Brexit 5: The week in which we still didn’t reach a deal

By Andrea Gutierrez-Solana November 27, 2020 2:36 pm

EU threatens to walk out

After four long years, UK and EU negotiators are approaching the end of their rope.  With thirty-four days to go and no Brexit deal in sight, Chief EU negotiator, Michel Barnier, warned his UK counterpart this week that without a significant shift in the UK’s position the EU will pull out of the negotiation. Those were strong words that added to the panic created by a halt to face to face discussions after a member of the EU negotiation team tested positive for Covid-19. Meanwhile, Commission President, Ursula von der Leyen, remarked that the EU was willing to “get creative” in order to reach a deal. It is not clear what she specifically meant by that, but it seems a reference to the EU showing some flexibility on its side.

Why are we still at this impasse?

The contentious issues remain fisheries, the level playing field for standards, state aid and taxes, and the dispute resolution mechanism.

Fishing has been a big hurdle since the beginning of the talks. The European Union has a system of national quotas distributed between Member States that dictates for how much of each species they can fish in EU waters. The UK, being an Island, has a vast amount of sovereign waters that it is claiming back. The UK Government is proposing annual negotiations with the EU to decide how much European fleets can catch in its waters. It is also pushing to implement the “zonal attachment” principle by which quotas are allocated based on the percentage of stock for each fish species in EU or UK waters, depending on where they reside. The EU, in turn, is opposing the idea of annual negotiations and the zonal attachment principle as it considers that it creates uncertainty and insecurity for its fishing fleets.

As for the level playing field, these refer to everything from social, labour and environmental standards to state aids and tax matters. The EU is demanding that the UK agrees to uphold EU standards to avoid unfair competition between the two zones and wants a clause in the deal by which, if one side develops further standards, the other side must consider adopting them as well.  The UK has agreed not to lower existing standards but is refusing to use EU regulations as the baseline through which to develop new ones. For state aid, a set of principles have been agreed but the EU is going further by demanding a mechanism to sanction the UK if it breaks these principles.

The dispute resolution mechanism discussions have also taken on a greater significance following the attempt of the UK Government to breach the Withdrawal Agreement through the UK Internal Market Bill. The EU wants a mechanism that can be used to dispute any breach of the future deal, while the UK wants to leave out of the scope both fisheries and security.

Concerns over a no-deal scenario keep growing

While the EU and the UK keep butting heads on these issues, the possibility of a no-deal scenario keeps looming and briefings and reports of its potentially disastrous consequences keep coming in.

This week, a September report from the Cabinet Office was leaked to the media, showing that a no-deal Brexit, in combination with the Covid-19 pandemic, may result in a “systemic economic crisis” in the UK. The paper describes a worst-case scenario across different sectors and its consequences, from reduced availability of fresh supplies and price increases to labour shortages and social unrest.

The Cabinet Office has however clarified that scenario planning is just the duty of a responsible government and this cannot be taken as a forecast.

The world is watching

The UK and the EU are not the only ones with Brexit on their minds. Newly elected US President, Joe Biden, has restated that the UK must ensure that the provisions of the Good Friday peace deal are respected by keeping the border between the Republic of Ireland and Northern Ireland open. The issue is important for Mr Biden not only because of his Irish heritage, but also because he has previously stated that the issue is a pre-condition for any future trade deal between the US and the UK.

One final push

Despite this dramatic countdown until B-day, there is still hope that a deal will be announced within the next few days. Irish Prime Minister, Micheál Martin, mentioned this week that there was still time for a good result and pointed to some hopeful “landing zone” for the two sides on the standards and level playing field issue, which may in turn facilitate a deal on dispute resolution. So, it looks like it might all come down to fisheries.

Face to face discussions will resume this weekend in London. The European Heads of State will have their next summit on 10th December and a deal needs to have been agreed by then. The European Parliament will then have a special session on 28th December to approve the deal, only three days before the end of the transition period.

So, if a deal is to be agreed, it will be in dramatic fashion, and it will make for a very entertaining movie once this is over and we are able to look back at it in amusement. In the meantime, let’s hope for the best and prepare for the worst.

The Whitehouse team are experts in the potential impact of Brexit, providing political consultancy and public affairs advice to a wide range of clients across the Member States of the European Union and the United Kingdom. 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@whitehouseconsulting.co.uk

By Andrea Gutierrez-Solana November 27, 2020 2:36 pm

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