Thread by @pmdfoster

Why will Barnier reject attempts by the UK to enter a 'Single Market for Goods" - as @CER_Grant and other well-informed UK sources is suggesting is the plan?

Some thoughts on what Barnier means by "huge and serious" differences /1

@CER_Grant As the EU services lobby group @EUServicesForum warned in a letter to @MichelBarnier and @DavidDavisMP this week some 20% 40% of the value modern day manufactured goods are in fact services.

That's embedded value in form of design, finance etc. /2

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP EU sources tell me they will "shoot down" a UK attempt to align on goods, but diverge on services because it will give UK unfair advantage.

Softer environmental rules, a soft loan that amounts to state aid, cheaper than EU data protection regime will all equate to advantage /3

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP Per EU source, "even 1%-2%" distortion is too much - and EU states that trade with UK are "very clear" they won't wear it.

So either UK takes full Single Market, or none of it. /4

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP The UK side push back that Switzerland has similar arrangements - true, but EU hates it - and also accept that an SM for Goods deal would require deep discussion on "level playing-field provisions".

Even then, it would require political will from EU side, which is lacking. /5

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP This sets up a worrying dynamic.

May takes plunge at Chequers, agrees CU in all but name, high alignment, SM for goods, it gets seen as MASSIVE leap in UK....but gets dumped on in EU.

That is going to make talks v tough. /6

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP Which begs the question, what does the EU want, if there is nothing between Canada Dry and Norway plus.

May can have an Free Trade Agreement, but of course, and stay in a Customs Union, but that does not fix the alignment problem.

OR the Irish border issue... /7

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP May is adamant she will not have a border in the Irish Sea - but the EU are equally adamant that the UK is making too big a deal of this issue.

They question if checks East-West really do post a "threat to the constitutional integrity of the UK" /8

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP Instead, the EU sees May's concern as an excuse not to cut a deal on Ireland in order to force an Autumn crunch, where Dublin and the EU fold on their red lines.

The EU side say they are determined not to let that happen, but... /9

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP The June Summit (once critical) has passed, and nothing has happened.

The Brits seem to be winning that argument anyway - or may be winning, depending on the outcome of that 'crunch' /10

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP If EU rejects UK plan, as promised, EU sources tell me they will focus on "de-dramatising" the Irish Sea issue.

Recall Barnier's slide on all the border checks NOT covered by a CU (a lot)...the Q will be how many of those conformity checks can be done away from the border? /11

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP By this means, the EU will try to win the argument.

The problem is that if UK accepts FTA, with CU and alignment, that means SAME CHECKS between Holyhead-Belfast as Dover-Calais.

Can the DUP wear that? Can May? Even de-dramatised? /12

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP This is why no deal fears are rising.

If EU can't see space between Canada and Norway type deals, and UK can't make the kind of bold political moves needed to access the interim space, you have a problem.

Not least of time... /13

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP Even if the UK cabinet could make a big leap at Chequers (doubtful) it would still need a v hard negotiation to access a Swiss-style deal.

On level playing-field issues outlined above, ECJ-role and (eek!) some kind of pay-to-play financial contributions /14

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP The Brits talk of a "temporary customs arrangement" after 2020 transition as a "bridge to the future" but there again, the EU playing hard.

They see that as a two-step process where UK improves its lot over time. No cigar. /15

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP All of which means there really are "huge and serious" differences.

And one last (cheery) point. If you think back to previous crunches (the bill, say) there was a lot of working going on technically behind the scenes. Landing zones were being created... /16

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP Which mean that when political permission was given to land, there were clear spaces to touch down.

With the exception of some deeper technical work on Northern Ireland, officials on both sides fret that the political deadlock is making that prep work impossible. /17

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP In short. People on both sides know they need to "access the space" between Norway and Canada, but they are defining that space very differently.

Pathways are not clear. Even non-alarmist people can see how a 'no deal' happens - though that still seems, on balance, unlikely /18

@CER_Grant @EUServicesForum @MichelBarnier @DavidDavisMP To sum up.

May has made big leaps in the past (Florence on the Brexit bill, for example), and appears to be bracing for another.

This risk is that this time, she gets a very hard landing. ENDS