Richard North, 11/10/2018  
 


A couple of days ago, I was remarking that the media coverage of the latest instalment of the Brexit soap opera didn't make sense.

It doesn't make much more sense now, but at least we have another speech from Michel Barnier to work on. By rights, we should have been able to put this alongside Tuesday's statement by Dominic Raab in the House of Commons. But that was such a vacuous word salad that it wasn't even worth reporting. I regret the time wasted reading it.

As for Barnier, much of what he said at the closing session of Eurochambre's European Parliament of Enterprises was familiar ground. But the fact that much of what he had to offer was unchanged told us something. The Commission in large areas of its work has reached the end of the road. There have been some concessions but there are to be no more.

The crunch is what it has always been. The UK wants to leave the Single Market and the Customs Union and that means that there must be checks of goods between the EU and the UK. That is unarguable and is not up for discussion.

Interestingly, Barnier lists customs and VAT checks. I may be wrong but I cannot recall him ever having specifically referred to VAT checks. I wonder if its dawning on the Commission that cross-border VAT issues could end up being as big a problem as the rest combined.

Anyhow, Barnier then addresses the crucial question. Both the EU and the UK are agreed that checks will not take place at the border between Northern Ireland and Ireland, so the matter to be resolved is where those checks will take place.

On offer are some administrative devices to make the checks in the least intrusive way possible, but there is no compromise on the fundamental point that checks must take place. And the sticking point is going to be what Barnier calls "health and phytosanitary checks" for animals and products of animal origin.

EU rules, he says. are clear. These checks must happen at the border because of food safety and animal health reasons. And obviously, in the future, the island of Ireland will remain a single epidemiological area.

Barnier, however. notes that checks already exist in the ports of Larne and Belfast. Post-Brexit, though, they would have to be 100 percent of live animals – a tenfold increase on the ten percent currently checked. And animal-derived products would have to be included for the first time.

To be fair, the EU's chief negotiator understands why such procedures are politically sensitive. But he makes three remarks. Firstly, he says, Brexit was not our choice. It is the choice of the UK. Secondly, the EU's proposal limits itself to what is absolutely necessary to avoid a hard border, but it gives Northern Ireland benefits that no part of a third country enjoys.

I think this is the point where he is saying thus far and no further, but he also makes reference to meeting the leaders of all Northern Ireland – Arlene Foster, DUP leader, among them. And, to judge from the press conference held afterwards, there was no meeting of minds.

As to Barnier's third point, his language is a little confusing. He talks of a "backstop" which will be needed "because it will be negotiated after the UK's withdrawal". But that brings him to the outline of the future relationship, whence he notes that "certain British positions expressed in the White Paper do not correspond to the guidelines of the European Council and to my mandate".

That's obviously the code for saying that Chequers is toast, or pain grillé. Anglicised, that could mean grilled pain, which is probably what Mrs May is experiencing.

We agree to base our future relationship on a free trade area without a tariff or quota, says Barnier. "But", he says, "we have two points of divergence with the British proposals because these two points are clearly contradictory to the foundations of our, your single market".

Firstly, in customs matters, he avers that the UK would like to maintain the autonomy of its trade policy, to be able to negotiate its own agreements, while remaining in our customs area. It also wants to apply its own external tariffs while collecting European customs duties.

These are problematical enough but what really screws the pooch is the divergence on the regulatory framework for goods. The United Kingdom has asked to align with a substantial part of our standards for goods, but only part of them, in order to maintain the same participation as today in our internal market, for these goods only. At the same time, it wishes to remain free to diverge on all the regulations that apply to the factors of production of these goods, whether we think of services, labour, capital or social standards and environmental.

Here, it is worth referring directly to the speech as M. Barnier gives some worked examples of how this "single market à la carte" would be "tantamount to offering the UK and its companies a major competitive advantage over companies working in the single market".

For instance, in the regulatory cost of chemicals, only 31 percent of the regulatory price is related to the REACH regulation. The rest is induced by compliance with other Union regulations, for example environmental standards. And it is on this part that the British would like to remain able to diverge.

This is our pain grillé on toast, so to speak. But negotiations with the UK continue this week intensively, day and night, in an attempt to meet the goal set by the leaders of the 27 that the agreement should be "at hand" for the European Council of 17 October - Wednesday next!

This has been taken by some in the media to suggest that a deal could be finalised by next week, but the main UK news is more focused on the DUP plans to topple Mrs May's government if too much is conceded to Brussels - grilled pain indeed.

Some commentators, though, think Foster is bluffing. The DUP has a lot to lose by bringing down the May government, which means that there is a deal there to be found.

In his speech, Barnier is clearly aware of what is at stake. In case of "no deal", costs would be very high, he says, first for the United Kingdom but also for certain sectors of our economy. But, he adds, there will have to be adaptations. "It cannot be business as usual", he warns.

Here, Spiegel Online picks up the threads. Diplomats, it says, continue to believe that the Brexit negotiations could fail, largely because of the unpredictable situation in British domestic politics.

Thus, when the European Council meets next week, unless there is "decisive progress" in the negotiations, the EU-27 will be "prepared for failure". At that point, the special European Council pencilled in for November could be rededicated to prepare for a "no-deal" Brexit.

Furthermore, the Commission has already ruled out cooperating with the UK on planning for a no-deal scenario and is not anticipating any special measures for transport, customs or financial services. Thus, should it indeed come to no-deal-Brexit, says Spiegel Online, "in all likelihood, the consequences would be dramatic".

For all that, there are doubts in Member States as to whether the Commission's minimalist contingency plan is sufficient. Many EU countries, including Germany, would like to move faster. Legislative proposals must be drafted by mid-November at the latest, so the November venue is ideal. The next scheduled meeting is not until December. By then, Spiegel Online observes, "it might already be too late".

By that measure, if there is a November Council and the UK is still in the game, we can judge that progress has been made – whatever the noisemakers might say. With no meeting to settle contingency measures, the EU will be committed to a deal. For once, we will all be sailing in the same boat, sharing the same pain.






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