One Brexit Deal Is Done, But the Big One Waits
(Bloomberg Opinion) -- After two phone conversations in as many days, Boris Johnson and European Commission President Ursula von der Leyen agreed to meet in person in a bid to keep the stalled Brexit trade talks from failing entirely. That rescue mission will take some doing.
But on Tuesday there was at least a positive sign: A side agreement was reached that removes the offending clauses of controversial U.K. legislation that would have breached the Brexit withdrawal treaty Johnson signed just last year.
Some saw the attention-getting legislation as a negotiating ploy, others as an existential matter of reclaiming U.K. sovereignty. Either way, it made a devilishly complicated situation more so since it meant there have been two parallel negotiations going on. Apart from the trade talks themselves, there were discussions, led by Johnson's cabinet colleague Michael Gove and EU Commissioner Maros Sefcovic, on the implementation of the Withdrawal Agreement and the accompanying Irish Protocol that ensured no return of a hard border with Northern Ireland.
The two negotiations were separate but intertwined. Without an agreement on implementing the protocol, Johnson would have pressed ahead with the legislation, which the EU made clear would have meant no trade deal.
All of this grew out of Johnson’s determination to have it both ways and find some additional leverage in the trade talks. Having signed the withdrawal deal last year (winning an election off the back of that success), the government quickly regretted how much sovereignty over Northern Ireland it had given away. It introduced the Internal Market Bill in September with a public declaration that the U.K. would be breaking international law in “limited and specific” ways to ignore the parts of the protocol that it doesn’t like. That gambit bore the fingerprints of his former adviser Dominic Cummings.
Tuesday’s agreement — which the British government says resolves all outstanding issues on the Irish protocol from border posts to the supply of chilled meats to supermarkets and the application of EU state aid rules — deescalates a major source of U.K.-EU tension. The deal will come as a relief to businesses in Northern Ireland and those trading with it. It removes a potential blight on Britain’s future relationship with the EU and the U.S. It’s a coup for Gove, and a reminder that the famously rules-driven EU can also be pragmatic.
The now defunct clauses would have allowed the U.K. to unilaterally waive the requirement that companies moving goods from Northern Ireland onto the U.K. mainland fill out export declaration forms. Another piece of legislation due this week, the Taxation Bill, would reportedly have given Britain the power to define the criteria by which goods from the mainland to Northern Ireland are deemed not at risk of entering the EU (and so wouldn’t need to pay a tariff). That threat has also been withdrawn.
Leaving the single market and customs union while also avoiding a border between Northern Ireland and Ireland means there has to be a border somewhere with the EU (in this case in the Irish Sea). It was always going to be costly and awkward. Even with a tariffs deal, there will be new trade barriers.
And even if Johnson reaches a trade deal, there will be sustained pressure on him from his party to ensure the EU isn't able to impose constraints through its rights under the Irish Protocol. Some Brexiters may even think this makes a no-deal exit more acceptable.
To its credit, it looks like the EU also recognized that a failure to find a compromise on the protocol would have dire implications for a trade deal and potentially Northern Ireland’s stability. Now it's down to Johnson and his EU counterparts to find a solution to the trade talks themselves.
Working against them is the absence of a clear deadline; the significant differences between the sides on the key issues of fisheries, rules for fair competition and how a deal would be policed; and the fact that Johnson struggles to make decisions where binary outcomes are involved. This is a prime minister who famously described himself as “pro having my cake and pro eating it.”
The contours of the broader trade talks, and the submission to reality on the Internal Market bill, show just how fanciful that is.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Therese Raphael is a columnist for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.
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