UK-EU trade negotiations - it’s all about the fish

09/03/2020

At the end of February, the UK Government set out its approach to the now underway trade negotiations with the European Union (EU). ‘The Future Relationship with the EU’ document was published two days after the EU’s declaration stating that the UK aims for a relationship similar to the EU-Canada agreement based on ‘friendly cooperation between sovereign equals’, with both sides respecting each other’s ‘legal autonomy’. The EU has declared that it is seeking an all-encompassing agreement that covers all aspects of future relations.

The Government’s approach was outlined in the House of Commons by the Chancellor of the Duchy and co-chair of the UK-EU Withdrawal Agreement Committee, Michael Gove MP. The UK’s chief negotiator, David Frost, was in Brussels at the beginning of March to kick-off the talks. In this blog, Atticus highlights some of the key elements outlined in the document likely to have a significant impact on negotiations.

In reference to the length of the negotiations, the UK repeated that it would not extend the transition period beyond 31st December 2020. However, the UK has also said that it may exit negotiations in June if significant progress has not been made towards a deal by that point. This significantly raises the chances of a no-deal exit and may concern businesses that have frequently voiced concerns about such an outcome.

Many commentators have claimed that the most contentious area of the trade negotiations will surround ‘level playing field’ requirements. The EU has expressed concerns about the UK deregulating and becoming a ‘Singapore-on-Thames’. A level playing field helps to ensure that businesses in one country are not able to unfairly undercut rivals next door. The EU is particularly keen on maintaining a level playing field in areas such as workers’ rights, environmental protection, and state subsidies. However, with Frost having rejected a ‘level playing field’ approach during a speech in Brussels in February, there is likely to be ongoing tension over this issue.

Talks between the UK and the EU on fishing will also be closely scrutinised since control of fishing waters represent a visual indication of ‘taking back control’, or lack thereof. The sector is likely to become a flashpoint with the UK stating it wants to conduct annual negotiations with the EU over access to UK waters - something the EU is likely to strongly oppose. The EU, led by France, has taken a strong line on this issue, with the media suggesting that there needs to be an agreement on fishing by the summer to allow all other negotiations to progress. Given that fisheries account for only 0.04% of UK GDP, one could imagine that the government is being heavily lobbied by other industries to not sacrifice an eventual deal on the ‘altar of fish.’

Furthermore, the UK has declared that it will not seek continued participation in the European Arrest Warrant as part of its future relationship with the bloc. The UK opposition benches, especially prominent Labour MPs such as Yvette Cooper, the Chair of the Home Affairs Select Committee, have already criticised the Government’s plans as ‘extremely worrying’. Tensions have also risen over the European Convention on Human Rights (ECHR). The UK has stated its support for the ECHR but argues that it does not need to play a part in Brexit negotiations. In response, the EU has accused the UK of ditching its human rights commitments.

The EU’s Head of Task Force for Relations with the UK, Michel Barnier, recently stated that British financial services companies will have to accept being ‘rule-takers’ if they want continued access to European markets. This comment sets a rather uncompromising tone for upcoming negotiations and is likely to anger Brexiteers. However, with financial services representing 7.1 per cent of the UK’s economic output, the British government will be keen to secure a positive outcome for its most dynamic sector. It remains to be seen whether the UK is willing to show flexibility and compromise to achieve this.

With the transition period ending on December 31st, and the UK Government declaring that they will not seek an extension, the government has taken a fairly hard-line approach at the outset of negotiations. Whether this can be maintained as a result of the global outbreak of the Covid-19 Coronavirus remains to be seen. If the virus as expected ravages the global economy and daily life, there is no reason why Brexit negotiations would be ‘immune’ from disruption.

It is staggering to see the difference an election, and a sizeable majority can make. The UK has announced its intent to make preparations for no-deal. Given that thus far the only thing the UK and EU can agree on is what they don’t agree on, this may be a wise measure or just the first tactical part of negotiations. The prospect of simultaneous negotiations between the UK and the United States may also be used as a timely bargaining chip. Given the US is in full election mode however and also getting to grips with the coronavirus, the prospect of a deal looks unlikely.

Though uncertainty related to a no-deal Brexit and a resultant new ‘cliff-edge’ looms, the heart of these negotiations will begin in the Autumn. Nine months is both an eternity and an incredibly short amount of time in politics. It is anyone’s guess if both sides come the end of the year, coronavirus permitting, shake hands.

To find out more about how the upcoming trade negotiations may influence your organisation and policy concerns, get in touch with Atticus Communications at info@atticuscomms.com