The speeches delivered on February 3rd by Boris Johnson in Greenwich and by Michel Barnier in Brussels reveal the deep differences between the parties on the eve of the adoption of their respective negotiation mandates. That is hardly surprising as each protagonist flexes his muscles before initiating the talks.
First it should be mentioned that both presentations were of excellent quality, their structure underscoring perfectly the differences in the personality and method of the orators. On the one hand, a flamboyant sentimental speech calling for the EU to trust Britain (a feeling that Boris Johnson’s track record renders dubious at best) and, on the other, a finely honed coherent demonstration repeating ne varietur the well-established positions of the EU.
A few preliminary conclusions can be drawn, should the respective claims turn out to be “inflexible”, considering that, at first glance, they seem incompatible.
To start with, one should acknowledge that the meaning of “cliff edge” has fundamentally changed since the ratification of the Withdrawal Agreement. Indeed, should the talks fail, there survives – written in stone – the 500+ pages of the W/A which include: reciprocal citizens’ rights, the guarantee of an open border in Ireland (the modalities concerning a customs’ border in the Irish Sea to be defined in light of the outcome of the talks) and the financial settlement. Furthermore with regard to trade, WTO rules, which apply to both parties, will automatically kick in.
Next, if it is correct that the “political Declaration” drafted jointly by the EU and the UK encompasses, as Michel Barnier points out, undertakings relevant to the future relationship including a commitment to a level playing field, the maintenance of existing social, sanitary and environmental standards, the competence of the ECJ in matters of European law, this document, annexed to the W/A, is not enforceable as it does not contain any particular performance obligations.
If Boris Johnson’s proposals are at odds with the Political Declaration, it is mainly in respect of the spirit that presided over its drafting in October 2019 aiming at an “ambitious agreement”; Michel Barnier seems to accept this, in as much as he has invited the British Government to define the aims it seeks, simply warning about the inevitable consequences deriving from any such choices.
It seems therefor reasonable to believe that in their early stages, discussions will lean towards a barebones agreement, possibly including an exchange of threats or even leading to an outright suspension. Rather than starting the talks on the basis of limiting the divergence from an existing common legal and regulatory framework, one is leaning towards a more classic negotiation aiming at improving on far looser and more limited WTO rules. This posture explains Johnson’s reference to the EU-Australia trade agreement and is not conducive to the building of trust he is advocating.
As a result, it is of paramount importance, as emphasized by both Johnson and Barnier, that economic operators reinforce their preparations in view of the UK’s departure from both the Single Market and the Customs Union on December 31st 2020. The consequences will, however, be asymmetrical: decisions taken, in particular those involving delocalization, will be mostly irreversible which should penalize the UK far more than the EU in what is inevitably a loose/loose situation. The more the start of the negotiations become bogged down, the more actors will be tempted to act; time to reach an agreement being shortened commensurately, the probability of a limited agreement will become a self-fulfilling prophecy.
As was well expressed by Martin Wolff in the FT of February 5th, despite that on paper discussions are taking place between two equally sovereign entities, the underlying reality is quite different, the EU holding most of the trump cards. In addition, the ability of the UK to negotiate trade agreements with third countries will be highly dependent on the relative importance of the EU market for each of them, reducing significantly the number of partners for whom the UK market is a priority.
Even more fundamental is the fact that a limited agreement (that would not guarantee the fluidity of trade) would put into jeopardy Johnson’s ambitious pledge to regenerate the left-behind UK territories (whose votes assured his Parliamentary majority) which are precisely those who are vulnerable, at least in the short term, to impediments to commercial relations with the continent.
In the obstacles that Johnson seems to be inflicting on himself one should mention his aim to negotiate in parallel additional trade agreements with USA, China, Commonwealth countries, etc. In this dangerous game he could well become isolated, loosing on all fronts or, at best, exchanging the “vassalization” to the EU that he seeks to escape (in which the UK was involved in decision making) for a far worse subordination to – or instrumentalization by – other major powers.
It is indeed in the sphere of geopolitics that the speculation on the consequences of Brexit risks to have a largely unforeseeable impact. For instance the recent surge of Trump’s popularity in the polls measuring his reelection chances could encourage him to offer an advantageous FTA to the UK in which he would deliberately sacrifice some commercial interests with the sole purpose of weakening the EU. In turn this could lead to tensions among the Member States, relating not so much to UK-EU relations but affecting, for instance, the EU’s relations with Russia with whom some Members – to the absolute horror of others – seek improving ties as a necessary counterweight to the duopolistic Sino-American domination. It is therefor indirectly that the cohesion of the EU could be undermined; the results of the upcoming Conference on the future of Europe should constitute an excellent barometer.
In conclusion, after the expected macho postures preceding important negotiations, it behooves both parties to demonstrate very rapidly that a constructive agreement is achievable within the short timespan allocated. To that effect, in order to pretend that both parties “red lines” have not been crossed, a compromise along the following lines could be envisaged: establish as a priority a notification and consultation process (on the model of the EU/USA cooperation in financial services regulation preserving the mutual recognition of equivalence), followed by setting up a monitoring unit for the implementation of the agreements (W/A and Future Relationship) as well as a robust mechanism for resolving conflicts resulting from their application. In this way, the UK could pretend that it has preserved its full sovereignty and its unilateral right to diverge while, simultaneously the EU would dispose of the necessary instruments to protect the integrity of its internal market (and vice versa).
Brussels February 7th, 2020.