The reality of trade will intrude on EU politics
Reporting on complex and highly political negotiations in real-time presents a number of challenges ..
Reporting on complex and highly political negotiations in real-time presents a number of challenges to pundits, observers and reporters alike.
When each side is engaged in strategic briefing and leaking, to whom do you give more weight? Which side do you believe? If, as has happened this week, unnamed officials in the European Commission let it be known that the EU will not approve a trade deal that covers financial services, should the news be treated as a definitive statement about an inevitable end-state – or as a tactic deployed as part of a live negotiation? We would suggest the latter is a more reasonable interpretation. After all, to quote the Brexit secretary, nothing is agreed until everything is agreed.
This is not to dismiss the challenges involved with successfully negotiating a trade deal that covers financial and professional services, but it is the stated objective of the British government to secure such a deal and it remains entirely in the EU’s interest for this to happen.
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Data released yesterday by the Office for National Statistics revealed a significant spike in UK-EU services trade in 2016, to record levels. Imports of services from the EU to the UK shot up, as did exports of UK services to the EU.
Given this backdrop, the briefings from EU officials yesterday that there’s “no way they’ll do a deal covering services” sounded particularly out of tune with reality. European businesses currently raising capital in London, drawing on the expertise of its legal services or relying on its market infrastructure may well wonder on whose behalf these EU officials are speaking.
Read more: EU is fastest-growing services trade partner for UK ahead of Brexit
We should not be surprised that the European Commission sticks to its line that financial services will fall outside the scope of any trade deal, but we shouldn’t treat such rhetoric as a benign statement of fact, either. It is a negotiating position, and one that will be sorely tested by the interests of EU member states and their constituent economies in the coming months.
On the UK side, a huge amount of work has been devoted to offering solutions that would allow for continued trade in services, to the benefit of both sides.
There will come a time when EU officials recognise this, and their language, in private at least, may begin to soften.
