Tuesday

19th Jan 2021

EU won't accept UK trade deal 'at any price', Barnier warns

EU affairs ministers on Tuesday adopted the bloc's negotiating position on the future trade talks with the UK, warning London it will need need to mirror EU rules to access the bloc's single market.

"We are ready to start this new stage," the EU's Brexit negotiator Michel Barnier said after the meeting, but also warned "We will not conclude an agreement at any price."

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London is expected to outline its negotiating position officially on Thursday, which will aim for a "Canada-style" free trade agreement, removing all tariffs and quotas on goods.

Barnier pointed out the UK will be the EU's third-largest trading partner, almost ten times bigger than Canada, and is close by, therefore the trade deal rules cannot be the same as in the bloc's deal with the North American country.

British prime minister Boris Johnson's aides have already said the UK does not want restrictions on its ability to diverge from EU rules.

The EU wants to make sure the UK does not undercut the bloc with lower, and cheaper, standards.

The bloc wants London to maintain a "level playing field" on state-aid, environmental rules, workers' rights and tax issues for a tariff-free trade.

Barnier emphasised that a trade deal is linked to a clear, level, playing field plus an agreement on fishing quotas.

No undercutting

France and other member states have managed to toughen up the EU's positions somewhat, setting out that the UK's rules will have to evolve and that EU standards will be "a reference point" for the UK obligations.

"If we cannot maintain this regulatory proximity, then we must apply tariffs or quotas," France's EU affairs minister Amelie de Montchalin said.

However, the mandate adopted does not require explicitly Britain's full, continued, alignment with EU rules - which would have been the toughest form of alignment, a red flag for the UK government.

"Given the union and the United Kingdom's geographic proximity and economic interdependence, the envisaged partnership must ensure open and fair competition, encompassing robust commitments to ensure a level playing field," the 46-page long document said.

"The envisaged agreement should uphold common high standards, and corresponding high standards over time with union standards as a reference point," it adds.

If the UK breaks the conditions, the EU wants to be able to impose measures, including permanent ones, to remedy the distortions.

The EU should have the possibility to "apply autonomous, including interim, measures to react quickly to disruptions of the equal conditions of competition in relevant areas", the text said.

Northern Ireland first

The EU ministers also warned London to stick to the divorce deal, struck last year, after reports that the UK would try to circumvent implementing rules agreed on Northern Ireland, a key point of the withdrawal agreement.

According to the agreement, Northern Ireland remains a UK's customs area but tariffs would apply from next year on goods crossing from mainland Britain to Northern Ireland if they were headed to Ireland or elsewhere in the EU.

The UK government has given mixed signals if it will implement border checks on the Irish Sea, which was a red line for the Northern Irish Democratic Unionist MP allies of Johnson's Conservatives.

"If there isn't progress on the infrastructure needed in the next few months, that's going to be a very worrying signal for whether or not it's going to be possible to conclude something sensible before the end of the year," Irish foreign minister Simon Coveney told reporters.

An EU-UK joint committee will be set up by the end of March to monitor the implementation of the withdrawal agreement, with the participation of commission vice-president Maros Sefcovic.

Barnier warned that respect, goodwill and trust will have to be key for successful negotiations.

Clock ticking

But trust between the EU and the UK is at a low point only four weeks after Britain left the EU club.

Trade negotiations will start next Monday with the British negotiating team led by David Frost, and will go on until Thursday. In March, discussions will continue in London.

Talks will need to wrap up before the end of the year when the transition period ends, and EU rules and obligations will no longer apply to the UK.

The UK has ruled out extending the transition period, although trade deals usually take several years to negotiate.

The new trade deal would also have to be approved by the EU parliament, before it can enter into force from the start of next year.

If the EU and UK cannot agree by then, trade between the two would revert to a basic arrangement under World Trade Organization (WTO) rules, causing economic disruptions on both sides, especially in Britain.

"The short timeframe was chosen by the UK, not by us," Barnier said.

Currently, Britain's trade with the EU is 45 percent exports and 53 percent of imports.

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