Brexit Negotiations Rev Up, but Uncertainty Prevails

The British Parliament and Big Ben.

CASTELBUONO, Sicily (CN) — With seven months to go before Great Britain leaves the European Union, negotiations between British and European officials are ratcheting up to smooth the transition, but an outcome is still far from clear.

In recent weeks, British media reports have been full of panic — over possible food and medicine shortages, blocked borders, disrupted trade and travel, broken communication between police forces — as the prospect seemed to grow that Britain might crash out of the EU next March without a grand withdrawal agreement outlining commercial, military, legal and political relationships.

Those fears were heightened by the British government’s own efforts last week to urge its citizens to prepare for a no-deal scenario. British Chancellor Philip Hammond, warned that leaving the EU without a deal could throttle the nation’s gross domestic product by 8.8 percent and force the government to borrow heavily in years to come.

This week, British Prime Minister Theresa May heightened concerns that a no-deal scenario might happen. En route to a three-day Africa trip, in part to secure trade agreements for a Britain independent of Europe, she said a no-deal “wouldn’t be the end of the world.”

On Wednesday the panic was quelled a bit after Michel Barnier, the EU’s Brexit negotiator, told reporters in Berlin that the EU was prepared “to offer Britain a partnership such as there never has been with any third country,” according to Reuters.

Presumably, under this scenario, the EU would give Britain more flexibility than Norway enjoys in its economic arrangement with the EU. Norway is not a member of the EU but adheres to the bloc’s market standards on everything but agriculture and fisheries.

That comment by Barnier lifted the pound sterling, Britain’s currency, in early trading Thursday and his comments were trumpeted by British newspapers. The Daily Mail called it a long-overdue “Brexit breakthrough.”

The Times, meanwhile, reported Thursday that French President Emmanuel Macron was softening his views on Britain’s exit proposals. The newspaper reported, citing diplomatic sources, that Macron would urge other European leaders to maintain close ties to Britain at a meeting in September.

On mainland Europe, though, news reports Thursday were less optimistic about a deal — and Barnier, the EU Brexit negotiator, helped foster those assessments. In an interview on German radio Thursday, Barnier said the EU must be prepared for a no-deal Brexit.

This caused the pound sterling to sink anew.

Barnier said again that the EU was willing to offer an unprecedented deal to Britain, but not “at the expense of what we are.”

There are a lot of sticking points. For one, Britain has said it does not want to allow the free movement of people, a position the EU has rejected. A major point of contention is how to handle the open border between Ireland, an EU member, and Northern Ireland and avoid setting up border controls again.

In terms of trade, the Tory government under May has proposed maintaining EU market standards to allow for frictionless trade.

But this outraged members of her party, and in July led to the resignations of prominent hard-line pro-Brexit members, including Boris Johnson, the foreign secretary. British media report that he may be seeking to oust May as Tory leader.

In Britain, there is deep division between those who, like Johnson, want even more freedom from EU laws and policies and those who want to remain part of the EU or maintain very close economic ties. There have even been calls for a new referendum.

The EU and Britain hoped to have a potential deal ready for an Oct. 18 EU summit, but news reports this week said negotiators are not optimistic to meet that deadline.

Uncertainties over Brexit continue to play out in more pragmatic ways, too.

On Thursday, the Nikkei newspaper reported that Panasonic, the Japanese electronics giant, will move its European headquarters from London to Amsterdam to avoid potential tax problems.

Ironically, Panasonic is worried that if Britain leaves the EU and lowers corporate tax rates too much, as it has suggested it will do to lure companies, then Britain might be designated a tax haven, and that could lead companies to be hit with paying back taxes in their home countries, Nikkei reported.

The politics of Brexit also were playing out in the Seine Bay of the English Channel on Tuesday, when British and French fishermen clashed over rights to rich fishing grounds for scallops off the coast of France.

It’s a clash that has been going on for years — with French upset that British fishermen can operate during the summer months when French laws prohibit them to do so — but this clash took on new meaning under the Brexit context. British fishermen voted heavily in favor of leaving the EU in June 2016, with the hope of “reclaiming” Britain’s waters and fisheries.

“The Seine Bay war is a storm warning,” an opinion piece in The Guardian newspaper said. “It shows what may happen on a wider scale if a hard Brexit removes all common rules for management of fisheries in European seas.”

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