THE CLOSING stages of a fraught negotiation between Britain and the EU about a future trade relationship were always likely to be tense. Political leaders have been preoccupied with the covid-19 pandemic, leaving the talks mainly to their negotiators. Yet the mandates given to Michel Barnier by the EU and to David Frost by the British government have made compromise on the most difficult issues all but impossible.
This was the background to the EU summit in Brussels on October 15th. The heads of government expressed concern that progress in the negotiations was insufficient, and called on Britain to make the necessary moves to reach agreement, thereby putting the ball firmly in Mr Johnson’s court. The British prime minister has now lobbed it back by asserting that, since the EU seemed unwilling to offer a trade deal like the one it has with Canada, Britain should now prepare for a relationship like Australia’s—meaning no trade deal at all.
Such language sounds hardline, but it does not mean that a no-deal Brexit is inevitable. The current standstill transition period ends on December 31st. Realistically, that leaves a few weeks in which both sides could seek a compromise. Angela Merkel, the German chancellor, asked Mr Johnson not to walk away from the negotiating table. And for all his talk of how “mightily” Britain would prosper without any deal, Mr Johnson has not done so: talks may continue in the coming weeks
The sticking points remain intractable, even so. The EU insists that Britain must have a robust regime to police future state subsidies to industry, with a credible system of dispute settlement. Angered by Mr Johnson’s plan unilaterally to rewrite the Northern Irish provisions in the withdrawal treaty that was ratified in January, it also wants a tough governance structure for any deal. And, most difficult of all, it wants to retain broadly its current terms for access to British fishing waters.
The usual blame game makes the outcome much harder to predict. The EU says that as Britain is demanding unimpeded access to its single market, it is for Mr Johnson to compromise. Mr Johnson retorts that the EU is refusing to accept that Brexit means Britain must be a fully sovereign independent state. The ability of each to blame the other for intransigence is making no deal seem ever more likely.
Yet the truth remains that it would also be bad for both sides. The economic hit would be worse for Britain, but the EU would also suffer from the erection of trade barriers. Even for fisheries, no deal would be bad for both—EU boats would lose access to British fishing grounds, but their British counterparts would also lose tariff-free access to the vital EU market. So despite this week’s tough talk, the betting should narrowly be on some deal being done in the next few weeks.
Editor’s note (October 16th): This article has been updated since it was first published.