French worries and intentions: Barnier at the French Senate

Post Segments

Michel Barnier, still officially the EU’s Brexit taskforce leader until March 2021, gives few interviews. As a Savoyard and keen mountaineer, as he habitually reminds us, he is a cautious man who advances step by step with the long climb firmly in his sights. So it was something of a surprise to see Barnier appear on 16 February before the French Senate Brexit follow-on committee (renamed ‘groupe de suivi de la nouvelle relation euro-britannique’). It is a sign of the importance of how Brexit will play out for the French that the Senate has formed a very senior commission to monitor and react to Brexit implementation and next stage negotiations. The 20-strong commission is co-presided by the presidents of the Foreign Affairs, Defence and Armed Services commission (Christian Cambon), the European Affairs commission (Jean-Francois Rapin) and the Economic Affairs commission (Sophie Primas).[1]

Of course Barnier and France have an interest in Brexit being implemented as they see fit. But there may be a good deal more to their common purpose than initially meets the eye. For Michel Barnier, former Gaullist Agriculture and Foreign Minister, former President of the Senate Foreign Affairs Commission, may be preparing his candidacy for the French Presidential elections of May 2022. The traditional Gaullist French right, Les Républicains, has no consensual candidate for the presidentials and Barnier’s name is cropping up a lot for having done a good job on Brexit and because some see him as motivated by a desire for revenge on Emmanuel Macron, who preferred Ursula von der Leyen to Barnier for president of the European Commission.[2] At 71 in 2022, Barnier would still be a tad younger candidate than François Mitterrand in 1988. His candidature may be more likely as a result of Nicolas Sarkozy’s recent prison sentence for corruption, which has thrown the French right into even more disarray given Sarkozy’s continued king-maker status. As an outsider Barnier could be seen as a clean pair of hands.

So would Barnier’s ambition get the better of his habitual reserve when he appeared before the Senate Commission and lead him to give away a few clues as to what is in store for Britain over the coming years? There was much ‘cher Michel’ this and that and much tutoying in the 1hr40 hearing. Below is a précis of the session in which the nature of the questions asked by French Senators were as revealing in what they say about French concerns about relations with Britain as were Barnier’s replies as to how the EU will behave over the coming years. (The questions were grouped together with Barnier replying en bloc. The structure of the session is retained here.)

We begin, however, with the salient points that emerged from the hearing:

Salient points

There is clear concern in France that the UK may distance itself even further from European integrated defence plans, but more seriously from Paris on foreign policy, defence and security matters [paragraphs 1, 11]. France cherishes the Franco-British defence and security pacts (Saint Malo and Lancaster House) and would not wish to see them lose their pertinence or value. France is bogged down in the Sahel with over 5,000 troops and would dearly love extra British combat support that she knows will not come from the EU (other than money). Two years ago Macron made a big play of post-Brexit global cooperation with the UK on strategic geopolitical matters. Barnier also suggests that the UK may be attempting to use defence to leverage concessions elsewhere.

The British media rarely mention that Brexit is also having an impact on French companies and their ability to sell into and buy from the UK in terms of customs clearance. There is French ambiguity here (and in other member states): clear French concern about the UK becoming a Singapore-on-Thames and a desire to see tighter customs inspections (phyto-sanitary), but reluctance when it hurts French companies. The French are worried that Britain may tighten the screw on its customs checks after its self-declared period of grace [paras 2, 6, 7, 12, 21]. The French are also worried by greater competition from other EU member states on more lenient customs checks, notably Belgium and Holland.

It is clear that the Commission is gearing up for fastidious monitoring of the withdrawal agreement and the new commercial and cooperation agreement, hence the setting up of two new services in the commission to oversee that [paras 5-7, 12, 18]. They clearly feel they have the UK over a barrel with the Northern Ireland Protocol and Barnier insists that it will be monitored very closely and not renegotiated. One senses, however, a real concern on Barnier’s part that Northern Ireland could easily become politicised, even weaponised, against the Commission, as evidenced by the EU’s knee-jerk use of Article 16, which Barnier repeatedly described as ‘an error’, that went against all his work on Northern Ireland. He is at the same time and for the same reason, also sensitive to the issue of the UK’s sovereignty and national borders appearing to be undermined by the Protocol. He corrects Senators who state that the Protocol puts the border between the EU and the UK down the Irish Sea. He protests – too much? – that it does not create a new border, but only customs checks, because, he says, he does not want UK sovereignty to be undermined. Evidently he is wary of lighting the blue touch paper.

Barnier is very proud of his ‘mirror agreement’, whereby renegotiation of fishing (where the EU is dependent on the UK) will be strictly tied to UK/EU energy connectivity (where the UK is dependent on the EU). This he believes will be strong leverage in fishing renegotiation in a few years time [para 9].

Financial services negotiations underway between UK and EU, scheduled to conclude in March, are going to be fought hard by the Commission [paras 10, 14, 15]. The French in particular want Paris to regain its former pre Great War status as Europe’s banker. They were pleased to get the European Securities and Markets Authority moved to Paris from London. Previous Senate Commission hearings have underlined their ambition, but are conscious of French impediments: bureaucracy, employment law, hostile and erratic tax environment.[3] Macron and his Finance Minister have attempted to improve that environment by employment legislation and abolishing a very political wealth tax. But given French pandemic finances (over 120% debt to GDP) as the 2022 presidentials approach there is already considerable pressure to re-institute the wealth tax and hike others on the corporate sector, not to mention a EU-wide ‘Tobin tax’ on financial transactions.

Barnier’s insistence on learning lessons from why Brexit happened is also a preoccupation of French Senators [paras 16, 20]. There is clear concern that the reasons are not UK specific and could therefore be repeated in another member state. Barnier states as much. This is linked to the question of how well the UK will do outside of the EU. Some French Senators are not persuaded that the UK will do badly. The implication is that if the UK does do well this may compound the EU’s coherence and unity if lessons are not learnt about Brexit.

The Barnier hearing is an important indicator of how strictly the EU will monitor the Brexit agreements, but also where their sensitivities lie. By the same token it reveals French concern about the future relationship with the United Kingdom.

Summary of the hearing:

Defence worries: Significantly it was the Gaullist Christian Cambon, chair of the powerful foreign affairs and defence commission, who opened the session to ask if the EU 27 will stay as united from now on as they have done so far. He wanted to know what was Britain’s frame of mind (disposition d’esprit) given their sensitivity over Northern Ireland and their attitude over vaccines. Would relations with London be constructive or ‘combative’, ‘perhaps even vengeful (revanchard)?’ Cambon asked the question because ‘We hope to pursue Franco-British defence cooperation with them via Lancaster House. We hope to continue this in the 3 areas it covers: nuclear, operations and capability (capacitaire) but we are worried (inquiet) as to Britain’s willingness ‘to stay tied to European defence’ outside of NATO. This, he added, was all the more the case based on past experience and recent declarations. France he insisted should try and keep the UK in ‘the game’. Could Europe, he asked, really only look to build European defence autonomy with just one of the two major European defence forces?
Trade worries: Sophie Primas (President, Economic Affairs commission) asked about economic relations and delays at the frontiers, which were hurting French companies. Were these merely teething troubles? She also wanted to be sure that Britain would fully apply the Brexit agreements. She was concerned that the agreements would be scrupulously applied by Fr\nce and not by the UK. Already, she insisted, a 2019 report showed that the British were not respecting phyto- sanitary rules. Is a Singapore-on-Thames scenario likely? What impact had there already been on the GDP of the EU and France? She asked about rules of origins and how strictly these would be applied. She wanted to know if the friction on vaccines is the sign of a more combative (‘offensive’) United Kingdom.?
Fishing and ports: Jean-François Rapin said that he was worried about the application of the agreement and its effects on the French: some fishermen still haven’t been given their permits to fish in UK waters; there was now overfishing in French waters ; the severity of the EU measures on British fish and seafood products makes the French worry that Britain will do the same in return to French exports and that British markets will be lost for good. What about the competition between European ports that could lead to some attracting more trade because of softer checks on British goods? What of the plans for Belgian ports to form a megaport to attract British trade? Could the London/EU tensions over Northern Ireland lead to a state of permanent harassment in relations with the UK that could spill over into other areas such as financial services?

Barnier’s answers:

Barnier’s reply opened with the statement that Brexit proves that the ‘EU is not a prison … It’s a divorce that provokes, like all divorces, tension and legal insecurity. We tried to put in certainty.’ But Barnier states twice that what was done by the EU Commission on article 16 in Northern Ireland was ‘une erreur’. But he adds, fortunately it was corrected within three hours.
On implementation he said that two new services were being set up in Brussels from 1 March 2021: one to monitor the withdrawal agreement, the second to monitor the new commercial agreement based on the old task force.
Level playing field: The new commercial agreement with the UK had been set up in nine months, a record when compared with agreements with Japan and Canada. He insisted that Brexit was lose-lose for everyone, but that EU exports to the UK were a mere 8% while the UK’s to the EU were 46%. The EU had learnt from the experience and from now on every EU agreement with third countries would be on a level playing field basis, using ‘dissuasive tools’ (outils de dissuasion), such as state aid and regulatory divergence (divergences règlementaires) conditions.
He added that agreements may not always work as one might have hoped, but it was important to check that everything was carried out according to the rules.
Barnier on fishing: Fishing, he admitted, was the most difficult part of the agreement. The UK initially wanted to regain all its fishing rights and could have done so if there had been no agreement. Only 8 member states were directly concerned but the EU 27 acted collectively. He added that the deal was positive for the EU because the EU fishes some 650 million euros annually in UK waters while the UK fishes 850 million in its own waters and 150 million in our waters.
The energy weapon: To get the deal, said Barnier, I introduced the notion of ‘mirror agreements’. The fishing agreement was linked to the question of energy connectivity, because the UK is very dependent on its energy connection with the EU. So when the British insisted on the fishing agreement being renegotiated after 5 years with quotas being adjusted annually, we imposed the mirror arrangement whereby energy connectivity would be treated similarly and with the same timescales. The overall agreement is now done. There will be no renegotiation. It will be applied.
Financial services: Two things, said Barnier, were kept out of the overall agreement; one the EU wanted to exclude: financial services; the other the UK wanted to exclude: defence and security. We insisted that when it came to negotiating a financial services agreement financial ‘equivalences’ cannot be negotiated. We have given them some ‘equivalence’ in some services, for example, rating agencies. But we can withdraw these concessions when we like because what is at stake is our financial stability. There will be no joint working committees with the UK on financial services application.
Barnier on defence: The UK refused to incorporate foreign policy, defence and security, and even cooperation on development aid, which disappointed us. Why did they do that? Perhaps because they wanted to present us as ‘requestors’ (‘demandeurs’), or because foreign policy, defence, security and cooperation is not a priority for them. If they eventually come round to wishing to discuss this then we are ready to do so e.g. on sanctions, overseas operations, cyber security or the defence investment fund (fond d’investissement de la défense) which has just been created.
Barnier’s warnings: Barnier insisted that on the overall agreements there must be 3 areas of vigilance: a) Northern Ireland; (b) Proper application of the treaty to ensure there is no risk of dumping (here local member state parliaments will be asked to monitor and pass on their findings to Brussels). The actual treaty may need some bedding in and adaptation (‘besoin d’adaptation’). But the UK must understand that it cannot mean ‘business as usual’. ‘This is not intended as punishment or revenge’, but the UK must understand, to use a German saying: ‘One cannot go dancing in two marriages simultaneously’ (‘On ne peut pas aller danser dans deux mariages à la fois’). They will have no more passporting. We are going to control all their products, as they will with ours, when they want to begin doing so. There are no quotas or tariffs but there are non-tariff barriers.We need to understand why Brexit happened. Why was there a rejection of Brussels? Because in the EU we have poor areas which are suffering in the way that those in Britain have suffered from globalisation, where there are fewer public services and this contributed to Brexit. This exists on our s ide too and we need to learn the lessons. What has been essential in all the Brexit negotiations is the unity of the 27.
There followed questions to Barnier by Senators from the floor, similarly grouped together.
Financial ‘equivalences’: By March 2021 a financial services agreement will be reached. Two equivalences have already been agreed for the British out of a possible 20. Where are these negotiations up to?
Barnier replies that ‘equivalences’ will be given according to our interests and financial stability. The UK, says Barnier, attempted to get round this, notably on the question of portfolio management, which is worth 3,000 billion euros. But the Commission insisted that this would not be in the future agreement and that there would be no co-management of such questions. It is a mechanical result of Brexit. We do have agreements with Japan and the US.
Lessons for the EU: Responding to another question on why Brexit had happened, Barnier was critical of the ultra-liberalism in the EU Commission. It was already exposed in financial services in 2008 and caused damage. This required new laws be put in place to control these excesses in financial services. Then there is the question of excess bureaucracy. There has also been deindustrialisation of many industries to the advantage of services. The UK and France went down this route, whereas Germany and Sweden did not. This has led to the deindustrialisation of economic sectors, problems with local sourcing as exemplified by poor medicines and vaccine supply. A further cause of Brexit was the weakness of democratic debate within the EU. Lessons must be learned. But Europe must at all costs protect the single market, in relation to China and all comers.
Britain after Brexit: To the question as to whether Britain would perform well after Brexit (in contradistinction to all the catastrophic scenarios presented since 2016, asks Senator Guerini), Barnier turned to a Powerpoint slide which he referred to as an updated Cameron slide (apparently used by David Cameron to show what would happen to Britain by 2050 in the event of Brexit). The slide showed that in terms of GDP the UK would remain a member of the G8 group of nations in 2030 but would not be one in 2050, whereas the EU would be in 3^rd place by 2050. Barnier concludes his answer by saying that the EU calculated that Brexit would result in the UK losing 3% GDP over several years and the EU 0.4 %. But Barnier insists that Brexit is a ‘lose-lose’ scenario and nobody should be pleased by it.
No flexibility: Barnier said that the EU needs to cooperate with the UK. We must avoid polemic at all costs and especially worsening relations. But Barnier says we need to be vigilant on the application of the treaty. He says he has heard three UK ministers recently talk of relaxing UK rules on the length of the working week, pesticides and prudential rules in financial services. Nor is the Northern Ireland Protocol negotiable. He was pleased to see Mrs May accept that and was pleased that the new American president was vigilant on this matter.
Barnier says somebody in the room mentioned a joint EU/UK control of frontiers for environmental issues. ‘There is no way that will happen !’ says Barnier. ‘We are not going to put the British in charge of our frontiers.’ Each will have its own customs etc officers.
In response to a question whether the administration in Brussels will do its own study of why Brexit happened, Barnier says yes. He adds that if functionaries take power it is because politicians allow them to do so.
To a question on French sugar exports to UK which will be hit, Barnier says we must not have any illusions, the UK will sign agreements with other states as they are completely independent and will seek to change their food import strategy away from the EU. But on rules of origins the EU can hold them to certain standards. These will be applied rigorously. We will not allow the UK to become an assembly hub for outside states to sell into the EU.
When asked whether it would be possible for the EU to reopen negotiations on certain aspects of the agreement, Barnier says no. That would be imprudent.
Finally on a question as to whether English should remain a common language of the EU, he says there are still two English speaking countries and therefore English will remain an EU language.