15 February 2018

Barnier’s hard line on transition is unreasonable and reckless


At the moment, Britain and the EU are negotiating the terms of the so-called transition period, which will start next March. The British are hoping to find agreement on this by the EU Summit on March 22. But, according to EU negotiator Michel Barnier, a deal is “not a given”.

Given how important it is for both the UK and the EU27 to avoid a damaging cliff-edge Brexit, that is a pity. The uncertainty is also unnecessary, and the fault sits on Barnier’s side of the negotiating table. There is little reason for the EU not to grant Britain at least the rights the other “rule-taking” non-EU members that enjoy full access to the Single Market have. And yet, in various ways, Brussels is refusing to do so.

The first point of disagreement is on the cut-off date for freedom of movement. Britain, having already conceded that this would not be the date of the Article 50 letter, March 29, 2017, but the date of its departure, March 30, 2019, wants to stick to that date. The EU has other ideas, and wants freedom of movement to last until the end of the transition period. Barnier has described this as a “major point for us and also the European Parliament”.

Regardless of the chance of EU citizens still using this period to try to “sneak” into Britain, one thing is beyond dispute: the EU is adopting a stricter line with the UK here than towards Norway, Iceland and Liechtenstein, those other non-EU countries that enjoy full access to the EU’s Single Market.

Norway has never used the so-called “emergency brake” whereby non-EU members of the EU’s Single Market can suspend parts of the Agreement, including the free movement of people, in the event of “serious economic, societal or environmental difficulties”, but Liechtenstein has. This happened in the late 1990s. It involved a minor restriction for a very specific case and subject to EU approval, and of course Liechtenstein is tiny, but the principle is there. The EU could show a bit more flexibility here, given that Britain will be allowed to restrict freedom of movement after the transition anyway.

A second issue is the UK’s demand to have some kind of a “right of opposition”, as Barnier called it, which would allow Britain not to have to introduce a new EU rule during the transition period. The UK government reportedly thinks there are about five EU directives that have a “high likelihood of materialising” and will carry a “high risk” for the UK when it would be forced to implement these during the transition stage, while nine would be highly likely to be implemented and carry a “medium risk”.

Britain’s Foreign Secretary Boris Johnson has said that after the transition, “the British people should not have new laws affecting their everyday lives imposed from abroad, when they have no power to elect or remove those who make those laws”. He has however specified that the UK may well find it wise to take over EU rules, so not to disrupt companies’ supply chains, stressing that regulatory alignment is “all about voluntarism”. Effectively, this is what the EU has agreed with Switzerland. The Swiss do suffer some restrictions on market access and despite the fact that they often simply copy paste many EU rules they do ultimately have the right to say “no”.

Given that Britain will not face restricted market access during the transition, the EU may find it justified not to grant it this Swiss-style veto power during that period. But even then, there is no reason not to give the UK the so-called “right to reservation” that other non-EU members of the Single Market, like Norway, possess. This doesn’t constitute a right to veto but is effectively a “right to delay”, which Norway has only considered in 17 cases and only actually used once – in the case of postal liberalisation, with the country ultimately changing its mind when a new government came in. In other words: the EU shouldn’t fear this would allow the UK a real veto right, but at least the British wouldn’t be treated worse than Norway.

Of course, one could argue that being able to delay EU rules during a limited period effectively constitutes a right to veto, but then we should ask ourselves how realistic it is not only for the EU to decide “anti-British” legislation in less than two years but also whether the UK would ever seriously consider implementing that legislation, especially given the lacklustere implementation by EU member states of many EU regulations. There’s one thing we shouldn’t lose sight off: during the transition, both sides will need to act in good faith, as they’ll be simultaneously negotiating a new trade relationship. The EU shouldn’t give the impression it is keen to “punish” the UK for leaving the club by withholding it the rights the non-EU members of the Single Market enjoy.

Third, the British are annoyed about a so-called “sanction mechanism” during the transition that would not only subject the UK to the European Court of Justice – despite the fact that the UK won’t have a judge in it, but would also allow the European Union to unilaterally suspend market access for the UK. Barnier has defended this, saying “it is perfectly normal to provide for an effective implementation mechanism to settle disputes”. But why is Norway not subject to such a unilateral mechanism? Especially given that Norway does have a judge in the “EFTA Court”, which polices its deal. Never mind that the EU has conceded that there is no supranational court to police Swiss-EU relations. The good news is that the EU appears to realise all this, as it is reportedly planning to replace the clause with a less tough-sounding paragraph that will refer to the standard EU infringement process.

Fourth, Norway’s “right to be informed” about the EU decision making process won’t be available for Britain. According to the Commission, the British only “may, upon invitation and on an case-by-case basis, exceptionally attend meetings” where EU rules are decided. This is an important tool for “rule-taking” countries to shape the EU decision-making process, so why should the UK be deprived from having it?

Doesn’t it increase the chance that Britain won’t be happy to take over EU rules, which would ultimately endanger a cliff-edge Brexit that would be very damaging to the EU as well? We know the possible damage for Britain in that case but let’s not forget that 1.2 million jobs may be lost in mainland Europe in this case. Countries like Ireland, but also the Benelux nations and Germany, which do a lot of trade with Britain, should be much more wary that this “penalising” spirit does not sneak into the EU’s offers to the UK.

Last but not least, Britain will be able to negotiate trade deals with third-party countries during the transition stage, but it will need to ask for permission from the EU. Why? Again, the other three non-EU countries that enjoy full access to the Single Market can happily talk trade with anyone. In any case, a lot of Britain’s trade efforts during the transition are likely to be focused on keeping the access UK companies enjoy due to trade deals with third countries negotiated by the EU and no longer automatically available from the end of the transition stage. Given that many supply chains run between Britain and the EU27, it’s very much in the EU’s own interest that Britain can convince third countries such as South Korea and Mexico to also keep this access after the transition.

Why not make sure Britain can have its hands free to convince them to avoid disruption for the period after the transition? Why complicate the whole process with procedural tools that can be abused by the weakest chain in in the EU machine?

And more generally, why insist on terms for Britain that are harsher than those agreed with the other non-EU countries with full access to the single market? Why make a cliff-edge Brexit more likely?

Pieter Cleppe represents independent think tank Open Europe in Brussels.