Brexit's next battle: The trade deal

Brexit's next battle: The trade deal

Britain's Prime Minister Boris Johnson. (Reuters photo)

After the decisive victory of Prime Minister Boris Johnson's Conservatives, Brussels now expects Britain to exit the EU on January 31 as he has promised.

Just hours after his win, EU leaders meeting in Brussels were to discuss their priorities in trade talks after the divorce.

Will Johnson keep his promise to reach a very quick comprehensive deal to preserve cross-Channel trade -- or will he be forced to ask for an extension to the post-Brexit transition period?

Johnson maintains he will strike a new trade deal with the EU by the end of a planned transition period at the end of 2020, and will not take the option of asking Brussels for extra time.

Experts widely agree that it will take far longer to achieve a comprehensive trade deal worthy of a country destined to be one of the EU's closest partners.

Despite Johnson's assurances, trade deals do not just come off the shelf "oven-ready", especially if Britain is looking for a vastly different relationship.

A fast agreement would be "a very big ask" that would limit the ambition of the deal tremendously, Fabian Zuleeg, chief economist at the European Policy Centre, told AFP.

The British government will have to decide by July 1 if it wants to postpone the December 31 2020 deadline.

On that date, it could make a one time only request for either one or two years of extra time.

Without an extension, "maybe they can achieve something very basic that would give the UK very limited leverage on the tricky subjects like services, fisheries or Gibraltar for Spain," Zuleeg said.

As a matter of reference, other EU trade talks have dragged on much longer from the launch of talks to implementation:

Canada deal: 8.5 years

Japan: 6.5 years

Singapore: 9 years

Vietnam: 7 years so far

Mercosur: 20 years so far

"Striking a trade deal by the end of 2020 is enormously ambitious. but we won't achieve it if we don't try," said Irish Prime Minister Leo Varadkar.

To reach the tough deadline, negotiators will have to shown convincing progress by July 1 and leave enough time for translation, legal rewrites -- known as "scrubbing" -- and ratification.

Zuleeg says the UK would have to accept major concessions on the key issues to win the fast deal.

Slashing tariffs will probably be achievable, but that would leave no time for the UK to negotiate on other topics, and Britain would find itself cornered with no choice but to accept EU terms on those.

If Johnson refuses to extend the negotiation period, a no-deal Brexit will loom once again, with Britain in danger of an abrupt cut in trade ties with Europe, rocking its economy.

"The default position once talks start is no-deal and third-country status," said Zuleeg, and that is much more dangerous for the UK, he added.

As a third country, Britain would immediately have trade terms set by the World Trade Organization.

Tariffs on key products would be high, ruining, for example, the business arithmetic for the UK production of cars and other industrial goods that depend on parts from overseas.

Entry points into the UK would be choked up with border guards forced to implement checks and fill out paperwork.

In the draft conclusions of Friday's summit, EU leaders tasked EU negotiator Michel Barnier to draw up a trade deal mandate as soon as possible.

This is necessary because trade policy in the European Union is unified across the soon-to-be 27 member states with deals negotiated by the European Commission, which must first secure a mandate from the capitals.

This will set the EU's vision for the deal as well as delineate red lines for the negotiations.

Opinions and priorities can diverge widely among the member states, with France and Ireland reluctant to give Brussels power to concede ground on farming, for example.

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