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Brexit Blog: Crucial Times Ahead - Will the Gap Narrow Between the Sides as Negotiations Continue

AUTHORs: Michael Jackson Date: 13/05/2020

The United Kingdom left the European Union on 31 January 2020. In our regular Brexit Blog, Matheson partners will keep you up to date by reviewing the negotiations on the future relationship of the EU and the UK as these unfold.

In Irish mythology, the salmon was a symbol of wisdom and knowledge. In early Christianity, the fish was a symbol used by Christians to identify themselves to fellow Christians. In the current phase of Brexit negotiations, the fish is emerging as a symbol of the differences between the UK and the EU in terms of strategy, perspective and approach.

This week, what is only the second substantive round of discussions between the EU and UK taskforces on Brexit, are underway. While little clarity has thus far emerged on how the sides are likely to resolve their differences, it appears increasingly clear that an extension of negotiations beyond the 31 December deadline using the mechanism agreed in the Withdrawal Agreement is highly unlikely. Speaking to the House of Commons Brexit Committee, UK Cabinet Office Minister Michael Gove spoke of deadlines concentrating minds. The deadline of 31 December seems set to remain.

During the Brexit debate, there were many nostalgic references to the days when Britain’s fleet opened and supported new trade routes from the UK. In the emerging tactical battleground of the current negotiations, the positioning by the UK of the fishing fleet suggests that preparations are well underway for a period of brinkmanship, with enormous potential consequences. While none of the UK position papers submitted to the EU to date have been published, it is clear that no paper has been submitted on fisheries. The UK wants to be treated, in Michael Gove’s words, “as an independent coastal state, like Norway, Iceland and the Faroes”. In short, the UK favours limiting access to UK waters for EU vessels and agreeing the available quota of fish on an annual basis. The EU fundamentally wants continuance of the Common Fisheries Policy, arguing that an annual negotiation of the quota is impractical.

Those in the UK arguing for a reduction in the level of access to UK waters granted to EU vessels point to the fact that vessels from other EU member states land many times more fish from UK waters than UK vessels land from EU waters. Those arguing for more open access note that some studies suggest that the UK imports most of the fish it eats and exports most of the fish it lands. This difference of perspective over fish mirrors the differing perspectives on many of the other outstanding issues between the sides. Many in the UK would argue that its position on how much certainty can be granted on fish quotas is akin to the EU’s position on financial services equivalence. Politically and symbolically, how and when agreement is reached on the issue of fishing rights is important. It will speak to how and when progress on other matters is likely to be achieved.

Three countries, Canada, Australia and Ukraine, are also emerging as code words for the gap in perspective between the EU and the UK. The UK wants a Canadian or an Australian style trade deal. It wants to use existing agreements the EU has with those third countries as the basis for agreement. In Mr Gove’s words by relying on precedent “we can cut and paste in order to ensure that we can reach agreement.”. The UK regards issues like fisheries as being issues which can be agreed on a case by case basis rather than as part of one comprehensive agreement.

The EU wants a comprehensive agreement which upholds EU standards on social, environmental, climate, tax and state aid matters for the future. Michel Barnier’s mandate is to reach an agreement which provides for continued reciprocal access to markets, and to waters, with stable quota shares. “The more we will have common standards, the higher-quality access the EU will be able to offer to its market” was Mr Barnier’s summation.

The UK’s reaction to the EU approach is that it is being treated more like a state seeking accession to the EU, like Ukraine, than one which is leaving the EU. The EU has equal difficulty in accepting the comparison to Canada or Australia, because the UK is geographically closer and a much larger trading partner than Australia or Canada, sending 40% of its exports to the EU. Distance imposes natural quotas of its own.

There is at least agreement on what Michael Gove characterised as the major obstacles to agreement so far. These are the level playing field, fisheries, governance and criminal justice. I will return to each of these in future blogs. The critical point, however, is that the EU is determined that the integrity of the single market is protected, and that future divergence in standards or laws is not a backdoor for unfair competition which disadvantages the EU27.  

Many in the UK argue that they are not interested in a ‘race to the bottom’ on standards, that decades of EU membership means that they are already aligned with the EU on those standards and that UK law transposes many of those standards to UK legislation. In a webinar which Matheson hosted with the British Irish Chamber of Commerce last week, Hilary Benn, the Chair of the House of Commons Committee on the Future Relationship with the European Union suggested that the focus for some was on the principle of independence, as opposed to a desire to immediately diverge from the EU standards in many areas. Michael Gove expressed it as a “broad set of non-regression principles, as there are in all free trade agreements” but not the type of level playing field provisions that the EU is requesting of the UK. One suspects that the EU’s appetite to rely on non-binding and difficult to measure assurances on these issues will no doubt be influenced by its perception of the conduct of the negotiations to date.

The scale of the philosophical differences between the sides, the impact of COVID-19 on progress and the absence so far of any real sectoral negotiations prompted many to assume an extension to the transition period was likely. What seems more likely now, is that there will neither be the time nor political capacity to fulfil the EU negotiating mandate as set out in February by 31 December.

In this game of brinkmanship, the UK is seeking to make time its secretary. In telescoping negotiations into the second half of the year, it appears to want to create an inevitable outcome where only a few areas can be agreed. Others must be left for future consideration if a no-deal, hard Brexit is to be avoided. This seems to be the emerging tactical plan, in pursuit of what are clear strategic goals. It wants sectoral arrangements, not an overarching arrangement, aligned with EU rules and arbitrated by EU institutions. The choice facing the EU next autumn will be one with fundamental consequences. Keep fishing and land what they’ve caught by 31 December, or prepare to raise anchor and sail away into the gathering storm.

Useful Links:

Agenda, EU - UK Future Relationship Negotiations: 11 - 15 May 2020

House of Commons Committee on the Future Relationship with the European Union, Monday 27 April 2020

Statement, Michel Barnier, 24 April 2020

Statement, Michel Barnier, 3 February 2020

For further information:

If you would like to know more about Matheson’s Brexit Advisory Services, please contact michael.jackson@matheson.comsharon.daly@matheson.com, your usual Matheson contact or any member of our dedicated Brexit Advisory Group.