Impressions of meeting with Michel Barnier in Brussels – John Mills

ON WEDNESDAY, 10TH JANUARY 2018

    Michel Barnier is an impressive person, tough and charming, who is evidently well on top of his Brexit brief and thus a formidable person to have on the other side of the table as the Brexit negotiations take place. He wants to get a deal completed but not at any cost to the EU27.

    His primary aim is to secure the integrity and security of the Single Market and the Customs Union rather than to search for a deal which is necessarily in the overall best interest of both the UK and the EU27. The notion that the EU27 may make substantial concessions to avoid economic pain is therefore very probably misplaced.

    While the best outcome from both the UK’s and the EU27’s point of view has always seemed to be for the UK to be outside the Single Market and the Customs Union but with a free trade deal in place covering goods and as many services as possible, this now looks as though it may be difficult to achieve. This is despite the fact that this is substantially the relationship the EU27 has with other countries as varied as Israel, Peru, Mexico, South Korea, Canada and the Ukraine.

    There are at least four major reasons why this is the case, these being:

1. The UK is starting from a radically different position from these other countries – essentially looking for a divorce rather than marriage, with all the baggage that this brings with it.

2. The UK is a much larger player in EU trade terms than any of these other countries, and thus potentially more disruptive if derogations are needed from the existing carefully balanced EU acquis.

3. The UK’s negotiation position has been gravely weakened both by the sequencing insisted on by the EU27 – dealing with money, Ireland and citizenship before trade – and by the result of the recent general election which has left no majority in Parliament for the WTO option which – although not the optimal outcome – is the only realistic fall-back position for the UK to have, without which the EU27 is left with all the cards in its hands.

4. Time is running short, although some extension of time by suspending Article 50 to create the proposed transitional period may help.

    In these circumstances, the most likely offer to the UK from the EU27 seems be free movement of goods and some concessions on services with the UK formally outside the Single Market and probably the Customs Union too but with the UK having to continue to accept nearly all the legal and regulatory obligations currently in place. These will almost certainly include substantial annual net contributions to the EU budget, free movement of people, significant jurisdiction by the ECJ, constraints on the UK’s capacity to negotiate trade deals on its own, and continuing membership of both the Common Agricultural Policy and the Common Fisheries Policy.

    An offer to the UK along these lines would probably be supported by all the EU27, led by Germany and France, but may not be acceptable to Parliament, let alone the British electorate. In these circumstances, preparing for the UK to fall back on WTO terms appears to be essential both to safeguard the position if no acceptable deal is presented to the UK, and to stiffen the UK’s negotiating position in the meantime.

    There may well be calls in circumstances where no acceptable deal is offered to the UK, for a second referendum on the UK’s EU membership, although probably only by a small minority of diehard Remainers. Even in the unlikely event of another referendum being held, current polls indicate that it would be unlikely to produce a different outcome from the one held in June 2016, thus confirming that Brexit is some form is likely to be inevitable.

    If the EU27 wants a deal with the UK it is therefore essential that this takes account of the political realities exposed by the 2016 EU referendum and current polls, which is that – if push comes to shove – the UK electorate would very probably be willing to opt for a clean break with the EU rather than finishing up being in a worse position than we were before Brexit started – with all the obligations against which people voted still in place, but with the UK having no say in how the EU develops in future.

John Mills 11th January 2018

Mrs May’s EU Vassal State

How much humiliation are Mrs May and Mr Davis prepared take at the hands of our European Union (EU) overlords? When will the pain they are going through reach such a level that they finally grasp the reality of the EU’s superior machinations?  It is now so obvious that the United Kingdom is to be made the latest example of what happens when the power of the EU’s rigid, self-interested bureaucratic and political machine is defied; it cannot be bargained with or changed – just obeyed.  And worse, Mrs May through her mistakes and Mr Davis through his slothful ignorance, has not just allowed it to happen, but made the EU’s worst excesses unavoidable. The first (So-called transitional) phase of  Mrs May’s ‘deep and special relationship with our EU partners’ after 29th March 2019 amounts to being a vassal state to the EU Empire just as around 2000 years ago Judea under King Herod the Great was a vassal of the Roman Empire. They eventually took over completely. The EU is threatening to do the same. What has gone so disastrously wrong?

In January this year Mrs May in her Lancaster House speech ruled out continuing membership of the Single Market (and European Economic Area, EEA aka Internal Market). Continuing membership is possible through membership of EFTA (The European Free Trade Association).  All the UK has to do is join – or rather re-join – assuming the existing EFTA members would have us back, which seems far from improbable. This route offers the ability to limit immigration from the day we leave by unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  The EFTA route to EEA membership does give members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). The EEA Acquis or body of law is about a quarter of the total EU Acquis since it only relates to successful functioning of the EEA. And EFTA members make their own trade agreements with other countries.  Membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland.  It is EEA membership that allows seamless trade since regulatory measures are the same for each side, whereas being a ‘third country’ outside the EEA brings a hard (often protectionist) border with the EU of controls, tariffs, inspections etc.

Mrs May rejected even temporary EFTA/EEA membership (for reasons that have never been stated) and now, in order to get a transitional agreement (to buy time to negotiate a free trade agreement), she is being faced with having to agree a far worse arrangement with the EU (see European Council (Art. 50) meeting (15th December 2017) – Guidelines). For two or more years (subject to EU agreement) we will continue to be subject to the full EU acquis, pay into the EU budget, accept freedom of movement, be unable to make our own trade agreements with other countries,and accept the overall jurisdiction of the ECJ. It gets worse. During this transitional time (after 29th March 2019) the UK would have to accept unconditionally any new additional or amended laws and costs the EU wants to impose. All whilst actually being excluded from any decision making – all pay with no say.

Even an agreement from the EU to this transitional agreement is not a foregone conclusion, in spite of Mrs May being forced to fall into line just to get this far.  She has had to agree to the EU’s methodology for working out outstanding financial liabilities, She has had to accept the ECJ creating a different (potentially privileged) legal status for EU citizens here and the Irish border being effectively an internal EEA border; (though she may not yet realise that is the only workable solution for a soft border). We would be stuck with the Common Fisheries Policy and there is nothing to stop the EU imposing further demands for accepting a transitional agreement or during implementation whilst we remain a vassal state, for example, participation in the emerging EU Army and its common procurement (concealed under the initials PESCO), implementing centrally imposed migrant quotas and paying EU imposed fines.

Mrs May’s recent Brussels ‘triumph’ is more likely a poisoned chalice where there is little incentive for the EU to be accommodating or to hurry up with a free trade agreement.  Such discussions are very much on the EU back burner until after we become a vassal state (aka “leave the EU in name only” on 29th March 2019). Mr Davis talks about having a FTA agreed before we leave the EU and Mrs May talks about its implementation period, but this isn’t going to happen, as explained above. Indeed, it was spelt out by the EU’s Trade Commissioner back in 2016.  Even if they believe what they are saying, these are no more than wishful thinking and no matter how often they repeat them, it won’t make their hopes come true.

Looking at the bigger picture, progress so far by Mrs May, our EU negotiators and the Department for (Not) Exiting the European Union in managing Brexit has been lamentable and cavalier towards managing risk. The recent Joint (progress) Report, (and EU Commission Communication), containing contradictions, fudge and weasel words to appease all interested parties, amounts to 15 pages. Although not legally binding, it is likely to become politically binding upon Mrs May, contradictions and all.  Then there are the 58 non-existent sector-by-sector impact assessments which Mr Davis once claimed existed, but has since denied. How can the best route out of the EU be chosen when those doing the choosing haven’t a clue what could go wrong or even how anything works?  By contrast, here are impressively informative sector-by-sector assessments by Eureferendum.com.

Predicting the future is fraught with imponderables and the potential exists for unforeseen events completely to change outcomes.  So in the end, it is possible that things could be fine. However, judging by experience to date, this looks increasingly unlikely. We can but hope that Mrs May will abandon her single-minded rejection of the EEA/EFTA option, as the options she seems to be pursuing contain impossible contradictions. Perhaps she doesn’t know enough yet to understand all the practicalities. Meanwhile, how long can Mr Davis will keep on talking up imaginary progress towards a free trade agreement whilst getting nowhere and at the same time, making regular, very public gaffes that undermine the credibility of Brexit negotiations?

Another question remains unanswered, perhaps because nobody has asked it yet:– why put all your efforts, concessions and kowtowing into negotiating a complex transitional agreement, which could end up lasting a long time, when a far better (or less damaging) simple solution exists (of EFTA/EEA membership) at least for a transitional arrangement?  You rejected it once, now you are leading us into a worse mess all round until who knows when, why?

Straws in the wind

Apart from signs of possible movement in the stalled negotiations with the EU on trade, events are beginning to push into reality those matters which have previously been merely the subject of rhetoric and speculation.

Whatever plans the government has, it will have to start giving practical information to businesses in the early new year about its intentions. In our extended article The Complexities of Brexit, we pointed out the urgency of the situation for chemical manufacturers, farmers, food producers and other businesses which have long production cycles or investment programmes which reach into the post Brexit era.

Whilst trade associations like to avoid publicity which might upset the government and to conduct their negotiations in private, the urgency of the situation is pushing these matters into the public sphere. Two articles from City AM of 22nd November demonstrate this.

EASYJET PLAN COULD SHAKE UP SHAREHOLDINGS by Rebecca Smith

EASYJET yesterday set out plans which could force UK shareholders to sell their stakes after Brexit, as it prepares to comply with foreign ownership rules.

Under EU law, the airline needs to ensure majority control and ownership by EU nationals after Britain leaves in order for it to keep operating intra-EU. Yesterday it unveiled plans to amend its articles of association which currently give directors the power to limit the ownership of the firm’s shares by by non UK nationals. Easyjet intends to change this so they apply to non EU shareholders, which will exclude UK shareholders once the UK has left the EU – giving it the power to force UK shareholders to divest their shares if need be.

The airline will put the changes to shareholders at its annual general meeting in February, saying the switch-up will ensure that Easyjet is able to remain EU-owned and controlled at all times after the UK has left the EU.

The carrier said it has “no current intention” of using the proposed powers……

BREXIT BREAKTHROUGH NEEDED BY EARLY 2018 TO HELP BUSINESSES.

By Jasper Jolly & Alys Key

THE GOVERNMENT must secure a Brexit transition deal by the end of the first quarter of 2018 before businesses implement “no deal” contingency plans, according to the head of the Institute of Directors (IoD).

Speaking at the lobby group’s annual dinner last night, IoD director general Stephen Martin said businesses “are concerned about what happens if a breakthrough is not made at the next round of talks in December”.

He said “It’s as simple as this – we are now only 16 months away from leaving the EU. We need the discussion to move on to our future trading relationship and critically what happens when the Article 50 timeline runs out in early 2019.

But he praise IoD members for their “determination” in preparing for every Brexit eventuality, saying that businesses have upheld their end of the bargain and now need the politicians to “deliver” for them.

IGNORANCE ABOUNDING IN HIGH PLACES

A colleague, who has been quietly lobbying trade associations for months, decided it was time to speak to his MP. During the course of their discussion, he mentioned EFTA (The European Free Trade Association) and was astonished to find that this shadow minister did not know what it was. He had never heard of it. Over many years of campaigning, we have often been surprised at the lack of knowledge by MPs of all parties concerning the European project. A national referendum and over a year’s intense debate on the result appear to have been insufficient to disperse the fog of ignorance on even such a basic matter as this.

It is not just politicians either. At a private meeting of senior business people, not one participant raised a hand when asked if they had ever downloaded and skim-read an EU Free Trade Agreement. Former civil servants at the meeting said that this was also true of ministers they had served.

Mind you, half an hour of reading the sort of leaden prose which the EU produces is enough to sap the will to live! Considering the very definitive statements made by leading spokesmen and media personalities, it would be interesting to know how many of their very emphatic opinions were based on direct acquaintance with the text. The Devil is always in the detail.

A WIND OF CHANGE

Commenting on a report of this meeting, our good friend John Ashworth of Fishing for Leave wrote “I haven’t been home long from three days in London and I too can’t say what I have been up to, but I can confirm there is a wind of change. I have a lot of work to do now, but I am happy with the three days, never satisfied enough. But movement is at last happening, so to all readers, keep the pressure up.

“The two factors which had the most effect on them were, on the one hand, a most extraordinary level of ignorance and, on the other, an almost complete inability to listen. If anything, the stories that have leaked out on these aspects are somewhat under-stated” – yes, spot on”.

 

Ireland – The Second Government Brexit position paper

No one wants to return to a hard border between Northern Ireland and the Irish Republic. Even less does anyone, bar a few fanatics, want to return to the days of “the Troubles”. This much is obvious.

Settling the issues relating to what will be the UK’s only land border with the EU has been given a high priority by the EU too. Only yesterday, in response to the first UK government position paper (on customs), the  EU’s chief negotiator, Michel Barnier,  named the Irish question as one of three important issues on which agreement would need to be reached before serious discussions on trade-related issues could begin.

So a mere 24 hours after the position paper on customs, another has appeared which offers us some insights into the Government’s thinking on Ireland.

The paper identifies four priorities:-

  1. Upholding the Belfast (‘Good Friday’) Agreement in all its parts
  2. Maintaining the Common Travel Area and associated rights
  3. Avoiding a hard border for the movement of goods
  4. Aiming to preserve North-South and East-West cooperation, including on energy.

As far as the Good Friday Agreement is concerned, the paper points out that it was an agreement between the UK and the Irish Republic rather than the EU. Among other things, it affirmed “the permanent birthright of the people of Northern Ireland, irrespective of Northern Ireland’s constitutional status: to identify themselves and be accepted as British or Irish or both, as they may so choose; to equal treatment irrespective of their choice; and to hold both British and Irish citizenship.”  The UK Government has every intention to preserve this arrangement after Brexit.

The Common Travel Area pre-dated either the UK or the Irish Republic joining the European project. Indeed, Irish citizens have enjoyed special rights in the UK for most of the period since 1922 – a reflection of the strong, historic links between the Irish people and those in the UK. The Common Travel Area in its present form also involves the Isle of Man and the Channel Islands, which were never part of the EU. It allowed freedom of movement throughout the area and  allows Irish citizens to vote in the UK’s locla and Parliamentary elections.

Given that the Common Travel Area arrangements have been administered by the governments of the parties involved rather than by the EU and that the EU has been happy about this, the document maintains that there should be no reason why this situation should not continue after Brexit.

The “hard border” issue is likely to prove the most complex. In 1972, the paper informs us, there were 17 HM Customs and Excise boundary posts at the major road crossing points along the 310-mile long Northern Ireland land border and more than 200 other crossings not approved for vehicular traffic.  These have all disappeared but this is the number of potential crossing points which would need to be reinstated if a “hard border” were imposed. No wonder all sides are keen to avoid such a scenario.  Some farmers’ land straddles the border.

The paper recognises that it cannot propose a unilateral solution to the problem of maintaining the free flow of trade across the Irish border. It does, however, point to instances “where the EU has set aside the normal regulations and codes set out in EU law in order to recognise the circumstances of certain border areas.” – including the border between the Greek and Turkish sectors in Cyprus and the Croatia/Bosnia border. At the same time, the paper acknowledges that resolution of this issue “cannot be based on a precedent”. This makes sense for, after all, the EU’s aspiration is for Cyprus to be reunited with both parts of the island in the EU and likewise, Bosnia is a candidate country, even though it is unlikely to be joining the EU any time soon. By contrast, the UK is going in the opposite direction.

The paper also refers to the position paper on customs. Obviously, on the one hand the peoples of the UK and Ireland have an unique relationship, but the Irish Republic is an EU member state and part of the EU’s Single Market and Customs Union.  A solution for customs issues at the Irish border is inevitably going to be linked to wider customs and trade issues which will need to be addressed as part of the Brexit process, but as anyone who has visited the Irish Republic will be very aware, a substantial percentage of the products on sale in supermarkets in Irish towns and cities originate in the UK. It is therefore unsurprising that Irish officials are very concerned about the damage their economy may suffer if no trade and customs agreement is in place on Brexit. Leo Varadkar, the Irish Taoiseach, expressed a wish that the UK would not actually leave the EU, or if it did, that we would remain within the EEA. Dan Mulhall, the Irish Ambassador to the UK, by contrast, hoped that we would remain inside the Customs Union.

So the  progress towards the “innovative and untested” customs proposals and the possibility of a temporary customs arrangement discussed in the earlier position paper will be followed particularly closely in Dublin. Given that even if the UK government  changes tack and opts for ongoing membership of the EEA, agricultural goods would be outside this arrangement, it will take a lot of hard bargaining on both sides if all goods and services are to enjoy even relatively free access across the Irish border, whatever form that border may take. If it sticks to the proposals outlined in the position paper, there will be a number of areas where agreements on mutual recognition of conformity would have to be signed and time is short.

The North-South East-West cooperation may be a new term to many of us. North-South simply means the Belfast-Dublin axis and East-West refers to the relationship between London and Dublin. In many ways, the various fora such as the British-Irish Council and the British-Irish Intergovernmental Conference which have been set up under this label are the outworking of the recognition of the  close historic and geographical links between the UK and the Irish Republic. The cooperation has manifested itself in some specific sectors such as energy and the position paper emphasizes the need for the cooperation to continue after Brexit.

With this in mind, the concluding statement that a formal agreement between the EU and the UK on the Irish border issue early in the Brexit negotiations would not mean the end of any dialogue between the UK and the Irish government makes perfect sense. There will be a number of bilateral issues to resolve which do not directly involve the EU as a whole.

As with the position paper on customs, the abiding impression left by this document is that it has identified the issues which need a resolution without offering too much detail as to how they are to be resolved. Unlike the customs paper, however, where failure to reach an agreement would be far more disastrous for the UK than for the EU as a whole, when it comes to Ireland, a crashing out of the EU with no agreement would probably hit them harder than us. The Irish government is well aware of this and we cannot but hope for their sakes as well as ours that it will not be WTO rules on March 30th.

 

Britain needs to play it smarter

There is some chatter on the web as to whether Brexit can be parked. Personally I don’t see that happening. Call it a hunch but I think the process has taken on a life of its own independent of the politicians and they lack the coherence to influence it in either direction. I can, however, see Brexit transmogrifying into something that is neither Brexit nor EU membership.

The repeal bill process is not an afternoon at the photocopier. It’s a major feat of legal engineering and it is going to take years. We can pass certain bills that technically mean we have left but the Brexit limbo could be of such a composition where making the final switchover in various sectors, ending EU supremacy, would be viewed as so destructive that it would go into some sort of review, much like TTIP has, where it exists as a concept but it’s not actually going anywhere until it’s taken off the shelf and dusted down.

We have heard much about the possibility of an accidental Brexit where we crash out without a deal, but there is also a possibility of “accidental remain” where our lack of direction and inability to agree on anything leaves it hanging in the wind.

The only way I see to avoid this fate is for the government to face the reality that the EEA is the fastest and most practical means of leaving the EU. It doesn’t matter if the EEA is suboptimal. It has the singular merit of being out of the EU.

We can quibble until the end of time over the various compromises the UK would have to make but since the advent of the WTO agreement on Technical Barriers to Trade there is little likelihood of reaching that elusive regulatory sovereignty. That issue we can address later. To my mind it is secondary to ending EU political union.

If we do not want to drift into a Brexit limbo then we need to see some decisive action from the government. All we are seeing right now is dithering, pretending it’s all there for the taking when what we’re actually doing is reinventing the wheel – and a poor copy at that.

The basic mistake is the belief that the Brexit process itself is the opportunity to do everything all at once. This is a classic misnomer. If anything the Article 50 process is a lengthy admin chore we must go through before we can start looking at systemic reforms. The only safe and sensible way to leave is by reverse engineering our membership and that means the first step has to be quite close to EU membership. It wouldn’t even matter if post-Brexit absolutely nothing had changed. What matters is that, having completed Article 50, we would have the power to start changing things on our own schedule.

This is the bit where us leavers need to get real. All of us have a strong dislike of the EU, but we cannot say that everything about economic integration is bad. What matters is that we preserve what is worth keeping and build on it. It would be a grave mistake to sacrifice any European trade in the belief that trading with the rest of the world will compensate. It really won’t.

That though, is going to require some adaptation to our ideas. Like it or not, the EU has us over a barrel. As the regional regulatory superpower it does call the shots, and since the EU has a number of other countries hooked into regulatory harmonisation by way of FTAs we are going to find the wiggle room for an independent UK régime will be next to nil.

Ultimately we are going to have to change our attitude to the EU in order to make a success of it. The hostile and confrontational tone is not doing us any good and it’s dangerous because we will need the EU’s extensive assistance in borrowing their third party cooperation agreements and trade deals. Secondly, since we won’t be going all out for regulatory sovereignty, our trade policy will have to be a collaborative and complementary policy to that of the EU.

As we have seen the EU likes to get bogged down in deep and comprehensive bundled deals which take a number of years and very often get tied up in technical detail at the last minute over soft cheeses or formaldehyde content in furniture. Despite this method causing a number of hang-ups for CETA and the demise of TTIP, they don’t seem to have learned. There are other ways.

What we can do is look at effects based trade policy. As a foreign policy objective we want to reduce the push factors that drive migration. In order to do that we need to get the poorest countries trading. We are told by Suella Fernandes that Brexit means we can reduce tariffs for Lesser Developed Countries. This fails on three counts in that for a long time the UK will maintain the existing tariff schedules, LDC’s already have tariff free access under the Anything But Arms agreement – and finally, it’s non-tariff barriers which stand in the way.

Ultimately LDCs struggle to meet stringent standards. Jacob Rees-Mogg and the likes would have it that we can trade away our safety standards but that invites a deluge of counterfeit and dangerous goods. Consumers won’t wear it. Our mission is to use our aid budget for technical assistance to ensure that they can meet regulatory requirements for export. Not only does that improve their ability to trade with the UK it gives them access to the European market as well.

Effectively we would be improving access to the single market for everyone. The benefit to us is the eventual slowdown in migration but also more trade means more opportunities for UK fintech and business services. Something our economy is geared toward in ways that France and Germany are not.

By acting in this way we have no real need to get bogged down in comprehensive bilateral talks as the EU does. What matters is we are enabling trade and paving the way for the EU to forge deals, to which we can be a party. Sector by sector we can improve the viability of African trade at a speed the EU is incapable of.

As much as this approach is in the cooperative spirit, little by little it removes the EU’s excuses for excluding poorer countries and in so doing we make allies and friends with countries with whom we cooperate. From there we can forge sectoral alliances to further pressure the EU into liberalisation and perhaps changing its stagnant trade practices.

All of this is quite futile though if we maintain an adversarial attitude to the EU. If we leave the single market we actually surrender an ace in the hole for our trade strategy while also losing the opportunity to expand and enhance it – and wrest it out of EU control. Moving entirely out of the EU sphere leaves us hobbled in Europe and pecking at scraps elsewhere.

I wish I could report otherwise but it’s time eurosceptics faced facts. The world got complicated while we were in our EU slumber. The beast we helped create is a power in its own right with its own gravitational pull. What is done cannot be undone. What we can do is leverage our position as an agile free trading country to strengthen the global rules based system and drag the EU out of its protectionist instincts. If we can do that we solve a number of problems not only for the UK but Europe as a whole.

Photo by (Mick Baker)rooster

Michel Barnier’s recent speech – some salient points

Either Michel Barnier, the chief EU negotiator for Brexit, is off his head or there are fundamental misconceptions being held by our government’s Brexiteer Big Beasts.  The following is a summary of the most salient points apparently made by Mr Barnier speaking ‘frankly and sincerely’ about Brexit recently in Brussels to the European Economic and Social Committee.  A more detailed analysis is provided on EUreferendum.com, Brexit: Barnier – “that is not possible”.

Point 1 – on being outside the Single Market and Customs Union

“There will be no business as usual. The UK will become a third country at the end of March 2019”.

Point 2  – on the UK cherry-picking (through negotiations)

“There can be no sector by sector participation in the single market: you cannot leave the single market and then opt-in to those sectors. You cannot be half-in and half-out of the single market”

Point 3  – on being able to ‘influence’ the EU from the outside

“The EU must maintain full sovereignty for deciding regulations: the EU is not only a big marketplace. It is also an economic and social community where we adopt common standards. All third countries must respect our autonomy to set rules and standards. And I say this at the moment when the UK has decided to leave this community and become a third country.”

Point 4  – on the British Side being out of touch with the reality of the EU

“I am not sure whether they have been fully understood across the Channel”. “I have heard some people in the UK argue that one can leave the single market and build a custom union to achieve ‘frictionless trade’, ……that is not possible”.

Point 5  – on the status of UK having left the EU – comprehensive free trade agreement (even if agreed before then doesn’t change this status)

“Whatever the outcome of the negotiations, at midnight on 29 March 2019, the United Kingdom will at the present stage be a third State, which will therefore not have the same facilities and rights as a State Member of the European Union. It’s its choice. Not ours”.

Point 6  – on trading from the outside being more difficult (e.g. customs duties and non-tariff barriers exist)

“A trade relationship with a country that does not belong to the European Union obviously involves frictions”.

Point 7  –  on no deal (trading under World Trade Organisation Rules) being a practical non-starter

“I therefore want to be very clear …to my mind there is no reasonable justification for the ‘no deal’ scenario. There is no sense in making the consequences of Brexit even worse”.

Point 8  – on cutting losses arising from the new relationship between the UK and EU

“Business should assess, with lucidity, the negative consequences of the UK’s choice on trade and investment. And prepare to manage them”.

To conclude

Mr Barnier has a conception of Brexit negotiations that is not shared (publically at least) by our government. The main takeway from M. Barnier’s speech (and assessment) is that he feels the UK is unprepared for Brexit or even to negotiate realistically based on the reality of dealing with the EU. A comprehensive free trade agreement finalised within two years isn’t going to happen, he claims, and would not solve all problems of seamless access to the Single Market. And it will not be all right in the end unless the UK’s Brexit negotiators understand what is actually involved.

Photo by EPP Group in the CoR