EUROPE AT
LARGE
Britain
plays hardball in Brexit trade talks
UK is
steering toward a far more disruptive break much quicker than EU policymakers
had contemplated.
By PAUL
TAYLOR 3/3/20, 4:36 AM CET
PARIS — The
Europeans came prepared to play three-dimensional chess, but the British seem
to have shown up dressed to play rugby instead.
The start
of negotiations on future relations between the United Kingdom and the European
Union has turned into an unsporting mismatch. British Prime Minister Boris
Johnson no longer seems to care about objectives his government signed up to
just a few months ago, leaving Brussels struggling to hold London to common
standards once the Withdrawal Agreement transition period the two sides
negotiated expires at the end of this year.
Johnson has
turned his back on the commitment to a regulatory level playing field set out
in the declaration on future relations, which he signed in October along with
the withdrawal treaty and which his Conservative Party endorsed in parliament
in January after it won a thumping majority.
The
government has also dropped all talk of seeking a “deep and special” relationship,
or of “frictionless trade,” and seems to have written off hope of a long-term
deal ensuring access for the U.K.’s giant financial services industry.
Ministers have made clear that they put the sovereign right to diverge from EU
rules above any economic benefit, and they have instructed business and farmers
to prepare for friction at the borders.
“The U.K.
will maintain the highest standards in these areas, better in many respects
than those of the EU, without the compulsion of a treaty” — Prime Minister
Boris Johnson
It could
all be a grand bluff. But barring another last-minute Johnson pivot in mid-year
as the steep cost of a chaotic no-deal rupture comes into sharper focus, the
U.K. appears to be steering toward a far more disruptive break on a much
shorter timescale than EU policymakers had contemplated.
Having
stressed since the 2016 Brexit referendum that the U.K. wanted to maintain
close security, foreign policy and defense ties, the official document setting
out Britain’s approach to future relations does not even mention diplomatic or
military cooperation — only law enforcement and justice. U.K. officials now say
they don’t want any institutional connection to EU foreign or defense policy,
just ad hoc collaboration on missions deemed to serve British interests.
This all
gives EU negotiator Michel Barnier little leverage to achieve Brussels’
preferred outcome of a smooth landing with a close economic partnership within
a broader association agreement. Barnier says his mission is to try to “rebuild
what was unraveled by Brexit” and that Britain’s access to the EU market will
be proportionate to its willingness to give “firm guarantees” that it will
respect a level playing field.
But
dangling a generous a zero-tariff, zero-quota trade deal will not be enough to
secure U.K. alignment with EU rules if London chooses to take the hit of
trading on barebones World Trade Organization terms, including tariffs and
quotas.
Johnson has
asserted the right to diverge à la carte from EU rules, whether they were
adopted while the U.K. was a member or after its departure, without saying
which ones he plans to discard.
While EU
neighbors worry about the specter of a low-cost, casino-capitalism Britain
undercutting continental labor, environmental, taxation or food safety
standards, the real risk may be more of a nimble high-tech rival on Europe’s
doorstep attracting cutting-edge science while the EU clamps regulatory
handcuffs on artificial intelligence, big data and biotechnology.
“The U.K.
will maintain the highest standards in these areas, better in many respects
than those of the EU, without the compulsion of a treaty,” the prime minister
declared last month. The EU cannot base a legally binding free-trade agreement
on such unenforceable verbal assurances.
Without
such a deal, car manufacturers such as Japan’s Nissan and Honda or Germany’s
BMW will face major supply chain disruption and may have to choose whether to
produce to EU or British standards, to run separate assembly lines or simply to
shutter their U.K. plants.
Inebriated
by election triumph, Johnson and his top adviser, Dominic Cummings, dream of
turning the U.K. into an innovation-driven “Silicon-Valley-by-the-North-Sea”
rather than the deregulated finance-driven “Singapore-on-the-Thames” tax haven,
or the gateway for “Frankenstein foods,” that gives the French nightmares.
The U.K.’s
new negotiator, David Frost, gave the clearest exposition of this objective in
a speech in Brussels last month. “We are going to have a huge advantage over
the EU — the ability to set regulations for new sectors, the new ideas and new
conditions — quicker than the EU can, and based on sound science not fear of
the future,” he said.
The
government has promised to double research spending in the next four years
after it loses access to EU science funding, of which it was the biggest
recipient.
“I have no
doubt that we will be able to encourage new investment and new ideas in this
way — particularly given our plans to boost spend on scientific research,
attract scientists and make Britain the best country in the world to do
science.”
Johnson’s
proposed brains-over-brawn points-based immigration system is designed to
recruit top talent while closing the door to low-skilled migrants, even if that
hurts the hospitality, catering, social care, farming and construction sectors.
Plenty of
other places around the world are trying to brand themselves as tech hubs —
from Berlin to Beijing and Bahrain to Bengaluru. Only one seems to be
contemplating starting that quest by voluntarily cutting itself off from its
biggest export market.
The
government has promised to double research spending in the next four years
after it loses access to EU science funding, of which it was the biggest
recipient. That is one of several big-ticket pledges that have yet to be
financed, including huge infrastructure projects and a home-made satellite
navigation system to rival the EU’s Galileo. Paying for them amid the economic
disruption of a no-deal Brexit breakup looks like it will be a tall order.
That leads
many in Brussels to dismiss Johnson’s goal as a mirage, given the relative size
of the U.K.’s 65-million-people economy compared with the EU’s
450-million-strong single market. But there’s little if anything Brussels can
do to stop the British leader from taking such a high-risk gamble. If successful,
it might prompt emulators elsewhere on the Continent.
“If they
want to administer shock therapy to the U.K. economy and attempt a conversion
that would normally take 25 years in a couple of years, that’s a choice for the
U.K. but I don’t see how you would avoid a sudden shock,” said a nervous EU
official close to the talks.
The Channel
crossing from Calais to Dover could end up playing a contentious role in
negotiations | Christopher Furlong/Getty Images
In the
run-up to this week’s talks, the EU ramped up “level playing field” demands
based on French-led fears of social, tax or environmental dumping just 33
kilometers from Calais. Across the Channel, the Brits wrapped themselves in the
Union Jack, threatening to walk away from the talks as early as June if no deal
is in sight, and looking to leverage parallel trade talks with the United
States.
They also
vowed to curb EU fishermen’s access to British fishing waters on an annual
basis, even though U.K. boats land three-quarters of their catch on the Continent.
That could trigger disruption in North Sea ports and even lead to violence.
Much of
this can be discounted as a Haka war dance before the kickoff. But if the U.K.
is truly bent on playing a completely different sport rather than just adopting
hardball tactics, to coin another sporting metaphor, then all bets are off.
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