From her Brussels visit this week, Kirsty Hughes identifies the core mantra in the EU27: Deal to be done is ‘level-playing field for free trade agreement’. No tariffs/quotas is a big offer and not given for nothing back. Governance is key.

First published in January 2020.

Much concern on the level-playing field as very brief commitment in political declaration to ‘uphold the common high standards’ at the end of the transition period on state aid, competition, social/labour standards, environment, climate change and ‘relevant tax matters’.

There are concerns too at the UK’s regulatory divergence goal. What does this mean in principle? There is a lack of understanding in some quarters of even the basic point that goods coming into the EU market must meet its regulations. Aim at dynamic alignment on state aids, probably also tax will be very tough.

The EU had this sewn up in the 2018 deal with Theresa MayAnnex 4 of the 2018 Northern Ireland protocol covers in great detail the areas and laws for level playing field, no regression, dynamic alignment for some, and almost the EU running the UK competition policy. It won’t be easy now.

Annex 4 - Provisions of Union Law Referred to in Article 9 (Page 54). /

The EU should finish assessing financial services equivalence by July and agree perhaps by the autumn. Will the UK get all the areas it wants?

Fisheries tough but possible landing zone: the UK as an independent coastal state, joint management of stocks, similar but lower access to waters than now. EU states are not there yet.

Other services: talks will have to wait until 2021 (also on intellectual property rights, possible public procurement), so there will be a real services cliff edge – services will be under WTO/GATS (General Agreement on Trade in Services), then talks will aim to slowly improve on that.

Governance is central across all areas: monitoring, enforcement, dispute settlement. There are concerns on this too. Again it had been set out fully in Annex 4 of Theresa May’s deal. But it might be where Boris Johnson’s government may go quite unclear. Key internal security issues for 2020: data, extradition, etc.

Climate change: the European Green Deal is now at heart of the European Commission strategy for the next five years. So climate change is being given more emphasis in the level-playing field. A big systemic change is coming, with big demands on business. Climate dumping will not be tolerated from the UK.

European Green Deal. /

So far, Johnson’s comments on climate are seen as positive. The UK has been relatively progressive on climate changeScotland is noted positively in particular here. But what will Johnson really do? No one knows, he cannot be trusted, etc. There are concerns as well as there are high political hopes for COP26 in Glasgow. There are concerns in particular at how the UK-EU talks – which could be bad-tempered or even break down, could impact on hoped-for close, continuing cooperation with the UK into COP26. Hope the UK and Scottish government frictions won’t impact negatively on COP26. There are fears it might.

UK politics is seen as unpredictable. Brussels hope the wider public opinion and pressure from a progressive Scottish government on climate could impact on the UK government (that is unlikely). The EU is interested if Scottish environmental legislation stayed closer to EU. Would Scotland then too face potential climate dumping from the UK?

If the UK doesn’t play ball on climate, it could even face a carbon border tax itself – one more big friction. Some potential gains here too if the UK, as a non-EU country signed up to EU emissions trading system, could provide a model/path for other non-EU countries.

The EU doesn’t want the talks to break down but that could happen – the UK would then have to come back to the table. No deal is now easier for the EU as it has got the 3 main elements of the Withdrawal Agreement. There will need contingencies, for aviation for example but any contingency measures mustn’t reduce the leverage for the next stage of talks.

In summary, there is a deal to be done. The EU will play hard ball. The EU is very concerned if it can get the level-playing field and the governance commitments needed. It see Boris Johnson needs some divergence gloss on it all but the deal needs to be pinned down with great precision. So there are real limits on that.

Tweets posted on 23 January 2020 by @KirstyS_Hughes.


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🗳️ Theresa May

🗳️ Boris Johnson

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[This piece was first published as a Twitter thread and turned into the above article on 23 January 2020 with the purpose of reaching a larger audience. It has been minorly edited and corrected. | The author of the tweets writes in a personal capacity.]

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