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5 things to know about the EUs Brexit negotiating stance

As the countdown to the United Kingdoms departure from the EU enters the final stretch, the bloc has..

As the countdown to the United Kingdoms departure from the EU enters the final stretch, the bloc has shifted its focus to upcoming negotiations over the future relationship with its soon-to-be former member.

Diplomats and MEPsfrom the remaining 27 EU countries, along with European Commission officials, have spent the past few weeks preparing Brussels position for the talks, mapping out priorities and tactics that the EU intends to follow.

The U.K. has yet to set out its position, expected in February.

Here are five things to know about the EUs approach to the imminent marathon talks.

1. What kind of free-trade deal can be done in 11 months?

Commission President Ursula von der Leyen wants an ambitious trade agreement of “unprecedented scale” with “no tariffs, no quotas and no dumping.” The broad scope of such a deal will be outlined in negotiating directives in early February, as soon as the U.K. has officially left the bloc.

Barnier has since confirmed to MEPs that transport and aviation would be excluded from such a limited deal.

However, both von der Leyen and her chief Brexit negotiator Michel Barnier have made clear the 11 months left until the end of the transition period is too little time to reach such a deal, so Brussels will have to “prioritize” certain sectors. U.K. Prime Minister Boris Johnson has said he does not want an extension of negotiations beyond December 2020.

Barnier said in Stockholm earlier this month that the only thing both sides could negotiate in the available time was a “basic agreement,” which would only cover “trade in goods, level playing field [meaning a commitment to EU social, environmental and competition rules], the fisheries sector, and internal and external security.”

He has since confirmed to MEPs that transport and aviation would be excluded from such a limited deal. But he avoided clarifying whether trade in services, which is particularly important for the British economy, would also be a victim of such a short timeline.

According to EU diplomats, the bloc aims to finalize its negotiation position in February and then kick off talks. These will be held in different groups of technical experts from different areas, but the clear focus in terms of allocation of resources will be on the prioritized sectors.

European Commission President Ursula von der Leyen | Fabrice Coffrini/AFP via Getty Images

The end of June is the deadline for agreeing to any extension of the transition period and Brussels plans to tell Johnson that if he wants anything beyond a basic deal, hell need to give way and allow more time.

2. Can salami tactics speed up negotiations?

London has suggested negotiations could be split to reach individual deals in different sectors, rather than having one all-inclusive deal where difficult questions are kept open until the very end and then resolved by doing trade-offs. While such a strategy might indeed help to speed up talks, the EU sees a clear risk.

“It will be a little like a salami tactic when one thing will be dealt with after the other, so there I hope we can maintain … the unity that we had in the past,” Christophe Hansen, Brexit rapporteur for the European Parliaments trade committee, said Tuesday. The worry is that different EU countries have different national priorities when it comes to a post-Brexit relationship with the U.K., so member states might end up putting these before getting good deals for the EU as a whole.

According information shared with EU diplomats — which describes the Commissions ideal solution — both sides would negotiate a “single comprehensive partnership agreement” with a general component, an economic component and a security component. There is then the possibility of “supplementing agreements.”

EU countries have also said they want a “comprehensive approach with the possibility of trade offs between chapters.” A draft structure prepared by the secretariat of the Council of the EU maps out what the deal could look like.

However, Barnier said earlier this month that the EU “will be pragmatic” if needed and could split negotiations on internal and external security from the rest of the talks.

U.K. Chancellor Sajid Javid said earlier this month that “there will be no alignment” with EU rules post Brexit.

By contrast, talks on the level playing field and fisheries “will remain linked” to trade discussions, he stressed. This is to ensure that Brussels has sufficient clout to extract concessions on labor rightsor access to British fishing waters.

3. Will the EU accept deregulation by the Brits?

U.K. Chancellor Sajid Javid said earlier this month that “there will be no alignment” with EU rules post Brexit. Such an approach would be problematic if the U.K. planned to lower labor or environmental standards, granting British companies anything the EU would consider an unfair advantage over European competitors. The same goes for a loosening of competition and state aid rules.

To avoid such a risk, the EU will insist on strong level playing field clauses in the deal that tolerate “zero dumping.” Brussels has also proposed installing an arbitration mechanism that would allow the EU to levy fines or even suspend trade benefits if the U.K. was not respecting its commitments.

A document outlining the EU countries priorities says that they will not tolerate any “competitive undercutting or free riding” and will insist on “credible and effective enforcement of rules” to “prevent unfair competitive advantages and trade distortions on a sustainable basis.”

Yet Britain could also deregulate in other areas that dont automatically result in unfair competitive advantages, for example by adopting diverging product safety standards. While the EU has little power to stop the U.K. from doing so, such a move risks disrupting supply chains and would make it more difficult to get products from cars to machines approved for the EU market. If Britain was to change food safety rules and, for example, allow hormone treatments for cattle, Brussels would respond by banning all British beef exports.

Chancellor of the Exchequer Sajid Javid | Peter Summers/Getty Images

4. Why do existing EU trade agreements limit the scope of a deal with Britain?

The Commission has warned that it has a “limited margin” to offer the U.K. better market access for goods and services than it offers other countries. Thats because of so-called most favored nation clauses included in most modern EU trade deals, such as those with Canada, Japan and Vietnam. These Read More – Source
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