With time running out for a deal, EU-UK talks resume

In March, the EU and the UK began negotiating an agreement on their future relationship that would take effect at midnight on December 31 when the UK would, with the conclusion of the transition period that began when it left the EU on January 31, leave the EU’s internal market and customs union. In order for an agreement to take effect at midnight on December 31, it would have to be approved by then by the British and European Parliaments and the British and EU governments, and that couldn’t happen, obviously, until the text and annexes had been completed, checked by the lawyers, translated into most if not all of the 24 official languages of the EU, and reviewed by the British and EU parliaments and governments. .

When the negotiation began, it was widely assumed, given the likely length of the text and annexes of the agreement—as of today, the text agreed upon thus far is more than 600 pages and the annexes another 1200—that, in order for it to be approved by all parties in time for it to take effect at midnight on December 31, it would have to be completed by mid-October at the latest. But with the negotiation stalled on several key issues—most notably, in regard to what is required in order to maintain a level playing field for British and EU businesses competing against each other, how to reallocate the current quotas of catches in British territorial waters between the UK and the EU coastal states and determine future quotas, and how to resolve trade disputes and enforce the terms of the agreement—the target date shifted to the end of October, then to early-to-mid November, and then to the end of November. Officials of the European Commission and European Parliament have made it clear that it will be all but impossible to complete the text and annexes, conduct a legal check and translate both, and review and approve the agreement by the end of 2020 unless it is completed this week at the very latest. A meeting of the European Parliament has been tentatively scheduled for December 28 in the event an agreement is concluded this week.

Aware as they both were of the ticking clock, more than a month ago the EU and UK chief negotiators, Michel Barnier and Lord David Frost, agreed to intensify the negotiation with in-person meetings of their teams alternating weekly between Brussels and London. On November 19, the negotiation was abruptly halted in Brussels when Barnier announced that one of the high-level members of the EU team had tested positive for Covid-19 and that he and the other high-level members would be self-isolating. He said he and Frost had decided to suspend the negotiations at their level for a short period while the teams continued their work online. The UK team returned to London, where the talks were scheduled to continue last week.

Last Monday, Barnier tweeted, “After technical discussions this weekend, negotiations continue online today with David Frost and our teams. Time is short. Fundamental divergences remain, but we are continuing to work hard for a deal.” According to Belgium’s quarantine rules, Barnier and the other high-level members of the EU team who had contact with the person who tested positive would be able to travel to London and resume the in-person talks at the end of the week if they tested negative. But on Tuesday, Barnier reportedly told Frost in their videoconference that without a significant change within 48 hours in the UK’s negotiating positions on the key issues on which the negotiation has stalled there would be no point in continuing the negotiation and his traveling to London at the end of the week. It’s not clear that he actually threatened to walk out on the talks but that was certainly the impression created in the British news reports of the conversation.

While the perceived threat of an EU walkout roiled the atmosphere, last Wednesday, European Commission President Ursula von der Leyen addressed the European Parliament on preparations for the next European Council meeting on December 10-11, the situation with respect to the Multiannual Fiscal Framework, the EU’s seven-year budget for 2021-27 that Poland and Hungary vetoed because of its inclusion of rule-of-law conditionality in regard to disbursements, and the Brexit negotiation. In regard to the latter, she said, “These are decisive days for our negotiations….I cannot tell you today, if in the end there will be a deal. There has been genuine progress on a number of important questions: on law enforcement and judicial cooperation; on social security coordination. And also on goods, services and transport we now have the outline of a possible final test.…However, there are still three issues that can make the difference between a deal and no deal. The crucial topics for the European side are of course questions linked to the level playing field, governance and fisheries. With very little time ahead of us, we will do all in our power to reach an agreement. We are ready to be creative. But we are not ready to put into question the integrity of our Single Market….This is why we need to establish robust mechanisms, ensuring that competition is – and remains – free and fair over time. In the discussions about state aid we still have serious issues, for instance when it comes to enforcement. Significant difficulties remain on the question how we can secure – now and over time – our common high standards on labour and social rights, the environment, climate change and tax transparency. We want to know what remedies are available, in case one side deviates in the future. Because trust is good, but law is better. And crucially, in light of recent experience: a strong governance system is essential to ensure that what has been agreed is actually done. [She was obviously referring to the UK’s inclusion of clauses in its proposed Internal Market Bill that would authorize the government to deviate from provisions in the UK-EU Withdrawal Agreement and, in so doing, violate international law.] Concerning fisheries: No one questions the UK’s sovereignty on its own waters. But we ask for predictability and guarantees for our fishermen and women.…The next days are going to be decisive. The European Union is well prepared for a no-deal-scenario, but of course we prefer to have an agreement.”

On Friday, Barnier tweeted that, “In line with Belgian rules, my team and I are no longer in quarantine. Physical negotiations can continue. I am briefing Member States & Members of the European Parliament today. Same significant divergences persist. Travelling to London this evening to continue talks with David Frost + team.” Frost tweeted in response, “I look forward to welcoming Michel Barnier and his team to London and to resuming face-to-face talks tomorrow. We are glad all are safe and well. Some people are asking me why we are still talking. My answer is that it’s my job to do my utmost to see if the conditions for a deal exist. It is late, but a deal is still possible, and I will continue to talk until it’s clear that it isn’t. But for a deal to be possible it must fully respect UK sovereignty. That is not just a word—it has practical consequences. That includes controlling our borders; deciding ourselves on a robust and principled subsidy control system; and controlling our fishing waters. We look to reach an agreement on this basis, allowing the new beginning to our relationship with the EU which, for our part, we have always wanted.  We will continue to work hard to get it—because an agreement on any other basis is not possible.”

Lest there be any doubt about the UK’s interest in reaching an agreement, on Friday Prime Minister Boris Johnson told reporters an agreement would “benefit people on both sides of the Channel…Everybody’s working very hard—but clearly there are substantial and important differences to be bridged, but we’re getting on with it.” In a phone conversation that evening with Irish Taoiseach Micheál Martin, his office said he had “underlined his commitment to reaching a deal that respects the sovereignty of the UK.”

In his briefing with the EU ambassadors Friday, Barnier reportedly said the online talks last week had made little progress with both sides holding their positions in regard to the level playing field, fisheries, and governance, and the negotiation might not produce a deal.  The EU, for its part, continues to insist that the UK commit to maintaining a level playing field for EU and British firms by adhering to EU rules pertaining to state subsidies and labor, health, and environmental standards and accepting the inclusion of both “non-regression” clauses that would prevent the UK from lowering its rules and standards relative to those in effect in the EU and “evolution” or “ratchet” clauses that would require it to match EU increases in those rules and standards. The UK, for its part, continues to insist that it not be prevented from lowering its rules and standards through “non-regression” clauses and not be required to match EU increases through “evolution” or “ratchet” clauses. Barnier told the ambassadors progress on the issue was “ephemeral;” while the UK has agreed to the inclusion of “non-regression” clauses, it doesn’t want the EU to be able to establish the standards and, in so doing, create an opening for the European Court of Justice to adjudicate the issue. But in regard to “ratchet” clauses, while the EU wants an independent panel to determine if a refusal to raise a standard creates a competitive advantage, the UK rejects reliance on such a panel.

The other major issue on which the EU and UK remain stalemated is, of course, fisheries – notwithstanding the fact that fishing represents a very modest portion of the GNP of the EU member states and the UK—indeed, less than 0.2 percent of the British GNP. The EU insists that the UK not only allow EU fishermen and women continued access to British territorial waters but also agree to the EU’s retention of a substantial portion of its current share of the combined EU-UK catch in those waters under the national quotas now in effect under the EU’s Common Fisheries Policy. It also insists on retaining the current practice of negotiating multi-annual quotas for the EU fishing states and the UK rather than negotiating the quotas on an annual basis. In his meeting with the EU ambassadors, Barnier said the EU had told the UK several weeks ago  it would be willing to reduce its share of the catch by EU fishermen and women in British waters by 15-18 percent, which, given that the aggregate catch is worth about €650 million a year, would mean a reduction of roughly €120 million a year. He said the UK has proposed a time-limited transitional period but insists that the EU agree to an eventual 80 percent reduction in its aggregate catch, which would mean a reduction of about €520 million a year. Barnier also met Friday, via videoconference, with the fisheries ministers of the eight coastal member states—Ireland, France, Belgium, the Netherlands, Denmark, Germany, Spain and Portugal—and told the ambassadors the EU is not prepared to accept a larger reduction in its aggregate quota than the 15-18 percent he offered several weeks ago. 

The third major issue involves the governance of  the agreement itself. The EU insists that the UK accept a governance mechanism for resolving disputes about the agreement that could, if necessary, enforce compliance with the terms of the agreement and the resolution of any dispute. The UK insists that it not be subject to a governance mechanism that has the power to enforce compliance with the agreement or the resolution of a dispute and has proposed instead the inclusion of clauses providing for review after several years.

In his private meeting with members of the European Parliament, Barnier told them the same thing he had told the ambassadors—that the online talks last week had made little progress, with both sides holding to their long-established positions in regard to the level playing field, fisheries, and governance. In regard to the fisheries issue, he told the MEPs what he had told the ambassadors—that the EU is not prepared to accept a larger reduction in its aggregate quota. Summing up, he reportedly said, “The conditions for an agreement are not there.” He said he would work through the weekend and then “maybe one or two more days.”

After concluding his meetings Friday, Barnier took the evening Eurostar to London and on Saturday the in-person negotiation resumed. The negotiation continues. But so too, the time left for reaching an agreement that could take effect at midnight on December 31 continues to run out.  

David R. Cameron is a professor of political science and director of the European Union Studies Program at the MacMillan Center.