UK must agree to common rules to get deal, warns EU

Bloomberg

The UK will need to go further than Canada in its commitments to the European Union (EU) if it wants to trade without tariffs and quotas, European Commission President Ursula von der Leyen warned, further raising the temperature with Britain before negotiations on the future relationship even start.
In a direct, personal response to the speech by Prime Minister Boris Johnson in London last week, the EU’s top official said the trading relationship she believes the UK is striving for is more ambitious than the regularly cited Canada model because of the “unique” level of access Britain would have to the bloc’s single market.
Johnson’s speech in Greenwich last week was “encouraging,” Von der Leyen said, but added that the prime minister needs to go further than mere “ambition” on standards in areas such as rights for workers and parents, the environment and rules on government subsidies.
“This is what we also want,” von der Leyen told the European Parliament on Tuesday in Strasbourg, France. “Let us formally agree on these objectives.”
The two sides are scheduled to start negotiating next month and are aiming to strike an agreement on their future relationship in areas including trade, security and financial services by the end of the year. If they don’t, the UK will be faced with the potentially damaging prospect of trading on World Trade Organization terms.
The EU insists the UK must stick to tough rules to prevent the country lowering standards and undercutting the European economy. Johnson said the UK will have the right to decide its own rules and is prepared to walk away if this is the condition for a deal.
On Tuesday, Chancellor of the Exchequer Sajid Javid said the government will break away from EU rules governing financial services, but wants to agree on a “durable” trading relationship for banks. The Treasury is drawing up a detailed plan for trade negotiations with the EU and Javid, writing in the London newspaper City AM, insisted Britain will diverge from the bloc’s regulations.
“Our deal with Canada eliminates tariffs on a wide set of goods, but not on all,” von der Leyen said. “Our deal with Canada eliminates most quotas, but certainly not all.” She poured scorn on describing the EU’s trading relationship with Australia as a possible model for the UK.

“The European Union does not have a trade deal with Australia — we’re currently trading on WTO terms,” she said.

Javid sets trade plan for financial services
Bloomberg

The UK government will break away from European Union rules governing financial services, but wants to agree a “durable” trading relationship for banks, Chancellor of the Exchequer Sajid Javid said.
The Treasury is drawing up a detailed plan for trade negotiations with the EU and Javid insisted Britain will diverge from the bloc’s regulations.
“We may choose to do things in the same way as the EU if it works for the UK,” Javid wrote. “But there will be differences, not least because as a global financial center the UK needs to keep pace with and drive international standards. Our starting point will be what’s right for the UK.”
The future access to the EU market for London-based banks will be a crucial battleground in the UK’s negotiations with the EU. Outside the bloc’s single market, financial services firms in the UK will no longer have automatic “passporting” rights allowing them to operate freely across the 27 EU member states.
Instead, they are likely to rely on a less stable arrangement known as “equivalence,” under which regulations on both sides are judged to be adequately aligned. One concern for the finance industry is that the EU can withdraw “equivalence” with just one month’s notice. The Financial Times reported in Tuesday’s edition that Javid wanted a form of permanent equivalence.
In his City A.M. article, he wrote that he wanted a “reliable equivalence process” on which “a durable relationship” can be built.
The U.K. left the EU on Jan. 31 and is now in a transitional period lasting until the end of the year, under which existing EU rules will continue to operate. Prime Minister Boris Johnson has insisted he wants to finalize a new trade deal before the transition phase runs out on Dec. 31.