sign up to freedom of movement in return for tariff-free market access. Barnier has repeatedly spoken of the link between the frictionless movement of goods and people. Never mind the well-documented exceptions to this rule; the EU for example carved off free movement of people from its trade deal with Ukraine.
This is an extraordinarily ambitious wish list, and one which seems especially ludicrous given EU officials' tendency to accuse the UK of "unicorn thinking". Still, it is Christmas I suppose...

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