Why The EU Might Have Just Hinted At A Brexit Compromise

Ursula von der Leyen may have given Boris Johnson a chance to claim victory and go for a deal.
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What a difference a year-and-a-half makes.

During his campaign to become Tory leader, Boris Johnson declared there was only a “million to one chance” of a no-deal Brexit.

Fast forward to Friday, less than three weeks from the end of the Brexit transition, and the prime minister was now declaring the UK defaulting to economically damaging World Trade Organisation terms “very, very likely”.

And yet, negotiators are still talking.

Not only that, but Ursula von der Leyen may have hinted that an 11th hour compromise is possible on the so-called standards “ratchet” that is holding up a deal.

Johnson insisted again on Friday that Brussels was trying “to keep the UK locked in to whatever they want to do in terms of legislation”.

But von der Leyen made clear in her closing remarks to the European Council summit of EU leaders that what was actually being proposed would leave the UK “free” and “sovereign”.

The European Commission president outlined a system whereby if the EU raises its standards, and the UK does not follow, then Brussels would be able to “adapt the conditions” for access to the single market, e.g. by imposing tariffs.

Crucially, it would be for the UK to decide if it wanted to pay the price for undercutting the EU and take the tariffs or not.

Even more importantly, von der Leyen stressed that “this would apply vice versa”, opening up the possibility that the UK could also hit the EU with tariffs for unfair competition.

There are real world practical examples where the UK could benefit from this, for example by taking action against Germany’s use of state aid or Ireland’s very low corporation tax rate.

Von der Leyen’s comments also appeared to at least partially address Johnson’s belief that the EU was trying to apply “double standards” (as set out in James Forsyth’s Times column, seen as a barometer of the UK government’s thinking).

Some experts are suggesting the move from the EU might be helpful for Johnson, who could claim a victory while making the necessary concessions to get a deal.

Jill Rutter, senior fellow at UK In a Changing Europe, tells me: “If you wanted to put it into Brexiter language: this isn’t the EU laying down rules for a supplicant pathetic UK.

“This is two sovereign equals agreeing that they will do something, they want the right to move their standards higher without incurring a trade problem and the UK can use that provision if it wants and so can the EU.

“And you could point to the fact the UK leads on some areas like climate change and things like that, so the UK could invoke (the ratchet).”

Some useful clarity from VdL given there is a lot of briefing & hearsay going on. Still don't know the exact details of EU ask on ratchet clause/LPF but she makes clear here it would be reciprocal which seemed to be one of the UK's objections. https://t.co/PQgolWUCmU

— Raoul Ruparel (@RaoulRuparel) December 11, 2020

Raoul Ruparel, a key Brexit special adviser during the Theresa May years, said von der Leyen’s comments provided “useful clarity” and emphasised that the ratchet would work both ways, “which seemed to be one of the UK’s objections”.

In comments reported by the Guardian, Dutch PM Mark Rutte described the comments as a “clear step” towards finding common ground, and talked of a “structured dialogue” to manage divergence in standards, rather than for example the EU imposing lightning tariffs on the UK.

Major health warning required though, as Downing Street quickly reacted to von der Leyen by saying there was “nothing new” in what she was setting out.
Georgina Wright, of the Institute for Government agreed, telling me: “What the Commission President said was not necessarily new.

“The EU’s concern has always been how to manage divergence going forward – it knows it cannot prevent it.

“Von der Leyen was simply saying that the EU and UK should reserve the right to change the conditions of access if standards diverge to such an extent that means one side cannot compete with the other.

“It’s not about maintaining the same standards, it’s about finding a way to manage them if they diverge.”

Meanwhile, UK sources in Brussels tell me that negotiations between Lord Frost and Michel Barnier are not making much progress.

But they talked for 10-11 hours on Thursday, eventually wrapping up at 8pm, which seems an awful long time to talk without going anywhere.

It may go beyond the Sunday deadline (sorry), but an 11th hour deal is still at least possible if Johnson is in the mood for compromise.

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