Friday, 19 March 2021

The great Brexit bodge job

It has been a complicated week for Brexit news. If there is a unifying thread that runs through it, it is of the consequences not just of Brexit but of the particular way that Brexit was done becoming clearer. In parallel, there is a concerted attempt by Brexiters to ignore, deny, disown, obscure or distract from these consequences and the decisions they made.

Brexit and trade update

There can be no serious doubt now that Brexit is inflicting significant damage on UK trade with the EU, the only debate is about how great that damage is which won’t be known for a while. Last Friday, just as I was posting, the Office for National Statistics reported a massive fall of 40.7% in UK exports to the EU in January 2021, the first month after the transition period ended, with imports from the EU falling by 28.8% compared with December 2020. Some sectors’ exports have been devastated, most notably food and live animals which fell by 54%.

The ONS report allows some wriggle-room for Brexiters (which they are taking full advantage of) to downplay, if not deny, the extent to which Brexit is the cause, rather than the pandemic. This, of course, was to be expected not least because, even before the pandemic struck, they ascribed any piece of Brexit bad news to some other factor. In effect, they have set up a circular - or more accurately ‘unfalsifiable’ – argument. When the effects of Brexit were predicted they were dismissed as Project Fear because no one could ‘prove’ they would happen. Now the effects are happening they are dismissed as having another cause because no one can ‘prove’ they are down to Brexit. Thus, happily for them, no evaluation of Brexit is deemed possible.

However, detailed analysis by John Springford of the Centre for European Reform, which corrects for pandemic effects, and uses a sophisticated ‘doppelganger’ method to model Brexit against the counterfactual of no Brexit, finds a 22% fall in total goods trade with the EU in January. There is still scope to argue that some of this is explained by anticipatory stockpiling of traded goods and it remains to be seen the extent to which that was a factor, but some supply chain experts suggest it will not have had a major impact. The 22% fall comes on top of a 10% fall in UK-EU goods trade since the 2016 Referendum. These figures all relate to goods trade. The picture for services trade is more difficult to establish yet, and more difficult to separate from pandemic effects, but it is not going to be good (£).

Whatever emerges in the longer-term, there are two particular points that stand out. One is that, given that the Trade and Cooperation Agreement (TCA) established zero tariffs in UK-EU trade it follows that what we are seeing, and will see, are the effects of non-tariff barriers, including customs formalities, as well as of tariffs due to rules of origin in some cases. This is important, because going right back to the Referendum campaign, Brexiters continually failed to understand the difference between a ‘free trade deal’ and single market and customs union membership and, in tandem with that, focused far too much on tariff barriers to trade and, even within that, ignoring what rules of origin would mean for international supply chains. That was a conceptual failure, and one which is now beginning to be quantified. In turn, this shows the deep flaw in David Frost’s claim, mentioned in my previous post, that economic models over-stated the significance of non-tariff barriers.

The second point of note is that exports have been much harder hit than imports so far. The most obvious reason for that is that the UK has not yet introduced import controls and, indeed, announced last week that their introduction would be delayed by a further six months. That will be welcome news for importers, but creates a quite extraordinary situation, especially when viewed from a Brexiter perspective, since it means that British exporters face controls which EU exporters to the UK are spared, a disparity not lost on farmers, for example. I’m not sure that this was what Brexiters had in mind when they argued that German car makers would ensure that a good deal was assured, but it is certainly a good deal for them. It will also be handy for those minded to offload substandard or dangerous products into Britain’s welcoming arms. Again, I’m not sure if this is what Brexiters meant by taking back control of our borders.

The legacy of stupidity and arrogance

Why has this happened? The answer is in part, again, because Brexiters didn’t understand or accept what leaving the single market, even with a free trade agreement, would mean. Indeed it was not until February 2020 that any government minster formally and publicly admitted that it would mean border controls on imports. Beneath that lies an astonishing mixture of stupidity and arrogance. Even before Article 50 was triggered, Brexiters were agitating against the idea of any transition period to implement the terms of a future trade deal, and both the principle and the length of a transition were the subject of ongoing rows within the Tory Party throughout the Brexit negotiations.

In November 2016 the then Brexit Secretary, David Davis, of whom it is almost no exaggeration to say that every word he ever uttered about Brexit has been wrong, languidly opined (£) that he “wasn’t really interested” in a transition but might consider one to “be kind” to the EU. By July 2017 he said that the practicalities would be ‘doable’ for the UK without transition but countries like France, Belgium and the Netherlands wouldn’t be ready and would need extra time.

In the event, the original Theresa May exit deal set a transition period that was to have lasted from the then planned Brexit day of March 29 2019 until the end of 2020. Even then, she and other ministers insisted that this was an ‘implementation period’, when in fact there would be nothing to implement until a trade deal was struck (this also reflected persistent failures to understand that the trade deal and the exit deal were separate things). That would have given some twenty-one months to negotiate the deal and ‘implement’ it but of course Brexit day didn’t happen until January 31 2020. Yet the original end of transition date was not changed, and Johnson refused to extend the period, when it was possible to do so, even though the pandemic had already started.

Thus, now that it is exposed that the EU was, in fact, ready in time but the UK was not, the government is reduced to prolonging the one-sided introduction of border controls. Doing so is not a violation of any of the agreements with the EU and although, conceivably, it could violate WTO non-discrimination rules with respect to non-EU countries it is highly unlikely that this will lead to any action against the UK. Apart from anything else, these are still temporary measures and it would take far too long for a dispute to be raised – and in any case the WTO dispute settlement process is still in chaos.

The drive to ditch the Northern Ireland Protocol

What is much more serious is violating the Northern Ireland Protocol (NIP) by unilaterally extending the ‘grace periods’. This led to the EU this week beginning legal action against the UK for breaching the NIP, as well as a political letter complaining of bad faith. In normal times this would be a big news story, and perhaps a scandal. The combination of Covid, Brexit fatigue, and a lack of political opposition and public interest means that, now, it hardly registers - but the damage being done to the UK’s international standing is considerable. That damage is not just to relations with the EU but, potentially, the US.

It has been suggested by one influential Conservative commentator this week (£) that the politics of US involvement might move things in the direction of the EU accepting much softer arrangements for the Irish Sea border than those entailed by the NIP. The rationale for this argument is the claim, long made by unionists but now being adopted by the British government, that the NIP is itself a violation of the Good Friday (Belfast) Agreement (GFA). Since the Biden administration is committed to upholding that agreement then, the idea goes, it will support the UK against the EU in flexing or even dropping the NIP.

This argument was tested in a speech in the US this week by Dominic Raab, and explains his bizarre claim that the EU is erecting an Irish Sea border (when in fact this is what the UK and the EU agreed). He then sought to present this, or at the very least the way that it is being implemented, as a violation of the GFA. Presumably the same argument is being made by the senior official the UK has sent to Washington. Meanwhile, the EU and Ireland have recently made representations to Biden about the need to uphold the Protocol, with the St Patrick’s Day (virtual) meeting between the US President and the Irish Taoiseach providing a potently symbolic focus.

It is already clear that Biden’s administration is not going to accept the UK’s line. To his existing statements of support for the GFA, this week he went further in articulating his support for the NIP and, by clear implication, for the Irish Sea border which it sets in place. The most obvious issue in all this is, indeed, the fact the UK signed up to the NIP, and Johnson hailed it as a great triumph of his negotiation to have ‘ditched the backstop’ that had been in Theresa May’s deal. The government did so knowing full well what its effects would be, yet from the outset has pretended otherwise. Thus having, like Boris Johnson, denied that it meant an Irish Sea border, Brandon Lewis, the Northern Ireland Secretary, is now engaged in a new pretence, which is being echoed in the wider phalanx of Brexiter ideologues.

This pretence has two prongs. One is to suggest that the whole thing is just a triviality, almost a joke. So Lewis talks lightly of just wanting “the great British banger” to be enjoyed in Northern Ireland, as if checks on processed and chilled meats did not have a serious purpose. Lower down the Brexiter food chain the same dismissive sentiment is found, for example in  suggestions that the EU is prioritizing “the inspection of lettuce before peace in Northern Ireland”.

The other prong, which also relates to the claims about the GFA, is that the NIP was, somehow, provisional and a step towards, as Lewis calls it, a “permanent solution”. Down the food chain that appears in the false claim from Iain Duncan Smith (£) that the Protocol “was originally not intended to be permanent … the Withdrawal Agreement was very clear that the Protocol would be ‘superseded’”. In fact, the Protocol allows for the possibility that it (or parts of it) may be superseded by subsequent agreement, not that it “would be”. That could happen were the UK to align with EU SPS rules, for example, but not simply by ignoring them. (Smith also, wrongly, says that “the EU still hasn’t ratified” the Protocol which is, at best, a misunderstanding: it has, it’s the TCA which hasn’t yet been ratified.)

Whether Biden’s slowly hardening stance will make a difference remains to be seen, but as things stand it is clear that the UK is toying with the idea of not just violating the NIP but of trying to completely revise or even abandon it. That may only be the beginning, if the Brexit Ultras get their way. Already some are agitating (£) for the UK to renege on the financial settlement payments. It is easy to dismiss such calls as coming from fringe and peculiar figures – and few merit that description better than Mark ‘World War Two’ Francois, the culprit in this case – but the Brexit process has showed over and over again that what starts with such figures ends up being government policy.

Global Britain?

The irony that this should be happening even as the government trumpets its commitment to leadership in shaping global rules could hardly be more glaring. This commitment was part of this week’s Integrated Review of Security, Defence, Development and Foreign Policy which ostensibly sets the strategic direction for Britain’s international role for years to come or, perhaps more candidly, articulates an overblown version of that role to appeal to voters’ nationalism and Johnson’s predilection for boosterish phrase-making. In effect, it reverses the British decision in the 1960s to retreat from ‘East of Suez’. Some argue that there is a logic to that, but political historian Professor Robert Saunders points out that the strategic and financial reasons for the 1960s decision still exist, and to an even greater extent.

This isn’t the place to discuss the review in detail, but from a Brexit perspective three things stand out. One is just that Brexit is what frames it – both because this is what Britain’s post-Brexit place in the world is meant to be and also because of the central emphasis placed on the Brexiters’ buzz word of sovereignty. The second thing is that, whatever its merits or otherwise, there is very little in it which could not have been done without Brexit and much in it that would have been done had Brexit not happened. The third is that it says relatively little about the EU, as opposed to bi-lateral relations with some EU members, as if to suggest that ‘Global Britain’ is above such parochialism.

That was certainly the implication of Johnson’s dismissive reference, when presenting the review to the House of Commons, to “the cramped horizons of a regional foreign policy”. But it makes little sense. On the one hand, the UK’s foreign policy has never been constrained by, or limited to, the EU. On the other, in relation to many of its objectives the review will entail collaboration with the EU, for example over climate change, or would benefit from closer and more harmonious relations with the EU, for example over security. An ‘Indo-Pacific tilt’ is all very well if you like that sort of thing – though whether Britain has the money and resources to make it more than tilting at windmills seems questionable – but, as the Brexiters used to say, we are leaving the EU, not leaving Europe. So Johnson’s words might best be interpreted as showing a preference for grand gestures over mundane practicalities (indeed that also characterises his entire approach to politics, including Brexit), as well as an attempt to cock a snook at the EU.

Yet, in fact, the UK’s most pressing foreign policy and security need is to regularise its relations with the EU, not least as this is a prerequisite for improving relations with the US which, as the review affirms, remain the cornerstone of UK policy. Lurking beneath this is the recurring Brexiter idea that defence and security are primarily, or even solely, linked to NATO with the EU a near irrelevance. This is, at best, deeply out-dated, as the recent statement by NATO shows, and in relation to some of the cutting edge issues of cyber-security simply false. It is also hard not to raise an eyebrow at the recognition that Russia is the most acute threat to UK security, given that it is not necessary to posit Russian interference in the 2016 Referendum to recognize that Brexit was a huge gift to Putin.

The ingrained antagonism towards the EU is vividly illustrated by this week’s absurd accusations (in the headlines, even if the stories don’t sustain them) that it is suspending use of the Oxford-AstraZeneca vaccine as some kind of anti-Brexit statement. Everything about that is nonsense. The EU is not suspending the vaccines use – and the EMA, the EU’s medicines regulator, has and continues to approve its use – but rather some individual states, not all of them even EU members. It may very well be that these suspensions are unnecessary, and it seems that many of them will be lifted very soon, but the idea that national regulators are animated by, or even remotely interested in, Brexit is preposterous. If this story shows anything about the EU it is that its individual members have, and can exercise, sovereignty in the same way as non-members. But, absurd as it is, it has taken root in the fertile soil of post-Brexit bellicosity in which, as per my last post, Brexiters remain obsessed with the EU and assume that the EU and all its members are obsessed with Brexit, so that in the UK the entire vaccine mess is seen through the lens of Brexit.

At first sight these two things - the vaccine rows and the Integrated Review - may seem very different, but they come from the same mentality, which is also evident in relation to trade. At the end of my previous post, I used the metaphor of a stroppy teenager storming out of the family home and it applies here, because that mentality licences both an imagination of the EU as malevolently tyrannical and a fantasy that ‘we don’t need them anyway’. The crucial link is that both responses are supposedly assertions of independence but remain bound by, and defined through, that from which independence is sought. If Global Britain is supposed to be a mature, self-confident, sovereign state exercising international leadership – though that is hardly how post-Brexit Britain appears to the bemused world - then Brexiters need first to lose that adolescent mentality.

Bodged Brexit

As these various post-Brexit realities play out, it’s worth separating out those things which arose inevitably as a consequence of Brexit, or of hard Brexit, such as the introduction of non-tariff barriers, from those which have arisen from the incompetent and dogmatic way in which (hard) Brexit has been undertaken. The timescale and preparedness issues are undoubtedly of the latter sort, as is the relentless antagonism towards the EU. Given that Brexit was, on any account, a major change in national strategy and, on the Brexiters’ account, a vital one, then it was entirely unnecessary to do it with such haste and with such ill-grace. That happened partly because the Brexiters didn’t know what they were doing but, more, because their hatred of the EU and, perhaps, the political calculations of the Conservatives about the threat from Farage led them to do a rushed, botched, bodged job of both the Withdrawal Agreement, including the NIP, and the TCA.

The consequences of that bodge job are becoming more and more evident with every day that passes. But just as their lies, ignorance and incompetence brought us to this situation so do the Brexiters now seek to address it with more lies, ignorance and incompetence. Almost everything that is happening now was warned of. The Brexiters were told over and over again what the consequences would be for trade, for Northern Ireland, for international relations. Every single time they did not just ignore the warnings but ridiculed them, and traduced those who gave them as misguided at best and treacherous at worst.

Now everything that they promised is coming unstitched but there is no contrition, and not even any recognition. Just more lies, and new lies about the lies they told before. No amount of grandstanding about Global Britain can conceal the squalid mess Johnson and his cronies have made back at home.

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