EU micro-aggressions: should Britain stoop to retaliate?

The EU is about to take legal action against the UK. Can the post-Brexit “special relationship” with Brussels be repaired?

João Vale de Almeida was in a forthcoming and friendly mood this Thursday morning in his first group Zoom call with Westminster lobby correspondents. It is a fair summary to say that he was – suitably – diplomatic. He spoke of a “special relationship” between the UK and the EU and of the need to avoid “point scoring.”  He also described himself as the EU’s ambassador to the UK, although Whitehall is still considering exactly how to style him. That is one needless point scoring spat where the concession of a courtesy title would surely satisfy both sides’ honour.

If only style was the main bone of contention. For, as the Portuguese diplomat (who was previously the EU’s ambassador to the United States and thereafter the United Nations) could not hide, there are issues of substance causing friction between Britain’s and Brussels’s shifting tectonic plates.

This friction is within days of getting considerably worse. There is nothing confected about the annoyance Brussels feels about the announcement by the Cabinet Office minister, Lord Frost, that the UK is unilaterally extending the regulatory grace periods on mainland British to Northern Irish trade until October. These are “temporary technical steps” claims Whitehall designed to find time for a binding agreement to overcome difficulties. The EU considers it otherwise, as a breach of the Northern Ireland Protocol and thus of international law. Its legal action is imminent.

From Brussels’s perspective, David Frost’s decision is egregiously insolent. Extensions of grace periods require both sides’ agreement through the Joint Committee procedure. If this is how London behaves, then what hope is there to treat fairly with perfidious Albion?

It is a perspective that would, of course, have greater moral weight had not the EU itself breached the procedures of that same Protocol when in January it unilaterally triggering Article 16 without first going through the established joint consultative mechanism, in its panic to prevent Covid vaccines crossing the Irish border. Brussels quickly recanted after an outcry from Dublin, but not before it had created a precedent that Frost has now followed.

As a clearly exasperated Brussels sees it, if the UK had no intention of adhering to the Protocol, which creates a regulatory border between mainland Britain and Northern Ireland, why did it sign-up to it?

The honest answer is that at the time the deal was agreed, Boris Johnson was in a tight-spot and, in a hung and fractious parliament, grasped the stinging nettle proffered in order to pave the way for a deliverable Brexit. It was the real politik of the moment – and one that will deliver a grievous economic severance between two constituent parts of the UK unless the grace periods are extended permanently (with the EU would not accept).

The economic consequences for Northern Ireland of the Protocol is reason enough to change its provisions. No less compelling is the political rationale to do so – given that in splitting the Unionist vote it risks making Sinn Fein the largest party at Stormont after the elections in May next year and that it has already provoked the main Loyalist paramilitaries into withdrawing support for the Good Friday Agreement.  An open border between Northern Ireland and the Republic of Ireland was supposedly an imperative to maintain the peace process. The reality is that it is the Protocol as devised that now risks peace – but from Loyalist rather than Republican anger.

Loyalist concerns have as little purchasing power in Brussels as they do in Washington DC. Brussels is not going to take ownership of the Protocol’s consequences on that community. It has been very clear that it has no appetite whatsoever to renegotiate the Protocol. Doing so would involve all 27 member states renegotiating a key part of the Brexit relationship when they thought they were finally well shot of the whole tiresome palaver (and before the EU-UK trade and cooperation agreement has even completed its convoluted process into EU law). Frost’s unilateral actions are the despairing action of a Whitehall short of more comprehensive solutions to a problem that the EU regards as Britain’s mess.

The polite and friendly language deployed by João Vale de Almeida cannot disguise that the immediate future of EU-UK relations is one of continual micro-aggressions.

it is the Protocol that now risks peace – but from Loyalist rather than Republican anger

Some of these have been needless and vulgar. Brussels is irritated that the failings of its Covid vaccine joint procurement scheme have been exacerbated by supply problems and contractual obligations which have seen far more vaccines manufactured in the EU going to the UK than vice versa. But for Charles Michel, the European Council’s president, to make the verifiably false assertion that the UK had blocked vaccine exports to the EU was unbecoming of the Belgian politician. His exact claim was “The facts do not lie. The United Kingdom and the United States have imposed an outright ban on the export of vaccines or vaccine components produced on their territory.” In this instance, Michel’s facts are a lie.

Indeed, the micro aggressions are multiplying. The EU’s effective prohibition of British shellfish is protectionism of the most brazen kind. As yet, London has not stooped to retaliate.

Charles Michel’s facts are a lie

Greater inconvenience is on its way. From 21 April, the EU’s new regulation 2020/2235 on composite foods (when a foodstuff has more than one food product in it – like a pizza, prepared sauces or a box of chocolates) containing meat or pasteurised milk will require an export health certificate approved by a vet whilst other such foods will need to provide paperwork on where each component comes from. Vets will need to be on near permanent call to major food manufacturers who export to the Single Market.

Regulation 2020/2235 is precisely the sort of regulation that Remainers point to as proof of Brexit’s self-inflicted damage as it would not apply to British producers if the UK was still in the EU. Equally it is evidence of the enterprise-destroying regulatory imperium that Eurosceptics have long identified as the cancer at the heart of the European project. Either way, it is not designed to facilitate the commercial fraternity of Britain and Europe.

Then there is the macro aggression on financial services. The UK has given the EU wide-ranging equivalence rights. In this way, London has deemed the financial rules in Europe to be sufficiently equivalent to its own so that European financial service providers continue to enjoy preferable market access and operational rights in the UK. Brussels has not reciprocated, except temporarily in the strictly limited areas of derivatives clearing and the settling of Irish securities – where, Europe is so heavily dependent on the City of London that a hasty unwinding would have catastrophic consequences.

Supposedly, a memorandum of understanding on the future financial services relationship will be concluded by the end of March. But nothing the EU’s financial services commissioner, Mairead McGuinness, has said in recent months offers hope for a broad-ranging agreement, unless the UK commits to a relationship that would effectively bind it closely or entirely to EU regulations.

There was a time when subservience of this kind was deemed a price worth paying. But the reality of Brexit having happened without a meltdown ensuing is stiffening London’s resolve. As the Bank of England’s governor, Andrew Bailey, told the Treasury select committee in January, “I would strongly recommend that we do not become a rule-taker. I think that is a very bad place to end up.”

There is debate about how significant an issue the possible breakdown of equivalence talks may prove. They are permissions that can be removed at short notice, thereby creating a permanent state of uncertainty about their future that limits the value they would otherwise offer. In any event, they will not include retail banks and reinsurance. What is the worth of an agreement that is always at risk of being revoked in the event of the smallest infraction? “I think what London needs to be focused on is not Frankfurt or Paris” foresees Barclays’ CEO, Jes Staley, but rather it “needs to be focused on New York and Singapore.”

The promise of the “special relationship” of which João Vale de Almeida speaks is based upon an aspiration that – to quote Daniel Hannan – in losing a bad tenant the EU has gained a good friend. The mutual benefit of such an outcome should be obvious.

Yet, if the first three months of this year are an indication, there is a danger that a continual process of micro aggressions, none conclusive in themselves, cumulatively conspire to convince businesses, as much as politicians, that the effort is no longer worth the bother, and that there are easier relationships to foster further afield.

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