Friday, 16 October 2020

In for the long haul

A month ago Boris Johnson set a deadline of 15 October for a trade deal with the EU to be done. That date has passed, no deal has as yet been done, but Johnson has not walked away from the negotiations. Perhaps he never intended to and it was just more empty bluster, as in July and September. Perhaps, as some pundits have been reporting, he will do so today when he is due to respond to the European Council meeting. Or perhaps he would like to, but is constrained by the resurgent Covid-19 crisis. Sometimes in politics manufacturing a new crisis can distract attention from an existing one, but it can also simply magnify the sense of a government losing control.

It is clear that the EU will not walk out of the talks and that whilst they continue, fisheries, state aid and the governance of any agreement remain the familiar, widely-reported, stumbling blocks. Of these, the third, governance, has grown in salience because the Internal Market Bill (IMB) has so badly damaged the EU’s trust in the UK (£). But the truth is that this lack of trust has been growing over years, as I catalogued in a post last May, accelerating with Johnson’s cavalier repudiation of much of the Political Declaration.

Lack of trust is now central

The IMB was just the last straw, and - even if the relevant clauses get abandoned, as they still may - its attempt at hardball tactics has badly misfired. For, especially given the new Covid-19 situation, Johnson might want to play the same trick as he did in January and sign up to some kind of deal which he could then try to backtrack on later. If so, the IMB has made that a great deal harder. He has played his tricks so many times that there is no longer any goodwill. Trust and goodwill can sound like airy-fairy concepts in the cold-eyed world of trade negotiations and international relations but they are indispensable, especially in such a complex and unprecedented negotiation as this one.

The fault is not Johnson’s alone. Apart from the back story going back to 2016, trust in the UK is also much damaged by the spectacle of Iain Duncan Smith, and other Brexiters (£), now repeatedly calling for the Withdrawal Agreement to be repudiated. At the same time, there are increasing concerns about the government’s commitment to the rule of law, not just because of the IMB but also the recent attacks from the Home Office on the legal profession, attacks repeated by Johnson in his party conference speech. The backdrop of the illegal prorogation of parliament and the grab of executive power in relation to both Brexit and the COVID-19 pandemic, especially through the extensive use of Statutory Instruments, contributes to these concerns. As David Allen Green, the Financial Times’ Law and Policy commentator, discusses, there is now a question as to whether Britain is moving towards “government by decree”.

Also rumbling away in the background is the long-standing hostility of many parts of the Tory Party – strongly overlapping with those that are the most pro-Brexit – to the Human Rights Act and, even, to the European Convention on Human Rights (ECHR). Indeed it is worth recalling that before the Referendum, Theresa May, whilst campaigning to remain in the EU, proposed that Britain leave the ECHR. Perhaps of more relevance at the present time is Dominic Cummings’ assertion that after Brexit “we’ll be coming for the ECHR”.

No doubt this would find considerable support amongst many leave voters. Throughout the Referendum campaign in conversations and on social media when leavers were asked to give examples of EU laws they disliked these were almost invariably judgments of the European Court of Human Rights (usually garbled versions of these, but that is another matter). Although this is only based on my own experience, I’m pretty sure it was the case more generally. It perhaps doesn’t need to be said here, but the ECHR and its Court are not EU institutions, and Brexit does not affect Britain’s participation in them.

At all events, the Tory 2019 election manifesto promised a review of the Human Rights Act, which translates the ECHR into UK law. This has itself been an issue within the future terms negotiations as it impacts on the EU’s willingness to share security and law enforcement data. Recent reports suggest that the UK has now agreed “not to materially alter” the spirit of the Human Rights Act in order to achieve agreement on such data sharing. Nevertheless, the very fact that Britain’s wholehearted commitment to the ECHR is in question is significant.

A problematic neighbour

So viewed from an EU perspective Britain now looks like a very problematic neighbour. In summary, its government has spoken quite openly of a willingness to flout international law. Influential politicians advocate reneging completely on an international treaty. Its commitment to the domestic rule of law is fraying and that to the ECHR is under debate.

It may well be that much of the noise in these areas comes from some rather cranky and even extreme individuals and thinktanks. But anyone observing British politics over the last few years will have seen how, again and again, ideas which have started there have become mainstream within a short period of time. For example, when in January 2019 Jacob-Rees-Mogg was urging Theresa May to prorogue parliament it was a very niche view. Eight months later, under Johnson and with Rees-Mogg’s connivance, it was attempted and the court ruling of its illegality remains much resented by Brexiters.

Indeed, more generally, one might see the entirety of Brexit as a story of a fringe idea colonising mainstream politics, and thereafter a progressively harder and more extreme version of Brexit become mainstream. So one way of thinking about the situation now is that, having seen Britain signally fail to confine the Brexit Ultras to the margins, and having seen every accommodation made to them by the British polity met with a still harder demand, the EU is now seeking to build a ‘firewall’, in the form of strict governance procedures, between itself and the country the Ultras have captured.

For who knows just how rogue the UK is going to go in the next few years? For that matter, what kind of state will it be if, as seems increasingly likely, Scotland departs and, as is by no means impossible, Northern Ireland also? Even if those things don’t happen – but especially if they do, leaving a mainly English rump – what is the EU to make of a country which, despite having achieved Brexit, still configures its relationship with the EU in wholly antagonistic terms? That may change with the passage of time and political generations, but it’s equally likely to become entrenched and even more bellicose.

The import of all this for the current negotiations is that even if from a British perspective the issue is (perhaps) to get some sort of deal over the line by the start of January so as to at least minimise disruption, from an EU perspective things look different. Not only would the disruption be less for the EU and it is better prepared for it but, more to the point, whatever gets agreed now will have long-term consequences.

Having been repeatedly stung by British perfidy – especially over the Withdrawal Agreement/ Political Declaration - there is a strong incentive to nail down the governance terms of any agreement, and if that is not possible to accept that there will be no deal this year. As Clement Beaune, the French European Affairs Minister said this week, “it’s a matter of how the UK is a partner of trust in the years to come”.

Britain unprepared

If such strategic considerations inform the EU’s approach to these final phases of the negotiations, in the UK it is short-term factors which mainly predominate. I’ve been writing since at least October 2018 about the lack of preparedness of businesses (and other organizations) for Brexit, and in several recent posts about how government information for businesses has come too late and been lacking in key operational detail. Throughout that time there has been a drumbeat of implicit criticism from the government of businesses for being unprepared (and – paradoxically – a veritable orchestra attacking business bodies for their warnings of how much will change).

In recent days, these criticisms have mounted. First, the Business Secretary, Alok Sharma, issued a panicky sounding “urgent message” to businesses to get ready for the end of transition. The next day Cabinet Office minister Lord Agnew accused them of “burying their heads in the sand”, attracting widespread condemnation (£). I’m conscious that I keep repeating that I am repeating myself but as I wrote a few weeks ago these criticisms of business are outrageous given the years of dishonest promises of continued ‘frictionless trade’, the lateness of government planning for the effects of Brexit, and the dismissal of the warnings about both.

Even now, although it is true that some of what is to come will occur with or without a deal, businesses that will face tariffs if there isn’t a deal are left in limbo since, in at least some cases, this is not something they can prepare for as it will simply sound their death knell regardless of any actions they take in advance. Nor are tariffs the only issue. It has long been explained to Brexiters that a ‘Canada-style’ Free Trade Agreement – actually, any Free Trade Agreement – will do relatively little for services trade and, certainly, will offer far less integration than single market membership. But for years they either ignored it, or pretended that a ‘Super-Canada’ deal would be done that would magically avoid this problem. 

The reason why trade agreements do little for services is because, even more than for goods trade, liberalisation requires removing non-tariff barriers. This in turn entails some loss of national regulatory control or, in Brexiter terms, sovereignty. An example of the kind of issue at stake is the mutual recognition of professional qualifications in, for example, law and accountancy, and in fact, despite its recent rhetoric of asking for no more than what Canada has, the UK has been seeking such recognition in the negotiations with the EU.

This seems to have been unsuccessful (though that cannot yet be said definitively) and if so that is unsurprising as it is a version of ‘cakeism’ – that is, wanting to have a benefit of single market membership without being a member. The consequence, as a House of Lords sub-committee reported this week (£), will be very considerable potential damage to the UK’s £225 billion professional services industry. As with sectors like pharmaceuticals, auto, aerospace, chemicals and also some that get less attention (e.g. music, computer gaming, fintech) the UK is ripping up some of its biggest economic success stories – areas where, to use the government’s favourite phrase, Britain is ‘world-beating’ – in the name of the Brexit theology of sovereignty.

Holding all the cards?

Also unsuccessful has been the “UK plea” for special allowances on electric car and battery exports (this would have meant an exemption for this sector from rules of origin which, in general, we already know will be applied). This, remember, is a sector identified by Boris Johnson in 2019 as being one in which the UK plans to emerge as a future world leader. And in the balance are arrangements for air travel at the end of the Transition Period if there is no deal. As things stand, it is not known what will be in place but, in the event of no deal, the Transport Secretary says “we expect the EU to bring forward contingency measures” so that flights can continue. Hardly reassuring for those wanting to plan travel for a time which is now less than eighty days away.

It’s worth noting the tone in both these stories. Whereas the Brexiters promised that Britain would ‘hold all the cards’ once it voted to leave the EU it is now a matter of ‘pleading’ with the EU for special treatment and being entirely dependent upon the EU to keep something as basic as air travel to the continent. That’s not the result of EU ‘bullying’ but the fact, as the air travel case illustrates literally, that if a country disconnects itself from an interconnected world then inevitably it becomes the supplicant when seeking to reconnect itself. Sovereignty doesn’t put planes in the air.

But there is small comfort in the spectacle of all the Brexiter claims being discredited. Between the ravages that Covid-19 is inflicting on businesses and those self-inflicted by Brexit it is becoming increasingly difficult to see what kind of economy Britain is going to be left with this time next year. And that self-inflicted wound isn’t just a result of Brexit, but of the way Brexit has been done and even just of the bone-headed refusal, in the midst of a pandemic, to extend the Transition Period, which would at least have cushioned or delayed much of the damage.

Time is running out but negotiations will never end

Having refused to do so when it was both possible and obviously going to be needed has now exposed the UK to a dire set of risks, for the end of year deadline is one that Johnson cannot now conveniently drop. It is ironic that David Frost is reportedly complaining that (£) the EU is “using the old playbook” of “running down the clock” when it was the UK that ensured that the clock stopped on 31 January. That of course was predicated on the theory that ‘the EU always blinks at the last minute’, a theory now being tested to destruction, with the most recent EU Council statement having a decidedly ‘take it or leave it’ tone.

This exposes the obvious difficulty with the government’s approach which is that it entails the UK being willing to ‘walk away’ without a deal. But apart from all the damage that would do, disproportionately to the UK, the story about contingency measures for air travel in the event of no deal shows the hollowness of the idea. For immediately after having done so Johnson would have to return to the table to agree these and other measures. So if later today, or any other time, he were to announce the end of future terms talks then almost the next day they would resume in a new form.

In several recent posts I’ve argued that it is pointless trying to predict whether or not there will be a deal, and I must confess to becoming increasingly irritated by the numerous pundits trying to do so. But, in addition to that, the wider implication of what I’ve written today is that if there is no deal – and, in a less dramatic way, even if there is a deal – that won’t be a ‘settled’ relationship, and so won’t be the end of ‘Brexit negotiations’. It will be the beginning of more negotiations.

So, depressing as it is to say it, the current ‘deal or no deal’ episode isn’t even the prelude to a resolution. For, given the irreducible fact that the EU is a major economic bloc sitting geographically right next door, there will be never-ending negotiations of one sort or another. Indeed it must be conceded that one, at least, of the Brexiters’ slogans has been proved true. Unsurprisingly so, since it was the truism that ‘we’re leaving the EU but we’re not leaving Europe’.

 

For the first time this year I will be taking a break from blogging next week. It may turn out to be a big week for Brexit news, which would be unfortunate. I hope to post again on Friday 30 October or shortly thereafter. Many thanks to all who read and help to publicise the Blog, which has this week hit the milestone of 4.5 million visits since its launch just over four years ago. I know that there are many other places people can go for Brexit news and analysis, so it is much appreciated and never taken for granted that you come to this site. Maybe this is also a moment to say that I’m sorry I don’t acknowledge every (mainly) kind comment made on Twitter – on ‘blog days’, especially, my notifications tend to go wild. But I do appreciate every one of them. CG

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