-The U.K. threatens to leave the table before even talks begin
The U.K. government published its road map of negotiations last week, which revealed that the government wants “regulatory freedom” from the EU and is unwilling to accept any role via the European Court of Justice (ECJ) in dispute resolutions.
According to the roadmap, the U.K. wants a liberalized market for trade in goods, with no tariffs, fees, charges or quantitative restrictions on trade in manufactured or agricultural products. The government is also asking that competition and subsidies are not subject to a final agreement’s dispute resolution mechanism, which had been previously signaled in the political declaration.
Moreover, the U.K. government is also looking for a separate agreement on fisheries that would allow for annual negotiations on access to reciprocal waters, including allowable catches and shares. The EU, however, wants fishing to be considered a part of the overall agreement.
But most importantly, the U.K. government is seeking an agreement on equivalence on financial services to be decided before the end of June.
-What happens if the U.K. walks away without a deal?
In this case, there would be no agreement and at the end of the transition period at the end of 2020 and the U.K. would start trading with the EU on World Trade Organization terms, a step that both sides do not want.
Considering that only 10 months are left to finalize a free trade agreement, it is hard to imagine how any concrete agreement on financial services can be reached by June.
It is possible that U.K. Prime Minister Boris Johnson’s negotiating strategy by threatening to leave the talks before even starting negotiations is just merely bluff. But at the same time, it also reflects the bureaucratic nature of EU institutions, which have suffered chronically last year with their inability to make decisions. The typical long discussions, months of negotiations and with no concrete results at the end is definitely not what Johnson wants at the moment. Nonetheless, it looks as if there will be many tough and dramatic negotiations ahead.