The UK’s white paper got a polite welcome from the EU, but the evolution will have to become a revolution if a deal is to be done (see EUROPE 12061). And it’s not just the UK that will have to move.
Firstly, and importantly, the UK said there would be a white paper on the future relationship and there was a white paper. The fact that it came more than two years after the Brexit referendum was not lost on Brussels.
Over in London, it was chaos. A debate in the House of Commons was suspended while the text was distributed, and in some cases flung across the chamber. MPs were furious they had not been briefed on it, while selected journalists in London and Brussels had.
Back on the continent, EU negotiators were keeping calm and settling in for some weekend (re)reading of the text, which will culminate in a joint statement at next week’s general affairs Council.
Lead negotiator Michel Barnier said the bloc would “analyse” the UK’s proposals, but that the EU’s offer remains an “ambitious” free trade agreement and “a strong security partnership” with the UK.
MEPs in the Brexit steering group welcomed the text as “a step towards” a future deal, and were upbeat that it “could take the form of an Association Agreement”, as the white paper says. But, they warned, there is “no space for outsourcing the EU‘s customs competences”.
That appears to knock back the central tenet of the UK’s economic partnership idea: an EU-UK free trade area for goods and food, with a “combined customs territory”, where the UK would abide by certain EU rules, collect tariffs and conduct product checks on behalf of the bloc.
One senior EU diplomat said the white paper contained “interesting things” but also “some ambiguities” on trade and customs that amounted to “cherry picking. It reads to some in the EU as if the UK will abide by the rules until it decides not to,” the diplomat said. “They talk of making concessions, but the forum for this is the negotiations.”
British officials say the white paper shows a “clear evolution” in their position, something the EU does not want to dismiss out of hand. “No other free trade agreement has what we are proposing here,” one British source said of the white paper’s non-regression clauses on state aid, environmental and labour standards, which they hope will unlock more market access for UK companies.
But the EU’s abiding fear remains: that they will be undercut by a less-regulated Britain. They are also simply annoyed at having to accommodate the UK. “Brexit was done to us and not the other way around,” an EU diplomat said. “We will not change who we are as the European Union because the UK is leaving,” Mr Barnier told the European-American Chamber of Commerce in the US this week. “We need to protect the EU's external border to preserve the integrity of our market.”
Even US president Donald Trump had a go at the white paper, saying it would rule out a transatlantic trade deal. “If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal,” Mr Trump told The Sun newspaper in an interview.
British officials maintain that their free trade and customs area would deliver a frictionless Irish border, but the Irish are not convinced. The EU insists on a backstop solution for the border in the withdrawal treaty, whatever happens in the future. But talks on that backstop are still stalled, though there is a further round of negotiations next week.
On financial services, there is some hope. Commission vice-president Valdis Dombrovskis said the white paper showed the UK was “looking for a pragmatic and realistic solution” with their proposals for a kind of beefed up equivalence regime. British chancellor Philip Hammond said the UK had chosen to “engage with reality and put down a proposal which we believe is genuinely negotiable, will protect the City and that the EU will engage with”. He also seems to have internalised the fact that City firms will manage to find their way around new regulations. “The City has always innovated, it’s always changing over time, and it will go on innovating to maintain its global lead,” he said in Brussels on Friday.
But there is still a battle to fight on the home front.
Leading backbench MP Jacob Rees-Mogg rubbished the white paper, calling it “the greatest vassalage since King John paid homage to Phillip II at Le Goulet in 1200”. Theresa May has risked quite a bit to get the paper this far, losing Brexit secretary David Davis and foreign secretary Boris Johnson in the space of a week (see EUROPE 12058). Even if European Council president Donald Tusk thinks that “the idea of Brexit” might leave with Davis and Johnson, their departure has not thinned the rebel ranks.
The EU has said it will move if the UK moves. The Brexit on offer in the white paper is clearly not enough for the EU, but the bloc will have to soften its stance if progress is to be made. (Sarah Collins)