Brexit: blancmange deals

18/06/2020

From having almost disappeared off the agenda, swamped by Covid-19 news, Brexit – or, to be more accurate, Trans-end – is making something of a comeback.

Pete has even been moved to write about the subject, commenting on the government declaring its formal interest in CPTPP, the Pacific regional trade agreement. He is not impressed: this is mainly a regional agreement on tariffs with investment and services provisions, only marginally more sophisticated than the WTO baseline.

Like every trade agreement, though, it has its winners and losers, with Canada benefiting from an uptick in sales of animal products to CPTPP partners – an interesting outcome as the EU-Canada CETA failed to deliver for the Canadian livestock industry.

The trouble is that even recent data is of little help in assessing performance. Covid-19 is progressively rewriting the global trade map. What might have looked promising, pre-pandemic, may offer very different prospects now. Before the disease hit, there was even talk of the US rejoining what, after all, is son of TTP, together with China.

More than a year ago, that possibility was being touted as a way of reducing tensions between China and the US, although hopes of China joining are being kept alive.

The latest seems to be that China’s decision-makers and stakeholders remain uncertain as to whether the benefits of the CPTPP membership would outweigh the costs and therefore remain divided on whether to proceed. There has even been a suspicion that the agreement is a politically-driven containment tool, although the lack of interest of Trump's USA has tended to alleviate concerns.

However, it does say that, for the UK, CPTPP is something of a leap in the dark – but then that is a reasonable description of Britain's entire post-Brexit trade policy. The interest here seems more like displacement activity, to siphon attention away from the lack of progress on the EU front.

Much as the Johnson gang would like to think otherwise, trade issues with the EU are not under control and neither are they going away. We're seeing multiple reports that Berlin is unimpressed by the recent "tiger in the tank" rhetoric, and is urging the EU Commission to draw up contingency plans for a no-deal Trans-end.

This, apparently, comes from Reuters, which has got hold of an internal German government document which "casts doubt" on Johnson's optimism about an early deal.

"From September", the document says, "the negotiations enter a hot phase", noting that "Britain is already escalating threats in Brussels", wanting "to settle as much as possible in the shortest possible time". It predicts that the UK "hopes to achieve last-minute success in the negotiations", a favoured MO for Johnson.

The German Foreign Office is fully convinced that the transition will not be extended beyond the end of this year, and this says that it is, "important to preserve the unity of the 27, to continue to insist on parallel progress in all areas (overall package) and to make it clear that there will be no agreement at any price".

Rather looking for the headline, one suspects, the German Foreign Office has coined the newly-minted end point as "no-deal 2.0", although it is difficult to imagine how this might differ from the original version.

For all that, Berlin is suggesting that the situation is not as bad as it has been, arguing that some of the more important issues were sorted by the Withdrawal Agreement. But it still believes that London's decision not to extend the transition might lead to a "cliff edge", compounding the economic damage caused by the coronavirus crisis.

The lack of great concern might reflect the different position of the Germans, vis à vis Brexit, as they are proportionately less vulnerable than the British to the trade impact. But it doesn't take a great genius – of even a German civil servant – to work out that a no-deal Trans-end might add to the grief on Covid-19.

Ursula von der Leyen, meanwhile, is putting her own oar in, reiterating the somewhat hackneyed EU stance that there will be no post-Brexit deal without the famed "level playing field" – the one for pigs in pokes to romp on.

No one can fault von der Leyen for her determination to make statements of the bleedin' obvious, as she says, "The negotiations with the UK always promised to be difficult and they have not disappointed".

Presumably without the aid of the Commission supercomputer, she has worked out that "We are now halfway through these negotiations with five months left to go". But she also adds that, "we're definitely not halfway through the work to reach an agreement". That much isn't new, and neither is her saying: "We will do all in our power to reach an agreement".

I suppose she, and the cohorts of EU officials will be saying that right up to the point when the UK walks away without a deal, muttering something like "we tried" in all of its 24 official languages.

Despite that, there does seem to be some movement on the fishing issue, with von der Leyen conceding that, at the end of the transition period, the UK will have clawed back "sovereign rights" over its waters. VDL says that all Brussels wants is a "long-term agreement", to give continuity to EU Member State-flagged vessels which have acquired rights.

This, though, is the pinch-point, as the UK is only prepared to look at access on a year-by-year basis, starting afresh each year with annual negotiations on fishing opportunities.

Seeing as the UK has always railed against the annual fisheries 'quota fest' in Brussels, and approved the introduction of multi-annual allocations, it is a bit rich for "team Johnson" once again to be applying annual limits. That is no way to run a commercial fishery.

Von der Leyen has thus told the European Parliament that "No one questions the UK sovereignty over its own waters". What she wants is "predictability", which means guarantees for vessels which have been sailing in UK waters "for decades".

What is going to be as difficult, if not more so to resolve, is the issue of treaty governance. This has had relatively little coverage, but right from the start, the EU has wanted a single, over-arching agreement, with standard rules and institutions, and a common dispute procedure.

This was the stance it took with the ongoing negotiations with Switzerland, arguing that the multiplicity of treaties was resource-intensive and needed to be rationalised. The Commission can hardly ask anything different of the UK, but the British government is still looking for a series of stand-alone agreements, none of them dependent on the others. Refusal of the UK to play could be a deal-breaker.

The European Parliament, on the other hand, is repeating its threat that it might hold back on ratification of any deal that doesn't meet with its expectations, with Kati Piri, the parliament's rapporteur on the "future relationship" negotiations saying that "parliament is united on a strong text with a clear political message, and that message is simple: yes we want a deal, but we will not simply consent to any deal".

No one serious though really believes that the European Parliament will strike an independent note if the Commission approves a UK-EU deal.

With these negotiations, though, nothing ever seems to be settled. Almost from the sublime to the ridiculous (except that big money is involved), Barnier is accusing the UK of trying to reopen an already fixed agreement on protecting EU regional food specialities, with mutual recognition of "geographical indications".

This may seem an issue of relatively less importance, but it perhaps serves to confirm the EU's view that dealing with the UK is like negotiating with a blancmange. Nothing ever settles and the moment you get close, it wobbles.