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As Boris Johnson prepares to travel to Brussels in hopes of sealing a Brexit trade deal, he will be armed with a memo from his chief negotiator, Lord Frost. Here are some of the likely key points, major obstacles, and possible solutions that will be discussed at the negotiating table:
1. Deal or no deal?
This is the time to decide how the prime minister will fulfill his promise to “make Brexit.”
The approach you take will be critical, as there are many points where the talks could collapse. Any decision will be based on medium-term strategic considerations: what Johnson can sell to his party and the British public as the best for the UK.
Without an agreement, at least in the short term, the economic pain will be greater. The necessary change to the terms of the World Trade Organization (WTO) would affect sectors such as agriculture and manufacturing with higher tariffs. And if Johnson leaves, the reality is that Britain will have to return to the negotiating table at some point in the future.
But Johnson and Frost will also consider: could there really be a better offer next year? Or will breaching an agreement this time hurt relations with the EU for years to come? And does the prime minister really want Brexit to remain a major domestic political issue well into 2021?
2. Fishing
This is not simply ideological; it is also about solving a complex business negotiation.
This is a sector that directly employs just 8,000 people, according to the Office for National Statistics, and accounts for £ 400 million, or less than 0.1%, of the UK economy. By contrast, financial services account for £ 126 billion. So allowing a fisheries deal to fail makes little sense. Reaching a deal also makes sense because UK fishermen want to sell their catch (herring, cod, prawns) abroad.
First, the numbers. EU trawlers currently catch 60% of the total tonnage of fish in the rich waters of Great Britain. The EU has offered to return between 15% and 18% of that amount to the UK; Britain has asked for 60%. It is perfectly possible to split the difference, or perhaps introduce different quotas for different species.
Next, the negotiation deadline. Norway negotiates fishing quotas each year with the EU, and the UK aims to do the same, although the bloc wants guarantees that its fishermen will not be denied reasonable access. Brussels may also try to impose punitive tariffs if EU vessels cannot fish in British waters. These fees are not attractive, but providing guarantees can be relatively straightforward.
Finally, the transition phase. Both parties recognize that a deal will bring big changes, but the question is how quickly to act. The UK wants a three-year transition; the EU position is 10. Once again, it should be possible to divide the difference, perhaps over five or seven years.
3. Governance and controversies
The EU is nervous that the UK tried to violate international law by invalidating the clauses of the withdrawal agreement, in a move that is seen as a massive breach of trust. Those clauses were withdrawn on Tuesday, which has been seen as removing an obstacle to a deal.
The EU wants a fairly strict dispute resolution system, including the power to suspend parts of the trade and security deal if the UK breaches the terms of the treaty. Due to a dispute over the UK border systems, you can impose tariffs on food, for example.
One solution here may be to restrict power to the most egregious cases. The UK would expect the EU to respect its position that the security deal, at the very least, cannot be dragged into a trade dispute.
4. Level playing field
Brussels’ demand that the UK not seek to gain a competitive advantage by participating in a “race to the bottom” on social, environmental and other standards is seen as crucial within the bloc. But Johnson’s counterparts know that he has made it clear that effectively following EU regulations would amount to the UK becoming “a vassal state.”
One answer is non-regression: both parties could agree not to dilute the standards they have, as ministers have repeatedly made clear that this is not the UK’s intention.
When it comes to the future, it is more complicated as the general idea of Brexit is that there will be some divergence. But the EU says it wants to raise those standards over time and impose punitive tariffs if they are not met. The prime minister will emphasize that the UK does not want to prevent the EU from exercising its sovereignty. Instead, what would be required is a regular review process, every four years or so.
In some respects, this is the most challenging area, because it ultimately requires a leap of faith from both parties – that each behave reasonably in the future. Johnson will have to assure the EU that the UK seeks a long-term complementary and friendly relationship.
5. Back home
With his mandate to “make Brexit”, a majority of 85 workers and a Labor party that has expressed its willingness to back a deal, Johnson sees himself in a strong position in his homeland.
If you strike a deal that can be said to respect British sovereignty, it is likely that it will ultimately pass the Commonwealth and be accepted by a large section of the public. In many ways, Johnson’s biggest challenge next year is overcoming the pandemic, not Brexit.
