Beyond the pandemic
Brexit: The Big Conversation with Phil Hogan, Sir Ivan Rogers and Georgina Wright
At the end of November, Phil Hogan, until recently the European Commissioner for Trade; Sir Ivan Rogers, former UK Permanent Representative to the EU and one of the best-connected insiders in Westminster and Brussels; and Georgina Wright of the Institute for Government, gave us their take on chances of a deal, the post-Brexit relationship between Britain and the EU – and the potential for future flashpoints.
Deal ‘in the balance' in coming weeks
The markets put the chance of a deal between Britain and the EU at between 75 and 80 per cent but this is ‘too high’ in Sir Ivan Rogers’ opinion. Europe is less optimistic than London, which ‘spends most of its time in these conversations talking to itself’. While the text of an agreement is largely there, the issues that remain are ‘immensely difficult questions’ that go to the heart of sovereignty and the motivations for Brexit. In the words of Phil Hogan, ‘There is no movement... on the key outstanding issues that will satisfy the European Union.’
A ‘level playing field’ may be an illogical goal
Ivan Rogers said that Boris Johnson, Dominic Cummings (and others) have always been clear that the purpose of Brexit is divergence. But the UK’s desire to regulate freely in areas such as AI, fintech, biotech and data may be hamstrung by trade agreements’ typical inclusion of a ‘non-regression clause’ that prevents both sides from backtracking on commitments (currently a sticking point in trade talks). Brexit is unique in that two already-aligned parties seek to move further apart, which could make a level playing field a logically inconsistent aim.
The price of a duty-free, quota-free deal
As much as the EU would like frictionless trade with Britain, Sir Ivan pointed out that it has never offered such a deal to a country outside the European Economic Area. UK negotiators should not underestimate the readiness of Brussels to exact a high price for such special treatment, and the UK may need to make significant concessions (such as a level playing field without regulatory divergence) for a duty-free, quota-free deal.
Standards will be important
Future standards and associated regulatory compliance will be important in influencing the location of manufacturing bases and demand for products. Phil stressed that the EU wants structured dialogue on creating the standards of the future with the US, China and other countries. But in discussions on regulatory cooperation with the UK, the EU is ‘not getting the same traction’.
The EU is a “regulatory superpower”
While the EU is far from being a geostrategic power, it has been much more effective in promoting its norms and standards extraterritorially. The UK will find it hard to ‘be on the receiving end of a regulatory superpower’ on data protection and privacy, or financial services, for example.
A no-deal Brexit will have long-term consequences
A no-deal Brexit will be extremely difficult to avoid, said Sir Ivan, and there is no easy way back from a no-deal scenario. If a no-deal exit materialises, Boris Johnson’s instinct will be to ‘blame the EU loud and long’, reducing the chances of amicable negotiations with the EU, perhaps for two years or more.
The UK isn’t ready for a ‘skinny deal’ (let alone no-deal)
The infrastructure required at the Irish border is not yet in place so there is insufficient preparedness for customs procedures and licence checks. Whatever (if anything) is finalised, the end of the transition period will bring serious challenges that may last months. Nevertheless, away from the politics, diligent officials on both sides of the Channel with longstanding relationships will try to minimise disruption.
Even a deal wouldn’t be final
As Switzerland has found, negotiating with the EU is a never-ending (and hard-bitten) process. Britain will have to be flexible and willing to make additional trade-offs – possibly indefinitely. Retaliation and counter-retaliation will be the norm if the UK diverges from the EU, and even in a best-case scenario, the UK may have to reconcile being simultaneously both competitor and ally of the EU.
Best practice for future dealings with the EU
In Georgina Wright’s view, British trade negotiators looking to make progress in the future should be prepared to look for common ground; bring strong, pre-scrutinised arguments to the table; maximise intelligence and data concerning what is going on in Brussels and where the member states stand on particular issues; develop state-of-the-art solutions; and offer meaningful incentives for agreement.