Brexit Update 6th March 2020

By March 24, 2020Brexit Updates

Crouch – Touch- Negotiate

Yes, the UK has officially left the European Union… but the negotiations have only just begun. Led by David Frost, over 100 British negotiators have now returned from the first week of negotiations hosted in Brussels. Following this first week, one could easily be deceived into believing that these negotiations will be a smooth process with good faith being exercised on both sides, but the early signs suggest this is unlikely to be the case. The procedure has only just begun and this first week has done little more than clarify the positions of both sides moving forward. The difference on key issues are stark and both sides have drawn lines they say they are unwilling to shift on, yet when these positions are incompatible – only time will tell whether there is space for flexibility.

The key clashes include fishing rights, governance and fair markets. Whilst the economic impact of the fishing industry is minor in comparison to other areas, the topic is symbolic and represents much more than an individual sector. Fishing rights were an influential campaigning point of the Vote Leave campaign with EU laws such as the Common Fisheries Policy being framed as an expensive and wasteful programme. Likewise, removing the ‘shackles’ of the European Court of Justice (ECJ) was a rallying point for leave voters. One specific reason for this is that Brexit campaigners have long argued that the unelected judges of the ECJ have prevented the UK from deporting dangerous foreign criminals. Similarly, ensuring a level playing field for open and fair competition is a point of fundamental importance for the EU. Michel Barnier is determined to prevent the possibility of the UK undercutting the European market through possible subsidies, labour laws and looser environmental restrictions.

Both parties, however, have shown good will in the first week of negotiations and a willing to make progress. This is particularly notable with Michel Barnier outlining that whilst there are significant roadblocks that need to be overcome for an agreement to be put in place, the points of contention are of no surprise to either side and that it should be possible to find a compromise. It remains to be seen, however, whether such an agreement can be decided on by December 2020, when the transition period comes to an end.

The level of willingness is clearly there and is evidenced by the equal status agreed between the parties, symbolised by the physical location of the negotiations which will alternate between London and Brussels. Arguably, Boris Johnson has missed a trick here by not hosting the UK’s negotiations in the north of England, but given the physical link between Brussels and London, this may not have been a very popular or convenient plan.

Looking at external factors, it is likely that Covid-19 may also play its part in the negotiations. Conferences and events across the globe have already been cancelled due to the virus, and the number of infections continues to rise at an alarming rate. The implications of this may be cancelled negotiations, further delays to the talks, or a tighter period with which to agree a deal. Until this unravels, it is difficult to say what will result, but one can be sure that both sides will continue their attempts to exert dominance over the other. This will be key not only to the negotiation itself, but for the UK it is symbolic of how they will act in a post-Brexit world. This will play its part in future negotiations with the rest of the world, but specifically with the US, where the President faces an impending election during which he will also be keen to demonstrate his tough stance and economic power.

Who’s going to (chlorinated) chicken out of the trade talks?

The Government this week published a 180-page document setting out its negotiating objectives for a post-Brexit trade deal with the United States. The document included the estimate that such a deal would only boost UK GDP by 0.16% over the next 15 years. Considering the economic losses of leaving the EU without a deal stand at 7.6% and 4.9% with a Canada style deal (according to Government estimates), it is becoming clearer that a US trade deal will not be some sort of economic panacea that will plug the gap that leaving the EU without a trade deal may create.

However, there is no doubt that a UK-US trade deal would still be hugely symbolic. It is a powerful statement to the rest of the world that the first major step the UK took as an independent nation was to strengthen its already unparalleled ties with the world’s largest economic, military and geopolitical superpower. The significance of this should not be underestimated, and to the rest of the world, it would show that the UK is as influential as ever, and that with even closer ties to the US, it should be an even better place to do business.

However, these conditions are only guaranteed if a trade deal actually gets over the line, and the concern here is that the US are renowned for being incredibly difficult to negotiate with. The Government needs to be strong and not cede too much in these talks. This will be vital for this deal to be sold to the UK public as well, to convince the sceptical UK about the merits of this deal, and that ultimately means that the political hotcakes such as the NHS and chlorinated chicken must not be included.

The UK has done well to so far to draw a line in the sand and outline that these red lines will not be crossed, but the only problem is that the UK is dealing with a President with an election looming, which means that he will not agree to any deal in which the US does not clearly come out on top. Perhaps the UK could use this election to their advantage, as it installs a November deadline to get a significant chunk of the deal negotiated before the election. While it is practically impossible to get everything over the line in that timespan, President Trump would be looking for progress which he would be able to sell to the US as evidence of his deal-making prowess – one of the key reasons he was elected in the first place. There is still a long way to go until a deal could be reached, but it still looks like the future relationship between the US and the UK will come down to a game of chicken.

Upcoming Key Dates

  • March: Future relationship talks begin.
  • 4th April: Result of the Labour Leadership Contest.
  • June: UK cut off point for negotiations, depending on progress.
  • 31st December: End of the transition period.