The UK is being belligerent, the EU inflexible. But a deal can be done this year
Gideon Rachman
© James Ferguson
The prelude to the trade negotiations between Britain and the EU has felt like the weigh-in for a heavyweight title fight.
As they prepared for Brexit Two, the rematch, the two boxers shouted threats at each other. Boris Johnson, the Blond Bomber — fresh from a knockout victory in the UK election — swore that he would come out swinging. Britain, he said, was ready to break off talks, rather than take a step backwards and compromise. Boris’s corner seemed confident that Michel Barnier — the Bruiser from Brussels (still undefeated, after two years of brutal negotiations) — was now ripe for the taking.
Meanwhile Mr Barnier’s trainer, Jean-Yves Le Drian (also known as the French foreign minister) warns that Britain and the EU will “rip each other apart”. On Monday, March 2, the bell rang for the start of the discussions, and the two boxers headed out into the ring.
It is all very exciting and very worrying, even for experienced observers. Mujtaba Rahman, head of the Eurasia Group in Europe, warned last week that: “Odds of no deal are rising and space for a deal is shrinking — and rapidly.” Others take a similar view.
There is no doubt that the issues involved are complex and the timetable is tight. The British side is belligerent and unprincipled. The EU side is complacent and inflexible.
None of that looks good. But, despite all this, I think a trade deal will be agreed by the end of the year. I even have a fair idea what it will look like.
Why the confidence? Partly, because we saw both the EU and Britain flirt with no deal during the negotiation of the withdrawal agreement last year, and then back off. Ultimately, neither side was prepared to accept the destructive consequences. It is certainly possible that one or both sides will miscalculate this time and we will end up with no deal. But the odds are that, as with the withdrawal agreement, a compromise will be found.
As Eurasia’s Mr Rahman has observed, the biggest issue in the negotiations is Britain’s “super hardline on divergence and the need to square this with EU’s expectations on the level playing field”. For those unfamiliar with the jargon, this means that the UK insists that it must retain the right to diverge from EU law. In response, the EU insists that if Britain undercuts EU standards on labour law, the environment or state subsidies, then it cannot also expect tariff-free and quota-free access to the EU’s single market.
It sounds like a big problem. Fortunately, the argument may be more about theory than reality. That is because the Thatcherite purists within Mr Johnson’s Conservative party are losing the ideological battle. They argued for 30 years that Brussels regulation was strangling the British economy and that the UK should break free to opt for a low-tax, small-state model.
But the pro-Brexit voters in the north of England, who delivered the last election for Mr Johnson, have been promised higher public spending and more social protection. The idea of Britain as “Singapore-on-Thames”, always a misleading analogy, is sliding off the agenda.
What remains of the original Brexit agenda is the Johnson government’s determination to restore British sovereignty, removing the EU’s right to legislate directly or indirectly for the UK.
This distinction between theory and practice opens the way for an eventual deal. The British will insist on their right to diverge from EU law but will assure the Europeans that, in practice, they will retain social and environmental standards that are at least as stringent as those of the EU.
This is rather like a child insisting that it will determine its own bedtime but indicating that, in practice, it will go to bed at 8pm as normal.
The EU, naturally, will not take this pledge on trust. It will grant Britain tariff and quota-free access to the European single market. But it will also set up a formal process through which the EU reviews British legislation.
If the European Commission or parliament (or some combination) finds that the UK has un-levelled the playing field, the EU will retain the right to impose tariffs on Britain.
Any such deal would involve risks and compromises for both sides. The British will have to trade with a sword of Damocles over their heads, which might discourage investment.
The UK will also have to accept that the EU will decide on breaches unilaterally. Having insisted on British sovereignty, they can hardly complain if the EU side also makes sovereign decisions.
As for Brussels, it will have to accept that a review process will mean that there is an element of constant negotiation in the UK-EU relationship. This is a feature of the EU-Switzerland relationship that Brussels is desperate to avoid replicating.
There is also clearly a risk that the British would game the system, by making incremental changes that eventually amount to significant divergence.
Even so, both sides will make real gains from the sword of Damocles solution. The EU avoids the danger of a total regulatory free-for-all. Britain retains a decent level of access to its most important market. And both sides retain a co-operative relationship with like-minded neighbours in an increasingly dangerous world.
It is less exciting than a first-round knockout. But it makes more sense.
0 comments:
Publicar un comentario