EU’s 9 most divisive Brexit trade deal demands – and why they’ll start a fight

Boris Johnson promised Brexit was "done" on January 31.

But today we kick-started 10 months of talks on a trade deal between the UK and Brussels.

And it's clear many of the same Brexit issues will rear their heads – after the EU finally published the first formal statement of what it wants.

Brussels' 46-page "negotiating directives" show we are heading for clashes on hot issues like courts, fishing, state aid rules and the "level playing field".

Britain, meanwhile, publishes its own negotiating mandate on Thursday.

These are only the starting points. If there is a trade deal, both sides will probably meet somewhere in the middle. But if they start too far apart, it'll scupper any hope of an agreement and we'll be left high and dry.

  • UK faces major Brexit row as EU fires starting gun on 10 months of trade talks

These talks are crucial for the future of the UK.

If we don't have a trade deal with the EU by 31 December 2020, transitional rules will expire.

That means it'll be harder to travel, new checks will spring up, and billions of pounds worth of goods will be whacked with major tariffs as they pass through ports like Dover.

Boris Johnson has made clear that, if the EU are too demanding, he'll be prepared to walk away – and hurl Britain into a departure with no trade deal on 1 January 2021.

But even if he does try to get a deal over the line, EU chiefs have warned 10 months simply isn't long enough. He wants a deal similar to Canada's, and that took seven years.

So what exactly are the EU demanding, and what are the sticking points? We've listed the most controversial parts of today's key document below.

1. Fishing

Perhaps the most emotional showdown that is set up by the EU's mandate is the argument over the future of fishing in British waters.

For years Britain's fishing communities have argued that EU rules put them at a disadvantage in their own waters – and for many, it became a leading reason to support Brexit.

Boris Johnson is understood to be prepared to make the issue a key showdown in the talks, and so it seems is the EU.

The UK government say that "British fishing grounds are first and foremost for British boats".

But the EU has said the future deal should "aim to avoid economic dislocation for Union fishermen that have traditionally fished in United Kingdom waters".

It says this means "continued reciprocal access…by Union and United Kingdom vessels to the waters of the Union and the United Kingdom".

And they want the outline of a deal on fisheries done by July this year, setting it up as a key stress point in talks this year.

But for both sides the issue is more about posturing than serious economic advantage, despite their emotionally significant role in politics in Britain, France and Spain. Fishing makes up a tiny proportion of each of their economies.

2. Business competition

The EU's number one priority is the so-called 'level playing field'. Basically it would guarantee in any agreement that the UK couldn't use leaving the EU to undercut its former partners to scoop up business.

In return, it would mean that UK businesses would be given tariff-free access to EU markets.

For the EU, it is about avoiding a competitor just off its coast which tries to make an economic advantage out of ditching its rules to make goods cheaper or less heavily regulated.

In return, they are offering easier access to the EU market which so many British businesses say are essential to their bottom line.

The UK government has increasingly distanced itself from this ambition, with talk of an "Australia-style deal" – which would be the equivalent of making no-deal as the EU and Australia trade on World Trade Organisation rules.

If Britain signed up to the EU's request the implications would be far-reaching, limiting its abilities to strike wide-ranging deals with the rest of the world, including potentially the US.

3. State aid

The EU declared it will push the UK to follow EU rules on the amount of government support that can be given to industries.

The Commission's documents says that the "envisaged partnership should ensure the application of Union State aid rules to and in the United Kingdom".

State aid is a financial assistance given by the government to companies or other organisations.

Under EU rules, member-state governments are allowed to provide state aid only with approval from the European Commission.

It is these rules that mean governments across Europe have been forbidden from giving assistance to their steel industries.

Some Brexiteers hoped that leaving the union would mean the government would be able to break with Europe – and could avoid the future collapse of what is left of Britain's steel industry.

But the EU Commission's negotiating position would try and stop Britain from being able to implement its own state aid rule – fearing they would undercut struggling industries across the continent with taxpayer-funded subsidies.

4. Environment

EU leaders say the UK must uphold all of Brussels' environmental standards that are in force by 31 December 2020.

Britain would also have to commit to the EU's climate change targets "where relevant".

And the UK would need a system of carbon pricing to "cost" pollution that has "at least the same effectiveness and scope" as the EU's. Brussels wants Britain to simply link its emissions trading system to the EU's.

While Britain has been keen to stress it won't back-pedal on environmental targets, tying us to EU rules might prove a sticking point with Boris Johnson if he wants to claim to be leading the world.

On the other hand, some campaigners fear the UK will be under pressure to accept lower standards – as part of trade deals with countries like the US – if there's no legally binding clause in an EU deal.

5. Workers' rights

The document says Britain must not lower any labour or social protection laws below the level of the EU's – as it is on 31 December 2020.

Those include workplace rights; health and safety; consultation rules; and fair conditions.

Although this stops short of "dynamic alignment" – following EU rules as they change – it could be a thorn in the side of Boris Johnson's hope to diverge from Brussels rules.

Although the government has insisted it doesn't want to water down workers' rights, sticking to the EU could in theory stop the UK from forging its own path as easily.

6. Security and police

Britain leaving the EU puts it outside of a number of key police and security agreements – notably, it no longer has a seat in the EU wide policing agency EUROPOL and is working to develop an alternative to the European Arrest Warrant.

British police officers can still use EU systems to check criminal records of foreign nationals, or alerts on wanted people from around the continent.

But without an agreement EU-wide access to that data could be more difficult.

In Brussels and London, both sides are keen to avoid any breakdown in the relationship that crack downs on continent-wide crime such as drug and people trafficking, terrorism and counterfeiting.

The EU's negotiating position says: "The security partnership should provide for close law enforcement and judicial cooperation in relation to the prevention, investigation, detection and prosecution of criminal offences".

7. European courts

For Boris Johnson and a lot of Brexiteers, one of the key red lines in Brexit talks has been removing Britain from the influence of European Courts.

A senior government source said No 10's priority was escaping any oversight from the European Court of Justice (ECJ).

They said: “Our overriding objective in the negotiations is by 1 January to have taken back control and we won’t agree to anything that doesn’t deliver that. Which means no rule-taking from the EU and no role for the European Court of Justice."

But the EU isn't playing ball.

In order to enforce whatever is agreed, the EU and the UK will have to agree to a dispute settlement system.

Probably a body of judges who'll decide if a particular decision falls inside or outside the rules agreed.

The European Commission insists the ECJ must have the final say on any ruling that requires EU law to be interpreted – and that the dispute body must agree to follow whatever decision the court makes.

The document says: "Should a dispute raise a question of interpretation of Union law, which may also be indicated by either Party, the arbitration panel should refer the question to the CJEU as the sole arbiter of Union law, for a binding ruling."

8. Financial services

Britain is a key part of the global financial market, and loadsa money has been made in the City of London by sucking up a lot of EU-wide business.

But for banks and financial service providers, Brexit means this is going to change and the EU's documents give us a little bit of a hint about how.

Last month EU’s chief Brexit negotiator, Michel Barnier, shot down UK hopes of securing a permanent access arrangement for its financial services sector, warning the British not to “kid themselves”.

The EU is keen to take advantage of companies looking to move key parts of their financial services out of the UK.

But in a bid to reduce any financial unrest it has called for "close and appropriately structured voluntary cooperation" on regulation and mutual recognition of one another's products and systems.

9. Gibraltar

The document tries to sidestep a couple of particularly difficult issues for the EU and UK, particularly Gibraltar.

The EU's negotiating mandate recalls a statement made back in 2018, in which the other 27 member states agreed Gibraltar would not be included in any post-Brexit agreement between the UK and the EU.

It means that the future of the Rock won't be covered in the main talks – but will likely have to be resolved by talks between the UK and Spain directly.

As negotiations heat up between Brussels and London, this presents an opportunity for the EU to pile on the pressure by encouraging Spain to be difficult in talks with the UK government.

But Boris Johnson has been pretty robust saying that he would "never, never, never” allow any change to the British sovereignty of Gibraltar.

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