STATE OF PLAY

The UK published two key documents: 

The Draft Comprehensive Free Trade Agreement and its Annexes, and separate sector specific agreements covering issues such Civil Aviation Safety (main text and annexes) and Air Transport. The documents set out the UK’s preferred position in the forthcoming negotiations on a wide range of issues, including chemical regulation, rules of origin and customs and trade facilitation.

Its approach to the Northern Ireland Protocol, in which the Government commits that trade from Northern Ireland to the rest of the UK “should take place as it does now” and that the UK will not levy tariffs on goods remaining within its customs territory, but only those “ultimately entering Ireland or the rest of the EU, or at clear and substantial risk of doing so.”

In an open letter addressed to EU Chief Brexit Negotiator Michel Barnier, his UK counterpart, David Frost, also explained in detail why the UK Government thinks the EU’s demands are unreasonable, concluding that “Overall, at this moment in negotiations, what is on offer is not a fair free trade relationship between close economic partners, but a relatively low-quality trade agreement coming with unprecedented EU oversight of our laws and institutions.” Responding, EU Chief Negotiator Michel Barnier criticised the “tone” of Frost’s letter and said that trade talks can move forward only with “constructive engagement by the UK”. Barnier continued that the UK “cannot expect high-quality access to the EU single market if it is not prepared to accept guarantees to ensure that competition remains open and fair” and that “tangible and parallel progress” is needed “across all areas of negotiations”.

Amidst increasing tensions between the two sides, the UK Government has reportedly increased planning for a ‘no-deal’ Brexit, with the Government’s ‘no-deal’ planning committee, known as XO, to sit regularly and civil servants who had been moved to deal with Covid-19 emergency being reassigned to work on ‘no-deal’ preparations. According to James Forsyth of the Spectator, the view in Downing Street is that the differences between the UK and the EU are so large that they cannot be resolved by a few more meetings. As COVID19’s impact has dwarfed any changes Brexit might bring, some Cabinet Ministers now believe that taking back powers to reshape the country’s approach to trade might prove more valuable as the country thinks about how to reconstruct its post-pandemic economy.

In other news –

The House of Commons has approved at second reading two Bills which will form part of the new post-Brexit domestic framework for the UK, specifically,

– The Trade Bill, which establishes a new Trade Remedies Authority and gives the Government powers to “ensure that all elements in trade continuity agreements can be fully implemented in domestic law (via secondary legislation) over time and in all circumstances”.

– The Immigration Bill, which will end the EU’s rules on free movement of people as they apply in the UK and introduce the Government’s new points-based immigration system from 1 January 2021.

Both Bills have now moved to Committee stage.

Separately, the Government has published its new Most Favoured Nation tariff regime, the UK Global Tariff (UKGT), which will replace the EU’s Common External Tariff (CET) on 1 January 2021. These tariffs would be applied to goods being imported into the UK, other than those coming from a country which has a trade deal with the UK, or if other exemptions apply.

OTHER KEY DEVELOPMENTS  

– Raoul Ruparel, sometime Special Advisor in the May Government’s Brexit Department, who was credited with coming up with a solution to break the impasse during the first phase of the Brexit process, has now floated the idea of a conditional extension of the transition period to give both sides some extra time to implement the changes arising out of any agreement reached during the negotiating period. While the idea has been dismissed by the UK, an EU diplomat said that “even if the Commission might say no to this now, they may be inclined to do something similar later on.”

– According to a leaked 76-page Whitehall report, local emergency response teams who are working on Covid-19 would be “overwhelmed” by any ‘no-deal’ Brexit preparations.