Reset means Reset

Regular readers will realise that this isn’t posted on a Friday morning, as normal. For various reasons I’ve had to post early this time. In line with the new fortnightly pattern, the next planned post is still Friday 27 September.

In my previous post I wrote about the new government’s lack of a post-Brexit strategy, at least in public. Politics, like nature, abhors a vacuum, so an inevitable consequence of this absence is speculation and criticism. What, beyond a ‘reset’ is the plan, and what does a reset mean? Recent examples include The Observer’s Andrew Rawnsley, suggesting that Starmer’s agenda risks antagonizing both pro- and anti-Brexit voters, whilst achieving little of value. Meanwhile, Luke McGee of the I identifies divisions within the Cabinet over how to proceed.

But it’s not just a matter of commentators trying to make sense of things. Political actors are also seeking to shape events. For example, the former leader of Labour MEPs, Richard Corbett, has outlined some of the steps the government could take within its ‘red lines’ whilst warning that these impose a caution which is at odds with the scale of what is needed. TUC leader Paul Nowak gave backing for Starmer’s re-set, but in doing so pushed for more extensive agreements on, especially, youth mobility than the government is publicly willing to entertain. And Labour MPs, along with those of some opposition parties, are pressing the government for clarity and action.

Talk about negotiations

There are some parallels with the period in 2016 when Theresa May kept insisting that ‘Brexit means Brexit’ prior to announcing that it meant hard Brexit. Now ‘reset means reset’. In both cases, in the background intense lobbying was going on within the UK. Meanwhile, in the EU, a steady process of consensus-building was developing about what Brexit would mean, and there are signs that something similar is happening now. A report of a leaked EU internal briefing document (£) suggested that Labour’s plan for a travelling artists’ mobility agreement would not be accepted, and its other publicly stated asks would not be straightforward.

Of course there are also important differences between these periods. Dealing with Brexit was the defining task for the UK government under May, and a major task for the EU. Neither of those things are true now. Moreover, then, there was the prospect (once Article 50 was triggered) of a defined negotiating process. Now, there is no equivalent. This makes a recent article in the Telegraph by Daniel Hannan, entitled “the UK has the whip hand in negotiations with the EU”, even sillier than his usual offerings. For, apart from the fact that it shows that the ‘they need us more than we need them’ fantasy still persists, in this case there are no negotiations with the EU over Brexit. Even holding them will be a UK request that may or may not be granted. In other words, Britain is a demandeur not simply within the negotiations but in seeking them.

Hannan and his ilk have less direct influence now, of course, but the continued existence of this kind of discourse can only feed suspicions in the EU that the UK polity as a whole has yet to purge itself of Brexitism. It’s tempting to add ‘despite the new government’, except that the fear that drives Labour’s timidity is itself a sign of the hold Brexitism still has.

At all events, there is little reason to expect any immediate clarity in what the reset is going to consist of, or achieve. That’s partly because even the first steps to that, of developing and improving relations, are still only just being taken, Starmer’s trip to Dublin last weekend to – yes, of course – ‘reset’ those with Ireland being a recent important example. Relatedly, it is because nothing much of substance is going to happen until the new EU Commission is in place, effectively at the beginning of next year. For that reason, it’s also probably sensible not to read too much into reports, such as that of the leaked briefing document, of what may or may not be agreed.

Familiar farces

During this ‘reset means reset’ period, many of the now familiar features of the post-Brexit (or should we call it pre-reset?) landscape continue. These include reports that the new government will yet again postpone the full introduction of import controls, with what was supposed to have been the October phase now put off until next July. It’s the latest iteration of a farcical saga which I’ve discussed in detail at the time of previous postponements.

This time there is the added feature that whereas, apparently, the new government thinks the need for controls will disappear if and when, following the ‘re-set’, there is an SPS agreement, the EU seem likely to be unwilling to agree to any re-set until the provisions of the original deal have been fully implemented. This includes the provisions for goods coming from Ireland to Great Britain, also much delayed, with construction work beginning only last week on the necessary facilities at Holyhead port. These facilities are due to be completed “sometime in 2025”. We will see.

Even more farcical, although, paradoxically, at the same time eminently sensible, is the latest retreat from the utter absurdity of the UKCA mark. Here too there has been a long history in delays to the date by which CE quality marks would cease to be valid, and UKCA would become mandatory. I discussed this issue in detail in August 2023, when the plan was “indefinitely postponed”. However, as I noted then, some products were not included in that, one case being construction products, where CE marks were still due to be phased out by the end of June 2025.

Last week, the government announced that this date would not apply and gave no other in replacement, suggesting that, for these products too, postponement is now indefinite. So far as I know, no such announcement has been made as regards medical devices, the other main area not covered by the 2023 indefinite postponement, with CE marking for these products due to be phased out by 2028 in some cases and 2030 in others. But I think it is all but inevitable that these will also be dropped.

UKCA was a particularly ludicrous piece of Brexit hubris, which has unravelled because in practice no one wanted it, and the country couldn’t afford it. In that sense, it is a metaphor for Brexit itself, albeit that, unlike Brexit, it proved easy to unravel by simply not doing it. Every time we see the Conformité Européenne mark on a product will serve as a reminder of that.

Evidently neither the latest postponement of import controls nor that of conformity assessment marking show any departure from the pattern of the previous government (from which derived the welcome news of the first Horizon funding for post-Brexit projects). In fact, in terms of things the government can do unilaterally (as opposed to through negotiation with the EU), the sole new departure so far has been the promised legislation to (mainly) track EU product safety, and weights and measures, provisions. Pretty much everything else remains unclear, and will most likely emerge in piecemeal decisions which only in time (if at all) will come to form a pattern of its own. In that sense, the ‘reset means reset’ period is likely to be a long one.

Latest false claims about Freeports

However, whatever the Labour government’s post-Brexit policy intentions may be, one thing which is pretty much irrelevant to them is Freeports. I’m not sure that this is even worth discussing, but there is a new myth gaining traction on social media that because the government apparently has no plans to close what are almost invariably referred to as ‘Sunak’s 86 SEZs and Freeports’ this means that it is precluding the UK from rejoining the EU or even the single market. In a more conspiratorial version, the reason the government doesn’t want to rejoin is in order to continue with ‘SEZs and Freeports’.

This is the latest iteration of something which has been doing the rounds for a few years. It started with the claim that Freeports are, or could become, ‘Charter Cities’, where companies are granted ‘charters’ to set and run legal systems. This would supposedly mean that all regulations, including employment and environmental laws, along with all public healthcare and education, would disappear within these zones. I wrote a detailed debunk of this in 2022, calling it a conspiracy theory because having already claimed that creating Charter Cities was ‘the real agenda’ behind Brexit, the subsequent announcement of Freeports was retro-fitted to ’prove’ this [1].

Subsequently, the same idea re-emerged, not always referring to Charter Cities explicitly, but making a similar false claim that ‘SEZs and Freeports’ were ‘States within a State’, again setting their own corporate legal and regulatory regimes. I wrote another debunk of this, earlier this year. It included reference to the then only emerging claim that ‘SEZs and Freeports’ are somehow a barrier to ever rejoining the EU and the very first references to Labour’s complicity in this.

Since the election, this latter claim, along with repetitions of the previous ones, has become quite widespread on social media. I won’t link to examples because, as a matter of general policy, I don’t make critical comments about social media posts by private individuals, as this can lead to bullying ‘pile-ons’ [2]. However, a quick key word search of X-Twitter, and to an extent BlueSky, will provide examples.

Freeports and the prospects of rejoining

I have put ‘SEZs and Freeports’ in scare quotes because this near-ubiquitous formulation is often the first clue that something misleading is about to follow. SEZ – meaning Special Economic Zone – is a generic term, encompassing many different institutional forms, of which Freeports are one (though they, themselves, are not all the same). So to say ‘SEZs and Freeports’ is a misnomer, and this is not a pedantic matter of jargon: it is a misnomer which carries some highly misleading implications.   

It implies that all 86 UK SEZs (exact numbers vary) are part of this supposed explanation for Brexit or this supposed barrier to re-joining the EU. Describing them as ‘Sunak’s 86 SEZs and Freeports’ makes that implication even stronger, since it suggests that they were his invention. In fact, the majority of these were created before Brexit and before Sunak, and so, self-evidently, neither explain Brexit nor preclude EU membership. Nor, by the way, have any of them ‘turned into’ anything remotely resembling Charter Cities or ‘States within a State’ which, if that was the ‘secret plan’ for them, there would surely be signs of by now.

So what about UK Freeports, specifically, which do, in their present form, post-date Brexit? It’s certainly true that Sunak and others proclaimed them as a post-Brexit ‘freedom’. Oddly enough, I recall correcting some of the initial criticisms of Sunak which were based on the fact that Freeports had existed, though had been closed, when the UK was in the EU. I pointed out that, post-Brexit, UK Freeports would indeed be different as they would not be bound by EU rules, highlighting in particular EU state aid rules. The problem with those initial critiques was that they were a knee-jerk reaction, ignoring key details.

I wrote that in February 2020, so it is somewhat ironic that now, over four years later, some are latching on to the differences between UK and EU Freeports, most especially as regards state aid, but again ignoring key details. (There’s also a certain irony in the way that they are simultaneously presenting Freeports as neo-liberal hellholes in the making and yet also fulminating about state aid, which they pearl-clutchingly tell us is really taxpayers’ money, for all the world like the most doctrinaire of neo-liberals.)

As to the details, there are two questions. One is whether, as a matter of fact, the tax breaks provided to Freeports would not be allowed under EU state aid rules. This is by no means an easy question to answer, as recently highlighted by George Peretz KC, a leading expert in this area, in response to the claim that this is so. It doesn’t just depend on what those tax breaks are, it also depends on the (hypothetical) question of how the EU Commission would interpret them. Moreover, it is simplistic to discuss the state aid issue in terms of EU rules, ignoring those of the UK (which exist: again, it’s not a neo-liberal free for all), the Level Playing Field provisions in the UK-EU Trade and Cooperation Agreement, the provisions of the Northern Ireland Protocol, WTO rules, and OECD protocols. In other words, the issue here isn’t reducible to EU rules versus no rules.

The second question is whether, even assuming that UK Freeports do violate EU state aid rules (or any other EU rules), this precludes the UK joining, or applying to join, the EU or the single market. The answer to that is certainly ‘no’ (this also applies to the parallel claim that they would preclude an independent Scotland joining the EU). Many other EU accession countries have had SEZs which, at the time of application, did not comply with EU rules. As part of the accession process, these SEZs either changed their rules or were phased out, in some cases over long periods, hence the idea that UK Freeport contract lengths might delay, even if not prevent, rejoining is also bogus [3].

There’s absolutely no reason to think the same would not be true for the any accession process for the UK and, anyway, it would be part of a much wider issue than that of Freeports. If the UK ever rejoins the EU or the single market, any and all divergences from its rules that may have occurred since Brexit will have to be ended. Freeports are different in detail, but no different in principle, to any other such case. The sole reason they are being presented as some kind of special obstacle to rejoining is because of the weird preoccupation with Freeports which has grown up.

It shouldn’t have to spelt out, but I will do so to avoid misunderstanding. None of this means that Freeports, specifically, or SEZs, generally, are ‘good thing’. On the contrary, there are serious questions about issues including corruption, various forms of criminality, value for money, and lack of accountability. That is especially clear from questions which have been raised in the case of the Teesside Freeport. Similar questions would arise with or without Brexit (because EU Freeports are by no means immune from criticism). But Freeports don’t ‘explain’ Brexit, they aren’t a vehicle for post-Brexit ‘States within a State’, and, to speak to the latest claims, they are irrelevant to the prospects of rejoining.

That being so, it would make no sense for Labour to continue with Freeports in order to subvert rejoining. Nor do we need to look to Freeports for some secret reason to explain Labour’s hostility to rejoining. The reasons for that may be poor or at least debatable, but they are well-known (freedom of movement, fear of Labour leave voters, fear of it dominating the entirety of the administration etc. etc.). The UK may or may not end up joining the EU again, or the single market, under a Labour government, but Freeports won’t play any part in deciding that.

Ruthless remainers?

Although I don’t think the distraction of these Freeport claims are very widespread amongst serious political actors, they do point to a wider issue for ‘remainers’ or ‘rejoiners’ (or whatever the best term would be: just ‘joiners’, perhaps?) So also, and more importantly, does the present vacuum of this ‘reset means reset’ period which, as I noted above, creates a space for such political actors to influence government policy. That wider issue is the politics of the ‘join’ or ‘rejoin’ movement.

The Bagehot (aka Duncan Robinson) column in the latest issue of the Economist (£) posed some sharp questions for what it called this “strangely ineffective” movement, exhorting “remainers” to become “more organized and more ruthless”, aping the determination of Farage and what became the Brexit movement. It provoked a lot of interesting discussion on social media, and although I don’t have space to discuss it in this post, I will probably return to it in the future.

For now, one observation is that, whilst part of the ‘ruthlessness’ of Brexiters was a quite cavalier disregard for factual accuracy, I do not think that will serve ‘remainers’ well. Ruthlessness needn’t mean truthlessness. That’s not a matter of squeamishness, or even of scruples, it’s more that, with so many excellent arguments against Brexit it’s hardly necessary to make false ones.

 

Notes

[1] I’m not going to re-hash all the tortuous arguments about this, but those who have followed them may be interested in a recently published academic paper by Patrick Holden and Nichola Harmer of Plymouth University, who note that: “The outcome [of the UK’s introduction of post-Brexit Freeports] is a Freeport policy that, whatever its merits, is not forging a neoliberal dynamic in the UK’s political economy.” This is actually a specific instance of a point I’ve made many times on this blog. There were certainly some Brexiters who saw it as vehicle to pursue a massive agenda of neo-liberal deregulation. This was ‘a’ reason for Brexit, but it wasn’t ‘the’ reason for Brexit, and when Brexit happened they found that there were many other constraints on the pursuit of their agenda apart from EU membership. It’s yet another instance of Brexiters simply being wrong about what EU membership meant and what Brexit would mean.

[2] By private individuals, I mean any account where it is not clear that they are posting in a professional capacity as politicians, journalists, or experts within the domain that is the subject of their post, or on behalf of some organization, or might reasonably be considered a ‘public figure’ in some other way.

[3] A related claim is that investors in Freeports would make use of Investor-State Dispute Settlement (ISDS) systems to sue the UK government if it adapted or closed Freeports in order to re-join the EU. However, that would be irrelevant if the contracts were simply wound down as part of any accession process. That aside, the ISDS claim is a bit like some of the Brexiters' 'technical' sounding claims which are difficult to disentangle as they involve a simplistic take on a deeply complex area, but it certainly isn’t true, as such claims imply, that ISDS would simply be available to foreign investors in such circumstances, as if it were some kind of international court open to all comers. It might (but wouldn’t automatically) apply if the investor was from a country with which the UK had an ISDS agreement as part of an investment or free trade agreement, which, post-CPTPP accession might apply if that country was a CPTPP member (though not if it was Australia or New Zealand). However, typically, ISDS (of which there are very many legitimate criticisms) comes into play in countries which do not have well-developed domestic legal systems to which investors can bring claims. For this reason, those ISDS agreements the UK has entered into have almost entirely been used by UK firms against foreign governments, not by foreign firms against the UK government (the UNTD database records only one such case, from an Indian investor in 2006, though some sources suggest there have been two; either way, no case has succeeded). Anyway, even if the UK sought to re-join, and if an investor in a Freeport had a right to bring an ISDS action, and if it did so, it would not follow that it would win, and even if it did win, whilst that might cost the government some money, it wouldn’t derail rejoining. In short, it is a red herring.