By Arab News
By Andrew Hammond*
Just as Europe gets over the peak of the coronavirus crisis, a second major shock could be on the horizon. As a new Brexit crisis brews between London and Brussels, talks could collapse in May or June.
European Trade Commissioner Phil Hogan warned the UK last week “to get on with the job” if there is to be a deal by the end of the year. With two rounds of talks this month and next, he said June’s stock-take would be “critical”.
By common consent of both sides, little progress has been made since negotiations for a new trade deal began in March. There remain big gaps in positions on the EU’s demand for guarantees of fair competition (so-called level playing field provisions) that have been rejected by the UK; guarantees on personal data protection; and the UK’s request for continued access to the EU police and border database, the Schengen Information System.
While the EU needs to show more compromise, it is the UK government that seems most inflexible. This includes ruling out (for now at least) even the possibility of an extension to the transition period at the end of the year, even if Brussels asked for this.
There are at least three interpretations of the UK’s dogmatic stance. First, that it is tactical and designed to convince the EU that London doesn’t mind if it gets a deal or not in the hope that a better deal then emerges on UK terms; and second, that Boris Johnson’s team would prefer a “no deal” outcome that signals maximum political distancing from the EU to the outside world, but then is somewhat softened by a series of sectoral “side deals” in areas to which the UK gives priority.
A third explanation is that the UK team has no intention of signing up to the likely terms on offer from the EU, and that with the recession accompanying the coronavirus crisis (the worst since 1707, the Bank of England says), leaving on WTO terms is a less daunting prospect that it appeared before the pandemic. It is noteworthy here that London has already said that it has re-commenced preparations to end the transition period for no trade deal on WTO terms.
Former Irish minister Hogan leans toward the third explanation. “UK politicians and government have certainly decided that COVID is going to be blamed for all the fallout from Brexit, and my perception of it is they don’t want to drag the negotiations out into 2021 because they can effectively blame COVID for everything. There is no real sign that our British friends are approaching the negotiations with a plan to succeed,” he said.
That startlingly candid assessment has, of course, been rejected by Downing Street. But unless the UK drops its doctrinaire position that there can be no transition extension, Hogan’s views are a plausible assessment of the government’s motivations given the short amount of time now to reach a deal.
Even before the virus crisis began, the 10 months from March to December was not likely to be nearly long enough to agree more than what chief EU negotiator Michel Barnier has called a “bare bones” UK-EU trade agreement; and not the kind of deep trade deal promised by some Brexiteers in 2016.
All in all, with the political mood music between London and Brussels so bad, there is a growing possibility of what even Brexit Party Leader Nigel Farage has called a new crisis next month by which time both sides need to decide if there will be an extended transition into 2021. So there is growing pressure on both sides with the prospect of a no-trade deal Brexit raising its head again.
If that happens, especially in the absence of any sectoral side deals, both Brussels and London would probably need to return to the negotiating table in the months that follow, but with a new set of incentives. Such discussions could take significantly longer in this scenario than if Johnson were to secure a deal in the transition period.
Moreover, outside a transition, the negotiating process could get significantly harder, with the same tough trade-offs as before. One factor that may make concluding a deal significantly more difficult is that — outside of transition, when it requires only a qualified majority of states to ratify — EU unanimity would be needed. Indeed, the possibility of just one European state blocking an agreement remains a key risk.
The stakes therefore remain huge and historic, not just for the UK but also the EU, which could be damaged by a disorderly no-deal Brexit. Delivering a smoother departure now needs clear, coherent, and careful strategy and thinking on all sides so that London, Brussels and the 27 member states can move toward a new constructive partnership that can bring significant benefits for both.
- Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics