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EU trade talks: UK to walk away if ‘Canada-style’ deal refused

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June or bust: Boris Johnson warns EU that the UK will walk away from post-Brexit trade talks in just FOUR MONTHS’ time if Brussels refuses to agree to a Canada-style deal

  • Boris Johnson is calling for a Canada-style deal and rejecting alignment with EU
  • UK wants signs that a ‘Canada deal with Brussels is possible by a June summit 
  • Otherwise Government ready to  switch to preparing  for Australia-type deal
  • Michel Barnier has already dismissed the ideas and demanded concessions 

The UK warned the EU today it is prepared to walk away from post-Brexit trade talks in just four months time if they are showing little sign of progress towards a deal the Government wants.

Britain’s negotiating strategy: key points 

  • Full UK control over key areas including state aid, workers’ rights, environmental standards and fishing rights. 
  • ‘Regulatory freedom’ outside the jurisdiction of the European  Court of Justice (ECJ)
  • Transition period is not extended past December 31. 
  • Progress on a Canada-style deal by June
  • Preparations for Australian-style arrangement if this is not happening.  
  • ‘Reciprocal arrangements not to weaken or reduce the level of protection afforded’ by laws on labour rights and the environment. 
  • Full ‘liberalised market access for trade in goods’ with ‘no tariffs, fees, charges and quantitative restrictions on trade in manufactured and agricultural goods’.
  • On fishing, document sets out that UK wants ‘annual negotiations on access to the parties’ exclusive economic zones and fishing opportunities’
  • An agreement on ‘equivalence’ in the financial services sector  by June

Boris Johnson‘s administration wants to see the ‘broad outlines’ of a ‘Canada-style’ deal with Brussels by the time the two sides are due to meet at a June summit, according to its confrontational official negotiating mandate, released this morning.

If the two sides remain at loggerheads Britain is ready to pull the plug and concentrate on preparing the country for a bare-bones situation using World Trade Organisation terms under an arrangement with the EU similar to Australia’s.

Whatever the outcome of the talks, businesses have been warned to expect friction at the border from January 1 because the UK will not extend the transition period and will therefore be leaving the EU’s single market and customs union. 

Speaking this morning, Mr Johnson said: ‘We’re not going to engage in some race to the bottom.

‘All we want is mutual recognition of each other’s high standards, and access to each other’s markets.

‘We wouldn’t ask the EU to follow every change in UK legislation, so it doesn’t make any sense for them to make the same requirement of us, and that’s where we are.’

But shortly after the document was published the EU’s chief negotiator Michel Barnier showed that Brussels was also sticking to its guns ahead of the protracted political battle ahead. 

‘We take note of the UK’s mandate published today and will discuss our respective positions on Monday,’ he said.

‘We will stick to all our prior commitments in the Political Declaration. We want an ambitious and fair partnership with the UK in the future.’

Michael Gove unveiled the UK’s negotiating aims in the Commons this morning as tensions ramp up again between the two sides – just weeks after Brexit legally happened.  

The UK’s main aims are: 

  • Full UK control over key areas including state aid, workers’ rights, environmental standards and fishing rights. 
  • ‘Regulatory freedom’ and outside the jurisdiction of the Court of Justice 
  • Transition period is not extended past December 31. 
  • Progress on a Canada-style deal by June

The official 30-page document reveals the tough line the Tory administration is prepared to take.  

Michael Gove unveiled the UK’s negotiating aims in the Commons this morning as tensions ramp up again between the two sides – just weeks after Brexit legally happened

The official 30-page document reveals the tough line the Tory administration is prepared to take, including a threat to walk away from talks in June

The official 30-page document reveals the tough line the Tory administration is prepared to take, including a threat to walk away from talks in June

Speaking this morning, Mr Johnson said: 'We're not going to engage in some race to the bottom. 'All we want is mutual recognition of each other's high standards, and access to each other's markets'

Speaking this morning, Mr Johnson said: ‘We’re not going to engage in some race to the bottom. ‘All we want is mutual recognition of each other’s high standards, and access to each other’s markets’

‘The UK is committed to working in a speedy and determined fashion … with an appropriate number of negotiating rounds between now and the June high-level meeting foreseen in the political declaration,’ it states. 

Key sticking points in EU trade talks 

Level playing field 

The UK insists it wants an off-the-shelf free trade agreement, similar to that the EU struck with Canada.

This would mean shunning almost all tariffs and quotas, and potentially bolting on preferential access for financial services.

Crucially, it would not involve the UK aligning with EU rules or obeying legal edicts from the bloc’s judges. 

However, Michel Barnier has said the Canada model is not appropriate as the UK is geographically closer to the EU and the competition issues are different. 

He insists that there must be a ‘level playing field’ for trade, with the UK following Brussels’ standards. 

Fishing

The EU is determined to keep access to UK waters after December 31. 

France is particularly keen to ensure that its fishermen have generous quotas when Britain leaves the EU Commons Fisheries arrangements. 

But Boris Johnson has said: ‘British fishing grounds are first and foremost for British boats.’

Food standards 

Mr Johnson and Donald Trump have vowed to push for a quick Transatlantic trade deal.

However, the US is likely to demand concessions on better access to lucrative UK food markets in return for good terms in other areas.

The EU is trying to thwart the discussions by insisting the UK must stay tied to its food standards rules. 

The Elgin Marbles 

The EU negotiation mandate includes a stipulation Britain should ‘return unlawfully removed cultural objects to their countries of origin’.

The passage is thought to refer to the Elgin Marbles, ancient Greek sculptures taken to Britain more than 200 years ago and now on display in the British Museum.

Greece has been vocal about demanding the marble sculptures, once situated in the ancient Greek Parthenon temple, are returned to Athens.

Downing Street has insisted the future of the marbles is ‘not up for discussion as part of our trade negotiations’.

‘The Government would hope that, by that point, the broad outline of an agreement would be clear and be capable of being finalised by September.

‘If that does not seem to be the case at the June meeting, the Government will need to decide whether the UK’s attention should move away from negotiations and focus solely on continuing domestic preparations to exit the transition period in an orderly fashion.’ 

Giving a statement on UK trade negotiations with the EU, Cabinet Office Minister Mr Gove said it is the Government’s aim ‘to secure a comprehensive free trade agreement’ as well as agreements on fisheries, internal security and aviation. 

‘We’re confident that those negotiations will lead to outcomes which work for both the UK and the EU, but this House, our European partners and above all the British people should be in no doubt – at the end of the transition period, on December 31, the United Kingdom will fully recover its economic and political independence,’ he said.

‘We want the best possible trading relationship with the EU, but in a pursuit of a deal, we will not trade away our sovereignty.’ 

It is understood the Government will base its decision on whether to back out of talks on how well talks have progressed in areas where the two sides are most in agreement already. 

If even those areas remain contested, it is ready to walk away, with a serious of public announcements pencilled in to help the public prepare for the new trade regime.

The document adds: ‘If it is not possible to negotiate a satisfactory outcome, then the trading relationship with the EU will rest on the 2019 Withdrawal Agreement and will look similar to Australia’s.’ 

The document also sets out plans for a public consultation on ‘the economic implications of the future relationship’ in the spring, understood to be launched before Easter. 

But it is unclear what results from the scoping exercise will be published afterwards. 

The document also calls on any agreement to include ‘reciprocal arrangements not to weaken or reduce the level of protection afforded’ by laws on labour rights and the environment. 

Shadow Brexit minister Paul Blomfield described the Government’s plans as ‘underwhelming’ before warning: ‘They started with a commitment to securing the ‘exact same benefits’ that we currently enjoy.

‘This was scaled back to ‘frictionless trade’ to protect our vital supply chains. Then it was Canada+++, now it’s ‘Canada so long as it doesn’t get in the way of ending our alignment with the standards we’ve previously enjoyed’.’

The mandate stresses Mr Johnson’s priority to secure ‘political and economic independence’ when the ‘standstill’ transition period ends on December 31.

Ignoring the provisions in the political declaration that was sealed along with the divorce deal, the document will reject calls for the UK to obey Brussels rules and standards. Instead it will call for a pact along the lines of that the EU has with Canada, with no tariffs on goods, or quotas restricting imports and exports. 

However, the looming talks are shaping up to be bruising – with the EU’s Michel Barnier already having dismissed the idea of Canada-style terms, and warning there will be no agreement unless Britain limits competition and concedes on issues such as fishing rights.  

Canada or Australia? The two options in post-Brexit trade talks 

CANADA 

The Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU was signed in October 2016.

It meant 98 per cent of goods traded are exempt from tariffs – although there are still regulatory barriers and the system is being phased in.

Companies in based in both jurisdictions can compete for public contracts.

There are protections for products from specific geographical locations, such as Parma ham.

But there is little coverage of services, aside from respecting intellectual property. 

AUSTRALIA

The EU and Australia do not have a formal trade deal – although one is being negotiated.

Instead the two interact based on World Trade Organisation terms.

That means tariffs apply on many goods, with ad hoc agreements in specific areas.  

Downing Street has angrily pointed out that other trade deals hammered out by the EU did not include the kind of ‘onerous commitments’ being demanded.

Mr Barnier’s mandate, published earlier this week, called for any agreement to use Brussels’ standards as ‘a reference point’ over time.

That suggested the UK would be expected to keep aligned with changes to the rules in future, something that would breach Mr Johnson’s red lines.

Mr Johnson signed the political declaration with the EU in 2019, which accepted there should be ‘robust commitments to ensure a level playing field’ on areas including state subsidies, workers’ rights and environmental standards.

But Downing Street insiders made clear he believes the mandate he won at the general election trumps the declaration, which does not have the status of a binding international treaty.

In the Tory election manifesto, Mr Johnson promised ‘no political alignment’ with the EU, an end to the role of the European Court of Justice and ‘full control’ of the UK’s fishing waters.

Mr Barnier has insisted that fishing rights for EU vessels must be included in the deal or there ‘won’t be any agreement at all’.

A Downing Street source said: ‘The Prime Minister is working to a mandate which derives from his manifesto which set out very clear what he would be seeking in the negotiations, also set out what would not be acceptable to the UK, and that whatever happens at the end of this year, the UK will be regaining in full its political and economic independence.’ 

On the eve of the UK setting out its red lines, Mr Barnier issued a fresh warning that the UK must accept common standards with the bloc if it wants continued preferential access to European markets.

Boris Johnson (pictured in Downing Street yesterday) is unveiling the UK's negotiating aims as tensions ramp up again between the two sides - just weeks after Brexit legally happened.

Boris Johnson (pictured in Downing Street yesterday) is unveiling the UK’s negotiating aims as tensions ramp up again between the two sides – just weeks after Brexit legally happened.

He said he accepted assurances from Mr Johnson that he did not want to turn Britain into a de-regulated ‘Singapore-on-Thames’.

What happens next in Brexit trade wrangling? 

Today: The UK’s negotiating proposals will be put before Parliament, after the EU signed off its mandate for Michel Barnier on Tuesday.  

Monday: Talks on the trade deal are due to start in Brussels. 

They will initially focus on the schedule for discussions – which in itself will be tricky. The EU wants to talk about fishing first, but the UK says it must be considered as part of a wider package. 

June: EU/UK summit to discuss progress, by which Britain wants the outline of a deal to have emerged. 

July: This is theoretically the last point at which the transition period can be extended – although Boris Johnson has insisted he will not contemplate any delay.

January 1: The transition period is due to end and the UK will be on new trade arrangements with the EU. This will either be the trade deal or World Trade Organisation terms. 

However, he said that without agreement on a series of common ‘ground rules,’ efforts to prevent unfair competition and to tackle climate change would be undermined.

Speaking to an ESCP business school seminar in Brussels, he said: ‘We are ready to offer to the UK super-preferential access to our markets – a level of access that would be unprecedented for a third country.

‘Is this something we can do without firm guarantees that the UK will respect the level playing field and avoid unfair competitive advantages? The answer, I’m afraid, is simple. We cannot.’

Mr Barnier said that whatever the outcome of the trade talks, there would be checks on goods entering the EU from Britain from the beginning of 2021 when the current transition period ends.

‘Of course we love ‘Made in Britain’ but we must guarantee that the goods we import from the UK – tariff and quota free – really are British.

‘We cannot take the risk that the UK becomes a kind of assembly hub for goods from all over the world, allowing them to enter the single market as British goods.’

Mr Barnier and the PM’s Europe adviser David Frost will meet in Brussels on Monday for the first round of talks on the post-Brexit relationship, with a further session expected in London later in March.

The looming trade talks are shaping up to be bruising - with the EU's Michel Barnier (pictured in Brussels yesterday) already having dismissed the idea of Canada-style terms

The looming trade talks are shaping up to be bruising – with the EU’s Michel Barnier (pictured in Brussels yesterday) already having dismissed the idea of Canada-style terms

 

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