Brexit: Stumbling

Just a short note on the state of Brexit. Negotiations continue on Friday but Barnier will have decamped to Brussels, leaving his team in London. Hopes of a deal by the weekend are off. As we’ll see, the press is still playing up the notion that there could be an agreement by the end of the weekend. But by all accounts, there’s still a big gap between the the two sides, and I have yet to see reports of any plans for Boris Johnson and Ursula von der Leyen to meet to try to close the gap.

The reason for the shift to a more downbeat view is that the 27 diplomat session with Barnier on Wednesday, with France leading but apparently not alone in applying pressure to Barnier not to concede too much, has had an impact on the talks. It appears, as has happened a couple of times with Barnier, that he may have gotten out over his skis and offered concessions that he now has reason to think the EU won’t swallow.

If you believe this scenario, you have to believe France is influencing the shape of the deal, as opposed to taking a self-assigned role of bad cop, regardless of whether or not anyone wants them to. Or else Barnier really was out over his skis and had gone further than his principals would accept.

Or it may be that the UK side is exaggerating more than a little in trying to depict the EU as acting in bad faith by retrading an offer. Recall that one of the things that came after the Barnier-EU diplomats session on Wednesday was that EU sources told the press that if the UK didn’t remove clauses that would override the Irish Protocol from recently-introduced Taxation Bill, they could kiss a trade pact goodbye. So the UK may be creating an uproar about the EU refining its position, which may or may not be as big a deal as the UK noisemaking would have you believe, to divert attention from their refusal to drop the deal-killing sections of the Taxation Bill.

The Bloomberg account makes clear the whinging is coming entirely from the UK side:

With negotiators working around the clock in London, optimism had been growing for days that an agreement could be struck this weekend. But British officials said the European Union had suddenly turned up with a new set of demands, sending the talks backward. They didn’t say what the demands were and EU officials denied it…

One U.K. official said talks had taken a big step backward because the EU had hardened its position in response to the French. Another said that, despite the setback, a breakthrough is still possible in the next few days.

Senior figures close to the European side questioned whether the remarks from the U.K. were another case of brinkmanship to pile last-minute pressure on the talks or an effort to disguise the fact that the British themselves are making concessions. One official said that fundamental differences between the two sides have persisted for weeks, but that hadn’t prevented both sides believing a deal was close, while another insisted bloc hadn’t made new proposals.

The Financial Times goes even further, blaming Macron (Tough Macron stance leaves Brexit deal hanging in balance):

Talks on an EU-UK trade deal hit a major obstacle on Thursday evening as British officials accused France of making new demands at the eleventh hour, leaving an agreement hanging in the balance.

Even though France doesn’t have a seat at the table, it is making a lot of noise from the sidelines:

Tony Connelly at RTE has more details, but it isn’t clear which if any of these EU desires were presented as a negotiating position, as opposed to giving illustrations of what might work, or when. Barnier appears to have consistently told the UK that the EU would insist on strong protections in its level playing field arrangements, but the UK isn’t prepared to live with what that would mean in practice. From RTE:

While the French President has in recent days hardened his position on fisheries, the current stand-off appears to be over the so-called level playing field.

EU officials point out that for months it has demanded that if the UK wants tariff and quota-free access to its single market it cannot unfairly subsidise its companies once outside the framework of the EU’s tough state aid rules.

In particular, EU negotiator Michel Barnier has been arguing for a robust, independent UK regulator to safeguard against any unfair competition.

France is reported to have demanded that the UK should have to get approval from such a regulator before any subsidies were paid, and that that regulator should apply principles shared by both sides.

Brussels also wants EU companies or governments who believe they have been put at a disadvantage by any UK subsidies to have redress through the UK courts.

At present, the European Court of Justice is where such disputes are settled, but London has demanded that the ECJ no longer have any role to play in the UK.

The EU also wants to ensure both sides comply with similar standards when it comes to labour and social rights, as well as environmental and taxation standards, and that if the UK diverges from these standards the EU will be able to take retaliatory action in an area of its choosing.

In recent days, France, Denmark, the Netherlands and Belgium have all indicated to Mr Barnier that he risked straying too far from his mandate in order to secure a deal.

Sources say that last night’s setback is the result of a tougher stance by Mr Barnier that may be reflecting those concerns.

The Financial Times confirms the RTE details on the level playing field proposals, but is similarly fuzzy on when they were presented to the UK. And despite Macron being the bad guy, this section simply say France supports this plan, not even that France is the author:

Governments’ concerns have been heightened by the fact that Brussels has failed to overcome UK opposition to French-backed proposals for the level playing field.

These included plans to require Britain to create a regulator with powers to police state aid to companies even before the money is handed out and demands for “ratchet clauses” that would force both sides to have environmental and labour regulations that evolve in a similar way over time. 

In any event, all of this posturing over level playing field seems to be a side-show given that Johnson hasn’t backed off from legislation that proves the UK won’t comply with any agreement. Again from RTE:

Meanwhile, British Prime Minister Boris Johnson will press ahead with plans allowing ministers to tear up the Brexit divorce deal he has already agreed, despite the current round of UK-EU talks being at a critical stage.

The British government will ask MPs to reinstate controversial legislation giving ministers the power to break international law by ignoring provisions in the Withdrawal Agreement relating to Northern Ireland.

MPs will vote on the UK Internal Market Bill on Monday, potentially throwing the talks on a UK-European Union trade deal into deep crisis unless an agreement can be reached by then.

In the meantime, The Sun reports that “red wall” voters from the Midlands and North will punish Johnson if he “sells out” on a trade deal:

They do not want him to betray his pledge to take back control of UK fishing waters. And 58 per cent of those voters said they would be less likely to return Mr Johnson to No10 for another term if EU judges continue to have control over British laws.

The ability for Britain to forge our own free trade deals around the world was also a major condition for Conservative support for 55 per cent.

The Centre For Brexit Policy who commissioned the poll said: “On the supremacy of the British Parliament, swing voters living in key battleground areas in the North that gave the PM his majority are adamant there must be no backsliding.”

The figures, based on a Savanta ComRes sample of over 2,000 people, will be a wake-up call for many Conservative MPs elected in traditionally Labour heartlands on narrow majorities.

The really no fooling around drop dead date appears to be just before next Thursday’s EU Council meeting. So before the start of business Tuesday looks to be the end of the runway. Stay tuned.

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  1. vlade

    Well, I guess we can see more fishermen in Sunderland once Nissan downscales the production there.

    Tories painted themselves into a corner, and the only remaining stragegy now is to claim that some other party (the EU) is not letting them to leave that corner.

    In the meanwhile, 4 out of 10 UK companies (including M&S) says they will cut food supplies to NI due to legal worries.

    1. Redlife2017

      I thought that no matter what, those companies will have to cut food supplies. And don’t get me started on what will happen in Kent, etc. on 1 January. Guaranteed [family-blog]show deal or no deal.

      Mr Redlife has figured that France is probably representing others and certainly not alone on their thoughts. Macron likes to look the heavy. But the Tories have built up this notion of what is sovereignty (uh, very ill defined but basically, it is that everyone does what we want and we get to “own” in that twitter sense the Euros) and there really is no way out. I cannot see how this ends with an agreement. And the Tories will have people to blame and also Covid. Blurg.

      2020 – the year when cans have no where to be kicked to. Or maybe the tide is almost completely out and we are definitely seeing who has swimming trunks on.

    2. PlutoniumKun

      We were discussing yesterday the likely reaction of Unionists to a No-Deal. Certainly for the upper middle class Unionists of Belfast, empty shelves in the local M&S would be a true deal changer, a real Arab Spring moment for them. They’ll be battering down the doors of the local Sinn Fein offices for their membership forms…..

  2. The Rev Kev

    Some time ago there was a guy’s link featured who would update the progress of Brexit with flow charts which were as informative as they were unknown in Whitehall apparently. By now, if he is still doing it, the number of flow paths must be very few left. This is more and more starting to resemble the ‘Kobayashi Maru’ scenario – but without any possibility of cheating to win. It is going to be awful next Tuesday.

    1. Ataraxite

      You’re thinking of Jon Worth He’s given up the Brexit diagrams as trying to make sense of the rumours, contractictory media reports, political feints and overall delusion has become too much for him. Can’t blame the guy.

    2. Redlife2017

      Ugh, the no win scenario without the cleverness of Kirk to get us out of it. But will we die with honour? Considering the cheats and liars in charge…I will go with no.

  3. PlutoniumKun

    I think the key indicator to watch is the Taxation Bill. The EU will not budge on this. If Johnson insists on pushing it through as it stands then that means he’s decided to go over the brink. If its quietly withdrawn or amended then that means he’s going to sign the deal. I think its anyones guess what he is thinking. The Sun apparently has articles the past few days insisting that ‘Red Wall’ voters will desert the Tories if there is a bad deal – I’d take this as a sign that Mr. Murdoch is happy with a no-deal, and he is very influential.

    I’ve seen it suggested elsewhere that it might not be just EU leaders who are signalling to Barnier that he may be going too far – the negotiations are also been watched by third party countries worried that something may be agreed that complicates their own agreements with the EU (or prospective agreements with the UK). As an example, the Chinese have quite complex arrangements over the importation of dairy and meat from the EU, this even includes the inspection of Irish facilities by Chinese health inspectors. Anything involving cross border food trade will be closely watched by them and expect them to speak up if they see a fudge that might result in non-certified food getting into the EU food chain, and hence to China.

    1. Yves Smith Post author

      Yes, the Brexit post yesterday said pressing forward with the offending clauses in the Taxation Bill would kill any deal, the EU would not stand for it. I just treated that as a given in today’s post rather than reiterating the point. My bad.

      1. larry

        This is in today’s Independent.

        “With less than four weeks to go until a no-deal, Jacob Rees-Mogg on Thursday confirmed that ministers will reinsert controversial clauses removed by the House of Lords from their Internal Market Bill.

        The House of Commons leader also announced the introduction of a new Taxation (Post Transition) Bill, which is expected to include other powers to overwrite parts of the withdrawal agreement.

        Ministers have admitted that their plans break international law, and the EU has said such a move would be “curtains” for talks. The precise content of the taxation bill is not yet clear, however.

        Hopes were raised that negotiators could be coming close to an agreement in London on Wednesday night after a large order of pizza was seen arriving at the door of their location – a sign of working into the night.”

        The UK government has admitted that the fisheries issue is inextricably linked to the issue of sovereignty. Once could be forgiven for concluding that this sticking point isn’t about the fishing inudstry at all, which is relatively small, but rather about something else Etonians care about, which is Britain’s past place in the world, something long gone but which they want back. Other fantasies they might be entertaining may also be clouding their judgement.

        So, Yves, you look spot on.

        1. PlutoniumKun

          I think the Ultras will have identified the Bill as the key issue they must win – if they can force it through, they get the no-deal they want (hence Moggies determination to reinsert all the clauses). I wonder if Johnson is even aware of the importance of cutting this off immediately if he really does want a deal. I’m no expert on Parliamentary procedures, but I wonder if a hard core of Tories could try to force it through even if it looks like Johnson is about to sign something, just to thwart it.

  4. John A

    I don’t think Johnson expects or wants to still be around come election time in 2024, so the red wall is of no importance to him, the fate of the Tory Party or even the people of Britain. He is already claiming to be poverty-striken on the £170,000 or so he has to get by on as PM, not to mention paying for his own food and nanny services. The Telegraph will re-employ him on much more than that, he’ll get on the extremely luctrative speaking circuit and other revolving-door sinecures. He has never cared for anyone or anything except himself and has a long track record of lying about pretty much everything. He will be quite happy to throw lighted matches on the petrol doused house of cards and walk away.

    1. larry

      John A, I think you have characterised Johnson’s character in a nutshell. He is just as narcissistic as Trump, though their other sets of pathologies appear to be somewhat different. As for the Telegraph, Johnson has alientated its editors, but this may prove to be a passing irritation for them.

    2. Pavel

      I was going to make the same point (though not so eloquently :).

      I don’t think Johnson gives a damn about staying on as PM. He got the shiny bauble he always wanted and will be content to go back grifting and making money to pay for all the alimony and child support (assuming he figures out how many kids he has).

      Though he may be too toxic for the staid Torygraph if Brexit turns into as much of a disaster as seems likely.

    3. PlutoniumKun

      Yes, ultimately whether or not there is a deal is entirely divorced from whatever is being negotiated right now. If Johnson decides its in his interests (or if he is persuaded by whoever has his ear this week), he will sign what is available now. If he decides a no-deal is best, the EU could concede on every single point and he still won’t sign.

      For those who think major turning points in history are all due to underlying forces, and not the whim of individuals, the next few weeks could be a wake up call. The entire future of the UK might depend on whether or not Johnson feels he can afford this months nanny bills.

  5. David

    I have a horrible feeling that we’re at that stage you get in some negotiations where nobody is really in control any more, and nobody is even quite sure now what the negotiations are about. In a standard negotiation of any kind, you can think of events as unfolding through a kind of funnel. In principle, you start with agreement on broad objectives and principles, then you move to major planks of the agreement, then you tidy up the details; There are always going to be unresolved difficult issues, and you bring the big guns in when you’ve exhausted what you can do at your level.

    At no point since these negotiations started have I ever seen this kind of process in action. The EU has largely proceeded along these lines in its own work (the WA for example), but the British seem to have been on another planet. It’s not clear at the moment that the two sides have a common idea of even what the negotiations are about, and of course each, in its own way, is having internal coordination problems. I mean, in what universe can you still be talking about the principle of a level playing field a few days before the deadline? In such a situation, I’m not sure that the players know what they want any more, or are even capable of understanding where they are, except that it’s a long way from where they wanted to be. Classically, this would be the point in a negotiation where you would bring the heavyweights in to restore order. But the structure of the negotiations prevents that. The weakness of the EU is that no-one is really in charge, the weakness of the UK is, well, Johnson. It’s like watching a slow motion car crash.

    I don’t, for what it’s worth, think the Red Wall thing matters much. Johnson won’t be around in 2024 and British politics will be unrecognisable by then anyway.

    1. PlutoniumKun

      I always find it amazing how much attention people are giving to fishing when, as you say, absolutely fundamental issues like the level playing field are still up for discussion. Reading through what Tony Connelly says, it does seem that the EU have a clear idea of some sort of independent legal process within the UK, but that sort of structure would take months to set up and agree – and of course the EU would be foolish to rely on verbal promises about it.

      Even if some sort of camel of a deal is cobbled together next week, I can foresee legions of lawyers all over the UK and Europe looking at how to misuse it or tear it apart as there are bound to be vast lacunae and outright contradictions given the nature of the negotiations. It would be a miracle if it is even moderately coherent and legally watertight.

  6. larry

    I recommend Chris Grey’s Brexit blog post of today for an incisive critique of what he thinks may be going on. He ends with a claim that the Brexiteers are incontinent liars. This has to do with their claim regarding the rapid approval of the Pfizer-BioNTech Covid vaccine. Personally, I don’t believe anything current UK government officials say. And that includes the Brexit negotiations.

  7. Brick

    Boris 72 virgins Johnson has his own agenda which the EU is concerned about. He has an image of a UK Tiger economy where business tax is reduced and worker tax is increased and worker rights are reduced to make UK business more competitive. Perhaps he sees himself as a chivalrous lady’s man pirate like Sir Francis Drake with henchmen dispatched if they cast aspersions towards lady’s. The UK is really a consumer society and relies on government understanding and using sectoral balances correctly (and not Chancellors messing up the bond curve). The concepts he favors increase inequality and are really the slave trader mentality which London residents caught on to that when he was Mayor. I think this attitude will be the driver of the discussions on business competition rules.

    The problem is the EU does not do subsidies but changes rules to subsidize and hides subsidies behind investment. It takes a blind eye to the tax regimes in Ireland and pretends new jobs in the east are not cannibalizing jobs from other countries. Any form of legal proper legal redress is likely to end in squabbles especially with France who heavily subsidize certain endeavors. Agriculture across most of Europe is so far behind world competitiveness that even the UK will have to fudge subsidies.

    The interesting question will be whether COVID has really changed the arguments enough for a deal to go through. Any suggestion that vaccines, drugs or food will be held up in customs and Boris will get in serious trouble. The UK’s new custom system to handle the new rules of course does not work currently so who knows what happens. This consistent theme for me is that the UK government is big on Rhetoric and very poor on getting down into the details. No deal legally means that many UK companies cannot trade by nature of the fact that most of their computer systems are in or closely tied to the EU. This places companies in an awkward position (ignoring the law) which they are not likely to look favorably on in the long term.

    I hope I am wrong but it looks like personalities will drive this towards a no deal despite any pleading from the US. That just makes the UK irrelevant and the more that happens the more the rhetoric will start to sound like it came from North Korea. Just maybe though the North of England is starting to figure out that it plays second fiddle to the south east and they will begin to undermine the government. Maybe some Brexit truths will come home to roost while the Brexit whisperers have headed for the hills.

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