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Brussels Warns BoJo Full Trade Deal By Year’s End Is “Basically Impossible”

Zero Hedge [1]
January 9, 2020

Here we go again…

During a speech at the London School of Business early on Wednesday ahead of a meeting with British PM Boris Johnson, new European Commission President Ursula von der Leyen warned that it will be “basically impossible” for the UK to negotiate the entirety of a hoped-for trade deal with the European Union, increasing the likelihood that the trade relationship between the two former partners will revert to WTO rules at the end of this year.

Following his dynamic election triumph last month, Johnson has been working to enshrine a deadline for negotiations into law, part of a plan to keep the pressure on the EU after the debacle over negotiating Johnson’s revised withdrawal agreement.

Von der Leyen insisted that ‘both sides’ must pick priorities during the negotiation. The message to Johnson is clear: Just because he’ll be dealing with a new EU Commission, doesn’t mean he’s going to face an easy path. The negotiations will be tough, and the EU is more than willing to walk away from the table. She also described Johnson’s insistence on finishing negotiations by the year’s end as unrealistic.

“The transition time is very, very tight…so it is basically impossible to negotiate all that I have been mentioning, so we will have to prioritise,” she said.

Following her remarks, which were chronicled in detail by the FT [2] and Reuters [3], Von der Leyen offered a summary of her remarks in a twitter thread published after her talk:

If negotiations continue along the current track, the EU will need to reexamine “every single aspect of our new partnership”. She added that “I want to be very honest about what lies ahead of us,” suggesting that she didn’t want the UK to be unpleasantly surprised if the negotiations stall out early.

The new commission president devoted substantial time in her speech to the importance of foreign and security policy cooperation, taking aim at a chit that Johnson reportedly plans to use to exert maximum leverage. The EU and UK “must build a new, comprehensive security partnership to fight cross-border threats, ranging from terrorism to cyber security to counter-intelligence,” von der Leyen said.

She also suggested that Brexit “will not resolve” any of the tensions between the British and their Continental partners.

“The truth is that Brexit will not resolve any of the existing challenges for the EU nor the UK,” von der Leyen. “Even being apart and not bound by the treaties, it will require intensive co-operation.”

Von der Leyen also highlighted financial services as an area where “all will change” after Brexit, warning the City that cross-border retail banking would become more complicated.

Finally, von der Leyen said that the “uncertainty” surrounding the “inevitably tense” Brexit withdrawal agreement negotiations will not also come to characterize the negotiations over a new trade deal. “This is done and dusted as far as I am concerned.”

However, starting the negotiations with a direct, public challenge to Johnson probably isn’t the best way to engender cooperation and prevent a repeat of the withdrawal agreement negotiation nightmare.