Think four years of political noise over Brexit will subside now that the European Union and Britain are set at last to kick-off negotiations on their future trade relationship? Think again.
Politics will be at the forefront of the EU-U.K. talks due to begin on Monday in Brussels. As a result, businesses must take seriously the risk of tariffs and quotas on two-way trade reemerging as of January 2021, when the post-Brexit transition that maintains the economic status quo is due to end.
But the past week has offered plenty of evidence of the political fireworks to come in EU-British ties over the coming months. It started with each side accusing the other of ditching past promises and ended with the U.K. government threatening to abandon talks halfway through the year.
Political divergences over the whole matter belie economic similarities that result from Britain’s almost half-century of EU membership. Like a couple whose long marriage ends without mutual consent, London and Brussels know each other well and their haggles reflect not misunderstandings but rather principle, pride and posturing.
The central sticking point is an EU call on the U.K. to continue following the bloc’s rules in policy areas such as state aid, the environment and employment. For Prime Minister Boris Johnson, such a demand for a “level playing field” is tantamount to disregarding the will of the 52% of voters who backed Brexit in the 2016 referendum (and of those who handed him a landslide election victory in December).
The degree of future U.K. regulatory alignment with the EU is essentially a technocratic question with high political stakes. Consequently, even with skilled negotiators seeking imaginative solutions, the issue is a potential deal-breaker that would leave both sides imposing tariffs and quotas on each other’s goods by defaulting to basic World Trade Organization arrangements.
So stay buckled up for the next bruising phase. The Brexit drama is done, long live the Brexit drama!
