The eighth round of the Brexit negotiations, which took place between 8 and 10 May 2020 in the British capital, ended without achieving a positive result, amid an atmosphere of tension between the European and British sides against the backdrop of Britain's intention to pass a bill that would enable it to abandon the Brexit Agreement that was approved in 2019 and based on which the transitional period and initial arrangements for future relations were determined, especially avoiding the difficult borders within the Irish island, which represent the most important issue raised between the two sides.

Initial issues

Prior to the start of the eighth round of negotiations, the main differences between Britain and the European Union (EU) focused on the following points:

  • Governance of future relations: while the EU proposes a single partnership agreement that covers and regulates all issues within a unified administrative framework, Britain wants to conclude separate agreements for each individual issue, in light of its rejection of partnership models such as the ones applied to Turkey, Switzerland and Norway, bearing in mind the specificity of each of those models.
  • State aid: one of the important issues that emerged at the seventh round of the European-British negotiations was the so-called state aid or "subsidies" according to the definition of the World Trade Organization (WTO), meaning financial intervention by governments to assist companies, both with tax exemptions and imposing customs duties and taxes on competing imports, in addition to supporting national industries.[1] Britain is bound by the EU rules with respect to state aid until the end of the transitional period (31 December 2020), while the rules would continue to be applied between Northern Ireland and the EU for four years. The point of disagreement lies in the extent to which Britain’s standards in support of companies and industries are in line with EU rules, especially that the EU fears that Britain would adopt unfair rules in competition with European companies, although Britain has recently been one of the least spending countries on business support by 0.38 percent, compared to France that spent twice that rate, and Germany that spent 1.45 percent, taking into account the difference in the legal interpretation between the WTO and the EU in supporting businesses and companies.
  • British fisheries and waters: British fishermen in Wales, Scotland, Northern Ireland and England were among those who supported the Brexit campaign in 2016, especially since the industry is low due to several factors, including poor income and potential, and preference by UK consumers for fish coming from the European continent. While the EU demands free access to British waters and that the negotiations on fishing be part of a general agreement that includes the rest of the other issues, Britain wants a separate agreement on fishing, even though the fishing industry constitutes only nearly 0.1 percent of the total value added of the British economy.
  • Police and judicial cooperation: while Britain objects to the jurisdiction of the Court of Justice of the European Union (CJEU), and considers it a supra-national control over its legal and legislative sovereignty after Brexit, the EU responds that Britain’s proposals on some issues seek to preserve the status of an EU member state.

The nature of the current disagreements

The eighth round of negotiations began, coupled with tension due to the adoption by British Prime Minister Boris Johnson of hostile rhetoric towards the EU, accusing it of imposing a food blockade on Northern Ireland on the one hand, and then the emergence of a bill called the Internal Market Bill that would enable the British government to disavow some of its obligations in the Brexit Agreement that was agreed upon in 2019 and upon the basis of which the British elections took place in December 2019. Johnson has argued that the current Brexit Agreement endangers Northern Ireland and the Good Friday Agreement. [2]  Besides, it was concluded hastily and without adequate study. That is why the Internal Market Bill has to be approved, being necessary to prevent the EU from adopting an "extreme and irrational" interpretation of the provisions contained in the Withdrawal Agreement in relation to Northern Ireland,[3] according to the statements made by Prime Minister Boris Johnson. This was actually done in the session on Monday, 14 September 2020, when Members of Parliament (MPs) agreed to the Bill by 340 votes, against 263 votes that opposed it. Below are some of the articles of the Bill that raised the EU’s reservation:

  • Abolition of the rules for state aid (subsidies) in Northern Ireland, which constitutes a violation of the Brexit Agreement that granted Northern Ireland a special status in the transitional period (Article 41).
  • Granting British government ministers powers to amend or reject the rules relating to the movement of goods in January 2021 if no agreement is reached with the EU[4] (Article 42).
  • The principle of mutual recognition: this principle concerns the equality of goods coming from parts of the UK with domestic goods from the legal perspective. For example, if a commodity obtains legal approval in Wales, it would be automatically accepted in Northern Ireland, even if different standards are established locally. In return, the EU would allow restricting the sale of goods on a number of grounds such as public policy, public security and other European foundations. Thus, according to this principle, Britain wants to violate the EU product requirements and food standards, which for the EU amounts to reducing the current standards after Brexit.
  • The project creates an authority for ministers to provide financial assistance under various purposes as an alternative to funding provided by the EU.
  • The Bill prevents the three legislative bodies in Wales, Scotland and Northern Ireland from passing any legislation that contradicts it, which is a restriction of the powers of those bodies in making their own policies in the future.

Possible scenarios

When the British government presented the Internal Market Bill to the British House of Commons, the EU objected to the text of the Bill and gave Britain a grace period until the end of September 2020 to withdraw it, while the European Parliament (EP) announced that it would not ratify any trade agreement unless Britain withdrew the Internal Market Bill. For its part, Britain, through its Minister for the Cabinet Office Michael Gove, informed the European Commission (EC) that it would not withdraw the Bill, prompting the Commission to threaten to resort to court against Britain for violating the Brexit Agreement.

With the continued disagreement between the two sides and the shortage of time remaining for the transitional period, before the end of which it is necessary to reach an agreement no later than October 2020, the most prominent possible scenarios can be presented as follows:

1. Exit without agreement: insistence by Johnson’s government on moving forward may push the EU to sue Britain, and raises the possibility of an end to the transition period without an agreement and the adoption of the WTO rules and definitions as in the case of the agreement between Australia and the EU. This scenario was recently announced by Boris Johnson, referring to his previous approach of exit without agreement.

2. Amending the Internal Market Bill: there is an opinion indicating that Johnson wanted by the Internal Market Bill to pressure the EU into offering new concessions that would enable Britain to obtain a special status in its future relations with the EU in order to achieve more gains after its exit. Therefore, according to this Scenario, the Bill will be amended in accordance with this proposition.

3. Extending the transitional period: according to the Brexit Agreement, the transitional period could be extended while working under the rules of the EU as they are, especially that Northern Ireland maintains its status with the Union for an extendable period of four years. Thus, negotiations between Britain and the EU could continue for a year or more.

Upon weighing the proposed scenarios, it is plausible to favour the scenario of extending the transitional period for at least one year due to the difficulty of exiting without an agreement, especially as this:

First, may lead to a decline in the UK’s GDP by at least 8 percent over the next ten years.

Second, my expose Britain's unity to the threat of disintegration. The lack of a deal would most probably drive the nationalists in Scotland to seek a new independence referendum. It would also jeopardize the Good Friday Agreement, thus imposing a solid border on the Irish island that would bring it back to the pre-1998 tension.

Third, pressures exercised by Johnson could be seen as an attempt to pressure the EU to reach the best agreement that distinguishes Britain from other agreements concluded with its counterparts such as Norway, Switzerland and others. Therefore, extending the duration of the negotiations to reach the optimal form of British-European relations would be more plausible as the two sides need each other. 

References

[1] “EU State Aid Rules and the WTO Subsidies Agreement”, a report published on the British House of Commons website. Available at: https://cutt.us/ZwFPB

[2] “Johnson: the EU threatens to strike our territorial integrity and seeks to impose a food blockade on us”, mc-doualiya, 12 September 2020. Available at https://cutt.us/nK8vG

[3] “Johnson's controversial Brexit bill clears first Commons hurdle”, RTÉ, 14 Sep 2020, available at: https://www.rte.ie/news/brexit/2020/0914/1165013-brexit-politics

[4] The text of the Bill is available on the British House of Commons website at the link: https://commonslibrary.parliament.uk/research-briefings/cbp-9003/

 

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