Brexit: The Empire strikes back

Barely a week ago, we reported on suggestions in a minor UK periodical that the British government was not planning to extend the year-end deadline in the current EU trade talks.

It looks like they might have a subscription to The Spectator in Brussels, judging by statements from Michel Barnier, the EU’s chief negotiator (reported here in the Financial Times).

His comments are gems of the genus Eurospeak (readily understandable in any negotiation).

Barnier was reported as saying that the UK had “refused to engage seriously on a number of fundamental issues”.  The best translation of this is that “the UK has so far refused to accept our negotiating parameters, as we have refused to accept theirs”.

He helpfully added that the EU has “never closed the door to an extension” of the transition period.  (Translation: “we are unlikely to agree a trade deal, as long as you are stuck as a non-voting member of the EU in a non-transitional transition”).

Provided one gets the negotiating rhetoric, the situation couldn’t be much clearer.  The EU is sticking to an unacceptable package and daring the UK to abruptly transition to WTO-terms at year-end.  And the UK is saying it might just do that.  

Meanwhile, the UK is doggedly trying to put reciprocal trade at the heart of the agenda.  And the EU is just as constantly pulling in other issues like fishing access and regulatory convergence to see how much it can wring from these sponges before giving away anything on trade.

This is because each side has a distinct calculus.  

The UK government now seems more cognisant of the long-term economic benefits of a clean break on WTO-terms.  So the main wins from a trade deal would be avoiding short-term economic adjustment costs (even more relevant in the era of Covid) and minimising the anger of those UK voters wanting continued close ties with the EU.

The EU is playing principally for political subordination, but is also asking for substantial tribute.  So far it has signalled – credibly – that without this it would prefer political and economic isolation from the UK, notwithstanding the economic cost.

The main change then is that political opinion in the UK has been firming.  The government’s willingness to go it alone seems to be increasing and its ability to offer concessions decreasing.

This still leaves room for our favourite solution of some last-minute interim agreement to prevent excessive mutual bloodletting, followed by a later smoothing of relationships.

But the clarity with which M. Barnier restates the EU position does not seem to be moving the UK in his direction.

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