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View from Brussels: The Brexit that lies in wait

A majority UK government means that Britain will almost certainly cease to be an EU member on 31 January 2020 but the Brexit saga does not end there, as an agreement on the future relationship between Brussels and London still has to be brokered.

The deal agreed back in October governs the UK’s withdrawal from the EU and puts in place transition measures up until the end of December 2020, a period of time that gradually ebbed away the longer negotiations dragged on earlier this year.

Prime Minister Boris Johnson has officially ruled out asking for a two-year-long extension to that deadline, a request for which would have been needed before July. The backing of the soon-to-be 27 EU member states would be necessary too.

That leaves less than 12 months for negotiators to agree on ambitious arrangements, given that the UK parliament is likely to give its assent only at the beginning of January, while the European Commission will need to get its own negotiating mandate approved after that.

“The timetable ahead of us is extremely challenging,” the Commission’s new boss, Ursula von der Leyen, told members of the European Parliament this week. She confirmed that if “we cannot reach an agreement by the end of 2020 we will face again a cliff-edge situation”.

Kicking off the talks all depends on whether MEPs give the green light though, as they have to ratify the withdrawal agreement along with their Westminster counterparts.

A vote has been pencilled in for 29 January and is expected to pass without incident, although the issue of citizen rights is still a potential stumbling block.

Talks thereafter will proceed along the lines of the political declaration that was sketched out by the two parties, also in October. That document is non-binding but sets the tone for what both the UK and EU want to achieve.

The top-line negotiations that need to wrap up by December 2020 will focus mainly on trade, and progress there will entirely depend on how closely Johnson’s government will stick to existing rules on everything from labour market to social standards.

French President Emmanuel Macron said after a summit last week that “the more loyal we are vis-a-vis each other, the closer relationship we can have”, adding that “we do not want them [the UK] to be an unfair competitor”.

The devil is in the detail though, as while officials like Michel Barnier will be racing against time to nail together a trade deal by the end-of-year deadline, other talks on more complex issues are set to be shelved until after that agreement is done and dusted.

Sectors like transport and energy might have to wait a while to see some results, as topics like road haulage rights and aircraft take-off and landing slots will probably be kept on the back-burner, Commission officials told E&T.

That means the future of the Channel-crossing Eurostar rail service will remain subject to further talks, although it is probable that transitional arrangements will be tweaked and rolled over. Maritime links will still be covered by international law.

In the power sector, groundwork has already been done on electricity and gas links but the most interesting area could prove to be the emissions trading scheme, the EU’s carbon market.

The UK still plans to set up its own system and there is already talk of linking that new market to the EU’s bloc-wide version. Analysts are still concerned about how quickly that could happen though, as it took nearly a decade for Switzerland, as a third-party country, to hitch its scheme to the ETS.

One thing going in the plan’s favour though is how close the EU and UK seem to be on climate policy, given that both reiterated their commitment to a net-zero emissions target by 2050 this month.

Emissions trading is seen as crucial to decarbonising industry and a high carbon price is necessary to displace fuels like coal and oil. Neither side would benefit if they are not pulling in the same direction.

EU officials are expecting tougher talks over intellectual property though, which has already proved to be a major obstacle in other trade deals with China and the South American bloc, Mercosur.

Under the political declaration, an agreement on protected foodstuffs like Champagne and Feta still needs to be found. That would also include British produce like Cheddar cheese.

But that will be dependent on how successful the broader talks are, as it is an area in which the UK in particular could choose to be belligerent if the wind is not in its favour. 

Away from the booze and nibbles, details on copyright law will also have to be hammered out, as well as artist resale rights.

Essentially, the agreements already in place between the EU and UK will keep the fundamentals of everyday life unchanged. But now that both parties have to start getting specific about what they actually want, with a ticking clock to boot, the true picture of what Brexit will look like will start to reveal itself.

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