View from Brussels - May 2020

The deadline for the UK and Brussels to reach agreement on a future relationship is fast approaching.

In recent weeks, the language between the two negotiators has become increasingly heated as both sides up their rhetoric in order to win concessions. David Frost has accused Brussels of being too ideologically wedded to a “level-playing field” whilst Michel Barnier retorted that the UK was seeking the “best of both worlds” in terms of market access and had yet to publish its plans for Northern Ireland. The UK has also begun trade negotiations with other countries including the United States and there have been reports that the EU may step back from its demands on fishing rights. However, the European Union’s Brexit negotiator said Britain would have to commit to upholding standards on state aid, competition, the environment, tax and labour in order for it to be allowed to trade freely with the bloc after the transition period comes to an end on 31 December 2020.

The final round of negotiations before the European Commission’s 1 July deadline for extending the transition period take place next week (w/c 1 June), but with little prospect of concrete output. Nevertheless, the UK has continued its preparations for life outside the trading bloc with the publication of the UK Global Tariff, which will replace the EU’s Common External Tariff at the end of the transition period, and apply to imports from all countries with whom the UK does not have a trade agreement, including the EU. The new regime promises to scrap tariffs on £30 billion worth of imports entering UK supply chains but has pledged to protect, amongst others, the automotive sector by maintaining a 10% tariff on cars.

Of course discussions could continue with a view to an accord in the Autumn (enabling sign off in time) but this would rely on the EU to facilitate this. And should it not happen, one view doing the rounds in Brussels suggests that the UK might continue to follow EU standards into 2021 until a formal agreement was brokered. Such an outcome would be unpalatable for the UK Government suggesting that, at this stage, the smart money would be on a ‘no deal’ Brexit at the end of the year.

Published 28 May 2020