Brexit negotiators try to pick up pieces as talks resume

The EU and UK will return to the Brexit fray on Wednesday to figure out how to salvage negotiations on London’s future relationship with the Brussels in the face of disruption caused by the coronavirus pandemic.

Michel Barnier and David Frost, the two chief negotiators, will have their first official contact since Mr Barnier, leading the EU team, announced on March 19 that he had tested positive for Covid-19. Mr Frost, his UK counterpart, went into self-isolation soon afterwards after displaying symptoms. 

The goal of the call will be to fix dates for rounds of virtual negotiations on the future partnership.

By this stage, three full negotiating rounds were supposed to have been completed. Instead, with much of Europe in lockdown to slow the spread of the deadly virus, contact between the two sides has been limited to seeking clarifications about each other’s proposals.

Wednesday’s phone call will not address the elephant in the room: the possibility of extending Britain’s post-Brexit transition period beyond the end of this year. 

Despite growing pressure on the UK government to request an extension, ministers insist Britain will not countenance a further delay to the Brexit process.

Why is an extension relevant?

Britain’s exit treaty, which was agreed by Prime Minister Boris Johnson and EU leaders last year, includes the option to extend the transition period for up to two years — keeping the UK in the EU single market and customs union until the end of 2022. 

Mr Johnson has been adamant that he would never use it — going so far as to write the end date for the transition period, December 31, into law. 

But his strategy was based on the EU and UK holding intensive negotiations to hammer out a new trade agreement that would cushion the blow of leaving the EU’s orbit. Those talks have been fundamentally disrupted by the virus. 

At the same time, Mr Johnson’s vision of a future EU-UK relationship based around a trade deal would create a hard regulatory border between Britain and the EU, requiring businesses to adapt to customs procedures and regulatory checks.

The UK has argued that this is a price worth paying to secure an independent trade policy. But the government will have to decide if that logic holds up given the heavy damage that the lockdown has inflicted on the private sector. 

Why is there any urgency to address the issue?

Britain’s exit treaty — known as the withdrawal agreement — specifies that any extension must be negotiated and approved by the end of June. But this cannot be done overnight. 

Britain and the EU would need to negotiate a “financial contribution” that would be paid by the UK in return for continued access. 

The EU would also need to go through its own internal procedures, including getting formal approval from the Council of the EU, the institution that brings together national governments. 

The final extension decision would be taken by the EU-UK “joint committee” that oversees the withdrawal agreement. EU officials estimate that the process could be wrapped up in two weeks. This means that there is still plenty of time, but the clock is ticking. 

How long would the extension last?

It could be much shorter than two years. There is no minimum time limit specified in Britain’s Brexit treaty, so the UK government could request as little as several months if it wanted — just enough to make up for whatever negotiating time is lost to coronavirus. 

But once the new end date is set, the transition period cannot be further prolonged. Britain’s Brexit deal does not allow for repeated extensions.

Would everything stay the same as now?

No. At the moment, Britain is effectively still an EU member state, just without any representation in the bloc’s institutions and agencies, and without any voting rights. 

But that would change with the start of the EU’s next seven-year budget cycle at the beginning of 2021. Britain would not be covered by that new budget and so would automatically be outside programmes that it finances, even with an extension. 

That means, for example, that the UK would no longer be covered by the Common Agricultural Policy (CAP) or the next round of EU regional aid funds. 

It would become what is known in EU jargon as a “third country”. It would only be able to buy its way back into programmes — such as the Horizon Europe programme for science and research co-operation — that are open to other non-EU countries. 

The core benefit of an extension would be that it would keep Britain within the single market and customs union.

How would the financial contribution be calculated?

Britain’s exit treaty says nothing about any methodology for calculating what it would have to pay. It is left up to negotiation. 

Other countries, such as Norway, also pay to access the single market, but there is no real precedent for Britain’s situation as a departing member state. 

EU diplomats said the starting point for Brussels would be to look at how much Britain was paying into the EU budget as a member state and then take into account that the UK would henceforth be outside many EU budgetary programmes, and so no longer benefiting from them. 

According to estimates by the House of Commons library, Britain’s net contribution to the EU budget (the amount it paid minus what it got back in receipts from the CAP and other EU programmes) was, on average, about £7.9bn per year between 2013 and 2017.

But what Britain would pay would ultimately depend on which programmes it joined and on the length of the extension it wanted. 

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