The Guardian view on a Brexit trade deal: tricky but not impossible
Size matters in trade talks, as the UK should have learned from the first phase of Brexit. But British Eurosceptics were slow to grasp the challenges faced by a lone member leaving the single market, when the rest of the European Union can negotiate en bloc. Now that the UK is a “third country”, the balance of power has shifted further in favour of Brussels. British refusal to adapt is causing bemusement and consternation on the continent. Earlier this week, the European commission president, Ursula von der Leyen, spoke dismissively of Boris Johnson’s notion of an “Australia-style” deal. She knows that this is a euphemism for no deal at all.
Also this week, Michel Barnier warned that UK ministers “kid themselves” if they think they can secure permanent, automatic access to EU financial services markets. Brussels decides which regimes enjoy regulatory “equivalence” and retains the right to withdraw that status unilaterally. (That is a statement of the obvious, but what is obvious in Europe often sounds like a rebuke to Conservatives.) The Treasury says it does not seek a once-and-for-all equivalence deal, just something more durable than certification that Brussels can revoke with only 30-days’ notice. In theory, that leaves plenty of room for a deal. In practice, the landing strip is narrow because the two sides come at the question of regulatory divergence with different concepts of what is being discussed.
The British side sees only intransigence when Brussels is wary of making exceptions and granting privileges to its neighbour. In Boris Johnson’s view, neighbours should do each other favours. The prime minister says he wants a close relationship and that he does not intend to undercut the EU on basic standards. The prime minister sees divergence as a symbolic right – vital for UK sovereignty, not something a European court can be allowed to enforce.
Viewed from Brussels, Mr Johnson’s statements of intent are worthless, and not just because he is known to have a loose relationship with the truth. They see beyond personality to the strategic nub, where divergence only has meaning as a device to carve out a competitive edge. That is the whole point of Brexit for its ideological architects. Once the decision was made to define national sovereignty as regulatory autarky, Britain set itself on a course of economic rivalry with the rest of the EU. The law cannot be fudged and the UK’s proximity to the single market therefore makes a deal harder to strike, not easier as Mr Johnson claims. This reality has penetrated parts of the government. Michael
Gove recently warned industry bodies to expect the return of wide-ranging border controls when the Brexit transition period ends in December. (The government no longer aims to minimise trade friction in the short term – and wants British businesses to pay for the downgrade in ambition.) On this trajectory Mr Johnson’s government is heading towards trade with the EU on WTO terms, not because it thinks that is a good deal but because that is the purest expression of the prime minister’s rhetoric. That might change as the negotiation gets under way.
The EU has good reason to encourage the shift, finding creative ways to satisfy the UK appetite for regulatory autonomy in principle, but with mechanisms that keep a level playing field in practice. Mr Johnson has to swallow some pride, because size still matters, but there is a lesson for Brussels too. The UK is not Switzerland or Norway. No British government could sign up to economic satellite status. If there is a deal available, it will be unlike any arrangement with any other third country. The first step towards realising that ambition would be for Mr Johnson to move on from the pretence that the strategic intimacy of the old relationship can easily be replicated in a new one. It is possible, but only on terms that the Tory party does not yet understand.