This blog was written on March 6th, 2019
It’s a Long, Long Way from Gove to Here
“The day after we vote to leave, we hold all the cards and we can choose the path we want.” – Michael Gove, April 2016
“I don’t believe it (no-deal Brexit) will be Armageddon” – Suella Braverman, March 2019
It’s a long way from “holding all the cards” to it won’t be “Armageddon”. Three years is indeed a very long time in politics.
Speaking to the Institute for Government last Monday, Sir Ivan Rodgers, the former UK ambassador to the EU who resigned from that position because his advice on Brexit strategy was being totally disregarded in London, said there was no chance that the UK would be able to disentangle itself from the EU even if Brexit goes ahead. He added:
“These fantasies of release and liberation – they are fantasies. We are going to be negotiating on everything from aviation to farming for evermore with our biggest neighbour. We cannot live in glorious isolation. Talk to the Swiss and to the Norwegians – they live in a permanent state of negotiation with the EU.”
At all times the EU is a continuous negotiation. Every day of the week there are meetings in Brussels and elsewhere where new laws are discussed, old laws updated, programs designed, problems grappled with, initiatives launched. The EU is, literally, negotiated governance. How else do you run a union of 28, soon to be 27, countries other than through permanent negotiations?
There is a big difference, however, between negotiations within the EU between fellow members and negotiations with the EU as an outsider, a “third country”. Within the EU member states will try to find an accommodation that all can live with. If you see things my way today, I’ll see them your way tomorrow.
But when the EU negotiates with a third country it is all about power and leverage and the EU has processes and procedures in place to project and maximise that power and leverage. The UK has been learning slowly over the past two years what it means to be an outsider negotiating with the EU, though clearly many in London still have not taken the lessons on board. They continue to give the impression that they are negotiating as if they were still in the club and entitled to the benefits of club membership. They keep asking the EU to sacrifice Ireland, a member, for a soon-to-be non-member.
In reality, negotiations between the UK and the EU have scarcely begun. To date, all that has been discussed have been exit terms covering financial obligations, citizens’ rights, and the issue that is now blocking the road, the Irish backstop.
But assume that the Withdrawal Agreement is accepted. What then happens?
The UK goes into a transition arrangement that runs to the end of 2020, but could be extended to the end of 2022. The UK hopes that during the transition it can negotiate the details of its future relationship with the EU.
That is highly unlikely, for two reasons.
The first is just the sheer range of topics that need to be discussed, as Rogers highlighted, everything from data transfers, to road haulage, to airlines issues. Just think of an issue, whatever it is, and it probably has to be discussed and agreed.
The second reason may be the more important. Today, because the UK has been a member of the EU for the past forty years, all of its market and customs arrangements are in line with EU standards. But the UK is leaving the EU so it can have the freedom to diverge from those standards. Otherwise, why leave? In the negotiations the EU’s position will be quite clear. Diverge from our standards and you lose market access.
The dynamic underlying all trade negotiations is to bring the parties closer together, to eliminate barriers to trade. Now, how do you frame your negotiating mandate when you are by far the smaller party to the negotiation and you are the one who wants the freedom to diverge from current, common standards?
What leverage will the UK have to secure full access to the EU’s internal market, while at the same time saying it wants to diverge from EU standards. “Please sir, would it be OK with you if we sold you what you would consider to be substandard goods or services?”.
While the UK is conducting this negotiation with what is its biggest market for goods and services it also wants to push ahead with negotiating a trade deal with the US. Last week the office of the US trade representative, led by Robert Lighthizer, released its “negotiating objectives” for a possible trade agreement with the UK.
The 18-page document said the US was seeking “comprehensive market access for US agricultural goods in the UK” through the reduction or elimination of tariffs. It is looking for the UK to remove “unwarranted barriers” related to “sanitary and phytosanitary” standards in the farm industry.
On industrial goods, the US said it was aiming for “comprehensive duty-free access” and stronger “disciplines to address non-tariff barriers” from the UK. In digital trade, which is rapidly expanding, the US wants “secure commitments not to impose customs duties on digital products”, such as software, music, video and e-books, and “non-discriminatory treatment” of content.
The EU has for years refused to negotiate market access for US agricultural products on the grounds that farming methods in the US, such as hormone raised beef and chlorine-washed chickens do not meet EU health and safety standards.
So, here’s the dilemma for the UK. If it wants a trade deal with the US then it will have to accept the US’s demands on market opening for US agricultural products. But then its own agricultural products, such as Welsh lamb, are going to find themselves shut out of the EU market because of suspicions on the part of the EU that the UK could be used as a backdoor for bringing US agricultural products into the EU market.
Consider the complications that could arise for the UK around data transfers and digital trade. The UK is desperately hoping that it can get a “data adequacy” decision from the EU before the end of the transition period certifying that is it safe to transfer personal data from the EU to the UK. But what if that adequacy decisions requires it to keep in place data protection standards that the US finds unacceptable?
Or take the proposed EU Directive on Copyright in the Digital Single Market 2016/0280(COD), also known as the EU Copyright Directive, intended to ensure “a well-functioning marketplace for the exploitation of works and other subject-matter… taking into account in particular digital and cross-border uses of protected content”.
The Copyright Directive has been subject to robust criticism from industry groups who believe that that the directives would inhibit online expression by requiring websites to obtain licenses in order to link to news articles. They also have other major concerns with the proposals.
Now, this is a subject that I know little about. But, just as with farming, you could have the UK caught between competing US and UK digital regulatory regimes, forced to make a choice between them.
Of course, there may well be negotiated solutions to farming and digital issues that allows the UK to trade to its advantage with both the EU and the US. It’s just that those solutions are not going to be found in an afternoon over a cup of tea or coffee in some office in Brussels or Washington. They will take years of energy-sapping negotiations.
Not only will the UK be locked in endless years of negotiations with the EU, and possibly the US, but UK politicians are also going to find that bringing trade issues back into domestic politics can be dynamite. Because negotiating trade deals involve trade-offs and some of those trade-offs may be very politically unpopular. Already we have seen clashes between UK cabinet ministers on post-Brexit tariffs on food with some ministers wanting zero tariffs to lower shop prices for consumers while others want tariffs to protect agriculture.
Did I mention that along with never-ending negotiations with the EU and protracted negotiations with the US, the UK will also be involved in about 40 other trade negotiations as it seeks to roll-over existing EU trade deals with countries such as Japan and Singapore? Japan has already made it clear that it will not simply “delete EU” and “paste UK” in the deal it now has with the EU. It wants to talk new terms.
As readers of this Briefing know, the Irish “backstop”, the commitment that the UK signed up to in December 2017 to make sure that there would be no return to border infrastructure on the island of Ireland has turned out to be highly problematic for the UK. As I write this, UK negotiators are in Brussels looking for a formula to ensure that the UK is not forever “trapped” in a customs union with the EU because of the backstop. Reports suggest that there are very few stones in Brussels that have not been unturned and still no formula has been found.
The Brexiteers in the UK parliament and their media allies have been claiming that there are “technological solutions” to the Irish border which means there would be no visible border, with paperwork and all necessary checks done elsewhere. Apart from the fact that no such technology exists, suggestions of “technological fixes” betray a complete misunderstanding of what the border issue is about. It has nothing to do with lines in the ground marking the boundary, camera systems or back-office computer systems.
It is about violently contested political space on a small island that resulted in unspeakable bloodshed and death that was brought to an end by the Good Friday Agreement (GFA). That agreement provides for managed ambiguity about the exact constitutional status of Northern Ireland (NI) and allows the people of NI to be Irish or British, as they choose, or both. The context was the ending of economic borders because of the common membership of the EU of Ireland and the UK.
Brexit shatters the ambiguous balancing act because it will force choices on the people of NI that no one wants to have to make. Old demons will be awoken.
In the 2016 referendum the people of NI voted 56/44 to stay in the EU. As we have written before we suspect that if the question was simply to stay in the single market and the customs union the majority would have been bigger. There is significant support across NI for the backstop. So, the UK will find itself having to negotiate the future of NI as Brexit unfolds. The DUP will not always hold the cards it holds today.
If NI finds itself as a “special economic zone” after Brexit, able to export freely to both the EU and the UK, though at the price of checks on goods coming into NI from the UK, it could quickly become a magnet for inward investment.
If Scotland saw that happening, as it was dragged out of the single market and the customs union by England, would it stay quiet? Or would demands for a second, Scottish independence referendum grow? Remember that last time one of the arguments against independence was that Scotland would be out of the EU and would have to apply for membership and go through the long and complex accession procedures.
There is also the little matter of Gibraltar, with Spain reasserting claims that were dormant while the UK was a fellow EU member but are now coming back into play again.
To sum it all up. Brexit will never be over. The UK will be locked in negotiations with the EU, ad infinitum, while at the same time trying to cut trade deals with the US and other countries, as it also seeks to sort out constitutional issues within its own borders. The UK will be pulled and stretched to breaking point.
Will the UK have the political bandwidth to cope? Questionable, because at the same time it will be dealing with the economic consequences of Brexit. As we write this, controversy has already broken out about the future of labour and employment law in the UK post-Brexit. As we have seen in the past week, the car companies are starting to walk. Others have already slipped quietly away.
One final point. While all of the above is happening who will be UK Prime Minister? It is unlikely to be Theresa May. But if the Tories continue to form the government, and that is not a given, could it be someone from the hard Brexit wing of the party? Or someone not as obsessed as ending freedom of movement as May is and more open to a customs union/single market relationship with the EU?
We are just at the end of the beginning of Brexit.