STATE OF PLAY

Ahead of the next week’s round of negotiations, the FT reports that further disagreement have arisen between the two sides after the UK rejected EU demands to make the Paris agreement as an “essential element” in a future EU-UK trade deal, a status normally reserved for core principles such as respect for human rights and the rule of law. The move would create a legal justification for the EU to suspend preferential trading arrangements if the UK decided to renege on its Paris obligations. However, the UK has so far opposed to embedding legally binding pledges into any deal with the EU.

As the FT notes, the split is emblematic of broader difficulties both sides have identified after two rounds of future relationship talks, with negotiators at odds on the conditions that should be attached to a far-reaching trade deal.  Irish Foreign Affairs Simon Coveney, who earlier this week spoke with EU Chief Brexit Negotiator Michel Barnier, said that, when talks resume next week, the EU will continue to insist on progress on its priorities of fisheries and level-playing-field provisions, including in areas such as tax and state aid, in parallel to trade talks. However, with only two rounds left until June, Coveney made it clear that trade talks between the UK and the EU will hit a crisis point unless there is progress the coming weeks.

Meanwhile, Cabinet Office Minister Michael Gove has once again insisted that there would be no extension to the Brexit transition period beyond 31 December, floating the idea of the UK accepting the “price” of tariffs on goods to strike a trade deal with the EU. Giving evidence to the Lords EU Committee, Gove said that the UK was “prepared to modify [its] ask”, to regain autonomy over ‘level playing field’ arrangements, acknowledging that, by doing so, the UK might “end up like CETA [the EU-Canada Trade Agreement] with tariff on a possible number of goods”. While he said the UK “will regret that, think it’s a missed opportunity, […] if that’s the price we have to pay, then there we go”.

OTHER KEY DEVELOPMENTS

  • Cabinet Office Minister Michael Gove has revealed that the Government is in talks with the freight forwarding industry about setting up a private sector academy to train up to 50,000 people who will be needed to fill in customs forms for post-Brexit trade with the EU. An online customs academy, launched last autumn with government backing, has already started providing training courses and industry recognised qualifications.
  • Experts in South Korea, which was the first country in Asia to sign a preliminary post-Brexit deal with the UK, have cautioned that whilst the “continuity” agreement has minimised disruption to business in the near future, its transition into a full Free Trade Agreement (FTA) is still tied to the uncertain outcome of the UK’s trade deal with the EU.
  • The US Chamber of Commerce has given warning that continuing uncertainty about UK’s future ties with the EU “risks limiting prospects” of a transatlantic trade deal. As trade talks open with the US formally opened on 4 May via a videoconference, the US Chamber of Commerce said that it would make sense for the UK to “reset its relationship” with the EU before concentrating on the terms of its other key trade partnerships.