Brexit ‘evolution clause’ is biggest issue to be resolved, says Merkel

source https://www.theguardian.com/politics/2020/dec/09/brexit-evolution-clause-is-biggest-issue-to-be-resolved-says-merkel

Angela Merkel has said the major obstacle to a Brexit deal is not access to British fishing waters but future regulatory standards in the UK, adding that she expects the talks to continue for days to come.

Boris Johnson and the European commission president, Ursula von der Leyen, are due to have dinner together in Brussels at 7pm GMT. Merkel said she did not expect a deal to be in place before an EU summit on Thursday but that hope remained.

Should the meal in the European commission’s Berlaymont headquarters be a success, negotiators on both sides expect to resume talks on Friday, and leaders will merely be updated on progress when they meet in Brussels.

Speaking in the Bundestag in her traditional address before a summit of the EU’s 27 heads of state and government, Merkel said there remained a chance of a deal. She said: “I don’t think we will know by tomorrow if this will happen or not – at least I can’t promise this, but we are still working on it.

“But we are also prepared for conditions we cannot accept. So if there are conditions coming from the British side which we cannot accept then we will go on our own way without an exit agreement. Because one thing is certain: the integrity of the single market has to be maintained.”

Merkel said the main stumbling block in the negotiations in Brussels was the EU’s request for an “evolution clause”, or “ratchet clause” as Downing Street has described it. Such a clause would establish a mechanism to ensure that as one side raises their environmental, labour and social standards, the other is not able to sit tight and enjoy a competitive advantage.

The UK’s chief negotiator, David Frost, has agreed to non-regression from a common baseline of standards at the end of the transition period, but Brussels is concerned that these will soon become obsolete as the bloc develops its rulebook.

The EU negotiators want a forum for discussion when the current minimum standards become outdated owing to developments on one side. There would then be arbitration and the potential for one side to hit back with tariffs or other corrective measures if the other drags its feet on agreeing a new “level playing field” of minimum standards.

Downing Street fears this will mean an alignment of standards via the backdoor, and is pushing back at anything that will cramp policymaking in Westminster.

Merkel said: “There are a number of complicated questions, which mostly are down to how to deal with the dynamic. We currently more or less have the same legal system, a harmonised legal system, but over the years the legal systems will diverge regarding environment law, labour law, health legislation, everywhere.

“And how will the respective other side react to this, when the legal situation either in the European Union or in Great Britain will change? And we can’t just say we won’t talk about this, but we not only need a level playing field for today but also for days to come. For this we need to find agreements about how each side can react when the other changes their legal situation. Otherwise there will be unfair competition conditions, which we can’t do to our companies.

“This is the big, difficult issue which is still on the table, next to questions about fishing quotas and similar things. But this issue of fair competition between two diverging legal systems – this is the actual big issue for which we need satisfying solutions.”

Leo Varadkar, Ireland’s deputy prime minister, who as taoiseach in 2019 worked with Johnson to find a compromise on the Irish border before ratification of the withdrawal agreement, said he believed Johnson would seek to find another compromise. He said there was a 50% chance of a successful outcome.

Varadkar said: “Both sides have more to gain, and certainly more to salvage from an agreement over the next few days than we have to lose. Ultimately, it takes a little bit of politics at the end, and both sides to move a little bit at the end but I think that is possible.

“Is Boris Johnson willing to make concessions in those areas? I think he probably is. I think his natural instincts are actually much closer to the more liberal London mayor that he was than the more conservative Brexiteer. I think he wants Britain to be part of the world. I think he wants Britain to be seen as a country that is a first actor, one with high standards.

“However, he will be very strong on the sovereignty point and I think any set of common minimum standards, any set of level playing field rules, would have to be ones that the UK wouldn’t feel are imposed on them. And that’s, I think, where the sovereignty piece comes in, and that will be a circle that’s going to be hard to square.”

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