Brexit: Movement Towards a Year-End Deal

Published on October 16, 2020

European Union leaders agreed yesterday to continue talks with the United Kingdom over the next few weeks to get a Brexit deal over the line, and Britain’s Prime Minister Boris Johnson, despite threatening comments just hitting the tapes, is hardly going to walk now after his own chief negotiator David Frost recommended he stay at the negotiating table. 

Indeed, despite the public hedging from both camps that they will not exclude a no-deal possibility, and that neither side will take a deal “at any price,” sources close to the negotiations noted a clear and more positive change in language and mood on Thursday.

** We believe after this last round a deal by year-end is in fact well within the cards, although the ultimate scope of that agreement remains uncertain. While the end of October was mentioned again as the (real) moment a deal should be ready, albeit with more and more officials talking of early November, both sides seem to be finally moving beyond setting deadlines to addressing the items that need to be settled.

** EU chief negotiator Michel Barnier stressed that he hoped there would be a breakthrough next week on the three main sticking points — fisheries, fair competition, and dispute resolution —  when talks are to continue in London and the following week during talks in Brussels. That softening of rhetoric extended from what we understand to the technically most challenging negotiations over fair competition, the most fundamental outstanding issue for the EU at large as it goes right at the heart of the internal market the 27 EU countries so cherish.

** EU negotiators remain concerned that without an agreement on fair competition, British companies will be able to engage in dumping practices by taking advantage of more favorable British environmental, climate, tax, or employment regulations than the EU has. But yesterday, instead of taking the usual position that the UK must adopt EU rules if it is to sell its goods in the bloc, Barnier talked about allowing for “reasonable divergence” in Britain’s rules, being informed about changes, the need for assurances of domestic enforcement of the British rules, and the setting up of a British body to monitor and enforce the rules.

** As to the dispute over fisheries — access to British waters for EU fishing boats in exchange for access to the EU market for British fishermen to sell their catch —  Barnier linked those negotiations to an issue near and dear to the UK, British access to sell its electricity to the EU. It is not lost on EU negotiators that an agreement there would be a valuable sweetener for most of all Northern Ireland, which accounts for nearly all the UK’s electricity exports. 

** And here again, and despite a tough line from France’s President Emmanuel Macron including pronouncements that Paris will never “sell out” its fishermen, Barnier’s language notably softened: he chose to talk about openness on the EU side on fisheries, and that the bloc has known all along that “we are going to have to make an effort,” even as the bloc pressures France to move off its hardline position.

The next two weeks of negotiations will be crucial. But the less in the way of headlines comes out through that stretch the better, as it would indicate the two sides have entered that special phase in negotiations where they shun the press, so as not to jeopardize the chances of a deal.

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