Last reviewed 30 April 2020

It is now almost four years since the UK voted on 23 June 2016 to leave the European Union; more importantly, at the time of writing, it is not much more than four weeks before Prime Minister Boris Johnson has to decide whether he wants to finally bring this saga to an end and cut the trading, political and security ties that still bind the two together. Despite the almost total focus on the coronavirus pandemic, the famous Brexit clock is still ticking in the background as the negotiations stutter their way towards 1 July, the date by which the two sides must agree if there is to be an extension to the transition period of up to two years.

Failing that agreement, the planned end date for completing Brexit will remain 31 December 2020 with European Commission lawyers warning that, if the July date is missed, EU law will make it very difficult to then extend the transition period. Adding to the complications, the Prime Minister has made it clear that he sees no point in continuing beyond June if the two sides remain far apart and has warned that he is minded to end the talks at that point and revert to operating under World Trade Organisation (WTO) rules.

Plus ça change

This has brought back worries about “crashing out”, “driving off a cliff edge” and “crippling the economy”, with many of the same organisations returning with the warnings about a no-deal Brexit that filled the newspapers only a few months ago. For example, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, said recently that she was trying to alleviate “a global recession we have not seen in our lifetimes”, arising out of the pandemic, and urged the UK and the EU not to “add to uncertainty” by refusing to extend the transition period.

The European Automobile Manufacturers’ Association has expressed concerns that the time remaining under the transitional arrangement is insufficient, given the on-going COVID-19 crisis. Director General Eric-Mark Huitema said: “Any future trade agreement must combine zero tariffs, workable rules of origin, simplified customs requirements and ensure the absence of technical barriers to trade.” This seems a very ambitious agenda given that there are now only two scheduled meetings of the negotiating teams before the June deadline — and none of these requirements seem to be anywhere near agreement.

The UK team seems unworried by the approaching deadline, with Michael Gove saying on 28 April that the Government would publish a draft legal text on the proposed trade deal in “a matter of weeks”, although there are only a few weeks left before the July deadline. The EU’s detailed draft text was published some months ago.

Two more years?

While there are clearly strong arguments for requesting an extension, given that the economy already looks to be in an unprecedentedly weakened state because of COVID-19, the Prime Minister and his team have not missed an opportunity to stress their opposition to the idea. Indeed Mr Johnson had it written into law although, of course, legislation can always be changed and the impact of the coronavirus on the economy would seem to many to be a reasonable excuse for a change of direction.

He is coming under pressure from the Scottish Government not only to seek an extension but to opt for the maximum two years. Constitution Secretary Mike Russell warned: “The Scottish economy cannot afford the double hit of COVID-19 and the growing likelihood of a no-deal or at best a hard Brexit deal in less than nine months’ time.”

Philip Rycroft, who worked for the now defunct Department for Exiting the European Union (DExEU), said that it would be simple common sense to ask for an extension of the transition period. The Road Haulage Association (RHA) has echoed this point, insisting that its members are not in a position to cope with more upheaval. The Director General of the British International Freight Association (BIFA) has gone further and said not only that he supports such a move, but that he expects it to happen. Robert Keen said: “In light of the huge issues involved with a sharp change in trading conditions at the start of 2021, particularly if that were to coincide with another COVID-19 outbreak, we think an extension looks increasingly likely.”

Not just trade

One problem with the ongoing negotiations is that they have been categorised as focusing on a “trade deal” but they in fact cover a much wider range, including road and air transport, law enforcement, energy, governance, fisheries, social security co-ordination, the role of the EU’s Court of Justice (CJEU) and level-playing field provisions. This is why the most recent round of talks actually involved 40 different video-conferences and 10 negotiating teams.

Having to rely on technology, rather than being able to meet in person, is said to be hampering the talks as, to give one example, it is not possible for small sub-groups to move to another room to thrash out the details of contentious points, as would normally be the practice during such negotiations.

Whatever the reason, it is clear from post-meeting briefings that the two have failed to narrow their differences on any of the major sticking points, including agreement on common environmental, social and competition law standards for free trade. The UK has been reported as saying that it has no plans to move away from EU standards in these areas but refuses to be dictated to on this point.

Taking back control

This resonates with one of the most potent arguments advanced by Brexit supporters during the referendum campaign: that it would allow the UK to “take back control” of its laws, borders and economy. The argument that sovereignty was not possible within a system such as the EU appealed to many and its advantages have been regularly repeated by the UK’s trade negotiators. These have included Michael Gove insisting that the EU must treat the UK as a fully sovereign independent state and the leading civil servant in the talks, David Frost, arguing that accepting EU rules after the transition period would be contrary to the “fundamentals of what it means to be an independent country”.

This has however led to a pointed reminder from the EU’s chief negotiator, Michel Barnier. After the latest round of talks, he said: “UK negotiators keep repeating that we are negotiating as sovereign equals. The reality is to find the best relationship possible between a market of 66 million and a market of 456 million.” With both sides accusing the other of intransigence and a refusal to compromise, there seems to be little evidence of goodwill.

This was typified when the European Commission wrote to the Government to ask if it could establish a Belfast office in order to more closely follow the position in Northern Ireland as last year’s Withdrawal Agreement is put into place. In particular, it is reportedly interested in the location of border inspection posts for controls on goods crossing the Irish Sea. This has yet to be decided probably because, in the run-up to the December General Election, Mr Johnson insisted there would be no checks despite this being written into the Agreement.

At any event, the EU request was bluntly rejected by Paymaster General Penny Mordaunt. Anything that the Commission needed to do could be managed through ad hoc visits, she insisted, describing the idea of a special EU office in Belfast as divisive in both political and community terms.

To the wire

Progress has been made with regard to trade in services and the two sides are close to agreement on matters such as aviation safety. One of the main barriers to moving the talks forward remains the UK’s refusal to accept that access to its fishing waters should be part of the main trade deal. It continues to insist on a distinct fisheries agreement involving annual negotiations over access modelled on the EU’s deal with Norway. “The EU will not agree to any future partnership that does not include a balanced and long-term agreement on fisheries,” Mr Barnier commented. “That should be crystal clear to the UK.”

On the UK side, the insistence by the EU on including level-playing field requirements in any agreement is a major irritant. We may not want to diverge from EU standards, the UK negotiators insist, but we should have the right to do so. Add into this mixture arguments going back several years about whether the UK can ever agree to the CJEU having a role in deciding on disputes, and the prospects of harmony breaking out seem bleak.

There is certainly a willingness to go to the brink, with politicians such as Michael Gove continuing to assert that the EU only ever reaches agreement on deals at the final moment. With the two sides waiting to see if the other blinks first, it means that businesses across the UK are left wondering if their main worry should be surviving the COVID-19 outbreak, or preparing for a no-deal Brexit.