In an effort to break the stalemate over a crucial post-Brexit trade deal with the EU, Britain has tabled a compromise proposal on the principal remaining sticking point – fishing, reports The Times.
The offer is suggested as potentially able to break the deadlock over a compensation mechanism if fishing quotas for the European Union’s fleet in a phased transition are drastically cut.
As Britain’s transition period (set for 31 December) draws near, negotiations between the two sides have bogged down on the issue of access to UK fishing waters for European trawlers. The new offer is claimed to be a significant concession on the part of the British side to the bloc’s chief negotiator Michel Barnier.
'Compromise' Fishing Deal
The new proposals are believed to offer a way to resolve the three key points of disagreement on fishing: the length of transition from the current quota shares in UK waters to new quota shares; the amount of quota share for European trawlers in Britain’s waters at the end of the transition; and dispute settlement if at some point in the future the quota share changed or the sides failed to reach agreement over access to waters.
The new proposals would reportedly allow the European Union to retain approximately two thirds of the value of fish, worth €650 million, ($794 million) that European boats currently catch in British waters.
It is believed that a transition period of five years would be installed to mitigate fallout from the changes.
According to the outlet, while the UK starting offer on the fish value quotas was 40 per cent, while Michel Barnier drove a hard bargain, demanding 75.
Arbitration could be resorted to in resolving all arising disputes in the future, according to the offer drawn up by Raoul Ruparel, a former Downing Street special adviser on Europe under ex-Prime Minister Theresa May, and published by POLITICO.
“In a scenario where the EU quota share is reduced from the levels agreed at the end of the transition, an independent arbitration panel would determine the economic cost of that loss to the EU and allow the EU to levy tariffs in other areas beyond fishing to compensate,” writes Ruparel.
As Brussels has been demanding a ‘review clause’ if reductions in fishing quotas were seen as going too far, allowing the bloc to suspend free trade in retaliation and slam tariffs on businesses, Ruparel’s offer also presupposes a termination clause.
According to cited EU sources, the compensation mechanism, arbitration for dispute resolution and review clause have been acknowledged as potentially breakthrough suggestions.
However, the percentage of fish by value is seen as unlikely to satisfy Brussels, and is reportedly to be increased over the coming days.
According to the outlet, both UK and EU sources claim fishing quotas worth less than €100 million could become pivotal to the future of any trade deal talks.
As time is fast running out, both camps have been under increasing pressure to meet each other halfway.
Downing Street hopes for a trade deal to be ratified in Parliament between Christmas and New Year, while the deadline for ratification by MEPs passed on 20 December.
Amid increased uncertainty whether last-ditch talks on trade, security or fisheries could result in a deal that might enter into force on 1 January, the European parliament has requested that emergency tactics be drawn up by 24 December, outlining a plan of action if negotiations continue until the end of the Brexit transition cutoff date – 31 December.
Manfred Weber, a German MEP who leads the European People’s Party, was quoted as saying:
“We will remain constructive partners. Alternative procedures are possible. Council and commission will have to find a way forward.”
Post-Brexit Logjam
The UK and EU talks have been at loggerheads for months, seeking to hammer out a post-Brexit trade deal.
Differences over fishing quotas, the so-called "level-playing field" and governance have hampered any breakthrough, and with the looming deadline for the transition period, a “No Deal” scenario has been suggested as the most likely by major UK media outlets, citing government sources.
If no deal is reached before the end of the year, the WTO rules take immediate effect as of 1 January, including customs tariffs and full border checks for UK goods crossing the English Channel.
MPs have been warning that food prices may skyrocket as a result of Downing Street’s plans to restrict UK producers’ access to European Union workers, who account for most staff in sectors such as meat processing and crop picking, according to the Commons environment, food and rural affairs select committee.
Visas will be issued after 31 December under a pilot scheme for seasonal agricultural workers. According to the committee, aspects of the new system were vague, rendering it “difficult for businesses to plan”.
Neil Parish, the committee’s Conservative chairman, was quoted as saying: “By leaving its plans vague and not having the proper figures to hand, the government is effectively turning off the tap for employers, without giving them time to adapt.”
According to him, this will allow for it to be ratified quickly by parliament before the end of the year. The deal will likely involve a compromise between the two sides on fishing, quantified in relation to the duration of the phase-in period (probably around 5 years) and quota reductions (probably around 30 percent).
An arbitration mechanism allowing the EU to impose tariffs in the event that future renegotiations of fishing quotas are deemed harmful will most probably be installed as well, extending to the whole of the agreement. This is fairly normal for Free Trade Agreements, believes the expert.
Therefore, the deal will leave the UK largely tied to EU regulations, with the country risking trade tariffs if departures are deemed to be harmful to the EU’s competitive position by the tribunal. Bearing this in mind, says David Collins, questions may eventually arise over why Brexit was pursued in the first place, as such an arrangement would probably undermine the UK’s capacity to diverge meaningfully over the long term from the EU’s regulatory sphere.
The expert adds:
"It seems clear that the UK, or at least the current government, is not particularly interested in streamlining regulations through a ‘Singapore on Thames’ approach, but rather maintaining statist, EU-style, government interventions across the economy, perhaps spurred on by the Covid pandemic.”
Crashing out without a deal was never a genuinely likely outcome, says the expert on international economic law.
“The alternative, trading without a deal, would not have been seriously harmful to the UK in the long term, but it would have been politically untenable for the Johnson government,” he concludes.
There will be a post-Brexit UK-EU deal in place, agrees Douglas McWilliams, Mercers' School Memorial Professor of Commerce from 2012 to 2014.
“My best guess is (like the financial markets) that there will be a deal,” says the chief executive and founder of Cebr, one of the UK’s leading specialist economics consultancies, adding:
“Fishing should be a non-issue. UK fishermen need the EU market, EU fishermen need a deal. But it generates disproportionate passions.”
The issue of the so-called “level playing field” is a bit more complex, according to him, yet European Union fears suggest that the bloc expects Brexit to be successful unless the UK is forced to accept EU rules and regulations.
“It’s an odd view because if the EU think their own rules are so damaging to their own competitiveness, why don’t they amend them? But there seem to be solutions emerging. I would be surprised if there is no deal,” Douglas McWilliams said.
It will go down very badly in Britain if the Government is seen to be paying for having access to our own waters, says Rodney Atkinson, British academic and political economist, responding to reports that the UK has tabled a cash-for-quota compromise proposal on the principal remaining sticking point – fishing.
Regarding talks between Britain and France on customs adjustments in light of the discovery of a new COVID strain that might eventually be used in the case of a no-deal Brexit, the expert does not believe the two issues are comparable, adding:
“The sudden blocking of trade does show what the EU has to lose in exports if they do not co-operate as free trading partners with the UK! And how a break down in trade affects as many EU based drivers as UK”.
On the suggested solution of the fishing problem, the British voter will accept transitional arrangements for foreign fishermen only if it is clear that “we control our own waters”, says Rodney Atkinson, adding that there can be no special privileges for EU fishermen that do not follow standard international practice.
Regarding dispute settlement, he believed there must be no role for the EU commission or courts in deciding future arrangements.
“I can see no solution other than full UK sovereigny over the fishing grounds and a transitional arrangement which comes to an end in a reasonable period - 3 - 5 years perhaps. No longer,” says the expert.
Commenting on media speculations regarding the likelihood of no deal being reached, Atkinson says that a ‘No Deal’ scenario is not only probable, but it is also the best deal for the UK.
“These acrimonious talks have gone on too long already and there is a growing British consumer reaction against German and French imports of wine, white goods and cars because of their arrogant assumptions about control of our fishing grounds and our laws. The losses to EU industries will be far greater than just additional tariffs. Whole British markets will disappear for them,” says the expert.
He also believes that the UK Government will refuse to extend the current talks, adding:
“The EU must experience the consequences of their failure to negotiate rationally with an independent nation state. In a no deal WTO scenario the UK will get billions more in tariff income which will be used to compensate our exporters”.
