Who will blink first as EU-UK talks near danger zone?

by nyljaouadi1
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It was always going to come to this, but the EU-UK trade negotiations are now entering the danger zone stage where we get to find out who will wilt under the pressure of a looming “non-negotiated” exit.

This week negotiators managed another round of incremental progress, but fell far short of reaching the headline political deal that Boris Johnson had said he wanted by this week’s EU leaders’ summit. 

Mr Johnson keeps on having phone calls with EU leaders in which he reminds them that an “Australia-style” exit holds “no fear”, even as a succession of government ministers, officials, industry chiefs and Commons select committees hear of the chaos and disruption this would bring.

For some weeks — as last week’s Briefing reported — EU diplomats have been sketching out the scenario of marginal progress up until this week’s European Council, followed by intensified talks over the last two weeks of October, with a deal in early November.

Even that looks ambitious now. The draft EU Council conclusions are chillingly anodyne; the diplomatic equivalent of a hard stare. They restate the EU’s insistence that its top negotiator Michel Barnier sticks to his mandate, while inviting him to “continue” (not even “intensify”) negotiations to reach an agreement that can apply from January 1 2021.

In short, the traditional EU negotiating squeeze is now on. The unspoken expectation in Brussels and EU capitals is that Mr Barnier’s infamous ticking clock will sound ever louder in the ears of British negotiators until the noise becomes so intolerable that David Frost, his UK counterpart, and Mr Johnson concede on most of the key sticking points.

For now the choreography of any concessions seems blocked, with member states pushing Mr Barnier not to give away leverage (particularly on fish) as the space for a deal narrows. EU officials complain that the UK side “does not look like a counterpart that wants a deal” — UK officials, citing the EU clinging to its position of status quo on fishing rights, say exactly the same. For now at least, the record appears to be stuck.

As in October 2019, if concessions come on the difficult outstanding issues — fishing rights, the level playing field and the governance of the deal — the EU will do its best to help Mr Johnson sell them back home, but they expect the British to make most of the running. 

Time will tell whether this is a huge miscalculation on the EU’s part, but the harder they look at Mr Johnson’s political options as Covid-19 closes in again, the more confident they become that he will ultimately give much of the ground they seek.

Some Brexiters will feel that Mr Johnson has learnt the lessons of his predecessor’s failed negotiations by threatening to walk away, getting Brussels to back down on some key areas — notably dynamic alignment with EU state aid policy. 

But this approach has worked only up to a point (the EU was always going to have to move on state aid), which raises the question over whether Mr Johnson should indeed walk away if only to try to break the stalemate. The assumption is he will not.

But if Mr Johnson stays at the table he risks being sucked slowly into an ever-more invidious choice between doing a very skinny trade deal — which will probably come with the offer of some nice easements in the end — and a destructive no deal.

Alternatively, both sides continue with the stand-off, and the entire process simply dribbles away into failure. The risks of this are higher than commonly appreciated, in my view. There are limits — politically, psychologically — to what Mr Johnson can concede. 

All of this has been made harder by Mr Johnson’s decision to threaten to legally override parts of the withdrawal agreement with the internal market bill. The move was intended to inject motion into the negotiations, but it has actually only complicated them on three fronts.

First, if the intention was to force an EU walkout or get the EU to back down, it failed. Brussels didn’t take the bait, but opened long-winded legal proceedings that did not kill the talks, while making clear that any UK-EU agreement would be contingent on the UK dropping the offending clauses.

Effectively Mr Johnson, who thought he had put a “gun on the table”, now finds it pointing back at him: “Drop the weapon, prime minister, or there won’t be a deal.” 

Second, by making such a spectacular show of bad faith over last year’s agreement, Mr Johnson has strengthened the arguments on the EU side (from the French, notably) for a very strict governance mechanism for a deal.

Even if Brussels is overplaying its hand on this front, given the thinness of the market access offer, the internal market bill has given it the perfect excuse to do so. The EU, in trying to protect the unity of the 27, retreats back to a “highest common denominator” negotiating position.

Third, and perhaps most important, the promise to unilaterally rewrite the Northern Ireland protocol in the event of a no deal makes it almost impossible to see how Mr Johnson could ever engineer a soft no deal.

Because of that move, a no-deal outcome is now set to be politically much more destructive than it otherwise needed to be. The Whitehall working assumption, I understand, is that it will take two years to get back to a basic free trade negotiation. 

If Mr Johnson really does want to take the plunge off the no-deal cliff, he just made the drop considerably higher.

This week a defiant UK government source accused the EU of “using the old playbook” of running down the clock in the erroneous belief, the source said, that “the UK would be more willing to compromise the longer the process ran”.

It looks, from the outside, very much like that is exactly what the EU believes. In the not too distant future, we are about to find out if it is right.

Brexit in numbers

Another reason often given in Westminster as to why Mr Johnson will ultimately have to do a deal with the EU is that the public already think that their vote for Conservatives last December was a vote to Get Brexit Done. And it is already done. 

There are fears in Number 10 that, as the Covid-19 crisis reasserts itself, the distinction between getting the divorce deal done and then failing to complete a free trade agreement would be lost on the vast majority of voters. It would just look like failure to deliver.

One nice illustration of how Brexit has faded into the political background was to be found at the Tory party conference where the “B-word” (as measured by two professors at the UK in a Changing Europe think-tank) was barely even spoken.

“While not entirely banned — the prime minister did, after all, say the B-word four times this year — talk of Brexit and the EU from the conference floor has fallen by a staggering 89 per cent in a year,” they wrote.

Just one more reason to support Brussels’s calculation that Mr Johnson will not dare to thrust Brexit back on to the already crowded political agenda by allowing talks to fail.

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