Brexit negotiators may still be deadlocked over phase 1 of their divorce, but both sides are already positioning themselves for the next clash — trade talks.
Heartened by commitment from EU leaders attending last week’s summit to begin “internal preparatory discussions” on the future trading relationship between the U.K. and the rest of the bloc post Brexit, the British government is pushing to get a trade deal wrapped up before it leaves in March 2019.
The EU27 have other ideas for how fast that can be done — suggesting more trouble ahead even if Brussels and London strike deals on Britain’s financial obligations to the EU or citizens’ rights, the issues that are causing so much heartburn now.
Speaking to British MPs Wednesday, Brexit Secretary David Davis said such a timetable was “eminently doable” so long as there was “political will.” Davis told MPs he fears discussing trade during a transition period would leave the U.K. in a “very difficult negotiating position.”
The remaining 27 EU countries, however, doubt that a rapid trade deal is achievable, and don’t see much incentive for them to try, particularly if the two sides are able to agree a transition period during which they could carry on talking.
It is “difficult to imagine that we can reach an agreement before [the U.K.’s exit in] 2019,” an EU diplomat closely involved in the talks said.
Leaving aside the question of how such a timetable would allow for votes by the European Parliament, the U.K. parliament and other national legislatures — Prime Minister Theresa May contradicted her Brexit secretary by confirming in the House of Commons later Wednesday that the British government would make time for such scrutiny of any eventual deal — many trade experts believe it is impossibly tight.
“I have never seen a deal negotiated and signed that quickly,” said Roderick Abbott, who spent 10 years doing trade work for the British government and 30 years in Trade department at the European Commission before being appointed deputy director general at the World Trade Organization in Geneva.
Even with the close regulatory alignment of the U.K. and EU, he told POLITICO, “it would take at least two years,” which means that trade talks would have to continue for months into a transition period — assuming one can be negotiated.
Even the most generous timetable for trade negotiations hinges on the EU27 allowing Brexit negotiations to move on from the current phase 1 — focused on citizens’ rights, the U.K.’s financial settlement, and the Northern Irish border — in December.
EU leaders are demanding further concessions from May’s government on the so-called Brexit bill before they will formerly agree “sufficient progress” has been made for talks to progress to phase 2.
“[They should] not take for granted that in December we move to phase 2,” said a senior EU diplomat from Central Europe.
At a meeting Wednesday, senior EU diplomats met to begin internal discussions about the second phase of negotiations.
“The key point now is that EU27 will start preparations for two scenarios for the December summit: One is no sufficient progress, and the second one is sufficient progress and move to phase 2,” said another senior EU diplomat. However, he stressed that “the start of internal preparations by 27 for a possible move to phase 2 should not be interpreted in a sense that such a move will actually or automatically happen.”
Even if the talks do shift from withdrawal to future relationship in December, Barnier’s mandate will need to be extended to include trade negotiations explicitly.
Assuming this is granted, Barnier insists trade talks will run on beyond the two years allowed under Article 50 for a departing EU country to negotiate its exit.
In an interview with a group of European newspapers published Monday, the EU’s chief negotiator said talks on future trade arrangements between the U.K. and EU would be very different from talks about a transition period. “[It] will be very different and will last several years. It is truly unique because instead of promoting regulatory convergence, it will aim to frame a difference,” he said.
Barnier also does not see himself as the man to conclude a lengthy trade deal, saying that he will step down from his role shortly after the U.K.’s official exit date.
Ironically, the U.K.’s hopes of achieving anything approaching a swift trade deal may depend on the Commission’s ability to maintain EU27 unity — rock solid in the talks so far.
It has been relatively easy to keep all the remaining EU countries singing from the same hymn sheet when their taxpayers’ money and citizens’ rights are at stake. But when it comes to trade talks, “national interests will not be so aligned anymore,” as one EU official put it.
Such divergent economic interests could leave negotiators with an EU position that is crisscrossed by red lines, slowing down the talks and making compromise positions harder to find.
Whether that fear materializes will largely depend on the Commission. Abbott said it is well used to doing that from its experience of negotiating trade deals on behalf of the bloc. And in any case, differences are often played up by national capitals for political effect, to demonstrate to certain interest groups — farmers for example — that they are fighting their corner.
“At the end of the day, if the Commission is clever, and in my experience it was … it produces something that everyone can sign on, that they don’t have to veto,” said Abbott.
Charlie Cooper and Tom McTague contributed reporting.
CORRECTION: An earlier version of this story misstated which publication interviewed Michel Barnier.