Richard North, 22/07/2020  

The Telegraph is telling us that it has "learnt" that Britain is close to abandoning hope of a Brexit trade deal, and will trade with Europe (meaning the EEA) on World Trade Organisation terms.

There are several ways of taking this news. It is possible that it's true and the report can be taken at face value. Or it could be a government-inspired leak, aimed at provoking the EU into responding with a better or revised offer.

There have been plenty of indications in the past that Johnson and those close to him think that, if the UK threatens a no-deal TransEnd, the EU will take fright and come up with a last minute deal. This could be such a ploy, although it is impossible to be certain.

On the other hand, if we are to take it at face value, then we have to accept that Ministers now believe that Britain and the EU will fail to sign a post-Brexit trade deal, "with just days to go until Boris Johnson's July deadline for an outline agreement passes".

If that is the case, then it has been told (possibly by Cummings or somebody close to him) that the government's "central working assumption" is that WTO terms will kick in after 31 December, although "senior sources" say that it remains possible that a "basic" agreement could be reached "if the EU gives ground in the autumn".

As it stands, although UK and EU negotiators began the latest round of negotiations in London on Monday, they remain deadlocked on the usual stumbling blocks of "fishing rights, so-called level playing field guarantees, governance of the deal, and the role of the European Court of Justice".

Through the day yesterday, we saw a piece on fishing that had European fishermen telling Michel Barnier to insist on EU boats "fishing the same amount of fish in UK waters as before Brexit".

This is an unsourced report by the Telegraph's Brussels correspondent and can mean something or nothing. What Barnier is asked to do by lobby groups, and what he does within the terms of his mandate are unlikely to be the same things. However, if he demands anything close to this, then it is obviously a deal-breaker.

That notwithstanding, we are told that the current round of formal talks between David Frost and Barnier is due to finish on Thursday, and that there is "no expectation on either side of a breakthrough". And that is almost certainly the case. If there was some sort of deal in the offing, the "mood music" usually signals the change.

Since there are no more face-to-face talks scheduled for this month, this means that if the parties walk away without an agreement, then Johnson's July deadline will have passed – for what that is worth, which is probably not a lot.

We're also supposed to read something into the fact that, last night, Frost hosted a dinner for Barnier in Downing Street, but while Mr Johnson had made a point of joining the two men the last time Barnier was in London, he made no such gesture this time around. This could be significant, but then it could just be that it's Johnson's nappy night.

There is a hint of the blame game emerging though, with that "senior source" saying that the government "has been making it clear for a while now that it is prepared for no-deal". Britain, we are then reminded, "isn't going to budge on fundamentals like fishing rights" – and then the money quote: "so it's all in the hands of the EU".

One has to remember, though, that this is a Telegraph piece, and if there were any doubts, this passage brings us back down to earth. "Britain is seeking a zero tariff, zero quota trade deal", we are told, "but trading on WTO terms would mean tariffs on goods and red tape that could lead to delays in the passage of goods entering and leaving the UK".

This is seriously in the land of the fayries, as if there was any doubt about there being delays – with or without "a zero tariff, zero quota trade deal". And if Johnson "has made clear it is a price he is prepared to pay" if the EU refuses to back down over its insistence on retaining some say over British laws and fishing waters, then he also needs to make it clear that this price is going to be paid, come what may – although not directly by him.

One does thus warm to the anonymous diplomat in Brussels who insists that the EU is ready for whatever the outcome of the trade talks may be. "They are right to work on the basis of no-deal [as] we are as well" this diplomat "from an influential member state" says.

He (or she) goes on to say that the bare bones nature of the trade agreement that British negotiators were pushing for means that there is "no material difference" between the deal or no-deal. And how very true that is. I wonder if Johnson and his merry men have the first idea of what they are letting us in for – or whether they even care.

As we get deeper into this piece, though, we see an insistence on banging the drum for the British stance. "Britain has stressed repeatedly that it is not asking the EU for a better deal than it has given other nations, but Brussels has insisted it will only offer a deal with strings attached", the narrative goes.

Then the paper employs a "UK negotiating team source" to tell us that: "We wanted to see an agreement this month. It's clear from the EU side that's not going to happen". The unspoken message is very clear: "it ain't our fault, Guv!".

The message is then reinforced with a further comment which tells us: "No trade deal has to be the working assumption, because that's what we have to prepare for. But it doesn't mean it’s what we want or are working to make happen". And, to nail it down, we have: "Mr Frost is understood to be ready to meet Mr Barnier again in August if there is movement from the EU on the sticking points".

Of course, the Johnson July deadline is self-imposed, and the EU is not bound by it. It has until the end of October, before it wraps up, so as to allow the European Parliament to strut its stuff, in time for final approval from the Council.

Some in Government apparently believe the parties will agree a deal, but the Telegraph has an anonymous "source on the British side" to say, "There is a chance of a deal, but it will be a basic deal, not a phenomenal deal. We should know by mid-August whether there's any chance it will happen".

"It all depends on whether the EU wants to step up negotiations over the summer", this source says. "If it doesn't, then the Government’s view is that it's not interested".

That is something of an acid test – but it takes two to tango. If both or either parties pack up for the summer break, then we can assume it's all over bar the shouting. Business will certainly need to take that view, and prepare for the worst, insofar as it can.

In reality, this has been the case for some long time. The Johnson administration has never given the impression that it has been serious about conducting trade negotiations with the EU. And, with the noises about abrogating the Withdrawal agreement, we can also assume that the EU will not be going out of its way to make things easier for us.

And even if there is a last-minute deal, it won't amount to very much. Then we'll start to discover the reality of working under WTO trade rules. The first few months of 2021 are looking to be a highly educative period for "Team Johnson", but there is every reason to believe that it will be the most expensive education in history.

Also published on Turbulent Times.

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