Brexit hurdles and solutions: Boris Johnson’s Brussels to-do list

Business

As Boris Johnson prepares to travel to Brussels in the hope of sealing a Brexit trade deal, he will be armed with a memo from his chief negotiator, Lord Frost. Here are some of the likely key points, big hurdles and potential solutions to be thrashed out at the negotiating table:

  1. Deal or no deal?
    This is the moment to decide just how the prime minister will deliver on his promise to “get Brexit done”.

The approach he takes will be critical, as there are plenty of points of detail on which talks could collapse. Any decision will be underpinned by medium-term strategic considerations – what Johnson can sell to his party and the British public as being best for the UK.

With no deal, in the short term at least, the economic pain will be greater. The necessary shift to World Trade Organization (WTO) terms would hit sectors such as farming and manufacturing with higher tariffs. And if Johnson walks away, the reality is that the UK will need to return to the negotiating table at some point in the future.

But Johnson and Frost will also be considering: could there actually be a better deal on offer next year? Or will a failure to agree this time damage relations with the EU for years to come? And does the prime minister really want Brexit to carry on being a big domestic political issue well into 2021?

  1. Fishing
    This is not simply ideological; it’s also a matter of resolving a complex trade negotiation.

This is a sector that directly employs only 8,000 people, according to the Office for National Statistics, and accounts for £400m, or less than 0.1%, of the UK economy. By contrast, financial services accounts for £126bn. So allowing a deal to flounder over fishing makes little sense. Striking a deal also makes sense because UK fishermen want to sell their catch – herring, cod, langoustines – abroad.

First, the numbers. EU trawlers currently catch 60% of the total tonnage of fish in Britain’s rich waters. The EU has offered to return 15%-18% of that to the UK; Britain has asked for 60%. It is perfectly possible to split the difference, or perhaps introduce different quotas for different species.

Next, the negotiation timeframe. Norway negotiates fishing quotas each year with the EU, and the UK is aiming to achieve the same – although the bloc wants assurances that its fishermen will not be denied reasonable access. Brussels may also seek to levy punitive tariffs if EU vessels cannot fish in British waters. Such tariffs are unattractive, but giving assurances may be relatively straightforward.

Finally, the transition phase. Both sides acknowledge that a deal will bring big change but the question is how quickly to move. The UK wants a three-year transition; the EU position is 10. Again, it should be possible to split the difference, perhaps at five or seven years.

  1. Governance and disputes
    The EU is nervous since the UK tried to break international law by overriding clauses of the withdrawal agreement, in a move considered to be a massive breach of trust. Those clauses were withdrawn on Tuesday, which has been viewed as removing an obstacle to a deal.

The EU wants a pretty tough dispute resolution system, including the power to suspend parts of the trade and security deal if the UK breaches the terms of the treaty. Because of a dispute about UK border systems, it may put tariffs on food, for example.

A solution here may be to restrict the power to the most egregious instances. The UK would hope the EU would respect its position that the security agreement, at least, cannot be dragged into a trade dispute.

  1. Level playing field
    Brussels’ demand that the UK does not seek to gain competitive advantage by engaging in a “race to the bottom” in social, environmental and other standards is seen as crucial within the bloc. But Johnson’s counterparts know he has been clear that effectively following EU regulations would amount to the UK becoming “a vassal state”.

One answer is non-regression: both sides could agree not to water down the standards they have, as ministers have repeatedly made clear that is not the intention of the UK.

When it comes to the future, it’s more complicated as the whole idea of Brexit is that there will be some divergence. But the EU says it wants to ratchet up those standards over time and levy punitive tariffs if the standards are not met. The prime minister will stress that the UK does not want to prevent the EU exercising its sovereignty. What would instead be required is a regular process of review, every four or so years.

In some respects, this is the most challenging area, because ultimately it requires an act of faith on both sides: that each will behave reasonably in the future. Johnson will have to reassure the EU that the UK seeks a complementary and friendly long-term relationship.

  1. Back home
    With his mandate to “get Brexit done”, a working majority of 85 and a Labour party that has signalled its willingness to back a deal, Johnson considers himself to be in a strong position on home soil.

If he secures an agreement that can be said to respect British sovereignty, ultimately it is likely to pass the Commons and be accepted by a large portion of the public. In many ways Johnson’s biggest challenge next year is getting on top of the pandemic, not Brexit.