The Times - UK (2020-09-05)

8 2GM Saturday September 5 2020 | the times

News

The European Union is demanding a

potential veto on Britain’s post-Brexit

laws and regulations, senior govern-

ment officials have claimed.

In what is described as the “single

biggest stumbling block” to a deal, the

EU’s chief negotiator Michel Barnier is

said to be insisting that the government

must agree not to implement any

change to UK legislation that could

distort trade with the bloc without first

consulting Brussels.

The obligation, which the EU wants

written into any trade agreement,

would potentially delay the govern-

ment from implementing reforms to

Britain’s environmental, social or state

Brussels accused of derailing

aid rules until they had been through a

formal dispute resolution process.

Lord Frost, the UK’s chief negotiator,

is understood to have rejected the ap-

proach. He has argued that the EU

must show that any change to UK rules

and regulations has distorted trade

between the two, in practice rather

than in theory.

One government source said that the

dispute was currently the biggest single

obstacle to progress in the talks, with

Mr Barnier insisting that it must be

resolved before ground can be covered

in other areas. The EU disputed the

characterisation of the impasse by

London. One source described it as a

“caricature” of the Brussels position

while another said it was “misleading”.

“We’re obviously not trying to pre-

vent them from legislating however

they want,” they said. “There would

need to be a breach of an obligation in

the agreement before there can be

dispute resolution.”

Sources on both sides, however, ac-

cepted that several rounds of negotia-

tions and informal talks between the

two lead negotiators had failed to lead

to a breakthrough in the most conten-

tious areas. These include both fishing,

where the UK is demanding a doubling

of current quotas, state aid as well as the

dispute resolution process.

Lord Frost warned yesterday that the

EU’s position on state aid, as well as

fisheries, could limit any progress next

week. He said Britain had been clear on

its position in the areas, which were

“fundamental to our status as an inde-

pendent country”. Posting on Twitter,

he added: “We will negotiate construct-

ively but the EU’s stance may, realisti-

cally, limit the progress we can make

next week.”

EU diplomats said that “expectations

are very low” of next week’s round and

that European leaders would not dis-

cuss Brexit at a September 25 summit.

Downing Street is equally pessimis-

tic. A government source said: “What

they want is that if we change our law in

terms of things like environmental or

social protections — they want us to go

to them first and allow them to object

and to potentially go through arbitra-

tion before we actually do it.

“We are saying we must have the

right to be able to do it and if they think

it distorts trade afterwards that is when

they can trigger the dispute resolution

mechanism. It is basically the WTO

model. No deal is better than compro-

mising on certain areas... this is not an

agreement at any cost.”

Some senior Tory Brexiteers are

starting to call on Mr Johnson to con-

sider repudiating the Withdrawal

Agreement he signed with the EU last

year to put pressure on the bloc.

David Davis, the former Brexit secre-

tary, said that if EU intransigence

meant the UK was going to end the

transition without a free trade deal then

Britain was under no obligation to pay

the remaining part of the divorce bill.

“We can repudiate it and see them in

court is my view,” he said.

Iain Duncan Smith, the former work

and pension secretary, said the EU had

shown “bad faith”, adding: “The EU has

to be prepared to bend. If they don’t

bend they don’t get a deal.”

Leading article, page 31

Oliver Wright Policy Editor

Bruno Waterfield Brussels

Francis Elliott Political Editor

News Politics

Almost all hope has faded in

the City for a last-minute deal

to grant financial firms smooth

access to the EU and it is

preparing for a hard Brexit

(Katherine Griffiths writes).

Banks had already shifted

hundreds of employees away

from London after the 2016

vote. They are now expected to

move business that they had

hoped they could continue to

do from the UK out of London

and into Frankfurt, Paris and

elsewhere to comply with more

restrictive rules due to come in

after the transition period.

The City’s main lobbying

effort has been for the UK to be

granted “equivalence” by the

EU, an agreement that because

its rules and regulations are

likely to remain similar to those

of the bloc, there should be

easy cross-border access on

both sides. A target of making

a deal this summer was missed.

Without one UK banks, insurers

and asset managers must work

in the bloc under WTO rules.

THE CITY

Last month the government

wrote to medicine suppliers

warning them that a

“reasonable worst case

scenario” for Brexit without a

trade deal was for “significant

disruption” to trade across the

Channel for six months with a

“particular risk” during the first

three months (Oliver Wright

writes). As a large percentage

of the UK’s medical supplies

come from the EU, ministers

urged them to make sure that

they had at least six weeks of

supplies and to investigate

alternative shipping routes.

This is easier said than done.

The pharmaceutical industry

has told the government that

disruption caused by Covid has

meant stockpiles have been

“used up” and that it might not

be possible to replenish them

before December. The

government recognises “that

global supply chains are under

significant pressure” but urged

drug companies to do

everything they can to hold

stock in advance.

Ministers are ready to

buy capacity on ferries

that could be used to

ship in medical

supplies. There are

concerns that

patients might

hoard medicine,

exacerbating

supply

problems.

MEDICINES

s

Even with a deal all food and

agricultural products crossing

between Britain and Europe

will be subject to new

veterinary and food safety

checks, which could lead to

long delays at the border

(Oliver Wright writes).

But without a deal they will

also be subject to tariffs, and

EU tariffs on most agricultural

products can be very high —

dairy products average about

35 per cent and for some meat

products, such as lamb, they

are more than 40 per cent.

Given that exports of food

and drink to Europe are worth

£13.2 billion a year this could

have a devastating impact on

the sustainability of the sector

in the long run. The Food and

Drink Federation believes that

no deal would result in tariffs

averaging 23 per cent or more

on goods, meaning that the

£35 billion of imports would

become more expensive.

The timing of the UK’s exit,

December, is widely seen by

retailers as one of the worst

dates possible as they will have

only just made it out of peak

Christmas trading and there

will not be as much time to

replenish warehouses that are

already fairly full at that time of

the year. The seasonality of

food production means that

the UK will also be more reliant

on imports than in the spring

and summer, when British farm

production is higher.

Ian Wright, chief executive of

the Food and Drink Federation,

said: “While our industry has

demonstrated remarkable

resilience during the Covid-

pandemic, businesses will have

used up the stockpiles they

acquired for a no-deal Brexit to

cope with increased demand,

redeployed their Brexit staff to

manage the crisis and crucially

now have less cash and time to

prepare.”

FOOD SUPPLY

It might sound technical but

one of the most profound

potential impacts of a no-deal

Brexit would be on the data

that flows between Britain and

the EU every day powering

everything from shopping to

banking to the back-office

functions of businesses (Oliver

Wright writes).

If there is no deal it will

become illegal for EU servers

to send personal data to the

UK. There are ways for

companies to get round this,

and many larger operators

have contingency plans. But

the government does not know

how widespread this is and

how strictly Brussels will try to

police the rules. The extent of

the problem was revealed last

year in an audit revealing that

Whitehall relied upon servers

based in Ireland that could be

switched off in the event of a

no deal. This has subsequently

been rectified.

DATA

No-deal Brexit

Even

agric

betw

will b

veter

chec

long

(Olive

Bu

also b

EU ta

prod

FOO

LAW AND ORDER

The law enforcement and

intelligence community has

repeatedly warned of the

risks a no-deal Brexit poses

(John Simpson writes). Police

would lose instant access to

the EU database of wanted

suspects, convictions, DNA

and fingerprints, potentially

making the UK a soft target

for criminals on the run.

Chief constables have

also raised concerns about

losing the European arrest

warrant (EAW), which the UK

said it was not seeking to

maintain access to. This may

slow Britain’s ability to return

foreign suspects to the

Continent or bring them

back. The forces would have

to revert to slower

conventions to share

intelligence and enable

extradition, meaning

procedures that take days

may take weeks. Lord Evans

of Weardale, director-general

of MI5 from 2007 to 2013,

said there was “no security

upside” to Brexit.

With or without a deal, the

UK faces a long negotiation

through which it intends to

replicate these intelligence

sharing tools and the EAW,

which police and security

services say are vital.