Negotiators for Britain and the European Union meet for the first time on Monday to begin hashing out the future relationship between the UK and the world's largest trading bloc.
Britain left the EU after nearly half a century of membership in January, and is in a transitional phase until the end of this year, continuing to observe EU norms pending an agreement on what comes next.
The UK and EU are poles apart on a series of sensitive issues from fishing to the so-called level playing field, any of which could collapse the talks. British negotiators say they want a free trade agreement with no obligations to align with EU standards, likening their aim to the arrangements the EU has with countries like Australia.
The EU says ease of access depends on closeness of standards, because allowing the UK equal access with freer rules would disadvantage EU companies. It also says a bespoke Canada-style deal is not achievable before the end-of-year deadline Britain insists on, because without overarching alignment negotiators would have to work through each category of goods from oils to textiles one by one.
‘Not Canada, not Australia’
“The idea . . . is for the birds as you say in the UK,” French European affairs minister Amélie de Montchalin said in a speech in London. “You are not Canada, you are certainly not Australia, first of all because you can get here by train.”
Irrespective of whether a deal is reached, the ambitions pursued by the government of prime minister Boris Johnson indicate a radical departure from the current situation, entailing customs and goods barriers on imports and exports to Britain. London now admits its choices entail "trade-offs" and "costs", and trade commissioner Phil Hogan has warned companies must do more to prepare.
The stakes for Ireland are high. The Irish economy will be between 3.2 per cent and 3.9 per cent smaller by 2030 if a free trade agreement is reached, compared to if current arrangements remained, according to analysis by Copenhagen Economics for the Irish Government.
Britain says it will prepare for “no deal” if it feels insufficient progress has been made by June.
Irish exports
Such an outcome would mean almost twice as much economic pain for Ireland, with an estimated 7 per cent cost to gross domestic product. Britain would automatically begin trading under World Trade Organisation rules and tariffs in January. Meat exports to the UK would be taxed at close to 50 per cent and dairy products at over 30 per cent: according to the Central Bank, this could "potentially eliminate" Irish meat and dairy exports to Britain.
Under the withdrawal agreement of last year, Northern Ireland is to remain aligned with the EU to avoid the need for checks along the land border with the Republic. This entails checks in the Irish Sea. The EU has made achievement of a deal contingent on the "effective implementation" of these arrangement, after secretary of state for Northern Ireland Brandon Lewis raised fears that London could renege by saying there would "not be a border down the Irish Sea, there'll be unfettered access for business".
The dour days of talks begin with a meeting between the EU and UK chief negotiators Michel Barnier and David Frost. Talks will then split into 11 groups that will work concurrently, dedicated to specific areas like transport, energy, and fisheries. Four more rounds are planned by May, alternating between London and Brussels.
