Barnier’s promise means EU can’t use coronavirus to delay Brexit– as UK can just walk away

Barney Reynolds, a partner at Shearman and Sterling LLB, warned a specific, cast-iron pledge agreed between the two parties to use ‘best endeavours’ meant Michel Barnier and his fellow EU negotiators had no excuse not to continue to work towards a deal by December 31 – suggesting failure to do so would permit the UK to “walk away”. Today’s European Council meeting in Brussels is likely to be a tense affair, with leaders of the EU27 due to discuss a 500billion euro package of measures aimed at mitigating the disease’s impact. Bitter divisions exist between countries in the south, especially Italy, which believe the plan does not go far enough and are pushing for a system of eurobonds nicknamed coronabonds, which will spread the cost across the bloc rather than imposing it on individual countries, and countries in the north, such as Germany and the Netherlands, who are opposed to the idea of debt mutualisation.

Mr Reynolds suggested the net result would be an attempt to “kick the can down the road”.

He explained: “I think there will be further purchases of eurozone member debt by the ECB, and possibly some common EU budgetary response to the crisis, which involves communal money being used somewhat, but clearly not in a way that creates meaningful mutualisation of debts between eurozone member states.

“This is unlikely to be up to the scale of the problem at all.

“So there might be a little bit more money that is lent to the southern eurozone and I suppose if you are in the south you pocket that money and wait to fight another day in a month or two months or whenever, when you are clear how much you need.

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Both parties have agreed to use ‘best endeavours’ to get there, which is the highest form of legal obligation in this context and permits no excuses, even reasonable, for failure to perform

Barney Reynolds

“But it doesn’t appear from anything I’m reading that there is any willingness to properly share, which is what’s necessary for the task.”

Furthermore, the EU’s negotiating team had no justification for using COVID-19 as an excuse for not pressing ahead with negotiations, Mr Reynolds warned.

He explained: “Both parties have agreed to use ‘best endeavours’ to get there, which is the highest form of legal obligation in this context and permits no excuses, even reasonable, for failure to perform.”

“If this obligation isn’t honoured the UK can’t be expected to stand behind the monetary and other transitional arrangements in the so-called Withdrawal Agreement.

“The EU can’t expect that Agreement to amount to a poison pill, forcing the UK to accept its terms. Under international law, a breach of best endeavours – and arguably the EU is already in breach – allows the UK to walk away.

“But let’s nevertheless see if we can get a reasonable sovereign-to-sovereign deal by year-end and whether there’s sufficient political will on the EU side to follow through on their undertakings.”

Mr Reynolds pointed to remarks by French President Emmanuel Macron, who suggested a moment of truth was looming when countries would be confronted with the fact that some nations were going to do very noticeably better after this than others.

He added: “That is going to create divisions – now, will it be an amicable set of divisions or will it be more explosive?

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“What’s the effect on everyone else? I think the UK has a different vision of Europe, at least in light of the Brexit vote, but this trade-based vision could be amplified and offered to anyone else who’s interested in taking it.

“Trying to create a common currency inevitably involves sharing money, which then, in turn, leads to some group, potentially unelected and unaccountable – at least, on the current eurozone construct, directly to those in need in the south – wanting to tell the recipients what to do with that money and how they can use it.”

Outlining his own alternative vision, Mr Reynolds said: “Instead, you trade with each other in a favourable way to create a trading bloc that everyone can benefit from. This bloc, to work for the UK, would have to be more accommodating to the common law way of doing things, since that reflects the UK’s way of approaching things structurally.

“And you take the EU back to the position it was in on topics when everyone had a veto and it was really (at least at the time) a trading venture.

“What we should be offering as part of a Brexit deal at the end of the year (and I think we’re doing this) is a free trade deal with no attempt by either party to impose its standards on the other, in accordance with international WTO law practices.

“And we need to have an arrangement for financial services based on Enhanced Equivalence so we can manage eurozone risk safely.”

The onset of coronavirus, and the rapidity with which nation states had taken unilateral action without any direction from Brussels, had highlighted the fundamental weakness of central control, he said.

He added: “What this has shown is that when the chips are down the nation state is ultimately what people cling to and how urgent problems are addressed. Committees only work for slow-moving situations.

“We can’t just sit here and allow others – because we’re no longer in the Council – to make rules and decide how we must operate.

“We need to manage our own lives and make our own decisions.

“We are rightly offering a reasonable trade arrangement and a fair one but I do not see why that cannot be negotiated by the end of the year.

“Both parties have agreed on the shape of the sovereign-to-sovereign agreement we’re negotiating – in the Political Declaration.

“The UK’s negotiating mandate reflects that – the EU’s currently doesn’t.”

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