Another week and another round of vital meetings with EU leaders over the future negotiations on how the UK is to leave the European Union. Only this week’s summit is being seen as particularly crucial in deciding how those negotiations are going to be carried out. In the first of a new series of regular “Beale on Brexit” columns, Miles Beale, chief executive of the Wine & Spirit Trade Association, reflects on the Brexit progress to date the major challenges that lie ahead.
There are times when the Brexit negotiations must look like how a five day test match seems to a non-cricket lover. You miss two days, come back and nothing much seems to have happened. Not for the WSTA’s Miles Beale. Here he sets out where we are in the process and why things are starting to hot up, starting with this week’s latest EU summit.
Where are we now?
With only a year to go before the UK leaves the EU, we seem to be finally making progress and – at long last – details of what Brexit means are beginning to emerge. The clock is still ticking, but the Government is also ticking some major WSTA Brexit boxes:
- both parties (UK and EU) have agreed that there must be a transitional period of around two years with one single change of rules at the end, and are on the verge of confirming its terms;
- both parties are seeking an ambitious UK-EU FTA, meaning there will be no tariffs or quotas; and
- the UK Government has recognised that “no deal” is in fact not “better than a bad deal” and needs to pull out all the stops to avoid a cliff edge Brexit which would be catastrophic for an industry like ours.
There have been some positive steps on securing citizens’ rights and the Prime Minister also issued a warning/signalled some flexibility in her Mansion House speech: “you can’t always get what you want” and we should accept the “hard facts” that leaving the EU is not going to be easy for everyone.
In the WSTA’s Brexit document in October 2016 – even with a little “cherry-picking” – we were realistic. We asked for what this industry needs and so far, so good. Working with our counterparts in Europe, the WSTA has created a joint document that is realistic yet ambitious. The WSTA has even received encouraging signals from Government that they intend to adopt a system of mutual recognition in respect of post-Brexit regulation.
But… despite all the positive developments made over the last year, there is one phrase hanging over all our heads: “nothing is agreed until everything is agreed”.
The biggest hurdles
Two major hurdles remain.
First, the Irish border.
The December agreement, signed by both the UK and the EU 27 and which allowed the negotiation to progress from talking about the withdrawal and transitional arrangement to the future relationship, set out three possible solutions:
- a future partnership agreement
- specific solutions
- (the “if all else fails” option) full alignment to protect the Good Friday Agreement, North-South cooperation and the all island economy.
The EU set out the final option in their draft legal text. Arguably the most ‘practical’ solution here, a border in the Irish sea would break up the United Kingdom and would be categorically unacceptable to any UK Prime Minister. And Theresa May drew a very clear red line at any idea of the creation of a border either between Northern Ireland and the rest of the UK. She drew another one at the notion of a border between Northern Ireland and the Republic of Ireland.
The ‘Irish question’ is the most difficult to answer. On the face of it, it is an impossible circle to square. How to accommodate a country outside the Customs Union while not introducing a hard border and yet also fulfilling Ireland’s EU obligations. Practical solutions that both side would accept still appear some way away.
Second, the UK’s sovereign Parliament.
Theresa May’s decision to hold a General Election just last year could once again come back to haunt her. While maintaining a strong position that the UK should seek to exploit international opportunities and leave the Customs Union to do so, her tiny majority propped up by the DUP may not be enough to see off an amendment tabled by Tory, anti-Brexit rebels that aim to keep the UK in the Customs Union.
Labour’s shift to a policy in favour of remaining inside the Customs Union could prove significant and their support for the amendment might push it through, obliging May’s government to seek Customs Union membership as part of the Brexit deal. Not only would this be a blow to her government, her leadership and her party’s unity, it could also throw a major spanner in the works for negotiating with the EU – by hurling the Government’s current Brexit strategy out the window and much of her credibility with it.
What do we (think we) want? The WSTA welcomed the message from the Government that the UK would remain within Custom Union rules during transition, but staying in a Customs Union post-Brexit would be an odd, half-way house with few benefits. Businesses would be bound by the same EU rules, but with no say over what they are. Yes, it gives the UK the same access as we have now to EU markets, but it forfeits any possibility of forging ambitious new deals with third countries, which, for wine, already make up some 45% of imports. And we should be able to secure free and frictionless trade with the EU without remaining in a Customs Union.
We welcome that the Prime Minister wishes to secure a new, enduring relationship with the EU that maintains frictionless trade and is fit for the future. Remaining in a Customs Union during a transitional period will be necessary to keep trade flowing while a UK-EU comprehensive trade deal is completed.
Last year, we called for a two-year transitional period, but for such an ambitious deal with negotiations moving at such a glacial pace, we may need flexibility for more time – not less (as David Davis has recently suggested). But, whatever the timetable, both sides of the negotiating table need to make fast progress and so provide certainty for businesses, as well as for citizens and the island of Ireland. As with most EU negotiations and all trade deals, agreement is unlikely to be reached sooner than expected. And, of course, nothing is agreed until everything is agreed.
We’ve said it all along…
Today and Friday marks another important staging post in the negotiation process. The European Council (minus Theresa May) will review the state of negotiations with the UK and it should, fingers crossed, adopt additional guidelines aimed at agreeing the terms of the transitional period. Should that happen the next phase of talks could begin, including starting on our future trading relationship. But will the EU insist on solving the Irish Question first? And will the UK Parliament move the May Government’s goal posts?
Did someone mention a ticking clock…?