EU negotiations: Third round not so lucky

Posted On: 
7th September 2017

There is an urgent need to make some real progress on Brexit talks, before the closing bell tolls on the Article 50 process, says Jon Hudson, Project Director of Brexit Exchange.

What Britain has failed to grasp is that whilst Brexit is the overarching issue in the UK, in Europe it is perceived somewhat differently, says Jon Hudson.
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The end of August saw the third round of the Brexit negotiations, with the cracks between each side beginning to really show. Both sides may want some kind of agreement but both have very different outcomes in mind. Things would be much easier if Britain just wanted a tariff free deal on goods, but it doesn’t. So, it is going to be complicated.

With the UK Parliament returning after its Summer break, the UK’s Labour Party has moved from its non-position to advocating full membership of the Single Market and the existing EU Customs Union during any transition period, and leaving open the possibility that it would advocate Single Market membership and Customs Union membership on the UK’s departure from the EU. But this is not a settled issue for the Labour Party, and this week saw the launch of the Labour Campaign for the Single Market.

Membership of the single market and the customs union would indeed, go some way to address the most complex of issues - through a ‘Norway’-style relationship - but the reality is that this is not currently UK Government policy. So, Britain proceeds on the assumption that something new is required.

What Britain has failed to grasp is that whilst Brexit is the overarching issue in the UK, in Europe it is perceived somewhat differently. For example, Brexit was not even mentioned during the recent Merkel v Shultz TV debate for the upcoming German election. Furthermore, this negotiation is between the UK and 27 sovereign member states. The EU negotiators, led by Barnier, are working to their mandate and doing a deal with Mrs Merkel – to get around EU institutional stasis - will not cut it. While Germany may be one of the most powerful European countries, the EU has to take on board the views of all its Member States. 

This requires genuine and urgent engagement with the each of the other EU Member States. Britain needs to be engaging with its closest allies in the European Union – Ireland, the Netherlands and Poland for example – whose businesses and citizens are disproportionately impacted by Britain’s decision to leave the EU – to explain the wider impact of a no deal scenario and working together to find solutions that would be acceptable to both sides. Until we know what our European friends are prepared to accept, it is very hard to make an offer with any realistic prospect of making progress.

It is much more than Europeans not being able to buy British goods, it is about where their banks get their capital from to enable their citizens to get a mortgage, or where their businesses’ insurance is underwritten.

As we heard from our co-chair Steffen Kampeter at the London launch of Brexit Exchange, some businesses in Europe are seeing Brexit as an opportunity for themselves. Why would European companies want British companies competing in their own market if they can shut them out?

Macron has already commented that France, and in turn the EU, should pursue a Europe first approach to procurement, as a counter to President Trump’s America First mantra, and last week we saw reports that European airlines were looking to take advantage of Britain’s potential new status as a third country on a par with Morocco. This approach would further the isolation of British companies outside of the Single Market.

So while EU member states may be jostling for opportunities for their companies, and the European Banking Agency and the European Medicines Agency search for new EU domiciled homes, in the end, a bad deal – or no deal - is bad for both sides.

We know where economic nationalism leads, we just have to look back in history to the Great Depression in the 1930s. Free and open trade is a good thing. That’s why Britain was one of the first countries to sign up to the General Agreement on Tariffs and Trade in 1947 and subsequently was a founder member of the World Trade Organisation. It was also why Britain pushed for the development of the Single Market when it became a member of the European Economic Community and the accession of new members into the EU in 2004.

What the British debate has failed to digest is that the Single Market as well as the Customs Union is essentially a rulebook which all its members subscribe to, designed to treat every one of its member states, businesses and citizens, equally.

The UK has voted to leave the EU, it is Britain’s right to do so. In turn, the UK cannot expect to have the same rights of access to the Single Market as those that are its members. But that doesn’t mean that Britain and the EU should not aspire to close and comprehensive partnership agreement.

As the clock continues to tick on the Brexit talks, there is an urgent need to make some real progress, before the closing bell tolls on the Article 50 process. That requires dialogue, not just in Brussels but in Britain and beyond, across the 27 Member States.