Tuesday4 February 2020 ★ FINANCIAL TIMES 3
JIM BRUNSDEN— BRUSSELS
GEORGE PARKER— LONDON
Boris Johnson chose the Royal Naval
College in Greenwich to make his long-
awaited “free trade” speech.
In the vast Painted Hall, a celebration
of Britain’s maritime supremacy and
global dominion, he proclaimed: “This
is the newly forged United Kingdom, on
the slipway.”
On the day the UK and Brussels set
out competing visions of their future
relationship, the prime minister said the
UK was about to embark on an expan-
sion of global trading ties comparable
with that ushered in by the “new mari-
time technology” of the 18th century.
But before he had even begun speak-
ing, Michel Barnier, the EU’s chief Brexit
negotiator, made clear that access to the
EU’s market would come with tough
conditions attached — both in terms of
Britain’s continued adherence to the
bloc’s rules and on its acceptance of a
role for the European Court of Justice.
Mr Johnson insists that such demands
are unjustified, and that Brussels has
failed to grasp the fact that Britain is
now an independent, sovereign country.
“There is no need for a free trade
agreement to involve accepting EU rules
on competition policy, subsidies, social
protection, the environment or any-
thing similar any more than the EU
should be obliged to accept UK rules,” he
said, noting that Britain wants a trade
deal that is “similar to Canada’s”.
Does Johnson have a point?
The UK is right that existing EU trade
deals with other countries, such as Can-
ada and Japan, contain nothing compa-
rable to the “level playing field” of regu-
latory alignment the EU asks of Britain.
Brussels’ draft mandate for the talks
says the EU will offer a tariff-free, quota-
free trade deal if Britain agrees to keep
upholding EU labour market and envi-
ronmental laws as they stand at the end
of the country’s post-Brexit transition
period at the end of the year.
For state aid, the EU is going further
and asking Britain to fully apply the
EU’s system of subsidy restrictions, and
for its authorities to work in “close co-
operation” with the European Commis-
sion. But Brussels argues that Britain is
not really seeking a trade deal that is
similar to Canada’s.
The planned market liberalisation —
set out in a political declaration that Mr
Johnson agreed with EU leaders last
year — goes beyond any agreement the
EU has with another major economy.
Mr Barnier also said the geographical
proximity of the UK and the size of trade
flows made the situation unique.
What is an Australia-style deal?
Mr Johnson said that, if it was impossi-
ble to reach a deal with the EU, there was
always the alternative model of Aus-
tralia. The remarks prompted head
scratching in Brussels, where officials
note there is little in the bloc’s relation-
ship with Canberra that goes beyond
basic World Trade Organization terms.
The EU and Australia have a civil avi-
ation agreement, a mutual recognition
agreement on product testing, and even
a 2008 agreement on trade in wine —
covering non-tariff issuessuch as label-
ling. But the limitations of thecurrent
relationship re such that Australia isa
negotiating a trade agreement with the
EU along Canada lines.
Trade experts see the Australia idea
as little more than a euphemism for a
no-deal Brexit at the end of 2020, mean-
ing tariffs on EU-UK trade.
Mr Johnson’s preferred Canada-style
deal would put the UK-EU relationship
on a different footing — with preferen-
tial market access for goods and services
and extensive regulatory co-operation.What does the EU usually demand
on regulatory alignment?
Brussels argues that the concept of a reg-
ulatory “level playing field” is not new.
The Canada deal, Ceta, includes com-
mitments by both sides not to weaken
workers’ rights; Brussels is in the middle
of a dispute settlement process with
South Korea over what it alleges is
Seoul’s violation of commitments to
uphold International Labour Organiza-
tion standards; and the EU’s trade deal
with Japan contains a promise to hon-
our the Paris climate agreement.
But the EU acknowledges that
what it is asking of the UK goes
far further in terms of the
requirements themselves and
how they are enforced. Brus-
sels wants the EU-UK trade
deal to grant both sides the
right to take rapid action,
including reducing market
access, if the other does
not live up to obligations.New dawn breaks but with familiar
sticking points on rules and justice
ohnson insists an independent Britain should not be subject to Barnier’s tough trade demandsJ
FT REPORTERSBoris Johnson yesterday said he was
prepared to sever links with the EU
without a trade deal if Brussels insisted
on tying the UK closely to its standards,
in spite of the government’s own esti-
mates that such a move could inflict
long-term damage on the economy.Mr Johnson insisted Britain favoured a
“Canada-style” trade deal, removing
tariffs and quotas on trade with the EU,
but said that the UK could “prosper
mightily” even if a free trade agreement
was not in place by the end of a transi-
tion period on December 31 that came
into effect after the country’s formal
withdrawal from the bloc last Friday.
The pound fell by as much as 1.4 per
cent against the dollar to $1.3011, and
also slipped against the euro, after the
prime minister said his government was
ready to walk away from talks with the
EU without a deal.
His opening salvo in the negotiations
came as the European Commission
warned that the UK would not secure an
extensive trade deal if it insisted on
diverging from EU standards on issues
such as state aid, the environment and
workers’ rights.
Michel Barnier, the EU’s chief Brexit
negotiator, said: “The UK answer will be
fundamental to the level of ambition of
our future relationship and the UK must
know this,” he said. “It will be up to the
UK to decide.”
Mr Johnson insisted during the
general election campaign last year that
there was “absolutely zero” chance of
the UK failing to agree a Canada-style
trade deal with the EU before the transi-
tion period ends.
Buthe said he was ready to contem-
plate Britain trading with the EU “like
Australia”. Canberra has no free trade
agreement with the EU, but is negotiat-
ing one.
In November 2018, the government’s
own analysis suggested that such a “no
trade deal” outcome could knock 7.7 per
cent off Britain’s growth over the next 15
years, blowing a hole in Mr Johnson’s
plans to revive the country’s economy.
The National Farmers Union has
warned that trading with the EU on
World Trade Organization terms like
Australia would lead to very high tariffs
on exports to the EU, citing 48 per cent
on lamb and 84 per cent on beef.
But Mr Johnson insisted the EU
should agree a Canada-style deal. “We
are not leaving the EU to undermine
European standards,” Mr Johnson said.
“We will not engage in any kind of
dumping, whether commercial, or
social or environmental.”
Brusselsinsisted that the European
Court of Justice must have a role in set-
tling any disputesin the futureover how
to interpret EU law.
Mr Johnson signed up to this in a polit-
ical declarationthat was part of the UK’s
withdrawal treaty with EU leaders last
year, butyesterday he rejected any role
for the ECJ.
The EU is also demanding access to
UK waters forits fishing industry n ao
similar basis as now.
Reporting by Jim Brunsden and Sam Flem-
ing in Brussels, and Sebastian Payne and
George Parker in London
Editorial Comment age 10p
Robert Shrimsley age 11pTrade talks
ohnsonJ
ready to cut
Brussels ties
without deal
CHRIS GILES— ECONOMICS EDITOR
Regional differences in productivity
are at their highest level for more than
a century and will be difficult to solve,
according to the government’s Indus-
trial Strategy Council, as it urges minis-
ters to apply policy “consistently”.
Today’s report comes as Boris Johnson
has made “levelling up” economic per-
formance across the UK a central aim of
his Conservative government after win-
ning December’s general election
largely thanks to a surge of support in
England’s north and Midlands, areas
that have badly lagged behind the more
prosperous south-east.
The council, headed by Andy Hal-
dane, chief economist of the Bank of
England, concluded there was no single
reason for places becoming successful
or left behind, but differences were
entrenched and regional rankings of
success rarely changed.
“Regional differences typically have
deep roots and are long-lasting,” Mr
Haldane said in a foreword to the report.
“For well-performing places, this is a
virtuous circle. For left-behind places, it
is a vicious one.”
He called for “large-scale, well-
directed and long-lived” policies to
level-up worst performing areas, which
the report said had never been achieved
in Britain before.
The report called for consistent gov-
ernment policies, criticising the lack of
continuity of efforts from past govern-
ments over the last 50 years. In a thinly
veiled criticism of the new government’s
policy, it also suggested the response toregional inequality must not be limited
to single soundbites and required “a
holistic approach across a range of pol-
icy interventions and success metrics”.
It called on policy to be “local” rather
than “regional”, saying the value of help
to local areas would be “greatest among
places falling furthest and fastest
behind”. Mr Haldane said: Chopping“
and changing UK regional policies has
contributed to these widening differ-
ences. That’s why the Industrial Strat-
egy Council welcomes the new govern-
ment’s commitment to ‘levelling-up’
the UK.”Regional differences in output per
worker fell in the first half of the 20th
century but grew again as the north of
England suffered from rapid deindustri-
alisation in the 1980s and 1990s, leaving
regional inequality of productivity as
high now as in 1901, the report said.
Even though there had been a slight
decrease in regional inequality in pro-
ductivity since 2010, the council said
differences within regions had risen as
successful citiespulled away from
smaller towns and coastal areas.
Thecouncil indicated there were
many causes of regional differences,
which extended much wider than the
popular narratives that blamed owerl
spending on transport infrastructure in
northern English regions.
Some places had fundamental geo-
graphic problems, such as former coal-
fields and some coastal towns, which left
them cut off from more dynamic parts
of the country. More successful and
larger citieshad, by contrast, benefited
from being able to attract clusters of
high-performing companies, generating
a virtuous circle, it said.
Higher-skilled people tended to move
from poorly performing areas to more
successful cities, exacerbating regional
and geographic divides.Industrial Strategy Council
Local focus urged to ‘level up’ productivity
Another bone of contention is the role
of the ECJ in policing any future trade
deal. Brussels insists that the ECJ must
be the final arbiter of any disputes over
how to interpret EU law, something the
UK agreed to in the political declaration.
It is a role that could give the court an
important say over issues such as
whether Britain is living up to level play-
ing field obligations.
For the EU, this is a non-negotiable
point and is already part of pacts it has
with other countries that refer to EU
law, such as its association agreement
with Ukraine.Where does Britain want to
diverge?
Mr Johnson and senior ministers have
always been reluctant to say exactly
how they want Britain to diverge
from EU rules; they make a broader
sovereignty point that they
seek “a right to diverge, not an obliga-
tion”.
On the big level playing field question
— covering issues such as competition
policy, state aid, environmental regula-
tion and workers’ rights — Mr Johnson
wants Britain to have the right to forge
its own policies.
He said Britain would never engage in
“dumping” of any kind and that it was
already more heavily regulated than
the EU in most areas. “Are we going to
insist the EU does everything that we
do, as the price of free trade?” he asked.
“Of course not.”Coming down:
a worker
removes union
flags in
Parliament
Square, London,
yesterday after
Friday’s events
marking Brexit.
Below, Michel
Barnier, the EU’s
chief Brexit
negotiator
DominicLipinski/PAMARK DI STEFANOA group of senior political journalists
have boycotted a briefing from govern-
ment officials after the prime minis-
ter’s head of communications attempt-
ed to exclude some members of the
media.Downing Street’smove to shut reporters
out was the latest in a series of confron-
tations between the press and Boris
Johnson’s combative communications
team and echoes some of the tactics
used by US president Donald Trump
towards the media.
According to some of the journalists
involved, government officials invited
only a handful of reporters from UK
news organisations, including the BBC,
ITV, the Guardian and the Financial
Times, to attendyesterday’s briefing
from the premier’s chief Brexit negotia-
tor David Frost.
But when several reporters from
other outlets, including the Daily Mir-
ror, the I and the Independent, also tried
to gain access tothe briefing there was a
tense stand-off inside umber 10. WhenN
Downing Street officials refused to back
down, all the journalists, including a
reporter from the FT, walked out.
Daily Mirror political editor PippaCrerar, who was excluded from the
briefing, said reporters were lined up on
either side of the room like in a school-
yard. “It was deeply uncomfortable
being on one side of the room... they
were the group who were deemed
‘acceptable’ by Number 10. It was sinis-
ter and sad,” she said.
Downing Street responded by claim-
ing it has been hosting briefings of a so-
called “inner lobby” of reporters for the
past six months, which is aimed at pro-
viding more detailed government brief-
ings to senior journalists.
It is the latest in a series of disputes
betweenthe communications team andnews organisations over access. Down-
ing Street recently instructed senior
government ministers not to appear on
BBC Radio 4’sToday rogramme, whilep
last week, Downing Street was furious
after the BBC and ITV failed to run clips
fromMr Johnson’s address to mark
Brexit day in its main late evening bulle-
tins. Broadcasters were angry the
speech had been filmed by Mr Johnson’s
internal staff, with no independent
camera crew granted access.
During last year’s election campaign,
the leftwing Daily Mirror was refused
access to Mr Johnson’s campaign bus.
Vivian Schiller, executive director of
the Aspen Institute and former chief ex-
ecutiveof National Public Radio in the
US, said the premier’s effort torestrict
the flow of information is similar to a
recent Trump administration tactics.
Last week, the state department remov-
ed an NPR reporter froma journalists’
pool covering secretary of state Mike
Pompeo, in what was considered retalia-
tion for a previous tough interview.
Ms Schiller said Mr Trump’s commu-
nications staff have alsocut on-camera
press briefings in recent months.
“The British press should be
applauded for standing up for each
other in this instance,” she added.Government tactics
Media boycott as No10 denies universal access
Mirror political editor Pippa Crerar:
called exclusion ‘sinister and sad’The UK’s post-Brexit transition period
ends on December 31. Both sides face
a daunting countdown for talks on new
trade arrangements.
Mar 1 he EU aims to have itsT
negotiating mandate agreed by this
date to allow Brussels to open talks.
JunA summit is due to assess
progress. June is the latest Britain can
request a transition extension.
Jul 1EU leaders say trade talks will halt
unless there is a deal on EU access to
UK fishing waters by July 1. The two
sides also aim to agree terms on
financial services access by this date.
Nov 26 U officials say a trade dealE
must be agreed, checked nda
presented to the European Parliament
by this week if it is to be ratified by the
end of the year.
Dec 31If a trade deal is not in place,
Britain will fall back on to basic World
Trade Organization terms, meaning
tariffs on goods and little
co-operation to smooth border checks.
After 2020 ichel Barnier, chief EUM
Brexit negotiator, says not everything
can be addressed by December 31. He
has given examples, including air and
road transport, where the EU can grant
temporary permissions to Britain so
services continue as normal.
Dec 31 2022The final date to which
transition could be extended.The core
trade deal may also be complemented
by further agreements after 2020,
notably in the area of services.Rocky road
lies ahead
for both
teams of
negotiatorsTimelineN AT I O N A L
‘Chopping and changing
UK regional policies has
contributed to thesewidening differences’
FEBRUARY 4 2020 Section:World Time: 2/20203/ - 19:35 User:john.conlon Page Name:UKNEWS2, Part,Page,Edition:LON, 3, 1