Brexit Talks Get New UK Chief, Government to Propose Terms for Future EU Relationship

12 July 2018

The Brexit negotiations saw a series of landmark developments over the past week, with UK Prime Minister Theresa May’s cabinet endorsing a statement outlining the “UK vision” for the country’s future relationship with the European Union, ahead of another round of negotiations with EU officials next week.

Meanwhile, Dominic Raab was confirmed as the new head of the department conducting the negotiations for the United Kingdom, after David Davis stepped down from the post last weekend. The internal political situation in the May government reportedly remains fluid, particularly after Boris Johnson resigned as foreign minister less than 24 hours after Davis announced his departure.

Both officials had indicated that they disagreed to some extent with the prime minister’s approach to the Brexit talks, worrying that the result would involve closer ties to the EU than what they say the 2016 Brexit referendum result implies, and speculation is rife that future political upheaval may be forthcoming – or, at the least, that passing legislation to formalise the overall Brexit withdrawal deal this autumn will be challenging.

The cabinet ultimately endorsed the UK prime minister’s proposal, though the endorsement came before Davis and Johnson resigned from their posts this week. Reports indicate, however, that the plan approved last week has enough backing to allow the current government to move forward.

Chequers position paper

May had gathered her cabinet at Chequers, the estate which has traditionally served as the UK prime minister’s country home, on Friday 6 July to present a proposal that would guide the UK’s approach to negotiating its future relationship with the European Union.

The discussions followed weeks of debate over whether May’s preferred approach on contentious issues such as customs cooperation and market access would pass muster domestically, while also garnering a positive reception from EU negotiators.

“Our proposal will create a UK-EU free trade area which establishes a common rule book for industrial goods and agricultural products. This maintains high standards in these areas, but we will also ensure that no new changes in the future take place without the approval of our Parliament,” said May after the meeting at Chequers.

The government statement issued after the Chequers meeting provides a preview of the “four main elements” that will serve as the core of a UK government “white paper” on the Brexit talks, which is due on 12 July.

That section of the government statement is devoted largely to trade, both in terms of the future UK-EU trading relationship as well as the UK’s foreign trade interests with other partners. For example, the UK is proposing that it share a “common rulebook for all goods including agri-food” with the European Union, while noting that it plans to take another approach for services trade that would allow for “regulatory flexibility,” given the expected market access limitations post-Brexit.

Furthermore, the statement suggests that the two sides should set up “strong reciprocal commitments related to open and fair trade into the legal agreements that define the future relationship,” adding that this would include a commitment to make sure that current regulatory standards with environmental and/or social implications do not “fall below their current levels.”

The document also indicates how the UK would like UK-EU accords to be adjudicated in the future, with each side using their domestic legal system within a “joint institutional framework.”

Customs relationship, future trade deals

Among the most high-profile questions before Chequers would be whether the UK Prime Minister would continue to advocate for a “customs partnership” that leaves in place EU tariffs and rules of origin in cases where goods transit through the UK on their way to the European market. (See Bridges Weekly, 3 May 2018)

“The UK would apply the UK’s tariffs and trade policy for goods intended for the UK, and the EU’s tariffs and trade policy for goods intended for the EU – becoming operational in stages as both sides complete the necessary preparations. This would enable the UK to control its own tariffs for trade with the rest of the world and ensure businesses paid the right or no tariff – in the vast majority of cases upfront, and otherwise through a repayment mechanism,” the Chequers statement says.

The Chequers statement also touts the potential benefits of such an approach, saying that it would ensure “frictionless access” for goods trade; respect existing peace accords between Northern Ireland and the Republic of Ireland and avoid the establishment of a hard border; allow for the UK to exit both the EU’s Common Agricultural Policy (CAP), which governs farm support in the bloc, and the Common Fisheries Policy, which governs fisheries management; and allow for an “independent trade policy.”

Regarding that latter point, the position paper says that it would provide the UK with the freedom to determine its own trading relationships with foreign partners. Currently, the EU has exclusive competence for trade, coordinating and consulting with member states to craft common positions in international trade negotiations. While trade deals are negotiated by the Commission, they require approval by member states in the Council, as well as members of the European Parliament, and in some cases if the deal’s substance requires, may also need approval by member state legislatures.

Talks in Geneva on how to separate out the UK’s commitments from the EU-wide ones at the WTO are ongoing, with the most recent development involving the UK asking to join the plurilateral Government Procurement Agreement (GPA) formally after Brexit, given that the EU is already a party. The UK has already put forward a market access offer for parties’ consideration, which involves the same terms as the wider EU, according to a WTO summary of recent discussions on the subject.

“The UK would have its own seat at the WTO, be able to set tariffs for our trade with the rest of the world, and have the ability to secure trade deals with other countries – including potentially seeking accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” the Chequers statement says.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is an 11-country trade accord among various Pacific Rim economies in Asia, Latin America, North America, and Oceania. It is the successor to the Trans-Pacific Partnership (TPP), which had included the United States, and which was signed but not fully ratified.

The US later withdrew, prompting negotiations to suspend some CPTPP provisions. That accord is now at ratification stage, with Mexico and Japan having already approved the deal in their domestic legislatures. It needs at least six signatories to enter into force, or half of the accord’s signatories, after which other countries can negotiate accession if they choose. If the UK does ask to join the CPTPP, it would be among the first non-Pacific Rim countries to do so.

The UK has indicated interest in a host of trade deals with other partners, including Australia, New Zealand, and potentially the US, once Brexit takes place next year. Under the terms of the post-Brexit “transition deal,” the UK can negotiate and sign such accords, but they cannot take effect until after the transition period ends on 31 December 2020.

Barnier: Talks advanced, prepping for next round

European officials have said that they are watching the developments in the UK closely, and have highlighted the importance of keeping the pace of the negotiations on track, both in terms of wrapping up the terms for the UK’s withdrawal from the EU as well as hammering out the details of their future relationship.

“Chequers discussion on future to be welcomed. I look forward to White Paper. We will assess proposals to see if they are workable & realistic in view of [the European Council] guidelines,” said Michel Barnier, the EU’s chief Brexit negotiator, on 6 July via Twitter.

Barnier also confirmed that the next EU-UK negotiating round would be held next week, with a focus on the withdrawal agreement, along with the UK “white paper” that is due for release on Thursday 12 July.

Since then, Barnier said during a speech at the Council on Foreign Relations on 10 July that the Brexit talks are well advanced, with only about one-fifth of the withdrawal negotiations still unresolved.

“Our challenge is to make sure that Brexit happens in an orderly way. We all know that the no-deal scenario would have substantial costs. And after twelve months of negotiations, we have agreed on 80 percent of the withdraw agreement,” he said.

He also underscored the importance of wrapping up the Brexit withdrawal talks in a way that ensures that negotiations on the future UK-EU relationship go smoothly.

“An orderly withdrawal would pave the way to an ambitious future relationship that we all want. In March this year, the European leaders have offered to the UK to work on an ambitious free trade agreement based on zero tariffs and no cut-outs,” he said, while clarifying that this was not the same as keeping the UK in the EU’s single market.

“Unfortunately, this partnership cannot amount to membership. Membership matters. Outside the European Union, you cannot have the same rights and benefits [as] inside. For example, being part of a single market is reserved to those respecting its rules,” he said.

ICTSD reporting; “EU reacts with dismay to British Brexit chaos,” FINANCIAL TIMES, 10 July 2018. 

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