Opinion: Standing on a cliff edge

Failure to make progress on trade talks in the next five weeks will mean the UK leaves the EU without a deal, according to Boris Johnson. Richard Dawson explores what the likelihood is of an agreement being reached by October 15

Will this be the week that we find out the UK is leaving the European Union without a deal?

If Prime Minister Boris Johnson’s statement published on the Government website on Monday (September 7) is anything to go by, then it could well be.

The four-year Brexit saga is undoubtedly reaching some kind of turning point, as the EU’s chief negotiator, Michel Barnier, arrived in London yesterday (September 8) for the eighth round of trade talks.

With the UK’s departure scheduled for December 31, Mr Johnson has sought to put pressure on the EU to proffer an agreement by October 15, in time for the meeting of the European Council.

This means that the latest round of negotiations could well be the most important in deciding Britain’s future relationship with its biggest trading partner.

It is therefore worrying that talks have gotten underway against a backdrop of “growing mistrust” after a Financial Times article claimed that the UK is planning to renege on key parts of the Withdrawal Agreement, which was ratified in January.

The report claims that sections of the Internal Market Bill, published today (September 9), will legally override the Northern Ireland protocol that was agreed to avoid a hard border on the island of Ireland.

This is substantiated by the fact that the head of the UK’s government legal department, Sir Jonathan Jones, resigned from his post yesterday – the sixth senior Whitehall official to do so this year.

More worrying still is what the Prime Minister said in his statement if a deal cannot be reached by October 15.

He said: “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.”

It is the strongest indication so far that the UK Government is prepared to leave the EU on WTO rules.

Mr Johnson seems to believe this would be a price worth paying for the UK to regain its status as an independent, sovereign state.

In a no deal scenario, the PM said: “We will have a trading arrangement with the EU like Australia’s. I want to be absolutely clear that, as we have said right from the start, that would be a good outcome for the UK.

“As a Government we are preparing, at our borders and at our ports, to be ready for it. We will have full control over our laws, our rules, and our fishing waters.

“We will have the freedom to do trade deals with every country in the world. And we will prosper mightily as a result.”

Previous rounds of talks have made precious little progress due to the fundamental differences between the two sides.

The EU’s guiding imperative is to preserve the integrity of its single market and the UK’s is to be able to make its own rules on environmental regulations, workers’ rights and state aid.

The EU wants regulatory alignment, but the UK wants regulatory divergence. It’s as simple as that.

Adding weight to the idea that this week’s talks will be decisive, the UK’s chief negotiator, David Frost, said: “We must make progress this week if we are to reach an agreement in time.

“We have now been talking for six months and can no longer afford to go over well-trodden ground.

“We need to see more realism from the EU about our status as an independent country.

“If they can’t do that in the very limited time we have left, then we will be trading on terms like those the EU has with Australia, and we are ramping up our preparations for the end of the year.”

For businesses in the North East already struggling to adapt to the coronavirus economy, the tough stance being taken both the PM and his trade representative will inspire fear, not confidence.

As I reported back in July, WTO rules would make Nissan’s position in Sunderland untenable.

WTO (World Trade Organisation) tariffs on UK-EU exports are around 10 per cent on cars, rising to more than 35 per cent on some agricultural products. Non-agricultural products would face an average tariff of 2.8 per cent.

The North East is full of exporters, has higher rates of unemployment and social deprivation than almost anywhere else in the UK and, because of this, stands to be worst affected in the event an agreement cannot be reached.

Sarah Glendinning, CBI North East director, said: “Amid all the noise and negotiations, businesses in the UK and EU remain clear – a good deal is essential.

“An agreement will be the foundation for post-COVID recovery across the Continent.

“It will protect the jobs under pressure from the pandemic via duty and quota free trade, closer customs cooperation and easing the implementation of the Northern Ireland Protocol.

“And it will form a foundation for a strong, growing relationship between the UK and EU in future.

“Getting a deal requires political leadership and compromise from both sides.

“Given the importance of trade with the EU to business in the North East, that compromise is needed urgently in the coming weeks.”