Earlier today the EU published it’s negotiation directives, along with a note from chief negotiator Michel Barnier. Thankfully, the Telegraph has done the reading and identified the main points of what will shape the future relationship. The UK negotiation directives remain unpublished (or more likely, under construction) but the government’s position can be somewhat interpreted by the (unconfirmed) leaked coalition deal and the Conservative manifesto; both of which are remarkably vague.
Governance
The EU negotiation directives are clear throughout that the envisioned partnership should be wrapped up into one deal. EU negotiators are keen to avoid another Switzerland scenario of ad hoc deals, one they have been working on remedying. The UK should not accept this demand outright and should be cautious of how it gives the EU the ability to punish the UK throughout the agreement, using a framework-wide dispute settlement. The EU does however admit that “supplementary” deals are likely to be needed as well as periodic review.
Level playing field
The directives pretty much start by emphasising how important a “level playing field” (LPF) is to the EU. The EU seeks to “uphold corresponding high levels of protection over time”. If the UK wants free access to the Single Market, then it will no be allowed to undercut the competition within the EU. This will include state aid rules, environmental regulations and worker’s rights. The LPF is likely to be an area of contention as Eurosceptic Conservatives would prefer the UK to have the ability to diverge from these standards, as well as not wanting direct ECJ oversight in the UK. It also puts into question if the UK has honoured the Single Market referendum if it ends up taking too many of it’s regulations. That being said, the Eurosceptics are likely to have to budge somewhat if the Government wants “as much access as possible” as cited in the leaked coalition deal.
Given that the UK consistently spends less on state aid than Germany, France and Spain, as well as often having stronger worker’s rights; disputes of this kind could be few and far between. There is certainly a landing zone here for an EU-UK FTA; more on this later.
Regulatory alignment
After the SM referendum, and the general direction of what the UK wants, the EU seems to not be expecting the government to agree to it’s regulations. There will have to be a regulatory border, for things like product standards, between the EU and the UK.
However, there may be some regulations that the EU insist on more such as animal products. If the UK wishes to import animal products from the United States in a post brexit trade deal, this may make trading difficult with the EU. On the other hand, the UK may well be happy to accept the maintenance of current standards, but will again be sceptical of direct ECJ intervention.
Fisheries
There is no doubt that fishing rights in UK waters will be a big issue in the upcoming negotiations. The EU is demanding that fisheries are included in the wider framework of the deal, the amount of access to UK waters maintained with their long term access guaranteed from the start. This would not be a wise thing for the British negotiations to allow on a whim. The EU has many communities that rely on fishing in UK waters, especially in the Netherlands, Denmark and Norway. Currently the EU fishes around 60% of the fish caught in British waters, it is not something they want to give up.
However, UK negotiators will be mistaken if they think they have a lot to gain here. Fishing makes up for 0.1% of the British economy and while that could grow, the UK also exports 80% of it’s catches to the EU. While British negotiators should seek to take back our sovereignty over our waters, if we shut the EU out we will face retaliation tariffs on the extra catch; or we will have to start eating lots of fish we don’t normally eat.
Where is the landing zone?
There are plenty of other parts to this deal, from defence cooperation to transport, from energy to data. All of these are important and will be subjects to further telegraph pieces. The above parts of the deal are the areas that will define the future trading relationship. A landing zone on this is certainly possible, but must take in key premises: both sides want to remove tariffs, the UK wants to retain sovereignty from the ECJ and the EU wants to protect itself from being undercut now or in the future, especially on state aid.
Throughout the directives the EU put emphasis on the “geographic proximity” of the UK, which explains why they are more insistent on the LPF than they were with the CFTA with Canada. One way to get around this would be for the EU to leave some tariffs in place, as they did with Canada, especially their more sensitive ones. The UK could then deviate from the LPF but not undercut the EU as the most sensitive tariffs would remain on places. This option is far from ideal however but negotiators will have it in their back pocket if talks of greater ambition break down. The tariffs that the EU is most sensitive about are often animal products, that the UK exports to the EU in great numbers. And again, due to the “geographic proximity” tariffs that the EU felt it could forgo with Canada, may need to remain in place with the UK.
A more ambitious option would involve the EU moving off of its red lines (as it already knows) on the LPF. On environment and labour laws this is somewhat easier. The EU mostly wants overall standards not to fall, the UK can claim it has gotten it’s sovereignty back (on something they don’t wish to change much anyway) if they can change individual regulations.
On state aid the EU directives are more strict, stating: “The envisaged partnership should ensure the application of Union State aid rules to and in the United Kingdom.”. This poses a particular problem for the UK as it will be direct EU control and ECJ ruling in the UK. There is no easy solution to this other than some sort of mechanism to keep within broader limits of EU state aid rules, without direct ECJ rulings. The EU must recognise that direct ECJ ruling in the UK is not going to be acceptable. Both sides will have to move of their red lines on state aid, especially the UK.
UK negotiators would be wise to be accepting of whatever dispute resolution mechanism arises, which will likely have some involvement of the ECJ. At the same time, the EU directives talk of “remedies” when referring to unfair competition. The EU will want to have trade defense mechanisms alongside the dispute resolution. So if the UK unfairly subsidises an industry that affects trade with the EU, then they can put in retaliatory measures to balance it out. These mechanisms will allow for the UK to regain it’s sovereignty, while not having to be subject to EU rules in areas that do not affect the EU. From the EU’s perspective, the threat of a laissez-fair international trading tycoon off the English channel is somewhat neutralised.
On fisheries the British negotiators would be foolish to so easily give in to the EU’s total demands. The British should instead look to regain total sovereignty, but be aware of the likely compromise that they will have to guarantee something. Most likely, there would be an agreed amount of minimum EU access that is less than their amount of access now. The EU wants to make any access guarantee permanent in the framework of the deal, this is not something the UK should accept unless the EU compromises heavily elsewhere (which they will not do, nor should they). Instead the two sides could agree with annual negotiations on the actual access limit, with that minimum access hard wired into the deal. This will allow the UK to have sovereignty and control, while the EU’s fishing can continue disrupted.
This is ambitious and there is little time to do this. It’s impossible to say where these negotiations will end, especially with the UK negotiation directives still secret. Much of the final landing zone will be decided by the next government. A wise government now would not wait to get to the negotiating table and angle the negotiations towards their vision for brexit, withholding key cards such as defence and security, alongside enacting vigorous preparations in every government department for a no-deal exit. The British negotiation directives
BrexitGlory is a political pundit and journalist, specialising in Labour party politics and the Brexit negotiations.





















