UK Prime Minister Boris Johnson. Picture: BLOOMBERG/JASON ALDEN
UK Prime Minister Boris Johnson. Picture: BLOOMBERG/JASON ALDEN

London — Prime Minister Boris Johnson will put the UK on a collision course with the EU on Thursday when he lays out his government’s red lines before talks start on a post-Brexit trade agreement next week.

The EU said on Tuesday that no deal will be possible unless Britain signs up to level playing field provisions meant to ensure it doesn’t gain a competitive advantage by undercutting the bloc’s regulations. But Johnson’s office made it clear that only full independence will do — and insisted the premier would walk away and trade with the UK’s closest markets without a formal deal if necessary.

“At the end of this year, we will regain in full our political and economic independence,” the prime minister’s spokesman James Slack told reporters. The UK wants a free-trade agreement (FTA) similar to the one Canada has with the EU, but he said a looser arrangement such as with Australia — which has no FTA with the bloc — would “be OK as well,” though he conceded there would be “some friction”.

Britain’s position leaves the two sides facing a fundamental clash. For the EU, it’s essential that the UK sign up to European rules on fair competition, and officials in Brussels are likely to regard Johnson’s rejection of this as a betrayal of the pledges he made in the political declaration, the legally non-binding part of last year’s divorce agreement.

The pound fell to the lowest in two weeks against the euro, and was little-changed against the dollar.

Johnson’s government, which will publish its negotiating mandate on Thursday, is expecting tensions with the bloc over competition and state aid rules, according to a UK official. It also expects difficulties over fisheries — a contentious issue that EU chief negotiator Michel Barnier said this week must be resolved before a deal can be struck.

Brexiteers in Johnson’s Conservative Party argued during and after the 2016 Brexit referendum that a trade deal with the EU would be straightforward because both sides start from the same point in terms of rules and regulations. But the picture has changed significantly, especially after Johnson secured a landslide majority in December’s general election.

Red lines

The prime minister’s key priority is to secure complete separation from the EU, ruling out any jurisdiction for the bloc in return for frictionless trade. UK negotiator David Frost said in a speech last week that the democratic consent of the British public could “snap dramatically and finally” if voters are forced to stick to EU regulations after Brexit.

Johnson’s government has made clear it is willing to re-interpret issues the EU regards as already settled, such as the transfer of goods between mainland Britain and Northern Ireland, which will have a special status with a foot in both trade systems.

The UK said it has no intention of building infrastructure at ports to check goods entering Northern Ireland — and therefore the EU’s single market — a position that triggered an instant warning over “backsliding” from European leaders including Irish caretaker prime minister Leo Varadkar.

But Johnson’s team has argued that the EU has backtracked on its own commitments, including the offer of a Canada-style free-trade deal, which London says contains no competition rules of the type the EU is demanding from the UK.

The EU argues in return that a commitment to maintaining a level playing field on trade is necessary because Britain is much closer to the bloc than Canada.

“We have heard Prime Minister Boris Johnson give assurances the UK will never engage in a race to the bottom, that it would not seek to undermine European standards, that the UK would, in fact, maintain higher standards than the EU — and to be frank we are ready to believe this,” Barnier said on Wednesday. “But that means it should not be a problem for the UK to agree on a number of ground rules.”

The gulf between the two sides means they will inevitably talk at cross purposes when negotiations begin Monday — at least until one or both agree to compromise as the clock counts down on the transition period, which is scheduled to end December 31.

Bloomberg