UK-EU: a question of trust

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Britain and the EU are about to begin trade negotiations by accusing each other of breaches of good faith. 

An angry Michel Barnier took Boris Johnson’s government to task this week for, in Brussels’ eyes, retreating from prior commitments to align its regulations with the EU’s. The UK, for its part, charges that the EU has reneged on an offer of a “Canada-style trade deal”.

It is a very strange backdrop for the start of a negotiation that is going to require trust and goodwill if it is going to succeed. 

After warning EU affairs ministers on Tuesday that the UK was backsliding on its promises, Mr Barnier said on Wednesday that he was concerned at “the distance that the British government wants to put between its previous commitments with us and the current speeches” by senior British government figures.

The EU’s chief negotiator said this week that trust will be an essential ingredient in the talks to come. An early test will be how Britain implements the withdrawal agreement that the UK and the EU agreed on last year, notably when it comes to checks on trade between Great Britain and Northern Ireland.

But Brussels is also pointing just as firmly at the political declaration: a 27-page document that was little more than an afterthought during much of Britain’s Brexit negotiations but that Brussels now wants to put front and centre. 

The text says that any trade deal must contain “robust” policy commitments “to ensure a level playing field”. The UK insists that the EU’s interpretation of this idea, which includes keeping Britain within the EU’s state-aid regime and limiting divergence in key policy areas, amounts to vassalage.

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For the EU, the document is its strongest defence in trying to justify the tough conditions it wants to impose on Britain in exchange for a tariff-free, quota-free trade deal. Little mention is made in Brussels now of the fact that the text is legally non-binding. Instead, EU officials argue it was signed “in good faith.”

“Every word counts,” Mr Barnier said in a press conference on Tuesday, noting Mr Johnson had negotiated the document barely six months ago. 

Phil Hogan, the EU’s trade commissioner, told the FT this week that Britain’s word was at stake in the spat.

“I was always brought up in my years with a strong political perception that the United Kingdom was an entity that, when you signed something in great solemness . . . was the last country that you would expect to act in any dishonourable way in relation to its implementation,” he said. 

“So the signature of the United Kingdom in a sovereign way to a withdrawal agreement, but also a political declaration, I always felt it meant something and I hope I’m right, that it still does mean something, and that there’s not any effort made to water down the agreements that have already been reached after three years,” he added.

The political declaration was originally conceived as a sop to Theresa May after she failed to convince the EU to negotiate on Britain’s divorce and on its future relationship with the union at the same time.

But the text began to matter more to EU leaders once Mr Johnson became prime minister. He made clear to Brussels that he wanted to rework the document by scrapping Mrs May’s plans for a customs union and defining a more distant economic relationship. The language on the “level playing field” was a key battleground. 

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All this means that Brussels really believed it had won a victory last year with the language it secured on regulatory alignment — a point underlined by the detailed negotiation stance that the UK published on Thursday. It is bewildered that Mr Johnson is simply ignoring that victory.

The UK argues, in any case, that the language in the political declaration is open to interpretation, and that the EU’s demands go further than what was agreed. 

The end result is that the document that was supposed to guide the negotiations is at the centre of a feud. 

Further reading

Environment secretary faces UK farmers’ anger over food standards
Angry farmers booed the newly appointed environment secretary at their annual conference on Wednesday after he failed to provide reassurances on post-Brexit food standards or extra help for those hit by widespread flooding. The angry reaction from the audience in Birmingham came after George Eustice declined to commit the government to upholding existing UK standards after Brexit in future trade deals that would bar imports of cheap food cultivated in countries, such as the US, that have weaker regulation. (Judith Evans, FT)

Boris Johnson to threaten to walk away from Brexit trade talks
Boris Johnson will threaten to walk away from Brexit trade talks if negotiations have failed to progress by June, focusing instead on preparations for a hard exit on World Trade Organization terms at the end of the year. (George Parker in London and Jim Brunsden, FT)

Hard numbers

Where are we in the property cycle? (James Pickford, FT)

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Chart showing average annual growth in house prices, percent. London house prices have grown fastest over the past two decades but other cities are closing the gap



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