Five flashpoints in the Brexit trade talks

Brussels – Britain and the EU have laid down their red lines for post-Brexit trade talks, setting up 11-months of gruelling negotiations just days after their historic divorce.

Here are some of the expected flashpoints in the upcoming talks, with the danger of economic chaos if both sides cannot swiftly come to agreement:

 

– Level-playing field –

 

This is the crux of the problem facing the talks. Europe is demanding that any agreement monitor and uphold standards on employment, the environment, climate change and competition, including state aid.

To do so Brussels wants the deal to provide “adequate mechanisms” to ensure a level playing field and stop companies from unfairly entering the European market.

Britain opposes this and “will not agree to measures in these areas which go beyond those typically included in a comprehensive free trade agreement.”

Boris Johnson’s government says both parties should “recognise” their respective commitments to maintaining high standards in these areas and simply agree to avoid using such regulation “to distort trade.”

 

– State-aid –

 

When it comes to the level playing field, the EU is especially demanding on state-aid provisions.

Brussels wants London — in cooperation with the EU commission — to set up an independent authority in the UK that would ensure that European anti-subsidy laws would be enforced in Britain.

This will be interpreted as a major violation of British sovereignty by the Johnson government and against the spirit of Brexit.

 

– Fishing –

 

The EU’s chief negotiator Michel Barnier has identified fishing as one of the EU’s top two priorities (after the level playing field).

His mandate says any trade deal “should aim to avoid economic dislocation” for EU fisherman “that have traditionally fished in United Kingdom waters.”

This is a far cry from Johnson’s pledge to reclaim “full control” of British fishing waters.

The topic is urgent for certain countries, notably France, where fish and seafood caught in UK waters account 30 percent of sales for fishermen.

The British plan says the UK “will become an independent coastal state at the end of 2020 and any agreement must reflect this reality.”

London is open to “annual negotiations with the EU on access to waters and fishing opportunities, and will consider a mechanism for cooperation on fisheries matters.”

 

– Data protection –

 

The EU’s mandate in the UK calls for “a high level of protection of personal data” and therefore for “full compliance” with European data protection rules.

“Working together on internal security with Britain requires exchanges of data and in particular personal data, sometimes very personal data”, said Barnier, who considers data protection “essential for Europeans”.

The EU is aiming to grant Britain “equivalence”, a status that recognises an adequate level of data protection provisions in the UK.

Given that Brexit is only days old and rules closely aligned, granting equivalence should not be a major problem at the beginning of the new relationship.

But things could become more complicated if the UK gradually diverges from EU rules and especially if Britain sets up similar deals with the US or China.

Britain says it intends to develop “separate and independent policies” on data over time.

Map of exclusive economic zones surrounding the UK and neigbouring coastal states

 

– EU court –

 

The European Court of Justice is the EU’s highest court and became a hated symbol of EU over-reach for Brexiteers over the course of Britain’s 47-year bloc membership.

The EU’s negotiation mandate vastly reduces the role of the court except in the case that a proposed independent panel asks for an interpretation of EU law in order to resolve a conflict.

Disputes would be settled by this panel with binding decisions, including financial sanctions and even a suspension of the agreement.

But even an indirect involvement of the EU court could raise objections in Britain. The new deal should have “dispute settlement arrangements appropriate to a relationship of sovereign equals,” the British plan says.

By Alex Pigman