EU’s Brexit taskforce leader is still Michel Barnier, at least till his term ends in March 2021. Barnier constantly reminds everyone that he’s a play-it-safe kind of man and that is how he advances in his career. This is why it came as a surprise when Barnier had to appear before the French senate Brexit follow on committee on the 16th of February. This is an important sign of how the Brexit will play out for the French and the senate has formed a senior commission to monitor this so they can implement the next part of negotiations. The 20-strong commission is co-presided by the presidents of the Foreign Affairs, Defence and Armed Services commission (Christian Cambon), the European Affairs commission (Jean-Francois Rapin) and the Economic Affairs commission (Sophie Primas).
Barnier and France both have an interest in Brexit being implemented how and as they see fit, but of course there may be more to it than it seems for this deal to go through. For Michel Barnier who is a former Gaullist Agriculture and Foreign Minister, former President of the Senate Foreign Affairs Commission, may be preparing his candidacy for the French Presidential elections of May 2022. This is seemingly the reason that Barnier wants the Brexit implemented the way he has planned for it as he faced a 14 hour hearing with the commission in regards to this.
Salient points
There is clear concern in France that the UK may distance itself even further from European-integrated defence plans, but more seriously from Paris on foreign policy, defence and security matters. France cherishes the Franco-British Defence and security pacts (Saint Malo and Lancaster House) and would not wish to see them lose their pertinence or value. France is bogged down in the Sahel with over 5,000 troops and would dearly love extra British combat support that she knows will not come from the EU (other than money). Two years ago Macron made a big play of post-Brexit global cooperation with the UK on strategic geopolitical matters. Barnier also suggests that the UK may be attempting to use Defence to leverage concessions elsewhere.
The British media rarely mention that Brexit is also having an impact on French companies and their ability to sell into and buy from the UK in terms of customs clearance. There is French ambiguity here (and in other member states): clear French concern about the UK becoming a Singapore-on-Thames and a desire to see tighter customs inspections (phytol-sanitary), but reluctance when it hurts French companies. The French are worried that Britain may tighten the screw on its customs checks after its self-declared period of grace. The French are also worried by greater competition from other EU member states on more lenient customs checks, notably Belgium and Holland.
It is clear that the Commission is gearing up for fastidious monitoring of the withdrawal agreement and the new commercial and cooperation agreement, hence the setting up of two new services in the commission to oversee that. They clearly feel they have the UK over a barrel with the Northern Ireland Protocol and Barnier insists that it will be monitored very closely and not renegotiated. One senses, however, a real concern on Barnier’s part that Northern Ireland could easily become politicised, even weaponised, against the Commission, as evidenced by the EU’s knee-jerk use of Article 16, which Barnier repeatedly described as ‘an error’, that went against all his work on Northern Ireland. He is at the same time and for the same reason, also sensitive to the issue of the UK’s sovereignty and national borders appearing to be undermined by the Protocol. He corrects Senators who state that the Protocol puts the border between the EU and the UK down the Irish Sea. He protests – too much? – that it does not create a new border, but only customs checks, because, he says, he does not want UK sovereignty to be undermined. Evidently he is wary of lighting the blue torch paper.
Barnier is very proud of his ‘mirror agreement’, whereby renegotiation of fishing (where the EU is dependent on the UK) will be strictly tied to UK/EU energy connectivity (where the UK is dependent on the EU). This he believes will be strong leverage in fishing renegotiation in a few years’ time.
Financial services negotiations underway between UK and EU, scheduled to conclude in March, are going to be fought hard by the Commission. The French in particular want Paris to regain its former pre-Great War status as Europe’s banker. They were pleased to get the European Securities and Markets Authority moved to Paris from London. Previous Senate Commission hearings have underlined their ambition, but are conscious of French impediments: bureaucracy, employment law, hostile and erratic tax environment. Macron and his Finance Minister have attempted to improve that environment by employment legislation and abolishing a very political wealth tax. But given French pandemic finances (over 120% debt to GDP) as the 2022 presidential approach there is already considerable pressure to re-institute the wealth tax and hike others on the corporate sector, not to mention a EU-wide ‘Tobin tax’ on financial transactions.
Barnier’s insistence on learning lessons from why Brexit happened is also a preoccupation of French Senators. There is clear concern that the reasons are not UK specific and could therefore be repeated in another member state. Barnier states as much. This is linked to the question of how well the UK will do outside of the EU. Some French Senators are not persuaded that the UK will do badly. The implication is that if the UK does do well this may compound the EU’s coherence and unity if lessons are not learnt about Brexit.
The Barnier hearing is an important indicator of how strictly the EU will monitor the Brexit agreements, but also where their sensitivities lie. By the same token it reveals French concern about the future relationship with the United Kingdom.
Summary of the hearing
Defence worries
Significantly it was the Gaullist Christian Cambon, chair of the powerful Foreign Affairs and Defence commission, who opened the session to ask if the EU 27 will stay as united from now on as they have done so far. He wanted to know Britain’s frame of mind given their sensitivity over Northern Ireland and their attitude over vaccines. Would relations with London be constructive or ‘combative’, ‘perhaps even vengeful (Revanchard)?’ Cambon asked the question because ‘We hope to pursue Franco-British Defence cooperation with them via Lancaster House. We hope to continue this in the 3 areas it covers: nuclear, operations and capability but we are worried as to Britain’s willingness ‘to stay tied to European Defence’ outside of NATO. This, he added, was all the more the case based on past experience and recent declarations. France, he insisted, should try and keep the UK in ‘the game’. Could Europe, he asked, really only look to build European Defence autonomy with just one of the two major European Defence forces?
Trade worries
Sophie Primas (President, Economic Affairs commission) asked about economic relations and delays at the frontiers, which were hurting French companies. Were these merely teething troubles? She also wanted to be sure that Britain would fully apply the Brexit agreements. She was concerned that the agreements would be scrupulously applied by France and not by the UK. Already, she insisted, a 2019 report showed that the British were not respecting phytol-sanitary rules. Is a Singapore-on-Thames scenario likely? What impact had there already been on the GDP of the EU and France? She asked about rules of origins and how strictly these would be applied. She wanted to know if the friction on vaccines is the sign of a more offensive United Kingdom…
Fishing and ports:
Jean-François Rapin said that he was worried about the application of the agreement and its effects on the French: some fishermen still haven’t been given their permits to fish in UK waters; there was now overfishing in French waters; the severity of the EU measures on British fish and seafood products makes the French worry that Britain will do the same in return to French exports and that British markets will be lost for good. What about the competition between European ports that could lead to some attracting more trade because of softer checks on British goods? What of the plans for Belgian ports to form a Megaports to attract British trade? Could the London/EU tensions over Northern Ireland lead to a state of permanent harassment in relations with the UK that could spill over into other areas such as financial services?
Barnier’s answers
Barnier’s reply opened with the statement that Brexit proves that the ‘EU is not a prison … It’s a divorce that provokes, like all divorces, tension and legal insecurity. We tried to put in certainty.’ But Barnier states twice that what was done by the EU Commission on article 16 in Northern Ireland was ‘une erreur’. But he adds, fortunately it was corrected within three hours. On implementation he said that two new services were being set up in Brussels from 1 March 2021: one to monitor the withdrawal agreement, the second to monitor the new commercial agreement based on the old task force.
Level playing field
The new commercial agreement with the UK had been set up in nine months, a record when compared with agreements with Japan and Canada. He insisted that Brexit was lose-lose for everyone, but that EU exports to the UK were a mere 8% while the UK’s to the EU were 46%. The EU had learnt from the experience and from now on every EU agreement with third countries would be on a level playing field basis, using ‘dissuasive tools’ such as state aid and regulatory divergence conditions. He added that agreements may not always work as one might have hoped, but it was important to check that everything was carried out according to the rules.
Barnier on fishing
Fishing, he admitted, was the most difficult part of the agreement. The UK initially wanted to regain all its fishing rights and could have done so if there had been no agreement. Only 8 member states were directly concerned but the EU 27 acted collectively. He added that the deal was positive for the EU because the EU fishes some 650 million euros annually in UK waters while the UK fishes 850 million in its own waters and 150 million in our waters.
The energy weapon
To get the deal, said Barnier, I introduced the notion of ‘mirror agreements’. The fishing agreement was linked to the question of energy connectivity, because the UK is very dependent on its energy connection with the EU. So when the British insisted on the fishing agreement being renegotiated after 5 years with quotas being adjusted annually, we imposed the mirror arrangement whereby energy connectivity would be treated similarly and with the same timescales. The overall agreement is now done. There will be no renegotiation. It will be applied.
Financial services:
Two things, said Barnier, were kept out of the overall agreement; one the EU wanted to exclude: financial services; the other the UK wanted to exclude: defence and security. We insisted that when it came to negotiating a financial services agreement financial ‘equivalences’ cannot be negotiated. We have given them some ‘equivalence’ in some services, for example, rating agencies. But we can withdraw these concessions when we like because what is at stake is our financial stability. There will be no joint working committees with the UK on financial services application.
Barnier on Defence
The UK refused to incorporate foreign policy, Defence and security, and even cooperation on development aid, which disappointed us. Why did they do that? Perhaps because they wanted to present us as ‘requestors’ (‘demandeurs’), or because foreign policy, Defence, security and cooperation is not a priority for them. If they eventually come round to wishing to discuss this then we are ready to do so e.g. on sanctions, overseas operations, cyber security or the Defence investment fund (fond d’investissement de la défense) which has just been created.
Barnier’s warnings
Barnier insisted that on the overall agreements there must be 3 areas of vigilance
Northern Ireland
Proper application of the treaty to ensure there is no risk of dumping (here local member state parliaments will be asked to monitor and pass on their findings to Brussels). The actual treaty may need some bedding in and adaptation (‘besoin d’adaptation’). But the UK must understand that it cannot mean ‘business as usual’. ‘This is not intended as punishment or revenge’, but the UK must understand, to use a German saying: ‘One cannot go dancing in two marriages simultaneously’ (‘on ne peut pas aller danser dans deux mariages à la fois’). They will have no more pass porting. We are going to control all their products, as they will with ours, when they want to begin doing so. There are no quotas or tariffs but there are non-tariff barriers.
We need to understand why Brexit happened. Why was there a rejection of Brussels? Because in the EU we have poor areas which are suffering in the way that those in Britain have suffered from globalization, where there are fewer public services and this contributed to Brexit. This exists on our s ide too and we need to learn the lessons. What has been essential in all the Brexit negotiations is the unity of the 27. There followed questions to Barnier by Senators from the floor, similarly grouped together.
Financial ‘equivalences’
By March 2021 a financial services agreement will be reached. Two equivalences have already been agreed for the British out of a possible 20. Where are these negotiations up to? Barnier replies that ‘equivalences’ will be given according to our interests and financial stability. The UK, says Barnier, attempted to get round this, notably on the question of portfolio management, which is worth 3,000 billion euros. But the Commission insisted that this would not be in the future agreement and that there would be no co-management of such questions. It is a mechanical result of Brexit. We do have agreements with Japan and the US.
Lessons for the EU
Responding to another question on why Brexit had happened, Barnier was critical of the ultra-liberalism in the EU Commission. It was already exposed in financial services in 2008 and caused damage. This required new laws be put in place to control these excesses in financial services. Then there is the question of excess bureaucracy. There has also been deindustrialization of many industries to the advantage of services. The UK and France went down this route, whereas Germany and Sweden did not. This has led to the deindustrialization of economic sectors, problems with local sourcing as exemplified by poor medicines and vaccine supply. A further cause of Brexit was the weakness of democratic debate within the EU. Lessons must be learned. But Europe must at all costs protect the single market, in relation to China and all comers.
Britain after Brexit
To the question as to whether Britain would perform well after Brexit (in contradistinction to all the catastrophic scenarios presented since 2016, asks Senator Guerini), Barnier turned to a PowerPoint slide which he referred to as an updated Cameron slide (apparently used by David Cameron to show what would happen to Britain by 2050 in the event of Brexit). The slide showed that in terms of GDP the UK would remain a member of the G8 group of nations in 2030 but would not be one in 2050, whereas the EU would be in 3rd place by 2050. Barnier concludes his answer by saying that the EU calculated that Brexit would result in the UK losing 3% GDP over several years and the EU 0.4 %. But Barnier insists that Brexit is a ‘lose-lose’ scenario and nobody should be pleased by it.
No flexibility
Barnier said that the EU needs to cooperate with the UK. We must avoid polemic at all costs and especially worsening relations. But Barnier says we need to be vigilant on the application of the treaty. He says he has heard three UK ministers recently talk of relaxing UK rules on the length of the working week, pesticides and prudential rules in financial services. Nor is the Northern Ireland Protocol negotiable. He was pleased to see Mrs May accept that and was pleased that the new American president was vigilant on this matter.
Barnier says somebody in the room mentioned a joint EU/UK control of frontiers for environmental issues. ‘There is no way that will happen!’ says Barnier. ‘We are not going to put the British in charge of our frontiers.’ Each will have its own customs etc. officers. In response to a question whether the administration in Brussels will do its own study of why Brexit happened, Barnier says yes. He adds that if functionaries take power it is because politicians allow them to do so.
To a question on French sugar exports to UK which will be hit, Barnier says we must not have any illusions, the UK will sign agreements with other states as they are completely independent and will seek to change their food import strategy away from the EU. But on rules of origins the EU can hold them to certain standards. These will be applied rigorously. We will not allow the UK to become an assembly hub for outside states to sell into the EU. When asked whether it would be possible for the EU to reopen negotiations on certain aspects of the agreement, Barnier says no. That would be imprudent. Finally on a question as to whether English should remain a common language of the EU, he says there are still two English speaking countries and therefore English will remain an EU language.
