The red lines that the UK has set down for its future relations with the EU are creating difficult barriers for itself, not least in the crucial field of financial services, Michel Barnier has warned.
Mr Barnier, the EU's chief Brexit negotiator, speaking to a Belgian business group in Brussels on Tuesday night, admitted to his frustration that it is still not clear what the UK negotiators actually want.
“On this issue we don’t yet have precise answers, but can make deductions of what will happen from both the nature of the EU’s legal order and the UKs’s red lines. In setting down such red lines officially, the UK is one by one closing doors on itself.”
The UK had made clear, he said, that it intended to leave both the single market and the customs union, and its rejection of a role for the European Court of Justice meant it was probably left with the option of a free trade agreement akin to that between the EU and Canada.
But although regulatory co-operation between two parties to such an agreement was possible, crucially “we have never given up our decision-making autonomy over regulation”.
“In the context of our relationship with the UK, arising out of the financial crisis, for example, in financial services, we created a single rule book and integrated European supervision mechanisms to protect consumers, the integrity of markets and to create a level playing field,” he said.
“A state that leaves that specific framework, established and supervised on a consistent basis by national authorities, may give itself a new freedom to go its own way, but it must lose the benefits of the internal market.
“Its financial services cannot benefit from passporting into the single market, nor from a system of common recognition of standards.”
‘Masters of our rules’
This reality, he argued, was not about punishing the UK, but “simply reflecting the necessity for us to remain masters of our own rules and of their implementation”.
He said the question remained whether the UK was willing to maintain regulatory convergence or was determined to diverge. “It’s an important question. Behind the European regulatory system lie fundamental assumptions to which we adhere: our social market, our protection of health, our food security, a financial regulation system that is fair and effective.”
He could have added that maintaining regulatory convergence is crucial to guaranteeing that the Irish Border remains invisible.
Any deal with the UK, Mr Barnier said, would have to make certain there could be no social dumping, that there must be fair competition, controls on state aids, and proper environmental and social standards.
Such guarantees were vital politically, he warned. Any future relationship treaty would almost certainly have to be approved by 27 national parliaments and, no doubt, by several regional parliaments.
