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Brexit: Stumbling

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Brexit: Stumbling

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Just a short note on the state of Brexit. Negotiations continue on Friday but Barnier will have decamped to Brussels, leaving his team in London. Hopes of a deal by the weekend are off. As we’ll see, the press is still playing up the notion that there could be an agreement by the end of the weekend. But by all accounts, there’s still a big gap between the the two sides, and I have yet to see reports of any plans for Boris Johnson and Ursula von der Leyen to meet to try to close the gap.

The reason for the shift to a more downbeat view is that the 27 diplomat session with Barnier on Wednesday, with France leading but apparently not alone in applying pressure to Barnier not to concede too much, has had an impact on the talks. It appears, as has happened a couple of times with Barnier, that he may have gotten out over his skis and offered concessions that he now has reason to think the EU won’t swallow.

If you believe this scenario, you have to believe France is influencing the shape of the deal, as opposed to taking a self-assigned role of bad cop, regardless of whether or not anyone wants them to. Or else Barnier really was out over his skis and had gone further than his principals would accept.

Or it may be that the UK side is exaggerating more than a little in trying to depict the EU as acting in bad faith by retrading an offer. Recall that one of the things that came after the Barnier-EU diplomats session on Wednesday was that EU sources told the press that if the UK didn’t remove clauses that would override the Irish Protocol from recently-introduced Taxation Bill, they could kiss a trade pact goodbye. So the UK may be creating an uproar about the EU refining its position, which may or may not be as big a deal as the UK noisemaking would have you believe, to divert attention from their refusal to drop the deal-killing sections of the Taxation Bill.

The Bloomberg account makes clear the whinging is coming entirely from the UK side:

With negotiators working around the clock in London, optimism had been growing for days that an agreement could be struck this weekend. But British officials said the European Union had suddenly turned up with a new set of demands, sending the talks backward. They didn’t say what the demands were and EU officials denied it…

One U.K. official said talks had taken a big step backward because the EU had hardened its position in response to the French. Another said that, despite the setback, a breakthrough is still possible in the next few days.

Senior figures close to the European side questioned whether the remarks from the U.K. were another case of brinkmanship to pile last-minute pressure on the talks or an effort to disguise the fact that the British themselves are making concessions. One official said that fundamental differences between the two sides have persisted for weeks, but that hadn’t prevented both sides believing a deal was close, while another insisted bloc hadn’t made new proposals.

The Financial Times goes even further, blaming Macron (Tough Macron stance leaves Brexit deal hanging in balance):

Talks on an EU-UK trade deal hit a major obstacle on Thursday evening as British officials accused France of making new demands at the eleventh hour, leaving an agreement hanging in the balance.

Even though France doesn’t have a seat at the table, it is making a lot of noise from the sidelines:

Tony Connelly at RTE has more details, but it isn’t clear which if any of these EU desires were presented as a negotiating position, as opposed to giving illustrations of what might work, or when. Barnier appears to have consistently told the UK that the EU would insist on strong protections in its level playing field arrangements, but the UK isn’t prepared to live with what that would mean in practice. From RTE:

While the French President has in recent days hardened his position on fisheries, the current stand-off appears to be over the so-called level playing field.

EU officials point out that for months it has demanded that if the UK wants tariff and quota-free access to its single market it cannot unfairly subsidise its companies once outside the framework of the EU’s tough state aid rules.

In particular, EU negotiator Michel Barnier has been arguing for a robust, independent UK regulator to safeguard against any unfair competition.

France is reported to have demanded that the UK should have to get approval from such a regulator before any subsidies were paid, and that that regulator should apply principles shared by both sides.

Brussels also wants EU companies or governments who believe they have been put at a disadvantage by any UK subsidies to have redress through the UK courts.

At present, the European Court of Justice is where such disputes are settled, but London has demanded that the ECJ no longer have any role to play in the UK.

The EU also wants to ensure both sides comply with similar standards when it comes to labour and social rights, as well as environmental and taxation standards, and that if the UK diverges from these standards the EU will be able to take retaliatory action in an area of its choosing.

In recent days, France, Denmark, the Netherlands and Belgium have all indicated to Mr Barnier that he risked straying too far from his mandate in order to secure a deal.

Sources say that last night’s setback is the result of a tougher stance by Mr Barnier that may be reflecting those concerns.

The Financial Times confirms the RTE details on the level playing field proposals, but is similarly fuzzy on when they were presented to the UK. And despite Macron being the bad guy, this section simply say France supports this plan, not even that France is the author:

Governments’ concerns have been heightened by the fact that Brussels has failed to overcome UK opposition to French-backed proposals for the level playing field.

These included plans to require Britain to create a regulator with powers to police state aid to companies even before the money is handed out and demands for “ratchet clauses” that would force both sides to have environmental and labour regulations that evolve in a similar way over time. 

In any event, all of this posturing over level playing field seems to be a side-show given that Johnson hasn’t backed off from legislation that proves the UK won’t comply with any agreement. Again from RTE:

Meanwhile, British Prime Minister Boris Johnson will press ahead with plans allowing ministers to tear up the Brexit divorce deal he has already agreed, despite the current round of UK-EU talks being at a critical stage.

The British government will ask MPs to reinstate controversial legislation giving ministers the power to break international law by ignoring provisions in the Withdrawal Agreement relating to Northern Ireland.

MPs will vote on the UK Internal Market Bill on Monday, potentially throwing the talks on a UK-European Union trade deal into deep crisis unless an agreement can be reached by then.

In the meantime, The Sun reports that “red wall” voters from the Midlands and North will punish Johnson if he “sells out” on a trade deal:

They do not want him to betray his pledge to take back control of UK fishing waters. And 58 per cent of those voters said they would be less likely to return Mr Johnson to No10 for another term if EU judges continue to have control over British laws.

The ability for Britain to forge our own free trade deals around the world was also a major condition for Conservative support for 55 per cent.

The Centre For Brexit Policy who commissioned the poll said: “On the supremacy of the British Parliament, swing voters living in key battleground areas in the North that gave the PM his majority are adamant there must be no backsliding.”

The figures, based on a Savanta ComRes sample of over 2,000 people, will be a wake-up call for many Conservative MPs elected in traditionally Labour heartlands on narrow majorities.

The really no fooling around drop dead date appears to be just before next Thursday’s EU Council meeting. So before the start of business Tuesday looks to be the end of the runway. Stay tuned.

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