Chill expected as UK delivers a defiant message to EU

FT subscribers can click here to receive Brexit Briefing every day by email. Since being given the task of leading the UK's trade talks with the EU last year, David Frost has kept a low public profile. But tonight Boris Johnson's chief Brexit negotiator will travel to the very heart of the EU to deliver a defiant message that will frame the discussions that are about to get under way.

Known as "Frosty", the former chief executive of the Scottish Whisky Association can expect a chilly reception from EU officials in the audience at the Universite Libre in Brussels. His message? That the EU's opening position for the talks is unreasonable in its demand that the UK sticks closely to its rules and standards on goods if London wants a trade deal that minimises friction at borders and reduces tariffs after the Brexit transition ends on January 1 2021.

Mr Frost's argument will be that Britain is not seeking a bespoke deal. The UK instead is asking for the same sort of trade agreement the EU has signed with similar nations such as Canada, South Korea and Japan. These deals, Mr Frost is expected to say, do not require those countries to implement EU regulations in areas such as state subsidies and taxation.

What is more, the UK strongly opposes the idea, being pushed hard by the French, that Britain commits to maintain these standards in the future. It believes many of its standards on labour and the environment aim for a higher standard than those in the EU. Paris's trenchant position on all this -- French president Emmanuel Macron has long opposed the notion that the UK could become a low-cost, low-regulation rival on its doorstep -- became strikingly clear over the weekend.

At the Munich Security Conference on Sunday, French foreign minister Jean-Yves Le Drian warned that the UK and EU were preparing to "rip each other apart" in the talks. Then another Frenchman Thierry Breton, the EU's single market commissioner, said in an interview with the Financial Times that the UK should have no problem following EU rules because it invented many of them. "They know that if they want to continue to benefit from what these rules have created, in other words, the largest single market, they know how to behave," he said.

A lot of this is part of the phoney war that has been raging since Mr Johnson's election victory last year made it more likely that the UK would seek greater distance from the single market in its future trading relationship with the EU. A deal is still in both sides' interests and that has to be the most likely outcome by the end of the year. But in recent weeks the ramping up of the British rhetoric has been hard to ignore: Mr Johnson's speech at Greenwich, which talked up the prospect of an Australia-style deal (a euphemism for no deal); Michael Gove's "get ready for friction" briefing to the UK haulage industry; and now Mr Frost in Brussels.

As with the negotiations on the Brexit divorce deal in October, the UK tactic is to make Brussels think it is deadly serious about no deal as an option, or rather a trade deal on limited WTO terms. But the more you hear from Mr Johnson and his senior team on Brexit, the harder it is to shake the impression that for them regulatory freedom and sovereignty is more important than trade and economics. 

Further reading

06-Aug-2019 A aerial view of the City of London.The City of London. Financial services account for 11 per cent of the UK tax take and more than 1m jobs (C) Steve Parsons/PA

UK must weigh the costs and benefits of regulatory divergence
Financial services account for 11 per cent of the UK tax take and more than 1m jobs, two-thirds of which are outside Greater London -- a fact often overlooked.

While the City will adjust to whatever is thrown at it, giving up these opportunities and tax income should be weighed up carefully. (Huw van Steenis, FT) 'Global Britain' goes missing at Munich security summit
The official reason given by Downing Street for the low key Munich approach was that Boris Johnson wanted all his senior ministers in London for a meeting of his new Cabinet on Friday. But foreign leaders expressed surprise at the idea that domestic political considerations had outweighed the chance to project an ambitious, international Britain just two weeks after its departure from the EU. (Helen Warrell, Guy Chazan and Michael Peel, FT)

Retailers say Brexit border friction will hit food supplies
Consumers face higher costs and reduced availability on the four-fifths of food imports that come from the EU, according to the British retail industry body as it renewed its call for Britain to strike a deal with the bloc that cuts red tape and border friction. (Antonia Cundy and Daniel Thomas, FT)

Videowatch

Will Brexit split the UK?
The FT's chief UK commentator Robert Shrimsley and deputy opinion editor Miranda Green discuss whether the UK could break up following the 2016 EU referendum.

Opposition parties in Northern Ireland and Scotland are pushing for referendums on independence from London. (FT)

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