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December 8, 2020

Europe

UK/EU: High-level meeting could kick the can further down the road

BY Carsten Nickel

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The upcoming meeting between PM Boris Johnson and Commission President Ursula von der Leyen might be what is needed to finally get a trade deal signed off – or at least to prevent a collapse of the negotiations ahead of time. Johnson’s direct involvement is positive, because at the core of Brexit lies the idea of furthering the space for political decisions. This idea also continues to render progress in the current talks difficult, for instance, agreeing on future fishing shares or fair competition rules upfront, rather than leaving them for democratically responsive UK governments to adjust further down the road.

On the European side, it makes sense that von der Leyen remains the main interlocutor, even at this late stage. Regardless of how strongly France, for instance, may feel about fishing rights, there is little point in negotiating with Paris directly, because the actual EU position only emerges when balancing these concerns against the position of countries more interested in other aspects.

In terms of contents, there will hardly be enough time (and the issues at stake are technically too complex) to actually “solve” them at the highest level. The upcoming talks can only be about the political desirability of a deal. Both sides will need to reassess their own ability to move slightly further on some key indicators already identified over recent weeks. Examples include, for instance, the specific percentage of the current volume to which EU fishing rights will be reduced at exactly which point in time.

However, do not expect fundamentally new issues and architectures to become part of the talks now. Yesterday’s UK offer to remove the most contentious parts of the internal market and finance bills further highlights this point: any deal will ultimately work with the variables that have been in play for a long time, including specifying state aid regimes and agreeing a zero tariffs/quota regime to simplify intra-UK trade with Northern Ireland.

If the high-level talks continue beyond Wednesday, it should still not be ruled out that some form of encounter with the French and German leaders gets staged at the Council’s margins. However, if this were to happen, do not expect these two leaders to fundamentally move beyond what Eu chief negotiator Michel Barnier (and, at that point, von der Leyen) will have discussed with Johnson before. This very realization might, in fact, be a central takeaway from any such encounter.

Beyond this, as ever in Brexit, the most promising solution might be to kick the can further down the road. This counts for the trade negotiations, which might continue after the meeting, and any eventual deal, which might end up simply deferring key questions again. On fish, this is already the essence of any solution under discussion, via timelines for phasing out existing arrangements. On the interlinked issues of the level playing field and governance, committing to a mix of arbitration and review mechanisms could perhaps do a similar trick.

Such an outcome would tie in with our overall expectation for the relationship over the rest of this decade. Just like in questions of regulatory alignment and equivalence, the switch from the transition period to a new trade deal will not be the end of Brexit but only the beginning of additional years of diplomacy and economic uncertainty.

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