EU will­ing to budge on state aid rules to get a Brexit deal

Irish Independent - - Business - Gabriela Baczyn­ska

THE Euro­pean Union is will­ing to com­pro­mise to res­cue trou­bled Brexit talks by soft­en­ing its de­mand that Bri­tain heed EU rules on state aid in the fu­ture, diplo­matic sources have told Reuters.

They said Brus­sels could go for a com­pro­mise en­tail­ing a dis­pute-set­tling mech­a­nism on any state aid granted by the UK to its com­pa­nies in the fu­ture, rather than oblig­ing Lon­don to fol­low the bloc’s own rules from the out­set.

Pro­vi­sions to en­sure fair com­pe­ti­tion pose the big­gest stum­bling block in the ne­go­ti­a­tions aimed at seal­ing a new trade ac­cord from 2021 fol­low­ing Bri­tain’s exit from the EU in Jan­uary af­ter 46 years of mem­ber­ship.

The 27 EU coun­tries have long de­manded so-called “level play­ing field” guar­an­tees from Bri­tain if it wants to con­tinue selling goods freely in the bloc’s lu­cra­tive single mar­ket of 450 mil­lion peo­ple af­ter Bri­tain’s tran­si­tion pe­riod ex­pires at the end of this year.

With­out an agree­ment, trade and fi­nan­cial ties be­tween the world’s fifth-largest econ­omy and its big­gest trad­ing bloc would col­lapse overnight, likely spread­ing havoc among mar­kets, busi­nesses and peo­ple.

But Prime Min­is­ter Boris Johnson’s govern­ment has re­fused to be bound by EU state aid rules, en­vi­ron­men­tal stan­dards or labour laws – say­ing the essence of Brexit was to let Bri­tain de­cide alone on its own reg­u­la­tions.

“The room for com­pro­mise lies in some­thing that will let the UK de­cide on its own since ‘re­gain­ing sovereignt­y’ is such a big Brexit thing,” said an EU diplo­mat close to the Brexit talks.

“We would re­serve the right to de­cide on any con­se­quences vis-à-vis ac­cess to the single mar­ket for UK com­pa­nies as a re­sult.”

An­other diplo­matic source said such a dis­pute res­o­lu­tion mech­a­nism could be a way to help clinch an agree­ment.

A third diplo­mat, also speak­ing on con­di­tion of anonymity, ac­knowl­edged the EU was ready to ease its ear­lier de­mands that Bri­tain agree to a “dy­namic align­ment” of its com­pe­ti­tion rules in the fu­ture with the bloc’s own.

The per­son said, how­ever, that Bri­tain would still need to agree with the EU on a broad out­line of com­pany sub­si­dies pol­icy – rather than spe­cific laws or cases – to al­low the bloc to go for such a fix. The EU’s Brexit ne­go­tia­tor Michel Barnier has re­peat­edly urged Lon­don to make its fu­ture plans on that known to the bloc.

“There must be a solid frame­work with in­de­pen­dent over­sight. If they agree to set­tle on broad rules for grant­ing state aid and to have this in­de­pen­dent in­sti­tu­tion, then we have a deal,” said the diplo­mat.

The other sig­nif­i­cant stick­ing point is fish­ing rights in sea chan­nels be­tween the EU and Bri­tain. The bloc has pre­vi­ously sig­nalled it was will­ing to com­pro­mise in that area as well should Lon­don shift too.

While ar­du­ous, the ne­go­ti­a­tions have brought the sides closer in re­cent weeks on some other as­pects, leav­ing the EU cau­tiously op­ti­mistic on chances for an over­all deal.

“Fish­eries won’t wreck the whole thing, it’s just about wait­ing for the right time for the UK to move,” said a fourth EU diplo­mat.

Op­ti­mism: EU Brexit ne­go­tia­tor Michel Barnier has urged the UK to make its plans known

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