Deal or no deal: a guide to trade ne­go­ti­a­tion ter­mi­nol­ogy

Canada, Aus­tralia or some­where else?

The Guardian - - National Brexit - Daniel Bof­fey

What has Boris John­son said? The prime min­is­ter claimed that due to the stub­born in­tran­si­gence of the EU, he had to con­clude that the “Canada-style” trade deal that he was seek­ing was not go­ing to be suc­cess­fully ne­go­ti­ated with­out a fun­da­men­tal change in Brussels’ ne­go­ti­at­ing po­si­tions. He said it was there­fore im­por­tant that Bri­tish busi­nesses pre­pare to trade with the EU on the ba­sis of “ar­range­ments that are more like Aus­tralia’s, based on sim­ple prin­ci­ples of global free trade”.

So what’s a Canada-style deal?

The EU has a trade agree­ment with Canada called the Com­pre­hen­sive Eco­nomic and Trade Agree­ment, or Ceta. This is the type of ar­range­ment that, at the start of the Brexit talks, the EU’s ne­go­tia­tor, Michel Barnier, said would be pos­si­ble if the UK wished to leave the sin­gle mar­ket and cus­toms union. There would be checks on im­ports and ex­ports and a great deal more red tape for busi­nesses, as the UK would take it­self out of the EU rule­book. But such a deal would re­duce tar­iffs, or taxes, on im­ports and quo­tas – the amount of a prod­uct that can be ex­ported with­out ex­tra charges. What is be­ing ne­go­ti­ated is some­thing more than that en­joyed by Canada, how­ever.

Both sides say they want a “zero tar­iff, zero quota” agree­ment. The Ceta deal goes some way to do­ing that – 98% of prod­ucts are tar­iff free – but they do re­main on poul­try, meat and eggs, for ex­am­ple. Quo­tas also re­main on some goods. “If they ac­tu­ally wanted a Canada-style deal, they should have ex­tended the tran­si­tion pe­riod – and then we could have gone through all the prod­ucts and put tar­iffs and quo­tas in place, in re­turn for lower de­mands on main­tain­ing EU stan­dards,” said one ex­as­per­ated EU of­fi­cial.

Why does John­son say this is now off the ta­ble?

Down­ing Street says the EU is of­fer­ing less gen­er­ous terms than the Ceta deal. There are var­i­ous ex­am­ples of this, in­clud­ing the length of stays for short-term busi­ness vis­i­tors or the lack of sec­tor-spe­cific pro­vi­sions for key in­dus­tries with tech­ni­cal bar­ri­ers, such as mo­tor ve­hi­cles, medic­i­nal prod­ucts, or­gan­ics and chem­i­cals.

The UK rightly says the de­mands on level play­ing field pro­vi­sions also go be­yond any­thing in the Ceta deal. These in­clude non-re­gres­sion from EU stan­dards, with the rais­ing of that base­line to­gether over time, and a UK com­mit­ment to fol­low the bloc’s state aid, or do­mes­tic sub­sidy, rules. The EU has said that the sheer level of trade be­tween the UK and the EU means it needs to be vig­i­lant in main­tain­ing fair com­pe­ti­tion. It has wa­tered down its orig­i­nal de­mands on stan­dards and state aid, but not enough for Down­ing Street.

What are Aus­tralia-style ar­range­ments?

No 10 uses this as a more palat­able short-hand for no deal. The EU does not have a free trade deal with Aus­tralia, al­though they are in ne­go­ti­a­tions. The two sides cur­rently op­er­ate mainly on World Trade Or­ga­ni­za­tion rules, with huge tar­iffs on im­ports and ex­ports.

It would be more ac­cu­rate to de­scribe no deal as an Afghanista­n style ar­range­ment. This is be­cause the EU does have a few agree­ments in place with Aus­tralia that it would not have with the UK in the event of a fail­ure of the cur­rent trade and se­cu­rity ne­go­ti­a­tions. These in­clude an agree­ment on the trans­fer of EU pas­sen­ger records to Aus­tralian bor­der au­thor­i­ties to help com­bat crime and ter­ror­ism, and an agree­ment on the mu­tual recog­ni­tion of con­form­ity as­sess­ments, so that a prod­uct tested to EU stan­dards in Aus­tralia is re­garded as com­pli­ant.

▲ ‘Sim­ple prin­ci­ples of global free trade’ will be Boris John­son’s de­fault

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