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Britain and Europe Need the Brexit Talks to Succeed

Britain and Europe Need the Brexit Talks to Succeed

Wednesday, 9 December, 2020 - 09:30

UK Prime Minister Boris Johnson is headed to Brussels this week for last-ditch talks with Ursula von der Leyen, head of the European Commission, on Britain’s future trading relationship with the European Union. In truth, with countless deadlines already broken and forgotten, there’s no last ditch. Regardless of what happens this week, Brexit promises a perpetual supply of new ditches — extending as far as one can see, and way beyond the end of the current transitional arrangements on Dec. 31.


Even if Johnson secures an agreement, and Britain avoids defaulting to a “no deal” arrangement based on World Trade Organization rules, the UK economy still faces imminent disruption. The limited free-trade deal that the prime minister has been seeking would avoid tariffs and quotas on trade in goods. But it would still put Britain outside the EU’s single market, meaning all manner of new restrictions, including new checks on goods at the border. Companies seem far from prepared for what’s coming even in this best-case scenario. The win that Johnson is hoping for would still cost the British economy — and the EU, for that matter — plenty.


Yet given the choice between bad and worse, bad is to be preferred. A free-trade agreement would ease some of these problems and, perhaps more important, signal a desire for cooperation and flexibility in managing the subsequent disruption. Lately, thanks mostly to Johnson’s erratic brinkmanship, Britain and the EU seem to have lost sight of their mutual interest in minimizing the harm of this ill-conceived divorce. A deal that reduces the damage can and should be done.


For months, talks have foundered on three issues. The first is a quarrel over the EU’s continued access to Britain’s fishing waters. Second is the threat that the UK’s divergence from EU policy on state subsidies and on labor and environmental legislation might pose to fair competition. The EU wants to bind Britain’s policies to its own to ensure a level playing field; Britain says that’s an affront to its sovereignty. And third is arrangements for resolving disputes. Brussels wants freedom to take rapid unilateral action, and to “cross-retaliate” — apply sanctions such as higher tariffs in sectors not involved in the dispute. Again, Britain says no.


In each case, there’s no clear-cut right or wrong answer. But all three are amenable to reasonable compromise — meaning that each side, in the larger context, can expect to gain more than it loses.


For this effort to fail over fisheries would be mad. The EU never seriously expected to permanently retain the access to British waters it had when the UK was a member of the union, and Britain never seriously believed that fishing rights would revert in full and at once to only its own vessels, regardless of the losses this would impose on its neighbors. Lately, both sides have budged, and they are now debating respective shares and phase-in periods. Too long has been spent on this relatively trifling disagreement. Split the difference and do the deal.


The other two disputes, on level-playing-field rules and dispute resolution, are more difficult because they involve deeper issues — pitting Johnson’s exaggerated notion of sovereignty against the EU’s instinct to dictate terms, now combined with understandable weariness at the prime minister’s endless showboating.


Britain won’t accept automatic alignment with EU rules (and no say in their content), and the EU won’t promise tariff-free access to its market regardless of British policy on subsidies and regulation. A plausible compromise would be for the UK to promise no regression from current policy, combined with cooperation and joint review of future reforms to judge their compatibility with the free-trade agreement. Dispute resolution, meanwhile, should favor deliberation over peremptory action, and should allow for independent arbitration — because what’s fair and unfair in subsidy and regulation is rarely black and white.


The evident desire, on both sides, to anticipate and deal with every possible scenario now is profoundly misguided. Future disputes can’t be resolved before they arise. They must be dealt with at the time, in a spirit of partnership and cooperation. Granted, Johnson did not help matters when he moved to unilaterally overturn aspects of the earlier withdrawal agreement that he himself had signed — a step his own government recognized as unlawful. It’s encouraging that, ahead of his meeting with von der Leyen, he’s withdrawn this threat. Perhaps this will inject some belated comity into what has been a ruinously fractious process.


It’s clearer by the day that Brexit was a tragic error. For now, it can’t be reversed. But Britain and the EU can still choose whether to be friends or enemies from now on. If they choose the latter, out of negligence or pointless obstinacy, the heavy costs of this fateful mistake will be hugely amplified.


(Bloomberg)


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