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Brexit Commentary
03 July 2020 by Alexandra Forrest Whiting

Brexit: Is the door closing on an EU Trade Deal?

We may be in the middle of summer but New Year’s Eve is really not that far away. In just a few short months the UK and EU will have either secured a post-Brexit trade deal or they will be facing a massive rupture. As always with Brexit, time is running out. Unless the two sides can quickly reach agreement on key issues, from fishing rights to state aid, the chances of striking a meaningful deal seem to be slowly disappearing.

London could have asked Brussels for an extension to the current transition period. The coronavirus crisis would have offered Boris Johnson’s government the perfect cover. But for political reasons that was never going to happen. 

Instead there is growing concern that the devastation caused by the pandemic may be used by Downing Street to hide the true economic impact of no deal. And despite another round of talks, there is still no sign of a big breakthrough. Yet again we are moving closer to the cliff edge. 

British businesses are preparing for the worst. Miles Beale heads up the Wine and Spirit Trade Association (WSTA) – an industry worth £49 billion. He believes failing to secure a deal is now “highly likely” and is advising members to prepare for trading on WTO terms come January 1st. 

“This is all very frustrating,” he admits. “Whichever side of the channel you are on, you want to produce your drinks for consumers wherever they are. You want to fulfil the demand. That’s how trade works. So for us and for our members it’s more a question of whether the European wine and spirit industry can persuade politicians to stand up for free trade, European businesses and consumers. As we all look to recover from the effect of Covid-19 it ought to be a no-brainer!”
His concerns are echoed across British business. At the beginning of July, more than 100 chief executives and business groups warned the British Prime Minister that failing to secure an EU deal would be hugely damaging. But is the PM and his Vote Leave team in Downing Street even listening?

While Boris Johnson is the face of government, it’s his top adviser, Dominic Cummings, along with Cabinet Minister, Michael Gove, who are seen by many as driving Brexit policy. Johnson’s refusal to sack Cummings over his lockdown breaches made that even clearer. These men are ideological. As Gove himself said earlier this year, “In pursuit of a deal we will not trade away our sovereignty.” But as all ministers know, sovereignty doesn’t fill order books or pay suppliers.

The British government is now pinning its hopes on securing trade deals elsewhere. One could be agreed with Japan within weeks – that short timetable at Tokyo’s request. While that would ensure a quick success for Mr Johnson, a rushed job will leave little time for the UK to negotiate what it really wants. 

Trade deals with Australia and New Zealand should be fairly straight forward. But negotiating via video conference can’t be easy. And anyway, why would they sign off on a deal until they know what the relationship between the UK and EU will look like? As for an agreement with the US, you only need to mention chlorinated chicken and hormone-fed beef to understand that securing anything preferential or even balanced with Washington could be extremely difficult. 

There is still a belief among some in the UK that in the end Germany will ride to Britain’s rescue. For too long politicians and many in the British media have been waiting for Berlin to put its own industry (particularly automotive) first, at the expense of the rest of the EU. As we all know, that hasn’t happened.

Germany’s former ambassador to the UK, Thomas Matussek, who is now an advisor at Flint Global, says Brexiteers have failed to understand how Chancellor Angela Merkel works. Her priority, he stresses, has always been to protect the interests of the EU and the integrity of the Single Market. Some also seem inclined to overestimate the power she has over the other 26 EU member states, he explains, while underestimating her personal strengths.

“They misinterpret her polite tone as being soft,” Matussek says. “She’s not soft and she hasn’t fallen for Boris’ charm either,” he adds.

On July 1st, the very day Germany took over the EU presidency, Chancellor Merkel warned that the EU should be prepared for trade talks with the UK to fail. And unless something changes fast, there could be a lot of sore heads when the UK wakes up on New Year’s Day, 2021. 

Alexandra Forrest Whiting is Brexit Analyst for DW News
and former ITV News political correspondent

Alexandra Forrest Whiting Brexit Commentary

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