Brexit’s Next Battle: The Trade Deal

BRUSSELS: Prime Minister Boris Johnson secured initial parliamentary backing for his Brexit withdrawal bill on Friday, putting Britain on course to leave on Jan 31 — but the saga will not end even with final confirmation from lawmakers.
From as early as Feb 1, European Union and British officials will launch intense negotiations on the future trading relationship between the divorcing partners.
The post-Brexit transition period, in which the UK will continue to follow EU rules, finishes at the end of 2020, and Johnson says he will not seek an extension.
But it will be “extremely challenging” to reach a comprehensive accord in time, the president of the European Commission Ursula von der Leyen warned this week.
EU negotiator Michel Barnier and his “Taskforce UK” are working overtime in Brussels to prepare a negotiating mandate, hoping to control the timetable and sequencing of talks.
Will there be an ambitious free trade agreement — or will the two sides settle for a bare-bones deal to simply keep the cross-Channel goods trade flowing?
Fast or slow?
Experts widely agree that it will take far longer to achieve a comprehensive trade deal worthy of a country destined to be one of the EU’s closest partners.
And, speaking to MEPs this week, Barnier said: “Time is limited and it won’t be possible to do everything, but we’ll do everything we can. We can’t do it all but we will give it our all.”
“After the transition period we’ll have to continue to work with the British and to negotiate,” he said.
Despite Johnson’s assurances to British voters, trade deals do not just come off the shelf “oven-ready”, especially if Britain is looking for a vastly different relationship.
If Britain wants frictionless access to the EU single market, it will have to follow European rules to maintain a “level playing field”, and Johnson has shown no sign of wanting this.
Trade deals: How long?
A fast agreement would be “a very big ask” that would limit the ambition of the deal tremendously, Fabian Zuleeg, chief economist at the European Policy Centre, told AFP last week.
The British government will have to decide by July 1 if it wants to postpone the Dec 31, 2020 deadline.
On that date, it could make a one time only request for either one or two years of extra time.
Otherwise, Zuleeg said, “maybe they can achieve something very basic that would give the UK very limited leverage on the tricky subjects like services, fisheries or Gibraltar for Spain”.
As a matter of reference, other EU trade talks have dragged on much longer from the launch of talks to implementation: Canada deal: 8.5 years Japan: 6.5 years Singapore: 9 years Vietnam: 7 years so far Mercosur: 20 years so far – What does six months get you?
“Striking a trade deal by the end 2020 is enormously ambitious, but we won’t achieve it if we don’t try,” Irish Prime Minister Leo Varadkar, who will be an influential voice on trade, has warned.
Negotiators will have to show convincing progress by July 1 and leave enough time for translation, legal rewrites — known as “scrubbing” — and ratification.
Zuleeg says the UK would have to accept major concessions on the key issues to win the fast deal.
Cutting or stopping tariffs on goods will probably be achievable, but that leaves no time for the UK to negotiate on other topics.
The return of ‘no deal’
Brussels officials now accept that Johnson is unlikely to seek an extension to the Brexit transition period.
But if December comes without an accord, the spectre of a no trade deal Brexit will loom once again, with Britain in danger of an abrupt cut in ties with Europe, rocking its economy.
Von der Leyen has warned against this, but says it will be more of a problem for Britain that for the remaining union, which will still have roughly six times the UK’s GDP.
“In case we cannot conclude an agreement by the end of 2020, we will face again a cliff edge,” she said.
“This would clearly harm our interests but it will impact more the UK than us.” As a third country, Britain would immediately have trade terms set by the World Trade Organisation.
Tariffs on key products would be high, ruining, for example, the business arithmetic for the UK production of cars and other industrial goods that depend on parts from overseas.
Entry points into the UK would be choked up with border guards forced to implement checks and fill out paperwork.
Finding an EU mandate
At this month’s EU summit, national leaders tasked Barnier to draw up a trade deal mandate as soon as possible.
This is necessary because trade policy in the European Union is unified across the soon-to-be 27 member states — with the deals negotiated by the European Commission.
This will set the EU’s vision for the deal as well as delineate red lines for the negotiations — and member states will have differing views.
Several countries — including France and Belgium — will push for generous access to British fishing waters, Spain has concerns over Gibraltar and Ireland over farming.
Published in Dawn, December 21st, 2019

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