Brexit: Trade negotiations between the UK and EU are still deadlocked

The Confederation of British Industry (CBI), British Chambers of Commerce and the Federation of Small Businesses told  that their members really need to know what arrangements to make for next year after the UK leaves the EU’s single market and customs union.

A little progress has been made in the past several months with the negotiations between the UK and EU; however, the two largest barriers to a deal are future fisheries arrangements and the UK’s future state subsidy regime, which is a part of discussions over the so-called level playing field.

The level playing field is a trade-policy term for a set of common rules and standards that prevent businesses in one country gaining a competitive advantage over those operating in other countries.

The trade negotiators have been trying to reach agreement for months on how widespread level playing field provisions should be once the UK is no longer part of the single market.

The EU is insisting they must be maintained when it comes to regulations involving workers' rights, environmental protection, taxation and - in particular - state aid (or government subsidies for business).

It refuses to guarantee the UK the best access to the single market - with no tariffs or taxes on goods crossing borders - if there is a possibility that companies based in the UK could be given state support to undercut their rivals elsewhere in Europe.

Prime Minister Boris Johnson wants a zero-tariff, zero-quota deal, but also insists on the UK's right to diverge or move away from EU rules and regulations.

That freedom to choose was partly what Brexit was all about. It could mean sticking closely to EU rules in some areas but not in others.

But the EU insists freedom comes at a price and it adds a third zero to the equation - "zero dumping", which means the strictest level playing field rules it can negotiate.

The UK government has said that the new UK state aid system will be based broadly on international rules, but it has yet to set out its plans in real detail.

And the EU says that isn't good enough. «We are ready to be creative," says President of the European Commission Ursula von der Leyen, "but we are not ready to put into question the integrity of our single market".

So, if there is to be progress, one side or the other (and probably both) is going to have to compromise on some fundamental principles.

British Chambers of Commerce co-executive director Hannah Essex said: “As things stand, businesses do not have all the information about what this will mean in terms of costs and processes and it is therefore difficult to be able to plan ahead with confidence. We’re hearing of firms losing EU customers who are also worried about additional costs and delays at the border come January”. CBI acting director general Josh Hardie warned: “Rolling [Brexit] deadlines are already costing companies, which have seen cash reserves disappear and stockpiles dwindle.”

Posted on Nov 27, 2020.

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