Friday, 9 March 2018

Brexit gets silly

At the end of a recent blog post, following Theresa May’s Mansion House speech, I remarked that even though Britain refuses to get real about Brexit that does not mean the EU can or will do the same. We saw that plainly with Donald Tusk’s speech this week. Although you would not think it from most of the coverage in the British media it was highly conciliatory in tone, welcoming cooperation on security and UK involvement in various agencies, and emphasising the urgent need to prevent any disruption to air travel. But it also made clear that the only trade option consistent with the UK’s own red lines is an extensive free trade agreement (FTA) which would necessarily create barriers to trade which do not currently exist. In that sense, it would be a worse deal than single market membership.

This is only a statement of definitional fact which has been stated many times by EU officials and which should be well-known to everyone in the UK who follows Brexit, and certainly to anyone in the government. In fact, Tusk gestured towards an FTA somewhat more extensive than that modelled by the UK government in its reluctantly publicly disclosed impact analysis (for example, by suggesting completely tariff free trade in goods, and even that “like other FTAs it should address services”). But – yet again – he reiterated that there could be no ‘pick and mix’ approach which undermined the function of the single market, because “it’s simply not in our [meaning the EU-27’s] interests”.

I’ll come back to that, but it’s important to clarify that “addressing services” does not mean or imply anything approaching the existing arrangement for services as a single market member. No FTA does this, or could do this (for example, CETA, the EU-Canada deal, mentions financial services but its provisions have almost no depth, barely going beyond what little would exist under WTO terms) and there is a reason for it, which is nothing to do with EU ‘intransigence’. The barriers to services trade are entirely non-tariff barriers (NTBs) relating to standards and regulation. To remove them requires a common regulatory and legal space (and, no, not just ‘mutual recognition’), which the EU single market creates, principally via the ECJ. That is why the single market is the only example in the world of extensive cross-border services trade liberalization. But since membership of the single market is excluded by the UK there is no prospect of an EU-UK FTA covering services in any extensive way. In this sense, the outcome of Brexit, if pursued as the UK government wishes, must be economically worse than remaining in the EU or at least the EEA. Indeed this is clear in the government’s impact analysis which stresses the significance of NTBs for post-Brexit trade.

So far, so obvious. The problem lies in the reaction of Brexiters, for example Liam Fox’scrass response to Tusk: “The idea of punishing Britain is not the language of a club, it’s the language of a gang. We need to begin this argument by putting politics aside and doing what is in the economic interests of the people we represent”. Of course, Tusk had not used the word ‘punishment’ or even ‘argument’: this is a standard misrepresentation by Brexiters, albeit especially reprehensible in a senior cabinet minister. Moreover, a Canada-style FTA was presented during the Referendum by some Brexiters, including Boris Johnson, as delivering exactly the market ‘access’ Britain needed, so there was no need for voters to worry about ‘Project Fear’. Perhaps they were lying, or perhaps they just did not understand how inferior such access would be to single market membership. Otherwise, how could such a deal be positioned as ‘punishment’?

But even leaving all that aside, the quote revealed several persistent and bizarre misunderstandings. Since we are leaving ‘the club’ why would Fox expect its remaining members to treat Britain in a ‘clubbable’ manner? It’s a line which is often heard from Brexiters, as if there is some sentimental reason why Britain should be treated preferentially as a kind of alumni member of the EU. Yet it is Britain that has chosen to leave and thus to forego such chumminess. More than that, it shows an extraordinary naivety about how international relations operates: niceness and nastiness are not the register in which such relations are played. They are, indeed, about interests.

Here we come to the other part of Fox’s statement. He appears to think that by insisting on ‘no pick and mix’ the EU is putting politics above economic interests (May said something similar in her Munich speech; the irony of saying this whilst enacting Brexit is, to say the least, striking). But, as Tusk said in terms, that is not so. Although an FTA Brexit will be damaging to the EU economy in the short-term, the long-term effects of allowing a third country to have equivalent trading terms to member states would be far more economically damaging. The EU-27 have judged, correctly, that their interests do not lie in allowing that. It is naïve of Brexiters to imagine it could be otherwise, and to think that the EU-27 have either a moral responsibility for or a strategic interest in ‘making Brexit work’.

In fact, this is just another version of the longstanding naivety of Brexiters about how ‘they need us more than we need them’ and all the associated nonsense about how the German car industry (or variants thereof) will secure what Fox once said should be ‘the easiest deal in history’. Imagining that others will conceive of their interests in the way that you think they should, especially if it is in the way that you need and want them to, is perhaps the most naïve assumption that can be made in international relations. At all events, it is by now abundantly clear that the EU-27 (and the industries within those countries) do not and will not see it as being in their interests to act as the Brexiters think they should.

Which in turn gives rise to a further naivety, which is to imagine that, whatever stance the EU-27 may take collectively, Britain can lobby individual member states in order to fragment that collective position. Right from the start, the British government have tried to do this, and their efforts are intensifying now. Sometimes the idea is that it’s just a matter of ‘getting Germany on board’; other times it's trying to woo the smaller countries. But it is a grave miscalculation. Although it is true that Brexit has very different impacts on the different member states, trying to chip away at individual countries would only make sense if the Article 50 deal required unanimity, which it doesn’t; and the idea that Germany has an interest in undermining the single market to accommodate Britain has been shown to be completely wrong, even if Germany ran the EU in the way that Brexiters wrongly believe it to do.

Beyond all of this, though, is a perhaps even more dangerous naivety, and it can be seen not just amongst hardline Brexiters but also amongst more pragmatic politicians – such as Philip Hammond – and in some journalistic commentary. This is the idea that the EU-27’s stance is ‘just a negotiating position’ and that, as in all negotiations, each side has to compromise. What underlies this is the assumption that Britain’s Brexit negotiations are rather like those she has conducted as an EU member, with last-minute deals, compromises on all sides, and a recognition of the particular domestic pressures of British politics from the Eurosceptic press and politicians. But the situation with Brexit is fundamentally different, partly because Britain is, indeed, leaving, so there is no particular desire to accommodate us; partly because the time clock of Article 50 and the catastrophic effect on Britain of ‘no deal’ completely changes the balance of power. To put it another way, whereas in those previous deals when we were a continuing member the EU was trying to achieve something and needed Britain to do that, now Britain is trying to achieve something and needs the EU to do it.

So there is a fundamental realpolitik in all this which Brexiters and – since they have colonised it – the British government have to face up to. Many adjectives have been applied to Brexit and to Brexiters. Looking at the way they are conducting themselves now the adjective which seems most applicable is one which may seem rather anaemic but which captures this serial naivety and lack of realism. Brexiters and the Brexit government have become … silly.

Post-script: Indirectly related to the theme of this post, consider the tweet this week from former UKIP MEP Roger Helmer, bemoaning the possibility that a post-Brexit US-UK trade deal might mean that Scotch whisky and Cornish pasties were not protected descriptions anymore (currently, they have EU protected name status). Admittedly Helmer is, against fairly stiff competition, at the lower end of the Brexiter intellectual spectrum. Still, it’s revealing of so many things: a failure to understand the benefits of EU membership, a naivety about how the US would treat the UK in trade negotiations, and the incoherence of a nationalist rejection of the EU whilst favouring a globalist trade policy.      

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