(Bloomberg Opinion) -- Michel Barnier, the European Union’s top Brexit negotiator, is the Brussels equivalent of a rock star. For three years, the unflappable 68-year-old Frenchman has been hashing out the terms of the U.K.’s departure while making sure the remaining 27 members stick together. He is the real survivor of the Brexit saga.
The fact that Barnier is still in the job is telling: Despite expectations that the Brits would make mincemeat of the perennially squabbling Europeans, it was the EU that stayed united while the U.K. cycled through two prime ministers, three Brexit secretaries and several botched attempts to get a better deal outside the bloc.The hard part is still to come. With the EU set to show the Brits the door — having secured the key goals of settling the U.K.’s financial obligations, avoiding a return to a hard Irish border and protecting citizens’ rights — Barnier and his team now have to negotiate a new deal to cement future trade ties with their troublesome, yet powerful, neighbor. Losing the U.K. is not like losing Liechtenstein: The City of London is Europe’s foremost financial center; the U.K. does around 600 billion pounds’ worth of trade with the rest of the EU each year; and the country accounts for about 40% of the bloc’s military might. There’s an incentive to stay close.The challenge for Barnier is that the U.K. is no longer just a partner but a “competitor on our own doorstep,” as Angela Merkel put it. Inside the EU, the Brits had skin in the game and obligations to fulfill: The free flow of goods and capital, the adoption of tough standards on everything from children’s toys to money laundering, and a common trade policy with 27 other countries. Outside the EU, the Brits will be free — in theory — to set their own rules. What if the Brexiters decide that the best way to replace the loss of frictionless trade with their biggest market is to slash taxes and take a far lighter touch on everything from financial regulation to food standards? Any EU deal would be a backdoor for trade dumping.This is why the main preoccupation for Barnier is going to be about negotiating non-tariff barriers to U.K. trade — rules and regulations — rather than just the tariffs themselves. “Access to our markets will be proportional to the commitments taken to the common rules,” he warned in October. If Boris Johnson wants a zero-quota, zero-tariff trade deal, that means zero divergence from the EU when it comes to the environment, or workers’ rights, or even state aid. This isn’t just a cheap tactic. It’s a reflection of the fact that the EU’s greatest asset is its single market and its ability to export its rules around the world. This so-called “Brussels Effect” would look more like a mirage if the Brexiters got their way.Johnson, who this month secured a big parliamentary majority, won’t make things easy. He has ruled out going beyond a very tight 11-month deadline for the trade talks, no doubt hoping the combination of time pressure on Brussels and the evaporation of anti-Brexit voices in the U.K. parliament will give him leverage. Johnson’s swagger is also tied to Donald Trump’s contempt for the EU and support for a U.S.-U.K. trade deal.But Barnier has cards to play, too. The somber Savoyard, who frequently compares negotiations to mountain hikes, will stick to his patient approach. The likelihood is that, in one year’s time, the U.K. economy will be no less entwined with the EU’s. British financial and legal services exports to the bloc, worth around 60 billion pounds annually, will depend on whether the EU deems regulatory alignment close enough. Cross-border U.K. data flows, chemicals exports, and carmakers’ U.K. supply chains will be similarly vulnerable. And Johnson’s new converts in working-class Labour heartlands are unlikely to accept anyone putting a bonfire to workers’ rights very well. Brexit alone won’t puncture the Brussels Effect.Ultimately it will be Barnier’s ability to keep the peace inside the EU that matters, just as much as Johnson’s bravado. Barnier will regularly tour the member states’ 27 capitals, use transparency as a way to ensure a common line, and update the European Parliament to avoid any last-minute surprises. But it will be a steep climb. Especially as the economic impact will start to bite from the U.S. ratcheting up tariffs on EU goods to extract its own trade concessions; and political divisions between Paris and Berlin are flaring up on a host of issues. Barnier will have to show he can move mountains as well as climb them.
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Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.
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