Top in sight. The negotiating teams of the EU and the United Kingdom face this Wednesday the last slope towards the agreement, but they have left behind the obstacle that has prevented them from moving forward for almost 40 days. Brussels and London have already agreed on the mechanism that will guarantee the adoption of commercial reprisals in the event that one of the two parties engages in unfair competition. The principle of agreement on this sensitive issue leaves the haggling of fishing quotas as the last obstacle to crown almost 11 months of negotiation two weeks after the deadline expires.
The teams led by Michel Barnier, on the European side, and David Frost, on the British side, have redoubled their efforts in the face of hours that are described as decisive and that could put an end to the agonizing negotiations of recent weeks. The growing lines of trucks to cross the English Channel and the risk of shortages of basic supplies for British importers have added drama to a calendar that was advancing inexorably towards the end of the transitional period of Brexit, which will arrive on December 31.
Without a new trade agreement, on January 1 the EU and the United Kingdom should submit their relationship to the rules of the World Trade Organization, with the introduction of tariffs and quotas in a traffic of goods that now takes place without any type of chopper. The EU offers the United Kingdom to maintain that privileged access to the European internal market, but in exchange for a control mechanism that guarantees fair competition between British and European companies, as European sources explain to EL PAÍS.
The definition of this mechanism has kept negotiations stalled, amid mutual accusations of lack of collaboration. London accused the EU of wanting to invade its sovereignty with a very intrusive scheme and Brussels the United Kingdom of wanting to take advantage of the lack of surveillance to embark on policies of dumping fiscal, social and environmental.
The two parties, according to European sources, have overcome this obstacle in the last 48 hours. The draft agreement establishes the setting of some guiding principles for the future relationship, which each party will be free to interpret in their respective laws. But these principles will be legally binding and even, although it is not yet fixed, a periodic review could be agreed every five years or more to update standards that may be exceeded by legal and economic developments. London had previously accepted a no-back clause, that is, a commitment not to backtrack on the European standards that are in force on December 31, 2020.
In the event of future legislative divergences that are interpreted by one of the parties as unfair competition, the mechanism provides two steps of protection if the dialogue between London and Brussels does not resolve the conflict. On the one hand, the party that is considered attacked may adopt retaliation measures in the form of suspension of any chapter of a treaty that covers not only the commercial relationship but also the integration of energy networks, transport connections or police cooperation and judicial. Retaliation may be asymmetric, that is, a violation, for example, in the environmental chapter could lead to punishment in the area of judicial cooperation.
These immediate and preventive defensive measures would give way to an arbitration system accepted by both parties if the alleged violation of the treaty persists. This mechanism could lead to the imposition of tariffs or quotas in compensation for the damage caused by unfair competition.
The mechanism would serve for any case of unfair competition, regardless of whether it is done through labor, health or environmental legislation. Reference is even made to the required levels of tax transparency to neutralize the danger of the most aggressive British jurisdictions in taxation such as the Channel Islands (Guernsey, Jersey …).
The principle of agreement reserves a specific section for State aid within the mechanism. The EU required the United Kingdom to have a prior control of the granting of public subsidies similar to that exercised by the Directorate-General for Competition of the European Commission.
The refusal of the Executive of Boris Johnson to that formula has led Brussels to accept a control in the aftermath provided it is very strict and accessible to European companies wishing to make a complaint if they consider that London’s aid policy distorts competition in a certain sector. “The rules on state aid will not be identical on either side of the English Channel, but the effects will be the same,” sums up a European source. The nature of the watchdog London would establish remains to be seen.