Here we go. The European Commission draft guidelines for the Brexit trade negotiations have leaked – and, as expected, it doesn’t make all that pretty reading for the British government. Although Theresa May’s Brexit speech was well-received in the UK, in Brussels many of May’s arguments and proposals appear to have fallen on deaf ears.
Speaking today, Donald Tusk has warned that it is not his priority to make Brexit a success:
‘I fully understand and respect Theresa May’s political objective to demonstrate at any price that Brexit could be a success and was the right choice. But sorry, it is not our objective.’
The main takeaways from the text, obtained by Politico, are that there can be no ‘partial participation’ – aka cherry-picking – in the single market. It warns that May’s version of Brexit will have ‘negative consequences’. It follows that any services aspect to a deal – not a given in itself – would only be included with restrictions. What the EU is more keen on, however, is zero tariffs on goods and reciprocal access to fishing waters. Also on the menu, close co-operation on defence and a deal on aviation. One could suggest that this in itself is ‘cherry-picking’.
As things stand, there is trouble ahead. Were the UK to give way on access to fishing waters, it would be seen as a red line by some Brexiteers. During the EU referendum campaign, both Michael Gove and Nigel Farage suggested the UK would take full control of its fishing waters through Brexit. It is also important for the Scottish Conservatives – and, in that vein, I understand Theresa May has given personal assurances to Cabinet colleagues that she will not ‘do a Heath’ – referring to Ted Heath’s role in signing Britain up to the Common Fisheries Policy.
As for services, Philip Hammond will spend today making the case that it is of ‘mutual interest’ to both the EU and UK to include financial services in the deal:
‘It is time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before – to them I say ‘every trade deal the EU has ever done has been unique.”
Of course, this is a negotiation and this is only a draft text – it will now be revised by the EU 27. The government hopes that this will allow the remit to be widened (especially on services) but time is running out for the UK government to convince the EU member states to do so. May has been clear that the UK won’t take on the obligations of Norway with only the access of Canada. But one thing the EU has been clear on in the draft text is that they are ready to change their position if the government rubs out its red lines. If Brussels believe May could change her mind on the customs union or single market, they have less incentive to offer an attractive free trade deal.