Post-Brexit agenda update

After two unsuccessful first sessions, in a context weighed down by the COVID-19 pandemic, the United Kingdom and the European Union resumed their negotiations on post-Brexit relations on Monday 11th May.

Crystallisation of quarrels over Northern Ireland issues and fishing rights

Previous talks in late April cast considerable uncertainty over London and Brussels' ability to come to an agreement by the end of the year. "The United Kingdom did not want to make a serious commitment on a number of fundamental points," regretted Michel Barnier, EU's chief negotiator. Negotiators must theoretically decide in June whether or not to extend the transition period and thus allow themselves more time to negotiate. But London still rejects this idea, even if the Coronavirus epidemic has disrupted the calendar of discussions which now take place via videoconference. German Foreign Minister Heiko Maas warned on May 9: "The British government still refuses to extend the deadline (…) If this continues, we will have to face Brexit, in addition to the Coronavirus at the end of the year".

Among the quarrels is the continued existence of an EU delegation office in Belfast, Northern Ireland after the end of the transition period. The UK has formally rejected the idea twice, with British Minister Penny Mordaunt seeing it as a "political and community divide" in the province. Following the last round of talks in April, Mr Barnier stressed that the EU needs "hard evidence that the UK is making progress on new customs agreements".

A third round of negotiations ended on 15 May with British chief negotiator, David Frost and Mr Barnier blaming each other for the deadlock at the heart of the talks.

The United Kingdom is asking nothing more from the EU than a classic free trade agreement, along the lines of that concluded by the EU with Canada, around which several sectoral agreements could then be negotiated. The EU replies that it can only propose an ambitious trade deal to London if it is accompanied by solid additional guarantees in the area of fair competition, the famous "level playing field". In particular, the question of fishing rights remains contentious: the United Kingdom reaffirms its ambition to become an independent coastal state, with annual renegotiations on fishing quotas in its waters, a measure the EU refuses.

Until the next round of negotiations scheduled for June 1, the idea of a hard Brexit lurks, with a return to trade under World Trade Organization (WTO) conditions in 2021!

And meanwhile… the UK is also talking to the US

While post-Brexit trade negotiations with the EU have continued to be bogged down, further talks between the UK and the US began via videoconference in early May with a view to an ‘ambitious’ free trade agreement. More than 100 government officials from across the Atlantic are involved. The first session of negotiations is part of a calendar of meetings held every six weeks, the British government’s goal being to have an agreement signed before the end of the year, in parallel with the post-Brexit pact with the EU.

But on that front, nothing is straight forward either: the congressional and presidential elections to be held in November reduce the chances of reaching consensus in time. In 2018, the United States was the United Kingdom's most important trading partner, accounting for almost 19% of British exports and 11% of its imports.

Boris Johnson’s government wants to reach agreements covering 80% of its foreign trade within 3 years and has chosen to favour the United States, Australia, New Zealand and Japan.

A new customs tariff under study

In this context, on Tuesday the United Kingdom presented its new customs tariff, UK Global Tariff (UKGT), for a post Brexit context which will replace the EU’s CET (Common External Tariff). Customs duties will be maintained on a certain number of products from the agricultural, automobile and fishing industries in order to preserve the sectors concerned locally.

The UKGT retains a 10% tax on the importation of cars, but will remove all tariffs below 2%, which should make it simpler and cheaper than the European CET. In addition, customs duties will be eliminated on a wide range of products: 60% of trade would thus enter the United Kingdom duty free from the 1st January 2021, under WTO conditions or via the current preferential access, according to the government.

Border controls for the entry of goods

Still on the customs front, in a letter addressed to the Northern Ireland parliament, Boris Johnson acknowledges that there will need to be customs checks within the Northern Ireland territory for goods coming from Great Britain, after the post-Brexit transition period. These checks will be carried out in the three ports of Belfast, Warrenpoint and Larne.

A sensitive issue. As a principle, the Northern Ireland unionist parties have long refused anything that might appear to be a de facto border within the United Kingdom. Irish nationalists from Sinn Fein, for their part, refused any border between the Republic of Ireland (a member state of the European Union) and the British province of Northern Ireland. However, each year, 450,000 lorries transport goods from Great Britain to Northern Ireland to the value of €12.42 billion. Traders in Northern Ireland are claiming formality exemptions for products intended for the local market only. They have evaluated the additional cost of controls at £100 (112 €) per lorry. "A document detailing how the border between Ireland and Northern Ireland will function will be released soon," said a spokesman for Downing Street.

Immigration control

On May 18th, British parliamentarians also adopted post-Brexit immigration reform, which will end the right for workers in the European economic area to immigrate freely to the United Kingdom in 2021. This means workers from the European Union but also from Iceland, Norway, Liechtenstein and Switzerland. New entry criteria are not yet detailed, but Prime Minister Boris Johnson has already presented a points system project, which is expected to favour candidates in highly qualified occupations. The Republic of Ireland will be exempt from immigration rules under a free movement agreement which pre-dates the two countries joining the EU in 1973.