EU chiefs stuck between rock and a hard place

Spain earlier this week threatened to veto the Brexit deal over the thorny issue of the future of Gibraltar. After reading the draft Brexit deal, the Sanchez government has demanded to Brussels that no future EU-UK trade or security deals can be applied to the territory without Madrid’s consent. Pictures: PA

While EU leaders are anxious to ratify the Brexit deal, the UK is not alone in demanding significant changes that could upset the political applecart, writes Andrew Hammond.

With European presidents and prime ministers making final preparations for this weekend’s historic Brexit summit, much remains up in the air.

While many leaders want to get ratification underway, Theresa May is not alone in demanding significant final changes which could yet upset the political applecart.

UK Prime Minister Theresa May is pushing for the most changes at this weekend’s historic EU summit, and continues to have intense pressure on her.

Take the example of Spain which earlier this week threatened to veto the Brexit deal over the thorny issue of the future of Gibraltar, the overseas territory on the southern Spanish coast which was ceded to the UK crown under the 1713 Treaty of Utrecht.

Madrid, which maintains a claim to the peninsula, has long adopted a sharp stance on this issue which has become more politically sensitive in the context of forthcoming local elections where the government of Socialist prime minister Pedro Sanchez has been criticised by the right-of centre Popular Party for not being robust enough.

After reading the draft Brexit deal, the Sanchez government has demanded to Brussels that no future EU-UK trade or security deals can be applied to the territory without Madrid’s consent. And also that any extension of the proposed UK transition deal would not automatically apply to it either.

Beyond Gibraltar, there are other political grumblings about the draft Brexit deal from other members of the EU27.

For instance, France is leading a group of countries, including the Netherlands, pushing for an EU declaration that a future EU-UK free trade agreement must rest on the UK granting comparable access to its fishing waters to those which now exist. This would be hugely politically contentious in the UK if May were to concede.

France is leading a group of countries, including the Netherlands, pushing for an EU declaration that a future EU-UK free trade agreement must rest on the UK granting comparable access to its fishing waters to those which now exist.

Meanwhile, France is also concerned that the withdrawal agreement which provides the basis for at least a temporary UK-EU customs union, and the possibility of a permanent free trade agreement, does not provide strict enough conditions to prevent the UK enjoying an economic competitive advantage.

There is therefore a push underway for so-called equalisation requirements, as a condition for any future EU-UK trade deal, that would try to prevent future unfair competition in areas like taxation, and employment policy.

What the positions of countries like France and Spain on these issues underlines is how, despite the EU27 negotiating the last two years as a cohesive bloc, each of the countries has distinctive political, economic and social interests that inform its stance on the UK’s exit.

These positions — which vary according to factors such as trade and wider economic ties and patterns of migration with the UK — are likely to come out more prominently in 2019 and 2020 if a Brexit withdrawal deal is agreed, and negotiations move on squarely to the future EU-UK relationship.

Yet, for all this EU27 upset, it is May who is pushing for the most changes at this weekend’s summit. She therefore continues to have intense pressure on her with some big decisions still to make.

One of these decisions is the length of the transition period after end-March 2019 if a Brexit withdrawal deal is agreed. Originally, this was planned to be until December 2020, but chief Brexit negotiator Michel Barnier and UK business secretary Greg Clark have this week suggested the transition could last until at least December 2022.

Wider changes May wants to make to the draft text includes not just to the 585-page withdrawal document, but also the accompanying political declaration document on the future relationship between the UK and the EU which is only currently seven pages.

One of her key ambitions with the latter document is to make it longer and stronger.

The reason for this is that it will set the agenda — if the much longer, legally-binding withdrawal deal is ratified by the UK and European Parliaments — for the talks from April on the new relationship between the UK and the EU.

Moreover, with the price tag for the withdrawal deal set at around £40bn, May is under intense political pressure to show that she has won significant concessions in her future ambition to secure the widest and most comprehensive future free trade deal with the EU27.

At present, many UK Brexiteers believe in the words of former foreign secretary Boris Johnson that the commitments the EU has so far given here amount to “diddly squat”.

Boris Johnson: At present, many UK Brexiteers believe that the commitments the EU has so far given amount to ‘diddly squat’.

As well as adding some text, there are also key elements of the current political declaration that May wants to see removed. For instance, Brexiteers have raised concerns about the reference to “combining deep regulatory and customs cooperations, building on the single customs territory provided for in the withdrawal agreement” which they suggest has potential to become a permanent EU-UK customs union.

Taken overall, it is not just May but also other EU leaders who are unhappy with parts of the withdrawal agreement and the accompanying future relationship declaration.

Despite the political pressure to finalise the details at the summit, this could mean that there is an unexpected negotiating breakdown, or that more time may potentially be required to seal a deal with the next scheduled EU leaders meeting in mid-December.

- Andrew Hammond is an associate at LSE IDEAS at the London School of Economics, and an adviser to ReputationInc

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