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Trade deal is sticking point for the EU and UK

Barbara Wesel
December 7, 2020

Talks on a trade package for the post-Brexit era just might fail. EU officials no longer trust their British counterparts to comply with an agreement.

Flags of UK and EU
After Brexit, the flags of the UK and EU will fly side by side much less frequentlyImage: picture-alliance/empics/S. Rousseau

After UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen gave talks a go Saturday, the EU's chief negotiator, Michel Barnier, and his British counterpart, David Frost, spoke late into Sunday. On Monday morning, Barnier informed the EU members of the state of affairs: The talks are still stuck.

"I would say he is very gloomy and obviously very cautious about the ability to make progress today," Irish Foreign Minister Simon Coveney told the Irish public broadcaster, RTE, after the meeting. "There really was no progress made yesterday," he said. "That's our understanding — and so we've got to try to make a breakthrough at some point today." 

Monday's agenda in Britain's House of Commons further complicated the situation. In the afternoon, two bills that contradict the terms of the oJanuary 2020 exit agreement were once again on the table — including the Internal Market Bill, which could have permit Britain's government to violate its provisional exit agreement with the European Union if a permanent accord is not reached. Should Britain pursue this path, that could spell the end of the regulation keeping the border open between the United Kingdom's Northern Ireland and the Republic of Ireland, an EU member state.

UK Symbolbild Boris Johnson Fangquote
UK and EU officials are curious as to exactly what kind of course Johnson is plottingImage: Duncan McGlynn/Reuters

'No way,' UK

EU officials no longer trust their counterparts in Britain. Diplomats say they assume that officials who are willing to break a treaty could also see the trade agreement as nothing more than printed paper. As a result, they are now trying to enforce the agreements through penalty clauses and other legal means.

Over the weekend, the UK government announced that, if a mutually satisfying agreement were reached, Downing Street would be prepared to remove the contentious clauses from the bills. That attempted leverage does not necessarily reassure the governments of the EU member states. 

Weeks ago, members of the the European Parliament made it clear that they would not vote to ratify a trade agreement should the Internal Market Bill pass. "There's no way the EU will agree to ratify a new agreement if the British government is breaking the existing agreement that's not even 12 months old and breaking international law by doing that," Coveney told RTE.

Maros Sefkovic, the European Commission's vice president for interinstitutional relations, met in Brussels on Monday with Michael Gove, the minister for Johnson's Cabinet Office. With the transition period set to end at the end of 2020, the preparations for the transport of goods still do not seem to be fully implemented. EU leaders, including German Chancellor Angela Merkel, have said an end to the transitional period without an agreement would be undesirable.

A sovereign kingdom

The talks remain focused on three core points: fair competition, monitoring the trade agreement and, ultimately, commercial fishing. EU officials say they are seeking a level field for trade policy to protect member states from being undermined in the future by British competitors with lower production standards. As the parties closed in on agreement, French officials said the European Union should be wary of conceding too much to Britain, as concessions might be used against the bloc later.

EU officials want to reserve the flexibility to react as harshly as necessary if Britain's government does not comply with the trade agreement — by, for example, decreasing standards or supporting domestic companies with illegal state aid. Direct punitive tariffs and legal sanctions are being discussed. Britain's government has so far rejected these.

The final element is fishing rights. How much access will EU enterprises have to Britain's territorial waters? How long could a transitional period be? What would the permissible quotas be for certain fishing areas? 

Over the weekend, Cabinet ministers reassured Johnson that they would support a no-deal Brexit, or the end of the transition period without an agreement. On Monday, James Cleverly, the minister of state for the Middle East and North Africa, told the BBC that an agreement was still possible. "There have been people trying to paint the idea of us leaving without a trade agreement as some kind of Armageddon," Cleverly said. "Countries can trade perfectly well without a formal trade agreement, as Australia does with the EU," he added. 

The ball is in Britain's court, said Mairead McGuiness, the European Commissioner for financial stability, financial services and the capital markets union. That, she said, means that things are not looking good — and that Britain must make compromises. It should be clear where talks are going by Thursday, when the heads of EU governments meet in Brussels — and possibly with Johnson himself in attendance. Some leaders are calling for emergency plans to be put in place for January 1.

This article was adapted from German by Dagmar Breitenbach.