EU Preparing to Give UK Worse Trade Deal than Canada, Japan: Report

European Commission President Ursula von der Leyen delivers a keynote speech at the London School of Economics in London on January 8, 2020. - The EU's top official on Wednesday predicted "tough talks" with Britain on the sides' future relations after Brexit enters force after years of delays at the …
ADRIAN DENNIS/AFP via Getty Images

The European Union is reportedly planning to offer the UK a trade deal with worse terms than it signed with countries such as Japan or Canada.

The Telegraph reports that it has seen an account from a meeting at the European Commission on January 10th, during which the EU’s executive arm told member-states that it would deny an agreement on standards recognition for British goods.

Mutual Recognition Agreements (MRAs) confer goods with certification to EU standards and allow the easy flow of products into the bloc. It was reportedly discussed with EU leaders that MRAs may be withheld to stop the UK from retaining access to the Single Market while the country seeks to diverge in other areas in order to become globally competitive post-transition period. The move would hit, in particular, the automotive and pharmaceutical industries.

The newspaper confirmed the report with two EU sources, with one saying: “Why would we rush into providing the UK a competitive edge to have the UK as an authorised testing lab on our shores?”

France, Germany, and EU bureaucrats have told the UK that the price of a trade deal with the bloc comes at retaining regulatory alignment to stop the UK becoming, in the words of France’s Europe minister Amelie de Montchalin, “a tax haven at the gates of Europe”.

Last week, Ireland’s prime minister Leo Varadkar said that it was “on team EU” and backed the bloc’s demands for the UK to abide by “level playing field” regulations. During a Downing Street meeting between Prime Minister Boris Johnson and the European Commission president, Ursula von der Leyen said the UK would have to make “tradeoffs” to secure a deal, signalling the UK would having to choice between, effectively, staying part of the EU’s trade institutions or opening up trade links to the wider world.

“Without free movement of people, you can’t have free movement of goods, capital, services. Without a level playing field, you cannot have the highest quality access to the world’s largest single market,” Mrs von der Leyen said.

Brussels also reportedly wants to be able to impose a fine should the UK breach terms of a future trade agreement, while the EU’s chief Brexit negotiator Michel Barnier has said that the European Parliament could hold up a trade deal unless the EU-27 is satisfied that the rights of European nationals living in the UK are guaranteed to Brussels’ standards.

Despite the EU’s threats, there remains a world of other countries with which the UK can sign better trade deals. In order to redress the perceived hold that the EU has over the UK in trade negotiations, Cabinet ministers and the U.S. ambassador to the UK have urged Prime Minister Boris Johnson to remind Brussels of that fact by making headway on trade deals with other countries, such as the United States.

Reports emerged on Friday that civil servants were looking at the pros and cons of prioritising a U.S. trade deal over one with the EU, while on the weekend, Boris Johnson was said to have agreed on plans to go “hell for leather” for an American trade deal, with 70 Whitehall staff on hand to work on the negotiations. There are also reportedly smaller teams of 20 to 40 working on Japanese, New Zealand, and Australian trade deals.

The plans could result in accelerated talks outside of the EU that would yield deals on items that would put pressure on the bloc to act in a more competitive manner rather than maintain its assumed position as a regional monopoly. One government source gave an example, saying: “If we can do a deal on beef with the US, that is beef we don’t need to buy from Ireland, which means we have some leverage with the EU.”

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