How the virus put a spanner in the Brexit works
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What a difference six months make. In January, all eyes in the UK and many in Europe were on Brexit. Then the COVID-19 pandemic took the world in its grip and Brexit disappeared from the news bulletins. Now Black Lives Matter demonstrations dominate the agenda.
On the other hand, what little difference six months make. In January UK Prime Minister Boris Johnson negotiated a withdrawal agreement that included an 11-month transition period in which to reach a trade deal, and since then neither side has moved away from their entrenched positions.
The obstacles to an agreement, then and now, are EU access to the UK’s plentiful fisheries, the jurisdiction of the European Court of Justice and a level playing field on environmental, social and state-aid rules.
There are valid reasons for the sluggish pace of progress; faced with a public health crisis, UK government priorities shifted and travel restrictions turned negotiations virtual. Nevertheless, time is running out, and Cabinet Office Minister Michael Gove has made it clear that the UK will not seek to extend the transition period; on Dec. 31 Britain is out, deal or no deal.
To soften the blow for British companies, in the event of no deal there will be a six-month staged customs and tariff schedule for imports from the EU. That is a pragmatic and useful proposal, but the EU sees no need to reciprocate. Come January 2021, the UK will be a “third country,” with customs formalities, regulatory checks and animal health inspections on British goods entering the single market — which is why a trade agreement is so important.
Prime Minister Boris Johnson will hold talks on Monday with European Commission President Ursula von der Leyen and other EU leaders to evaluate where the negotiations have got to. Meanwhile the heads of two of the UK’s devolved governments, Nicola Sturgeon in Scotland and Mark Drakeford in Wales, complain that they have been insufficiently consulted given the importance of a UK-EU trade agreement for their economies.
Brexit was never going to be easy; the new realities created by COVID-19 and other factors make it even harder.
Cornelia Meyer
Scotland in particular has genuine concern for its fishing industry. It is true that leaving the common fisheries policy will give UK fishermen more exclusive access to their own waters, but what good is a massively increased catch if you cannot export the fish to your major customers in the EU? And while chief EU negotiator Michel Barnier might have leaned toward a compromise on fishing, the French and Dutch fleets depend on access to UK waters, and their powerful lobby groups will not give it up without a fight; there is already talk of a blockade of the port of Calais.
Access to the single market is vital to many parts of British industry. UK supermarkets import 80 percent of their food products from the EU and shoppers demand freshness; establishing a new supply chain would not be easy. UK carmakers would face a 10 percent tariff when exporting to the EU, making several plants unprofitable. And that is finished products only: The supply chains of carmakers or aviation factories are highly integrated, with parts shipped back and forth across the Channel, each time adding value.
And none of this even touches on the intricacies and difficulties of introducing a hard border down the Irish Sea between Northern Ireland and Britain as a quid pro quo for leaving the land border between Northern Ireland and the Republic open.
However this ends up, it will be crucial to give business sufficient time to adjust, to avoid a repeat of the chaos of March 2019 at the precipice of a no-deal Brexit.
Apportioning blame for why the negotiations have stalled does not help. Barnier represents 27 member countries who have decided on their collective position; his brief may not afford him sufficient flexibility, so finding a compromise is not easy.
On the other side, much has changed since Johnson won his overwhelming parliamentary majority on a pledge to “Get Brexit Done” — not least the pandemic’s decimation of the economy, which contracted by 20.4 percent in April. And despite that majority of 80, Johnson now faces a genuinely formidable opponent on the other side of the House of Commons dispatch box. Gone is the ineffectual Labour Party leader Jeremy Corbyn, replaced by Sir Keir Starmer.
Brexit was never going to be easy; the new realities created by COVID-19 and other factors make it even harder.
- Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources
