UK's Johnson talks tough over post-Brexit trade with EU

British Prime Minister Boris Johnson is setting out a tough opening gambit Monday in negotiations with the European Union, saying the U.K. will walk away without a free-trade deal rather than agree to follow rules set by the 27-nation bloc. “The choice is emphatically not ‘deal or no deal,’” Johnson plans to say, according to extracts released by his office. “The question is whether we agree a trading relationship with the EU comparable to Canada’s – or more like Australia’s.” Australian-style trade would mean a panoply of new tariffs and other barriers between the U.K. and the EU, its near neighbor and biggest trading partner.

In their divorce agreement, Britain and the EU agreed to strike an “ambitious, broad, deep and flexible partnership,” including a free trade deal and agreements for security and other areas. They gave themselves 11 months to do it. A post-Brexit “transition period,” in which relations stay essentially unchanged, runs until the end of 2020. For the rest of this year, the U.K. will continue to follow EU rules, although it will no longer have a say in EU decision-making.

Britain says it wants a “Canada-style” free trade agreement with the EU covering both goods and services. But it is adamant it won’t agree to follow the EU’s entire rule book in return for unfettered trade because it wants to be free to diverge in order to strike other new deals around the world. Johnson intends to double down on Britain’s tough stance.

“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 U.K. rules,” he will say. “The U.K. will maintain the highest standards in these areas — better, in many respects, than those of the EU -– without the compulsion of a treaty. And it is vital to stress this now.”

It’s a message aimed as much at a domestic audience as it is at the bloc, but EU leaders are unlikely to be impressed by what they’ll see as British intransigence and wishful thinking. EU chief Brexit negotiator Michel Barnier is due to publish the bloc’s draft negotiating guidelines on Monday. Formal talks won’t start until next month, once they have been approved by the remaining 27 EU nations.

If there is no deal by the end of 2020, and the U.K. refuses to extend the negotiating period, Britain faces an abrupt, disruptive economic break from the bloc — with tariffs and other obstacles to trade imposed immediately between the U.K. and the EU. That prospect alarms many businesses, especially in sectors such as the auto industry, which depend on the easy flow of parts across borders.