Here’s where things stand: the UK formally left the EU on January 31st. Since then, it has been in a transition period where it still obeys EU rules in exchange for commercial activities as usual in key sectors, especially trade.
The central point of the transition period was to create a space in which both parties could safely negotiate their future relationships without causing disruption to businesses and citizens. However, that transitional period ends on December 31st and sources from both sides say that these negotiations are not going very well.
The pandemic did not help the political stalemate. The negotiation teams were unable to meet physically, relying instead on video conferencing tools. The next round of virtual talks will begin on Tuesday, but sources from both sides have claimed that this has damaged the quality of the negotiations, as individuals are unable to separate for private chats on how to solve thorny problems. And the magnitude of the coronavirus crisis has overshadowed the urgency of the Brexit talks.
Johnson must now pass June with an eye to complicated and problem-filled negotiations with the world’s largest trade bloc, also overseeing the response to the country’s worst public health crisis in recent decades.
Both sides agreed that June would be used as a period to reflect on the presence of an agreement in sight or on the need to respectfully insert a bullet into the talks and prepare for a scenario without agreements.
No deal is almost universally accepted as the worst possible outcome. The British economy relies heavily on imports from Europe. The greatest perturbation of this trade would affect supply chains, making life hell for businesses, such as car manufacturers, who rely on them and cause potential shortages of basic necessities, such as food, for consumers. Numerous studies predicted that it would be a huge economic success for both families and the nation at large.
Although neither the UK nor the EU say they want this result, negotiators fear that political stalemate means that it is becoming more and more likely. “The EU is unreasonable, asking that if we want a free trade agreement, this must come at the cost of continuing to follow EU rules,” according to a UK government official who was not allowed to speak the news negotiations. “Clearly, they know we can’t accept it. If we did, what would the Brexit point have been?” the same source said.
The rules to which they refer are a particularly thorny part of the negotiations known as “a level playing field”. It is essentially an agreement on certain rules and standards intended to stop businesses on the one hand and reduce businesses on the other. The EU single market is the largest economic bloc on earth. Its level playing field is controlled by EU courts and institutions. And if the UK wants free access to tariffs after the transition period, as Johnson did last autumn when it entered into an initial Brexit deal with the EU, then the EU will need to adhere to those rules.
Equal conditions are not the only area where Brussels and London don’t see the eyes. There are disagreements over fishing rights, security and governance and exactly what is happening on the island of Ireland. However, negotiators in both London and Brussels are confident that a long-awaited crisis caused by the looming cliff edge will drag the two sides together. The same cannot be said for differences on an equal footing.
The UK says it will abandon its ambitions for duty-free trade with the EU if the EU reduces its level playing field. The EU is not interested in this idea because it believes that there is not enough time left to negotiate on tariffs during the transition period.
Theoretically, Johnson could have gained more time if he wanted to go down this road. He has until June 31 to request an extension of the transition period. However, it would be so politically toxic that doing so at the moment seems unthinkable for Johnson’s consultants. It is this toxicity of the Brexit debate that is not making it much more likely, since any perceived capitulation would put Johnson in trouble with his supporters.
Furthermore, the pandemic oddly creates an opportunity to mask the significant negative impact that a deal-free Brexit could have on the UK economy. “There is some logic in saying that we have to deal with both economic disturbances simultaneously,” says Anand Menon, director of the UK think tank in a Changing Europe.
“From supply chains to the way the whole economy is managed, everything will change because of this virus. So even if the two are not really related and could worsen the other, I can see some logic politically in doing everything at the same time “.
Even better, the pandemic creates room for the government to throw money away in the event of a major collision on the road, should the worst happen.
“Some parts of the economy will be affected by both Brexit and coronavirus,” says Raoul Ruparel, Brexit’s adviser to Johnson’s predecessor, Theresa May. “If Johnson spent government money to mitigate the impact in these areas, he might find that there is less opposition than if he was simply spending money to compensate for the impact of Brexit alone, since there is a greater unity across the political spectrum on the need for such spending to foster recovery from Covid-19 “.
In Brussels, Member States came to terms with the lack of agreements at the end of the year some time ago. “We are no longer emotionally involved in UK decisions,” said a Brussels-based European diplomat. “It is a country outside the EU, we are focusing on our coronavirus recovery,” said the same source.
This level of dissatisfaction is not uncommon in the EU institutions, where a negotiating official said with a shrug that “the UK is free to do what it wants” and that Brussels is ready for a “situation of stall “at the end of June.
The EU has believed for some time to cope with problem-free shock better than the UK. “The EU knows it is in a stronger position. Yes, no deal is bad for them, but it’s much worse for the UK,” says Thomas Cole, a former EU negotiator. “It is true that both sides are equal to the sovereigns but are very aware that they must not make the kind of concessions that the United Kingdom must make.”
And just like in the UK, coronavirus could make some no-deal calculations easier for the EU to ingest in the long run. “Paradoxically, it could make aspects of the EU no longer manageable,” says Fabian Zuleeg, CEO of the European Political Center. “Companies that were looking to downsize their operations in Europe after Covid might decide that it is easier to completely close UK offices and factories. It solves some problems in some respects.”
Of course, neither side does not want an agreement and both continue to tell reporters that they are committed to overcoming this deadlock and reaching a mutually beneficial solution. However, the current political blame will worsen as June reverberates if the Brexit story is something like this.
If the talks collapse, both sides will expect the other to try to point the fingers and play the victim. This could adapt politically to Johnson in the short term, as he plays the brave leader who opposes European bullying. But, as Menon points out, the post-Covid world is already trying to be a messy and unpredictable place.
“Everyone is angry at China and God knows what will happen in the American election,” he said. “Does the UK really want to have a space with Europe as it emerges from the pandemic and its brave new future?”
So if Boris Johnson is serious about avoiding any deal, the combination of talks is frozen, both sides are distracted by a pandemic, and this pressing June deadline makes the summer start hellishly.
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