Same old wine in Brexit whine

Editorial | Mary Ma 10 Sep 2020

The pound has dipped on Brexit uncertainty, but there is no sense of panic.

Everyone knows it would be against the interests of both Britain and the European Union to crash the massive trade train.

Even though talks on a post-Brexit trade pact appear to have stalled, the issues are just too minor to bring the deal crashing down.

British Prime Minister Boris Johnson's latest proposal for an internal market bill comes on the back of a hardened stance on the questions of state aid and fishing rights.

Could the proposal, coming at such an advanced stage in negotiations, be a rerun of the endless back-and-forth that characterized the first half of the Brexit talks?

The EU and Britain completed the first part of the negotiations with an agreement that, while Britain officially left the EU on January 31, existing customs arrangements based on EU rules would continue until the end of the year.

Both sides are now desperately trying to work out what to do with each other's goods and services at the border, in addition to the movement of each other's citizens.

Unless an agreement is reached, businesses are predicting chaos once the transition period ends.

It does not make any sense to let the train crash now after every effort has been made to keep it on track for four years.

Britain's chief negotiator David Frost and his EU counterpart Michel Barnier met for many hours in London yesterday to focus on fishing.

The industry is crucial to the EU since so much is at stake for EU fishermen who regularly fish for lucrative catches in British waters.

But this is less of an issue for Britain as fishing is not a significant contributor to its economy. This is despite many wars of words between rival fishermen in the open seas.

In making such a fuss about fishing, Johnson could indeed be taking aim at the issue of state aid. So what, exactly, is state aid - and why is it such a thorny issue?

The Treaty of Rome - which founded the European Economic Community which evolved into the EU - bans member states from subsidizing companies or industries. But it allows exemptions for reasons of economic development.

The British government has been spending less on state aid than its EU peers.

For example, in 2018 Britain spent 0.38 percent of GDP on state aid, compared to 0.79 percent in France and 1.4 percent in Germany.

According to The Guardian, Johnson is keen to have a free hand to support companies - especially technology start-ups - as part of the vision he has for the nation after Brexit. It's a perspective advocated by his chief adviser Dominic Cummings.

If Britain cannot break away from EU's restrictions on state aid, Britain would have its hands tied by European rules - and its ability to rejuvenate industries with technology start-ups would be inhibited.

On the table is a bargain. If the EU gives Britain the freedom on state aid, would Britain give the EU what it wants on fishing? The writing is on the wall.

The Internal Market Bill is designed to show to the EU that Johnson's government is prepared to walk out of the talks.

At the end of the day, it's just old wine in new bottles.

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