Post-Brexit negotiations between the EU and UK in Brussels, Belgium on June 29, 2020 (photo: AFP/VNA)

Prime Minister Boris Johnson said last week that the UK will be ready to sever ties with the European Union "on Australia terms" if no deal is reached. Australia has no comprehensive trade agreement with the EU. Most commercial transactions follow WTO regulations, except for a few special agreements on certain commodities. So far the EU has taken an inflexible stance on trade negotiations with the UK.

The UK shows strong stance

The British Prime Minister’s office said in a statement last Saturday that the UK will negotiate constructively but will be ready to end the transition period on Australia terms if an agreement cannot be reached.

Johnson said there is no need for the UK to accept EU rules on competition policy, subsidies, social protection, the environment, or anything else, any more than the EU should be obliged to accept UK rules. The choice for Britain, Johnson said, was between a deal like Canada has or a deal like Australia has with the EU.

Last Saturday UK Brexit chief negotiator David Frost made it clear that the UK will not agree to any proposal from the EU like the one currently circulating giving the EU the right to retaliate with tariffs if the UK chooses to make laws in its own interest.

On June 12 the UK informed the EU that it will not try to extend the transitional period.   

The EU shows tough stance

Responding to the statement that the UK is prepared to sever ties without a deal, German Chancellor Angela Merkel said the UK will have to “assume the consequences” of weaker economic ties with the EU at the end of the Brexit process. Germany will become the next rotating president of the European Union Council on July 1st.

At the end of their 4th negotiation in April, conducted remotely because of the coronavirus pandemic, EU negotiator Michel Barnier accused the UK of going back on commitments made in writing before the Brexit referendum. There were “significant differences of principle” in other areas, as well, including fisheries, regulations, and governance.

Analysts predict the current negotiation will end without an agreement just like the previous ones because neither side is willing to compromise. A no deal scenario will hurt the UK the most. Organization for Economic Cooperation and Development (OECD) has forecast that the UK’s economy will see a slump of 11.5% in 2020.