01 March 2018

Speech by Michel Barnier at BusinessEurope Day 2018

The top EU Brexit broker said that "the UK is closing the doors on itself, one by one, and the only possible model that remains is that of a free trade agreement," outlined the options left for an FTA with the UK, and reminded Britain that "the future of our Union is more important than Brexit."

[...]My aim today is not to speculate on or prejudge the Prime Minister's proposals.

I simply want to repeat that any vision of the future must take into account the fact that the EU cannot and will not compromise on its founding principles.

We have learnt that the United Kingdom wants to leave the Single Market and the Customs Union. And it also wants to leave our common supervision and enforcement structures.

So, as this slide shows, the UK is closing the doors on itself, one by one, and the only possible model that remains is that of a free trade agreement.

It should be our common goal to make such a free trade agreement ambitious.

All of the models remain available, as long as the UK is willing to accept the balance between rights and obligations.

We need to tell the truth. That means making a number of difficult but necessary choices. Let me mention three of these choices.

I – Does the UK want to regain full decision-making autonomy or does it want to retain the advantages of the Single Market?

So far, we have learnt that the UK wants to regain its decision-making autonomy. We respect this, as the UK should respect our own decision-making autonomy.

This inevitably entails a series of consequences.

The UK Government wants to end the free movement of people, which is indivisible from the other freedoms, such as the free movement of goods and services.

It has, therefore, indicated its intention to leave the Single Market.

[...] The transfer of personal data to the UK will only be possible if the UK provides adequate safeguards. One example to ensure that adequate safeguards are in place is an "EU adequacy decision". This is an autonomous EU decision. There can be no system of "mutual recognition" of standards when it comes to the exchange and protection of such data.

In the Single Market, we have a modern and very detailed regulatory framework that allows for the "free movement" of personal data.

The same rule goes for standards underpinning free movement of products and services.

In the absence of a common discipline, in the absence of EU law that can override national law, in the absence of common supervision and a common court, there can be no mutual recognition of standards.

The Single Market allows for fluid economic exchanges because it is a living system that we adapt permanently.

Ladies and gentlemen, the second difficult choice is linked to the ability to negotiate free trade agreements.

II – Does the UK want to have complete freedom to decide its trade policy, or does it want to continue to benefit from a comprehensive Customs Union?

The UK Government wishes to regain its autonomy in terms of negotiating international agreements. It has indicated its intention to leave the Customs Union.

This choice has consequences.

Being outside of the Customs Union always involves customs procedures and checks, for example to ensure compliance with preferential rules of origin.

Now, as I said, it is always possible to choose a more ambitious model and stay in a customs union with the European Union. But this would imply a balance of rights and obligations.

You can always go up and down the stairs.

In a customs union, the UK would apply the same external tariffs as the EU.

This would involve fewer border controls between the UK and the EU than outside of a customs union.

For example, we would not have to check the rules of origin between us.

But it should be well understood that – even in a customs union – a country which is outside of the Single Market always faces border checks to ensure compliance with European standards. This is the case for instance with Turkey.

As President Donald Tusk clearly said this morning, only the combination of the internal market and the customs union makes frictionless trade possible.

Lastly, Ladies and Gentleman, there is a third choice that will shape our future economic relationship.

III – Does the UK want to move away from or stay close to the European regulatory model?

This is an important choice. Underlying the European regulatory framework are key societal choices that we hold dear: our social market economy, food safety, effective financial regulation, and a precautionary approach to environmental and public health risks.

For an ambitious economic partnership, we will need to find common groundon the rules that apply to social and environmental matters, to consumer protection and to competition. [...]

These questions are not only economic. They are first economic as far as the level playing field is concerned. They are also political. Why? The answers to all of these questions will be key to the ratification of any future deal in each national parliament, and in certain countries in regional parliaments. We need to be careful about the political conditions of the ratification for any future deal. This will be a mixed treaty. It will require not only the ratification of the Council and the Parliament, but each of the 27 national parliaments by unanimity. This is the reason why I take the time in each of my visits – tomorrow in Copenhagen – to meet not only the Government, but also the trade unions, the business community, the national parliaments. I want to succeed in this stage and prepare the next.

Not one of the choices I have mentioned is easy. And I recognise the political temptation to avoid making a choice or to downplay the cost of Brexit.

Or indeed to pretend that the UK could obtain a free trade deal with the EU with all the benefits of the Single Market.

Abandoning such ideas will enable us to begin building an ambitious future partnership based on a foundation of realism and in the interest of our citizens and our businesses. This is my objective.

Ladies and Gentlemen,

There are also choices to be made on the EU side.

The 27 Member States wish to minimise the negative impact of Brexit on the European Union and so does business.

But we are all fully aware that the economic and political benefits of the Single Market, of the Customs Union and of staying together in the EU are far bigger than any possible cost of Brexit.

Since December, the EU has done extensive preparatory work on how to manage the negative impact of Brexit and exploring avenues for the future relationship in many sectors. [...]

You, as business leaders, also have choices to make in a context of uncertainty.

The UK will leave the EU on 29 March 2019. That is the only certainty we have at this stage.

It is therefore important that all businesses analyse their exposure to the UK and are ready to adapt their logistics, supply chains and contracts.

Of course, the transition period currently under negotiation would give you more time to adapt.

However, certainty about the transition will only come at the end of the process, with the ratification of the withdrawal agreement by both sides –probably early next year. [...]

Full speech

Related: Keynote speech by President Donald Tusk at the BusinessEurope day

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