Plans are afoot to strike mini-agreements in lieu of a full deal. Would it work?by Georgina Wright / August 17, 2018 / Leave a comment
Those hoping for summer respite from Brexit will be bitterly disappointed. Three months left to finalise the terms of the UK’s withdrawal and there is still no agreement in sight. There is also no guarantee that the final agreement—if one is reached—would make it through the UK parliament. The chances of extending Article 50 negotiations seem remote. Is it time to start planning for “no deal”?
The European Commission certainly thinks so. In recent months it has published around 60 sector-specific notices highlighting areas for immediate consideration, from new licensing requirements to data-sharing rules, many of which are not covered by WTO terms. The UK government is expected to do the same.
Some commentators have suggested that even if the UK and the EU27 failed to agree a full withdrawal deal, they would still prepare separate, time-limited agreements to fall back on. Their proposal is worth considering. The thinking runs that even if negotiations break down on one issue, mini-agreements could be struck elsewhere to minimise the chaos. It would be in effect “no-deal-lite.”
It’s an interesting thought. But even these steps cannot fully mitigate the risks of a “no deal.” They would also come at a price.
This is because it is not just a question of tariffs. Once the UK leaves the EU single market and customs union, it will no longer share a common regulatory space with the EU. At the moment British goods are considered EU goods: they meet a whole range of EU standards (from health to environment to production methods) and are part of a complex system of monitoring, compliance and authentication, which is shared between member states and European institutions.
Take the example of a British company exporting goods to the EU. Under a no deal scenario, it would need to fill in all sorts of paperwork to prove that its products still complied with EU rules of origin, customs duties and VAT. Likewise, transport companies would need to ensure they had the correct certification and licences to travel through the EU. This would present a logistical and bureaucratic headache, especially given that some forms are issued at the EU level, and others by national authorities. There would also be financial implications. Any obstacle that delays trade or makes it less efficient often results in higher costs for producers—costs that are usually passed on to consumers.
Forward planning would be necessary in…