In just over five weeks, the UK will leave the EU’s single market and customs union with or without a trade and security deal. Much of the 600-plus pages of legal text is complete, but three outstanding issues remain to be resolved. Such are the differences between the two sides that it is likely the politicians will have to take over from the negotiators, who are running out of track given their respective mandates.
Fishing The issue was always likely to be a thorn in the side of the negotiators, as there will be clear winners and losers. The UK is leaving the common fisheries policy and taking back control of its exclusive economic zone: 200 nautical miles from the territorial sea baseline or to the halfway line in smaller stretches of water. The UK is seeking annual negotiations with the EU on what European fishing fleets will be allowed to catch in its sovereign waters. A “zonal attachment” system would divide up species between the two sides according to where the fish reside rather than the current division based on fixed fishing patterns. The UK also has priority stocks where it expects to enjoy an increase in the amount its fleet can fish within its own waters. The EU is resisting both “zonal attachment” and annual negotiations as it does not offer security to its coastal communities. It also wants to keep the British gains to around 15-18% of the fish caught by EU boats today. The UK is seeking a far higher windfall but has offered a three-year transition period to phase in the changes. The EU is seeking a longer transition period. Standards and domestic subsidies In the political declaration on the future relationship, both sides committed to “uphold the common high standards” in the UK and the EU “at the end of the transition period in the areas of state aid, competition, social and employment standards, environment, climate change and relevant tax matters”. The UK has agreed to “non-regression” but it does not want EU law to be the baseline. That would introduce EU concepts and the European court of justice into the treaty. The two sides are therefore locked in talks about how to define their current common high standards. The EU is also seeking a “ratchet clause” to ensure that as either side develops its standards over time, the other side faces consequences should it choose not to follow with equivalent regulations. The negotiators are working on a model where if one side raises standards, the other must consider adopting them. The EU then wants an independent panel to judge if one side’s refusal to move in tandem is creating a competitive advantage. They would then set a remedy. The UK is resisting anything that amounts to Brussels having the right of prior approval on domestic legislation. On domestic subsidies, or state aid, the two sides have agreed on principles which would be part of both sides’ regime. The UK will also have an independent regulator. But the EU wants a mechanism through which to swiftly sanction the UK if it believes the government or the new regulator has breached the principles set out in the treaty. Again, the UK is allergic to the suggestion that the EU will have any ex-ante oversight of government decisions. Dispute resolution Given that the UK unilaterally sought to rewrite the withdrawal agreement and break international law, there is particular onus being put on keeping the British government to the promises it makes in the treaty. The EU wants to be able to swiftly cross-retaliate if there is a breach of obligations in any part of the treaty. The UK wants to keep fisheries and security outside of the scope of the dispute resolution provisions.