Doing a deal in a year means obeying EU rules

by Quentin Peel | 20.11.2019

Boris Johnson was at it again in the leaders’ debate on Tuesday night: insisting that there will be ample time to conclude a trade agreement with the EU next year, and therefore no need to extend the transition beyond 2020.

Of all the claims with which he is fighting this election, this is the least credible. Theresa May’s ill-fated Withdrawal Agreement with the EU included a transition period lasting 21 months with a provision to extend it by another two years if necessary.

Now the transition period has been squeezed to 11 months flat. Given the sheer scale and complexity of the impending negotiations, it looks like he is threatening once again to crash out without reaching agreement.

Very few trade negotiators believe that the deeply integrated UK-EU trade relationship can be unscrambled and replaced by a “comprehensive and balanced” free trade agreement (FTA) in such a short timescale. Such an exercise has never been attempted before. All previous international trade negotiations have been about convergence – removing barriers to trade. This one is about divergence from a single market. We start from a position of full alignment, with zero tariffs and quotas, and seek to end up in two separate regulatory regimes.

It is a fantasy to think it will be easy, not least because Johnson is also insisting – in time-honoured cake-and-eat-it style – that divergence from EU rules is core to the UK agenda. He says his aim is “Canada-plus-plus”, a much more comprehensive partnership than the FTA Canada negotiated with the EU. That took seven years to agree. The UK-EU deal must cover much more detail – especially in the services sector, which accounts for the bulk of UK exports – and create from scratch a new dispute resolution mechanism, because the UK is a far greater potential competitor than Canada.

Before negotiations start, both sides would normally draw up impact assessments, decide on the areas to negotiate, conduct a public consultation exercise and get parliamentary authorisation for a negotiating mandate. For the EU, that means submitting the mandate to both European Parliament and the Council of Ministers. For the UK, it would have to go to both Houses of Parliament, and their committees.
Normally such processes would take at least six months. The UK public consultation last year on a future US trade deal took 12 weeks and produced 600,000 responses to be assessed. In order to meet the deadline, any such consultation will have to be drastically limited, if not abandoned

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    The good news for Johnson is that Philip Hogan, the (Irish) Commissioner responsible for trade in the next European Commission, seems to think he can submit and win approval for a negotiating mandate from the EU-27 in February, assuming the UK really does leave on January 31. He wants to start negotiations on March 1.

    That is necessary in order to meet the first set of deadlines: by July 1, according to the Political Declaration Johnson has agreed to, there has to be a separate bilateral agreement on fisheries, and another on the implementation of “equivalence” rules for the financial services sector, to enable UK institutions to continue to operate inside the EU. June is also the effective deadline for Johnson to seek any extension of the transition period. A “very high-level meeting” – i.e. a summit – has been provisionally fixed for mid-June.

    The bad news for Johnson, Hogan says, is that if he is serious about “getting Brexit done” so fast, he will have to accept pretty much everything the EU puts on the table. That means agreeing to a strictly-policed “level playing field” to obey EU rules on all the subjects spelt out in the Political Declaration: state aids, competition, social and employment standards, environment, climate change and rules to prevent tax fraud and evasion. Many of those are anathema to the Brexiters on the Conservative back benches.

    The EU is happy enough: the shorter the deadline, the more likely that Johnson will have to roll over and accept what the EU proposes. Even if they do agree, there will be months of technical work on the documents: legal “scrubbing” to make sure it all stands up in court, and translation into all the EU working languages. (That took four months in the case of the EU-Japan agreement.)

    Only then can the Council and European parliament agree on “provisional implementation” of everything that comes under the exclusive competence of the EU. That is most of the FTA. But they must be unanimous. None of the rest – including the bits the UK wants most, such as defence and security, law enforcement and judicial co-operation, cyber security and counter-terrorism, health security and migration control – can be implemented until the whole agreement has gone through all 27 national parliaments. It could take years. Welcome to the world of “getting Brexit done”.

    The headline was updated on December 3

    Edited by Andrew Gowers