Report - What’s in store for UK-EU negotiations?
Tuesday 14th January 2020
Jack Harris, EU & Brexit Officer
UK and EU businesses alike are increasingly concerned about the consequences of not just “getting Brexit done”, but in particular the prospect of getting Brexit done whatever the cost. In order to provide some clarity for our members on what we can expect from the next 12 months and beyond, we were delighted to welcome Rory O’Donnell, Director of EU Trade Policy at the UK Permanent Representation to the EU (UKREP), to the Chamber on Tuesday.
The timeline outlined by the Withdrawal Agreement (WA) and Political Declaration (PD) agreed last year has set a maximum transition period of 11 months for the UK and EU to strike a deal, with a deadline for requesting an extension to this fixed at the end of June. When the lengthy processes of amendments and ratifications in the European and UK institutions are taken into account, as well as other administrative boundaries such as translation, Boris Johnson has left himself an estimated 7-8 months to negotiate a functioning FTA. Talks will begin in earnest on 1st March.
During these 7-8 months, the UK has committed to seeking the most ambitious and frictionless trade deal possible, aiming for zero tariffs and zero quotas - but not at any cost. What this means exactly is to be clarified by the PM some time in February. The UK aims to be ‘as clear as it can be as soon as it can be’; a significant departure from previous negotiating tactics, and largely a result of the huge mandate handed to the PM by the British public in December. The EU has also recognised this new dynamic to the process.
Financial and other Services
The cross-border delivery of financial, legal, digital, healthcare, and other services are incredibly complex matters that require a significant amount of detailed legislation. Taking into account the strict timeline in which these negotiations are set to take place, it is difficult to see how sufficient progress can be made on these matters so as to minimise disruption and economic impact.
One possible solution to these complications is for the UK and EU to agree a ‘bare-bones’ FTA by the end of the year, covering most sectors in relatively general terms and allowing trade across borders to continue with as little friction as possible. Once this is in place, the two parties can continue further negotiations in to 2021 and beyond, hammering out the details and specifics. At this early stage, both sides recognise how crucial the services sector is to their economies, and as a result the UK is pursuing the most ambitious services agreement possible, and are keen to begin discussions on financial services in particular as early as possible.
Regulations and Standards
The UK has been clear for months now that the level-playing field provisions required for Single Market access are categorically unacceptable; conceding to this has the potential to give the EU an unfair competitive advantage in far too many areas. In the digital world, the UK has an opportunity to carve out a new role for itself in the global arena of technological innovation and regulation. There are potentially a multitude of options available to the government after leaving the EU, including positioning itself as a broker between the US and EU technology industries. An alternative to this is taking a lead on regulating emerging technology such as AI and connected mobility, although it may be some time beyond the end of 2020 before a coherent position can be fully developed and implemented.
Negotiating in Parallel
Perhaps the biggest question mark on the practicality of the timeline set out is the intention of the UK government to negotiate further agreements with other countries in parallel to talks with the EU. The UK intends to prioritise talks with not only the EU and US, but also Australia, Japan, and potentially New Zealand.
The aim of these parallel talks is to avoid a ‘cliff-edge’ on 31 December, when UK industry could suddenly lose access to not only the European market, but also all the existing trading relationships the EU has with 3rd countries. British Business has repeatedly emphasised the point that the priority on this front should be to maintain as much existing access as possible. Of the countries listed, only Japan has a pre-existing trade agreement with the EU and there has been little to no information regarding concrete plans for negotiations with countries that do - such as Canada, South Korea, and Singapore. It’s currently unclear how much public consultation will take place regarding these matters.
The Irish Border
In order to secure Parliamentary backing on the WA last year, the Prime Minister agreed to shift the ‘hardest’ border from NI/ROI to the Irish Sea - between the island of Ireland and Great Britain. This plan leaves the Single Market and Customs Union intact across the island of Ireland, and in turn preserves the integrity of the Good Friday Agreement by eliminating the possibility of a hard border between NI and ROI. The consequence of this is that it’s now highly likely that border checks will have to take place between NI and GB. It’s impossible to leave the Single Market and Customs Union without creating friction across borders, however the UK government is confident in its plans to minimise this friction as much as possible.
Exactly what to expect from the next 11 months is currently unclear. Once the UK negotiating position becomes more apparent in February, we may be able to speculate further as to what the situation will be at the turn of the year. Until then, the cloud of uncertainty and pessimism among the business community on both sides of the Channel shows few signs of clearing.
Director of EU Trade Policy | UK Permanent Representation to EU (UKREP)
Rory started as Director of EU Trade Policy in September 2019. Prior to that he was the Head of the Regions, Agriculture and Fisheries Section and UK Spokesman at the Special Committee for Agriculture. Before joining the UK Mission, Rory worked in a number of government departments on a range of issues including social security, local government service delivery and animal health policy. He was also Principal Private Secretary to a number of cabinet Ministers and Director of Communications at the Department for Environment, Food and Rural Affairs.