INSIGHT-Bluff and brinksmanship: How Britain got a Brexit trade deal done

* Conversations characterized by bluff, brinkmanship and suspicion
* The UK is always a reluctant member of the EU
* Economic and strategic consequences that are likely to be felt for years
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By John Chalmers, Elizabeth Piper and Gabriela Baczynska
BRUSSELS / LONDON, December 24th (Reuters). When trade talks with the UK stalled on December 9th, an EU official summed up the mood in Brussels and wrote in a memo: "The British ... take us for a ride, we have to stay firm."
The British Prime Minister Boris Johnson and the President of the European Commission, Ursula von der Leyen, had just met for dinner in the Berlaymont building, the seat of the EU executive branch with 27 nations in Brussels, and could not block the fisheries and competition policy to solve.
Although these and many other differences were resolved on Thursday with a deal to avert a break in a $ 900 billion trading relationship on the edge of the cliff, the pattern of mutual distrust highlighted in the memo seen by Reuters persists.
This distrust is likely to hurt future relations as the UK and EU tackle a huge amount of unfinished business ranging from trade in services to cooperation in criminal matters and security.
"Unfortunately, trust will not come overnight," said a senior EU diplomat from Brussels.
The economic ramifications of Britain's sharp breakout from its historic European allies will be painfully apparent - but the geostrategic ramifications are likely to be even greater.
If one of Europe's major military and economic powers shuns the EU while the bloc seeks to become a coherent counterweight to Russian and Chinese assertiveness, it will diminish Europe's transatlantic community with the United States and Canada.
The UK officially left the EU last January, 47 years after joining and 3 1/2 years after its Brexit referendum, but then entered a transitional period where the rules on trade and travel were frozen until the end of 2020.
EU officials and diplomats described the talks to introduce a trade deal after the transition by January 1, 2021 as a grueling exercise of bluff and brink manners.
On the EU side, the 27 member states remained united under their negotiator, the Frenchman Michel Barnier, a staunch defender of their internal market of 450 million consumers.
The UK side was harder to gauge because it sometimes tried to take advantage of differences between member states and often seemed to be guided by the whims of domestic politics, EU officials said.
For the mass circulation of newspapers at home and the Brexit ideologues in his administration, Johnson's tough line with Brussels on competition rules and EU fishing boats access to British waters was welcomed as a much-needed exercise of sovereignty.
Bad fit?
Britain has always been ambivalent about the project to unite and rebuild Europe from the ashes of World War II.
It joined late in 1973, but its economic liberalism rocked much of continental Europe and it never joined the single currency, the euro, or the Schengen passport-free travel zone.
British Euroscepticism has been fueled for decades by much of its press, whose members - including Johnson, a correspondent for the Daily Telegraph in Brussels (1989-94) - waved the federalist ambitions of the “Eurocrats” and mocked the EU's regulatory zeal.
Johnson once poked fun at rules in an opinion column that he said would prohibit recycling of a tea bag or children under eight from blowing up balloons.
For many Britons, Brexit has an intellectual rationale: The UK should break away from the stagnating EU economies and compete with a project they believe will fail.
However, Britain's restless relationship with the EU was also controversial at home.
Margaret Thatcher's aggression against Brussels led to a coup by the Conservative party that ended her term in 1990. The 2016 Brexit referendum led by one of their successors, David Cameron, resulted in his departure and polarized British society with 52-48% divided voters.
On the other side of the Channel, many have long thought that Britain was a bad fit.
The French war hero Charles de Gaulle twice vetoed his attempts to join what was then the European Economic Community in the 1960s. Five decades later, following the referendum, President Emmanuel Macron was pushing for the UK to leave quickly, fearing that Eurosceptic sentiment could seep across the continent.
Britain's boldest move in trade talks came last summer when an inner circle around Johnson met to find a way out of the impasse. Your solution: trigger a crisis.
In the words of a source close to the group, they decided to "put a gun on the table" by drafting laws that explicitly override parts of the withdrawal agreement, the divorce treaty the UK had already signed with the EU put.
Several British officials told Reuters that the Single Market Act was a shock tactic to counter the EU's efforts to prevent Britain from regaining its "sovereignty" before it finally exits orbit the bloc on January 31.
Brussels was all the more determined to enforce a trade agreement.
Von der Leyen put it this way: "Trust is good, but law is better ... And in light of recent experience, a strong system of governance is crucial to ensure that what has been agreed is actually done."
The strategists behind the move, according to sources, included some who felt Britain had been humiliated in previous talks and were determined not to allow it again.
The British tabloids were outraged in 2019 when Johnson's predecessor Theresa May - another Conservative prime minister who fell victim to the struggle for Europe - sat for hours in front of a summit meeting while, as the Sun newspaper put it, "EU leaders showered on Langoustine and Duckling ".
A PIECE OF CAKE
At a summit in Salzburg a year earlier, chairman Donald Tusk posted a picture of himself at a cake stand next to May on Instagram with the caption: "Maybe a piece of cake? Sorry, no cherries."
The jibe was referring to a May-proposed withdrawal deal plan that the EU had publicly dismissed as cherry picking for the benefits of membership - and Johnson's belief that Britain could do just that, "have its cake and eat it".
"The cake business certainly had an impact," said a UK source. Some considered it tasteless because May is diabetic.
A source involved in the divorce talks last year said that when delegations paused for refreshments, they often sat on opposite sides of the room and stared at each other in silence.
Resentment over UK Single Market Act set the tone for negotiations as the year-end deadline emerged.
A spit broke out on Twitter between British negotiator David Frost and the normally slick Barnier. Both sides discussed fishing rights, ways to resolve future disputes and rules on a level playing field to ensure fair competition, including state aid to businesses.
The UK announced in October that it would abandon negotiations entirely. But they resumed a week later after Brussels acknowledged that both sides had to compromise - a signal London welcomed as evidence that its strategy had worked.
Johnson's December 9 dinner with von der Leyen and the two negotiators - ironically including turbot, a flatfish found in British waters - threw a sharp contrast between the two sides as the previously captured photos went viral.
On one side stood the elegantly dressed German President and French negotiator for the Commission; On the other hand, Johnson in an ill-fitting suit with disheveled hair and his negotiator in a tie that is too short.
A UK source said Johnson made proposals and "really tried to find a way to resolve it" but was blocked and left feeling that "things were very bleak".
Another source close to the conversations said Johnson's friendliness failed to charm the more formal von der Leyen.
"I don't think one would normally invite the other to a dinner party," the source said. "Chalk and Cheese."
The EU memo sent after dinner said London appeared to have tried to stamp out concessions by saying it was ready to leave on January 1 without a deal.
It took another two weeks of negotiations, which continued into the evenings and weekends, to reach an agreement.
An EU diplomat close to the negotiations said the past 4 1/2 years had been an "annoying melodrama" that had compromised goodwill and weakened enthusiasm for further talks.
"The divorce was supposed to be consensual. But our estranged spouse went crazy and it didn't go smoothly," he said. "Either way, we'll still stick together. Loveless."
(Writing by John Chalmers; Editing by Kevin Liffey)

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