Brexit's new chapter: the 'impossible' trade deal

Photo: AFP

Britain has left the European Union after 47 years of membership and on Monday chief negotiator Michel Barnier will lay out the EU's strategy for the next phase: negotiations to hammer out a new future with the UK.

Prime Minister Boris Johnson is expected to also swiftly reveal Britain's game plan for talks where both sides will "have to rebuild everything", in the words of Barnier.

Here are the main battle lines for the coming weeks:

- No extension -Throughout his campaign, Johnson said he would seal a trade deal by December 31, the deadline set by the EU-UK divorce agreement.

London could request an extension of one or two more years, but it would have to do so by July 1. Johnson insists he will not.

That leaves only eight months, from late February to October, to reach an agreement and allow time for ratification, which could require the approval of roughly 30 national and regional parliaments, depending on the final scope of the deal. 

"It's an impossible task," warned one European diplomat.

"By the end of the year, we could get the skeleton of a trade agreement plus something on internal and foreign security, but there is no guarantee," the diplomat added.

Negotiations cannot officially begin before EU ministers approve Barnier's mandate on February 25. 

- 'Negotiation tables' -Months of intense discussions, to alternate between London and Brussels, will be coordinated by Barnier and his UK counterpart, probably David Frost.

The tight deadline allows "about 40 days of pure negotiation" in eight to ten-week sessions, an official warned. 

This is a far cry from the years devoted to trade deals with Canada, Japan or South Korea.

Barnier said negotiators would open about ten "negotiating tables" in parallel.

"We will give each subject two or three weeks and see what is possible. If the divisions are too great, we drop it and move on," a diplomat said.

An EU-UK summit is planned for June to gauge where talks stand.

- New 'no deal' -Johnson has scrapped his predecessor's goal of close ties with Europe that would minimise disruption to the cross-Channel economy.

Pushed by big business, Theresa May's government had proposed a "dynamic alignment", where London would find a way to match EU rules on the environment, state aid and other standards to guarantee UK companies easy access to Europe.

Instead, Johnson wants to pursue a far more minimal trade deal, sometimes called a hard Brexit, that will seek zero tariffs and quotas on goods, but make no binding commitment on maintaining standards.

"The prime minister has been clear that he wants a Canada-style free trade agreement with no alignment," a UK official told AFP.

This refers to the EU's trade deal with Canada that Europeans consider too narrow for an important neighbour like Britain.

Given London's stance, Barnier said that some items will be a priority "otherwise we will create a fracture".

He wants handshakes on fisheries, internal and external security and above all trade in goods. 

If there is no deal by December 31, when the unextended transition closes, ties would devolve at a stroke into the most rudimentary relationship, with high tariffs, grave disruptions and major aftershocks to Britain's and Europe's economy.

- Threat to unity -Many in Brussels fear that Johnson's low-bar strategy could split the Europeans.

"It will be difficult to maintain European unity," said an EU diplomat with eastern European countries attaching greater importance to auto construction and others pushing financial services.

In any case, a trade deal on goods only means no alignment on EU standards, which means custom checks, paperwork and all sorts of new limits to commerce and that will most affect Britain's closest neighbours such as France, Belgium and the Netherlands.

Those countries are also under pressure to keep access to British waters for local fishermen; Britain and the EU have pledged to agree that touchy issue by July 1.

- 'Zero-dumping' -Referred to as keeping a level playing field, the EU wants to ensure that British companies gain no unfair advantage after Brexit.

When British goods and services come knocking on Europe's door, Brussels will insist that UK goods are subject to checks like those from any other non-EU country.

"It won't be the same as the relationship we have had for several decades. You cannot be both in and out," warned French President Emmanuel Macron on Friday.

Diplomats warn there are no airtight ways to enforce fair exchange in a simple trade deal.

The EU 27 have begun to draw up an elaborate arbitration process that could mean fines or the suspension of the eventual EU-UK accord if either side fell out of line.

- Big deal? - One question nagging Europeans, notably France, is the future structure of the EU's relationship with Britain. 

Will it be something formal, with clearly set joint institutions, or a looser arrangement structured by separate deals on trade, security and other topics as necessary?

Many European capitals abhor the latter, spooked by the EU's confused ties with Switzerland, which are governed by over 100 deals that cause never-ending squabbles.

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