Richard North, 28/09/2020  
 


The tempo seems to be quickening as we approach the final stage of the future relationship talks with the EU, set to begin on Tuesday. Media reports on the talks, however, seem to be all over the place, leaving us guessing – as always.

According to The Sunday Times, if this ninth round of talks is successful, Frost and Barnier hope to enter the "tunnel", at the end of this week, where final details will be hammered out in total secrecy.

These secret discussions would then be expected to last two weeks, allowing an agreement to be presented to the European Council at its meeting on 15-16 October.

Current "mood music" from Frost is optimistic, with him describing a deal as "very much possible". All it needs to get an agreement over the line, according to Frost, is for the EU to "scale back" its "unrealistic ambitions" in areas such as fishing.

What seems to be different – or so we are told - is that Johnson really, really wants a deal, having been pressurised by Gove, the minister in charge of no-deal planning. Gove is said to be "terrified" of the combination of a second coronavirus hit and a no-deal TransEnd.

Supposedly, the narrative on offer is that Brussels would water down its demands for "onerous checks" on the movement of goods between Great Britain and Northern Ireland. In return, the UK would agree to "baseline rules" on state aid, without having to remain fully aligned to EU rules.

Frost's officials have privately said: "There will be a deal" which, according to a Tory source will allow Boris to say "with a straight face" that "there aren't meaningful restrictions on GB-NI trade and they will get some reassurance on state aid".

Frost himself says: "As we enter the final stages of negotiations we are all focusing on what it might take to get a trade agreement in place. An agreement is still very much possible, but equally very far from certain".

Much the same signals are coming from the Financial Times, which confirms that the target is to make enough headway to justify both sides entering into the "tunnel".

Officials have said that this week's talks will establish whether signs of flexibility in recent EU-UK contacts, including informal talks last week between Barnier and Frost, could turn into real movement.

Apparently, the two sides have discussed the idea that a solution on fish could include a "phase out" process by which EU catching rights in UK waters would decline over a period of years. Nevertheless, officials from EU fishing nations caution that the two sides are still far apart and there were limits to what their governments would accept.

Particular problems include the UK wanting long-term fishing rights to be based on "zonal attachment", which is still a bone of contention. One diplomat says, "It's hard to imagine any compromise based on zonal attachment", suggesting that, "fishing communities would probably sooner opt for no-deal".

On state aid, the FT says that Brussels is seeking to work around Britain's reluctance to spell out in detail its state-aid regime by proposing to write principles directly into the trade deal.

Yet, for all the guarded optimism, the Guardian is doing its best to dampen expectations, with the headline, "Brussels punctures optimism that deal is in sight". EU sources, the paper says, fear Boris Johnson hasn't yet got backing for compromises on state aid to business.

Barnier, at the end of last week told ministers from the 27 Member States that there was "a more open atmosphere at the negotiating table", but he had also emphasised that "substantial differences of opinion remain, particularly on a level playing field" – the issue of state aid to businesses.

The enthusiasm for entering the "tunnel", therefore, is primarily at the Downing Street end. Brussels, on the other hand, is not convinced the prime minister yet has the support of his colleagues to commit to what might emerge. Senior EU officials are treating with scepticism reports that the UK could see a way to secure a deal.

"We cannot trust this prime minister's word, so the EU Member States are not yet willing to go blind into a tunnel negotiation and see what happens", says one source, "It will take more than David Frost telling us Johnson wants a deal".

When the next round of negotiations opens this week, the EU is hoping Frost will present a compromise proposal on state aid. "There is better mood music but no substance yet from London to justify it", one diplomatic source says.

Negative vibes are also coming from the Irish Times, which warns that the most intractable issue remains state aid. Although the EU made a major concession during the summer, dropping its demand that Britain should continue to follow EU rules, there has been no further progress on the issue. Talks over dinner between Frost and Barnier in London last week bore no fruit. There is now "little hope in Brussels" of a breakthrough this week and no sign in London that Frost is about to budge.

Predictably, the CBI is getting a little frenetic about the lack of progress, with director general Carolyn Fairbairn declaring: "Now must be the time for political leadership and the spirit of compromise to shine through on both sides".

Insisting that, "A deal can and must be made", she says that, "Businesses face a hat-trick of unprecedented challenges – rebuilding from the first wave of Covid-19, dealing with the resurgence of the virus and preparing for significant changes to the UK's trading relationship with the EU".

Showing somewhat inflated expectations, she adds that, "A good deal will provide the strongest possible foundation as countries build back from the pandemic. It would keep UK firms competitive by minimising red tape and extra costs, freeing much-needed time and resource to overcome the difficult times ahead".

I've never been particularly impressed with Fairbairn, and her woolly optimism seems to suggest that she is not on the ball. Deal or no deal, some of her members are going to have a pretty torrid time, and most of them will face extra "red tape" and additional costs, come what may.

Slightly more realistic, perhaps, is Ireland's Taoiseach Micheál Martin, who is pessimistic about the chances of an EU-UK trade deal. He says that the Internal Market Bill has "eroded trust" between the two sides, with the EU no longer confident that Britain's word can be relied upon.

The Irish government is preparing its budget in three weeks' time on the basis that there will be a no-deal Brexit. "That's the basis on which we're preparing the budget and we're warning and alerting businesses to that terrible reality", says Martin.

With far too many imponderables, though – and the distinct possibility that both sides are grandstanding in order to establish their positions - nothing can be taken from the flurry of media interest. We must assume we are being told what the players want us to know, which means we can't rule out surprises over the coming week.

We'll know what's happening when it's happened, with at least two weeks to go before we get a final result. Meanwhile, the "noise" will continue.

Also published on Turbulent Times.






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