Johnson Faces Deal-Or-No-Deal Choice as EU Balks at Demands
(Bloomberg) -- Boris Johnson faces a choice in the next few hours that will define his premiership: accept a trade deal with the European Union or go it alone.
It could scarcely have come at a more difficult time. As he wrestles with his dilemma about the U.K.’s relationship with its nearest and biggest trading partner, his government is battling a new, highly contagious variant of the coronavirus that has prompted EU countries to impose travel bans and plunged much of England into emergency lockdown.
With only days remaining until the U.K. leaves the EU’s single market and customs union at 11 p.m. London time on Dec. 31 -- and the British government ruling out any extension of that deadline -- it’s still not clear which way Johnson will turn after the bloc refused to offer more concessions over the weekend.
People close to the negotiations on both sides said there’s a strong possibility a deal could be done on Monday -- but acknowledge that there’s still a significant chance that the talks could collapse.
Although both sides view Christmas as a natural deadline, EU and British officials aren’t even ruling out being asked to return later in December for one final push if that’s what’s needed. EU officials said the issue isn’t really about time, but whether Johnson wants to go for it or not.
“The obligation over the next few days is to close out this negotiation -- that can be done,” Irish Foreign Minister Simon Coveney told RTE Radio. “Countries like France, the Netherlands, Denmark, Belgium, and Ireland, are very unlikely to support a further offer because we have we have our own interests, just like the U.K. have.”
Johnson wants to extract concessions from the EU to secure a good deal in order to satisfy lawmakers from his own party who he’ll rely on to get an agreement approved. Several have been pushing for him to walk away from the negotiations and many of those same MPs are also unhappy at the way he’s handled the latest developments in the coronavirus crisis.
As the Brexit uncertainty continued, Johnson was set to hold a meeting of the U.K. government’s emergency committee on Monday to discuss the surge in infections and the impact on international travel. Meanwhile, the pound tumbled 2.5% against the dollar for its worst day since the virus roiled markets in March.
David Frost, the U.K.’s chief negotiator, and his team of about 25 people are in Brussels, where they await their final orders alongside their counterparts from the EU Commission.
“In this crucial moment for the EU-U.K. negotiations, we continue to work hard with David Frost and his team,” Michel Barnier, the EU’s chief negotiator, said on Twitter on Sunday. “The EU remains committed to a fair, reciprocal and balanced agreement. We respect the sovereignty of the U.K. And we expect the same.”
The entire deal -- one that would encompass a security relationship and cooperation arrangements in several other areas -- now hinges almost entirely on reaching an agreement on the rights EU boats will have to fish in British waters.
Johnson’s government sees taking back control of U.K. waters as an issue of sovereignty, while European countries with large fishing industries are resisting any moves by the EU to make concessions to secure a deal.
After discussions with member states on Friday, the Commission made an offer that would see the bloc lose around 25% of the current 650 million euros ($735 million) of fish it catches annually in British waters. The U.K. rejected it, and has been pushing for the EU to give up 60%, according to the officials who spoke on condition of anonymity.
The difference between the two sides in economic terms therefore comes down to about 230 million euros worth of fish, a tiny amount in the context of their wider trading relationship. U.K. commerce with France alone amounts to about 53 billion euros a year.
The EU’s offer was widely seen as final, people close to the negotiations said. The bloc also offered to reduce the phase-in period of the new arrangements to six years, after originally wanting 10. The U.K. rejected the offer of six and has proposed just three years.
A person familiar with the British side of the negotiations said that basic questions remain unanswered as to what the EU’s proposals mean for U.K. fishing communities.
Johnson faced calls on Monday from Scotland First Minister Nicola Sturgeon and London Mayor Sadiq Khan to extend the U.K.’s post-transition period beyond the end of the year to allow more time for negotiations. That’s something Johnson has previously ruled out and which the EU has said may be legally impossible.
The European Parliament, which has a veto over the whole agreement, warned it won’t be able to ratify any deal in time for the end of the transition period on Dec. 31.
The EU may have to take the rare step of applying any agreement provisionally, before putting it to a vote in the new year -- or the U.K. could face a spell outside the bloc without a trade deal.
“We need more time,” Bernd Lange, chairman of the European Parliament’s committee on international trade, told Bloomberg Television on Monday. “We are ready to be flexible, but the final word will be in the next year.”
Failure to reach a trade deal would leave the U.K. doing business with its largest and nearest commercial partner on terms set by the World Trade Organization. That would mean millions of businesses and consumers would face the cost and disruption of tariffs and quotas.
©2020 Bloomberg L.P.