Boris Johnson’s Brexit nightmare returns at the worst possible time

As it happened: The day the UK left the EU

This is where things are: The UK formally left the EU on January 31. Since then, it has been in a transition period in which it still obeys EU rules in exchange for regular business in key areas, especially trade.

The main objective of the transition period was to create a space where both parties could safely negotiate their future relationship without causing disruption to companies and citizens. However, that transition period ends on December 31, and sources on both sides say those negotiations are not going very well.

The pandemic has not helped political stagnation. The negotiating teams have been unable to physically meet, relying instead on video conferencing tools. The next round of virtual talks begins Tuesday, but sources on both sides have said this has damaged the quality of the negotiations, as people cannot separate for private chats on how to solve thorny problems. And the magnitude of the coronavirus crisis has overshadowed the urgency of the Brexit talks.

Johnson must now spend June with one eye on complicated and tense negotiations with the world’s largest trade bloc, while overseeing the response to the country’s worst public health crisis in decades.

Both sides agreed that June would be used as a period to reflect on whether there is an agreement in sight, or whether they should respectfully put a bullet in the talks and prepare for a scenario without an agreement.

No agreement is almost universally accepted as the worst possible outcome. The British economy is highly dependent on imports from Europe. The maximum disruption of this trade would affect supply chains, making life hell for companies like the car manufacturers that depend on them and leading to a possible shortage of essential household products like food, for the consumers. Numerous studies have predicted that it would be a major economic impact for both households and the nation as a whole.

Despite the fact that neither the UK nor the EU claim to want this result, negotiators fear that political stagnation means that it is increasingly likely. “The EU is unreasonable and requires that if we want a free trade agreement, we have to continue at the cost of following EU rules,” according to a UK government official, who was not authorized to speak at the file on the go. negotiations “Clearly, you know we can’t accept that. If we did, what would have been the goal of Brexit?” the same source said.

The rules they refer to are a particularly thorny part of the negotiations known as a “level playing field.” This is essentially an agreement on certain rules and standards designed to prevent companies on the one hand from weakening companies on the other. The EU single market is the largest economic bloc in the world. Its level playing field is supervised by the courts and institutions of the EU. And if the UK wants tariff-free access after the transition period is over, as Johnson’s position was last fall when he reached an initial Brexit deal with the EU, then the EU will need it to subscribe to those rules. .

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The level playing field is not the only area where Brussels and London do not meet face to face. There are disagreements over fishing rights, security and governance, and what exactly happens on the island of Ireland. However, negotiators in both London and Brussels are confident that a long-awaited crisis caused by the looming cliff edge will drag both sides together. The same cannot be said for differences on a level playing field.

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The UK says it will drop its duty-free trade ambitions with the EU if the EU lowers its level playing field. The EU is not interested in this idea because it believes that there is not enough time in the transition period to negotiate the tariffs.

Theoretically, Johnson could buy more time if he wanted to go this route. You have until June 30 to request an extension to the transition period. However, it would be so politically toxic that doing so seems unthinkable to Johnson’s advisers. It is this toxicity of the Brexit debate that makes a deal more unlikely, as any perceived capitulation would lead Johnson to trouble with his supporters.

Furthermore, the pandemic creates a rare opportunity to mask the considerable negative impact that a no deal Brexit could have on the UK economy. “There is a certain logic in saying we deal with both economic shocks at the same time,” says Anand Menon, director of the UK think tank on a changing Europe.

“From supply chains to the way the entire economy is managed, everything is going to change as a result of this virus. So while the two are not really related and could make the other worse, I can see some political logic to do it All at the same time “.

Even better, the pandemic creates room for the government to throw money at any major obstacles along the way, should the worst happen.

“Certain parts of the economy will be affected by both Brexit and coronaviruses,” says Raoul Ruparel, Brexit adviser to Johnson’s predecessor, Theresa May. “If Johnson were to spend government money to soften the impact in these areas, he might find that there is less opposition than if he simply spent the money to offset the impact of Brexit alone, as there is a much greater unity across the political spectrum about the need for that expense to aid in the recovery of Covid-19. “

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In Brussels, member states agreed that there was no agreement at the end of the year some time ago. “We are no longer emotionally involved in UK decisions,” said a Brussels-based European diplomat. “It is a country outside the EU, we are focusing on our coronavirus recovery,” said the same source.

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This level of nonchalance is not uncommon in all EU institutions, where an official working on the negotiations shrugged that “the UK is free to do what it wants” and that Brussels is poised for “stagnation” in late June.

The EU has believed for some time that it will deal with the shock without a deal better than the UK. “The EU knows it is in a stronger position. Yes, no deal is bad for them, but it is much worse for the UK,” says Thomas Cole, a former EU negotiator. “It is true that both sides are equal sovereigns, but they are well aware that they do not need to make the kind of concessions that the UK should do.”

And just as it has in the UK, the coronavirus could make certain calculations without a deal easier for the EU to swallow in the long term. “Paradoxically, it could make aspects of any agreement more manageable for the EU,” says Fabian Zuleeg, executive director of the Center for European Policy. “Companies that were considering downsizing their European operations after Covid might decide that it’s easier to shut down UK offices and factories entirely. It actually solves some problems, in some ways.

Of course, neither side wants to reach an agreement, and both sides still tell journalists that they are committed to breaking this impasse and reaching a mutually beneficial solution. However, the current political blame is likely to worsen as June reverberates, if the Brexit story has anything to do with it.

If the talks collapse, both sides will wait for the other to seek to point the finger and represent the victim. This could be politically adapted to Johnson in the short term, as he plays the brave leader facing European harassment. But, as Menon points out, the post-Covid world already seems to be a messy and unpredictable place.

“Everyone is angry with China, and God knows what will happen in the American elections,” he said. “Does the UK really want to have a fight with Europe as it emerges from the pandemic and into its brave new future?”

So if Boris Johnson is serious about not wanting to avoid any deals, the combination of talks freezes over, both sides are distracted by a pandemic, and this pressing June deadline is a hellish start to summer.

Muhammad

About the author: Muhammad

Wayne Ma is a reporter who covers everything from oil trading to China's biggest conglomerates and technology companies. Originally from Chicago, he is a graduate of New York University's business and economic reporting program.

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