EU dangles hope of broad trade deal in exchange for softer Brexit
‘Signs of deep division’ as member states push back against Barnier team’s negotiating approach ‘Member states don’t want to limit discussions to a narrow range of issues. There is no desire to pre-set the shape of negotiations’
EUROPEAN Union member states are leaving the door open to Boris Johnson signing a broad-based trade deal by Dec 31 2020 in the hope that he will embrace a softer Brexit, EU diplomatic sources have told The Sunday Telegraph.
EU leaders last week ordered the European Commission to draw up a “comprehensive mandate” for the future relationship talks, after pushing back against Commission plans to confront Mr Johnson with a narrower menu of options.
Three EU diplomatic sources said the shift in position created the potential for a broader future partnership deal, including some elements of services trade, if Mr Johnson chose to extend the transition period which currently expires on Dec 31 2020.
“The member states didn’t want to limit mandate discussion to a very narrow range of issues,” said an EU diplomat familiar with internal discussions.
“There was not desire to pre-determine the shape of the negotiation.”
A second EU diplomat said there might still be space to include elements of services trade that are key to the UK economy. “Maybe we will be able to get services into the overall package; the UK will no doubt want something on that,” the source said.
The orders issued by EU leaders at their quarterly summit in Brussels on Friday also removed an earlier reference to there being “limited time” for the coming negotiations, since it appeared to implicitly accept that talks would not run beyond the end of next year.
EU leaders, including the Irish taoiseach Leo Varadkar, have said that it would be “enormously ambitious” to complete a trade deal by the end of 2020, but maintained that he believed a “mighty” agreement could be struck between the two sides.
EU analysts said that the less prescriptive approach by EU leaders had revealed that the Commission negotiating team, led by Michel Barnier, and EU member states were “deeply divided on the best way to proceed” to avoid a hard crash out in 2020.
Mujaba Rahman, the chief Europe specialist at the Eurasia Group, wrote in a note to clients that the internal differences “could also presage a less united front; something the Commission worked painstakingly to maintain throughout the entirety of the Article 50 negotiations”.
The EU maintained iron discipline in the first phase of “divorce” negotiations by refusing to even discuss the future relationship until the UK had agreed a £39billion financial settlement, guaranteed EU citizens’ rights and avoided a hard border in Ireland.
It is understood the Commission wanted to repeat this “sequencing” strategy, which provided the EU with mounting leverage as the talks deadlines approached, by ruthlessly prioritising what it would discuss with the UK, depending on the time available.
However, a senior EU official warned that “prioritisation will become the new sequencing” if the UK did not extend the transition and options for what could be addressed in the short time available would narrow sharply, leaving much of the UK services and manufacturing vulnerable to a hard Brexit.
In this scenario the EU could agree to a “stage one” Brexit deal based around a “zero-tariff” Canada-style free trade agreement if the UK agreed to follow EU rules on environment, social issues and state aid to avoid unfair competition.
An agreement covering internal and external security could also be added, alongside harder-to-negotiate areas such as aviation, transport and social security that under EU law require ratification by the EU’s 36 local and national parliaments.
The EU side has already made clear that any trade agreement must be accompanied by a deal on fishing quotas and access, ideally completed by July 2020, but diplomats conceded that the broader approach also concealed unease about EU splits developing in the coming talks.