Negotiators Continue Talks
Despite threats from both sides to walk away from a deal, Brexit Talks Continue for Another Week.
Intensive and secretive, the talks are a final bid to seal a new partnership agreement for when Britain’s transition out of the European Union runs its course at the end of this year.
If the sides overcome their differences, the new deal would govern everything from trade and energy to transport and fisheries. If they fail, an estimated $900 billion of annual bilateral trade in goods and services would be damaged from Jan.1 by tariffs and quotas.
An EU diplomatic source and a UK official said negotiations would continue face-to-face in Brussels on Monday following a full weekend of talks. An update on their progress and the chances of a deal was expected on Wednesday or Thursday, they added.
These talks started in January then quickly fell apart when the EU made demands the UK could never accept.
As discussed previously, last minute deals are the norm for the EU.
Deadlines come and go unless there is a hard reason they cant.
October 15 Deadlines Comes and Goes
Please recall my September 6 post UK Lays the Brexit Line on the EU: October 15 or ‘Move On’
“If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on,” he will say, according to comments released by his office.
That was a in reaction to ludicrous demand by the EU.
I commented on September 6
Either the EU bends on fishing rights and other rule changes or the UK walks.
There is still time for a deal, but but it will not be the one-sided affair envisioned by the EU.
Kudos to Boris Johnson for his stance.
Drop Dead Date
The actual drop dead date by the Brexit Treaty is in December.
Bluff Upon Bluff
On September 13 I noted the EU is to Blame for the Latest Brexit Crisis by reiterating ridiculous demand.
In response, Boris Johnson urged Conservative MPs to back his Plan to Override Part of the Brexit Withdrawal Agreement.
German Finance Minister Olaf Scholz then launched another EU bluff: No-Deal Brexit Would Hurt Britain More Than EU.
“Europe would be able to deal with it and there would be no particularly serious consequences after the preparations we have already made,” said Scholz.
My September 13 Comments
If “Europe could deal with this with no serious consequences”, then why would it care?
The fact of the matter is German exports to the UK would crash in the absence of a deal.
Forget the EU’s Bluff
We are here because the EU demanded fishing rights and interfered in UK internal policies on state aid.
Boris Johnson responded in kind.
Verge of a Huge Tactical Mistake
On October 7, I commented EU on Verge of Huge Tactical Brexit Mistake
Miscalculation or On Purpose?
France may very well want the UK out on a hard deal for reasons we don’t fully understand. That said, Germany does get hit harder than France in a No Deal setup.
Possibly it’s just a large last-minute bluff.
But perhaps Eurointelligence has this right. The EU has seriously misjudged UK politics.
Let’s go back much further, First to January 31 in a Tweet, then to February.
Johnson “Caved”
WTF are you talking about!
The EU caved led by Ireland and France
And if the EU had an ounce of sense it would work out a fair deal or German exporters will get crucified.https://t.co/e1X35Bmaw9 https://t.co/LigeNUWDvh
— Mike “Mish” Shedlock (@MishGEA) February 1, 2020
Flashback February 2, 2020
On Feb 2, I made this bold claim In Wake of Brexit, EU Will Cave In to UK Once Again
The smart bet is that the EU caves not that Johnson caves.
Given events in Germany (demise of cars) and France (Macron’s problems at home), the EU needs a deal more than the UK.
Expect a deal, just not a comprehensive one. The EU is too pathetically slow to work out a comprehensive deal and that is another reason the UK was wise to leave.
Amazing Feat
1: Supposedly the EU would never remove the backstop
2: Supposedly the EU would never change the political declaration
3: Supposedly the Remainers would tie up the legislation forever
Who was it that changed the Political Declaration and the Withdrawal Agreement. The Easter Bunny?
October 15, has come and gone and there has been shockingly little progress on anything.
EU Mistakes Increase the Odds of No Trade Deal
On October 21, I commented EU Mistakes Increase the Odds of No Trade Deal.
Numerous soft deadlines posed by UK prime minister Boris Johnson and the EU have come gone like rain goes down the gutter.
Failed EU Summit
Last week there was a Failed Summit in which EU leaders called on the UK to “make the necessary moves” towards a deal.
That “deadline” came and went but the sides are still talking.
No Progress Since January
There has been no progress on any of these points since January.
When dealing with the EU, there never is. Progress only comes at the last second.
This time however, the EU made such absurd demands that the UK is discussing not honoring the withdrawal agreement.
EU stubbornness and arrogance is why we are here now. A basic deal should have been easy but the EU again foolishly thought it held all the cards.
Will Macron bend? Johnson?
Both have to and it is not at all clear if they want to.
Moreover, if the EU makes another mistake, there will not be a deal, even if both sides want one.
If there is no deal, both sides will suffer, with Germany taking the biggest hit to exports.
Dateline November 1
Here we are, still talking. But that is a good sign.
Moreover, it appears the EU is willing to make concessions and so is the UK, perhaps even on fishing rights.
But the one thing the UK cannot and will not do is agree to let the European Court of Justice be the sole arbiter in any dispute.
Reflections on Trade Deals
A trade deal is very easy in theory. I can write an excellent trade agreement on a napkin in 30 seconds.
In practice, trade deals are never easy, especially in the EU where 27 nations all have to agree to get anything done.
But in this case, and as a direct result of Brexit, Barnier has considerable leeway in terms of what he can do. That leeway expires in December.
Macron, Johnson, and Barnier all have to want a deal, and it has to be done in a way where everyone save face.
But these kinds of face-saving deals happen more often than not in the EU and at the last second, often with meaningless or ambiguous terms that cause further bickering for years.
It’s the way of the EU.
Mish
There appears no point in having a deal now. The hit of a hard Brexit is probably a rounding error in the total cost of Covid to the UK and EU.
I had a denial of service attack and had to turn of comments for a while
Seems to me any trade deal will founder once again over Northern Ireland. Frankly I’m surprised that other EU countries aren’t taking the opportunity to squeeze the UK more – for example, Spain over the return of Gibraltar and Greece over the return of the Elgin Marbles.
“…I’m surprised that other EU countries aren’t taking the opportunity to squeeze the UK more…”
“Squeeze” implies the Brits are negotiating from a position of weakness. They ain’t!
If you mean the UK is willing to impoverish themselves, unilaterally wreck the Good Friday Agreement and permanently ruin their relationship with their neighbors, then indeed, maybe they’re in a position of strength.
If “impoverish” means a little short term suffering while the economy pivots away from the overbloated finance sector to one more reliant upon actually useful goods and services underlined with a more sound monetary system, then the temporary suffering will pay off in spades. Same goes for the US by the way.
Sure, its easier and safer to sit on the couch and eat doritos instead of training for a marathon, but the marathon training is better for the long term health.
What goods and services? UK doesn’t produce much and about the only services they provide is money laundering. I mean, good luck to them if that’s what they want to do. They’d be better off in the long term by playing nice with their neighbors, even outside of the EU.
Whenever somebody uses that analogy I always think of 43 year old William Goggins, who dropped dead at mile 24 of the San Francisco Marathon…..in one of the years that my wife and I ran it.
Not sure the UK or the US is in good enough shape anymore to train for a marathon. Maybe a sack race.
“If we can’t agree by then, then I do not see that there will be a free trade agreement”
Bilateral agreements that govern trade cannot possibly be “free trade” by any definition. Only a no-deal Brexit can be, depending…
Without a deal U.K. becomes far less important to the U.S. especially if Biden wins. Defense ties will hold but Washington will view the continent as far more important
Only the US is important to the US. IMO I should add.
so you think regardless of who is president the u.s. withdraws into its shell
In varying degrees perhaps.
Edit
I don’t think they withdraw into their shell, they threaten, using whatever means is at their disposal to try and get their own way. A lot of damage has been done.
Rowan Atkinson’s solution.
Of course there will be a deal or some kind of extension fudge (more likely). Mish – you often cite the German car industry as a loser from this. I’m intrigued which home grown cars UK residents are going to flock to instead? Nissan? I can’t see this. I can’t see BMW being hit at all. Who is going to setup a new car plant for such a small market as the UK. Surely all the cars that UK people want to buy come from outside the UK and so will hit exactly the same tarrifs – so it just comes down to the normal car buying dceisions – except all of them wil be more expensive – oh except for those lovel Nissans!
Suzuki sharing space in Toyota plant in UK, Nissan in North East. New marques have been in planning for “baby” variants of other UK p market vehicles. Big uptick noticed recently in Hyundai. Old Vauxhall active in build in UK (French owned now).
No shortage of cars and frankly increased tariffs won’t be a killer for a while.
If you can afford a German car you can afford to pay more tax.
Suzuki, Toyota, Nissan, Vauxhall Astra (the only model) all not loved. Hyundai maybe. Popular cars are Ford, other Vauxhalls, PSA group, Volvo all made outside UK. As most parts are sourced in EU, even the UK assembled cars will go up in price. So I still can’t see why the German manufacturers will see a competitive threat.
“As most parts are sourced in EU, even the UK assembled cars will go up in price. So I still can’t see why the German manufacturers will see a competitive threat.”
Presumably American parts and other non EU country’s parts would become comparatively more competitive as the same tariffs would apply everywhere? As would anything else we’d usually source from the EU?
Canada and NZ?
I expect there will be a deal….at the very last minute. I hope it’s equitable for Britain. It’s in both parties interests to deal….but as Mish said, the EU is very unwieldy at negotiating…..looks like cat herding from here.
Onshoring costs already calculated for key elements. Tariffs paid by those able to afford imported cars will reduce the tax burden on others. UK either defaults, devalues or taxes plebs into oblivion as borrowing is off the charts so let the BMW, Merc and Audi drivers contribute on spares and new vehicles.
UK credit rating downgraded recently.
The Nissan Figaro was about the cutest little ‘Toon Town car of all time. I wish they sold them here, but they never did.
Indeed – I stand corrected!
There will be no deal. Start from zero for UK, reset or restart, whatever you might call it. Take a big hit and be sovereign. Boris Johnsson will get a kicking if there is much of a deal.
The deadline is so close there is no practical difference between the thinnest of all possible agreements and the reality of Brexit means exit. Chaos will ensue.
Inventing an acceptable alternative to ECJ would take years.
Neither side really wants “a trade deal”. Both sides bluster about tough action, but neither really wants to do anything. It’s all theater. The English leadership didn’t believe there was a real chance Brexit would pass. They thought they could go through the motions, and put the issue to rest after a vote failed. Surprise! London is not Great Britain. The continuous negotiations will drag on for years, barring a collapse in the system.
I agree the silence is encouraging. I’m sure everyone would welcome some good news at the moment. If a deal is forthcoming it would be nice if it wasn’t followed by them bragging on who got the better of the other.
No deal at all likely. Any flexing by Johnsson would not be good news. Whole relationship with Brussels needs to be broken for a proper restart. Hard, but half measures won’t work. Tories are toast otherwise. Long shadows will be cast by their current actions and there are people waiting in the wings in the old Brexit camp ready to call out a rat. People voted to Leave, start again from zero, rebuild as a sovereign nation. Not get tied into the EU outside of mutually advantageous trade.
I’m obviously showing my naivety by assuming everyone would welcome a deal. Unfortunately, “My way or the highway” seems to be the preferred course these days.
4 yrs wasted. There comes a time when its obvious its going no where so call it a day, stop the BS, expect an economic hit, move on, do the best possible to adapt and stop looking back.