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When does the Barnier-Frost slow dance become a quick step?

Michel Barnier and David Frost will emerge blinking into the light on Friday after another week of intense Brexit videoconferencing, but what will the chief negotiators have to show for it?

Three rounds into the future-relationship talks, we are precisely where almost any trade negotiation would be at this stage.

Both sides have a clear idea of where the other stands and what are the problems. The difficulty in this case is that they can’t spend years of generously-caffeinated meetings solving them. An agreement probably needs to be found by October to be ratified in time for the end of the UK’s post-Brexit transition period on December 31. 

The difficulties are well known: in short, Britain’s interpretation of untrammelled sovereignty is incompatible with handing over long-term fishing rights, giving binding guarantees that it will stick closely to EU regulations, or allowing an enforcement role for the European Court of Justice; for its part, the EU risks a backlash of epic proportions if it grants Britain extensive market access without firm safeguards against unfair competition for its companies and security for its fishermen. 

Brussels is convinced that it is the British who should be feeling the pressure: Team UK needs to show progress in the talks, so the thinking goes, to stave off domestic calls for a politically-treacherous extension to the transition period — a possibility that legally disappears at the end of next month.

The EU has always maintained that the failure of the talks, and with it the end of preferential-trading terms with the UK, would be felt disproportionately on the British side. Also, for all UK ministers’ talk of pivoting to an “Australia-style” deal if the talks founder, Brussels is clear that Britain should not expect a fallback solution. 

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During negotiations on Britain’s withdrawal from the EU, Brussels prepared an array of legislative measures to cushion the blow of a no-deal Brexit, covering everything from flights to financial services. But the commission is adamant that this is no longer on the table, as industry has had much more time to prepare.

“There are no contingency measures any more,” said one EU official. “We cannot perpetuate the benefits of the single market forever.”

But the EU also has plenty of incentives to get a future-relationship deal done: a former French fisheries minister, Mr Barnier needs no reminding of that sector’s dependence on access to UK waters. Also, the imposition of tariffs and other barriers to commerce with a country with which the EU enjoys a hefty trade surplus in goods is one of the last things the bloc’s battered economy needs. 

So what have we really learned from the talks so far? If anything, it is probably that, to get a deal, the two sides are going to need to pull off a feat even more impressive than the one we originally thought would be needed.

Little headway will have been made by the time of a high-level EU-UK meeting in June. (By then, the two sides could also be embroiled in a row over the Irish trade border.) Some EU diplomats even predict that the real crunch discussions may not even come until after the summer, a mere few weeks before an agreement needs to be reached. 

“We will probably only see in September if there is a chance for a deal,” said one senior EU diplomat. “Is the UK prepared to be more flexible? If not, then we are probably headed to a no deal.”

Your coronavirus reads

  • The pandemic has shown that central banking is inherently political — Foreign Policy

  • A European Safe Asset is the way to reinforce the eurozone — Vítor Constâncio, MacroViews

  • How ready is the global supply chain to revive after Covid-19? — Ifo Institute

Chart du jour: Eurozone and UK economic blues

Column chart of GDP, % change over previous quarter showing Coronavirus plunges major economies into a steep economic fall

The UK economy shrank at the fastest monthly pace on record in March as the coronavirus lockdown triggered a crash in activity and demand. But it still fared better than that of the eurozone, which contracted 3.8 per cent in the first quarter — reflecting the later start of the British lockdown. (chart via FT)

Coronavirus news round-up

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Karlsruhe clash
Vera Jourova warned against actions that put into question the role of the European Court of Justice in the wake of the German constitutional court ruling, saying this could have far-reaching consequences for the EU’s legal order and its citizens, writes Sam Fleming

The European Commission’s vice-president for values and transparency told a Bruegel/FT event that the EU’s lawyers were still analysing the implications of the Karlsruhe court decision, but that “it is very important that the commission stands firm on the principles”. 

Ursula von der Leyen, commission president, said on Sunday that she was considering steps including taking Berlin to court following the German constitutional court’s decision to cast aside an ECJ judgment on European monetary policy. 

The German judges dismissed the ECJ ruling in the European Central Bank’s favour as “incomprehensible” and “meaningless”, in a move that opened the door to potential legal challenges against the EU from other countries, such as Poland and Hungary, whose governments are at odds with Brussels on the rule of law.

Ms Jourova warned that the bloc could not afford to destroy its basic principles given the uncertain times Europe was going through, saying “this is a serious moment”. She added, however, that the commission has a “very weak toolbox” to respond to such situations, adding “we have to consider whether the system works well”.

Moving threat
Catalonia is increasingly becoming the focal point of Spain’s fight against Covid-19. The region accounted for more than half of Thursday’s coronavirus death toll. (FT, La Vanguardia)

Demetropolitisation
The head of France’s employers’ federation tells the FT’s Victor Mallet that the pandemic could bring lasting changes to how the country does business: “For 20 years all the wealth, all the jobs have been concentrated in metropolitan areas, obviously Paris but also other big cities . . . People will live in Chartres or Orléans and work at a distance from there much more frequently.”

Hungary on trial
A group of 80 MEPs and civil society groups have written an open letter to Ursula von der Leyen and European Council president Charles Michel urging them to stand up to Viktor Orban over his government’s stifling of opposition voices and free expression. “The European Union must not sit idly by while a Member State’s democracy is in jeopardy,” they wrote.

Clairvoyant commission
Great work by Agence Europe, which has unearthed an EU-funded cartoon strip from 2012 about global pandemic — featuring a killer illness that can spread from animal to man, a Chinese laboratory and . . . time travel. “Infected” is still available to read on the EU’s website.

Sanofi summoned
Emmanuel Macron will meet pharmaceuticals group Sanofi’s top management at the Elysée Palace next week after the company’s chief executive Paul Hudson told Bloomberg News that the US “has the right to the largest pre-order” of a Covid-19 vaccine “because it’s invested in taking the risk”.

In an interview for the FT’s Global Boardroom event, Hudson said it was “news to him” that he had been called to meet the French president and denied that he had meant that the US would have access to the vaccine first.

Planet Europe

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Cyprus intrigue
The Mediterranean island has long been a favoured spot for Russians and has become emblematic of fears about Moscow’s influence in the EU, real and imagined. Cyprus is also a microcosm of wider problems facing the European bloc, from regional security risks to corruption fears around Nicosia’s “golden passport” scheme to sell citizenship to wealthy foreigners. Here’s a (pre-lockdown) FT Magazine dispatch by Michael Peel.

Trade champion needed
WTO chief Roberto Azevêdo announced that he would leave his post a year early, saying that the move would avoid any distractions for the organisation in the build up to a crucial summit next year. The summit was postponed due to the pandemic, pushing it into the period when countries would normally be jostling over his successor. (FT)

Freedom forever
Brussels has ordered the UK to fully honour EU citizens’ free-movement rights, using its powers to open infringement proceedings during the country’s post-Brexit transition period. (FT)

Touché
UK cabinet office minister Michael Gove has, in parallel, raised his own concerns about shortcomings in how some EU countries are implementing protections for UK citizens that are guaranteed by last year’s Brexit treaty.

Coming up
Michel Barnier will hold a press conference following this week’s Brexit negotiation round; euro area finance ministers will hold a video meeting of the eurogroup to discuss the economic response to Covid-19; EU trade officials discuss possibilities for reviving talks with the US.

[email protected]; @jimbrunsden

This article was first published at https://www.ft.com/content/b4fe6ed5-2300-4054-8c13-5724c6268b03

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