High June?

Tiffany Burrows explains why the accelerated talks beginning on 29th June, not the June deadlines, should be the focus of those assessing the progress of the UK-EU negotiations

The 1^st July deadline to submit the request to extend the transition period – due to end on 31^st December this year – is fast approaching.

On Friday, the Withdrawal Agreement Joint Committee, led by Cabinet Office Minister Michael Gove and EU Commission Vice President, Maroš Šefčovič, met for the second time. Mr Gove took the opportunity to give the idea of an extension short shrift; “there will be no further opportunities to extend the transition period”, reads the Cabinet Office press release.

A further signal supporting the UK Government’s sincerity of this is the announcement on Friday that new border controls would be introduced in three stages from 1 January until 1 July 2021. The Cabinet Office referred to the approach as “flexible and pragmatic” in a nod to just how difficult the adjustment will be to UK businesses, citing that these measures will “give industry extra time to make necessary arrangements”. The Cabinet Office also unveiled a new £50 million support package to “boost the capacity of the customers intermediary sector”.

So what happens now?

The end of June is also the deadline set by the UK-EU Political Declaration for an agreement to be made on both fisheries and financial services. However, it is no secret that these negotiations have stalled, and it certainly isn’t the first time this has happened between the two negotiating teams. However, much of the rhetoric since 2016 could be attributed to political posturing from both sides but in this case, there is a genuine stalemate.

BBC Europe Editor Katya Adler reported last month that the EU has accused the UK of focusing on its own priorities whilst going slow on the EU’s priorities, such as the level playing field and access to fishing waters, and by all accounts, these remain the sticking points.

Last month, the UK’s Chief Negotiator, David Frost, sent his EU counterpart Michel Barnier a letter restating the UK’s position on an FTA with the EU based on precedent. Not pulling his punches, Frost asserted: “Given this reality, we find it perplexing that the EU, instead of seeking to settle rapidly a high-quality set of agreements with a close economic partner, is instead insisting on additional, unbalanced, and unprecedented provisions in a range of areas, as a precondition for agreement between us.” This sentiment is echoed throughout the letter  - “we find it hard to see what makes the UK, uniquely among your trading partners, so unworthy of being offered the kind of well-precedented arrangements commonplace in modern FTAs” - with Frost setting out clearly the UK’s response to the EU’s arguments around the aforementioned sticking points.

The UK Government is unequivocal about being prepared to walk away from any deal that is not in the UK’s interests and beginning its new relationship with the EU on WTO terms and the EU has to take the UK Government at its word.

It has to be remembered that whilst Brexit may appear all encompassing to us here in the UK, the EU member states have other political priorities requiring their attention. They cannot, and will not, spend the next months consumed by Brexit. The focus of the EU27 is setting a new long-term budget and how the bloc responds to the economic challenges posed by COVID-19. A clear indication of the direction of travel of the EU member states (particularly as Germany [read Angela Merkel] takes over the Presidency of the European Council for its six month stint on 1 July), and its willingness to move things forward on the UK negotiations, will come from the European Council Summit due to be held virtually on Friday.

Ahead of the summit, a high-level meeting will take place this afternoon (virtually) between the UK and the EU, represented by European Commission President Ursula von der Leyen, European Council President Charles Michael and the European Parliament President David Sassoli, to take stock of the progress (or lack of) made to date.

Number 10 confirmed that the two negotiating sides have also agreed an intensified timetable for trade negotiations in July, with talks taking place each week between 29^th June and 27^th July. Some of these sessions will be in-person, an admission that negotiating by Zoom has not been as effective has both sides had hoped.

This is cause for hope that a deal could still be made, particularly for business. CBI Director General Carolyn Fairbairn recently wrote of the concern business has about the impact of defaulting on WTO terms amidst the hit the economy is taking due to COVID-19: “For many firms fighting to keep their heads above water through the crisis, the idea of preparing for a chaotic change in EU trading relations in seven months is beyond them. They are not remotely prepared. Faced with the desperate challenges of the pandemic, their resilience and ability to cope is almost zero.”

By accelerating the talks throughout the summer, both sides are mitigating against the risk of a second spike of COVID-19, and the disruption will have domestically, and on negotiations. It is a recognition that whilst leaving things to the last minute has been an effective strategy politically, it doesn’t work for business and supply chains.

Whilst we won’t know how the negotiations will end, we do know that high noon will not be in June. Instead we can expect the next few months to be critical, to see who, if anyone, blinks first. The situation requires political leadership, determination, and compromise - and lots of it.