A Gloomy Reception with Michel Barnier

27 Apr 2018

BFPA CEO Chris Buxton reports on his recent participation in a meeting withthe EU’s Chief Brexit Negotiator – Michel Barnier.

As I was travelling back to Hanover airport having attended the Integrated Automation Motion and Drives exhibition at the Hannover Messe in April I was somewhat bemused by reading a tweet on my iPhone from Michel Barnier; the European Commission’s chief Brexit negotiator. It read;

“Very happy to be at @hannover messe. Listened to businesses’ concerns over and their preparations for #Brexit. Received strong message that #SingleMarket is business priority” Michel Barnier

I was somewhat perturbed as I was lucky enough to be a guest at that meeting and I did not see any evidence of listening – only talking. What was promised to be a highly interactive meeting with questions from privileged guests from various companies and countries, turned out to be a very sobering monologue with only limited respite when two or three innocuous and obviously pre-prepared questions were asked by an on-stage speaker at the end of the speech. Clearly, the risk of a potentially controversial and difficult cross-examination was not very palatable to the organisers of what was admittedly a highbrow and successful PR event on the part of the Messe. I confess to being very frustrated and I was not alone! More concerning than the lack of interaction was the content of Monsieur Barnier’s delivery although we can only accept and agree with some of what he said – however unpalatable.

The tone of the so called ‘conversation’ was, from the start, very down beat and it was clear that there is a huge sense of incredulity amongst our European colleagues as to why the UK made the decision to leave Europe in the face of what they all believe is a process to the detriment of all parties – most notably the UK.

He opened by stating that we all now operate in a highly globalised economy and that the supply chain for all core-manufacturing businesses is cross-border dependent. He went on to say that Brexit can only result in a poorer and weaker situation for all parties and that the UK appears to be in the throes of a major damage limitation exercise. ‘There are no winners and losers in this negotiation – we are all losers.’ He felt that the UK does not appear to know what kind of a Brexit we want and that we are now a divided nation. (It is hard to refute the fact that as long as the internal arguments continue in Whitehall, there is some truth in what he says.) He reiterated the EU position that whilst trade with the UK is important for any one member state, trade with the rest of the EU is far more important.

Brexit, he feels, is a complete paradox and is against all of the current global trends in terms of cultural, technological and social convergence. Most of the technological innovation that was evident at the Hanover exhibition was highly dependent upon the EU ecosystem and is no longer the product of one country. All of the products, services and technology are now cross-border; businesses can currently export freely to sixty other countries because EU rules and standards are being adopted worldwide. Furthermore (he added), only 6% of the trade between EU countries is external whereas the majority is internal to the common market. The UK joined the EU to be part of that common market and is now turning its back on it and he profoundly regrets our decision.

In a slightly more conciliatory tone, Monsieur Barnier went on to emphasize the fact that in the negotiations, there is no room for revenge, punishment or anger. After forty-five years of working together, he was of the belief that both the EU and the UK have a responsibility to make the best of the situation. On harmonisation, he felt that it was essential that both parties do not drift apart. We must still try to harmonise technological and regulatory standards if we are to continue to trade. To fail to do so would isolate the UK and divergence would be tantamount to suicide for the UK as our domestic market is not sufficient to sustain our manufacturers. Why would we wish to do it anyway? We would only unnecessarily isolate ourselves. (The latter is certainly something that the BFPA is seeking to avoid through our work with the BSI and ISO organisations.) Even China and India are manufacturing and trading to EU standards. They, like the EU, will not make a special case for the relatively small UK market.

The subject of Security and data sharing was of particular concern when it comes to the fight against terrorism. Barnier emphasised the fact that it is impossible to operate securely in the absence of adequate border controls. This gives rise to problems when it comes to the Good Friday agreement and the Northern : Southern Irish border. He felt that the customs union might provide a solution to this problem but that the UK cannot seem to agree internally, the required format of a solution. (Again a fact that has to be acknowledged.) A socio –economic agreement on aviation and security is also critical.

Turning to the eighteen months transition period, Monsieur Barnier put an interesting twist on the issue. European companies, he suggested, should spend the time wisely, reducing their dependence upon the UK market and making plans to replace what will most likely be lost business and revenue from across the channel. He clearly saw the period as being required by European countries in order for them to develop a strategy that did not include easy trade with the UK rather than a time for UK companies to adjust.   The UK is seen to have brought the current situation upon themselves and they should not therefore expect any sympathy or concessions although he reminded everyone that during the transition period, the UK would remain a full member of the EU and would thus have full membership rights. To this extent, it was important that all parties and the twenty-eight member states honour any financial obligations irrespective of what they fear the future may hold. At all costs, it was essential that both parties remain on good terms.

On specifics relating to the negotiations, Monsieur Barnier expressed the difficulty of finding a middle ground when both parties had laid down ‘red-lines’ on issues that were ‘none-negotiable.’

In the PM’s Mansion House speech Theresa May indicated that the UK no longer wished to be subject to the European Courts of Justice and wished to have total control over the free movement of people across its borders. In contrast, the EU considers the ‘four freedoms’; (free movement of goods, capital, services and labour), to be an EU ‘red-line.’ One cannot, he argued, have free movement of goods and services without the free movement of labour. (The UK Food industry is an example of one such industry that is consistent with his thesis.) He also felt that EU State rules must apply to IPR and that trade must be undertaken on a level playing field. Unfair competition must be avoided and State Aid rules must be maintained in any trade agreement.

On progress towards a solution, he reported that a new Treaty was being drafted and that the current draft contained 168 articles. Seventy five percent of them are in green, which indicates a level of agreement. The remaining twenty five percent are in red and will be the focus of further debate. It will ultimately have to be agreed by all of the remaining twenty-seven states which may present something of a challenge! The EU has also produced more than sixty notices and ‘guides’ on policy issues which are widely available and which he hopes will be of help to industry on both sides of the channel.

Interestingly, Monsieur Barnier stated that whilst the heads of state have ambitions to succeed in the negotiations, the next stage in the talks must be driven by the expressed needs of business and industry. (If this is to be the case, the time for organisations such as the BFPA to engage with Government is now and I took some comfort from the fact that we are working with BEIS, DxEU and DIT through organisations like EAMA and EURIS in this endeavour.) Companies, Barnier said, must not waste any time deliberating or burying their heads in the sand – they need to prepare now for what is to come.

In concluding what was a very down-beat presentation, Monsieur Barnier stated;

“Make no mistake – there are no winners in these negotiations – we are all losers…  there is no added-value for anyone – these negotiations are negative in every respect. One thing is certain – the future of the EU is far more important than the future of the UK. The ball is now in the UK court and we are awaiting their proposals as to where we go next.”

These are strong and worrying words from a man who is leading on the negotiations on behalf of the EU and who therefore, has so much potential influence over the future of the UK economy.

As one of very few Britain’s in the group I spent the rest of the evening drinks reception being questioned by other Europeans from all walks of industry as to why the UK had made; and I quote; ‘such a crazy decision?’ As the CEO of the BFPA I have members from both the ‘remain and leave camps’ so I make no comment upon the wisdom or otherwise of Brexit, but there was no doubt as to the views held by our European friends.

I hope that our future is not quite as gloomy as predicted by Monsieur Barnier!