Is a No-deal Brexit Becoming Increasingly Likely?

The EU General Affairs Council approved of a document that should serve as a reference point in any future trade deal between the UK and the bloc on Tuesday. Meanwhile, on Thursday, UK ministers will present a final agreement to Parliament that states what the British Government’s mandate for Brexit discussions will be.

EU Trade Deal Blueprint

The EU’s 46-page mandate will be the blueprint that the EU’s chief negotiator Michel Barnier will follow in discussions with his British counterpart, and it says the bloc’s standards should apply in the areas of state aid, competition, state-owned enterprises, social and employment standards, and more.

But the problem both sides have is that neither of them can agree on what the final agreement should look like, even though British Prime Minister Boris Johnson has repeatedly said that he wants a Canada-style trade pact with the EU.

Barnier has ruled out such an agreement, arguing that Britain is too close in proximity to be permitted to compete with the other 27 member states on such terms.

MEPs such as Nathalie Loiseau, an MEP for French President Emmanuel Macron’s party La République En Marche!, told the BBC that the UK’s relationship to the EU is different to that of Canada’s, adding that this will make achieving a Canada-style trade deal more difficult.

No-Deal Looks Increasingly Likely

The prospect of no-deal is looking increasingly likely. Johnson has repeatedly stressed that his country should not be bound by European standards on social legislation, state aid and the environment in any agreement.

While Barnier is embracing the concept of a new relationship with the UK, he has warned the British Government that abiding by EU rules is a price worth paying for the British to continue to have access to 450 million consumers as part of a comprehensive trade deal.

To abide by EU rules post-Brexit would defeat the purpose of leaving the bloc. During the transition phase, Britain has no say over how those rules are made and that will continue after December. This is a cynical bid by Brussels to prevent the UK from becoming a competitive nation, and it is a shameful attempt to eradicate the sovereignty many British people voted for during the 2016 EU Referendum.

Johnson Must Resist the Temptation to Compromise

After being elected on a huge mandate to deliver Brexit, it would be unacceptable for Johnson to compromise on this issue at the expense of free trade. The Prime Minister’s special adviser David Frost has said that the British Government is ready to trade with Brussels on the same international laws that Australia abides by if necessary.

The EU knows it is in its best interest to offer Britain a zero-tariff trade agreement. Though pacts with Canada and Japan have taken years to negotiate, Brussels must demonstrate some flexibility, otherwise the impact of a no-deal Brexit will hit them hard.

The Legatum Institute estimates that if the EU does not provide the UK with a free trade deal, the EU automotive industry would lose between two to seven billion euros in annual revenues. The beef and dairy industries in Ireland could see an export decline between 34 to 50 percent and 23 to 42 percent respectively.

Of course, Brussels is notorious for offering trade deals at the last minute. They budged on Johnson’s Withdrawal Agreement in October and as the Prime Minister’s own deadline approaches, the reality of a no-deal Brexit could cause them to do so again. Even Irish Taoiseach Leo Varadkar acknowledged a “barebones deal” is possible.

Therefore, it is clear what the EU needs to do to avoid a no-deal scenario. The British Government is well-prepared for such an event and it is Brussels that will lose out more if they play hardball to the very end.