As the political theatre plays out in London, the EU’s behind-the-scenes preparations for Brexit continue apace.
Brexit watchers were this week bombarded with a series of slides, technical notices and political guidelines setting out the EU’s thinking not only on a post-Brexit transition period, but also on the broad outlines of its thinking on a future trade deal.
Level playing fields and cherry-picking were the mantras of the day, but the seemingly bland terms belie a massively complicated web of detail.
Take the level playing field.
The European Commission is nervous the UK will try to undercut its EU competitors by relaxing rules on state aid, lowering taxation and cutting environment and labour standards.
The EU is particularly worried about taxation, seeing a “clear risk” in the UK using lower tax to gain a “competitive advantage”, according to a European Commission slide presentation to diplomats.
They will insist, the presentation says, on inserting “substantive provisions” to prevent a lowering of those standards into a future trade deal with the U.K.
Those provisions will include “non-regression clauses” (which exist in current EU employment law) and swift sanctions (including financial penalties) in a future trade deal with the UK.
“Nobody wants in their direct neighbourhood a country which undermines your standards, principles and laws,” explained a senior EU diplomat close to the Brexit talks.
The discussions also served as a repeat warning to the U.K. to abandon its hope of cherry picking special deals for financial services, as well as other crucial services such as aviation, telecoms, audiovisual and media, or professional and legal services.
While EU lead negotiator Michel Barnier, backed particularly by France and Germany, is reported to be more hard line, particularly on financial services, there are others who are willing to talk about some kind of equivalent regime for UK banks (see EUROPE 11952).
But passporting is definitely out, according to three diplomats who participated in the talks.
“Not a single member state of the 27 is nice,” said one EU diplomat of the position on financial services.
Hugely frustrating for EU negotiators is the continuing lack of clarity from the British side on what it wants from a future relationship.
“There are no British positions,” said one senior EU diplomat. “We read the media.”
However there have been several - sometimes conflicting - statements about what the UK wants in a transition (see EUROPE 11948), and it has not pleased Tory Eurosceptics, who have accused May, her chancellor and her Brexit advisers of trying to thwart Brexit and turn the UK into a EU “vassal state”.
Talks on a post-Brexit transition period are due to take place in Brussels next week, preceded by a working lunch between Barnier and UK Brexit Secretary David Davis (see EUROPE 11949).
However, Prime Minister Theresa May told reporters on a trip to China this week that she intended to fight back against the EU’s transition guidelines when it comes to migration (see EUROPE 11952).
“All this time we are wasting now on discussing being a member in all but name,” said Greens co-chair and Belgian MEP Philippe Lamberts. “It’s time for British politicians to come to terms with reality.”
With the curtain going up on transition talks, it will take a lot of stage managing to meet the desired March deadline to get a deal signed - and the hard work on trade has yet to begin. (Sarah Collins)