According to British Prime Minister Boris Johnson, a month and a week remain to negotiate a free trade agreement between his country and the EU. The negotiations are frozen. And only a breakthrough can prevent Britain’s uncontrolled exit from the European single market and customs union, to the detriment of businesses and economies on both sides.
Johnson according to information from the British media he told EU negotiators on Monday that his country “cannot compromise on the foundations of what it means to be an independent state.” He therefore announced that it must be clear on a possible trade agreement by 15 October, otherwise Britain will end negotiations. “We are entering the final phase of negotiations. The EU has been very specific in terms of deadlines, and so am I,” the British Prime Minister said.
Johnson also insists that untying trade relations with the union without an agreement will ultimately be a “good outcome” of Brexit and give his country a better position than it had as an EU member state. If an agreement is not reached, for example, both parties face complications in the form of tariffs and quotas, which are set for international trade by the rules of the World Trade Organization (WTO). She marked the end of October earlier as the deadline for the agreement of EU diplomacy.
According to Kryštof Kruliš, an analyst from the Association for International Affairs in Prague, preventing further delays in negotiations is a fundamental political issue for Boris Johnson. “It is connected with last year’s elections, when he promised to significantly extend the situation by promising not to extend the transitional period,” he recalls. The head of the Conservative Party won a comfortable majority in parliament last December after he managed to convince voters that he would take the United Kingdom out of the EU.
This happened at the end of January this year, when the so-called transitional period requested by London itself came into force. He wanted to use it to negotiate permanent rules for trade between the European mainland and the British Isles. These unsuccessful debates have been going on for half a year – with a break caused by the coronavirus pandemic.
One of the main points of contention between London and Brussels at the moment is the rules of so-called “state aid”, ie support and subsidies from the British government for companies there. The EU insists that such aid must be available to businesses only under pre-determined conditions, so that European companies do not remain at a disadvantage compared to British companies. The second problematic point is Brussels’ demand for unrestricted access to British waters for fishermen, in exchange for full access to the European fish market.
According to Boris Johnson, it is Brussels that must compromise on its demands. His ultimatum was also supported on Sunday by British Brexit negotiator David Frost.
Conflict of principles
The British voted in a referendum four years ago, until last year Johnson’s predecessor, Theresa May, tried in vain to carry it out. Negotiator Frost now promised that he and Johnson had learned from the Mayans’ mistakes and would not give up on the union. “If Johnson agreed to extend now, the intensity of the negotiations would slow down. He won the election for five years in parliament, but he needs to use them for other topics than Brexit,” Kruliš said. He also points out that, if Johnson wanted, he could theoretically extend the transitional period if Brussels agreed.
Both parties are interested in establishing a trade agreement. “The conflict is more principled. On the British side, it’s the principle of sovereignty, that is, not having a controller over it who would tell me what I can and can’t do. Then the whole Brexit would be meaningless,” Kruliš explains. On the contrary, the Union does not want to lose control of access to its protected internal market.
Krulish recalls that it is unlikely that Johnson’s conservative government would want to massively subsidize domestic businesses to the extent that, for example, Johnson’s electoral opposition candidate, Labor politician Jeremy Corbyn, said. In EU diplomacy, however, there is a growing belief that the British are not trying to reach an agreement. “If this does not change quickly, we will move towards a scenario without a trade agreement, with all its negative effects,” one of the diplomats was quoted as saying by the Telegraph.
According to Krulis, however, some conditional form of the agreement could be considered. “If the rules contained in it were not followed, customs duties would be introduced. For example, if China subsidizes its steel producers, Brussels will introduce tariffs and the World Trade Organization is fine because it is perceived as a reaction to illegal state aid. This is probably the only way to overcome the differences – to leave the British free to decide, but with the threat of sanctions, “is a convinced analyst.
The return of the Northern Ireland issue
According to information available to the Financial Times and the Guardianbut now the deal is threatened by another problem. It is the so-called Internal Market Act, which describes the new rules for intra-UK trade. The Johnson government wants to publish it on Wednesday, and according to the British media, it follows that in the absence of a trade agreement, London is going to disregard some parts of the so-called exit agreement, an international agreement that allowed Britain to leave the EU in January and approved by the British and European parliaments. .
The agreement stipulated that Northern Ireland, which is part of the United Kingdom and therefore not a member of the EU, will remain in the customs union and internal market of the EU27 from next year, but also forms a customs union with Britain. The customs union consists of an agreement to reduce mutual barriers to trade, while a common approach to third countries.
What would trade under WTO rules mean?
Each member of the World Trade Organization has its own list of duties (actually taxes on goods) and quotas (number or volume of goods that can be traded). This is then applied in trade between countries that do not have a special trade agreement, which simplifies and reduces the price of the movement of goods and services. This variant could occur from January between the United Kingdom and the EU27.
The European Union also has its own list – the average level of tariffs is only about three percent, with the exception of cars (ten percent duty) and some foods (35 percent for dairy products, 21 percent for confectionery).
The British government has now drawn up its own list. If it does not conclude an agreement with Brussels, although the number of products that London will trade duty-free (such as roses, baking powder, pistachios in shells or corks) will increase, it will lose free access to the Union market (which is completely duty-free). and quotas). So far, about 46 percent of all British exports have gone to it. In addition, the British will have various administrative obligations – proof of origin and quality – which will require border controls. The British government itself has acknowledged in the past that convoys and delays need to be taken into account.
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According to analyst Krulis, the agreement on Northern Ireland is a hybrid system that basically does not exist anywhere else in the world. “He reckons that when goods are exported from Britain to Northern Ireland, but no longer to the EU, they will not be subject to customs duties,” Kruliš describes the essence of the agreement, whose ambition is to prevent the restoration of the guarded border between Northern Ireland and the Republic of Ireland. which remains an EU Member State.
However, according to the British media, the current bill envisages that London should be able to change these rules unilaterally, even in violation of the International Brexit Treaty. “It is not clear exactly what the proposal contains, but the British may be trying to gain room to react to various loopholes that could circumvent the complicated customs system,” Kruliš explains.
The Government of the Republic of Ireland has already described the possible adoption of a similar law as a “very unreasonable step”. European Commission chief Ursula von der Leyen warned the British on Mondaythat the withdrawal agreement is a commitment of international law and a precondition for any future partnership. EU negotiator Michel Barnier then emphasized that the precise application of the exit Brexit agreement was crucial to concluding negotiations on a trade agreement.
In addition, the internal diplomatic communications of EU officials, to which the Guardian has gained access, indicate that Brussels is losing faith, that Johnson’s government is worthwhile to complete the formal negotiations. Kruliš agrees with this. “With this proposal, London may test its counterparty’s capabilities and reactions, but as a result it distracts from a trade agreement that should be addressed first and foremost. It also leads (Brussels) to consider what to discuss with London if the British fail to comply. nor what they have already committed to, “says the analyst.
The current round of discussions between London and Brussels is the eighth in a row, with diplomats meeting for the ninth time at the end of September. If the negotiations fail, according to the Telegraph, an emergency meeting of Member States’ leaders should take place in November.
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