Under a dreary London sky, a recording of the famous chimes of Big Ben heralded the moment that to some felt like it would never come, and others wished wouldn’t. A chaotic three and a half years since the referendum, Britain officially left the European Union…sort of.
The current arrangement is similar to that of a broken marriage…the breakup is official, yet the estranged partners begrudgingly accept living under the same roof, sharing the bills for another 11 months until their divorce settlement is finalised. That is the reality of Britain’s departure, for now, entering a transition period in which negotiations must be finalised before the 31st December 2020, after which the UK embarks into its post-EU future. As London Suisse Luxe went to print, some of the most pressing Brexit questions remain unanswered, heading into a crucial 10 months for Boris Johnson’s government.
Deal or no deal?
Negotiating a trade deal is the priority for both Westminster and Brussels. By the 25th February, the EU had published its ratified negotiating mandate (the UK followed suit a day later) with formal negotiations commencing on the 2nd March. However, time is not on Boris’s side, with the EU's penultimate Brussels summit in October considered the true deadline to achieve a deal.
The first obstacle relates to ‘level playing field' rules, a set EU of regulations covering a range of policies from workers’ rights and environmental commitments, to taxation and state aid for businesses. The EU maintains that any potential free trade agreement would be subject to the UK adhering to such guidelines, so as not to create unfair advantages between businesses. This does not sit well with Johnson, who argues that an agreement need not involve the UK's compliance with EU rules. Instead, the prime minister insists his government would maintain and improve on existing standards but ruled out accepting a mandate calling for measures “beyond those typically included in a comprehensive free trade agreement”.
Equally as unpalatable for Westminster was Barnier's position on the role of the European Court of Justice, demanding the institution be able to issue legally binding rulings on “concepts derived from European law”. Restoring ‘Britain’s sovereignty’ was an important part of the leave campaigns rhetoric. Many were keen to shake off the ECJ’s influence, and Johnson was unambiguous on this point, stating that a deal cannot allow the ECJ “any jurisdiction over the UK's laws”.
Boris remains buoyant, confident that a ‘Canada style’ deal can be pushed through within the required timeframe, something Mr Barnier has ruled out, citing geographic proximity as a barrier to such terms. Others are sceptical, considering the 2017 agreement between Canada and the EU was the result of seven years of negotiations. If replicated, such a deal could allow for trade on an almost tariff-free basis, with as much as 98% of tariffs on imports and exports waived. Like Canada, this would not give the UK access to the single market, meaning that the UK could set about negotiating its own trade deals elsewhere. However, goods traded between Britain and the EU could be subject to regulatory customs checks at the border.
Others have put forward the idea of an ‘Australia style’ deal. Curiously, no such deal currently exists. Australia has been negotiating for a trade deal for 18 months, to no avail, and continues to trade with the EU as per WTO regulations, as will the UK if no agreement is reached by the 31st December. This is essentially considered code for ‘no deal’.
Plenty of fish in the Sea
Brexit stoked considerable anti-EU sentiment amongst Britain’s fishing communities, with many disaffected by concessions made under the Common Fisheries Policy in 1973. Fishing represents a tiny fraction of the British economy (as little as 0.1% of its GDP), but may yet prove to be a significant flashpoint in negotiations.
European vessels are currently granted significant access to Britain’s waters, something Barnier was quick to address, stating that a trade agreement must include “continued, reciprocal access to markets and waters with stable quota shares”. Johnson’s position remains unmoved for now, and whilst his government was willing to “consider an agreement on fisheries” emphasised that “British fishing grounds are first and foremost for British boats”, advocating an agreement like that of Norway’s, with quotas, access and catches negotiated and settled with the EU annually based on scientific data.
By early July, both sides hope to have reached a consensus on the matter. Johnson maintains his government will not budge, yet a compromise may be necessary for Britain to attain favourable terms for its services and financial industries, which represent a significantly higher portion of the country’s economy. It’s not unthinkable that Britain’s fishermen may again have to take one for their team in the interest of diplomacy.
Coming or going?
Immigration remains one of the thorniest issues of the Brexit debate. The approximately 3.5m EU citizens residing in the UK must now apply for the right to remain in the country under the EU settlement scheme by the 30th June, but the greater challenge lies in how the country approaches immigration once the freedom of movement rights of EU citizens expire after the December deadline. Westminster outlined a post-Brexit immigration policy, based on the concept of an Australian style points system. Visas would be granted only to those with a total of 70 points, awarded in accordance to a specific criterion covering English language skills, qualifications, minimum salary requirements, and professions in which labour shortages exist. These changes will be a concern to businesses within certain sectors, some of which are heavily reliant on labour from within the EU.
The year ahead?
There are some significant hurdles ahead, for instance, the status of Gibraltar under any negotiated deal. Sans a crystal ball, it is incredibly difficult to predict the outcome of the bruising negotiations between Westminster & Brussels. Inevitably, these things take time, and European leaders will reconvene for a two-day summit on the 18th June to assess the progress of negotiations. Many consider this to be the final point at which Britain could ask for an extension, something Johnson continues to rule out. Ensuring a deal is in place is beneficial to all, but to achieve this within Boris’s ambitious timeframe, tough decisions and compromises will need to be made on both sides of the channel.