Trade

Whisper it … an EU-UK deal is there to be done

LONDON — In the Brexit talks, the English Channel looks wider than ever — but a deal by the end of the year is more likely than many think.

The gulf between the two sides has been widened by Boris Johnsons insistence that the U.K. wants maximum sovereign divergence from Brussels. On three key issues — state aid, dispute resolution and fishing — what the EU is asking for is not just problematic for the U.K.; its anathema.

But cut through the noise and there is a landing zone for a deal.

Paradoxically, the U.K. governments decision to cut loose the aim of Johnsons predecessor Theresa May for a “deep and special partnership” with the EU has injected a dose of realism.

Despite the seemingly intransigent rhetoric, the political conditions in the U.K. make compromise more likely.

As Sam Lowe, senior research fellow at the Centre for European Reform, has pointed out, the U.K. accepts that leaving the EUs single market and customs union means more autonomy but also more barriers to trade. There is none of the cognitive dissonance of the early May era, when the U.K. wanted to “have its cake and eat it.”

“Beyond the headline issues the two parties arent so far apart,” Lowe said.

“A landing zone will only really become visible later on,” agreed Georgina Wright, senior researcher at the Institute for Government think tank. “Now its all about standing up for your interests and constituencies [or at least being seen to be] … A basic U.K.-EU deal in goods which covers some aspects of services is possible, but it will require both sides to compromise.”

A former U.K. trade official, speaking on condition of anonymity, agreed. “On the trade side, the points of convergence are remarkably similar,” the official said. Crucially, both sides agree that avoiding tariffs and quotas on trade in goods is desirable. However, it remains to be seen if the EU will compromise on its demand for regulatory alignment or whether the U.K. will budge on its objection to such level playing field requirements.

Art of the deal

For all the tub-thumping rhetoric about taking back control of U.K. fishing waters, it is relatively easy to see a happy middle ground between the two sides. The U.K. wants annual negotiations with the EU over access to each others waters while Brussels wants, more or less, to maintain the status quo. U.K. Environment Secretary George Eustice signaled on Wednesday that some aspects of the fisheries question could be negotiated on a multiannual basis, suggesting that the U.K. position could be malleable.

On state aid and the wider role of the Court of Justice of the European Union in enforcing the agreement, U.K. negotiators are more hard-line.

The EU wants its state aid rules to apply in the U.K., with a role for the CJEU in deciding if and when the U.K. had overstepped the mark. British negotiators say that is not acceptable.

Some observers in the U.K. wonder whether Brussels approach is a little over the top. “The U.K. is historically much more strict than other EU member states” at enforcing state aid rules, the former trade official said.

With a healthy majority, Johnson has comfortable room for political maneuver should he have to make the odd concession.

Lowe and otherRead More – Source