In a lead article with French broadsheet Le Monde finance expert Stéphane Madaule said: “The EU27’s economic weight – which is much greater than the United Kingdom’s – could lead people to believe that the bloc will enter negotiations in a position of strength. But this general observation should be qualified. “Yes, the UK is very dependent on the European market but it has less to lose than the EU if trade conditions tighten,” he added in direct reference to the looming threat of a challenging no deal scenario.
He said: “The UK can diversify its imports, enter new markets and boost its exports to non-EU countries. In this negotiation, in the event of a no deal, the EU is, therefore, more exposed than the UK to a sharp decrease in bilateral trade flows, which in turn could create new trade barriers.”
Brussels has repeatedly warned Britain that the depth of future trade ties depends on how closely London adheres to EU rules and regulations.
While Brussels if generally against bringing in tariffs or quotas in trade in goods, it also wants no dumping.
“We are ready to offer a highly ambitious trade deal as the central pillar of this relationship, including zero tariffs,” the bloc’s chief negotiator Michel Barnier told a news conference in Brussels earlier this month.
He added: “We must now agree on specific and effective guarantees to ensure a level playing field over the long term. That means a mechanism to uphold the high standards we have on social, environmental, climate, tax and state aid matters today and in their future developments.”
Prime Minister Boris Johnson is determined to deliver the independence cherished by Brexiteers.
He said that while he is in favour of a wide-ranging EU-UK trade deal, breaking free from the bloc’s rules remains his top priority.
The UK left the EU to “go out into the world,” he said in a speech in London days after Britain officially quit the bloc and added: “There is no need for a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar, any more than the EU should be obliged to accept UK rules.”
Mr Johnson has asked for the EU’s trade deal with Canada, CETA, to be used as a model.
But while many in Brussels consider the pact acceptable on tariffs and quotas, critics say it is too weak on provisions to guarantee free trade.
The upcoming negotiations will be tricky no matter what.
On Sunday, French Foreign Minister Jean-Yves Le Drian warned the two sides would likely “rip each other apart” as they scramble to “defend their own interests”.
“I think that on trade issues and the mechanism for future relations, which we are going to start on, we are going to rip each other apart,” he told a security conference in Munich.
London and Brussels have just 11 months to strike a free trade agreement, before a post-Brexit transition period ends on December 31.
If they fail to reach a deal, trade relations will be administered according to the rules of the World Trade Organization (WTO), with tariffs and increased barriers that could hobble EU-UK supply chains.