The Covid Crisis Has Put Trade Talks Between EU and UK at Greater Risk
OPINION |

The Covid Crisis Has Put Trade Talks Between EU and UK at Greater Risk

IN FEBRUARY THE NEGOTIATIONS SEEMED TO BE GOING BETTER, BUT THEN THE PANDEMIC ARRIVED. TIME FOR A PAUSE FOR REFLECTION

by Paola Mariani, Bocconi Dept. of Legal Studies
Translated by Richard Greenslade


The Brexit saga is a continuous race against time and it's not over yet. The withdrawal agreement that came into force on February 1, 2020 in fact provides for a transitional period of only 11 months with unchanged conditions during which the parties must negotiate and conclude an agreement that governs their future relationships, in particular economic and commercial relations. Until the end of the transitional period, the UK will still be subject to European rules and will benefit from participation in the single market. But what will happen next if agreement on new rules is not reached? It is in the interest of both sides, the Union with its 27 Member States and the United Kingdom, that effective exit from the Union take place in an orderly fashion. That will give economic operators and all people clear rules on whether and how relations can continue - realtions consolidated in almost fifty years of a free and open European market.

For this reason, both sides wasted no time and immediately engaged in the new negotiation, aware that never before had an agreement of this nature and complexity been concluded in so few months. It is true that we should have "benefited" from a political agreement on the framework of future economic relations contained in the Political Declaration accompanying the Withdrawal Agreement. But when the respective negotiating directives were published in late February, it turned out that some of the principles contained in the Declaration were no longer shared by the United Kingdom. In particular, the maintenance of the level playing field existing at the time of the United Kingdom's exit from the Union in some key sectors of the economy including competition, state aid, workers' rights, environmental protection and food and health security as a condition for the free access of goods and part of the services in their respective markets was denied. The UK instead claimed unilateral and unconditional power to diverge from European standards while maintaining free market access.

If at the end of February the negotiations seemed to be on the rise, the arrival of the pandemic made the undetaking even more difficult. The virus did not spare the protagonists of this saga - the two chief negotiators Michel Barnier and David Frost, and Boris Johnson himself, were positive and had to stop their activities to recover. Fortunately they are now well and can start to deal again with the negotiation,which after a long pause is starting again with videoconferencing sessions. But the pandemic has not only forced the negotiation into lockdown, it has had devastating effects on international trade. We do not know if at the end of the emergency trade relations between the States will return to those of before.

Both sides share open positions towards world trade and foreign investment. In particular, the United Kingdom considers leaving the Union as the condition for proposing itself as a champion of free world trade. In relations with the rest of the world, the objective pursued by the British government is to activate a tight campaign of negotiations to conclude new trade agreements to replace the European Union and its Member States with new trade partners, from the United States to the emerging economies of Asia. For this reason, adherence to the high standards of the Union is seen as an obstacle to opening up to global trade. But is this goal still achievable? The reaction to the pandemic in the immediate term was protectionist, the internal market itself saw border closings for goods and people due to the emergency. The Union's response has been to counteract internal protectionist behavior but at the same time it has closed towards non-EU countries.

In these moments of great uncertainty the wisest choice for both parties would be to take a pause for reflection and return to rethinking future scenarios when the world picture is clearer. The withdrawal agreement allows an extension of the transitional period for a maximum of one or two years, but the possible extension will have to be decided jointly by the EU and the United Kingdom by 1 July 2020. To date, there does not seem to be any political will of the British Government to seek an extension. The exceptional nature of the times we are experiencing could lead to the United Kingdom's real exit from the Union without an agreement, further jeopardizing economic activities that by the end of 2020 will have already been hit hard by the economic crisis caused by the pandemic. Europe must be united in facing the crisis if it does not want its citizens to pay an even higher price. This also applies to the United Kingdom which in its own interest must continue to pursue realtions with its most important trade partner, under clear and agreed-upon rules.

Paola Mariani, Giorgio Sacerdoti, The New Negotiations on the Future Trade Relations, in FABBRINI (ed), The Law and Politics of Brexit: The Withdrawal Agreement, Oxford University Press, forthcoming 2020, Vol. II

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