UK is about to give up hope for a striking post-Brexit trade deal with the EU as Boris Johnson walks around the clock until his July deadline
- The UK government assumes there will be no post-Brexit trade deal in December
- Boris Johnson expects to trade with the EU under WTO conditions after the transition period
- The UK is currently bound by EU rules that cannot be extended after December 31
- Talks have stalled on fishing rights and the role of EU courts in UK affairs
Britain is about to give up hope of signing a trade deal after Brexit with the EU as Boris Johnson walks around the clock until his July deadline.
The government assumes that there will be no agreement and expects to deal with block trading under WTO conditions on December 31.
Senior sources told The Daily Telegraph that a ‘basic’ agreement remains possible if the European does his best in the autumn.
Britain is currently bound by EU rules for an eleven-month period known as the transition which cannot be extended beyond this year.
Talks between Britain and Europe, led by David Frost from the UK and Michael Barnier from the EU, started Monday and will be completed tomorrow.
But negotiators get stuck in fishing rights, the governance of the deal, the role of the European Court of Justice and the so-called level playing field – and neither side seems ready to budge as Britain’s time for the July deadline running out.
This means that the UK could crash out of the Customs Union and the Internal Market without a trade agreement concluded after Brexit with the EU before the end of the transition.
The government assumes that there will be no agreement and expects to trade under WTO conditions with Europe when the transition period ends on 31 December. Senior sources claim that a “base” agreement will continue to be possible if the European does its best in the fall
Talks between Britain and Europe, led by David Frost from the UK and Michael Barnier from the EU, started Monday and will be completed tomorrow. But negotiators are stuck in fishing rights, deal governance, the role of the European Court of Justice and the level playing field – and neither side is willing to budge as Britain approaches the July deadline running out
Acting under WTO conditions would mean tariffs on goods and red tape that could lead to delays in entering and leaving the UK – a price Johnson is willing to pay if the EU doesn’t back down on issues like UK laws and fishing waters.
Britain has so far rejected Brussels’ demands for a level playing field, fearing that alignment of European tax, labor and environmental standards will prevent it from coming up with its own rules after Brexit.
What is the transition period? And why is it so important?
Although the UK ‘left’ the EU on 31 January, it remains during the transition in the EU Customs Union and the Internal Market.
- Travel to and from the EU (including rules on driving licenses and pet passports);
- Free movement (the right to live and work in the EU);
- UK-EU trade, which will continue without additional costs or controls.
Britain has left the European Parliament and the European Commission, but still follows EU rules during the transition – for example, the European Court of Justice is the last legal arbitrator.
The transition also means that the UK is contributing to the EU budget.
While in transition, the UK remains in the EU Customs Union and the Internal Market. The transition cannot be extended beyond December 31.
If a trade agreement is not concluded after Brexit by then, the UK will crash without a deal and trade with the EU under the terms of the World Trade Organization.
The EU also insists that the Court of Justice should play a role in the agreement between the UK and the EU, where decisions on the interpretation of EU law are required.
Some in the UK government claim the two sides could reach an agreement in the fall, but said it would be a “basic deal, not a phenomenal one.”
A senior source told The Daily Telegraph: “The government has been making it clear for some time that it is not willing to make a deal. Britain will not address fundamental issues such as fishing rights, so it is all EU-owned. ‘
A member of the UK negotiating team said: “We wanted to see an agreement this month. It is clear from the EU side that this will not happen. No trade agreement should be the work assumption, because we have to prepare for it. But that doesn’t mean we want to or want to work on it. ‘
Britain is entering into trade agreements with other countries and setting up its own sanctions regime, and has previously insisted that it does not have to live up to the bloc’s standards.
A spokesman for Mr Johnson said Monday that Britain will continue to engage constructively with the EU on future relations, but London is unwilling to relinquish its rights as an independent state.
The deadlock comes after the Institute for Government (IfG) warned that many UK companies were unprepared for the impact of a No Deal Brexit.
Falling off the cliff in December could place UK plc in a difficult situation after the government crashed the economy during the coronavirus blockade.
Last week, the IfG said that three out of five companies had not even started preparations for the end of the transition period: “Since the pandemic broke out in February and the formal closure took effect in late March, public and corporate resources have been focused on respond to the pandemic, rightly preferring it over Brexit preparations.
“Businesses that are suffering the economic consequences of the coronavirus are ill-placed to prepare for Brexit: in many cases in a worse position than in the months leading up to the possible no-deal in October 2019.”