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EXPLAINED: What are Britain and the EU going to row about now that Brexit is 'done'?

EXPLAINED: What are Britain and the EU going to row about now that Brexit is 'done'?
8 min read

Behind the rhetorical flourishes, Britain and the EU are gearing up for a major tussle over a post-Brexit trade deal. Matt Honeycombe-Foster digs into the detail


WHY ARE WE STILL TALKING ABOUT BREXIT?

Boris Johnson may have stormed to an election victory on a promise to ‘Get Brexit Done’ - but there’s still plenty of work ahead of him to make the full-blooded Eurosceptic dream a reality.

While Britain formally left the European Union at 11pm on 31 January, the country is now in an 11-month “implementation period”, where most EU rules and standards continue to apply and trading continues as before.

It’s what comes after that transition period runs out that is now occupying minds in Westminster and Brussels - and the Prime Minister’s punchy speech on Monday vowing that Britain will “take off its Clark Kent spectacles” and become a global Superman of free trade set the tone for the tense talks to come. Helpfully, ministers have also provided a chunky statement to Parliament spelling out what the country is after.

EU chief negotiator Michel Barnier meanwhile unveiled the bloc's own pitch going into the talks - warning the Prime Minister that Britain cannot expect "business as usual" now it has left.

But what exactly are the two sides pitching beyond the spicy rhetoric? Let's take a look.


WILL THE PM REALLY NOT EXTEND THE TRANSITION?

He certainly says he won’t. And if anyone was in any doubt that the PM was serious about his manifesto pledge not to extend the transition period beyond the end of 2020, the statement once again puts it in writing, vowing “complete certainty that at the end of 2020 the process of transition to that relationship will be complete and that the UK will have recovered in full its economic and political independence”.

And, just to make sure nobody thinks Number 10 is messing about, it makes clear that however the talks pan out Britain will be “leaving the single market and the customs union at the end of this year and stakeholders should prepare for that reality”.


WHAT’S ALL THIS TALK ABOUT ‘ALIGNMENT’?

If you’d just recovered from trying to understand the ‘backstop’, get used to a word you’ll be hearing a lot of over the next 11 months: ‘alignment’. It’s a word that goes to the heart of the post-Brexit battle: will the UK choose to closely align with EU rules to gain continued high levels of access to the single market? Or will it strike out alone - potentially hitting businesses in the process as new barriers are erected?

Monday’s speech from the Prime Minister made it pretty clear where the Government sees its priorities. Johnson said the UK does not seek “alignment of any kind” as it pushes to become “an independent actor and catalyst for free trade across the world”. This has already raised alarm bells in Brussels, with the Barnier saying that whether not the UK chooses to follow bloc’s rules and standards will be “fundamental for the level of ambition of our future relationship”.

In other words, the EU is telling Britain: the more you converge with our way of doing things, the more access you’ll get to our consumers. And the EU believes that the sheer size of that single market - with Barnier on Monday pointedly reminding Johnson that it covers some 450 million people - will force Britain down this route as the talks progress.

But while the UK’s pitch says the Government “will work hard to achieve a balanced agreement that is in the interests of both sides”, it says any pact between the two sides “must respect the sovereignty of both parties and the autonomy of our legal orders” - and that includes ruling out alignment. For Brexiteers, the whole prize of leaving the EU was the ability to do things differently - and the UK under Johnson is unlikely to want to give away regulatory autonomy before it even gets the chance to use it.

For good measure, the UK pitch makes clear the areas where it believes the EU should have absolutely no say as talks progress. It vows to “develop separate and independent policies” on immigration, competition and subsidies, tax, the environment, welfare and data protection.

The Government insists it will maintain “high standards as we do so” across all these areas - with Johnson using his speech to promise not to “engage in some cut-throat race to the bottom” and saying the UK is a world-leader on many of the areas deemed off-limits. Foreign Secretary Dominic Raab has pointed to the UK’s minimum wage as an one example of how the UK outpaces many of its EU counterparts.


WILL EU LAW STILL BIND THE UK?

Not if Number 10 has its way. But get used to hearing plenty about the European Court of Justice. The UK document makes a few direct mentions of the EU-wide legal body, which has long been treated with suspicion by Brexiteers. It argues that the court cannot have “any jurisdiction” over UK laws or “any supranational control in any area” as part of a deal.

The ECJ gets another namecheck in the section on post-Brexit security ties. While the pitch calls for a “pragmatic agreement” on fighting crime across borders, it adds the following warning: “The detail of such an agreement must be consistent with the Government’s position that the CJEU and the EU legal order must not constrain the autonomy of the UK’s legal system in any way.”

That, of course, may not go down well with the EU - particularly given that the political declaration signed up to by both sides before Christmas says the UK is willing to “respect the integrity” of that court with “regard to alignment of rules and the mechanisms for disputes and enforcement”. Expect this one to run.


CANADA? AUSTRALIA? WHAT KIND OF DEAL DO THEY WANT?

Downing Street has been adamant that Britain’s free trade deal with the EU must be modelled on existing tie-ups the bloc has with other countries - with no special stipulations placed on Britain just because of its decades-long membership.

Both sides have said they are aiming for a Canada-style deal, mirroring that country’s Comprehensive Economic and Trade Agreement (CETA) which scraps tariffs on most types of goods while also limiting some food imports into the EU and imposing curbs on the all-important financial services sector.

But ministers have also been talking up a back-up ‘Australia-style’ deal in recent days. This is a slight misnomer, as Australia is still in the process of negotiating a free trade deal with the EU and is subject to high tariffs in some areas while it trades on World Trade Organisation terms. Critics say this is alarmingly close to the ‘no-deal Brexit’ being countenanced by the Government before the divorce agreement was signed before Christmas.

The Government’s pitch does not make explicit reference to either previous deal, but it demands “no tariffs, fees, charges or quantitative restrictions between the UK and the EU” and says an agreement must include both goods and services.

For its part, the EU’s own draft mandate talks up “zero-tariffs and zero-quotas on all goods” - but Barnier made clear that this “exceptional offer” will be “conditional” on competition between the UK and EU remaining “open and fair”.

“We must now agree on specific and effective guarantees to ensure a level playing field over the long-term,” he said on Monday. “That means mechanisms to uphold the high standards we have on social, environmental, climate, tax and state aid matters today and in the future developments.”

Number 10 says it wants “smooth trade between the UK and the EU”. But, in another potential flashpoint, Brussels has argued that fresh checks, dubbed “customs formalities” by the EU’s chief negotiator on Monday, are an inevitable consequence of Britain’s insistence it is quitting the customs union. “Access to the EU markets will be subject to certification and market authorisation and supervision activities,” Barnier said on Monday.


WHY ARE THEY ARGUING ABOUT BANKS AND FISH?

One of the most emotive issues through the Brexit process has been the fate of Britain’s fishing communities, many of whom feel they’ve had a raw deal under the EU’s Common Fisheries Policy. Boris Johnson has been adamant that the UK will “take back control” over its “spectacular maritime wealth” after it quits the bloc, with Britain becoming an “independent coastal state” no longer bound by quotas set in Brussels.

But the EU has already linked Britain’s bountiful seas to a potential deal on financial services. The argument essentially goes: give us your fish, and we’ll let your banks do business here largely unimpeded. Given that fishing accounts for less than 0.05% of the UK’s overall economic output while the financial services industry represents a whopping 7.1%, it’s easy to see why ministers could be tempted to sell fishermen and women down the river.

The Government’s opening pitch for the talks certainly leaves some wiggle room on that front. Although it says Britain will become an “independent coastal state at the end of 2020 and any agreement must reflect this reality”, it pitches for “annual negotiations with the EU on access to waters” and says it will “consider a mechanism for cooperation on fisheries matters”.

On financial services, meanwhile, the EU is already talking tough. Britain says it wants “both sides to provide a predictable, transparent, and business- friendly environment for financial services firms”.

But Barnier on Monday reiterated the EU’s longstanding position that British banks and insurers “will no longer have the passporting rights they used to enjoy” as they did under membership - closing the door on a system that allows financial firms to trade through the bloc without extra regulatory barriers. That has already come as a big blow to the banking sector - so can the two sides find enough goodwill to negotiate an alternative? We're about to find out...


 

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