The EU’s chief negotiator on future relations with the UK warned EU businesses on Thursday (9 July) to step up their planning for a ‘no deal’ scenario when the UK leaves the Single Market at the end of 2020.
As the latest negotiating round on a new EU-UK trade deal ended in London on Thursday, Michel Barnier said that “this week’s discussions confirm that significant divergences remain between the EU and GB. We will continue working with patience, respect and determination.”
Little progress is believed to have been made on the long-time sticking points of fisheries and the “level playing field” arrangements, designed to prevent the UK undercutting the EU’s environmental and social policy standards and state aid.
However, while the talks will resume in Brussels next week, the Commission communication ‘Getting Ready for Changes’ urged businesses to “consider revisiting their existing preparedness plans”.
The European Commission stated that there will be changes from 2021 in trade in goods and services, energy and legal cooperation, travel and tourism regardless of whether there is a new deal, or not.
The decision by Boris Johnson’s government not to extend the post-Brexit transition period beyond December meant “inevitable disruptions will occur” next year that would “risk compounding the pressure that businesses are already under due to the COVID-19 outbreak”, the Commission paper adds.
“Although these were drawn up for the risk of the UK’s withdrawal from the union without a withdrawal agreement – a scenario which did not materialise – part of that work will still be very relevant for the changes at the end of the transition period,” it added.
Johnson’s government is expected to unveil revised plans for its border policy next week, with businesses on both sides of the Channel now less than six months away from new border arrangements and, potentially, the imposition of tariffs on goods.
Earlier this week, a leaked letter from the UK’s International Trade minister Liz Truss to Johnson warned that the government’s border plans could break international trading rules and lead to smuggling from the European Union.
Truss added that the UK might also leave itself “vulnerable to World Trade Organisation challenge” if it gives EU goods temporarily preferential treatment even if there is no UK-EU free-trade agreement in place.
Last month, the Johnson government backtracked on its previous plans to control imports after it leaves the EU Single Market by allowing traders to defer customs payments for six months until the customs declaration has been made.
The Commission has also repeatedly expressed concern that the UK’s plans to implement the Northern Ireland protocol, the part of the Withdrawal Agreement which commits the UK to avoid the return of a hard border between Northern Ireland and the Republic, will not be ready by next January.
[Edited by Zoran Radosavljevic]