Second wave of Brexit issues on way, says French think-tank expert

Dr Elvire Fabry, senior research fellow at the independent Institut Delors think tank on Europe, is in charge of trade policy and Brexit as well as issues around globalisation and the EU. She told The Connexion UK-EU relations have got off to a rocky start with Brexit, with many aspects still to be ironed out.

“The deal was a good thing in that it gave a framework,” Dr Fabry said. “We avoided the blank page and maximum uncertainty at a time when we really didn’t need that as we were dealing with the pandemic and a profound economic crisis.

“We hadn’t anticipated no-deal could actually happen – things had changed radically between 2016 and January 2021 both in terms of the internal situation of the UK and EU and the international situation, with a complete upheaval of international commerce, a US-China rivalry now firmly established, and a major reflection under way in the different countries, that tends towards a more national approach to the economy and which raises questions on the reorganisation of supply chains and of economic partnerships.

“In this context the deal gives a framework. Though it doesn’t resolve everything, it goes further than we feared three months before because it covers a lot more than a simple free trade agreement.

“Notably it goes quite a long way in clarifying things for citizens’ daily lives, including workers and retirees.

“However what is becoming clear now is that after a few months of application, it is complex to put into practice, and that’s partly due to the deal itself – it’s undeniably a hard Brexit. There’s still a lot to be done and to be dealt with.”

‘Acrimonious’ UK-EU relations are making things harder

Dr Fabry said that confidence has, from the EU side, been much eroded by events this year.

“Brussels and the EU capitals think they’re now going to have to manage this bilateral relationship in a rather acrimonious way. The deal has not led to pacification and cooperation, on the contrary.

“We’re going to have to take time to live with the deal and it risks causing a pile-up of disputes, which is not ideal since many subjects remain to be dealt with because they were left completely out – notably everything to do with security and defence and foreign policy.

“In terms of cooperation with Europol, for notifications about criminals and illegal migrants etc. there is the possibility of agreement on access to European data, but it will be less rapid, less extensive and nothing systematic. So it really puts a brake on this cooperation, which is decisive – and Brexit has not made the problems to be dealt with disappear.”

Success of ‘Global Britain’ model remains to be seen

Dr Fabry said the Johnson government’s aim of a ‘Global Britain’, more turned towards the US and Asian markets, “doesn’t change the fact that you can’t move the island of Britain”.

“Compensating for the restricted access to the European market can’t be easily done with one or two partners. Even a deal with the US – and it remains to be seen how deep it would go – would only represent a fifth or a quarter of commercial volume with the EU. They would need four or five equivalents of the US.

“That doesn’t exist, and as the British economy depends 80% on services and services are even more linked than goods to questions of geographic proximity, it’s an additional challenge for the British economy to manage to accede to far-off markets.

“Services are always the poor relation in commercial agreements: There are a lot of difficulties in opening up markets, a lot of regulatory obstacles.

“And that’s what we are seeing now, with the deal, with British firms that are very exposed to all the complexity of the specific rules of the 27 member states.

“It’s a real nightmare, when you have been used to the simplicity of the single market – to find case by case, many complications and exceptions. This will be part of the ‘second effect of Brexit’, which will accompany the end of the Covid restrictions, with the services markets starting up again, it’s a reality that will become a bit more tangible in the months to come.”

Dr Fabry said it is possible we will see sector by sector deals to simplify things but the current acrimonious atmosphere does not help.

“At the moment there’s no appetite on the side of the Johnson government to add agreements. What was on the agenda was mostly concerned with transfer of data and financial services, but it’s not an agreement, it’s a question of the granting of a principle of equivalence by the European Commission, it’s a unilateral decision.

“The European Parliament recently voted in commission a vote to reject an agreement on transfer of data, which isn’t great.

“They can’t stop the Commission from giving equivalence but it shows there is a strong distrust on the European side.”

Dr Fabry said it had been hoped that these two big topics would be resolved during the spring. There are many other issues to move on to, she said, but there needs to be appetite for it on both sides.

Johnson government is now less focused on Brexit

“The Johnson government is focused on the pandemic and the management of the economic crisis,” she said. “It’s managed to restore its image over vaccinations and is capitalising on it, and people are talking about Brexit less.

“In Europe Brexit is not talked about much at all, the tension is really elsewhere since January and focused on the European agenda. However I was surprised that over the conflicts concerning the Northern Ireland border there was relatively little coverage in the British media.

“That shows a certain Brexit fatigue. The UK government remains discreet around many subjects, notably the support and clarification that should accompany the deal. There are some financial aids but quite a few delays. UK businesses, the CBI and others, have said the government has been slow to help.

“Johnson doesn’t look ready to commit to new negotiations. However what we can hope for – though there is less confidence now on the European side – is that with the ratification of the deal and the putting in place of mixed committees [to oversee it] finally there will be work of cooperation that will get underway at a more technical, less political, level and that will be more favourable towards cooperation. That may depoliticise things a bit and reduce the pressure.

Border checks on goods are causing difficulties

“One crucial area is the checks that should now be put in place on plant and animal health – for export of living animals and food products. The fact that Johnson didn’t seek to put in place a veterinary agreement allowing to simplify them, as exists with Switzerland, because he wanted to keep the possibility of moving away from EU norms on food to negotiate with the US, means he’s facing a lot more pressure from British producers to start discussions on that subject.

“There’s the complexity of the procedures but also problems of delays and costs that cause difficulties for businesses for whom it’s no longer of interest to develop these exchanges.”

Fishing dispute has ‘not helped’ good relations...

The recent dispute over fishing rights around Jersey had not helped matters at all, she added.

“What caused these confrontations was that each fishing boat that continues to have access to the British fishing waters must be accredited and obtain a licence from the British officials and delays in issuing licences showed a certain lack of goodwill in terms of applying the agreement. It means they’ve been in dock for four months and can’t go out and fish.

“And conditions had been added unilaterally, where they had to prove they were already fishing in British waters between 2012-2016 while not all small boats were equipped with GPS that could allow them to show this history. Brussels denounced these delays and extra barriers saying it was not in conformity with the agreement.”

Britain and France depend on each other reciprocally over fishing, she said.

“More than 70% of British fish is sold to Europe and more than 60% of fish imports come from the EU. It’s not the same fish that we fish.

“The Jersey waters are full of fish and are right next to France, so very much fished by French fishermen.

“We see now how it has aroused the historic national feelings on both sides – the fishing sector isn’t very important economically, but there’s an attachment to it. And between France and the UK it reminds people of some bad memories, and gesticulations from war boats on both sides were really not necessary.

“The fishermen are in despair, and the British fishermen, who mostly voted for Brexit, feel cheated because they expected to recuperate much more of the British waters. Johnson started negotiating asking for 80% [of European fishermen’s quota from British waters to be handed to Britain] and in the end it’s less than 25% by 2026 and then there will be a new negotiation – far from what the fishermen hoped.

Feared Brexit ‘domino effect’ did not happen

Dr Fabry said there had been “great fears” on the European side as to a possible “domino effect” from Brexit or that it could cause divisions as each country tried to defend its own bilateral interests with the UK. It had not helped that the UK itself sought to lobby directly in the major capitals.

However the consensus is that EU negotiator Michel Barnier had done a good job in creating cohesion among the Europeans, she said.

“There was lot of work on transparency and on clarifying Europe’s red lines, and there was a sense that the negotiation was in good hands. He used the negotiation to undertake a kind of positive lesson about the reality of the single market and the weight of the EU in international commerce.

“All that at a time when the way of running economies has become much more geopolitical. Now no one is calling to leave the EU. They want to transform it from inside – or in some cases the Europhobes want to block it. We can image that Marine le Pen if she won the elections would seek to block the European machine. But she no longer calls to leave the euro, or the EU.”

EU will be key in French presidential elections

The EU will be an important issue in next year’s presidential elections, Dr Fabry said.

“Emmanuel Macron has especially as President Macron punctuated his presidency with clear pro-EU stances and he has pushed for EU reform, the Covid-19 relaunch plan and the mutualisation of the European debt, and it’s a major step on the German side to have accepted that.

“He pushes hard for a more offensive commercial policy towards China.

“He will have the far left and right opposite him that are both quite anti-European – Mélenchon and Le Pen – and parties that are a bit more wary, like the Socialists and Republicans.”

France would “definitely” continue to play a key role on the European stage in coming years if Mr Macron is re-elected, Dr Fabry said.

There are many areas under reform in the EU, currently, with a “new dynamic” especially with regard to the EU’s commercial role on the world stage, she said.

There is a renewed sense that in a “world of elephants” like China and the US, the EU must be strong and competitive and be tough towards “distortions of competition practised by China and others”.

Germany has notably turned more towards the EU rather than its previous stance of focusing more on its links with the UK and China, she said.

“There is a focus on industrial projects – hydrogen, batteries, the cloud… creating ecosystems in the strategic technologies for the future, that shows there’s really been a turning of the German bosses who have seen that they need to bank on the weight of the single market.”

Dr Fabry said there had been a regain of support for the EU in France, following its relaunch plan for recovering from Covid-19, though the support had fluctuated earlier in the year with “cacophony” over the vaccination issue.

“I think if things are getting better as the summer approaches it will have a positive impact,” she said.

Could EU introduce an immigration ‘points’ system?

Asked if it is possible the EU could one day adopt a unified immigration ‘points’ system, as the UK is putting in place, she said the idea had been “floating around for a while” but there were no concrete plans.

At present there are a few standardised EU rules on immigration, such as specific rights for certain foreign residents after five years, however otherwise it is left to national laws.

“That’s one of the problems of Brexit – the British are now exposed to all the specific requirements for visas and so on.

“The British press have talked about how it’s starting to impact on some service providers, notably musicians wanting to play in the EU. It’s a tragedy. When you are already very successful it’s OK, but if you are starting out it’s complicated.

“It’s also very sad that Erasmus was suspended, and that au pairs can no longer go to the UK because there are about reinforcing cultural and human links. It’s also a tragedy that now EU citizens must pay international rates for UK universities, because already at the national rates they were very high.”

She said it is possible that improved rules for British second home owners to stay longer than 90 in 180 days “could come” eventually, but she doubts there is a will to offer this in the short-term.

“It could come. In certain regions there are British people who have been very integrated for years and who contribute to the local life. There could be a local demand that favours it. But I think that there isn’t a huge appetite to make concessions for now.”

‘Second wave’ of Brexit effects are coming now

She added that once Britons start coming back as Covid rules ease we will also have to see what happens in terms of border checks, including potential VAT on items Britons bring over for their second homes.

“That’s why there is going to be a second wave of Brexit – with the relaunch of the economy. Then a third wave when the UK starts imposing import checks (in 2022).

“We see already that people are starting to avoid ordering from the UK and I hear talk about the impact on small companies, that are feeling exhausted from the additional costs.

“We’ve focused on customs fees, but that’s not the biggest barrier, it’s above all all the checks and certificates that are needed, the delays, and the rules of origin – which were never mentioned during the negotiation.

“They mean mean if goods weren’t made to the correct percentage in the UK [or EU] then it’s prohibitive for firms that were used to just working in the single market.

“The small businesses were already struggling with the economic situation, and didn’t have time to prepare.”

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