Davis: EU can’t cherry pick on trade deal
THE European Union must not be allowed to “cherry pick” a free trade deal that excludes the City of London and financial services, David Davis warns today.
Writing in The Daily Telegraph the Brexit Secretary tells Brussels that the UK wants “the full sweep of economic cooperation” and with minimal barriers to trade in goods and services.
His intervention represents a direct challenge to Michel Barnier, the EU’S chief Brexit negotiator, who has repeatedly said that the final Brexit deal cannot include financial services. The issue is likely to be one of the most controversial of the second phase of Brexit negotiations this year amid concerns that the EU is seeking to mount a Brexit land-grab on the City.
In his article, Mr Davis deliberately adopts the language of Mr Barnier, who has repeatedly said that Britain cannot “cherry pick” the benefits it wants from the Single Market after Brexit.
Mr Davis says: “I do not believe the strength of this cooperation needs change because we are leaving the Eu- ropean Union. Many of these principles can be applied to services trade too. Given the strength and breadth of the pan-european economic relationship, a deal that took in some areas of our economic relationship but not others would be, in the favoured phrase of EU diplomats, cherry picking.”
It comes after Mr Barnier said last month that there was “no place” for financial services in a free-trade agreement, claiming that Britain had only itself to blame for leaving the EU.
In December we reached an important milestone in Britain’s negotiations to leave the EU. So, what next?
First, European Council president Donald Tusk has approved an immediate start to discussions on the future relationship, and though EU guidelines will not be agreed until March, when chief negotiator Michel Barnier and his team will be able to confirm their positions, talks about implementation begin early in the New Year. At the same time we will begin a deep and open exploratory dialogue to discover a mutually acceptable point of balance in our relationship with the EU.
The process for transitioning into the new arrangements should be agreed early on, given that each side’s positions are well known. At Florence, the Prime Minister proposed a period of around two years in which Britain leaves the EU but maintains the key rights of the single market and customs union, along with the corresponding responsibilities. This is in the interests of both sides, meaning agreement by March is doable.
Much is said about the lack of certainty about the future relationship, and I understand that people wish to know more about what it will involve. But the thirst for knowledge should not blind us to the areas where established positions already exist.
Brexit will allow us to take control of our borders, our money and our laws. We will use the opportunity of an independent trade policy to strike deals with other countries from around the world. The EU might work for countries who have chosen to be members, but at a time when the European Commission itself says that the majority of future global growth will come from outside Europe, it makes sense for Britain to place itself at the cutting edge of new technologies and the regulatory regimes they will require.
The emphasis here must always be on raising standards. There is no route to prosperity in trying to become cheaper than China, or undermining the safety standards which give confidence to British goods. Whether it’s the Prime Minister’s commitments to workers’ rights, or Michael Gove’s determination to uphold animal welfare standards, this Government believes the UK’S future lies in a race to the top in global standards.
It would therefore be inconsistent to have a situation where we are outside the EU but bound by its every rule and regulation. Instead, we will work to create an economic relationship that delivers for the whole of Europe and is right for the UK.
We start from a uniquely trusted position, closer than Canada or Japan, bigger than Norway, and more deeply integrated, from energy networks to services, than any other trade partner.
Our approach is simple: we are looking at the full sweep of economic cooperation that currently exists and determining how that can be maintained with the minimum of friction, while returning control to the UK parliament. In terms of scope, the final deal should, among other things, cover goods, agriculture and services, including financial services, and be supported by continued cooperation in highly regulated areas such as transportation, energy and data.
When it comes to the barrier-free goods trade we enjoy, our guiding principle should be the maintenance of what we already have, and nowhere is that more important than on the island of Ireland. Currently a car produced in Europe, for sale in the UK, only has to undergo one series of approvals, in one country, to show that it meets regulatory standards. For decades we have been happy to let European bodies carry out the assessments that ensure products like these from cars to medical devices are fit to go to market in the UK. Given the level of trust we place in each other’s institutions I see no reason why such mutual recognition should not continue after we leave.
But it will require the support of our regulators working together, collaborating on assessments to authorise products and sharing data on public health and safety risks. I do not believe the strength of this cooperation needs to change because we are leaving the EU, so long as it is understood that this involves working together.
These principles can be applied to services trade too. Given the strength and breadth of our links, a deal which took in some areas of our economic relationship but not others would be, in the favoured phrase of EU diplomats, cherry picking.
My objective is that services can be traded across borders, from highly regulated sectors like financial services, to technological ones such as artificial intelligence. Of course this will require some common principles: our shared adherence to international standards; the cooperation of our regulators; and an effective disputeresolution mechanism with proportionate remedies.
But it will also require people to deliver these services, and our Immigration Bill will put in place a new system that provides businesses with access to talent, while maintaining the consent of the British people.
Once people do travel across borders it is important that the qualifications that allow them to work are still valid, a process which provides mutual benefit.
So with enough determination and flexibility, a successful outcome can be found, and without threatening our partner’s most important priority: the integrity of the European single market. Because after Brexit, the growing prosperity of the UK will come alongside that of Europe, not instead of it.
But there must also be a realisation that these talks are about more than just trade. We have already set out our ambition for continued partnership in areas such as security, defence, law enforcement and counter-terrorism. The threats Europeans face are the same, whether they are at a pop concert in Manchester or a Christmas market in Berlin. If a consequence of Brexit is that vital information-sharing is diminished then collectively our governments will be failing in in the first duty we have to our citizens.
But just as many wrongly predicted that the exit negotiations would not move on by this point, so there are many reasons to be optimistic about the direction of the future trade talks. I understand when people say that the first responsibility for proposing solutions to Brexit’s conundrums lies on the British side. But that does not mean that the process should be all one way. In my experience, the world sees Brexit as a European issue, not solely a British one.
The sprit of mutual compromise which gave us momentum in the talks last year needs to continue and I’m encouraged when the EU’S negotiator says he is ready to offer their most ambitious free trade approach.
The negotiations about the future will not be straightforward. They will generate the same public thunder and lightning we have seen in the past year. But I believe they will be successful, because the future of the Europe continent is best served by strong and successful relationships.