Brexit negotiations: back to square one, tougher words, no good faith

On 5 February, Theresa May, Prime Minister of UK received at 10 Downing Street Michel Barnier, the Chief EU negotiator for Brexit (in the middle) and his British counterpart, government minister David Davis. (Photo UK government work).

This past week, the EU and UK  Brexit negotiators’ solemn exchanges became for the first time, really aggressive and plain. Since the beginning of September 2017, during the Michel Barnier – David Davis meetings there had being difficult moments. Nevertheless, the two chief negotiators never questioned the good faith of the other side; not any more.

Only twelve months before the official divorce day and nobody can be sure, even if a cliff edge is to be avoided. Until now it was common knowledge the two sides were close to an agreement about an interim period after the exit day of 29 March 2019. Suddenly, this prospect became mistier than the winter skies above the narrow sea channel separating the shores of Dunkirk and the cliffs of Dover.

The new conflict started on Monday 5 February. A spokesperson for 10 Downing Street, the official residence of the British Prime Minister said loudly, the UK will “leave the European Union customs union and Single Market after the official Brexit day” of 29 March 2019. Until now the two sides had an understanding that during the interim period of less than twenty four months, after March 2019 nothing will change and Britain will continue as a quasi member of the customs union and thus have full access to the EU markets. By the same token, Britain would be obliged during that time to provisionally apply the entire package of the EU legislation, accept the authority of the EU Courts and recognize the Brussels supervision.

Who needs to adjust?

Such an interim period after Brexit is considered as ‘sine qua non’ for the British business community. The idea is that all businesses, including the golden square mile of the London City, irrespective of size they need this adjustment period to adapt to the long term trade relations between the two sides, after December 2021. Theoretically, within the next twelve months and before 29 March 2019 the future trade relation of the UK with the EU and the rest of the world will be clarified. So, the business community will have an interim period of up to December 2020 to make the needed investment and hiring decisions.

According to the BBC news group, Adam Marshall, the general director of the British Chamber of Commerce said “In the long term, we should aim to avoid imports and exports being subjected to two sets of customs checks, and to ensuring the smoothest possible future trade relationship between the UK and EU.” He clearly estimates that the ‘smoothest possible future trade relationship’ must be with the EU and not with any other trade partner. So, according to this British business representative, the prime target in negotiating Brexit has to be set accordingly.

Saying no to customs union

However, the latest statement by Theresa May’s spokesperson about Britain leaving the EU Customs Union and the Single Market on 30 March 2029, points to the other way. In a direct response, an EU spokesperson said “As Michel Barnier has said on several occasions, ‘frictionless trade’ is not possible outside the single market and customs union.” In this way, the EU clearly denounces the 10 Downing Street statement that Britain will leave the customs union on 30 March 2019, but retain its right of a fully frictionless trade with the EU in the subsequent interim period.

Last Tuesday, before boarding the plane to London, to participate in the latest Brexit negotiations, Michel Barnier severely questioned this new UK’s option. He went as far as to cast doubt on the very possibility for the mere existence of a transition period. He clearly said a transition period after the Brexit of 2019 ‘is not given”.

Wide divergence

Barnier also cited wide divergence between UK and the EU, regarding key issues of the interim period. Firstly, the freedom of movement for mainland Europeans in Britain is far from being agreed during that time, while the UK also avoids defining the future of the mainland Europeans already living and working in Britain. Secondly, he said if the UK decides to leave the EU customs union and single market in March 2019, the enactment of hard borders in Ireland is inevitable. In the middle of this green island there is a theoretical border line of 400 km, separating Northern Ireland, a part of UK from the Republic of Ireland, a solid member of the European Union. For decades now nobody has any perception of this theoretically existing border, because both sides belong to the EU.

The moment the UK leaves the EU customs union and the single market though, the enactment of hard borders with physical checks and controls separating the two parts of the island, becomes necessary. The EU cannot tolerate a ‘hole’ of 400 km in its only land borders with the UK. On 27 November 2017 this newspaper published a leading article containing this passage: “As things stand now, the Irish people on both sides of the line cannot stomach a new partition. More so, because the freedom of crossing has constituted the base for the Good Friday or Belfast Agreement, which brought an end to the long and deadly civil conflict in Northern Ireland … The political scenery in the entire island both in Eire and the North is now crumbling only in view of the likelihood real borders are being again enacted.” Undoubtedly, the Irish question is not only an economic matter.

Trading obligations

However, Barnier went even further. He brought about an issue the British tend to forget. In December last, the 27 EU leaders in their last 2017 summit decided that during the interim period the UK cannot sign free trade agreements with other countries of the world without the approval of Brussels.

According to a document seen by the German news group Handelblaltt “During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorized to do so by the Union.” The idea is that the UK in full knowledge of the soft points of the EU’s trade agreements with third nations, may take advantage of this knowledge in striking its own deals.

A ‘vassal state’?

In reference to the above issue, the same source revealed that “Brexit Minister David Davis…fighting off concerns that Britain will become something of a ‘vassal state’ of the European Union during any transition phase once the country leaves the 28-nation bloc”. In this way Davis authentically expresses the hard Brexitees of his political party. Obviously, there is a strong and unbending opposition within the British governing party, the Tories, about this thorny affair. Truly it’s a bit farfetched for Brussels to demand that after Brexit and until the end of the interim period, London should not be able to negotiate let alone strike trade agreements with third nations for the era after December 2020, without the consent of the EU.

All in all, the fact is that the unresolved key questions regarding the long term future trade relations between the EU and the UK are reemerging now during the negotiations for the interim period. It’s about the following three issues. The fate of the people who will be caught next year working in the wrong shore of the Channel, is far from being resolved. The Irish question is getting rather worse and there is no discussion about the divorce cost yet.

The ineluctable consequences

So, not without good reason Barnier concluded that Britain has to “accept the ineluctable consequences of its decision to leave the EU, to leave its institutions and its policies”. Truly, last week the Brexit negotiations returned to square one, with Britain not being able to determine what kind of divorce she wants and the EU not showing any intention for a moderate attitude.

The latest clashes between the EU and the UK have surpassed any conflict of the past months in aggressiveness and use of strong language. It seems the ticking clock’s beats have got into the nerves of everybody. If there is no agreement for the interim period in a few weeks, then the true negotiations for the long term future trade deal will not start before summer and will not be concluded before the official exit date. This will bring about a disaster for the economy on both sides of the Channel, the repercussions of which cannot be estimated or foreseen.