A poisonous backdrop for talks

A poisonous backdrop for talks


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Fishing disputes between the UK and France have hogged the headlines this week in the Brexit sphere, but in truth a much more serious crunch-point is looming over Northern Ireland.

The Anglo-French fishing row is predictable, since it is a political pressure-point for both sides. To fully understand it, however, it needs to be seen as the latest eruption of an underlying tension that has simmered in the Brexit process from the very outset.

Even before Article 50 was triggered to formally begin UK exit negotiations, the European Commission was clear in its early statements that the UK would get no free passes from Brexit — despite leading Brexiters promising it would be the ‘easiest trade deal in history’.

In simple terms, Brexiters banked on their belief that the big EU states like Germany, Italy and the Netherlands would prioritise the protection of their goods trade surplus with the UK over defending the legal niceties of the EU single market.

That was, to put it kindly, naive on the part of the British political establishment. Right from the outset the European Commission, backed by the 27 member states, was clear that the “size and proximity” of the UK as a trade rival would mean the precise opposite.

EU demands for a ‘level playing field’ — rejected as absurdly overblown by UK Brexit minister Lord David Frost during the 2020 trade negotiations — flowed from this defensive EU position. And there was no greater defender or stickler for this position than France.

Brexiters have long grumbled this is unfair treatment. What the French and the EU Commission say is an unavoidable consequence of the UK’s obsession with regulatory autonomy, the Brexiters say is wilful legalism or, as Boris Johnson termed it this week, “punishment”. 

As Frost said in his speech in Portugal last month. “What we do see, instead, is an organisation [the European Commission] that doesn’t always look like it wants us to succeed. We didn’t want it to be like this. We just want friendly relations, free trade, and the chance to do things our own way.” 

The leaked letter from the French PM Jean Castex suggesting that the UK needs to be held to its treaty commitments and the price of leaving the EU needs to be made visible, therefore didn’t come out of the blue.

Throughout the four years of negotiations it was most often France (sometimes to the point of making officials from other usually loyal EU member states roll their eyes) that took the toughest line.

On everything from aviation rights and UK participation in the Galileo space programme to technical trade facilitation measures such as granting the UK so-called Mutual Recognition Agreements on conformity assessment, Paris gave no quarter.

Well, two can play at that game. The British, from a French perspective, have taken a very legalistic approach to granting licences to smaller French boats within the 6-12 nautical miles zone, requiring catch and location data that many of them say they cannot provide.

So when it comes to fishing, the French – such sticklers with the rules when it comes to British and Brexit – are, as I’m sure Frost did not say to his French counterpart Clément Beaune in Paris today, somewhat hoist on their own petard. And as the Castex letter intimated, there isn’t much the European Commission can do to help them.

All of which provides the poisonous backdrop to what looks like an increasingly certain confrontation over the Northern Ireland protocol as Frost moves on to Brussels for a meeting with EU Brexit negotiator Maros Sefcovic on Friday.

This situation would be difficult enough to manage in any circumstances, but the combination of sour relations with France and a continued refusal by the British side to accept the consequences for Northern Ireland that flow from a decision to do a clean-break Brexit now looks at risk of coming to a messy head.

The added dimension with the Northern Ireland issue is that, given the unique political circumstances of the region, British demands for flexibility (rejected as ‘cakeism’ in other EU-UK contexts) do have merit. The stability of the region is at stake here.

The problem is that British behaviour to date, including threatening to break international law last year, has sapped the negotiating environment of any of the trust and goodwill that might be needed to finesse the issues.

The current signs are not good. Talks in Brussels do not seem to be going anywhere. The history of Brexit negotiations tells us that when the two sides are negotiating in public — in newspaper opinion columns and on Twitter — deals are not being done.

Sefcovic took to the pages of the Daily Telegraph to say he was “increasingly concerned” that Frost will “refuse to engage” with the EU Commission’s offer to try and reduce checks on the Irish Sea border created by the Northern Ireland deal.

At the same time Frost continues to protest that the deal that he himself negotiated is unfair, was completed under political duress when the UK government was too weak to defend itself and requires not just easements but a fundamental rewriting from first principles.

With such vast gaps between the two sides, there is a growing expectation that the UK will use the Article 16 safeguards clause in the protocol, and not just to address the technical trade issues.

The fact that Frost is out looking for fresh legal advice, as the FT reported this week, is being seen as another ominous indicator that the UK intends to use Article 16 to suspend the key parts of the Protocol (Articles 5 to 10 broadly) that leave Northern Ireland in the EU’s regulatory and judicial orbit.

If the UK does take that most expansive approach to Article 16, there is some discussion on the EU side about whether or not EU member states should respond by terminating the entire Trade and Cooperation Agreement, which it could do with one year’s notice.

This might seem extreme or improbable — but from an EU perspective it is arguably a cleaner and politically easier approach than targeted trade sanctions on specific products like whisky, cars or fish, which hurt different member states to different degrees and open the EU’s own political pandora’s box.

There is also a logic to threatening blanket termination on the EU side — which is that the TCA negotiation was predicated on the UK sorting out money, citizens rights and Ireland, so if the UK is pulling the rug from one part of that deal, then the TCA should fall.

It would also, after an initial political big bang, create space for another negotiation — another year-long cliff edge in which to try and sort something out.

That negotiation would take place not so much to the sound of a clock ticking, as former EU negotiator Michel Barnier famously told Boris Johnson, but a ticking time-bomb of a reversion to ‘no deal’ and WTO trade terms.

That would be a dark place for EU-UK relations to end up in. Do we really want to go there? Well, decision time is approaching. There is still time to step back. There are other avenues. Frost could, for example, continue his battles with the EU Commission by other means, using what you might call skirmishing tactics, rather than all out confrontation.

In that scenario, the UK could accept some of Sefcovic’s highly conditional offers to cut border frictions and then foot-drag on the quid pro quos — like providing data and building border inspection posts. At the same time the UK could look to reduce the role of the EU in areas, like subsidy control policy, where stronger arguments can be made. In short, claim a tactical win out of the current round of brinkmanship, but continue in the same vein.

In the end Johnson must set the cursor. With inflationary pressures rising and Christmas supply chains already under great strain, it would be a bold move to risk a full-blown trade war with the EU, even one that is deferred for a year.

Johnson blinked last time — in 2019 when he agreed to the Protocol — but Frost is correct to say that the political circumstances are different now. There will be those arguing internally that a tough approach will both provide a dramatic assertion of UK sovereignty and finally call the EU’s bluff over Northern Ireland.

Still, that would be a massive gamble, even for Boris Johnson.

Brexit in numbers

There has been much focus on the impact of Brexit on UK exporters, as five years of under-investment and, since January 1, new red tape and domestic labour shortages combine to create a significant drag on Global Britain.

Less attention has been focused on UK importers who, thanks to a UK government policy of delaying border checks on goods from the EU, have felt less of a pinch from Brexit, even if they have been battling the effects of Covid-19 on global supply.

But next January UK importers will start to face new Brexit tests as the UK government begins to phase in checks — starting with the need for customs declarations, including so-called IPAFF import declarations of food products, followed by full documentation, like export health certificates, in July.

There will also be other bureaucratic areas to grapple with. For example, the ‘grace period’ on rules of origin declarations ends in January, meaning that EU exporters will need to have a suppliers’ declaration to prove their goods qualify for zero-tariff entry into the UK. Neither side is properly prepared for this, but it will add cost and complexity.

There are also continuing questions over other post-Brexit UK schemes, like the introduction of the UKCA quality mark (a British equivalent of the EU’s ‘CE’ quality mark), which has been delayed once to January 2023, but companies will need to start preparing in mid-2022 to be compliant by that date.

As Eleanor Shearer at the Institute for Government observes, disentangling the effects of Covid and Brexit is hard, but the Office for National Statistics has some useful rolling business impact surveys that have documented issues business is facing since the pandemic began.

As she notes: “Around a third of businesses have consistently reported trouble importing since summer 2020, and the end of the transition period in January didn’t seem to have much of an effect on those numbers.

“However, the number of businesses now reporting issues with additional paperwork does imply there has been an impact from Brexit, suggesting not all disruption will fade as the pandemic eases.”

To some degree, the UK government can choose to have less intrusive inspections at the border to reduce frictions, but it was interesting that trade and customs experts were divided on this point when giving evidence to parliament’s International Trade Committee this week.

What came through from the discussion was the extent to which UK importers will be reliant on EU hauliers and businesses being sufficiently prepared to get through the UK border in a compliant fashion — and how hard it is to predict how many will find the burdens too great to make continued trade worthwhile.

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Given the difficulties presented by getting mixed loads of food products through high-speed roll-on, roll-off ports, the customs expert Robert Hardy suggested that perhaps the UK government, in time, could not require export health certificates from EU suppliers if they were part of a trusted supply chain.

But that quickly raised a red flag with James Russell of the British Veterinary Association, who warned of risk to UK health, both animal and human, if the UK prioritised border flows over public health. Avian and swine flu were real threats, he said.

He also warned that it might be unwise to do away with export health documentation on products, like meat, that were going to be processed in the UK and then re-exported to the EU — because without documents to trace origins of ingredients, those exports would be impossible.

At the same time, Andrew Opie of the British Retail Consortium also raised the level playing-field issue of EU companies getting permanently easier access to the UK market compared to British goods going into Europe which faced full EU checks.

In his speech last month David Frost said that the UK was “never going to adopt the same levels of checks and controls required by EU systems because we don’t believe the level of risk requires them”.

Next year we will start to find out what that actually means — but as with so much of Brexit, it will require the UK to strike a delicate balance between keeping borders flowing, consumers safe and British businesses not at a permanent disadvantage to EU counterparts.

And, finally, three unmissable Brexit stories

A shortage of lorry drivers has caused chaos across the UK’s logistics industry. Daniel Thomas, chief UK business correspondent, joined trucker Royston Dyble on a 13-hour shift to listen to the views of a veteran driver on the challenges facing the haulage industry.

Robert Shrimsley returns to the theme of Brexit in his latest column and the damage it has done to the British economy. “The unavoidable fact is that, at a time of anaemic growth, huge national debt and a tax burden that is already too high for Conservatives, Brexit is costing the exchequer and the country billions that the UK could really use,” he says.

Brexit was billed as a win-win bonanza for Northern Ireland: access to not one but two single markets — the UK and the EU. But as Ireland correspondent Jude Webber reports it has not proved utopian for the region’s fishermen.

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