Brexit Bulletin: Barnier’s Way Back

  • Barnier says U.K. still can change its mind on Brexit stance
  • Negotiator signals “red lines” can change following the split

European Council President Dislikes Brexit

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Chief EU negotiator Michel Barnier says the U.K. has plenty of time to change its mind about the kind of relationship it wants with the European Union after Brexit, opening the way for Prime Minister Theresa May to reverse into a closer relationship with the bloc following the divorce.

In an interview with Sueddeutsche Zeitung, Barnier said the U.K. can change its negotiating stance (German) even after it has left, as it will still be part of the single market and customs union during the transition period ending in 2020. The period is when the details of the post-Brexit relationship will be finally thrashed out.

“If Britain decided to change its red lines, then we’d also change our positions,” he said.

Michel Barnier
Photographer: Dario Pignatelli/Bloomberg

The comment shows three things. Firstly, the EU really wants the U.K. to stay in the single market and customs union. Secondly, it underlines the fact that when the U.K. leaves the bloc in March next year it still won’t have much idea about the future trading relationship with its biggest partner. 

It also signals a possible way ahead for the U.K. government. May needs to deliver Brexit. But once that’s done and the trade negotiations start in earnest, there may be scope for a softening of the U.K. position and the blurring of some red lines in the interests of keeping the access to the single market that businesses are so desperate for. There’s already a feeling in May’s office that there’s no mandate for an extreme Brexit. 

Barnier’s comments also provides a hint about what the agreement on the future relationship, which the two sides plan to formalize by the end of this year, might look like. While the U.K. in public continues to say it wants to nail down the outline of a trade deal before leaving, EU officials have said it will be a vague statement that’s short on detail and not binding. The disadvantage of that is that Britain will be agreeing to pay a £40 billion ($57 billion) divorce bill without knowing what kind of trade deal it gets in the end. The advantage – at least for businesses that want the closest ties possible – is that there’s still a way back.

Brexit Latest

Business Wants EU Rules | British businesses overwhelmingly want to stick to European rules after Brexit, according to the most detailed sector-by-sector analysis of what companies need the U.K. to fight for in negotiations. The Confederation of British Industry says 18 of 23 sectors would be better off if regulations remain as they are. May has identified just a few sectors where rules should stay the same. 

Clearest Call | Airbus CEO Tom Enders writes in the Financial Times that May should stick to EU rules and offer clarity on future customs arrangements. Airbus makes wings in the U.K. and wing parts cross the U.K.-EU border many times before final assembly. It spends £5 billion a year with U.K. suppliers and Brexit will affect 672 of its sites. “Hard borders and regulatory divergence risk blocking trade, creating supply chain logjams and causing our business to grind to a halt,” he says. He urges May to present the EU with a trade plan it can accept and says “pragmatism must trump pride.”

Non-Regression | Barnier says a “non-regression clause” must be included in the agreement on the future relationship to ensure there’s no reduction in environmental standards after Brexit. The EU has long been concerned that the U.K. will seek a competitive advantage after Brexit by slashing regulation.

Government Clash | Brexit Secretary David Davis has clashed with civil servants over how detailed the outline of the future trade relationship should be, the Telegraph reports. Davis wants as much detail as possible by the end of the year while officials believe that's unrealistic.

And Finally…

European Council President Donald Tusk is still struggling to get over Brexit.

“I don’t like Brexit,” he said in a speech in Dublin on Tuesday. “Actually, that’s an understatement: I believe Brexit is one of the saddest moments in twenty first-century European history. In fact, sometimes I am even furious about it.”

Donald Tusk
Photographer: Dario Pignatelli/Bloomberg

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