Tale of Headlines

The New York Times reports Boris Johnson Fails to Break Brexit Deadlock in Brussels Talks

A meeting over dinner between Prime Minister Boris Johnson of Britain and Ursula von der Leyen, the president of the European Commission, the bloc’s executive body, ended without significant progress, with large gaps left remaining between the two sides, and no clear path to bridging them.  

Wednesday’s three-hour meeting had been set up with the goal of ending months of deadlock in trade negotiations, talks that remained stalled just three weeks before Britain completes the final stage of Brexit, by leaving the European Union’s economic area at the month’s end. 

But in a statement Ms. von der Leyen said that despite “a lively and interesting discussion” the two sides’ positions “remain far apart.”

But the lack of progress at Wednesday’s dinner is another setback to a negotiation that has been stuck for months.

The above story is mostly rear view silliness. A key breakthrough happened yesterday when out of the blue Boris Johnson dropped a threat to break the Withdrawal Agreement.

There was zero chance of a deal until that happened. No one expected a deal with Ursula von der Leyen over dinner.

The Eurointelligence headline this morning has things correct:

"How a Deal is Done"

The EU and the UK yesterday wiped away the controversy around the internal market bill in one fell swoop. The agreement between Maroš Šefcovic and Michael Gove is a reminder of how quickly and unexpectedly a breakthrough can happen. It’s best to regard this as a necessary but insufficient precursor to a trade agreement.

For that, we need a lot more. Tonight, Boris Johnson and Ursula von der Leyen will meet for a dinner. We do not expect an agreement tonight. Johnson and von der Leyen are not trade negotiators. 

For the EU the issue is the preservation of the single market. For Johnson it will be the appearance of sovereignty. We are fairly certain that he wants a deal but not at any cost, very much as he says. We confidently rule out the two corner options. We don't believe that he has already decided against a deal and is running down the clock. Likewise we don’t believe that he will sign up to any deal. For a deal to happen, both sides will need to compromise. Only when that happens will the two sides enter the final phase of negotiation and start making the trade-offs.

The separate agreement between Šefcovic and Gove at a meeting of the EU-UK joint committee resolves most of the uncertainties regarding the status of Northern Ireland after the end of the transition period: on border controls and entry points, export declarations, and the supply of medicines and food products. There will be lists of criteria for goods deemed not to be at risk, exemptions from state aid rules for agricultural and fish subsidies, a dispute settlement system. EU officials will have access to Northern Ireland, but the EU agrees not to have a permanent office in the province.

In turn the UK drops from its internal market bill the three contentious chapters that breach international law. And it won’t become a repeat offender. The agreement is provisional, and due to be finalised at the next meeting of the joint committee before the end of the year.

Deal on December 31

Eurointelligence reports hearing the deadline is now December 31. 

This is amusing because we saw deadlines of June, September, Halloween, and mid-December come and go. 

The actual deadline was December 31 all along. 

Bluffs Cancelled 

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Earlier this year, the EU demanded complete fishing rights and for the UK to agree to a level playing field as decided by the European Court of Justice.

Boris Johnson responded with a bluff of his own, to break the Withdrawal Agreement in regards to Ireland. 

Yesterday, Šefcovic and Gove worked out an agreement acceptable to both sides. 

Bad Deal on Fish or No Deal on Fish?

I discussed this setup on November 25 in Bad Deal on Fish or No Deal on Fish?

It was pure silliness to expect any deal before now. It was also silly to believe any soft (non-legal) deadlines mattered.  The post-brexit actual deadline is December 31. The true deadline might be a bit before Dec 31 given the need for UK parliamentary approval and EU parliamentary approval.

What I Expect

  1. Johnson will offer some fish tails.
  2. The EU will demand the whole fish.
  3. Johnson will offer fish heads and tails and if necessary, fish livers.
  4. Nigel Farage will complain no matter what part of the fish the EU gets.

Heads and tails aside, as long as Johnson does not allow the European Court of Justice (ECJ) to be the final arbiter of any disputes, not just fish, the deal is likely to be a fair one.

Room to Go Fishing

With Ireland out of the way, there is room to go fishing. 

Since a deal makes sense for both sides, it is far more likely than not there will be a deal. 

But please note that it's only December 9. 

There is plenty of time for more threats and more bluffs before a deal is reached. 

Even then it will not be the "final deal". It will be a bare bones WTO agreement of some sort with provisions to haggle for years to come. 

This is the only way the EU works, using the word "works" loosely.

Mish