Gregor Kleinknecht – Rocky Road

Rocky Road is a popular type of candy containing lumps of chocolate, marshmallows and nuts. It is also what the UK can expect to lie ahead in the months and years following Brexit, as it endeavours to forge new relationships with the EU and trading partners around the world. The December elections have come and gone and, yes, much to Europe’s surprise, the English (if not necessarily the British and Northern Irish) electorate really did want Brexit. As the election results filtered through, and the scale of the Tory party triumph became clear, Der Spiegel, Germany’s weekly news magazine, concluded with some consternation that the geese really did vote for Christmas (that is because the Germans eat goose rather than turkey for Christmas, to stick with the food theme for a moment).

The election has put paid to the second referendum that many had been calling for and the result has allowed the government to finally push through its Brexit legislation unimpeded; at the time of writing, the European Union (Withdrawal Agreement) Bill has completed its passage through the House of Commons. It is now, for a change, safe to assume that, this time around, Brexit will really happen on 31 January 2020. Both the UK and Europe will be the poorer for it. Quite literally: Bloomberg estimates that Brexit has cost the UK economy 130 billion pounds since the 2016 referendum and, if nothing else, the EU will have to do without the UK’s financial net contribution once the divorce bill has been paid.

The good news is that a no-deal Brexit has been averted and that at least the leaving bit of Brexit will happen pursuant to agreed terms and with an (albeit fairly short) transition period to 31 December 2020. ‘Get Brexit Done’ clearly was a winning slogan but (true to form) misled the public as to the scale of the task ahead: namely, that of defining the future relationship between the UK and EU (and, in parallel, the terms of a much touted free trade deal with Trump America).

There is a healthy dose of scepticism in Europe as to whether an “ambitious new trade deal” can really be done by the end of the transition period, as the government claims. Although this would be in both sides’ interests, what it will likely require is that some areas of trade will have to be prioritised and others will have to be left out of the initial talks. The trade in goods appears to be top of the agenda for both parties but the prime minister has barely mentioned the trade in services in recent months, perhaps a surprising omission, given that services make up 80 per cent of the UK economy. How those trade negotiations are going to develop will depend to a significant extent on how closely the UK will remain aligned with the EU on matters such as environmental and employment standards. The prime minister has already poured cold water on expectations in this regard by declaring that he will be seeking a more loose relationship with Europe. At the same time, Donald Trump will no doubt try his best to bully the UK into aligning as closely as possible with the US on trade and foreign policy. UK trade negotiators will have their work cut out to balance the competing EU and US demands.

Let’s see whether the rocky road leads to a fudged deal in 11 months’ time that allows both the UK and the EU to claim that they got what they set out to achieve while still allowing talks on unresolved aspects of the future relationship to carry on into next year and beyond without the UK defaulting to WTO terms for some of its trade with the EU.

Gregor Kleinknecht LLM MCIArb is a German Rechtsanwalt and English solicitor, and a partner at Hunters, a leading law firm in Central London. Hunters Law LLP, 9 New Square, Lincoln’s Inn, London WC2A 3QN

E-mail: gregor.kleinknecht@hunterslaw.com
Web: www.hunterslaw.com

Disclaimer: The views and opinions expressed in this column are those of the author and do not necessarily reflect the official policy or position of Discover Germany, Switzerland & Austria.