February 12th, 2020 / Insight posted in Articles

Tussles over Brussels muscles

The Brexit clock is ticking as Boris Johnson heads for crucial trade talks with the EU27. Here we are well into February and the UK’s EU membership has ceased. But of course Brexit has not been concluded. Whether we align with EU rules on competition policy, subsidies, social protection or the environment still remains to be seen.

Drawing on the 2019 Political Declaration that was part of the Withdrawal Treaty, the EU is likely to push hard for a ‘level playing field’, where the UK stays in line with EU environmental and labour market rules. Indeed Michel Barnier, the EU’s chief Brexit negotiator, has made clear that access to the EU’s market will come with tough conditions attached. This is both in terms of the UK’s continued adherence to the bloc’s rules and its acceptance of a role for the European Court of Justice (ECJ).

The UK position will be to drive hard for a free trade deal on tariffs and quotas – but the concessions for this to happen may well be too big for Boris Johnson to accept. Regarding the ECJ, Brussels insists that the ECJ must have a role in settling any disputes in the future over how to interpret EU law. Boris Johnson signed up to this in the Political Declaration EU27.

A Canada-style agreement is Boris Johnson’s targeted outcome but that could prove impossible to conclude, especially in such a tight timeframe. Also known as the Comprehensive Economic and Trade Agreement, this agreement was signed in October 2016 and provisionally came into force in September 2019. Waiting for all the EU27 states to ratify it could take several years!

Some 98% of all goods traded between the EU and Canada are tariff-free. All will be tariff-free within seven years, and EU and Canadian contractors can cross-tender for projects within the two regions.

Of course, the geographical proximity of the UK to the EU27 and the size of trade flows makes the situation unique. And the 2020 timeline is daunting.

To mitigate potential uncertainty, upheaval and extra cost following a no-deal Brexit, Moore Kingston Smith can help with contingency planning and guidance. Our BX360 analysis tool provides a bespoke evaluation of how Brexit will affect individual businesses. Find out more about BX360 here.