Britain will develop its own system for regulating state aid and controlling subsidies after its post-Brexit transition period is over, London’s negotiator for the long-term relationship with the European Union said on Monday (17 February).
“Obviously we will develop our own state aid system, our own anti-subsidy regime once the transition is over,” David Frost told an audience after delivering a lecture at a Brussels university.
The EU wants Britain to accept its rules and regulations on state aid as part of a tariff- and quota-free trade deal to guard against unfair competition with a large competitor on its doorstep.
— No.10 Press Office (@Number10press) February 18, 2020
Frost said that the UK was not prepared to compromise on the fundamental parts of its negotiating position with the EU, and was “not frightened” by suggestions there would be trade frictions and barriers as a result of the deal ultimately agreed.
He added that it was perfectly possible to be both an economic competitor and political partner with the EU in the future.
He said the UK was “not asking for anything special”, just a normal trade agreement that the EU has with other countries around the world.
Frost said that London was prepared to accept an “Australia-style” free trade agreement with the bloc if its member states continue to have doubts about the terms of a no-quotas, no-tariffs deal.
The EU does not have a free trade agreement with Australia, and so such an arrangement would effectively be a trade relationship governed by World Trade Organization rules.
Frost said that the UK wanted a trade agreement similar to that which Canada has with the bloc when a transition period ends on 31 December 2020.
EU negotiators have said that for a Canada-style deal, Britain would have to adopt a level playing field with the bloc on state aid, environment, employment and other regulations to guard against unfair competition with the European single market.
Frost was adamant that London would not follow EU-imposed “level playing field” rules.
Instead, it will set its own standards for commerce and state aid even if that means giving up privileged access to the EU single market.
“It isn’t a simple negotiating position which might move under pressure — it is the point of the whole project,” Frost said of Brexit.
“We must have the ability to set laws that suit us — to claim the right that every other non-EU country in the world has,” Frost said.
“So to think that we might accept EU supervision on so-called level playing field issues simply fails to see the point of what we are doing.”
European trade experts also met on Monday and tweaked the negotiating mandate that Barnier hopes member state ambassadors will approve during the week.
In the latest version of the mandate seen by AFP, member states made clear that they wanted “sufficient guarantees for a level playing field”.
Frost said Britain would not be asking for an extension of the transit period beyond December 31.
“At that point we recover our political and economic independence in full. Why would we want to postpone it?” he asked.