STATE OF PLAY

British Chief Negotiator David Frost and his counterpart Michel Barnier will meet again next week for a restricted round of negotiations. In what will be the first face to face meeting since March, the two sides will discuss some of the most contentious issues so far, including the level playing field, fisheries and criminal justice in the hope of finding some common ground.

Tweeting ahead of the negotiations, Frost said “these meetings will be smaller and focused on seeing whether we can begin to make genuine and rapid progress towards an agreement”, adding “this needs to be a real negotiation and some of the EU’s unrealistic positions will have to change if we are to move forward”. He also dismissed suggestions that the UK Government might offer the EU a new right to retaliate with tariffs if the UK chose to make laws suiting its interests, saying “We could not leave ourselves open to such unforeseeable economic risk”.

In turn, EU Chief Negotiator Michel Barnier warned that the EU’s demands for level playing field guarantees were “not for sale” but said that Brussels was willing to work on “clever compromises” to get a trade deal with the UK done. Barnier also said that the zero tariff, zero quota deal was “still in our reach” but added that “the ball is the UK’s court.”

The two sides meet as reports suggest further points of divergence, including demands made by EU Brexit negotiators that the UK commits to not using tariffs for trade retaliation or as an ‘anti-dumping’ mechanism on EU goods after the transition period, even in cases where it can be shown that UK farmers are being unfairly undercut by imports; and that UK car manufacturers should source parts from the EU rather than cheaper imports from elsewhere in the world.

Meanwhile, speaking days before Germany takes over the EU rotating presidency, Chancellor Angela Merkel said that the UK will have to “live with the consequences” of Boris Johnson abandoning Theresa May’s plan to maintain close economic ties with the EU after Brexit, adding “We need to let go of the idea that it is for us to define what Britain should want… That is for Britain to define – and we, the EU27, will respond appropriately.” Merkel also made clear that her priority will be pushing through the EU-wide pandemic rescue plan.

OTHER KEY DEVELOPMENTS

  • The UK Government has published plans for post-Brexit financial regulation which it claims will maintain the “highest” standards, challenging the EU to decide if it is sufficient to allow UK groups continued access to its markets. While the papers stress that the new UK rules will reflect existing EU and international standards such as the Basel Accord on bank capital requirements, City minister John Glen said “there will be changes”, including a more “bespoke” approach to regulating investment groups.
  • Japan’s Chief Negotiator Hiroshi Matsuura has said that his Government requires an agreement to be confirmed “by the end of July” if it is to obtain the approval of the country’s Parliament before the end of the transition period. Both the UK and Japan have agreed to base a deal on the existing EU-Japan trade agreement, but the UK has set out further goals, including the “reduction or elimination” of Japanese tariffs on goods and agriculture and “ambitious commitments on market access” for UK services. However, Matsuura suggested there would be little time for talks on contentious areas such as tariffs and quotas, saying that “The shortage of time means that both sides will have to limit their ambitions”.
  • Conservative MP Jonathan Djanogly has tabled a number of amendments to the Trade Bill that would prevent the Government opening talks on new deals or implementing agreed deals unless negotiating objectives and final agreement texts have been approved by both houses of Parliament. The amendments, which were tabled ahead of the report stage, were backed by four other Conservative MPs, including Environment Committee Chair Neil Parish.