Last month, we reported that time was almost up in the Brexit negotiations and last weekend, it looked as if a make-or-break decision on the future of the talks would be made on 12th December. As is nearly always the case with EU negotiations, and Brexit especially, the talking has continued beyond the latest deadline. A few days’ back it was suggested that about 97% of the draft legal text had been agreed. More recently, there have been signs of progress on addressing two of the three outstanding issues – the Level Playing Field (LPF) and Governance. However, Fisheries remains unresolved.
On the LPF and Governance, the outline of the Deal is taking shape. EU Commission President Ursula von der Leyen claimed that the architecture of the LPF is based on two pillars: State Aid and standards. On State Aid, it appears that the common principles around robust domestic governance, and the right to autonomously remedy situations of unfair competition / distortions in trade have now been established. In terms of standards, the EU Commission President also claimed that a mechanism of non-regression on labour, social and environmental standards has been agreed although there some issues remain around future-proofing such arrangements.
Sources close to the talks suggest that the negotiators’ energies are currently focused on resolving the remaining LPF/Governance impasses. Thereafter, the final hard bargaining will take place on fish. This looks set to come down to a pure numbers game in terms of quota access which both sides are able to live with. The EU appears to be linking access to fisheries with access to its Single Market which gives an indication of how hard it intends to bargain. There are also rumours that a five-year review mechanism will be included in the trade deal which will take stock of how the fisheries quota share and access arrangements are working on the one hand and whether the playing field has remained level. A formal review of how any agreement is functioning would seem prudent.
Overall, it appears that the talks are inching towards a Deal, but hurdles remain which could still scupper the negotiations. The European Parliament is unhappy that it will not have the necessary time to scrutinise the agreement before voting on it. Although the EU would technically be able to ‘provisionally apply’ the Deal before MEPs get to vote, this is not desirable. All EU institutions would much prefer an EU Parliamentary vote on 28th December. To have any chance of meeting this timeline, an agreed text would be needed a few days in advance of Christmas.
If a Deal is not agreed until after Christmas, a short No Deal (interregnum) period in January becomes a distinct possibility. Some claim that even if both sides agree to provisionally apply such a Deal, a range of procedural measures would still be required. However, in such circumstances, one would surely think that some sort of brief standstill period could be agreed whilst the required measures are put in place?
From an agri-food perspective, there is a big element of wait-and-see in terms of what Deal might be agreed. However, irrespective of a Deal/No Deal, major changes are afoot. Whilst arrangements such as those recently agreed under the NI Protocol (see accompanying article), might provide for a limited grace period, preparations for friction on UK-EU trade in early 2021 need to continue with urgency. Customs agents need to be booked. There are reports that some do not want to become involved in agri-food because it is too complicated given all of the additional Sanitary and Phytosanitary regulations which can result in difficulties in getting consignments through Customs. For agri-food companies trading with the EU, training and upskilling in Customs and other regulatory formalities will also be necessary. This is especially the case for exporters to the EU, as it appears that regulations will apply to a greater extent from January in comparison with importing from the EU into the UK.