In an address to the European Economic and Social Committee (EESC) on Thursday 6 July, the EU’s negotiator on Brexit, Michel Barnier, highlighted the disadvantages of a hard Brexit with no agreement.
“The 'no deal' scenario would make the lose-lose situation that is the inevitable result of Brexit even worse”, said Barnier (our translation throughout), who believes that a balanced agreement is vastly preferable to no deal. He said that if the UK simply leaves the EU in March 2019, this would be a return to a distant past, with the trade relationship between the EU and the UK based on the GATT regime.
“That would mean customs duty of nearly 10% of vehicle imports. An average of 19% on alcoholic drinks, an average of 12% on lamb and fish, most of which will be British exports to the EU”, the former French minister warned.
Barnier also stressed the problems this situation would cause, in terms of unwieldy procedures and controls, for companies on either side of the English Channel operating on the basis of ‘just-in-time’: taking three or four days to put stocks in place rather than just a few hours, increased transport costs and logistical risks.
The EU negotiator said that some British leaders and commentators did not fully appreciate the scale of Brexit. Leaving the EU and enjoying seamless access to the single market, even partially, is impossible. “By choosing to leave the EU, they put themselves on the other side of the external border, which defines not only customs union, but also the space of the adoption and application of the single market rules”, Barnier stressed, adding: “the single market without customs union – namely, the European Economic Area – involves a regime of customs procedures and controls, for instance to verify the preferential rules of origin. And the other way around, a customs union agreement without the single market – as is the case with Turkey – does not allow the free movement of goods, as it involves a regime of customs procedures and controls, including controls and compliance with European standards”.
Reducing uncertainty
The members of the EESC asked the former European Commissioner how to minimise the uncertainty that is already hampering investments in the UK and causing European citizens to worry about their future in the country.
Quoting the poet Alfred de Musset, Emmanuelle Butaud-Stubbs (employers’ group, France), said that uncertainty destroyed all value. Is an interim agreement of five to six years from March 2019 possible, she asked. She spoke of the hypothesis of mobilising the European Globalisation Adjustment Fund (EGF) to help businesses hit hard by Brexit. Belgium’s Philippe de Buck of the same group stressed the importance of knowing as soon as possible the outlines of the second phase, related to the negotiation of a free-trade agreement that will govern EU/UK relations post-Brexit.
Barnier said that the most certain interim period started on 29 March 2017, the day London officially asked to leave the EU. He called on civil society to use this time to prepare itself as best as possible. After March 2019, there will probably be a transitional arrangement, he added, stressing that during that period, the Court of Justice would retain competence.
The Christian Democrat went on to observe that the forthcoming negotiations were entirely unprecedented, particularly on the trade question. The 30 or so free-trade agreements the EU has signed with third countries provide for a process of regulatory convergence.
With the United Kingdom, the opposite will be true. “We are fully integrated, they will diverge mechanically”, said Barnier, who added that the future free-trade deal with the UK would “probably” have to be ratified by the 27 countries of the EU. He asked what would become of this divergence. Will it be reasonable, measured, possibly verified, and by whom? Or will it be the subject of regulatory competition, tax, environmental or consumer rights dumping?
The EU negotiator-in-chief, who will travel to the Belgian port of Zeebrugge this Friday, called for confidence between the parties by negotiating the three priority dossiers first of all: the status of European citizens resident in the UK and of British citizens living in the EU, the budgetary invoice related to British withdrawal and the specific case of Northern Ireland, where peace must be maintained at all costs.
Barnier hopes that sufficient progress can be made on these three subjects in parallel to allow the EU27 to agree in the autumn to start discussions on the future free-trade agreement and other subjects of common interest, such as cooperation in security matters, the fight against terrorism and defence. “Once we have greater clarity on the nature of this new relationship, we will obviously be able to discuss any transitional measures”, he added.
Barnier, who was applauded warmly by the EESC, concluded by saying that the Brexit talks would have to be carried out peacefully and with lucidity, but not in a spirit of revenge, and certainly not involving any diversion of the EU27’s attention away from the reflection on the European project. “The future of Europe is far more important than Brexit”, he said. (Original version in French by Mathieu Bion)