STATE OF PLAY

Informal discussions between UK Chief Negotiator David Frost and his counterpart Michel Barnier concluded ahead of schedule for the second week running without clear progress being made. Speaking at the close of talks, Barnier said: “This week’s discussions confirm that significant divergences remain between the EU and UK. We will continue working with patience, respect and determination”, but added: “Regardless of the outcome, there will be inevitable changes on 1/1/21.” The talks are scheduled to continue in Brussels next week.

Meanwhile, in an official EU communication published to help companies and citizens prepare for the end of the transition period on 31 December and released to coincide with the close of discussions, the European Commission urged Member States and businesses to revisit their preparedness plans. The Commission also reiterated that “the choices made by the United Kingdom’s government on the future relationship and on not extending the transition period decision” will result in substantial extra bureaucracy at borders even in the event of a free trade agreement, risking “compounding the pressure that businesses are already under due to the COVID-19 outbreak”.

The paper includes advice to EU businesses, such as urging them to acquaint themselves with the formalities and procedures for doing business with the UK as a third country as of 1 January 2021, and factor in the increased administrative obligations and potentially longer timeframes that will arise from them. Other recommendations include that EU businesses should be ready to start treating any UK content (inputs and processes) as ‘non-originating’ in the context of trade with current Union preferential partner countries and should become acquainted with and prepare for the relevant VAT procedures.

In other news –

– President of the European Council Charles Michel has announced proposals for the establishment of a Brexit Adjustment Reserve worth EUR 5 billion “to counter unforeseen consequences in member states” and “support the countries regions and sectors that will be most affected” based on a needs assessment undertaken by the European Commission. Under the new plan, further details will be laid out by the Commission in November, when the outcome of the negotiations should be clear. The fund is part of a compromise proposal aimed to break deadlock in negotiations over the EU’s next budget and recovery fund.

– Giving evidence to a House of Lords Committee, EU Chief Negotiator Michel Barnier confirmed that, unlike the UK, which recently announced a gradual three-phased implementation of border checks in June 2021, the EU will introduce full border checks with the UK on 1 January.

– In a leaked private letter to Chancellor Rishi Sunak and Cabinet Minister Michael Gove, Trade Secretary Liz Truss has warned that PM Boris Johnson’s Brexit border plans could result in smuggling and the breaking of international rules. Commenting, former Government aide and Brexit advisor Raoul Ruparel tweeted, “Usual DIT gripes which have been around for some time. What they actually want is a harder border on day 1 as it suits their trade negotiations & WTO role. That would be a bad thing. The phased approach is the right call.” The Government’s border plans are due to be published on 13 July.

– Valdis Dombrovskis, the European Commission’s Executive Vice-President in charge of financial policy, has announced that Brussels will adopt emergency measures to preserve Europe’s access to the UK-based clearing houses once transition period expires. However, Dombrovskis said that this access will be time-limited only and “encourage[d] all market participants to prepare for all possible eventualities.”

OTHER KEY DEVELOPMENTS

– The UK Commons Select Committee on Environmental Audit (EAC) has written to Environment Secretary George Eustice urging the UK Government to “re-consider seeking associate membership” of EU REACH and the European Chemicals Agency (ECHA), due to “many fundamental issues” in the Government’s proposals to regulate the chemicals sector post-Brexit.

– Northern Irish Agriculture Minister Edwin Poots has said that his Department within the devolved administration in Northern Ireland will not submit formal applications for new Brexit related port infrastructure until he receives more clarity from the UK Government on how it will be used at border control posts (BCPs).

– HMRC is tendering for “an end-to-end service to support businesses with new administrative processes” to help Northern Ireland firms with new customs and checks after December 2020. The service will help NI firms adjust to new processes required for goods moving between Great Britain and NI from the start of next year”. Tender documents note that HMRC “wants to test the market for a service that can identify and support the education of traders and carriers about their obligations”.

– Turkish Foreign Minister Mevlut Cavusoglu has said that is “very close” to signing a free trade agreement with the UK covering manufactured goods, agriculture, and services. Cavusoglu, who was in London this week to meet PM Boris Johnson and Foreign Secretary Dominic Raab, said that in principle there were no differences over the deal, but added that some technical issues needed to be finalised.

– Trade association British Retail Consortium (BRC) has published a new report assessing the impact of the proposed UK tariffs on food and non-food imports from the EU in case of a ‘no deal’. According to their findings, 85% of foods imported from the EU could face an average tariff of more than 20%, including 48% on beef mince and 16% on cucumbers.

Many thanks to consultant Nicky Donnelly, a valued client and former public affairs and communications manager, with nineteen years’ experience in-house with a multi-national and via consultancy, in the UK, Greece, Ireland and Brussels.