EU and UK negotiators have yet to find a way to overcome “significant divergences” in their attempt to seal a post-Brexit agreement. Following the UK’s departure from the EU on January 31, the two sides are trying to secure a new trade deal before the end of the year, when Britain will effectively exit the EU’s customs union and single market. However, negotiations have proved difficult and the parties appear far apart on a number of issues including on the level-playing-field and the fishing industry.
Speaking during his regular press conference, the EU’s chief Brexit negotiator Michel Barnier said last week: “Too often this week it felt as if we were going backwards more than forwards.
“Today, at this stage, an agreement between the EU and UK seems unlikely. I simply do not understand why we are wasting valuable time.”
The next round of negotiations will begin in London on September 7.
According to a recent report by Best For Britain’s CEO Naomi Smith, though, Brexit talks have not been the only trade discussions Brussels has undertaken this month.
The bloc has also been engaged in negotiations with China – the EU’s second biggest trading partner after the US – and Ms Smith argued that these ongoing talks could cast a long shadow on Brexit.
She explained: “Sino-European talks aren’t a new thing. Relations were established in 1975 and in 2013 efforts began to produce an investment agreement which would deliver predictable, long-term mutual access to the EU and Chinese markets. There have so far been 31 negotiating rounds, including the one earlier this month.
“One of the core topics of discussion was the Comprehensive Agreement on Investment (CAI), a weighty set of issues which boil down, very approximately, to EU businesses being treated in China the way Chinese businesses are treated in the EU.
“A Sino-European Free Trade Agreement (FTA) could pave the way for huge increases in business between the blocs. In 2017, for example, Chinese research suggested that an FTA could boost EU exports to China by a third between 2020 and 2025, with Chinese exports to the EU rising by a fifth. Given that China-EU trade is already worth more than €1billion a day, that’s a very big prize.
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“China is eager to agree to a 2025 Cooperation Agenda with the EU, a strategic initiative with the potential to reset Sino-European relations in areas ranging from climate control and energy security to science and technology.”
However, Ms Smith noted, there is a major hurdle to overcome, and it is one that will sound familiar to anyone following the UK’s negotiations with Europe: the 2025 Cooperation Agenda and the CAI are dependent on the satisfaction of a gnarly set of issues which include level playing field considerations.
She continued: “The EU has been working to bring fairness to its dealings with China for many years. It will not budge until it considers the playing field to be level, so that both sides are playing by the same rules.
“Progress is being made. Success is not a given, but there is reason to believe China may abandon some of its protectionist practices in pursuit of a lucrative win-win deal with the EU.”
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Ms Smith then asked: “What can we learn from this about the Brexit negotiations?”
She added: “The EU has made it clear that level playing field considerations, as well as other areas of contention such as fisheries policy, must be addressed as a matter of priority in any trade negotiations. If it’s not prepared to buge for mighty China, it’s not likely to roll over for the UK, given that it would create a low-cost competitor on its doorstep and undercut EU businesses.
“But the Chinese deal also reveals something more deep-seated about the UK-EU negotiations. There is, right now, a historic opportunity to build on our proximity to Europe, if we seize the same advantages that the Chinese are seeking.
“This is why business leaders and organisations such as Best for Britain have been pushing the government to agree a comprehensive trade deal with the EU. With economies reeling from the impact of covid, it has never been more important to maximise mutual economic benefits.”
Ms Smith concluded: “If China is prepared to contemplate significant change to its business practices in pursuit of closer EU links and a lucrative FTA, why on Earth is Britain threatening to chuck any chance of a comprehensive trade deal in the Channel?
“Brexit has been delivered. We’re shuffling out of the EU. But we have links, knowledge and allies in Europe that China can only dream of. They provide an opportunity to take Brexit and turn it into a showcase of how trade with the EU can best be done, starting with the level playing field. Far from being something to fear, we should see it for what it is – a chance for British businesses to fight fairly in that massive market on our doorstep.
“If we turn down that chance, we’re going to get to 2025 and find that our businesses are lumbered with crippling costs to enter the single market and competing for European business with the EU’s newest FTA partner: Beijing.”