Boris Johnson, Brexit, British Government, Brussels, Data Protection, Negotiating

#Brexit and the story of Paddy’s Two Rules

pint and ham

It was back in 1972. I had joined the Workers Union of Ireland, now part of SIPTU, as a trainee official. Full of naïve, student radicalism. Impatient to change the world.

I was assigned to learn my trade with an old-time official named Paddy.

Paddy was had risen through the union ranks from a shop-floor worker, to shop-steward, to full-time official. He was no intellectual, but he was full of what we would nowadays call “street-smarts”. An old-fashioned, working class union official whose heroes were Larkin, Connolly, and Bevan. Marx and Lenin didn’t come into it.

At the time, Paddy was in discussions about the renewal of a two-year agreement with a major food company. I was the junior bag carrier.

After several weeks of tough bargaining, we signed the deal mid-afternoon. Paddy and myself then went to the pub for a pint and a ham sandwich. Back in 1972, that was all you could get in a pub, a ham sandwich. Maybe with a slice of cheese. If you were lucky, they might even toast it. Gastro-pubs were waiting to be invented.

Well Paddy”, I said, “Here’s to us. That is that. We won’t see these guys for another two years”.

He took a long sip of his Guinness, and a deep pull on his cigar (those were the days), looked at me over his glasses and said:

“Son, we will be back in there next week, and every other week for the next two years. We will be arguing about what the agreement means. The bosses think it means one thing. The lads another. Always was that way, always will be.

I could do with another sandwich. Ask your man to bring us one. And another couple of pints while he’s at it. Might as well call it a day.”

And so it turned out. We were back there every other week. Soon, I was there on my own, Paddy having other things to do. The idealism of my radical student days was ground down against the reality of discussing the details of overtime rates for rotating four-shift systems. Not a fluttering red flag or barricade in sight. I grew up quickly and learnt the “art of the deal”. Trade union life was about a penny here and a penny there. Talk of romantic revolutions cut no ice on the shop floor, even if there was always a Stalinist or Trotskyite shouting the odds. That’s all they were ever good at. Shouting.

There never is an endpoint. Never a day in an interdependent relationship where you do not have to negotiate and renegotiate. As Paddy said, “always was that way, always will be.”. The agreement is just the end of the beginning. Then the hard work starts.

Paddy taught me something else. Perspective, though that is not a word he would ever use.

“Son, always take a step back. Forget the hurly-burly of the meetings and the this-and-that of little things. Too easy to get dragged into the bushes. Ask yourself, where did we begin and where did we end? Have we put an extra pound in our members’ pockets? Are they better off now than they were before? Did we come out ahead?”

1972 is close on fifty years ago. I moved on and I have worked the employer side of the street for the past forty years. I have been through a lifetime of labour and other negotiations and I have probably read every book on the subject there is to read.

But Paddy’s two “street-smart” lessons have always stayed with me: in an interdependent relationship, negotiations never end; and two, forget the small stuff, always look at the big picture.

And so with Brexit. The “Christmas Eve Deal” is just the end of the beginning. The EU and the UK will forever be locked in ongoing negotiations over everything and anything. (here)

As time goes on, the UK will find that one against twenty-seven means that there is only ever one winner. There already is one winner: the EU. It has walked away with 90% of the deal.

Rule two: look at the big picture. Forget the small stuff.

Above all else, the relationship between the UK and the EU is about trade. Trade in goods and trade in services. Yes, I know that there are multiple other aspects to the relationship and they are important but, at heart, it is about business.

Forget the smoke and mirrors stuff of UK newspaper headlines about “Boris Beats Brussels”. As I see it:

  • The EU has an €90bn food and manufacturing trade surplus with the UK. The EU sells more to the UK than the UK does to the EU. The EU has secured a tariff/quote-free trade deal with the UK. The EU will continue to sell more to UK than the UK does to the EU.
  • The UK has a €20bn services surplus with the EU. The UK sells more services to the EU than the EU does to the UK. The UK has failed to secure a deal on services with the EU. Inevitably, the sale of UK services to the EU will decline. Not a “blowout” but, as Anand Menon has said, “a slow puncture over time”. For example, it is not clear if a UK based lawyer or consultant can go to a meeting in an EU country where they are paid by the client for advice without a work visa. The devil is always in the detail.
  • The UK has ended freedom of movement which means EU citizens cannot freely move to the UK. Nor can UK citizens move freely to Europe. As a result, the UK will struggle to fill vital jobs across many sectors which European workers did until now. They will be reluctant to come back to the UK because of the new immigration points system and the declining value of the pound. The UK will continue to need immigrants. They just may be from somewhere else, other than Europe.
  • UK citizens will find it more irksome to travel to Europe, having to use the slower “Non-EU Citizens” lane at airports. Stays in Europe will be limited to 90 days in 180, meaning the many hundred of thousands who own holiday apartments and houses will find their time in Europe curtailed.
  • The continued free flow of personal data from the EU to the UK, on which a great many businesses are dependent, will be down to a unilateral “data adequacy” decision on the part of the EU. Yes, there is a grace period from January 1 of four to six months during which data can continue to flow freely, and businesses will be grateful for that, but long-term uncertainty still lingers.

Now, while it makes a great deal of commercial sense for the EU to grant the UK such an adequacy decision, the EU Commission does not have a free hand in the matter. The Schrems II judgement of the Court of Justice of the European Union (CJEU), which ruled invalid the “Privacy Shield” arrangement between the EU and the US will have a bearing. “Privacy Shield” was struck down because of the ease with which the US intelligence services could access personal data transferred to the UK from the EU.

Now that the UK is a third country, the same concerns will arise especially over the UK’s Investigatory Powers Act. Inside the EU, the UK got a free pass on this. Outside the EU, it becomes an entirely different matter. If the EU Commission grants the UK an adequacy decision, expect an immediate legal challenge from privacy campaigners.

On the UK plus side, over the next five to six years the UK will take back a (slightly) greater share on the fish in its waters. If it can catch them. Which means building up its fishing workforce. But where is the evidence of a pent-up demand on the part of young British people for a career at sea? If offered the chance how many young people would go back down coalmines? Not many, I suspect. Fishing, like mining, is one of those professions from the past now much romanticised but which young people, wisely, will walk away from when other life chances are on offer.

If fishing is a Brexit “win” it’s not one the fishing organisations recognise. They are already crying betrayal.

So, a “thin deal” but a deal nonetheless. Yet a far cry from “one of the easiest deals in human history” that would deliver “the exact same benefits” of EU membership without any of the obligations or financial costs.

As part of the EU’s Single Market and Customs Union the UK had free, frictionless, uncomplicated trade in goods and services with the EU. 16,000 trucks a day crossed between Dover and Calais with border checks taking mere seconds. British bankers, accountants, architects, and consultants could freely sell their services across 28 countries. British artists and musicians were free to “gig” without the need for complicated paperwork.

Travel was easy. You could wake up anywhere in the morning in the UK and be anywhere in Europe that evening, even if you only had days left on your passport. Now, you will need at least six months on your passport, and you may be asked to show sufficient means to support you during your stay. Health insurance for your visit could become an issue. Borders always mean bureaucracy and bureaucracy always causes problems.

That frictionless world is gone. The EU/UK deal is the first trade deal in history that creates barriers and paperwork rather than eliminate them. Barriers always come with a cost.

So, when you take a step back, and apply Paddy’s test of who came out ahead, the Brexit deal is a great deal – for the European Union.

I am not the only one to read it this way. This is from the New York Times, December 26:

That loss is especially painful for Britain, which ran a surplus of £18 billion, or $24 billion, on trade in financial and other services with the European Union in 2019, but a deficit of £97 billion, or $129 billion, on trade in goods.

“The result of the deal is that the European Union retains all of its current advantages in trading, particularly with goods, and the U.K. loses all of its current advantages in the trade for services,” said Tom Kibasi, the former director of the Institute for Public Policy Research, a research institute. “The outcome of this trade negotiation is precisely what happens with most trade deals: The larger party gets what it wants and the smaller party rolls over.”

The trade expert, David Henig, also seems to see it the same way here.

This deal does not close the door, nor does it bring negotiations between the UK and the EU to an end. Paddy’s first rule: in an interdependent relationship, negotiations never end. Implementation of the deal can be as difficult as the negotiation of the deal. As the commentator David Allen Green notes:

About ten pages of the UK-EU trade agreement are devoted to setting up – without exaggeration – dozens and dozens of UK-EU talking shops committees, assemblies, working groups and so on

All with various powers and functions Welcome to the future, negotiations without end.

Have a look at the new EU/UK institution structure here.  And on what remains to be done here.

Good for the Eurostar. When it returns to normal operations when we finally contain Covid19 it will be full of UK officials heading to Brussels every day of the week for negotiations on every aspect of EU/Brussels business.

Brexit will never be over. The relationship between the UK and the EU will be front and centre of UK politics for evermore. Every time the EU takes a step the UK will have to work out how to respond to that step. It will have no choice. The EU is the elephant in the UK’s back garden and you simply cannot ignore what the elephant does. Unless you want to get trampled on.

However, in one sense Brexit is finished. There is now an agreement in place between the UK and the EU, subject to it being approved by both parties. From here on, the EU will treat the UK as another “third country”. On January 1 next, in a few days’ time, the UK will have finally left the EU behind. The curtain will have come down on endless Brexit negotiations. For now.

And the curtain also comes down on these Brexit Briefings. From now on, the UK being outside the EU will just be a normal, if regretful, part of everyday life. For BEERG members we will report on future developments in our weekly newsletter. For others who have read these briefings over the past four years we hope we have been of some little assistance in helping you to make some sense of something which, to be honest, has never made any sense. At least not to us.

At some stage, during the coming year, we may write something on Brexit as a study in negotiations. But the key learning is already clear. When you start out not knowing what you want, you simply end up with what you get. When it comes to Europe, the UK still does not know what it wants, beyond vague slogans about “sovereignty”.

Until then, let me leave you with some words on Brexit written by a Dutch friend of mine. As an Irishman, I share his feelings entirely.

You have longed to move away from us. Your desire fuelled by dark sentiments.

When the day comes, I will reach out to you. Tell you how I love and admire you, your beautiful country, graceful language and glorious history.

Remember you will always be welcome to live, laugh and weep with us.

Upon your return I will embrace you as a neighbour and a friend.

Return you will, for your departure is but a cold winter. In spring you and I will move in tune again.

Says it all.