After another week-long round of EU-UK negotiation, again no substantial progress

This week the EU and UK teams led by Michel Barnier for the EU and David Frost for the UK met again, via videoconference, in their fourth week-long round of negotiation aimed at concluding an agreement that would take effect at midnight on December 31, when the current transition period, during which the UK remains in the EU’s Single Market and Customs Union, ends. Today, speaking after this week’s round concluded, Barnier said, as he had three weeks ago after the previous week-long round, there was no substantial progress. Indeed, he said, “there has been no substantial progress since the beginning of these negotiations.” 

On May 15, at the conclusion of the previous week-long round, Barnier said that, while the discussions that week had clarified some issues, “with the exception of some modest overtures, we failed to make any progress on any of the other more difficult issues.” He said the UK “did not engage in a real discussion on the question of the level playing field—those economic and commercial ‘fair play’ rules that we agreed to, with Boris Johnson, in the Political Declaration. On this topic, this was a round of divergence, with no progress.” Likewise, in regard to the governance of the future relationship, he said, “the few useful discussions we had were limited to sectoral questions. We were unable to make progress on the issue of the single governance framework that we believe is necessary to build a close and comprehensive partnership.” And, he said, the UK “refuses to commit, in an agreement with us, to guarantees protecting fundamental rights and individual freedoms resulting from the European Convention on Human Rights, as agreed in the Political Declaration.” Emphasizing that the EU’s trade policy “must be underpinned by fair competition conditions, namely when it comes to state aid, social standards, or taxation,” he made it clear that the EU’s demand for strong level playing field guarantees isn’t negotiable: “Our Member States have been very clear that, without a level playing field, and without an agreement on fisheries, there will be no economic and trade partnership agreement.”  

Frost echoed Barnier’s views about the lack of progress in that week’s negotiation. Acknowledging that “we made very little progress towards agreement on the most significant outstanding issues between us,” he said it was “hard to understand why the EU insists on an ideological approach which makes it more difficult to reach a mutually beneficial agreement….We very much need a change in EU approach for the next round.” For its part, he said, “The UK will continue to work hard to find an agreement, for as long as there is a constructive process…and continues to believe that this is possible.”

On May 19, Frost emailed a letter to Barnier informing him that, as he had said in the previous week’s discussions it would do, the UK had made public all of the draft legal texts it had sent the EU in recent weeks, including its draft Comprehensive Free Trade Agreement which, with annexes, is 406 pages in length, its 12-page draft Fisheries Framework Agreement, and draft agreements pertaining to air transport, civil aviation, energy, law enforcement and judicial cooperation, and several other areas. In the letter, Frost made three points that he thought might clear up misunderstandings about the UK’s position. First, he noted that the UK doesn’t want to remain in the EU’s Single Market or Customs Union but wants, instead “a suite of agreements with a Free Trade Agreement at the core,” modeled on those the EU has agreed with Canada and Japan. Likewise, he said the UK’s draft fisheries agreement is modeled on the one the EU has with Norway. He said, “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.” Second, Frost said “we find it surprising that the EU not only insists on additional provisions but is also not willing even to replicate provisions in previous FTAs.” After noting several provisions that are in EU agreements with other countries, he said, “Overall, 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.” Third, in regard to the level playing field issue, he said that, although the UK agreed in good faith in the Political Declaration to a set of commitments, and although its text sets out a comprehensive set of proposals designed specifically to prevent distortions of trade and unfair competitive advantages that are closely modeled on similar arrangements agreed by the EU with other countries, the EU continues to suggest that the UK isn’t willing to deliver on those commitments and is now asking it to commit to much more than that: “Your text contains novel and unbalanced proposals which would bind this country to EU law or standards and would prescribe the institutions which we would need to establish to deliver on these provisions. To take a particularly egregious example, your text would require the UK simply to accept EU state aid rules; would enable the EU, and only the EU, to put tariffs on trade with the UK if we breached those rules; and would require us to accept an enforcement mechanism which gives a specific role to the European Court of Justice. You must see that this is simply not a provision any democratic country could sign…Similar issues manifest themselves across labour, environment, climate change, and taxation….We cannot accept any alignment with EU rules, the appearance of EU law concepts, or commitments around internal monitoring and enforcement that are inappropriate for an FTA.” Concluding, Frost said, “Overall, at this moment in negotiations, what is on offer is not a fair free trade relationship between close economic partners, but a relatively low-quality trade agreement coming with unprecedented EU oversight of our laws and institutions.”

Barnier responded the same day with a letter to Frost—although noting at the outset that he didn’t think “an exchange of letters regarding the substance of the negotiations is necessarily the best way to discuss on substantial points. It cannot be a substitute for serious engagement and detailed negotiations and, in particular, I would not like the tone that you have taken to impact the mutual trust and constructive attitude that is essential between us.” To Frost’s three points, Barnier responded with three of his own: First, that the only precedent the EU is following in the negotiation is the Political Declaration the EU agreed with Prime Minister Boris Johnson last October that aims for a comprehensive economic partnership that includes a free trade agreement with no tariffs or quotas on any goods. Noting that the EU and the UK are equally sovereign and as such will set the conditions for access to their respective markets, he said, “Regardless of what your letter suggests, there is no automatic entitlement to any benefits that the EU may have offered or granted in other contexts and circumstances to other, often very different, partners….  Just as we do not accept selective benefits in the Single Market without the corresponding obligations, we also do not accept cherry picking from our past agreements.” Second, in regard to the level playing field issue, Barnier said, “The UK cannot expect high-quality access to the EU Single Market if it is not prepared to accept guarantees to ensure that competition remains open and fair….Given our geographic proximity and economic interdependence, there must be robust level playing field safeguards to avoid distortions of trade and unfair competitive advantages….This means upholding the common high standards applicable in the EU and in the UK at the end of the transition period in the areas of state aid, competition, social and employment standards, environment, climate change, and relevant tax matters. It also requires appropriate mechanisms for the effective implementation of these standards domestically, as well as for enforcement and dispute settlement.” And third, with regard to law enforcement and judicial cooperation, he said the EU has never previously offered such a close and broad security partnership with any third country outside the Schengen area and noted these are areas that by their nature require strong safeguards in terms of protection of fundamental rights and the UK must, as it agreed in the Declaration, provide those guarantees. In concluding, Barnier said, “I would like to state again that the success of our negotiation will only be possible if tangible and parallel progress is made across all areas of negotiations, including engagement on and commitments to a level playing field and appropriate governance mechanisms, as well as to balanced, sustainable and long-term arrangements on fisheries. The next round must bring this new dynamism in order to avoid a stalemate.”

With that exchange of letters setting the stage, this week’s round of negotiation focused on what Barnier said were four big sticking points—fisheries, the level playing field issue, guarantees of fundamental rights and freedoms, and the governance of the future relationship. Unfortunately, he said today, there was no substantial progress on any of those issues. On fisheries, the UK didn’t show any real willingness to explore other approaches than ‘zonal attachment’ on quota sharing (which means allocating quotas based on the percentage of fish inside each side’s 200-mile limit) and continues to insist on annual negotiation of quotas, while the EU wants a more stable partnership without zonal attachment and with longer-term quotas. On the level playing field issue, he said there was no progress despite having focused on the playing field issues that should have been more consensual such as non-regression mechanisms on social and environmental standards, climate change, taxation or sustainable development. And on the governance issue, he said they were unable to make progress on the single governance framework that would establish legal linkages between various areas of cooperation.

Barnier went on to note that the EU engaged in the negotiation on the basis of the joint Political Declaration that clearly sets out the terms of the future partnership and was negotiated with and approved by Johnson. “Yet, round after round, our British counterparts seek to distance themselves from this common basis.” He then cited the relevant paragraphs in the Declaration pertaining to the level playing field and three other issues, noting in each case that Johnson had agreed to the objective and that, despite that, “We are today very far from this objective.” In  these and many other areas, he said “the UK continues to backtrack on the commitments it has undertaken in the Political Declaration….We cannot accept this backtracking on the Political Declaration.” Frost for his part said of this week’s round, “We continue to discuss the full range of issues, including the most difficult ones. Progress remains limited but our talks have been positive in tone.”

Over the next several weeks, the progress (or, more accurately, the lack thereof) will be a subject of discussion in several fora. Barnier noted that in the coming days the Commission will take stock of the negotiation with the 27 member states, European Council President Charles Michel and European Parliament President David Sassoli. The Joint Committee that oversees the implementation of the Withdrawal Agreement will meet for a second time on June 12. The leaders of the EU27 will convene as the European Council on June 19. And on a still-to-be- decided date, Michel and Commission President Ursula von der Leyen will meet with Johnson in the High Level Conference called for in the Political Declaration to take stock of the negotiation. And as Barnier suggested today, the first of the next rounds in the negotiation will probably take place near the end of June or in early July.

Given the continuing lack of progress, there will undoubtedly be increasingly insistent calls for an extension of the current transition period, during which the UK, although no longer a member state, participates in the EU’s Single Market and Customs Union. Article 132 of the Withdrawal Agreement allows the Joint Committee to adopt, prior to July 1, a decision to extend the transition period from December 31 to December 31, 2021 or 2022, and there have already been many calls for an extension, given the damaging consequences for both economies, but especially the British economy, of the UK’s departure from the Single Market and Customs Union without an agreement with the EU in effect in regard to their future relationship. On April 20, the Scottish government called for the UK to request a two-year extension. On May 15, the leaders of six parties in the UK House of Commons—the Scottish National Party, the Liberal Democrats, the Greens, Plaid Cymru, the Social Democratic and Labour Party, and the Alliance party—wrote to Barnier urging an extension of the transition. (He responded that an extension can be agreed by the EU and UK and noted the EU has always said it remains open to an extension.) And on Tuesday, the Northern Ireland Assembly passed a motion calling on the UK government to request an extension.

But there won’t be an extension. The UK has made it clear on many occasions that it won’t ask for one and, indeed, to underscore that position it added a clause to the European Union (Withdrawal Agreement) Act 2020 that prohibits a minister from agreeing in the Joint Committee to an extension. (Michael Gove, the British Chancellor of the Duchy of Lancaster and Minister of the Cabinet Office, is co-chair of the Joint Committee and has said, whenever asked,  there won’t be an extension.) Leaving the EU’s Single Market and Customs Union on December 31 without any agreement in regard to their future relationship would, of course, be immensely damaging for the British economy. And as Barnier noted in an interview with The Times on Sunday, it would be much more damaging to the UK than to the EU, since 47 percent of British exports go to the EU while only 7 percent of the EU’s exports go to the UK. But refusing to request an extension doesn’t necessarily mean the UK wishes to exist without a trade agreement with its largest partner after December 31. What it means, more likely, is that the UK believes, rightly or wrongly, that, by not extending the transition period, its bargaining position vis-à-vis the EU will be strengthened when the negotiation resumes at the end of this month, making an agreement on terms more favorable to it more likely. We’ll see.

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