As the UK/EU negotiators face up to the definitive stages of shaping their post-Brexit world, questions are being asked in London and elsewhere whether the Johnson Government is approaching these negotiations with serious intent having gone from “let’s get Brexit done’ to “let’s get our Sovereignty back”.
The government has been dismissive of the unavoidable complexities the negotiations entail while laying down broad non-negotiable deadlines for staying in the game.
Given the complexities of dismantling four decades of interdependent relationships and agreements, their replacement within such a period is seen as a political and practical impossibility. Boris, who will have other matters on his mind over this period, has decreed that the essential elements of the post-Brexit arrangements should be agreed by June or he will walk away; and even if they are, their final form must be completed by 31st December. If not, the previously visited ‘cliff face’ will confront again. Essentially, will the UK’s approach be politically driven or economically rationally driven? Will an irretrievable point be reached sooner than later?
At this point the two sides are far apart, and in the UK’s case, apparently indifferent to the dislocations to supply lines and life in general that a no-agreement will cause. Perhaps through the trade dislocations now likely from the COVID-19 pandemic will provide an experience not to be repeated or have the opposite effect if these breaks in trade chains are shown to be relatively easily repaired – should that turn out to be the case.
The basic premise of the UK negotiating document specifies that each party will maintain ‘legal autonomy’ and ‘control of its own laws and political life’, with “no role for the EU’s regulatory standards or governance structures”. That is the cake; the eating of which would allow them to trade free of tariffs and quotas and have assured access to Europe-wide financial services, autonomy over agriculture policy and virtual autonomy over fisheries – all without physical borders.The UK positioning paper can be seen at:
On the other hand, the EU wants a ‘level playing field’ for commitments with the UK’s regulatory framework remaining in step with the EU. If the UK does not match EU regulations, including controls on subsidies, the EU wants a mechanism for unilateral remedies with the European Court of Justice (ECJ) settling any ensuing legal disputes. That would take a long time to sort out … if ever; and anyway, a role for the ECJ is non-negotiable for the UK. The EU positioning paper can be seen at: https://www.consilium.europa.eu/media/42736/st05870-ad01re03-en20.pdf
It’s interesting to reflect, as the two face one another, on what the WTO’s Director General Azevêdo said prior to the UK referendum in May 2016 … “the complexity of the BREXIT negotiations would be akin to “the tortuous… accession” negotiations countries go through to join the WTO. He was criticised then for exaggerating the potential problems confronting any BREXIT negotiations. Note: the UK has still to undertake its formal accession negotiations at the WTO as its status there has rested solely with the EU.
In his prognosis, Director General Azevêdo didn’t have in mind the ensuing politics of the UK parliament and elsewhere as part of his time line. He was talking about negotiations of substance. “Britain will have to strike a deal on everything from the thousands of tariff lines covering its entire trade portfolio to quotas on agricultural exports, subsidies to British farmers and the access to other markets that banks and other UK services companies now enjoy. Pretty much all of the UK’s trade with the world would somehow have to be negotiated.”
For a trade negotiator like Azevêdo, the “tortuous” negotiations on Brexit have just started. The preceding exchanges have largely been political posturing. In terms of the time needed, he noted that the average duration of the last six accessions was 15 years. To think of the outstanding BREXIT trade negotiations themselves being completed by the end of the year is regarded in informed circles as being absurd. \
What then may happen at the end of the year if there is no substantive agreement? For many, the preferred route would be to maintain the status quo as far possible, for example, keeping intra UK EU trade as free as possible and roll over existing trade agreements; i.e.: “cut and paste” what now exists, and hope governments will not use the opportunity to improve their own trading relations. This will not work for many reasons; particularly, as it’s just not in the DNA of trade negotiators.
And in terms of what is to be negotiated, there is plenty of grist for the mill. The EU/UK goods schedule contains tariffs and other measures relating to 9,379 individual product lines; the U.K trades with the 163 other WTO member countries. Countries exporting to the UK will certainly use the opportunity to negotiate improved access to the UK, particularly as the structure of trade with the U.K. will probably not be the same as for the EU.
According to Pascal Lamy (a seasoned trade negotiator and former head of the WTO), any suggestion that post-Brexit, tariffs could be kept as they are today is “one of the many Brexit unicorns flying around”.
The complexity of tariff arrangements pale into insignificance when compared with trade in services arrangements. The recently released draft UK schedule for trade in services is seriously complex and 90 pages long.
A good example of the difficulties of rolling over existing arrangements is the EU’s (including the UK) extant FTAs. There are 36 trade agreements with 58 countries and all of which were negotiated by the EU. If the UK wants to keep them, they will have to be renegotiated in accordance with Article XXIV of the GATT. Agreements like that between the UK and South Korea (and 15 other smaller countries) promising to maintain the same preferential trading arrangements as if the UK had remained in the EU have no status. They are a clear breach of the basic MFN principle. Some suggest that with a bit of goodwill all can be managed. However good-will is not in the mind set of trade negotiators. The WTO is first and foremost a “horse trading institution” where nothing is given away for free.
In this context a point made recently by Michel Bernard Barnier (the senior EU trade negotiator) is correct: any EU-UK free-trade deal could be blocked by any one of three dozen national or regional parliaments in Europe seeking some national or regional benefit. “Don’t underestimate the difficulties of the process of ratification for a trade deal, as well as other agreements the UK must negotiate with the EU in the coming years. If not ratified, we return to zero.” (Barnier)
Once the parties enter into the negotiation of substance, there will be plenty of issues ready for analysis, opinion and explanation. The list is long and complex. they include what to do with tariff rate quotas and sheep meat. There are many others. Will the EU insist on anti-dumping and safeguard provisions vis a vis the UK as in other EU FTAs; how will the UK handle its status in the Trade Facilitation Agreement as a non-member of the EU; what’s its status ex-EU in the Trade in Information Technology Agreement and the Government Procurement Agreement? Will it require the same MFN exemptions in the Services Agreement as when it was a member of the EU (most exemptions were requested by the EU)?
There are even wider international ramifications in of all this. See: “The EU isn’t interested in free trade with the UK, just political domination” (https://briefingsforbritain.co.uk/eu-isnt-interested-in-free-trade); and for a specific French view, see: “President Macron’s take on a new post-Brexit negotiating position” https://briefingsforbritain.co.uk/macrons-new-post-brexit-negotiating-position/
Moreover, what will be the implications in all of this once the UE and the UK emerge from their tangle-weeds for their future trade and economic relations with the United States, and indeed, Australia?
Andrew Farran, former Australian diplomat, senior law academic and trade policy adviser – long on the Brexit trail.
Gary P. Sampson, former Director at the WTO and Senior Counsellor in the Office of the Director General; now Professor of International Trade at the Melbourne Business School.