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Johnson’s emergency lockdown adds pressure to Brexit talks

British Prime Minister Boris Johnson leaves 10 Downing Street, London, Britain, 14 October 2020. Johnson is due to attend Prime Ministers Questions (PMQs) for the first time after introducing a three tier levels of restrictions to deal with a rise of COVID-19 cases. EPA-EFE/WILL OLIVER
By Bloomberg
20 Dec 2020 0

Failure to reach a trade deal would leave the United Kingdom doing business with its largest and nearest commercial partner on terms set by the World Trade Organization.

(Bloomberg) — Boris Johnson’s emergency virus lockdown is heaping last-minute pressure on negotiators as they race to reach a post-Brexit trade deal.

Officials said the announcement has focused minds on bringing the talks to a conclusion within days. As the British prime minister was detailing the new restrictions for London and southeast England on Saturday, negotiators in Brussels were inching closer toward an agreement.

People familiar with both sides’ positions said the talks are unlikely to wrap up on Sunday but should do so before Christmas. Chief negotiators Michel Barnier and David Frost met on Sunday for further discussions.

“In this crucial moment for the EU-U.K. negotiations, we continue to work hard with David Frost and his team,” Barnier said on Twitter afterwards. “Both EU and UK must have the right to set their own laws and control their own waters. And we should both be able to act when our interests are at stake.”

Whether nine months of talks between the U.K. and European Union result in a trade accord will depend on the two sides bridging their disagreements over fishing, the last remaining major obstacle. But that is proving difficult: European countries with large fishing industries are resisting any further concessions proposed by the European Commission. Nevertheless, officials from both sides said the gap can still be bridged.

“I think everybody wants a deal,” said U.K. Health Secretary Matt Hancock on Sunday. “Unfortunately, the EU have put in some unreasonable demands” that don’t respect Britain’s 2016 referendum decision to leave the bloc, he told Sky News.

Cost of Failure

Failure to reach a trade deal would leave the U.K. doing business with its largest and nearest commercial partner on terms set by the World Trade Organization. That would mean millions of businesses and consumers would face the cost and disruption of tariffs and quotas.

The pandemic has heavily disrupted the post-Brexit trade talks since they started in March. Both chief negotiators were forced into isolation after displaying symptoms early in the process and for months the two sides could only talk by video link.

“We do need to see that movement from the EU side and I very much hope that they make the steps that are necessary so that we can conclude a deal and then we can all look forward,” Hancock said. “We have got a huge amount to get through as a continent because there are very significant problems with this virus on the continent as well.”

With most other major issues now settled, the entire deal now effectively depends on how much the EU is prepared to give up of its fishing catch in U.K. waters. While Britain was a member of the EU, the bloc controlled fishing rights through its Common Fisheries Policy, a system that Johnson argues penalized the U.K.’s domestic industry.

Teams from the European Commission in Brussels held a second round of talks with national capitals on Saturday. The deliberations were tense and not straightforward, one EU diplomat said.

EU’s Offer

After its discussions with member states on Friday, the Commission made an offer that would see the bloc lose around 25% of the current 650 million euros ($735 million) of fish it catches annually in British waters. The U.K. rejected it, and has been pushing for the EU to give up 60%, according to the officials who spoke on condition of anonymity.

The EU also offered to reduce the phase-in period of the new arrangements to six years, after originally wanting 10. The U.K. rejected the offer of six and has proposed just three years.

The British team feels it has the upper hand after making recent concessions on the other major roadblock, the so-called level competitive playing field for businesses. But Michel Barnier, the EU’s chief negotiator, made clear on Friday that access to the single market will be conditional on keeping U.K. fishing waters open to boats from the bloc.

The talks could still break down. Despite the cautiously optimistic tone coming from the negotiating room, one person familiar with the U.K. government’s position said a no-deal outcome remains the more likely. DM

©2020 Bloomberg L.P















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