The EU’s Brexit Proposal, Explained
By: Dave Olsen
Tags: Europe, UK, Brexit, Politics, World

The EU’s proposal

What’s important to understand is that a lot of progress has actually been made in the talks, despite the pandemic hindering negotiations and distracting the leaders of the two parties, Boris Johnson of the UK and Commission President Ursula von der Leyen of the EU.

Hard at work, Lord Frost and Michel Barnier have been negotiating on behalf of their principals, but without yet finding agreement on two key issues: fishing, and the conditions for free trade.

The two sides have fairly rapidly agreed that around 90% of trade should continue to be tariff-free, in a similar style to the agreement which the EU has with Canada. The problem which is threatening to destabilise that entire agreement is that the UK wants to be able to diverge from the EU’s standards and “level playing-field” as it wishes to, “taking back control” of its laws.

The EU’s solution to this problem has been to propose an agreement based on constructive ambiguity. This is a fairly straightforward idea that has allowed so many important international treaties in recent decades, such as the Good Friday Agreement. The idea is that, instead of walking away entirely from a deal due to some small issues, you make an ambiguous deal that allows for flexibility and changes within its framework.

The EU, therefore, have proposed to allow free trade on goods so long as the UK follows its rules. However, if the UK ever wishes to depart from the EU’s standards on certain goods — and vice versa — they can unilaterally impose tariffs on those goods. Therefore, it would mean that the UK still has sovereignty to do as it wants with regulation, state aid, and workers’ rights, but preserve free trade where it doesn’t want to diverge.

Practically, that would mean most goods would still be exempt from tariffs, as the UK, even while a member of the EU, had significantly higher standards in most areas than the EU’s minimum requirements.

The other issue, fishing rights, is perhaps more symbolic, though still important. Sovereign nations have complete control over their own Exclusive Economic Zones, or EEZs. This areas are defined by the area of sea within 200 miles of a country’s coastline, or the median line between two different countries’ coastlines.

However, in the EU, member states have significant access to fish in each others’ EEZs. Naturally, EU member states don’t want to lose their access to British waters (though it should be mentioned that Britain will lose its access to EU waters, so we might think the EU’s approach to be somewhat unfair). Therefore, the EU has proposed that 18 percent of any fish caught in British waters post-transition period would be returned to Britain, as a compromise arrangement.

So that’s what the EU have put on the table. Now we need to understand why these two sticking points remain.

The UK’s Objections

Fishing is perhaps the easier of the two problems to deal with here. The UK has rejected the EU offer on the basis that it’s just not particularly fair. The Brexit campaign was fought on the basis of taking back sovereignty from the EU, getting out of its rules and regulations, and being able to set our own path. A key issue in the referendum quickly became fishing, with many fishermen keen to get out of the EU’s restrictive Common Fisheries Policy and “take back control” of our waters.

The simplest arrangement I can think of is to either maintain the right of both parties to fish in each others’ waters, or for neither to be able to, with the latter probably most palatable to Boris Johnson and the Conservative government. That doesn’t mean the trade of fish needs to be subject to any tariffs, but it would simplify the arrangement, and probably be the fairest way of resolving the issue.

The objection to the EU’s proposal on standards is a bit harder to make sense of, mainly because the issues that the UK has with it are not so much substantive, but rather rhetorical. Boris Johnson will get a deal — should a deal be found — through Parliament, but he knows that voters would take a dim view of a deal which might look like (to the untrained eye), or be easily spun as, the EU controlling the UK’s rules and ability to deviate from EU law.

Boris Johnson articulated this as a genuine objection at the Cabinet meeting after meeting with Ursula von der Leyen in Brussels on Wednesday, saying that he understood the EU’s proposal as making the UK the “twin” of the bloc, which would have to comply with the standards of its single market and which would not have fully taken back control.

That is, of course, nonsense. And it’s particularly difficult to understand when you consider that the UK has suffered an annualised 11% drop in GDP during the pandemic — the highest in the G7, and the second highest in the G20, just behind Argentina. Boris Johnson, for his own sake and for the sake of the British economy, has a really strong incentive to get a deal.

But populists will be populists, and, as I have written about previously — most recently here, at the start of the pandemic here, and before the general election here — it’s been a tumultuous year for the wave of populist leaders elected in the late 2010s, as they have struggled to adapt their methods to a serious health crisis.

No-Deal is likely — but what will that mean?

So, with two clear sticking points remaining — one where the UK is probably being unreasonable, and one where the EU is — it is now highly likely that the UK will not have a free trade agreement with the EU on January 1st when the transitional arrangement expires.

However, “no-deal” will not mean absolutely no deal at all — both sides have agreed to limited-time, temporary additional transitional arrangements in case no agreement can be found, which will ensure that air and freight travel is not abruptly cut off between the UK and EU.

And a no-deal scenario doesn’t mean that a deal couldn’t be struck in future either. It just means that, for now, the UK and the EU would trade on WTO terms, with standard tariffs for two parties without their own bilateral agreement.

No-deal would significantly hack at the beleageured economy of the UK, and it wouldn’t do European economies any good either, with many countries on the continent also reeling from multiple lockdowns and high government spending.

But while both sides remain dug into their positions, this economic catastrophe looks set to be compounded by a no-deal Brexit in the new year.