Trade

Salami tactics loom for Brexit trade talks

Facing a brutal timetable to negotiate a comprehensive deal on their future relations by the end of the year, Brussels and London are weighing up a more slice-by-slice approach to talks.

While both sides insist a traditional, all-inclusive trade pact is still possible, they are now also considering more piecemeal tactics to avoid a catastrophic cliff-edge of tariffs and trade barriers from January 2021.

To the EU side, that means a potential Plan B of more sector-by-sector agreements, while the British are mapping out the attractions of negotiations that move forward by incrementally locking in wins, rather than waiting for one last-minute finale.

“We are very clear we want to get on in terms of negotiating a deal and so maybe the approach of nothing is agreed until everything is agreed which characterized previous negotiations is not an approach that we are interested in taking,” a British government spokesperson said during a briefing in London while U.K. Prime Minister Boris Johnson was meeting European Commission President Ursula von der Leyen.

“Nothing is agreed until everything is agreed” is a long-standing mantra for EU trade negotiators, who have never faced such a tight political deadline on a major pact as December 31, when the transition period runs out — and which Johnson says he wont extend.

“We might want to take a reconsideration of the time frame before July 1.” — Ursula von der Leyen

The logic of keeping all the elements on the table in talks is that both parties will be able to play to their strengths — one side could be strong in farming, the other in machinery, for example — and the endgame will provide an opportunity for the final big cross-sectoral trade offs.

EU officials have always insisted that this kind of wide-reaching, ambitious agreement is their goal. One of their chief fears is that Britain could emerge as a light-regulation competitor to the EU after Brexit, so they have traditionally not wanted Britain locking down small sector-by-sector zero-tariff trade deals before it commits not to deviate from EU rules and regulations.

However, given the intense pressure of Johnsons deadline, EU officials and diplomats say the European Commission is now considering a safety net option of negotiating separate, limited deals in four to five sectors, covering trade, fisheries, security and foreign policy as well as transport and aviation.

Race against the clock

Speaking at the London School of Economics on Wednesday, von der Leyen hinted at such a change of negotiating tactics when she pointed out that the clock was ticking.

“The transition time is very, very tight,” she said. “So it is basically impossible to negotiate all … so we will have to prioritize.”

She added that negotiators should primarily focus on areas where there are no international trade treaties to fall back on. “It is not an all or nothing thing, but it is a question of priorities,” she said.

One EU diplomat cautioned, however, that “of course, these potential sectorial agreements would not be completely independent from each other.”

“There are areas where the EU has more leverage, like market access, and others like fisheries where the U.K. has more leverage, so that wouldnt mean that they pull us over the barrel on fish and we do the same with them on trade.”

One EU official said that EU chief Brexit negotiator Michel Barnier had first brought up the idea of sectorial deals in December after technical experts made clear that it was completely unrealistic to negotiate and ratify a comprehensive future relations deal before the end of the year. The salami tactics were described as an emergency measure.

Von der Leyen, in her speech on Wednesday, made another attempt to urge Johnson to rethink his position. “We might want to take a reconsideration of the time frame before July 1,” she said.

July is the deadline by which the EU and U.K. will have to agree whether they extend the transition period beyond the end of the year.

Mixing it up

The question of the timetable and scope of the U.K.-EU trade deal is squarely in focus in Brussels, where a decision must be taken on whether the deal is legally considered a “mixed” agreement.

That is highly significant for the timetable. If it is a “mixed” agreement it will need ratification by some 40 national and regional parliaments across the EU. That makes an 11-month timetable practRead More – Source