Monday 15 June 2020

Is the shape of a deal emerging?

There are tiny hints emerging that the shape of a possible deal is starting to emerge. This comes as Johnson is today scheduled to speak by Zoom call to Ursula Von der Leyen, David Sassoli and Charles Michel - presidents of the Commission, Parliament and Council of the EU. All very impressive individuals by the way. A report in the Irish Times claims that the two sides may be closer than we think.  No doubt later today the usual tub-thumping rhetoric will emerge from government "sources" - better known as Dominic Cummings - but we can ignore that.

The Irish report includes this:

"Sources close to the talks suggest that the shape of a deal on “level playing field” commitments on environmental, employment and consumer rights is visible. But Britain continues to resist the EU’s demand that it should continue to follow the same rules on state aid to industry." 

If true, this will mark the moment that the Conservative party returned to the mid sixties, a time when the government use to think it could somehow back winners and is probably the last big red-line that Cummings will not want to see breached.  The PM's abrasive senior adviser is a big believer in state intervention. He wants to recreate something in the UK equivalent to the American DARPA organisation, a body through which British industry would become far more focused on advanced research into the products of the future.

This could only be dreamed up by someone who has never been on the shop floor of any British company and was then able to compare it with how the Europeans do things.  It will never work, trust me.

This is why state-aid rules are so important to Cummings.  He doesn't ask himself why British passports are printed by a Franco-Dutch company or why the track and trace app we are developing from scratch still doesn't work properly.  It is not lack of state-aid believe me.

The Irish Times report is reinforced by comments from Chancellor Rishi Sunak who told Faisal Islam that "progress" has been made:
What we don't know is who has given ground.  I suspect if there has been compromise (and it would be odd if there had not) most, if not all of it, will be by the UK.

The reason to doubt there has been much give on the EU side can be seen in the 137 page report issued at the weekend by the EU parliament. I learned about this is a tweet by Alyn Smith a former MEP, for Scotland and now SNP MP in the UK parliament for Stirling:
The report, under General principles on page 7 says the EU parliament:

"Reiterates that the EU stands firm in its position that tangible progress must be achieved in all areas of negotiations in parallel, including on the level playing field, fisheries, internal security and governance, as outlined in the Political Declaration; emphasises that all negotiations are indivisible and the EU will not agree to a deal at any cost, in particular not to a free trade agreement (FTA) without having robust level playing field guarantees and a satisfactory agreement on fisheries; thus fully supports the Commission in defending the need for a comprehensive draft treaty as proposed by the EU at the outset, instead of agreeing to separate agreements as proposed by the UK;" 

I think this neatly captures all three of the big issues on which the sides are at an impasse and demonstrates what little room for manoeuvre Barnier has.  It makes the job of the negotiator that much easier - he can say to Frost I have nothing here to compromise on even if I wanted to. 

And provided Von der Leyen, Michel and Sassoli stick to the mandate - as the EU27 heads of state expect them to - I don't see the UK making any ground at all.

I have been involved many times with customers, big global businesses, who employ a main contractor to build a new plant or extend an old one. They are notoriously hard to negotiate contracts with because you never know who is making/influencing decisions. Everyone you speak to claims it isn't them but someone else. The other person then says it isn't, it's actually the person you spoke to earlier. And nobody but nobody has the power to change the specification (read mandate).

This is in many ways the EU's masterstroke in negotiations. 

Things may go down to the wire internally and are often extended, but not when they are negotiating with a smaller, weaker ex-member no matter how powerful that ex member thinks it is.
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