Brexit : EU Offer Tricky Brexit Contingency Proposal

[OnDoutside]

Stuff is close to getting real !

Given that a brexit trade deal with the EU is all but impossible before the end of the transition period, the EU Commission have presented their plan in the form of a contingency agreement which, if accepted by Boris Johnson, would mean transport access for a short period in return of accepting the level playing field rules and access to fishing waters. Can Johnson afford to turn it down?

[DFW]

1. There might be a poison pill in there that Johnson could be reluctant to swallow

And that is the access to fishing waters. The EU appetite for fish has led them to overfish their own waters to near barrenness, and as long ago as the 1990s, I talked with Canadian diplomats who were so frustrated over EU fishing boats illegally in Canadian waters as to contemplate sinking some of them. Spain, in particular, has been aggressive all over the Atlantic in poaching other countries' fishing grounds after having emptied their own. Letting the EU fish the UK dry is not a long term substitute solution to other disputes.

[OnDoutside]

4. Yes, fishing is a complete poison pill, and a dagger into Johnson's discomfort. I agree about Spain

especially wrt fishing, but the UK are boxed into a corner and the EU are starting to tighten the screw. Their main ace was the holding of the Irish border as a hostage, but Joe Biden has swept that away from them, so there really isn't that much left. Ireland have new ferry options, increasing frequency and adding a new Rosslare to Dunkirk route, with a promise of more to come.

[My Pet Orangutan]

2. The EU's bottom line is a "Ratchet Clause" -

The UK must not only promise to comply with all of today's EU standards, they must also agree to meet any new standards the EU may adopt in the future.

So, the UK is being offered a deal imposing a totally unknown set of standards they would no control nor input into in the future.

It's not on. Here come the 'No Deal' Brexit.

(So long, and thanks for all the fish!)

[OnDoutside]

3. The reality is that you have a country of 55m trying to bully the EU of 450m into giving them a

deal where they could take on, and undercut EU companies, lowering their own standards and dumping that cheaper crap onto EU markets.

As I said here years ago, the British think the EU's "intransigence" was all about getting at them, and maybe there's a little bit of that, but it was mostly about safeguarding the future of the EU. In the years after the Brexit Referendum, there was a genuine fear that if the UK got what they wanted, you would have the Far Right in the Holland/Denmark/Italy/ even France, destabilising their countries to "Take Back Control", and follow the example of the UK who got this great deal, so what's the point being in the EU ? That could never be allowed to happen. The Brexiters have never understood this point. And the fish is a Sun Headline rather than substantive issue.

Not aligning with EU standards, and not abiding by domestic subsidy limits for industrial investment is/was never going to be acceptable, and still have a functioning Single Market. So here we are.

[My Pet Orangutan]

5. The fact is the EU would not insist on a Ratchet Clause in any other trade deal.

They are bent on the bottom line that Britain should get no benefit whatsoever from leaving. See fish.

I loathe the Brexiteers, but the EU is giving the UK little choice. Leave must mean something. The UK is agreeing to all existing EU standards, but not a blank cheque for any and all new EU standards for the future, in perpetuity.

[OnDoutside]

6. Actually, yes the EU have insisted on a Rachet Clause in other more significant deals than a UK deal

There seems to be a British expectation that Johnny Foreigner should bowl over for Imperial Britain. They're getting a very sharp, rude lesson in being a small isolated country, after nearly 50 years within the protective environment of the EU. There are no free lunches.

Ratchet clause A “ratchet clause” is a provision through which the Parties commit that, if they unilaterally decide in
the future to further open up their respective markets in one specific sector, such opening would be "locked in" – i.e. there can be no step backwards.

In the example mentioned above, the Party cannot roll-back vis-à-vis its negotiating partner the unilateral decision to allow 40% foreign ownership. Since commitments normally reflect existing levels of market openness, a ratchet clause ensures that a free trade agreement is forwardlooking and remains up-to-date by capturing the unilateral liberalisation that the other Party may undertake in the future.

In all the cases where Parties to a trade agreement open a sector, be it through a positive or negative list (and with or without standstill and ratchet), the Parties retain their right to maintain or introduce non-discriminatory legislation, for instance standards of treatment for patients, capital requirements for banks, qualification requirements for certain professions or universal services obligations (e.g. for the postal sector).

SNIP

3. How has the EU used the “positive list” and “negative list” techniques in its trade agreements?

The choice of the approach tends to be influenced by “negotiating traditions”. While some countries traditionally adopt a negative list approach in their FTAs, others usually follow a positive list approach. This said, there is actually no such thing as a "pure
positive list" approach - not even in GATS which is often cited as the most prominent example for a positive list agreement. In GATS, once a WTO Member has chosen to include a given sector in its schedule of commitments, it has to list all restrictions that apply (just like in a negative list).

Similarly, the horizontal part of a positive listing schedule (i.e. restrictions that apply across all committed sectors) needs to be exhaustive. In some services agreements both approaches have been used (so-called “hybrid approach”). For example, in the TISA negotiations (Trade in Services Agreement), National Treatment commitments are scheduled using a negative list approach while a positive list approach is applied for Market Access commitments. It is thus difficult to draw a clear line between the two approaches.

The EU has used both negative (e.g. agreement with Canada) and positive lists (e.g. agreements with Korea or Singapore) and is actually simultaneously engaged in (or has just concluded) negotiations using negative (Japan) and positive lists (Vietnam). The EU has also accepted the use of the so-called “hybrid approach” in TISA. Other countries in the world also take a flexible stance as to the technique used in services negotiations.

For instance:

South Korea signed a trade agreement with the United States based on a negative list in 2007; the country subsequently signed a trade agreement with the EU in 2010 using a positive list approach.

China opted for using a negative list in its bilateral investment negotiations with the EU and the US.

In the Australia-China FTA signed in 2015, Australia uses negative listing and China positive, which is evidence that the two approaches can co-exist.

https://trade.ec.europa.eu/doclib/docs/2016/april/tradoc_154427.pdf

Oh, and there is the semblance of an agreement over fish https://www.theguardian.com/politics/2020/dec/06/major-breakthrough-on-fishing-rights-brings-brexit-deal-closer

[My Pet Orangutan]

7. OK. Basically, if you enter into trade deal with the EU, they reserve the right

to unilaterally weaponise their standards against you, as China is currently doing against Australia.

[OnDoutside]

8. Welcome to the world of Big v Small ! You'll see an even bigger demonstration soon of it

when the US rides the UK sidesaddle in their trade deal, as they pick off the carcass. As someone said yesterday, Project Fear is about to become Project Reality.