En garde

Discover Germany, Switzerland & Austria - - Business - TEXT & PHOTO: GRE­GOR KLEINKNECH­T

“En garde! Prêts? Allez! ”are the tra­di­tional in­struc­tions to fencers as they square up to each other. They sprang to mind as the EU and UK pub­lished their re­spec­tive ne­go­ti­a­tion po­si­tions ahead of launch­ing ne­go­ti­a­tions for a post-Brexit EU-UK trade deal. In par­al­lel, trade ne­go­ti­a­tions be­tween the UK and the US have also kicked off, with Boris John­son pre­par­ing the ground for things to come with com­ments to the ef­fect that there can’t be much wrong with GMO foods and chlo­rine chicken be­cause Amer­i­cans look pretty well nour­ished to him; con­cerns about in­fe­rior food stan­dards are ap­par­ently noth­ing but hys­ter­i­cal anti-Amer­i­can mumbo-jumbo. We are also told that the NHS is not on the ta­ble even though (ac­cord­ing to fig­ures pub­lished by the FT last Novem­ber) US com­pa­nies al­ready pro­vide, for ex­am­ple, about 13 per cent of in­pa­tient beds for NHS men­tal health­care in Eng­land.

The in­ter­na­tional trade sec­re­tary tells us that the UK-US trade deal rep­re­sents “one of the key op­por­tu­ni­ties” re­sult­ing from Brexit. But, be­yond the Brexit spin, the gov­ern­ment ac­tu­ally es­ti­mates that a postBrexit trade deal with the United States would boost the UK econ­omy by just 0.16 per cent over the next 15 years. By con­trast, if the UK failed to reach a trade deal with the EU, the gov­ern­ment es­ti­mates that UK GDP would be 7.6 per cent lower over 15 years. I won­der which talks are more im­por­tant, then. Ex­actly. So, let’s hope that the gov­ern­ment will fo­cus on the EU-UK talks for the mo­ment. The first round of talks with the EU at the be­gin­ning of March did not go well, by the looks of it, high­light­ing deep di­vi­sions be­tween the UK and EU on is­sues rang­ing from fish­eries and dis­pute set­tle­ment to reg­u­la­tory align­ment.

Both sides have in the mean­time also pub­lished draft treaties, which is all about who sets the terms of de­bate. Be­yond the fact that both sides want an “am­bi­tious” trade deal with zero tar­iffs and zero quo­tas, a first look at the com­pet­ing draft treaties sug­gests that not much com­mon ground has been iden­ti­fied so far, not even as to what ground the treaty should cover. The EU text rep­re­sents a com­pre­hen­sive, over­ar­ch­ing agree­ment, cov­er­ing all as­pects of the fu­ture re­la­tion­ship, in­clud­ing for­eign pol­icy, se­cu­rity co­op­er­a­tion, fish­eries and agri­cul­ture, trade in goods and ser­vices, re­search and de­vel­op­ment, and more. Dis­putes would be re­ferred to an ar­bi­tra­tion panel, save that the ECJ would have the fi­nal word on any mat­ters in­volv­ing EU law. By con­trast, the UK is try­ing to avoid any link­age be­tween is­sues that would in­volve, for ex­am­ple, trade-offs be­tween fish­ery and fi­nan­cial ser­vices. The UK there­fore prefers a sim­ple free-trade deal, sim­i­lar to that en­tered be­tween the EU and Canada, with sep­a­rate agree­ments on other is­sues along­side it, each gov­erned by sep­a­rate dis­pute res­o­lu­tion mech­a­nisms, and of course re­sists any in­volve­ment of the ECJ.

For the EU, free trade is linked to fu­ture reg­u­la­tory align­ment. The EU is clearly con­cerned about the UK us­ing its new­found in­de­pen­dence to un­der­cut EU economies with lower stan­dards and prices; it has placed an em­pha­sis on cre­at­ing a “level play­ing field” be­tween the UK and EU, re­quir­ing the UK to main­tain sim­i­lar stan­dards to the EU when it comes to com­pe­ti­tion, tax­a­tion, en­vi­ron­men­tal, labour and state aid rules. The UK re­jects the prin­ci­ple, based on the ar­gu­ment that it does not make sense for the UK to have left the EU only then to be bound by EU rules, and be sub­ject to the ju­ris­dic­tion of the ECJ, any­way. Boris John­son ap­pears pre­pared to ac­cept that a more loose re­la­tion­ship with the EU may in­volve cus­toms checks, ex­tra pa­per­work, and some bar­ri­ers to trade as a ‘quid pro quo ’for main­tain­ing sovereignt­y. The sec­ond round of talks was meant to take place in Lon­don as I write but has been can­celled due to the coro­n­avirus. Both sides are now ex­plor­ing al­ter­na­tive ways to con­tinue dis­cus­sions, but who knows at this time what Covid-19 will do to the timetable for fur­ther ne­go­ti­a­tions. If the talks keep go­ing, my prin­ci­pal hopes will be: one, that both sides will avoid the mis­un­der­stand­ings, mis­cal­cu­la­tions and stand-offs that char­ac­terised the ne­go­ti­a­tions of the Brexit deal first time round; and, two, that the gov­ern­ment will be trans­par­ent with the pub­lic about the trade-offs that a trade deal will nec­es­sar­ily in­volve.

Gre­gor Kleinknech­t LLM MCIArb is a Ger­man Recht­san­walt and English so­lic­i­tor, and a part­ner at Hunters So­lic­i­tors, a lead­ing law firm in Cen­tral Lon­don. Hunters Law LLP, 9 New Square, Lin­coln’s Inn, Lon­don WC2A 3QN, E-mail: gre­gor.kleinknech­t@hunter­slaw.com www.hunter­slaw.com

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