Coronavirus takes the stage
An unwelcome guest has (temporarily) disrupted the negotiations between the EU and the UK to reach a trade agreement. The spread of COVID-19 is seen as the main priority for Governments across Europe as the disease has the potential to collapse national health services if not slowed down. Efforts to stop the disease have resulted in different measures put in place, from calls to citizens to be responsible and have as fewer social interactions as possible and work from home, to travel restrictions and regions or even countries – in the case of Italy and probably soon Spain – in lockdown.
The European institutions have taken measures to keep the legislative and decision-making processes going. The European Parliament has decided to reduce parliamentary activity to a minimum in order to minimise contagion risks while keeping essential legislative activity going. The European Commission asked all its employees in “non-critical functions” to work from home. The leaders of the Council of the EU and the European Council have decided to maintain essential Council meetings to uphold the Union’s capacity to take decisions while cancelling all non-essential or non-urgent meetings.
EU and UK negotiators have followed through and suspended the second round of negotiations that was due to take place in London on 18-20th March. If trade talks continue to be delayed, it may jeopardise the chances of achieving a free trade deal. UK Prime minister, Boris Johnson, has already stated that they will walk away from Brexit trade talks if negotiations have failed to progress by June.
Canada style agreement or no agreement at all
Even when they were on, negotiations were not going smoothly. Since the EU-UK talks on their post-Brexit relationship started – with the first round of talks taking place last week in Brussels – it has been quite clear that the two sides have significantly different positions and hopes on what the final trade deal should look like.
In a written ministerial statement on Monday 9th, Michael Gove told UK MPs that the UK plans to table its own draft trade agreement with the EU during the next negotiating round, in what is seen as a move to pressure Brussels. Gove insisted there were already some areas of understanding between the two sides while also admitting there are considerable differences in regard to fisheries, governance, dispute settlement, and the “level playing field” issue. Regarding the later, EU Commission President, Ursula von der Leyen has warned that “it will be important that the UK makes up its mind – the closer they want to have access to the single market, the more they have to play by the rules that are the rules of the single market”.
Everyone agrees that the tone of the negotiations is much more aggressive than that of previous discussions, with the UK insisting that it is either a Canada style trade agreement or no agreement at all.
Taking things down a notch
Both the UK and the EU negotiations teams have agreed to ‘dial down’ the tone of the talks to facilitate a better negotiation when they resume. Both sides will present legal texts of their positions for the second round of negotiations, which will be studied to assess the real magnitude of the divergence between the two sides.
Some warn, however, that with the very short timeframe available to reach an agreement, the confrontational approach will be inevitably used by both sides as a tactic to pressure the other. The UK Government in particular is determined to avoid extending the transition period beyond 31st December 2020 – even amidst fears that coronavirus will delay the talks – and is facing great political pressure to reach a favourable agreement or face losing the trust of UK voters.
Industry presses for standards retention post-Brexit
Meanwhile, the UK Chartered Institute of Environmental Health (CIEH) have demanded that the UK Government kept its word that it would not put the UK’s food and environmental standards up for negotiation during trade talks. They are putting pressure on Government to safeguard the UK food and drink supply chain post-Brexit, as industry bodies urged negotiators not to sacrifice jobs and standards in pursuit of trade deals outside the EU.
National Farmers Union president, Minette Batters, previously called for British food production standards to form the benchmark of any future trade deal, to prevent UK producers from being undercut by cheaply made goods flooding into the country. “We must not tie the hands of British farmers to the highest rung of the standards ladder while waving through food imports that may not even reach the bottom rung,” she said. EU trade body FoodDrinkEurope (FDE) urged negotiators to work towards a tariff and quota-free trade agreement in a bid to safeguard jobs and allow the industry to continue to drive the European economy.
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To end on a positive note
In the meantime, something somewhat positive for UK retailers has resulted from the uncertainty caused by Brexit during the past year. While consumer demand for products such as toilet paper, hand sanitisers and non-perishable foods have drastically surged following fears that Coronavirus will affect these products stocks, UK retailers are better prepared as they are using reserves assembled during 2019 when they were preparing for a potential no-deal Brexit scenario.
Consumers are however being encouraged to avoid stockpiling as this – and not the COVID-19 – might result in shortages in a couple of months if manufacturers cannot keep up with surges in demand and reserves run out. The UK Competition and Markets Authority (CMA) has also warned retailers not to “exploit” consumers fears about coronavirus by increasing prices or making “misleading” advertising claims.
From everyone at The Whitehouse Consultancy, we wish you and your relatives to remain safe and sound!
The Whitehouse team are experts in the potential impact of Brexit, providing political consultancy and public affairs advice to a wide range of clients, not only in the United Kingdom, but also across the member states of the European Union. More information about our Brexit experience can be found here, or, if you have any questions, please contact our Chair, Chris Whitehouse, at chris.whitehouse@whitehousecomms.com.
