Mujtaba Rahman is hardly a household name but as a former senior Treasury and EU Commission employee he obviously has good connections in Brussels and often puts out interesting and highly readable snippets on Twitter. On Thursday he tweeted some intriguing comments about the EU's evolving strategy for the next phase of the talks. It might make negotiations a bit awkward for Johnson who has made it clear he wants real divergence. The EU will be trying to keep the UK in a 'continental orbit'. This will 'underpin' their approach according to Rahman.
Here is the Twitter thread if you're interested:
It continues:So. I'm picking up some really interesting colour on EU side about how they're thinking about the next phase of Brexit. There's still debate. But the bottom line, for now, is that keeping "UK in the continental orbit" will underpin EU's approach & objectives in phase 2. Thread— Mujtaba Rahman (@Mij_Europe) November 28, 2019
One senior official tells me: "We want to keep the UK in the continental Europe's orbit. We don't want to lose the UK. This will have a big impact on where the EU will be in 10-15 years, between the 2 poles of the US & China." This objective will impact architecture & approach
There's some discussion (& has been before) of an "umbrella architecture", at leader's level, that will meet twice per year. There will be a co-ordinating body, that works on a limited number of agreements:
1) Trade/FTA; 2) Foreign/security policy; 3) Research/Erasmus/Verizon etc. "There will not be 120 bilateral deals" like Switzerland. This is to avoid complications, but also because EU side is considering an interdependent negotiation between the various, limited, layers
So if UK wants to diverge, "to be a competitor", then this *won't only* hinder access to Single Market, but will also impact co-operation/access via-a-vis the other levels too. As one senior official tells me: "We want leverage in these areas" to try & keep UK as close as poss
Of course, this could also give UK leverage over its strongest card - defence. But what's clear is thinking on EU side regarding phase 2 is quite mature, and Commission & MS have already done a lot of work. On negotiating structures
On paradigms for phase 2 mandate; on core interests that will foreshadow discussion among Heads of State. For now, goal seems clear: "We want to limit divergence" & forge as close a relationship as possible. Will @BorisJohnson agree - if he delivers majority ppl now expect?
This will I think be welcomed by Sir Ivan Roger's who in various speeches, including the one in Glasgow last week, has called for more pragmatism from the EU, saying to the EU27:
"We have far larger fundamental similarities on our view of the world than we have differences, and we have plenty that, in a sane world in which we could think beyond next week or next year, we would find new ways to work on together.
"But you do risk, in a hardball repetition next year of the tactics of the last couple of years, ending up with a deal which simply does not fly politically.
"And which, even if it did, far from warming U.K public opinion, would alienate it. Yet you consistently say you want to create the conditions in which the U.K. rethinks its long term position, and wants greater proximity to you."
Rogers thinks to get an agreement quickly the EU will offer something along these lines, saying to UK negotiators:
"....if you want zero tariffs and zero quotas to continue—and that’s better than any other non-member gets—we aren’t going to agree that without formal Trade Treaty agreements about not undercutting and dumping.
"And that’s real Treaty-based conditionality we demand, in the form of dynamically aligning with our rules if you want fuller market access than other non member trading partners: on food standards (you can forget much access to our market for your agricultural products if you shift to US standards), on subsidies to industry, on energy (there won’t be a deal with us at all without a corresponding one on climate policy, committing to a carbon pricing level in line with ours on an ongoing basis), on environmental and social regulations.
"Third: fish. We just won’t do zero/zero deal at all unless we sort out a fisheries deal as part of the trade deal, which protects our boats’ access to your waters and replicates what we currently get on fish stocks and catches. And because your fish processing industry relies very largely on exporting into our market, if we do not give you duty free access, we can probably close a large chunk of your industry down. But you can forget any chance of a zero/zero trade deal flying in the Parliaments of our fishing member states, unless we sort this."
Bear in mind Johnson has already come under pressure in the form of a letter signed by several vital industry groups warning about the "damage which would be done by the current approach on regulatory divergence", adding, "Pan-European regulatory alignment has been a success in our industries, supporting continued creation and retention of highly skilled manufacturing jobs in the UK."
The government will find itself simultaneously pushed by industry groups employing 1.1 million people and contributing £98 billion to the economy and pulled by the offer from the EU, if Rahman is correct in outlining the Commission's approach.
The problem will be in how Johnson reacts since Britain will essentially remain in the EU's regulatory orbit with less influence than we have now but nonetheless some influence through the proposed 'umbrella architecture' at leaders level and a new co-ordinating body with power over a limited number of areas - trade, foreign/security policy and research.
Will it be attractive? Could he 'sell' the idea to the Spartans? Would the fundamental question then be why are we remaining that close - we might as well have stayed in the EU and had influence over everything. On the other hand if Johnson refuses it we might be looking at a no deal calamity by the end of 2020 with all that that means for the UK economy.
By the middle of 2020 we will come face to face with the question that Brexit means Brexit has never satisfactorily answered: How close do we want to be to the EU?
I should point out our friend Richard North also thinks the EU will offer us a "bare bones" or de minimis treaty and we will "get it signed in time for it to take effect when the transition period finishes, at the end of December 2020. Logic tells us that this would certainly amount to a basic agreement on tariffs and quotas, perhaps with some provisions on rules of origin and anything else that can be achieved in the time."
This is supported by a paper Rahman references HERE by Agata Gostyńska-Jakubowska which also talks about a bare-bones deal being agreed quickly.
However, unlike Rogers, North doesn't think the EU "would necessarily impose conditions before it would agree to freeing up tariffs, etc., but there is no logic in this assumption." Rogers thinks there is every logic in the EU insisting on level playing field conditions, access to UK waters and several other things too.
North then says after reaching this bare-bones deal we would go on to negotiate a "series of mini-deals" – "such as Switzerland and Norway have done – which allow for such an incremental approach to treaty-building." This is at odds with what Rahman reports, " 'There will not be 120 bilateral deals' like Switzerland. This is to avoid complications, but also because EU side is considering an interdependent negotiation between the various, limited, layers"
North then says after reaching this bare-bones deal we would go on to negotiate a "series of mini-deals" – "such as Switzerland and Norway have done – which allow for such an incremental approach to treaty-building." This is at odds with what Rahman reports, " 'There will not be 120 bilateral deals' like Switzerland. This is to avoid complications, but also because EU side is considering an interdependent negotiation between the various, limited, layers"
So perhaps a deal of some sort could be agreed by the end of 2020. This is not to say it would not present big problems for UK business with Rules of Origin checks, limited access for UK services and so on. The EU are certainly shaping up to go for that tight time frame but it is still a heroic assumption and Johnson will finally have to start making real decisions about where we want to end up in 5 or 10 years time.
This all assumes of course that Johnson wins a majority, something that seems more likely than not at the moment, but you never know.
