Article 50, Brexit, British Government, David Davis, Irish border, Negotiating

#Brexit Illusions Are Now Meeting Reality

This post was written today, March 23, 2018

waves-breakToday, Friday, March 23, at the time of writing, the European Council of the heads of government of the (remaining) 27 Member States are expected to sign off, politically, on the details of the transition arrangement that the UK government had requested be put in place after it leaves the EU on March 29th, 2019.

The transition will run until December 31, 2020. During that time the UK will be bound by all EU laws and procedures, including new laws, and will also be subject to the jurisdiction of the European Court. But it will have no role in EU governance meaning it will not attend Council meetings, it will have no members of the European Parliament and will have no Commissioner.

Arriving in Brussels on Thursday, Mrs May said:

“I’m looking forward to talking about Brexit. We made considerable progress through the agreement on the implementation period, which will bring certainty to businesses and people.”

An “implementation period” AKA “transition” AKA “standstill” is a long way from where the leading Brexiteers said, in the run up to the referendum, the UK would be at this point.

Here is what they were saying back then (our comments in bold):

Michael Gove:

April 8 2016:

The day after we vote to leave we hold all the cards and we can choose the path we want.

They didn’t. Not only did the UK not hold all the cards, it turns out it didn’t even hold all the fish as the EU will decide on fish quotas until the end of transition.

He also said, on the same day:

There is a free trade zone stretching from Iceland to Turkey that all European nations have access to, regardless of whether they are in or out of the euro or EU.

Such a zone doesn’t exist. He made it up.

Boris Johnson

Not only did he promise £350m a week for the NHS he also boldly announced that there will continue to be free trade, and access to the single market.

“Access” to the Single Market is not the same as membership of the Single Market, though Johnson seems to imply that it is. Access comes at a cost and with borders. The NHS is still waiting for the £350m.

John Redwood

This prominent Tory backbencher and long-time Brexiteer said that getting out of the EU can be quick and easy – the UK holds most of the cards in any negotiation.

As with Gove, it turned out that UK didn’t hold a single card, apart – maybe – from a Joker.

Nigel Farage

The Brexiteer in chief said:

“To me, Brexit is easy”.

Probably true for Farage, because he just shouted for it but didn’t have to deliver on it as he could never get elected to the UK Parliament. Not true for anyone else.

Liam Fox

Now the International Trade Secretary, he was telling voters that:

“The free trade agreement that we will have to do with the European Union should be one of the easiest in human history”.

Discussions haven’t even begun and because the UK has decided it wants to be out of the Single Market and the Customs Union they will not be easy when they do.

David Davis

However, some of the most quotable quotes belong to the UK’s chief Brexit negotiator. Days before being appointed a cabinet minister in July, 2016, he said:

So be under no doubt: we can do deals with our trading partners, and we can do them quickly. I would expect the new Prime Minister on September 9th to immediately trigger a large round of global trade deals with all our most favoured trade partners. I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months.

Update: Not one negotiation opened, never mind close to being concluded. Davis did not seem to realise that as a continuing member of the EU the UK was not free to engage in such negotiations. Oh, and it turns out the UK didn’t have the people with the experience to handle such negotiations anyway.

So within two years, before the negotiation with the EU is likely to be complete, and therefore before anything material has changed, we can negotiate a free trade area massively larger than the EU. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.

I wonder how the construction of this massive free trade area is going? See above.

We are too valuable a market for Europe to shut off.  Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.

Who’s that knocking on the door, who’s that ringing the bell? No one. German business has made it clear that it values the integrity of the single market more than trade with the UK.

And this is not just German cars. The same will happen with Shell and Unilever in the Netherlands, EDF, EADS and the viticultural trade associations in France, Seat in Spain, and Fiat and the fashion designers in Italy.

Didn’t happen. Won’t happen. Any coincidence that Unilever folded its UK headquarters and located it head office to Amsterdam?

The pressure from European companies for a free trade deal between the UK and the remaining member of the European Union would be huge.

Hasn’t turned out that way. Major EU companies think the integrity of the Single Market more important than cutting the UK a cherry-picking deal.

Actually, matters are somewhat worse that stated above.

It turns out that the EU has some 750 agreements on a wide range of issues with other countries. When the UK leaves on March 29, 2019, it will fall out of all these agreements. The UK wants them rolled-over until it can get around to revalidating them with the countries concerned but the counterparty countries are under no obligation to do so and may well demand concession for their agreement.

All the EU can do to help out the UK with these agreements is set out in a footnote on Page 77 of the Draft Withdrawal agreement which reads:

The Union will notify the other parties to these agreements that during the transition period, the United Kingdom is to be treated as a Member State for the purposes of these agreements.

So, it will fall to International Trade Secretary, Liam Fox, rather than negotiating trade agreements with far away countries, to spend between now and March, 2019, asking the counterpart countries if they will agree to kindly rollover the agreements. Global Britain reduced to a footnote. Will he forever be known as Fox the Footnote?

More seriously, before the draft agreement can be finalised as a legal text which would be binding on both parties once it is ratified, two major issues need to be resolved: the “Irish question” and the “framework” for future trading (and other) relations between the EU and the UK.

When you look at a map of Ireland you see one island. What you don’t see is that there are, in the words of Benedict Anderson, two “imagined communities” on the island, each with a different political and cultural ethos: Nationalist/Republicans, mostly Catholic, on the one side, Unionist/Loyalist, mostly Protestant, on the other.

While the Republic of Ireland is overwhelmingly Nationalist/Republican, in Northern Ireland the two traditions work and live side-by-side. Historically, each has contested the legitimacy of the other and that contest has resulted in violence and death during most of the second half of the 20th century.

The horrors of the terrorist campaign of the Provisional IRA, against what it perceived as an illegitimate British presence, and the counter attacks by Loyalists paramilitaries, between the early 70s and late 90s, are, tragically, only too well known to all.

Since 1922, when what is now the Republic of Ireland gained independence from Britain, there has been a border on the island between Ireland and Northern Ireland. For the best part of 80 years or so that border had been a hard border, with police and customs checks on both sides.

Because of a Common Travel Area agreement between Ireland and the UK you didn’t need a passport to travel between the two parts of the island and to the rest of the UK. But that didn’t mean you weren’t stopped at the border and checked.  Where there is a border, people are always stopped. It is just in the nature of border guards to do so.

Police and customs border posts were a natural target for the Provos because they were seen as symbolising a British political authority and interference in Ireland that was hated and despised. The area around the border on the northern side was one of the most militarized zones in Europe.

The Good Friday Agreement, twenty years in existence next month, put in place, via an international treaty, constitutional and political arrangements that allowed the two communities to coexist in relative peace and that respected the identities of both.

It was as if a way had been found to stabilise a volcano and stop it erupting, but deep below the earth the fires still burn and rumblings can be heard from time to time.

That Ireland and Northern Ireland, through the UK, were both members of the EU and in the Single Market and Customs Union meant that there was no longer any need for a physical border to manage the flow of goods between the two parts of the island, but the constitutional border continues to exist.

As the independent Chairman of the Northern Ireland peace talks, Senator George Mitchell, recently reminded us, the daily interaction in Brussels that joint membership of the EU gave to British and Irish politicians and officials, played a key part in thawing relations and building trust between the Republic and Britain. This in turn enabled the peace process to move forward and was central to the Good Friday Agreement.

The decision by the UK that Brexit implies exit from the Single Market and Customs Union means the inevitable return of a physical border on the island of Ireland. if that happens, the volcano may come to life again. Hence the insistence by the EU, in the absence of any other workable solution, that as part of the Withdrawal Agreement the UK must accept such alignment between NI and Ireland as means that NI effectively stays in the Single Market and the Customs Union.

The “other workable solution” is that the whole of the UK stays in both and we will come back to this later. In the absence of that solution, the question becomes what would NI staying in the Single Market and Customs Union mean? It would likely mean checks on manufactured goods and food products coming into NI from GB We have already discussed this fully here:

There is no doubt, as UK government economic analysis shows, that staying in the Single Market and the Customs Union would benefit NI economically and would probably be endorsed by a majority in NI which, after all, voted 56/44 to stay in the EU. But some Unionists argue that it would introduce a border between NI and GB and somehow, undermine the “Britishness” of those in NI who deeply value their Britishness. But there are already considerable divergences between NI and GB as Matthew O’Toole points out HERE.

Would the checking of manufactured goods and food products as they passed through the ports of Belfast or Liverpool really make anyone in NI less British or even feel less British? Hard and unavoidable decisions involving the NI loom for the UK government in the months immediately ahead. Technology is not a solution because it addresses the wrong question. A car registration recognition camera at any other border in the world is just that: a camera. In Ireland, it is a political symbol. The question is political, not technical.

Could these decisions be avoided by the UK as a whole staying in the Customs Union and the Single Market?

The UK will remain in the EU’s Customs Union and Single Market until December 31, 2020. After March 29, 2019, the day it leaves, it will begin detailed discussions to flesh out the future “framework” that will have been agreed as part of the Withdrawal Agreement. The EU has made clear that because the UK has said it will not stay in either the Customs Union or Single Market then all that will be on offer is a free trade agreement a le Canada.

As the realities of what this will mean in practice begins to become clear – e.g., more paperwork and costs, queues at borders, restriction on the export of services – there will be pressure on the government to review its position. Practically all reputable economists are agreed that trade deals with far away countries will not compensate for what will be lost with the EU. The UK government will, literally, be negotiating with the EU so that the UK can become poorer than it otherwise would be.

Politically, keep in mind that it was fear of UKIP, more so than the Eurosceptics within the Conservative Party, that drove Cameron to call the referendum. UKIP is dead and, to coin a phrase, will be even deader, when it no longer has seats in the European Parliament. Just as in the Conservative Party, there is a majority in the parliamentary Labour Party to stay in the Customs Union and the Single Market. Within the next two years so-called “Corbyn mania” may well have run its course and be seen as less of an electoral threat to the Conservatives as it is perceived to be today.

Could May be tempted to abandon her red lines “for the sake of the economy” and face down the Brexiteers in her party? She could call an election arguing that the UK is no longer a member of the EU but has taken the pragmatic decision to stay in the Single Market and Customs Union for the sake of the economy and to safeguard the union of GB and NI. Where would this leave the Opposition?

Yes, the UK would not be able to negotiate its own trade deals, but it would be easy to argue that there were not many deals on offer anyway, given the turbulence the global trading system may soon experience, starting today, with the US and China hitting one another with tariffs.

As for immigration, which could well fall anyway, as Denis McShane has long argued, labour market controls could be put in place within EU law to manage it and to curtail exploitation. New EU legislation on Posted Workers and the Written Statement (on terms and conditions of employment) could help in this regard.

The major issue is that all this would leave the UK without a seat at the table when decisions relating to the Single Market and the Customs Union are being taken. If it all came down to this could a solution be found? Given good will on all sides, probably yes.

Might it happen?

Harold Wilson once said that a week was a long time in politics. It would take a political Stephen Hawking to define the political length of three years. Go back to the start of this Briefing and look again at where the Brexiteers said the UK would be today. They were wrong then in their claims as we now know.  From here on in anything could happen.

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