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Bord Bia’s London Office Brexit Update: 28th February 2020

28 February 2020

Cian Hassett, Global Graduate London, Bord Bia - The Irish Food Board

 

 

The UK Government has published its Approach to Negotiations which was presented to Parliament on Thursday. This consists of a 32 page document in three main parts:

 

  • A Comprehensive Free Trade Agreement (CFTA)
  • “Other” Agreements, and
  • Technical and other processes beyond the scope of the future relationship negotiations.

 

 

It contains a clear statement that transition will end on 31 December in all circumstances, at which point the UK “will fully recover its economic and political independence”. It also cross refers to the Prime Minister’s Greenwich speech of 3 February and accompanying written statement to Parliament setting out the vision underlying today’s announcements – “a relationship based on friendly cooperation between sovereign equals”. A briefing from No 10 Downing Street suggests that the Government will decide in June whether sufficient progress has been made for talks to continue, or whether to simply prepare to trade with the EU on ‘WTO terms’ from the end of the year, as Australia and others currently do.

 

 

 

Although the UK is seeking to agree rules of origin based on those in other existing FTAs, it does want there to be provision for ‘cumulation’ between the UK and the EU, which would mean EU inputs and processing could be counted as UK input in UK products exported to the EU, and vice versa, as well as ‘diagonal cumulation’ which would allow similar treatment for trade with countries where both parties have their own FTAs.  Regulatory arrangements would strictly respect each party’s sovereign rights to legislate, while seeking maximum facilitation of trade, including the use of relevant international standards. A similar approach is envisaged for Sanitary and Phytosanitary (SPS) measures, on the understanding that the UK would maintain a robust autonomous regime reflecting their existing high standards, but specifically including a risk-based approach to disease management and an equivalence mechanism.

 

 

 

It is also noteworthy that – apart from a single reference to the electricity interconnector between Great Britain, Northern Ireland and the Republic of Ireland – there is no mention of the Ireland/Northern Ireland Protocol to the Withdrawal Agreement, or how that might impinge on any aspects of the CFTA or the customs or regulatory provisions. In a speech in Brussels yesterday, ahead of publication, Michel Barnier signalled that trying to reconcile these divergent approaches will be extremely challenging in the current timescale – and that the EU will be looking for early evidence of the UK’s intentions with regard to implementing the provisions of the NI Protocol.

 

 

 

The lines for talks on a post-Brexit settlement between Britain and the EU have been set. In light of Prime Minister Boris Johnson publishing the guide on Britain’s approach to talks on a future relationship with the EU, and following on from the 27 members of the EU agreeing their own negotiating mandate on Tuesday, there are four key points to watch:

 

 

  • Level Playing Field: Michael Gove said on Thursday that Britain wanted full autonomy to set its own rules on state aid, labour and the environment without being legally tied to EU standards, which Brussels sees as a reference point. Mr Gove added that Britain wanted much looser rules than those proposed by the EU, such as those agreed between the EU and Canada. He added that he didn’t accept the EU’s stance that Britain’s geographic proximity to the bloc required much tighter rules.

 

  • Fisheries: Ensuring that fishing rights do not end with Brexit is a top priority for the EU’s coastal states, not least France. The EU mandate demands continued access to each other’s waters with the bloc acknowledging that fishing grounds are richer on the British side. The EU wants a long-term deal guaranteeing access to British waters for the bloc’s fishermen, while the British mandate states that there should be annual negotiations to agree reciprocal access. Mr Gove referenced the arrangements between Norway, Iceland and the Faroes and the EU where annual deals are currently made, as what Britain would want to achieve.

 

  • Financial Services: The City of London generally accepts the view of Mark Carney, Bank of England governor, that Britain should be not a “rule taker” from Brussels and that access to the single market should be through an equivalence regime. However the British mandate confirms that Mr Johnson’s negotiators will attempt to secure a more stable regime than that on offer from Brussels to third countries, under which equivalence approval can be withdrawn with just 30 days’ notice.

 

  • The Timetable: Trade talks begin in Brussels on Monday and will switch to London later in the month. David Frost, a pro-Brexit former British ambassador to Denmark will lead the talks for the UK while Michel Barnier will continue as the EU’s chief negotiator. Brussels sees time as one of its big advantages during the negotiations as they believe Britain has more to lose from a no-deal scenario than the EU27 – few believe the real negotiating will start before the autumn. Mr Johnson is adamant that Britain would be prepared to exit the transition period on December 31st without a trade deal, and would be willing to do business with the EU on the World Trade Organisation terms, with tariffs and quotas among the large amounts of paperwork involved.

 

 

 

 

The EU’s chief Brexit negotiator has hit out at Britain’s stance on future trade talks, revealing the depths of Brussels’ frustrations with perceived backsliding by Prime Minister Boris Johnson only days before the start of trade negotiations. Michel Barnier warned Britain “not to go backwards when we should be going forwards”, insisting the UK should not be surprised by EU demands that any trade deal is underpinned by common rules in areas such as environmental policy and state aid. Speaking after EU ministers adopted their negotiating mandate for the talks, Mr Barnier said the requirements were already set out in a political declaration on future relations that Britain signed up to as part of the Withdrawal Agreement less than six months ago. Brussels is wary that Britain is seeking to avoid the kind of extensive partnership set out in the political declaration – a text that is legally non-binding but the EU officials insist was agreed in good faith.

 

 

 

Key Dates

11th March 2020: UK Budget released

18th-19th June 2020: UK/EU summit to discuss progress

30th June 2020: Deadline for the UK and EU to extend the transition period

31st December 2020: If a trade deal has been agreed by this date, new relationship with EU starts. Otherwise, the UK exits transition period without a trade deal.

31st December 2022: Last date to which transition period can be extended