Are The Prospects Of A No-Deal Brexit Increasing?

Summary

• EU negotiators discard a UK proposal to avoid consignment pileups at active shipping ports after the Brexit transition period gets over
• Both the UK and EU negotiators said they made no progress in the last talks held on 21 August
• Next round of talks between David Frost and Micheal Barnier scheduled in a few days at London
• Both Britain and EU have earmarked October 2020 as a deadline for the trade deal to be signed off

Michel Barnier, chief negotiator, European Union (EU) is a strong negotiant and has asked the EU states to be thick-skinned with Britain as the Brexit deadline is coming closer.

During the seventh round of trade negotiations held between the two parties that concluded on 21 August 2020, the UK wanted a transportation arrangement to aid the smooth flow of the ‘roll-on roll-off (RoRo)’ system to allow free flow movement of freight traffic, with up to 1000 lorries daily, through the Channel Tunnel, Dover-Calais, and Holyhead-Dublin shipping routes. To aid this movement, the UK government had proposed that companies should make advance customs declarations which could avoid any stoppage at the crossing points.

Britain also asked for truck permits to be recognized on select routes.

These measures would have prevented freight backlogs at ports after the Brexit transition period expires in December 2020.

However, according to media reports, Barnier has rejected the British proposal quoting that such a system would indefinitely tie the Union to an arrangement that they may not desire in the long-term. Instead, EU preferred to have more flexibility over such a system.

In fact, analysts are also pointing out that EU wants each member state to handle incoming shipments from Britain in its own way, that may suit it the best.

On 21 August 2020, the seventh round of post Brexit trade negotiations meeting concluded where both EU and Britain blamed each other on the lack of any progress on the matter. At the trade talks, the crucial issues of competition rules and fishing rights were placed on the table for discussion.

On the sidelines, a British government spokeswoman said that the UK would implement the RoRo measures anyways, even if the EU counterparts do not agree. However, it will be mutually beneficial if these measures are implemented in a consistent manner, she added.

Well, despite disagreements, one can’t deny the fact that both the parties want the negotiations to succeed. For instance, Marco Digioia, secretary-general, European Road Haulers Association emphasized that the association does not want the flow of goods to be interrupted in any way. Market access is the key to competitiveness and both the sides should look for a balanced approach to ensure progress on the post Brexit trade negotiations, he added.

Even though each round of negotiations has ideally aimed at quickly reaching a mutually beneficial agreement, however, at the end of each round of trade talk, serious differences have remained between both the parties involved.

For instance, during the third round of talks, David Frost, chief Brexit negotiator, Britain had said that the nation will not be giving the European boats any access to its waters. The EU had wanted the same in return for improved market access for the UK financial services sector across the unified Union market.

Also Read: Boris Johnson and EU Chief to Hold ‘High Level’ Virtual Summit to End Post-Brexit Deadlock

Similarly, after the fifth round of negotiations, the EU said that it wanted a guarantee for a level playing field, a sustainable solution for its fishermen, and a robust dispute settlement procedure. The Union has emphasised that it will allow a zero-tariff zero-quota access to Britain only if it is given a level playing field.

Essentially, the two main areas of discord between the UK and the EU are state subsidies and fishing rights.

At the same time, the UK has now narrowed down on its wish list and is primarily looking for free access to the EU market. It is open to simpler structures with respect to agreements on aviation, civil-nuclear cooperation, and fishing.

However, compromises need to be made on both the sides and political will from both the sides shall be of prime importance in arriving at the final agreement, especially because fishing rights is an extremely politically sensitive subject.

Pound slipped after no progress in Brexit talks

Pound sterling dropped against the euro as a result of the long drawn out concerns over Brexit.

The pound fell 0.3 per cent against the euro to touch 90.35 pence at 3.04 PM on 21 August 2020, after the news of a scanty progress on Brexit negotiations came out.

The United Kingdom had left the European Union in January 2020. At the same time, both the parties were allowed a one-year transition period to hold trade negotiations and come out with a mutually beneficial trading arrangement. In case there is a no-deal Brexit, Britain and EU would be trading with each other under the WTO (World Trade Organisation) rules.

Also Read: British Economy To Rebound In Q3

Outlook

Going ahead, the last three weeks of trade talks will be more important that the first three years, said Former Brexit Secretary David Davis. While both the sides (UK and the EU) are trying to narrow down on the list of disagreements, to arrive at a mutually beneficial post-Brexit trade agreement, but it is mainly the political will that will decide the final shape of things to come. During the seventh round of trade talks, both the negotiators said that they made no progress. But till the time the trade negotiations are going on, one needs to be optimistic and hope for the best outcome, despite continuing points of discord. In fact, if both sides agree to make compromises, we might actually witness a trade deal between these two global biggies by the end of October 2020.