It’s been a horrible week for Brexit news, and a depressing one for any hope that UK-EU relations will settle into harmony or, at least, pragmatic cooperation. Careful readers of this blog will have been primed for the resumption of the Jersey fishing rights row this autumn, and almost everyone expected a crisis over the Northern Ireland Protocol (NIP). With both happening simultaneously, it’s important to understand how they do and don’t relate to each other, not least because it’s clear that the Brexiters and the government are intent on lumping them together in false and hypocritical ways. But that’s also a difficult task, because each of them involves considerable complexity – hence an even longer than usual post.
Fishing licences row
As regards the row over licences for French boats, it is a complicated story as fishing stories always are. It is partly about the issuing of licences to fish in the 6-12 nautical mile zone by the UK generally (licences for the 12-200 mile zone are effectively granted automatically). However, the central issue relates to the large number of rejected or outstanding applications to fish in Channel Island waters, which first erupted in May. That adds another layer of complexity because of the distinctive constitutional status of the Channel Islands.
Jersey and Guernsey
The Jersey dispute arises from Brexit because the Trade and Cooperation Agreement (TCA) superseded the Anglo-French Granville Bay Agreement. The latter agreement was originally created, following numerous disputes between Jersey and France, in 1839 and was updated in 2000 with implementation in 2004. Scrapping it as part of Brexit was strongly lobbied for by the Jersey Fishermen’s Association during the TCA negotiations. Separately, the UK also chose to leave the 1964 London Fisheries Convention causing problems for fishing around Guernsey, Alderney and Sark.
As well as having that difference in historical background, the Guernsey problems have so far been quietly dealt with because its approach has been to issue interim licences until 31 October 2021, automatically renewable monthly until full new licences are issued in December to be in force from 31 January 2022 [1]. By contrast, the Jersey approach has resulted in a mixture of boats fully licensed, boats temporarily licensed until 31 January 2022, and boats which had an ‘amnesty’ until, in effect, 31 October 2021 but with no renewability unless transferred to the temporary licensing list. It is the latter boats which are at the centre of the row. This Guernsey-Jersey distinction is a niche issue, to say the least, yet it seems an important and neglected part of the story.
Bogus comparisons
At all events it is crucial to grasp that this row is primarily over licences for Jersey waters, which are issued by the Jersey government, given that central to France’s complaint is an alleged disparity between the UK’s treatment of its boats and those of other EU states. Thus Clément Beaune, France’s Minister for European Affairs, tweeted in response to David Frost that whereas about 90% of all EU licence requests had been granted by the UK [2], France had not received licences for 40% of its requests. The implication was that France was being discriminated against.
However, it was a bogus comparison because the majority (59%) of France’s ungranted licences are applications to fish in Jersey waters, and France seems to be the only EU country with boats applying for such licences (certainly, all licences so far granted by Jersey are to French boats). Moreover all of the small (under 12 metre) boats and about 80% of the large boats seeking UK (not Channel Islands) 6-12 mile licences are French. It is these smaller boats which are far more likely to have ungranted licences because they tend to lack the expensive GPS systems needed to readily provide the data required to prove they have an historical record of fishing in the relevant waters.
This means that, as a matter of simple arithmetic, France’s number and proportion of ungranted licences is bound to be far greater than any other EU country, not because it is being discriminated against but just because it is the only EU country involved in the vast majority of relevant applications (i.e. small boats in the inner zone around the UK and Jersey). It would be equally absurd to say that, because all the Jersey licences for EU boats have gone to France, it has been specially favoured! In fact, the only inter-country comparison that can be made for the applications over which the UK has discretion is between France and the other country seeking large boat licences in the UK inner zone, Belgium, which has 19% of its licences still pending (i.e. 81% granted) whereas France has only 3% pending (i.e. 97% granted).
This isn’t to say that France has no grievance at all – a key point is that had the TCA negotiations not been so truncated, at British insistence, the details of licensing data requirements for small boats could have been agreed. Nor is France behaving particularly heinously. After all, it’s hardly the only country in the world to make bellicose noises about fishing rights! But the grievance is not especially serious (although of course it matters hugely to the fishermen affected) and it’s not the grievance of discriminatory treatment claimed.
Contradictory conduct
Moreover, France’s conduct has been somewhat contradictory. On the one hand, it has been acting as if this were still an Anglo-French matter. That is despite the fact that France, like Jersey, had wanted Channel Islands fisheries to become part of the TCA - although, interestingly, during the May crisis, the French Minister of the Sea called for the Granville Bay Agreement to be reactivated and in September France called for a revival of consultative process of the old agreement. Yet, on the other hand, it has been seeking to make it a UK-EU dispute.
These are contradictory to the extent that, viewed as a UK-EU dispute, making threats of unilateral French action against British boats and imports, or raising energy supply tariffs to Jersey, is not only arguably disproportionate to the grievance but also arguably illegitimate. The UK government has suggested such action would be a breach of the TCA. The French argument is that it would be ‘retorsion’, falling outside of the Dispute Resolution Mechanisms of the TCA [3]. Yet, at the same time, French Prime Minister Jean Castex requested concerted EU action in a letter to European Commission President Ursula von der Leyen which was leaked last weekend (and of which more later).
In fact, the European Commission has been notably unwilling to ‘take France’s side’ or to escalate the row politically, perhaps recognizing that the grievance claim is rather overblown. Rather, it has acted as a broker, arranging technical meetings between British, French and Channel Island authorities. This led (unless it was a coincidence) to Jersey issuing some forty-nine further licences on Monday, and France subsequently suspending its threat of unilateral sanctions. On Thursday, Frost and Beaune met – itself perhaps slightly odd if this is seen as a UK-EU dispute – without apparent outcome but with no new flare-up of hostilities either. This isn’t the end of the story as there are still talks to come, and the new licences granted are only temporary, but as the week has gone on the row has certainly de-escalated.
Yet much damage has been done. Apart from a further deterioration in the Anglo-French relationship, Brexiters and the UK government have been all too keen to build upon the conflation of the Anglo-French and UK-EU aspects of the row to try to link it with their wider confrontational approach to Britain’s post-Brexit relations with the EU, especially as regards the NIP. So, in what was already a fraught situation, the fisheries row has exacerbated a “poisonous atmosphere” for the NIP talks (£).
Northern Ireland Protocol row
The NIP is bound up with a similarly long and far more fraught history, this time between the UK and Ireland, which is far too complex to review here. Crucially it too grows from (though does not supersede but seeks to accommodate) a situation defined by a pre-existing agreement between two member states of the EU, i.e. the 1998 Good Friday (Belfast) Agreement (GFA). Moreover, this agreement was to a large degree predicated upon both parties being member states, in that the EU single market and customs union had removed the need for an economic border between Ireland and Northern Ireland prior to the GFA and thereby created an important pre-condition for it.
So in both cases inter-governmental relationships became ameliorated by being enfolded within common membership of the EU and have been disrupted by Brexit. It’s not difficult to see how the longstanding UK-Spain dispute over Gibraltar falls into the same category, for all that it isn’t currently so fractious. The argument that the EU played a role in maintaining peace was mocked by Brexiters during the referendum campaign with the reductio ad absurdum that to point to it was to predict that Brexit would mean World War Three. But it is a fact that many longstanding disputes between member states have, at least, been de-escalated by virtue of membership of the EU.
Indeed, that’s underscored by Boris Johnson’s call upon Ursula von der Leyen to intervene in the fishing dispute with France. Actually, as an interesting article by Gideon Rachman suggests this week (£), it is probably the US which is best-placed to act as some sort of mediator between the UK and France over their now constant acrimony. The same may well be true as regards UK-EU relations, and if the NIP row escalates to a UK invocation of Article 16, as many expect, I wouldn’t be surprised to see some such initiative from Joe Biden’s administration, for all that the Brexiters distrust him.
Differences and connections
However, although in both cases Brexit has thrown up new problems, they are problems of a fundamentally different sort. As regards fishing rights, the French accusation is that the UK is not sticking to what it agreed in the TCA, but not questioning the terms of what was agreed. As regards Northern Ireland, the UK accusation is, first, that the EU is sticking too rigidly to what was agreed in the NIP and, second, that the terms of what was agreed are unacceptable.
Yet despite being different in these ways, both sides see the issues as being linked. For France, and perhaps the EU, they are both examples of UK duplicity and bad faith. This may well be unfair to the UK in terms of fishing licences, but it is certainly not as regards the NIP and goes to show the high price to be paid for serial dishonesty: it completely undermines credibility.
For the UK, what is now erroneously being called ‘the punishment letter’ from Castex to the European Commission President about fishing licences is being used to suggest that the EU’s entire approach to Brexit, including the NIP, is one of seeking to punish the UK. As ever, the liar-in-chief is Boris Johnson, who said (£) that Castex was “explicitly asking for Britain to be punished for leaving the EU”. In fact, the word ‘punish’ or its cognates didn’t appear in the letter. The relevant sentence would best be translated as “It is essential to clearly show to European public opinion that respect for commitments made is non-negotiable and that there is more damage in leaving the union than in remaining there.”
As such, this is just the boilerplate EU position that it must be demonstrably better to be a member than not to be, otherwise the union, like any other, has no purpose. Actually, If anything, the EU’s conduct over the fishing row, which has been placatory and not markedly supportive of France, shows the opposite of a punitive stance to Britain.
By pretending that the letter threatens ‘punishment’, an ever-present Brexiter myth is being invoked, as when in 2017 Johnson spoke of France trying to “administer punishment beatings”. In this current invocation it uses what Castex (didn’t) say as regards fishing to bolster the longstanding falsehood that the NIP and ultimately the entire issue of the Irish border was invented by the EU to punish the UK for Brexit and that they succeeded because of the failures of Theresa May’s government. Notably this position was re-iterated in David Frost’s foreword to a Policy Exchange document on the NIP published this week.
So there is a triple lie here: a lie about what Castex said about the fishing row, a lie about the reasons for the NIP, and a lie about the implications of the fishing row letter for the NIP row. The latter lie involves an entirely opportunistic and false equivalence, in the same way as that endlessly drawn between the quickly abandoned EU proposal to invoke Article 16 over vaccines and the UK’s current threat to do so.
No need to take sides
Because of this incontinent flood of lies, there is a temptation for erstwhile remainers to ‘side with France’ in all aspects of the fisheries row. It is also tempting because the Brexiters are trying to use the row with France to drum up jingoistic support for Brexit just at the time that the economic damage of Brexit is becoming so obvious. But these are not good reasons to support France’s stance, any more than they were when some sought to defend the EU’s Article 16 foolish mis-step over vaccines in the face of the Brexiters’ lies and jingoism about that.
It is neither necessary nor right to embrace the ‘them versus us’ logic of Brexiters. The dividing line on both the fishing and the NIP issues is a clear and principled one which is solely about who is abiding by, and who is flouting, the terms of what was agreed. Being sucked into supporting France when it is not especially warranted simply plays into the hands of those Brexiters who want to paint ‘remainers’ as unpatriotic, and to use such tactics to discredit or divert attention from the follies of Brexit. It also undermines the legitimate defence of the EU’s position as regards the NIP by enabling the accusation that those who are opposed to Brexit blindly support the ‘other side’, using their stance on the fishing row as proof.
On the other hand, it is perfectly justifiable to point to the hypocrisy of the Brexiters and the government. After all, they constantly call for the EU to be ‘flexible’ in its implementation not just of the NIP but also of import controls generally (remember the outcry over the ‘ham sandwich confiscation’). So why not offer flexibility over fishing licences, especially as the row revolves around a few small boats? Equally, for all that the French threats of unilateral action were unjustified, it is rank hypocrisy for the government to be invoking respect for international law and good faith when it has shown so little of either over the NIP.
The clocks (don’t) go back
As to that, Frost continues to escalate the rhetoric, which suggests that the triggering of Article 16 is in the offing and, with that, as the Irish Taoiseach warned this week, a very serious crisis. Frost meets Maros Sefcovic today, which may yield further clues as to whether that will happen. However, as I’ve repeatedly argued, there is little point in speculating about the intentions of a government whose intentions are entirely opaque, perhaps even to itself.
That said, reports that the government plans to rig the legal advice to justify invoking Article 16 (£) are very ominous. And the Policy Exchange document Frost forwarded makes it clearer than ever that Brexiters see phase 1 of the Article 50 negotiations, in 2017, as having being pivotal (correctly, in my view, though I don’t agree with their explanation or conclusions). Equally clearly, they, and more particularly Johnson and Frost, think they can use Article 16 to re-wind the clock and have another shot at getting ‘true Brexit’.
Whatever else happens, they will fail in that. History, politics, and indeed physics, don’t work like that. As for ‘true Brexit’, it remains as elusive as ever, the fading illusion of a dwindling number of the deluded and the deranged. All we have are the realities of Brexit. These, in the form of this week’s bickering and dishonesty, have been on display to the world because of COP-26, with a cringingly ‘larky’ speech from our manifestly inadequate Prime Minister.
Imagine how different that might have been had the UK still been a leading partner within the huge EU economic and diplomatic power bloc. Or imagine if, as the Brexiters promised, the UK was striding self-confidently forward as Global Britain, admired and respected throughout the world, rather than the laughing stock Brexit has made us. Amongst the many crimes of Brexit is to have robbed us of the former possibility on the fraudulent prospectus of the latter. There’s no way to turn the clock back on that.
Notes
[1] This also means that the implied complaint in the Castex letter that Guernsey has issued no permanent licences, and therefore fewer even than the UK and Jersey, is misconceived – it is only because that point in the process hasn’t been reached, but French boats are able to fish in Guernsey waters in the meantime. This is quite different to the situation of those boats which have neither permanent nor temporary licences from Jersey.
[2] The UK government gives the figure as 98%, but this is misleading, especially in the context of this row, as it excludes the Channel Islands figures. With those taken into account the French claim of about 90% is right (in fact, it’s closer to 88% on the basis of the UK government’s statement of licences issued as at 3 November – this statement is the source of all the statistics cited in this post for licences granted other than where other links are provided).
[3] The entire situation is a complicated one because the specific fisheries dispute settlement mechanism within the TCA does allow some retaliatory measures to be taken in advance of arbitration, but with various rules and processes attached. A further complication is that some of the provisions within that specific mechanism don’t apply to the Channel Islands. And yet another complication is that the UK government seems to be envisaging a counter-action to any French actions under the general TCA disputes settlement mechanism rather than that specific to fisheries. I don’t pretend to have any expertise at all in this arcane topic but for those seeking to make sense of it there is an Institute for Government overview, a more detailed House of Commons Library briefing, and a lengthy blog post on Professor Steve Peers’ EU Law Analysis website. I’m very grateful to Professor Peers for answering my queries on this topic whilst preparing this post – all errors are of course my own.
Showing posts with label Fishing. Show all posts
Showing posts with label Fishing. Show all posts
Friday, 5 November 2021
Friday, 7 May 2021
The realities of sovereignty
One way of telling the story of Brexit is that it was sold to the British public as, and perhaps believed by its advocates to be, a project to regain sovereignty but without any economic costs and, even, with economic benefits. Since that was impossible, when it came to be delivered, sovereignty was prioritised despite the economic costs. Of course, there is a huge flaw in that story, which is that the idea that EU membership meant a loss of sovereignty and Brexit meant regaining it was simply false or, at best, as demonstrated in Anthony Barnett’s superb essay from 2018, based on a concept of sovereignty so dated and naive as to be worthless.
Nevertheless, for Brexiters, and perhaps many leave voters, it had a meaning, which had two, related but different, aspects. One was that a country should and could decide ‘for itself’ what rules to follow. The other, more blatantly nationalistic, was that this country, in particular could and would get ‘more for itself’ on its own than it could within the EU because, as Vote Leave insisted (see slide 10 of link), “Great Britain is a great country” with the fifth largest economy, G7 membership, a permanent seat on the UN Security Council, and significant intelligence and military capability.
Sovereignty in practice: latest news
What we are now seeing in abundance are the realities and limitations of those ideas of sovereignty, even within their own terms. It was already plain in the Trade and Cooperation Agreement (TCA) which reflects the way that the UK prioritised sovereignty over anything else. Thus what resulted was, in effect, a tariff-free deal for domestically produced goods and very little more. All of the currently emerging costs to industries and consumers flow from that, including the extensiveness of the checks needed to comply with the Northern Ireland Protocol (i.e. because a ‘deeper’ TCA would have meant a correspondingly ‘thinner’ Irish Sea border).
Norway non-agreement
The most obvious new example is the failure to reach a fishing deal with Norway, with potentially devastating effects on British cod fishing. Before, the UK benefitted from the agreements made between the EU and Norway, which is not part of the Common Fisheries Policy (CFP). Now, it must strike its own deal with Norway but has not been able to. This is an interesting development because, unlike negotiations with the EU, it is not presented in terms of Britain being ‘punished’ for Brexit or as a failure by Norway to recognize Britain as a ‘sovereign equal’. So a lot of the standard Brexiters’ rhetorical smokescreen is stripped away and the reality emerges: UK sovereignty is circumscribed by that of other countries, even quite small countries can and will resist the UK’s demands, and they are more able to do so now that it is not an EU member.
Jersey row
Fishing is also central to this week’s drama over the permits that, because of Brexit and in line with the fishing chapter of the TCA, French fishermen now need to fish in Jersey’s waters (it has arisen now because, until the end of April, there was an ‘amnesty’ under which the pre-Brexit arrangements continued). It’s a highly complicated story as all fishing stories are, but particularly so because of the distinctive constitutional status of the Channel Islands. Thus it is not actually about CFP, but it is about Brexit because the TCA superseded the Granville Bay Agreement, dating back to the nineteenth century but last amended in 2000, which had governed fishing rights in these waters. Scrapping it as part of Brexit was strongly lobbied for by the Jersey Fishermen’s Association during the TCA negotiations. Separately, the UK also chose to leave the 1964 London Fisheries Convention (causing problems for fishing around Guernsey, Alderney and Sark which have been more quietly dealt with by agreeing an extension of the interim arrangements with the EU).
Brexiters see ‘taking back control of our waters’ and being ‘an independent coastal nation’ as emblematic of regaining sovereignty. But the inevitable consequence is to encounter the sovereignty of other countries. For this was not, as some Brexiters are inevitably spinning it, a row with the EU but with France, although the EU is ‘siding’ with France in saying the permits are not being issued as the TCA says they should be (£) (the UK government disputes this – I do not know who is correct, but there are now talks underway).
This carries two lessons. First, that the EU will tend to stand up for its members against third countries, which is one of the ways sovereignty is magnified by membership. Second, it underscores that EU membership does not end national sovereignty. Nor is it necessary to leave the EU to engage in nationalistic posturing to appeal to nativist voters. Hence, with elections in both countries in prospect, foolish and ridiculous words from French politicians threatening to cut off electricity supplies to Jersey were matched by foolish and ridiculous actions from the UK in deploying Royal Navy vessels to observe what turned to be a rather limited ‘blockade’ of St Helier by French (and some Jersey) trawlers. For all the furore, the drama is already fading but it or similar rows have plenty of potential to flare up again.
At one level, all this is (just) yet another Brexit mess, and a reminder of how Brexit has thrown a rock which produces waves and ripples which are now showing up in small and large ways. Interestingly, despite the political rhetoric, as the participation of some of them in the blockade shows, Jersey fishermen are highly sympathetic to their French colleagues, recognizing that they’ve all been caught up in this mess. It also bears saying that as long ago as March 2017 the House of Lords EU Committee warned the government of the dangers Brexit posed for the Channel Islands. But my point here is that this episode illustrates the consequences of a free-for-all between ‘sovereign equals’.
Lugano Convention
This week’s third lesson in the realities of sovereignty, just announced though long-trailed, comes with European Commission’s recommendation that the EU should not accept Britain’s application to re-join the Lugano Convention on cross-border enforcement of legal judgments. Technically, membership is not confined to EU or even single market members, but the Commission’s view is that the UK’s relationship with the single market is now so distant that it should not be re-admitted to the convention. Inevitably this is described by Brexiters as ‘punishment’ but it’s actually no different in kind to the Norwegian fishing non-agreement: other powers have the right to decide not to agree to what the UK wants, and they will sometimes, even often, exercise that right. The eventual outcome will depend on whether the - yes - sovereign member states of the EU decide to follow the Commission’s recommendation.
It doesn’t even matter if, as some may think, the European Commission or Norway or France are miscalculating their interests: that is their prerogative. In fact, much of the Brexiters’ case was based on claims about what was and was not in the EU’s interests. Hence all the stuff about the UK trade deficit, German carmakers and so on. As a matter of fact, these claims were proved wrong – as many of us knew they would be – and the EU prioritised the integrity of the single market. Again, it’s irrelevant to argue that the EU ‘should have’ made a different calculation of its interests. Brexiters have to face the world as it is, not as they imagine it ought to be.
A permanent negotiation
This basic fact is not going to go away. What Britain now faces – not temporarily, but for the foreseeable future – is an ongoing process of negotiating with the EU and others, constantly facing choices about what it will sacrifice in the name of sovereignty, and constantly facing the reality that others have powers, rights and choices which they will exercise as they see fit. That is true both in general but also in relation to specific aspects of the TCA (Jersey fishing permits being a minor example) where there are phased implementations.
Currently, that means primarily the negotiations over the Northern Ireland Protocol (NIP). Several reports this week suggested that the EU is offering some flexibility in its implementation but within the basic parameters of the agreement, and proposing UK alignment with EU Sanitary and Phyto-Sanitary (SPS) rules. This, at a stroke, would remove many of the Irish Sea border checks. So far, the UK government still regards this as incompatible with sovereignty even though, at least for the time being, it doesn’t actually propose to diverge significantly from EU SPS standards.
The issue is, rather, that alignment means ‘dynamic alignment’ (i.e. when the EU rules change, the UK’s are bound to do so) and it’s this which would supposedly violate sovereignty. It therefore becomes a theological argument about whether the UK’s SPS standards are the same as the EU’s because they are agreed to be aligned or because they just happen to be the same at the moment. It’s true that the UK might want (or have) to change SPS as part of a future trade deal, especially with the US. But since, as has been emphasised this week by US Secretary of State Anthony Blinken, that is at best some way off, it is very hard to see why a temporary alignment with the EU could not be agreed.
After all, the UK government would be happy with, and is currently seeking, an ‘equivalence’ agreement (in other words, an agreement in which, whilst standards might not be the same in each market, they are deemed good enough for both). But that doesn’t work from an EU point of view, primarily because it involves a high-trust relationship with a third country that has not shown itself to be very trustworthy during the Brexit process, and about which there are lingering memories of the BSE epidemic as well as one with a shortage of Official Veterinarians (which also a problem for the current arrangements). Additionally, the volume of trade with the UK is much greater (and differently configured) than that of those third countries (such as New Zealand, which is the model usually touted) with which the EU does have SPS equivalence agreements.
And, again, if the UK were to decide, perhaps because of a trade agreement with the US, to substantially change its SPS rules then an equivalence agreement with the EU would presumably go out of the window anyway. Plus I think (I’m not sure – this is a horribly complex topic) that if EU SPS rules changed significantly then any equivalence agreement would have to be renegotiated anyway, so the practical distinction, on sovereignty grounds, between ‘dynamic alignment’ and ‘equivalence’ seems a fuzzy one. (For an excellent explainer of the concepts of dynamic alignment, equivalence and trade agreements in the context of Brexit, see trade expert Dmitry Grozoubinski’s ExplainTrade briefing).
In practical terms, then, dynamic alignment would mean the UK automatically changing the rules (or exiting the agreement) when EU rules changed whilst equivalence would mean re-negotiating (or exiting) the agreement. To any normal person this surely seems like some mediaeval debate about how many angels can dance on the head of a pin. It’s perfectly possible, and there’s just the tiniest sign of it, that what will be created is something which in substance is dynamic alignment but which the UK will call equivalence.
No coherent strategy
To re-iterate, whilst negotiating the operation of the NIP is the biggest immediate issue, the underlying one is that the UK-EU relationship is going to be the subject of a never-ending negotiation, and all the time the UK is going to have to make decisions about what to prioritise: the Brexiters’ peculiar version of sovereignty, or economic and political reality. That is inevitable simply because, like every other country in the world, but more so because of economic and geographic connection, the UK faces the reality of EU regulatory superpower deriving from market size.
It doesn’t seem that there is any coherent strategy for, or even understanding of, this from the UK government. For example, having made an issue of not recognizing the diplomatic status of the EU Ambassador to the UK, the government has this week agreed to do so. That’s the right decision, but by not making it from the beginning the UK squandered good will by posturing – for nothing. This is, precisely, a sign of an absent or incoherent strategy. The same will be true if, after marching up the hill of unilaterally breaking the NIP, the government quietly marches back down and accepts SPS alignment. If so, again it would be the right decision but reached via a foolish route.
Moreover, our relations with the EU cannot be separated from those with other countries for at least two reasons. On the one hand, the UK needs the EU’s support – political, diplomatic, and economic - in its antagonistic relationships with, especially, Russia, Iran and China. In this respect the recent ‘Global Britain’ Integrated Review was inadequate (see section five of link), since it barely touches on the UK-EU relationship despite it being a pivotal one. Though here, too, there are tiny signs of a more realistic approach quietly emerging.
On the other hand, the UK’s primary ally, the US, is deeply concerned with UK-EU relations in general, and the security and political situation of Northern Ireland in particular. This week saw the first face-to-face meeting between Dominic Raab and Anthony Blinken and though couched in diplomatic terms the message was clear: not only will the US not countenance anything that violates the Good Friday Agreement (translation: ‘Brexiters wanting to rip up the NIP, beware’) but it wants “political and economic stability in Northern Ireland” (translation: ‘make the NIP work’).
Irresponsibility or cynicism?
In the face of these realities, the question is how far the UK government is willing to push the Brexiters’ idea of sovereignty. The answer hinges on whether the government is irresponsible or cynical (most likely it will be ‘both’, but it needs to be ‘neither’).
If it is irresponsible then it will push on with the naive sovereignty agenda, making absurd provocations such as that of the EU Ambassador and silly gestures with Royal Navy ships, trashing its relations with the EU and the US by flouting international law, indifferent to the economic and political damage, and indifferent to the security situation in Northern Ireland. It may well do that if there’s no domestic political price to be paid or, indeed, a political benefit as a result.
If it is cynical, it will quietly yield on what to most people are arcane technicalities about, say, SPS whilst bigging up false claims about what Brexit has achieved. This would rely upon Brexiter MPs and commentators being gullible and ignorant, but that’s not a completely outlandish expectation. We’ve already seen this approach deployed with misleading or simply untrue claims about Brexit and vaccines, about freeports, and, most recently and perhaps most ludicrously, about Brexit enabling Britain to resist the aborted football super-league plans.
The UK-India ‘trade deal’
It is also evident in overblown claims about the UK’s post-Brexit trade deals. This was on display again this week when Liz Truss asserted that Brexit had allowed the UK to do a ‘trade deal’ with India. In fact, for the most part, it was a commercial deal of the sort that UK could, and did, make whilst an EU member, just as EU members like Germany have. It’s true that it also contained a Memorandum of Understanding (which may, though it’s by no means certain, eventually lead to a Free Trade Agreement with India), and that couldn’t have been done as an EU member. But the overall claim was misleading although, inevitably, jumped on by those Brexiters who don’t understand that the term ‘trade deal’ is an imprecise one, and not necessarily the same as a Free Trade Agreement, as a vindication of Brexit. In any case, the actual economic benefits of any eventual trade agreement probably won’t be very large, certainly compared with the loss of trade caused by exiting the single market.
These points about trade policy are boringly unoriginal, having been made endlessly in one form or another by many people, including me, for years. But they still matter, because the ongoing false claims about trade deals root back to the basic issues with which I began this post. That is, they pretend that ‘regaining’ sovereignty was not just cost-free but economically beneficial. So it is important to say that some of the claimed benefits did not require this ‘sovereignty’ whilst, overall, the costs are much higher than any benefits which may derive from it.
Moreover, it is important to confront the persistent slipperiness of Brexiters in the way that when challenged about the economic costs they very often resort to saying ‘you don’t understand, it wasn’t about the money it was about regaining our freedom, which is priceless’. But not only was that not how Brexit was sold in 2016, it is also not what is being said about the benefits of an independent trade policy. If Brexiters want to justify themselves in economic terms, then they can’t use ‘priceless’ sovereignty to escape a proper accounting.
But ‘we are where we are’?
I understand the view that ‘we are where we are’ and so there’s no point harking back to the false promises that were made. But I don’t accept it. For one thing, it is galling to hear so many Brexiters now wheeling out as arguments against Scottish independence precisely those they dismissed when made by remainers against leaving the EU. More importantly, the promises made in 2016 are not part of some remote past. Rather, they are only now, since the end of the transition period, actually playing out in terms of practical consequences. That is less than five months ago. So these are not dead issues and one way we know that is, indeed, because the Brexiters are still at such pains to churn out false claims to justify what they have done.
So if there is to be a ‘moving on’ and an acceptance that ‘we are where we are’ that has to start with an honest acknowledgment from the Brexiters – meaning, principally, the government – of where exactly it is that we are. And that means, even assuming that they may have done it in good faith (which requires considerable charity), acknowledging that this particular form of sovereignty they have created presents very serious problems.
If they are to be addressed, or at least ameliorated, it will require a patient diplomacy and a realistic recognition of the powers that other countries, and the EU, have and of Britain’s relatively (not, of course, entirely) limited power. In short, it requires the opposite of both the ‘cynical’ and the ‘irresponsible’ responses we currently see. I’ve mentioned in this post a couple of tiny signs this might happen, but I’m not holding my breath.
Do you receive an email alert for this blog? If so, please note that this facility is being switched off across all Blogspot blogs from July 2021. There is no obvious way that I can replace this free service, although I am looking into it, so please assume that from then on you will need to access the blog directly via https://chrisgreybrexitblog.blogspot.com/
My book Brexit Unfolded. How no one got what they wanted (and why they were never going to) will be published by Biteback in June 2021. It can be pre-ordered from Biteback, or via other online platforms, as a paperback or e-book.
Nevertheless, for Brexiters, and perhaps many leave voters, it had a meaning, which had two, related but different, aspects. One was that a country should and could decide ‘for itself’ what rules to follow. The other, more blatantly nationalistic, was that this country, in particular could and would get ‘more for itself’ on its own than it could within the EU because, as Vote Leave insisted (see slide 10 of link), “Great Britain is a great country” with the fifth largest economy, G7 membership, a permanent seat on the UN Security Council, and significant intelligence and military capability.
Sovereignty in practice: latest news
What we are now seeing in abundance are the realities and limitations of those ideas of sovereignty, even within their own terms. It was already plain in the Trade and Cooperation Agreement (TCA) which reflects the way that the UK prioritised sovereignty over anything else. Thus what resulted was, in effect, a tariff-free deal for domestically produced goods and very little more. All of the currently emerging costs to industries and consumers flow from that, including the extensiveness of the checks needed to comply with the Northern Ireland Protocol (i.e. because a ‘deeper’ TCA would have meant a correspondingly ‘thinner’ Irish Sea border).
Norway non-agreement
The most obvious new example is the failure to reach a fishing deal with Norway, with potentially devastating effects on British cod fishing. Before, the UK benefitted from the agreements made between the EU and Norway, which is not part of the Common Fisheries Policy (CFP). Now, it must strike its own deal with Norway but has not been able to. This is an interesting development because, unlike negotiations with the EU, it is not presented in terms of Britain being ‘punished’ for Brexit or as a failure by Norway to recognize Britain as a ‘sovereign equal’. So a lot of the standard Brexiters’ rhetorical smokescreen is stripped away and the reality emerges: UK sovereignty is circumscribed by that of other countries, even quite small countries can and will resist the UK’s demands, and they are more able to do so now that it is not an EU member.
Jersey row
Fishing is also central to this week’s drama over the permits that, because of Brexit and in line with the fishing chapter of the TCA, French fishermen now need to fish in Jersey’s waters (it has arisen now because, until the end of April, there was an ‘amnesty’ under which the pre-Brexit arrangements continued). It’s a highly complicated story as all fishing stories are, but particularly so because of the distinctive constitutional status of the Channel Islands. Thus it is not actually about CFP, but it is about Brexit because the TCA superseded the Granville Bay Agreement, dating back to the nineteenth century but last amended in 2000, which had governed fishing rights in these waters. Scrapping it as part of Brexit was strongly lobbied for by the Jersey Fishermen’s Association during the TCA negotiations. Separately, the UK also chose to leave the 1964 London Fisheries Convention (causing problems for fishing around Guernsey, Alderney and Sark which have been more quietly dealt with by agreeing an extension of the interim arrangements with the EU).
Brexiters see ‘taking back control of our waters’ and being ‘an independent coastal nation’ as emblematic of regaining sovereignty. But the inevitable consequence is to encounter the sovereignty of other countries. For this was not, as some Brexiters are inevitably spinning it, a row with the EU but with France, although the EU is ‘siding’ with France in saying the permits are not being issued as the TCA says they should be (£) (the UK government disputes this – I do not know who is correct, but there are now talks underway).
This carries two lessons. First, that the EU will tend to stand up for its members against third countries, which is one of the ways sovereignty is magnified by membership. Second, it underscores that EU membership does not end national sovereignty. Nor is it necessary to leave the EU to engage in nationalistic posturing to appeal to nativist voters. Hence, with elections in both countries in prospect, foolish and ridiculous words from French politicians threatening to cut off electricity supplies to Jersey were matched by foolish and ridiculous actions from the UK in deploying Royal Navy vessels to observe what turned to be a rather limited ‘blockade’ of St Helier by French (and some Jersey) trawlers. For all the furore, the drama is already fading but it or similar rows have plenty of potential to flare up again.
At one level, all this is (just) yet another Brexit mess, and a reminder of how Brexit has thrown a rock which produces waves and ripples which are now showing up in small and large ways. Interestingly, despite the political rhetoric, as the participation of some of them in the blockade shows, Jersey fishermen are highly sympathetic to their French colleagues, recognizing that they’ve all been caught up in this mess. It also bears saying that as long ago as March 2017 the House of Lords EU Committee warned the government of the dangers Brexit posed for the Channel Islands. But my point here is that this episode illustrates the consequences of a free-for-all between ‘sovereign equals’.
Lugano Convention
This week’s third lesson in the realities of sovereignty, just announced though long-trailed, comes with European Commission’s recommendation that the EU should not accept Britain’s application to re-join the Lugano Convention on cross-border enforcement of legal judgments. Technically, membership is not confined to EU or even single market members, but the Commission’s view is that the UK’s relationship with the single market is now so distant that it should not be re-admitted to the convention. Inevitably this is described by Brexiters as ‘punishment’ but it’s actually no different in kind to the Norwegian fishing non-agreement: other powers have the right to decide not to agree to what the UK wants, and they will sometimes, even often, exercise that right. The eventual outcome will depend on whether the - yes - sovereign member states of the EU decide to follow the Commission’s recommendation.
It doesn’t even matter if, as some may think, the European Commission or Norway or France are miscalculating their interests: that is their prerogative. In fact, much of the Brexiters’ case was based on claims about what was and was not in the EU’s interests. Hence all the stuff about the UK trade deficit, German carmakers and so on. As a matter of fact, these claims were proved wrong – as many of us knew they would be – and the EU prioritised the integrity of the single market. Again, it’s irrelevant to argue that the EU ‘should have’ made a different calculation of its interests. Brexiters have to face the world as it is, not as they imagine it ought to be.
A permanent negotiation
This basic fact is not going to go away. What Britain now faces – not temporarily, but for the foreseeable future – is an ongoing process of negotiating with the EU and others, constantly facing choices about what it will sacrifice in the name of sovereignty, and constantly facing the reality that others have powers, rights and choices which they will exercise as they see fit. That is true both in general but also in relation to specific aspects of the TCA (Jersey fishing permits being a minor example) where there are phased implementations.
Currently, that means primarily the negotiations over the Northern Ireland Protocol (NIP). Several reports this week suggested that the EU is offering some flexibility in its implementation but within the basic parameters of the agreement, and proposing UK alignment with EU Sanitary and Phyto-Sanitary (SPS) rules. This, at a stroke, would remove many of the Irish Sea border checks. So far, the UK government still regards this as incompatible with sovereignty even though, at least for the time being, it doesn’t actually propose to diverge significantly from EU SPS standards.
The issue is, rather, that alignment means ‘dynamic alignment’ (i.e. when the EU rules change, the UK’s are bound to do so) and it’s this which would supposedly violate sovereignty. It therefore becomes a theological argument about whether the UK’s SPS standards are the same as the EU’s because they are agreed to be aligned or because they just happen to be the same at the moment. It’s true that the UK might want (or have) to change SPS as part of a future trade deal, especially with the US. But since, as has been emphasised this week by US Secretary of State Anthony Blinken, that is at best some way off, it is very hard to see why a temporary alignment with the EU could not be agreed.
After all, the UK government would be happy with, and is currently seeking, an ‘equivalence’ agreement (in other words, an agreement in which, whilst standards might not be the same in each market, they are deemed good enough for both). But that doesn’t work from an EU point of view, primarily because it involves a high-trust relationship with a third country that has not shown itself to be very trustworthy during the Brexit process, and about which there are lingering memories of the BSE epidemic as well as one with a shortage of Official Veterinarians (which also a problem for the current arrangements). Additionally, the volume of trade with the UK is much greater (and differently configured) than that of those third countries (such as New Zealand, which is the model usually touted) with which the EU does have SPS equivalence agreements.
And, again, if the UK were to decide, perhaps because of a trade agreement with the US, to substantially change its SPS rules then an equivalence agreement with the EU would presumably go out of the window anyway. Plus I think (I’m not sure – this is a horribly complex topic) that if EU SPS rules changed significantly then any equivalence agreement would have to be renegotiated anyway, so the practical distinction, on sovereignty grounds, between ‘dynamic alignment’ and ‘equivalence’ seems a fuzzy one. (For an excellent explainer of the concepts of dynamic alignment, equivalence and trade agreements in the context of Brexit, see trade expert Dmitry Grozoubinski’s ExplainTrade briefing).
In practical terms, then, dynamic alignment would mean the UK automatically changing the rules (or exiting the agreement) when EU rules changed whilst equivalence would mean re-negotiating (or exiting) the agreement. To any normal person this surely seems like some mediaeval debate about how many angels can dance on the head of a pin. It’s perfectly possible, and there’s just the tiniest sign of it, that what will be created is something which in substance is dynamic alignment but which the UK will call equivalence.
No coherent strategy
To re-iterate, whilst negotiating the operation of the NIP is the biggest immediate issue, the underlying one is that the UK-EU relationship is going to be the subject of a never-ending negotiation, and all the time the UK is going to have to make decisions about what to prioritise: the Brexiters’ peculiar version of sovereignty, or economic and political reality. That is inevitable simply because, like every other country in the world, but more so because of economic and geographic connection, the UK faces the reality of EU regulatory superpower deriving from market size.
It doesn’t seem that there is any coherent strategy for, or even understanding of, this from the UK government. For example, having made an issue of not recognizing the diplomatic status of the EU Ambassador to the UK, the government has this week agreed to do so. That’s the right decision, but by not making it from the beginning the UK squandered good will by posturing – for nothing. This is, precisely, a sign of an absent or incoherent strategy. The same will be true if, after marching up the hill of unilaterally breaking the NIP, the government quietly marches back down and accepts SPS alignment. If so, again it would be the right decision but reached via a foolish route.
Moreover, our relations with the EU cannot be separated from those with other countries for at least two reasons. On the one hand, the UK needs the EU’s support – political, diplomatic, and economic - in its antagonistic relationships with, especially, Russia, Iran and China. In this respect the recent ‘Global Britain’ Integrated Review was inadequate (see section five of link), since it barely touches on the UK-EU relationship despite it being a pivotal one. Though here, too, there are tiny signs of a more realistic approach quietly emerging.
On the other hand, the UK’s primary ally, the US, is deeply concerned with UK-EU relations in general, and the security and political situation of Northern Ireland in particular. This week saw the first face-to-face meeting between Dominic Raab and Anthony Blinken and though couched in diplomatic terms the message was clear: not only will the US not countenance anything that violates the Good Friday Agreement (translation: ‘Brexiters wanting to rip up the NIP, beware’) but it wants “political and economic stability in Northern Ireland” (translation: ‘make the NIP work’).
Irresponsibility or cynicism?
In the face of these realities, the question is how far the UK government is willing to push the Brexiters’ idea of sovereignty. The answer hinges on whether the government is irresponsible or cynical (most likely it will be ‘both’, but it needs to be ‘neither’).
If it is irresponsible then it will push on with the naive sovereignty agenda, making absurd provocations such as that of the EU Ambassador and silly gestures with Royal Navy ships, trashing its relations with the EU and the US by flouting international law, indifferent to the economic and political damage, and indifferent to the security situation in Northern Ireland. It may well do that if there’s no domestic political price to be paid or, indeed, a political benefit as a result.
If it is cynical, it will quietly yield on what to most people are arcane technicalities about, say, SPS whilst bigging up false claims about what Brexit has achieved. This would rely upon Brexiter MPs and commentators being gullible and ignorant, but that’s not a completely outlandish expectation. We’ve already seen this approach deployed with misleading or simply untrue claims about Brexit and vaccines, about freeports, and, most recently and perhaps most ludicrously, about Brexit enabling Britain to resist the aborted football super-league plans.
The UK-India ‘trade deal’
It is also evident in overblown claims about the UK’s post-Brexit trade deals. This was on display again this week when Liz Truss asserted that Brexit had allowed the UK to do a ‘trade deal’ with India. In fact, for the most part, it was a commercial deal of the sort that UK could, and did, make whilst an EU member, just as EU members like Germany have. It’s true that it also contained a Memorandum of Understanding (which may, though it’s by no means certain, eventually lead to a Free Trade Agreement with India), and that couldn’t have been done as an EU member. But the overall claim was misleading although, inevitably, jumped on by those Brexiters who don’t understand that the term ‘trade deal’ is an imprecise one, and not necessarily the same as a Free Trade Agreement, as a vindication of Brexit. In any case, the actual economic benefits of any eventual trade agreement probably won’t be very large, certainly compared with the loss of trade caused by exiting the single market.
These points about trade policy are boringly unoriginal, having been made endlessly in one form or another by many people, including me, for years. But they still matter, because the ongoing false claims about trade deals root back to the basic issues with which I began this post. That is, they pretend that ‘regaining’ sovereignty was not just cost-free but economically beneficial. So it is important to say that some of the claimed benefits did not require this ‘sovereignty’ whilst, overall, the costs are much higher than any benefits which may derive from it.
Moreover, it is important to confront the persistent slipperiness of Brexiters in the way that when challenged about the economic costs they very often resort to saying ‘you don’t understand, it wasn’t about the money it was about regaining our freedom, which is priceless’. But not only was that not how Brexit was sold in 2016, it is also not what is being said about the benefits of an independent trade policy. If Brexiters want to justify themselves in economic terms, then they can’t use ‘priceless’ sovereignty to escape a proper accounting.
But ‘we are where we are’?
I understand the view that ‘we are where we are’ and so there’s no point harking back to the false promises that were made. But I don’t accept it. For one thing, it is galling to hear so many Brexiters now wheeling out as arguments against Scottish independence precisely those they dismissed when made by remainers against leaving the EU. More importantly, the promises made in 2016 are not part of some remote past. Rather, they are only now, since the end of the transition period, actually playing out in terms of practical consequences. That is less than five months ago. So these are not dead issues and one way we know that is, indeed, because the Brexiters are still at such pains to churn out false claims to justify what they have done.
So if there is to be a ‘moving on’ and an acceptance that ‘we are where we are’ that has to start with an honest acknowledgment from the Brexiters – meaning, principally, the government – of where exactly it is that we are. And that means, even assuming that they may have done it in good faith (which requires considerable charity), acknowledging that this particular form of sovereignty they have created presents very serious problems.
If they are to be addressed, or at least ameliorated, it will require a patient diplomacy and a realistic recognition of the powers that other countries, and the EU, have and of Britain’s relatively (not, of course, entirely) limited power. In short, it requires the opposite of both the ‘cynical’ and the ‘irresponsible’ responses we currently see. I’ve mentioned in this post a couple of tiny signs this might happen, but I’m not holding my breath.
Do you receive an email alert for this blog? If so, please note that this facility is being switched off across all Blogspot blogs from July 2021. There is no obvious way that I can replace this free service, although I am looking into it, so please assume that from then on you will need to access the blog directly via https://chrisgreybrexitblog.blogspot.com/
My book Brexit Unfolded. How no one got what they wanted (and why they were never going to) will be published by Biteback in June 2021. It can be pre-ordered from Biteback, or via other online platforms, as a paperback or e-book.
Friday, 29 January 2021
This period will shape the post-Brexit narrative
The stories of Brexit disruption catalogued in my last few posts continue apace, not least because firms which had built up stockpiles in anticipation of the end of the transition period are now starting to replenish them. However, remaining stockpiles and the new* trade barriers, plus the pandemic, mean that freight movements between the UK and the EU are still 38% down on this time last year. Some 65% of trucks returning to Calais/Dunkirk are empty, over twice what is normal, and there are daily reports of companies struggling, or failing, to deal with export processes (£).
The UK is not yet imposing full import controls, but even without that there are numerous reports of customers astounded to find that they have to pay customs duties, import VAT and handling charges on goods delivered to them from the EU. This links with reports of uncollected incoming freight piling up at ports (£).
There are now the very beginnings of hard data about the aggregate effects, including indications of a harp drop in services exports. Obviously Covid is playing a big part, but the fact that the UK figures are worse than the US, France and Germany amongst others is suggestive of a Brexit effect, and the IMF has reduced its forecast for UK output growth for the first quarter of 2021 by 1% as a result of Brexit disruption.
The long-term effects of Brexit on trade have yet to be seen but the fundamental reality remains, not as a matter of doctrine but as matter of plain definition: Brexit creates new barriers to trade with the EU and so suppresses trade with the EU. As I argued in a piece in Byline Times this week these barriers are in the process of becoming structurally embedded, and small firms are the biggest losers (£). Of course it may, now, be creating new opportunities – for customs agents, say, as when the government said Brexit was ‘growing the customs sector’, or for staff at Kent lorry parks – but it would be perverse to call these, in any substantive sense, ‘benefits’.
That is not to deny that there are numerous business benefits of Brexit. It’s just that they don’t accrue to British businesses and people. EU countries are the happy beneficiaries of financial services leaving London (£). Irish ferry companies are mopping up business by creating new routes to bypass Brexit Britain to the detriment of Welsh ports (activity through Holyhead has dropped by 50% and through Fishguard by a whopping 75% since the end of the transition period). Dutch, and no doubt other, warehousing and logistics firms are experiencing a boom as UK firms seeks bases in the EU.
The latter connects with the most extraordinary Brexit story of the week, with it being reported that government officials are advising British firms to set up EU subsidiaries (and, hence, to shift employment) to avoid the problems of Brexit. The reason this is extraordinary is not in the idea of firms doing so – that is simply the economic logic of the situation Brexit has created – but in the fact that a government extolling the virtues of Brexit is providing such advice. That said, it’s a story that needs to be treated with a little caution in that it’s not clear how widespread this advice is, nor whether it is official advice as opposed to informal suggestion.
Brexiters’ reactions
It is interesting, and politically important, to see how leading Brexiters are reacting to what is happening, not least because this may set the tone for how leavers, especially, in the general public respond. It’s a mixed bag, but mainly depressing. Some are simply boneheaded refusals to understand it, as with John Redwood calling for the government to intervene to ensure the free flow of goods between Great Britain and Northern Ireland. But of course the end to such a free flow was integral to the Withdrawal Agreement. Since Redwood stood on a manifesto to which that agreement was central, voted for it in parliament, and the government signed it his comment is either stupid or dishonest.
Others resort to sophistry, to put it more charitably than is probably warranted, such as former Brexit Party MEP Ben Habib. He claimed this week that the plight of the fishing industry was not down to Brexit but caused by the pandemic suppressing demand as restaurants in the UK and EU were closed, by the Trade and Cooperation Agreement (TCA) having given EU fishing boats unfettered access to UK waters so that EU fishermen could supply EU restaurants (even though Habib says these are closed), and by the bureaucracy created by the TCA for UK fish exporters to the EU.
Where to begin? The pandemic has been going on for a year, but the rotting fish piles only began when the transition period ended, so they plainly are very much to do with Brexit. It can’t be because EU fishermen have taken all the fish, or these fish piles would not exist, and these fish piles are there not because there are no customers for them but because they can’t be shipped to those customers. That is, indeed, because of the bureaucracy that now attaches to UK exports, including fish, to the EU. Which is, precisely, down to Brexit because it was created by leaving the single market and customs union, as advocated by Habib.
A different account was given this week by another Brexit Party ex-MEP Lance Forman, who himself works in the fish industry (he owns and manages a smoked salmon business). He offered a more coherent argument, yet one which still denies that what is happening is a problem of Brexit. Rather, he suggested it is a problem of lack of preparedness for the bureaucracy entailed by Brexit. It’s a fine distinction, in that the bureaucracy is, itself, a problem of Brexit which adds new costs to trade with the EU. But it’s true that some of the export delays might well have been avoided with better preparation. However, a big reason for that lack of preparation was that, until far too late, Brexiters refused to admit that there would be new bureaucracy – denouncing warnings as Project Fear – and because they regarded any extension to the transition period, which might have aided preparation, as unconscionable.
Forman also bemoaned the fact that the EU is applying import controls when the UK is not doing so. But that arises simply because the UK government is not ready to do so, again an argument for extending transition, but not some unreasonable disparity of treatment. Thus, whilst the tone is more urbane, it is all of a piece with reports, such as the Daily Mail’s, which speak of the “dirty tricks” of “pernickety jobsworths” in enforcing the rules which the 17.4 million – who, don’t forget, knew exactly what they were voting for, and it is remainer elitism to suggest otherwise – voted for.
Whatever the tone, the meaning is the same: a refusal to accept that the damage that is being done to British business, well beyond fishing, is the direct consequence of Brexit and the unavoidable responsibility of those who advocated it. This isn’t surprising, because it has long been the hallmark of Brexiters that they abjure responsibility – it’s always someone else’s fault or because, as its apologists are wont to say of Communism, Brexit inevitably hasn’t been done ‘properly’. In May 2018 I compiled a list of six excuses that Brexiters make for why the consequences of Brexit are nothing to do with them. They continue to be rolled out.
Brexit really does mean Brexit
But I think there are some other features of Brexit mentality lurking in all this as well. One is the frequent implication that the EU is some kind of cuddly uncle who will or ought to be ‘nice’ to Britain. That’s sometimes found amongst remainers, too, but it is far more bizarre from Brexiters who, having spent decades denouncing the EU for every evil under the sun, now seem to expect that it will just benignly waive the rules in order to help the UK out of a mess of its own making. Linked to that is the phenomenon, which I have also noted in the past on this blog, whereby some Brexiters seem to think that leaving the EU was a kind of symbolic act, rather than one with concrete legal effects. So it seems to come as a surprise and, somehow, ‘not fair’ when the EU applies the rules to Britain that apply to other third countries.
It is neither surprising nor is it ‘petty’ or ‘vindictive’ to do so, as was said during the recent row (£) about the confiscation of a ham sandwich. This rule exists and is enforced because of the very real dangers of African swine fever, which can devastate pig farming, or even of foot and mouth disease. Indeed this is why, back in 2019, the British government launched a campaign warning tourists not to bring such items back home with them. So what, exactly, do Brexiters expect EU border officials to do? Just shrug and say that because you’re coming from Britain the rules don’t apply? Or let you off because you didn’t realize these rules existed and that Brexit would mean they applied to Britain?
What of the future?
There is an obvious linkage between this lack of realism and the idea that the adverse effects of Brexit are the fault of the EU, or ‘punishment’ from the EU. To the extent that this narrative takes hold there is little chance of any honest appraisal of Brexit. Equally, it contributes to the continuing antagonism with which the Brexiters seem determined to conduct relations with the EU post-Brexit.
The ongoing row over the diplomatic status of the EU’s Ambassador is a good example of this. It’s not just that this is – indeed – petty, it’s also, as Georgina Wright argues on the Institut Montaigne blog, misguided in terms of the UK’s interests and global standing. Britain’s stance on this is causing serious anger across the EU’s member states (£) and it is intensifying, with the EU now cancelling a meeting with the UK’s Ambassador (£).
That matters, because apart from growing the economic costs of Brexit, the geo-political ones have also been profound. As Dr Rudolf Adam, of the University of the Federal Armed Forces Neubiberg (Munich), writes “the enduring legacy of Brexit is a massive loss of respect and sympathy for a country that for centuries was admired as a bastion of pragmatism and liberal values. The UK is losing soft power faster than hard power.”
Amongst other things, that implies the UK needs to work constructively with the EU through the TCA partnership apparatus and also, especially, to make the Northern Ireland Protocol work via the Joint Committee. Moreover, there are and will be a huge range of security and foreign policy issues – Hong Kong, Russia – where the UK will need the support and friendship of the EU and, no doubt, vice versa. And any idea that the UK can take a leading role in international responses to climate change, or anything else, whilst maintaining a ‘dog in the manger’ attitude to the EU is absurd.
From that point of view, there’s no conceivable benefit to Britain in taking this position of the EU Ambassador. It would seem to be explained partly by the visceral hatred that Brexiters have for the EU. It may also be a prelude to far more substantive conflicts over the TCA and may have the effect, if not the intention, of providing a ready-made narrative to justify pulling out of it.
Equally, again in effect if not intention, continued and growing antagonism towards the EU serves to divert attention from the Brexiters being held to account for what they have done, because it enables them to present the consequences of Brexit as being the fault of the EU and to deflect anger onto the EU. In this way, Brexiters can continue to re-fight the battles of the referendum.
It’s hard to resist the conclusion that this lies behind current attempts to justify Brexit by reference to the failures of the vaccination programme in the EU or the row over vaccine delivery (£), which needless to say is more complicated than the tabloids allow (see also, for the wider context of the issue, this report in Politico). Tellingly, as Maria Tadeo, Bloomberg TV’s Europe reporter, says, within EU countries, the narrative of this row is not generally framed in terms of Brexit at all. It certainly has little to do, or should have little to do, with the case for a long-term strategic partnership between the EU and the UK.
Shaping the narrative
The coming few months will therefore be very significant for two reasons. Firstly, because this is the period during which the effects of Brexit will be most visible and, therefore, during which the possibility of holding Brexiters to account is the greatest. This is why it is important to keep highlighting those effects and challenging attempts to deny them. If they manage to implant a narrative that these effects are nothing to do with Brexit, or are down to the EU being unreasonable, that may well become established and much more difficult to challenge later. For, by then, the visible effects will have declined (though the underlying damage will continue) and, of course, the longer-term effects will be difficult to definitively disentangle from those of Covid, in particular.
That cuts both ways, of course, in that it makes highly dubious the current attempts to claim that, had Brexit not happened, the UK’s vaccine programme would have suffered compared with how it actually is. That may or may not be true – any such claim requires a long string of counterfactuals about what would and would not have been done by multiple actors in that alternative universe. Clearly that isn’t so for straightforward cases such as that leaving the customs union creates new processes and costs for exporters.
Secondly, and even more importantly, although the damage of Brexit itself is now unavoidable regardless of who is held to be responsible for it, it is not inevitable that post-Brexit UK-EU relations have to be added to the list of that damage. As I have been arguing for months, the mandate of the 2016 referendum has now been fully discharged. Nowhere in that vote was there a mandate for Brexiters to permanently sour UK-EU relations post-Brexit, nor should those relations continue to be seen through the prism of the now dead question of whether the UK should remain a member of the EU.
So the current period is potentially crucial for changing the tone of those relations and shifting them from the virulently hostile ones the Brexiters are seeking to embed. It’s clear, as with the vaccine row, that they will weaponize whatever comes to hand in that attempt. The chances of such a change of tone are, in any case, negligible given that we have a government which is Brexiter to the core. But they are not non-existent because no government has complete control of the narrative. Other politicians, journalists, grass roots organizations, and civil society generally also have a role. And then, as the old cliché has it, there are ‘events, dear boy, events’.
*Some people dislike the term ‘new’ in this context, because what is happening is, rather, the re-imposition of barriers which had been removed by the customs union or single market. However, I think it is a reasonable usage for two reasons. First because, obviously, it is intended to mean ‘new as compared with when the UK was an EU member’. Second, because in a certain sense we are not simply facing a return to pre-customs union, pre-single market days as these rules are now being applied in the context of a very different economy to when the UK joined the EEC in 1973, in particular as regards the realities of international supply chains.
The UK is not yet imposing full import controls, but even without that there are numerous reports of customers astounded to find that they have to pay customs duties, import VAT and handling charges on goods delivered to them from the EU. This links with reports of uncollected incoming freight piling up at ports (£).
There are now the very beginnings of hard data about the aggregate effects, including indications of a harp drop in services exports. Obviously Covid is playing a big part, but the fact that the UK figures are worse than the US, France and Germany amongst others is suggestive of a Brexit effect, and the IMF has reduced its forecast for UK output growth for the first quarter of 2021 by 1% as a result of Brexit disruption.
The long-term effects of Brexit on trade have yet to be seen but the fundamental reality remains, not as a matter of doctrine but as matter of plain definition: Brexit creates new barriers to trade with the EU and so suppresses trade with the EU. As I argued in a piece in Byline Times this week these barriers are in the process of becoming structurally embedded, and small firms are the biggest losers (£). Of course it may, now, be creating new opportunities – for customs agents, say, as when the government said Brexit was ‘growing the customs sector’, or for staff at Kent lorry parks – but it would be perverse to call these, in any substantive sense, ‘benefits’.
That is not to deny that there are numerous business benefits of Brexit. It’s just that they don’t accrue to British businesses and people. EU countries are the happy beneficiaries of financial services leaving London (£). Irish ferry companies are mopping up business by creating new routes to bypass Brexit Britain to the detriment of Welsh ports (activity through Holyhead has dropped by 50% and through Fishguard by a whopping 75% since the end of the transition period). Dutch, and no doubt other, warehousing and logistics firms are experiencing a boom as UK firms seeks bases in the EU.
The latter connects with the most extraordinary Brexit story of the week, with it being reported that government officials are advising British firms to set up EU subsidiaries (and, hence, to shift employment) to avoid the problems of Brexit. The reason this is extraordinary is not in the idea of firms doing so – that is simply the economic logic of the situation Brexit has created – but in the fact that a government extolling the virtues of Brexit is providing such advice. That said, it’s a story that needs to be treated with a little caution in that it’s not clear how widespread this advice is, nor whether it is official advice as opposed to informal suggestion.
Brexiters’ reactions
It is interesting, and politically important, to see how leading Brexiters are reacting to what is happening, not least because this may set the tone for how leavers, especially, in the general public respond. It’s a mixed bag, but mainly depressing. Some are simply boneheaded refusals to understand it, as with John Redwood calling for the government to intervene to ensure the free flow of goods between Great Britain and Northern Ireland. But of course the end to such a free flow was integral to the Withdrawal Agreement. Since Redwood stood on a manifesto to which that agreement was central, voted for it in parliament, and the government signed it his comment is either stupid or dishonest.
Others resort to sophistry, to put it more charitably than is probably warranted, such as former Brexit Party MEP Ben Habib. He claimed this week that the plight of the fishing industry was not down to Brexit but caused by the pandemic suppressing demand as restaurants in the UK and EU were closed, by the Trade and Cooperation Agreement (TCA) having given EU fishing boats unfettered access to UK waters so that EU fishermen could supply EU restaurants (even though Habib says these are closed), and by the bureaucracy created by the TCA for UK fish exporters to the EU.
Where to begin? The pandemic has been going on for a year, but the rotting fish piles only began when the transition period ended, so they plainly are very much to do with Brexit. It can’t be because EU fishermen have taken all the fish, or these fish piles would not exist, and these fish piles are there not because there are no customers for them but because they can’t be shipped to those customers. That is, indeed, because of the bureaucracy that now attaches to UK exports, including fish, to the EU. Which is, precisely, down to Brexit because it was created by leaving the single market and customs union, as advocated by Habib.
A different account was given this week by another Brexit Party ex-MEP Lance Forman, who himself works in the fish industry (he owns and manages a smoked salmon business). He offered a more coherent argument, yet one which still denies that what is happening is a problem of Brexit. Rather, he suggested it is a problem of lack of preparedness for the bureaucracy entailed by Brexit. It’s a fine distinction, in that the bureaucracy is, itself, a problem of Brexit which adds new costs to trade with the EU. But it’s true that some of the export delays might well have been avoided with better preparation. However, a big reason for that lack of preparation was that, until far too late, Brexiters refused to admit that there would be new bureaucracy – denouncing warnings as Project Fear – and because they regarded any extension to the transition period, which might have aided preparation, as unconscionable.
Forman also bemoaned the fact that the EU is applying import controls when the UK is not doing so. But that arises simply because the UK government is not ready to do so, again an argument for extending transition, but not some unreasonable disparity of treatment. Thus, whilst the tone is more urbane, it is all of a piece with reports, such as the Daily Mail’s, which speak of the “dirty tricks” of “pernickety jobsworths” in enforcing the rules which the 17.4 million – who, don’t forget, knew exactly what they were voting for, and it is remainer elitism to suggest otherwise – voted for.
Whatever the tone, the meaning is the same: a refusal to accept that the damage that is being done to British business, well beyond fishing, is the direct consequence of Brexit and the unavoidable responsibility of those who advocated it. This isn’t surprising, because it has long been the hallmark of Brexiters that they abjure responsibility – it’s always someone else’s fault or because, as its apologists are wont to say of Communism, Brexit inevitably hasn’t been done ‘properly’. In May 2018 I compiled a list of six excuses that Brexiters make for why the consequences of Brexit are nothing to do with them. They continue to be rolled out.
Brexit really does mean Brexit
But I think there are some other features of Brexit mentality lurking in all this as well. One is the frequent implication that the EU is some kind of cuddly uncle who will or ought to be ‘nice’ to Britain. That’s sometimes found amongst remainers, too, but it is far more bizarre from Brexiters who, having spent decades denouncing the EU for every evil under the sun, now seem to expect that it will just benignly waive the rules in order to help the UK out of a mess of its own making. Linked to that is the phenomenon, which I have also noted in the past on this blog, whereby some Brexiters seem to think that leaving the EU was a kind of symbolic act, rather than one with concrete legal effects. So it seems to come as a surprise and, somehow, ‘not fair’ when the EU applies the rules to Britain that apply to other third countries.
It is neither surprising nor is it ‘petty’ or ‘vindictive’ to do so, as was said during the recent row (£) about the confiscation of a ham sandwich. This rule exists and is enforced because of the very real dangers of African swine fever, which can devastate pig farming, or even of foot and mouth disease. Indeed this is why, back in 2019, the British government launched a campaign warning tourists not to bring such items back home with them. So what, exactly, do Brexiters expect EU border officials to do? Just shrug and say that because you’re coming from Britain the rules don’t apply? Or let you off because you didn’t realize these rules existed and that Brexit would mean they applied to Britain?
What of the future?
There is an obvious linkage between this lack of realism and the idea that the adverse effects of Brexit are the fault of the EU, or ‘punishment’ from the EU. To the extent that this narrative takes hold there is little chance of any honest appraisal of Brexit. Equally, it contributes to the continuing antagonism with which the Brexiters seem determined to conduct relations with the EU post-Brexit.
The ongoing row over the diplomatic status of the EU’s Ambassador is a good example of this. It’s not just that this is – indeed – petty, it’s also, as Georgina Wright argues on the Institut Montaigne blog, misguided in terms of the UK’s interests and global standing. Britain’s stance on this is causing serious anger across the EU’s member states (£) and it is intensifying, with the EU now cancelling a meeting with the UK’s Ambassador (£).
That matters, because apart from growing the economic costs of Brexit, the geo-political ones have also been profound. As Dr Rudolf Adam, of the University of the Federal Armed Forces Neubiberg (Munich), writes “the enduring legacy of Brexit is a massive loss of respect and sympathy for a country that for centuries was admired as a bastion of pragmatism and liberal values. The UK is losing soft power faster than hard power.”
Amongst other things, that implies the UK needs to work constructively with the EU through the TCA partnership apparatus and also, especially, to make the Northern Ireland Protocol work via the Joint Committee. Moreover, there are and will be a huge range of security and foreign policy issues – Hong Kong, Russia – where the UK will need the support and friendship of the EU and, no doubt, vice versa. And any idea that the UK can take a leading role in international responses to climate change, or anything else, whilst maintaining a ‘dog in the manger’ attitude to the EU is absurd.
From that point of view, there’s no conceivable benefit to Britain in taking this position of the EU Ambassador. It would seem to be explained partly by the visceral hatred that Brexiters have for the EU. It may also be a prelude to far more substantive conflicts over the TCA and may have the effect, if not the intention, of providing a ready-made narrative to justify pulling out of it.
Equally, again in effect if not intention, continued and growing antagonism towards the EU serves to divert attention from the Brexiters being held to account for what they have done, because it enables them to present the consequences of Brexit as being the fault of the EU and to deflect anger onto the EU. In this way, Brexiters can continue to re-fight the battles of the referendum.
It’s hard to resist the conclusion that this lies behind current attempts to justify Brexit by reference to the failures of the vaccination programme in the EU or the row over vaccine delivery (£), which needless to say is more complicated than the tabloids allow (see also, for the wider context of the issue, this report in Politico). Tellingly, as Maria Tadeo, Bloomberg TV’s Europe reporter, says, within EU countries, the narrative of this row is not generally framed in terms of Brexit at all. It certainly has little to do, or should have little to do, with the case for a long-term strategic partnership between the EU and the UK.
Shaping the narrative
The coming few months will therefore be very significant for two reasons. Firstly, because this is the period during which the effects of Brexit will be most visible and, therefore, during which the possibility of holding Brexiters to account is the greatest. This is why it is important to keep highlighting those effects and challenging attempts to deny them. If they manage to implant a narrative that these effects are nothing to do with Brexit, or are down to the EU being unreasonable, that may well become established and much more difficult to challenge later. For, by then, the visible effects will have declined (though the underlying damage will continue) and, of course, the longer-term effects will be difficult to definitively disentangle from those of Covid, in particular.
That cuts both ways, of course, in that it makes highly dubious the current attempts to claim that, had Brexit not happened, the UK’s vaccine programme would have suffered compared with how it actually is. That may or may not be true – any such claim requires a long string of counterfactuals about what would and would not have been done by multiple actors in that alternative universe. Clearly that isn’t so for straightforward cases such as that leaving the customs union creates new processes and costs for exporters.
Secondly, and even more importantly, although the damage of Brexit itself is now unavoidable regardless of who is held to be responsible for it, it is not inevitable that post-Brexit UK-EU relations have to be added to the list of that damage. As I have been arguing for months, the mandate of the 2016 referendum has now been fully discharged. Nowhere in that vote was there a mandate for Brexiters to permanently sour UK-EU relations post-Brexit, nor should those relations continue to be seen through the prism of the now dead question of whether the UK should remain a member of the EU.
So the current period is potentially crucial for changing the tone of those relations and shifting them from the virulently hostile ones the Brexiters are seeking to embed. It’s clear, as with the vaccine row, that they will weaponize whatever comes to hand in that attempt. The chances of such a change of tone are, in any case, negligible given that we have a government which is Brexiter to the core. But they are not non-existent because no government has complete control of the narrative. Other politicians, journalists, grass roots organizations, and civil society generally also have a role. And then, as the old cliché has it, there are ‘events, dear boy, events’.
*Some people dislike the term ‘new’ in this context, because what is happening is, rather, the re-imposition of barriers which had been removed by the customs union or single market. However, I think it is a reasonable usage for two reasons. First because, obviously, it is intended to mean ‘new as compared with when the UK was an EU member’. Second, because in a certain sense we are not simply facing a return to pre-customs union, pre-single market days as these rules are now being applied in the context of a very different economy to when the UK joined the EEC in 1973, in particular as regards the realities of international supply chains.
Friday, 22 January 2021
Get ready for 'Long Brexit'
Another week and more stories of the disruption that Brexit is bringing to UK-EU trade in addition those in my recent posts. Fishing continues to be the most high-profile example in the media coverage, with a major protest in London this week, but increasingly the impact on the meat trade is being reported along with numerous others. Inevitably it is perishable goods which are the most obviously impacted by transport delays, but the problems go much wider. More major logistics groups, as well as a host of smaller companies, are now simply suspending deliveries between the UK and the EU.
As mentioned in the previous post, disruption in the form of queues has been muted by the low volumes of goods traffic over the New Year period – about 25% of normal in the first week of the year and 40% last week on the short Channel – so much greater problems are expected (£). I also referred in the previous post to the fact that at the end of March the grace period on applying full certification rules to shipments from Great Britain to Northern Ireland will end, and this week haulage industry leaders warned that when that happens they will face “an abyss”. According to Richard Burnett, CEO of the Road Haulage Association, “these are not teething problems. These are structural problems”.
It’s an almost impossible task to keep track of everything that is going on but there are two useful resources for doing so. One, mentioned in my previous post, is Yorkshire Bylines Davis Downside Dossier. Another is the ongoing Twitter thread being created by Daniel Kelemen, Professor of Political Science and Law at Rutgers University. However, even these listings show only the tip of the iceberg.
The legacy of lies
The crucial point, unsurprisingly being avoided or misrepresented by the government and by Brexiters more generally, is that this isn’t just a matter of ‘teething problems’ and it isn’t simply because Johnson agreed a ‘bad deal’. It is true that, had there been more time to prepare, some of the problems of conforming with the new situation could have been dealt with. But that would only have made the consequences of Brexit less visible and less newsworthy. It wouldn’t have changed the underlying reality of there being new barriers to trade.
That reality represents the exposure of the lies or misunderstandings, going right back to before the referendum, that a trade deal would more or less replicate the conditions of single market and customs union membership. Associated with that was the monocular focus on the removal of tariffs as being the sole issue. It has not come out of a clear blue sky. It was warned of repeatedly (Dr Matt Bishop of Sheffield University gave an excellent summary with multiple links in February 2020) and those warnings were ridiculed and dismissed. But now we have, precisely, a zero tariffs trade deal and the warnings have been proved right.
The pervasiveness of the lie also (along with lack of time and Covid) explains the lack of preparations because many businesses thought that if there was a trade deal then their terms of trade would continue unaltered. A report in The Times this week (£) – which includes a lot of crunchy detail on the massive problems facing especially smaller exporters – quotes Ruth Corkin, the VAT and indirect tax Director of Hillier Hopkins, reportedly the only British accountancy firm to offer a customs agent service to SMEs dealing with Brexit. As such, it seems a fair assumption that she has extensive contacts with such firms and is right to say that some had assumed that because there’s a trade deal “everything will be hunky dory and like it was before”.
If so, it was an entirely understandable assumption given the last five years of promises and lies. But even firms which did understand and prepare for the new realities have been caught out by the complexities of the new requirements and the inadequacy of the administrative and IT systems they have to deal with. A particular problem (the link in the previous sentence gives an example) is the outdated Customs Handling of Import and Export Freight (CHIEF) system, a legacy system which is still being used because of delays in creating the new Customs Declarations Service (CDS). Another problem now being reported by Joe Mayes of Bloomberg is a desperate shortage of ‘transit guarantees’ and delays in new ones being issued by HMRC, this being due to delays in another IT project, the New Computerised Transit System. (These examples of deficiencies in the systems needed even for a frictive border might also serve to remind us of the hollowness of Brexiters’ claims for technologies which would make borders completely frictionless).
A fundamental shift in the trading economy is underway
There are now daily reports of the damage being wrought, but focussing on each individual one is to miss the point of what is happening. What is underway is a fundamental shift in the ‘tectonic plates’ of the UK trading economy and its supply chains, happening in real time and under our noses, but with little comment on the aggregate picture. And it is going to get worse when all the new rules are stringently applied on the EU side and applied at all on the UK side. It is reaching, or will reach, into every niche of economic life, from business travel to the EU (£) to having to make a declaration if an individual or group takes more than £10,000 out of Great Britain (i.e. including trips to Northern Ireland) to an EU country.
As Shane Brennan, CEO of the Cold Chain Federation puts it “the big worry here is that ‘not trading’ becomes the habit”. My view is that this is an inevitability, partly because some trading firms will simply give up as things are too costly or too complex (for SMEs, in particular), but mainly because of the impact on customers. If they experience even a short period of disruption leading them to go to an alternative supplier then, very likely, they will stick with the new supplier.
This is evident in an example in Joe Mayes’ report where the Managing Director of Sealight, which exports LEDs, explains that “[EU] clients will say: ‘Forget this, it is just too much”. He expects his firm’s annual sales to drop by 25%. In the same report it is suggested that some 20% of SMEs have suspended exports to the EU. Those affected include companies selling via platforms like Amazon and Ebay.
Meanwhile other businesses, both large and small, are struggling to get the imports they need – hair salons being just one example – and they will surely face price rises, if not now then down the line, because EU hauliers are now charging €10/km to carry freight to the UK, up from €1.50/km. That aside, British purchasers of EU goods are finding that they face charges (due to customs, VAT and handling fees). These are not necessarily known in advance and are demanded at point of delivery by couriers. Again, after the initial ‘disruption’, the long-term effect is likely to be that customers cease to order such goods.
Most of the current focus is on the impact on goods trade, because it is this which is affected by new customs formalities and, when falling foul of rules or origin, tariffs. A huge additional, and so far under-reported, problem is the impact of regulatory duplication caused by Brexit, an important example being the £33 billion a year UK chemicals industry. Moreover it shouldn’t be forgotten that new non-tariff barriers are, under the surface, affecting service businesses. An illustration is the report that some 2,500 jobs and £170 billion of assets had moved from the UK financial services sector to France alone up to the end of 2020. That was before (though of course in anticipation of) the end of the transition period and is expected accelerate now. There are also new warnings of significant threats to the UK’s huge fund management industry.
Today’s announcement that Nissan will continue its Sunderland operations is great news for its workers and suppliers there. It’s an important example of why having a trade deal with the EU is better than ‘no deal’ would have been. It’s also an example of the ‘shifting tectonic plates’ in that Nissan will move production of the battery for the Leaf model from Japan to the UK so as to ensure it meets the rules of origin for tariff free export to the EU, including the three year window provided for by the TCA for electric car batteries. But it doesn’t follow that the rest of the auto industry will stay, nor does it negate the fact that other damage is occurring. In terms of assessing Brexit it is ‘not bad news’ rather than being a positive achievement. For despite what Brexiters will be saying loudly today, it is not a demonstration of the success of Brexit to retain companies that were already here, and are staying despite the new trade barriers that Brexit has erected.
Overall, it will take a long time before the full effects of all these new trade barriers are known, but Dr Thomas Sampson of the LSE, writing in a new UK in a Changing Europe report (p.106), suggests that over ten years UK exports to the EU will drop by 36% and imports by 30% compared to EU membership. These are big figures, and it shouldn’t be forgotten – as Brexiters sometimes do – that they will have knock-on effects on firms and individuals who don’t themselves engage in trade with the EU. These may be firms that supply goods and services to traders, individuals employed both by such firms and by trading firms, or customers experiencing higher prices or less choice/ quality in what they can buy. And, as mentioned in my previous post, trade deals with non-EU country are not going to go very far in compensating for all this.
It’s important not to focus solely on economics and trade. Brexit is going to have multiple, short and long-term impacts on almost every area of British life. The UK in a Changing Europe report I just mentioned – by happy coincidence entitled, like this blog, Brexit & Beyond - is a superb new resource assessing just about every conceivable one of these areas, each written by a leading academic expert. It is well worth taking the time to digest it. Equally worthwhile are the (sometimes less high-profile) writings of industry experts. One example this week is a blog this week by Clive Simpson, a journalist specialising in the space industry, on how Brexit it set to affect that (one of the few topics not directly covered by the compendious UK in a Changing Europe report).
Assigning – and evading - responsibility
Simpson also proposes the term “long-Brexit” (analogous to ‘Long Covid’, so perhaps ‘Long Brexit’ would be better) to apply to the ways that short-term Brexit impacts will morph into chronic problems. It is a useful idea because the very elongated timeframes of Brexit should not deter us from linking the effects of Brexit to the decisions (and indeed promises) made going back to 2016.
There may sometimes be problems of causality when looked at over such timeframes, and the Brexiters will use that to try to gaslight us about what is happening and why, as well as about what they originally said. Indeed this week saw a spectacularly egregious example, with Jonathan Saxty in The Telegraph (£) lachrymosely complaining that “Brexiteers” (sic) were wrongly being blamed for the problems they had warned of all along. To those who have been on the end of the ubiquitous ‘Project Fear’ dismissal it had a hollow ring, to say the least.
The main lines of the Brexiter rebuttal of responsibility for the policy they urged are clear enough. Adverse effects will be denied or downplayed; admitted but with a denial that Brexit was the cause; admitted but blamed on the EU for acting unreasonably; or admitted but blamed on Brexit not having been done properly, with this in turn blamed upon ‘the remain establishment’. What can be assured is that they will never take responsibility. It will be important to continue to challenge this, and it continues to be disappointing that the Labour Party is not taking the lead in doing so. That is a great error, as former Labour MEP Richard Corbett has cogently argued this week.
But there is a more insidious problem, which is that many – by no means all of whom will be Brexiters – will slip into saying that the problems caused by Brexit need to be ‘sorted out’ by the government, perhaps by means of discussion with the EU. That won’t always be misplaced. It is certainly for the government to sort out its customs IT systems, for example. And there may be areas where discussion with the EU can clarify features of the Trade and Cooperation Agreement (TCA), or where this or that extension of grace periods on certain measures can be agreed. However, the fundamental architecture of the deal, and therefore its effects, is a direct consequence of the policy of hard Brexit, and we have that policy because the (hard) Brexiters insisted upon it. To use the ‘Long Brexit’ analogy, the cause of the symptoms is the virus.
From this point of view the provisions of government compensation and support, which have been offered in the case of fisheries and are being considered for the music industry (£), are palliative rather than curative. And where does it end? Compensating all businesses for all the costs of Brexit would involve huge sums, especially coming on top of the government support rightly and necessarily being provided because of coronavirus. It’s ironic, too, that after all the promises, including that of extra money for the NHS, Brexit should now be revealed as something requiring compensation.
UK and EU relations
Meanwhile, as the early effects of Brexit play out, the wider context of the EU-UK relationship shouldn’t be forgotten. The TCA set in train a complex set of decisions and deadlines which have been mapped by the Institute for Government. An immediate issue is that the European Parliament has yet to ratify the TCA and the deadline for doing so looks set to be extended to April. Ostensibly this is to allow translation work but what lies behind it seems to be continuing concerns about the robustness of the governance mechanisms, which are also due to be discussed today by EU Ambassadors.
This in turn reflects the now embedded distrust in the UK’s intentions, a distrust that can only be fed by fresh mutterings in the undergrowth (of which I suspect we will hear more) about the possibility of the UK reneging on parts of the Withdrawal Agreement, as well as the rather more high-profile talk of ‘reviewing’ workers’ rights. The latter may, as Mike Buckley argued in a piece in Byline Times this week prove more difficult to enact than the government think, not least because of potential sanctions under the TCA but, as he astutely observes, may prove to be an example of the UK constantly pushing at the boundaries of EU patience in terms of what might or might not be allowable under the TCA. Hence continuing EU concerns.
In any case, although the British Parliament settled for a “farce” in its scrutiny of the TCA, it’s not unreasonable that the European Parliament intends to scrutinise it diligently and seriously. Boris Johnson’s reported “rage” and “warning” that ratification must occur by the end of February is unwarranted but also irrelevant as there’s not much he can do. But it illustrates that neither he nor the Brexiter press are going to allow any good grace to be introduced to how the UK interacts with the EU.
That gracelessness is especially evident in the story that emerged yesterday that the government is refusing to grant the EU’s new (and first) Ambassador to the UK full diplomatic status. It is petty, reflecting how, even having got Brexit, Brexiters are determined to sour and antagonise relations with the EU, and it is foolish in the context of the ongoing negotiations deriving from the TCA.
But beyond that, it reveals an extraordinary irony, because the government’s justification is that full diplomatic status is not warranted as the EU is ‘not a nation state’ but simply an ‘international organization’. Yet for years the Brexiters’ core complaint was that the EU had become a super-state, making the UK’s membership sovereignty-sapping in a way that was quite different to its membership of other international organizations. So as the costs of Brexit rip through our country, revealing all the lies told of there being no costs, it is tacitly admitted that this was another lie. Indeed, it was the foundational lie.
As mentioned in the previous post, disruption in the form of queues has been muted by the low volumes of goods traffic over the New Year period – about 25% of normal in the first week of the year and 40% last week on the short Channel – so much greater problems are expected (£). I also referred in the previous post to the fact that at the end of March the grace period on applying full certification rules to shipments from Great Britain to Northern Ireland will end, and this week haulage industry leaders warned that when that happens they will face “an abyss”. According to Richard Burnett, CEO of the Road Haulage Association, “these are not teething problems. These are structural problems”.
It’s an almost impossible task to keep track of everything that is going on but there are two useful resources for doing so. One, mentioned in my previous post, is Yorkshire Bylines Davis Downside Dossier. Another is the ongoing Twitter thread being created by Daniel Kelemen, Professor of Political Science and Law at Rutgers University. However, even these listings show only the tip of the iceberg.
The legacy of lies
The crucial point, unsurprisingly being avoided or misrepresented by the government and by Brexiters more generally, is that this isn’t just a matter of ‘teething problems’ and it isn’t simply because Johnson agreed a ‘bad deal’. It is true that, had there been more time to prepare, some of the problems of conforming with the new situation could have been dealt with. But that would only have made the consequences of Brexit less visible and less newsworthy. It wouldn’t have changed the underlying reality of there being new barriers to trade.
That reality represents the exposure of the lies or misunderstandings, going right back to before the referendum, that a trade deal would more or less replicate the conditions of single market and customs union membership. Associated with that was the monocular focus on the removal of tariffs as being the sole issue. It has not come out of a clear blue sky. It was warned of repeatedly (Dr Matt Bishop of Sheffield University gave an excellent summary with multiple links in February 2020) and those warnings were ridiculed and dismissed. But now we have, precisely, a zero tariffs trade deal and the warnings have been proved right.
The pervasiveness of the lie also (along with lack of time and Covid) explains the lack of preparations because many businesses thought that if there was a trade deal then their terms of trade would continue unaltered. A report in The Times this week (£) – which includes a lot of crunchy detail on the massive problems facing especially smaller exporters – quotes Ruth Corkin, the VAT and indirect tax Director of Hillier Hopkins, reportedly the only British accountancy firm to offer a customs agent service to SMEs dealing with Brexit. As such, it seems a fair assumption that she has extensive contacts with such firms and is right to say that some had assumed that because there’s a trade deal “everything will be hunky dory and like it was before”.
If so, it was an entirely understandable assumption given the last five years of promises and lies. But even firms which did understand and prepare for the new realities have been caught out by the complexities of the new requirements and the inadequacy of the administrative and IT systems they have to deal with. A particular problem (the link in the previous sentence gives an example) is the outdated Customs Handling of Import and Export Freight (CHIEF) system, a legacy system which is still being used because of delays in creating the new Customs Declarations Service (CDS). Another problem now being reported by Joe Mayes of Bloomberg is a desperate shortage of ‘transit guarantees’ and delays in new ones being issued by HMRC, this being due to delays in another IT project, the New Computerised Transit System. (These examples of deficiencies in the systems needed even for a frictive border might also serve to remind us of the hollowness of Brexiters’ claims for technologies which would make borders completely frictionless).
A fundamental shift in the trading economy is underway
There are now daily reports of the damage being wrought, but focussing on each individual one is to miss the point of what is happening. What is underway is a fundamental shift in the ‘tectonic plates’ of the UK trading economy and its supply chains, happening in real time and under our noses, but with little comment on the aggregate picture. And it is going to get worse when all the new rules are stringently applied on the EU side and applied at all on the UK side. It is reaching, or will reach, into every niche of economic life, from business travel to the EU (£) to having to make a declaration if an individual or group takes more than £10,000 out of Great Britain (i.e. including trips to Northern Ireland) to an EU country.
As Shane Brennan, CEO of the Cold Chain Federation puts it “the big worry here is that ‘not trading’ becomes the habit”. My view is that this is an inevitability, partly because some trading firms will simply give up as things are too costly or too complex (for SMEs, in particular), but mainly because of the impact on customers. If they experience even a short period of disruption leading them to go to an alternative supplier then, very likely, they will stick with the new supplier.
This is evident in an example in Joe Mayes’ report where the Managing Director of Sealight, which exports LEDs, explains that “[EU] clients will say: ‘Forget this, it is just too much”. He expects his firm’s annual sales to drop by 25%. In the same report it is suggested that some 20% of SMEs have suspended exports to the EU. Those affected include companies selling via platforms like Amazon and Ebay.
Meanwhile other businesses, both large and small, are struggling to get the imports they need – hair salons being just one example – and they will surely face price rises, if not now then down the line, because EU hauliers are now charging €10/km to carry freight to the UK, up from €1.50/km. That aside, British purchasers of EU goods are finding that they face charges (due to customs, VAT and handling fees). These are not necessarily known in advance and are demanded at point of delivery by couriers. Again, after the initial ‘disruption’, the long-term effect is likely to be that customers cease to order such goods.
Most of the current focus is on the impact on goods trade, because it is this which is affected by new customs formalities and, when falling foul of rules or origin, tariffs. A huge additional, and so far under-reported, problem is the impact of regulatory duplication caused by Brexit, an important example being the £33 billion a year UK chemicals industry. Moreover it shouldn’t be forgotten that new non-tariff barriers are, under the surface, affecting service businesses. An illustration is the report that some 2,500 jobs and £170 billion of assets had moved from the UK financial services sector to France alone up to the end of 2020. That was before (though of course in anticipation of) the end of the transition period and is expected accelerate now. There are also new warnings of significant threats to the UK’s huge fund management industry.
Today’s announcement that Nissan will continue its Sunderland operations is great news for its workers and suppliers there. It’s an important example of why having a trade deal with the EU is better than ‘no deal’ would have been. It’s also an example of the ‘shifting tectonic plates’ in that Nissan will move production of the battery for the Leaf model from Japan to the UK so as to ensure it meets the rules of origin for tariff free export to the EU, including the three year window provided for by the TCA for electric car batteries. But it doesn’t follow that the rest of the auto industry will stay, nor does it negate the fact that other damage is occurring. In terms of assessing Brexit it is ‘not bad news’ rather than being a positive achievement. For despite what Brexiters will be saying loudly today, it is not a demonstration of the success of Brexit to retain companies that were already here, and are staying despite the new trade barriers that Brexit has erected.
Overall, it will take a long time before the full effects of all these new trade barriers are known, but Dr Thomas Sampson of the LSE, writing in a new UK in a Changing Europe report (p.106), suggests that over ten years UK exports to the EU will drop by 36% and imports by 30% compared to EU membership. These are big figures, and it shouldn’t be forgotten – as Brexiters sometimes do – that they will have knock-on effects on firms and individuals who don’t themselves engage in trade with the EU. These may be firms that supply goods and services to traders, individuals employed both by such firms and by trading firms, or customers experiencing higher prices or less choice/ quality in what they can buy. And, as mentioned in my previous post, trade deals with non-EU country are not going to go very far in compensating for all this.
It’s important not to focus solely on economics and trade. Brexit is going to have multiple, short and long-term impacts on almost every area of British life. The UK in a Changing Europe report I just mentioned – by happy coincidence entitled, like this blog, Brexit & Beyond - is a superb new resource assessing just about every conceivable one of these areas, each written by a leading academic expert. It is well worth taking the time to digest it. Equally worthwhile are the (sometimes less high-profile) writings of industry experts. One example this week is a blog this week by Clive Simpson, a journalist specialising in the space industry, on how Brexit it set to affect that (one of the few topics not directly covered by the compendious UK in a Changing Europe report).
Assigning – and evading - responsibility
Simpson also proposes the term “long-Brexit” (analogous to ‘Long Covid’, so perhaps ‘Long Brexit’ would be better) to apply to the ways that short-term Brexit impacts will morph into chronic problems. It is a useful idea because the very elongated timeframes of Brexit should not deter us from linking the effects of Brexit to the decisions (and indeed promises) made going back to 2016.
There may sometimes be problems of causality when looked at over such timeframes, and the Brexiters will use that to try to gaslight us about what is happening and why, as well as about what they originally said. Indeed this week saw a spectacularly egregious example, with Jonathan Saxty in The Telegraph (£) lachrymosely complaining that “Brexiteers” (sic) were wrongly being blamed for the problems they had warned of all along. To those who have been on the end of the ubiquitous ‘Project Fear’ dismissal it had a hollow ring, to say the least.
The main lines of the Brexiter rebuttal of responsibility for the policy they urged are clear enough. Adverse effects will be denied or downplayed; admitted but with a denial that Brexit was the cause; admitted but blamed on the EU for acting unreasonably; or admitted but blamed on Brexit not having been done properly, with this in turn blamed upon ‘the remain establishment’. What can be assured is that they will never take responsibility. It will be important to continue to challenge this, and it continues to be disappointing that the Labour Party is not taking the lead in doing so. That is a great error, as former Labour MEP Richard Corbett has cogently argued this week.
But there is a more insidious problem, which is that many – by no means all of whom will be Brexiters – will slip into saying that the problems caused by Brexit need to be ‘sorted out’ by the government, perhaps by means of discussion with the EU. That won’t always be misplaced. It is certainly for the government to sort out its customs IT systems, for example. And there may be areas where discussion with the EU can clarify features of the Trade and Cooperation Agreement (TCA), or where this or that extension of grace periods on certain measures can be agreed. However, the fundamental architecture of the deal, and therefore its effects, is a direct consequence of the policy of hard Brexit, and we have that policy because the (hard) Brexiters insisted upon it. To use the ‘Long Brexit’ analogy, the cause of the symptoms is the virus.
From this point of view the provisions of government compensation and support, which have been offered in the case of fisheries and are being considered for the music industry (£), are palliative rather than curative. And where does it end? Compensating all businesses for all the costs of Brexit would involve huge sums, especially coming on top of the government support rightly and necessarily being provided because of coronavirus. It’s ironic, too, that after all the promises, including that of extra money for the NHS, Brexit should now be revealed as something requiring compensation.
UK and EU relations
Meanwhile, as the early effects of Brexit play out, the wider context of the EU-UK relationship shouldn’t be forgotten. The TCA set in train a complex set of decisions and deadlines which have been mapped by the Institute for Government. An immediate issue is that the European Parliament has yet to ratify the TCA and the deadline for doing so looks set to be extended to April. Ostensibly this is to allow translation work but what lies behind it seems to be continuing concerns about the robustness of the governance mechanisms, which are also due to be discussed today by EU Ambassadors.
This in turn reflects the now embedded distrust in the UK’s intentions, a distrust that can only be fed by fresh mutterings in the undergrowth (of which I suspect we will hear more) about the possibility of the UK reneging on parts of the Withdrawal Agreement, as well as the rather more high-profile talk of ‘reviewing’ workers’ rights. The latter may, as Mike Buckley argued in a piece in Byline Times this week prove more difficult to enact than the government think, not least because of potential sanctions under the TCA but, as he astutely observes, may prove to be an example of the UK constantly pushing at the boundaries of EU patience in terms of what might or might not be allowable under the TCA. Hence continuing EU concerns.
In any case, although the British Parliament settled for a “farce” in its scrutiny of the TCA, it’s not unreasonable that the European Parliament intends to scrutinise it diligently and seriously. Boris Johnson’s reported “rage” and “warning” that ratification must occur by the end of February is unwarranted but also irrelevant as there’s not much he can do. But it illustrates that neither he nor the Brexiter press are going to allow any good grace to be introduced to how the UK interacts with the EU.
That gracelessness is especially evident in the story that emerged yesterday that the government is refusing to grant the EU’s new (and first) Ambassador to the UK full diplomatic status. It is petty, reflecting how, even having got Brexit, Brexiters are determined to sour and antagonise relations with the EU, and it is foolish in the context of the ongoing negotiations deriving from the TCA.
But beyond that, it reveals an extraordinary irony, because the government’s justification is that full diplomatic status is not warranted as the EU is ‘not a nation state’ but simply an ‘international organization’. Yet for years the Brexiters’ core complaint was that the EU had become a super-state, making the UK’s membership sovereignty-sapping in a way that was quite different to its membership of other international organizations. So as the costs of Brexit rip through our country, revealing all the lies told of there being no costs, it is tacitly admitted that this was another lie. Indeed, it was the foundational lie.
Friday, 15 January 2021
Dawning realities
Having initially spoken of there being some bumps in the road, Michael Gove last weekend told businesses to prepare for “significant disruption” as a result of Brexit. He was right to do so, because on top of the extensive difficulties traders were already experiencing, outlined in my previous post, this week there have been reports of “a high volume of vehicles being refused and delayed” at ports. Couriers are reporting that “Brexit delays and costs are escalating rapidly” whilst DPD, one of the largest couriers, has temporarily suspended all UK-EU road services.
These distribution problems are now leading to some shortages in shops and they are set to get worse (£). Northern Ireland is the worst affected place, despite there being a three month grace period during which full certification rules on food coming from Great Britain are waived, which may or may not be extended. As regards exporters, one of the worst affected industries seems to be the Brexit icon of fisheries, unsurprisingly since this is a highly perishable product and the EU is its main market. (It shouldn’t be forgotten that EU fishermen are also suffering from Brexit – in which they had no say – especially in Ireland, although there is an EU support fund to help them and the other businesses being damaged.)
It is irrelevant that there are no big queues at ports because the overall volume of traffic is still much lower than normal, not least because part of the damage lies in hauliers simply not undertaking journeys. So even with turn-backs and delays there aren’t, at least for now, queues building. Beyond that, an under-appreciated point, made by Shane Brennan, head of the cold chain trade body, is that there is not simply a single, physical, border. Rather, hauliers, customs agents, vets, and government agencies each, in effect, act as ‘borders’ – making decisions and undertaking processes which determine whether or not a laden truck actually passes or even reaches the physical border.
This in turn is a reminder that customs formalities are only one of the new barriers to trade that Brexit has created (or revived). There are also issues such as product labelling and veterinary checks. To put that another way, we are experiencing the consequences of Great Britain being outside both the customs union and the single market. In this sense, talk from Boris Johnson and others of using Article 16 of the Northern Ireland Protocol is misplaced as the disruptions are the foreseeable result of what was agreed (the idea is flawed for other reasons, too). I’ll return to the Article 16 issue in more detail in a future post if it starts being raised as a serious possibility. For now, the point is that what we are seeing is the start of what Brexit looks like, at least when a very narrow definition of sovereignty is made the overriding priority in its execution.
What will it mean when things ‘settle down’?
This means that even when the immediate disruptions ‘settle down’, as in due course most of them very likely will, there will most definitely not be a return to the pre-Brexit situation. For one thing, some firms may not survive these immediate problems, or will permanently have lost customers. But in any case, any such settling down will merely conceal rather than remove the newly (re)instated barriers. It will consist either of firms simply not doing all or any of the trade that they used to – with knock on effects on jobs and product availability – or doing so with additional costs which will, most likely, be passed on to UK customers in the form of higher prices.
That may mean anything from a few more pence on some vegetables to many hundreds of pounds on a new car, as was announced this week by Ford explicitly as a result of the new post-Brexit terms of trade (in this case, tariffs due to the application of rules of origin). An illustration of the scale of the costs caused just by the new border friction is that “the average cost of transporting a lorryload of goods to Britain from Germany was 26 per cent higher in the first week of 2021 compared with the average for the third quarter of last year” (£).
Whether visible as disruption or hidden by being incorporated into new standard procedures, these new barriers and their consequences do not indicate that the Trade and Cooperation Agreement (TCA) is a ‘bad deal’ in itself. Rather, for the most part they would exist regardless of what was in the TCA precisely because no such agreement could prevent all the effects of leaving the single market and customs union. So they are the result of that decision rather than the TCA which flows from it, as are the even less visible impacts on services trade.
Accordingly, they are not going to be ‘fixed’ by further discussions with the EU about the TCA, or by the operation of the Partnership Council and its sub-bodies. As regards Northern Ireland, specifically, they derive from what is I think the still under-recognized fact, plain since Johnson’s Withdrawal Agreement, that Brexit has put an end to the UK single market.
So as and when the visible disruptions settle down what will emerge will be an underlying and permanent readjustment and downgrade of the UK economy (though Northern Ireland may well benefit from being by far the most attractive part of the UK for investment in manufacturing). This will not, as some Brexiter MPs are claiming, be offset by the government’s recently signed trade deals because these only (at best) replicate agreements the UK had via the EU. In due course there may be trade deals with countries that the EU does not have deals with, but that will take time – during which plenty of damage will have been done - and is highly unlikely to come close to making up for lost trade with the EU.
Beyond the immediate disruption
It would also be wrong to think that all that is at stake is a temporary period of disruption followed by a new (albeit worse) normal. That may describe the situation as regards things like customs formalities for goods trade, but coming down the line are some potentially greater disruptions. One will depend on what the EU decides to grant the UK financial services sector in terms of regulatory equivalence. The TCA only provides a temporary fix, and reaching the permanent outcome is likely to be a long, drawn-out process with, depending on what is decided, a potentially major effect on the British economy given the size of the sector.
Another crucial issue will be the EU decision on UK data protection adequacy, for which the TCA again only provides a temporary bridging mechanism pending that decision. As with the VAT issue discussed in my previous post, it is an area of great technical complexity but with a huge practical significance for a wide variety of businesses of all sectors and sizes, as well as for security cooperation. The outcome will potentially add another swathe of administrative processes and costs. There’s a good discussion of the issues by Dr Karen Mc Cullagh of University of East Anglia on the DCU Brexit Institute blog, including an explanation of the way that, as in so many other areas, Brexiter ideas of ‘sovereignty’ conflict with the practical realities of modern life.
Of course the adverse realities of Brexit are not just about trade, any more than EU membership was just about trade, even though that is how generations of British politicians have represented it. One example is losing access to the Erasmus scheme for student exchange. More generally, the many advantages of freedom of movement have now disappeared, restricting the opportunities and impoverishing the lives of those who might otherwise have made use of them.
For that matter – and it’s the reason why freedom of movement of people is one of the indivisible four freedoms of the single market – losing this freedom itself has an economic aspect, illustrated by the case of touring musicians and other performers. There was a strand of Brexit support which seemed to imagine that it would only affect people coming from the EU to the UK and not vice versa. Even if that had been so it would still have been a wretched thing, but of course it wasn’t. Hence, now, reports of the dissatisfaction of British owners of second homes in Spain.
The causes of the disruption
The main reason why the current and ongoing consequences of Brexit may not be very well-understood is that the Brexiters lied about them, and many still are.
This also partly explains why the visible disruptions are occurring. For years, businesses were told that talk of disruption was just Project Fear or, if it came from the EU, derided as a threat of ‘punishment’, rather than being a simple statement of fact. That slowed government preparations and made some businesses underestimate the scale of what they had to prepare for. And although some government preparation was done earlier, it was not until February of last year that any government minister – Michael Gove – formally admitted that there would be border frictions.
As regards the Irish Sea border, the Prime Minister and other ministers maintained it would not exist, and the Northern Ireland Secretary still is. To do so whilst also asking people to prepare for the coming changes was, to massively understate things, giving a hopelessly mixed message.
In addition to this, the government’s approach to the TCA negotiations, based as it was on taking them to the last minute in anticipation of the EU ‘blinking’, baked in the disruptions that we are now seeing. It meant that businesses had to try to absorb highly complex new processes which were not fully specified until days, or in some cases hours, before they had to be implemented. That this was over the Christmas and New Year holidays and during the deepening coronavirus crisis could only compound the difficulties. It is again an understatement to say that this was grossly irresponsible.
Alongside the lies told about Brexit, there were two other features which have contributed to the current problems which, whilst involving untruths, were not in most cases deliberate lies. One, which I first remarked on several years ago, was a pervasive sense amongst Brexit supporters that, somehow, nothing much would change as a result. That was obviously linked to the lies about how it would be quick, easy and cost-free but was different to them in treating Brexit as a symbolic act (of, perhaps, freedom) that had no connection with the taken-for-granted systems that make modern life work – for example in terms of putting food in shops or planes in the air. So you could leave the EU, and it would be a wonderful liberation, and then carry on as before. As Sally Jones, trade strategy and Brexit lead for the EY consulting firm, speaking of the re-introduction of barriers to trade, put it, “people forget just how difficult things were in the past”.
Related to this was a lack of understanding about how these systems actually worked. That’s not unreasonable – few of us understand the inner workings of our computer or our car. This perhaps explains why we do not hold votes on whether to rip out the motherboard or crankshaft in the name of consumer sovereignty. Similarly, few understand the hidden complexities of trade, customs, supply chains etc. Indeed, Brexit throws up so many technical niche areas that no one person could possibly be conversant with them all.
What is unreasonable is that Brexiters ignored or denied this, and derided those who pointed it out. For example, in March 2017 I wrote about how Brexiters almost invariably talked about trade as if it were a simple once-only movement of goods from country A to country B. We are seeing the results of the naivety now with, for example, the stories of how pan-European distribution hubs in the UK face tariffs when they re-export goods and, more generally, the problems faced by international supply chains of all sorts.
This isn’t a betrayal of Brexit – it’s the reality of Brexit
So decisions about Brexit, lies about Brexit, the way Brexit was undertaken, and misunderstandings about what Brexit meant are now having the consequences we are seeing (for a regularly updated list of them, see Yorkshire Bylines’ ‘Davis Downsides Dossier’). It’s important to keep on saying this for two reasons.
One is the way that, all too predictably, some are now already talking of there having been a Brexit ‘betrayal’, for example over fisheries and Northern Ireland (£), and of the TCA being a ‘disaster’ in particular for its limited services coverage. But these and other consequences were entailed by hard Brexit rather than being a betrayal of it. The criticism should be of the denial that there would be such consequences. It’s a crucial distinction because, without it, Brexiters can and will continue the lies by pretending that, done differently, there was a hard Brexit that avoided the consequences.
Secondly, recalling the underlying reasons matters because another prevailing reaction seems to be a general shrugging off of what is happening as if it were ‘just one of those things’. I don’t think that is just because coronavirus is the main preoccupation as it is very similar to how the collapse of sterling after the referendum vote, which would in other times have been a major crisis, caused barely a political ripple. Similarly, imagine the reaction if in the past there had been the kinds of disruptions described at the start of this post. The explanation, at least in part, is that the Brexiters have so aggressively attacked those who draw attention to such things that the media and some politicians have become cowed.
What is to be done?
As the realities of Brexit continue to emerge, it’s crucial to be honest about what it means and about how we got here. From that point of view the near political silence about what is happening, with the partial exception of fisheries, is both disappointing and – if anything about the Brexit process could be so any more - astounding.
Obviously the pandemic is the dominant issue at the moment but the significance of the Brexit-induced disruption should surely not be ignored. The government won’t, for obvious reasons, want to talk about it but the Labour opposition certainly should. Not only would it be right to do so in its own terms, simply because it is a growing crisis, but it would also be a way of setting in train what Labour’s policy towards EU relations would be if it won the next election. That could be one part of meeting the challenge to Keir Starmer, as posed by Rafael Behr this week, to “narrate a journey to a better Britain”.
So it is neither right, nor electorally prudent, to remain silent for fear of alienating ‘red wall’ voters or of inviting Johnson’s predictable ‘remoaner’ jibes. And whilst parties in Scotland, Northern Ireland and Wales are raising it, Labour as the official opposition has a particular role to play and it isn’t – with some limited exceptions – doing so. In particular, it seems truly extraordinary that Starmer did not use even one of his six questions to the Prime Minister this week to raise the extensive disruptions to trade which are occurring and their longer-term significance.
Starmer’s stance through 2020 was that it was for the government to deliver its promised deal and that Labour would hold Johnson to account for it. So now we have the deal, but where’s the holding to account? Worse, how can there be any holding to account when he has just said (£) Labour would not seek any major changes to the TCA if in power? In consequence, at least as regards the two main political parties, there is now a virtual conspiracy of silence about Brexit, compounded by Jacob Rees-Mogg closing down the cross-party committee that would have scrutinised the deal.
That said, even if it were not for coronavirus and regardless of the immediate political reaction, it is far too early to expect the kind of serious ‘national conversation’ about Brexit that we need to have. The wounds of the last five years are still too raw and the divisions too entrenched. Moreover, it will have to be informed by broader considerations than those of the current disruptions. A Chatham House report this week discussed what kind of global role is now feasible for the UK, and that is one part what needs to be considered. So too are the strategic implications of a regionalised and multi-polar world, and an understanding of the strategic issues which led the UK to join the EU (EEC) in the first place, which – as Professor Robert Saunders argues in an excellent essay - Brexit now re-poses.
Still, an honest account of the immediate disruptions is not irrelevant to that and perhaps the first step towards it. It is probably necessary to experience the realities of what leaving means in order to expose the lies of those who led us so carelessly to abandon our membership.
These distribution problems are now leading to some shortages in shops and they are set to get worse (£). Northern Ireland is the worst affected place, despite there being a three month grace period during which full certification rules on food coming from Great Britain are waived, which may or may not be extended. As regards exporters, one of the worst affected industries seems to be the Brexit icon of fisheries, unsurprisingly since this is a highly perishable product and the EU is its main market. (It shouldn’t be forgotten that EU fishermen are also suffering from Brexit – in which they had no say – especially in Ireland, although there is an EU support fund to help them and the other businesses being damaged.)
It is irrelevant that there are no big queues at ports because the overall volume of traffic is still much lower than normal, not least because part of the damage lies in hauliers simply not undertaking journeys. So even with turn-backs and delays there aren’t, at least for now, queues building. Beyond that, an under-appreciated point, made by Shane Brennan, head of the cold chain trade body, is that there is not simply a single, physical, border. Rather, hauliers, customs agents, vets, and government agencies each, in effect, act as ‘borders’ – making decisions and undertaking processes which determine whether or not a laden truck actually passes or even reaches the physical border.
This in turn is a reminder that customs formalities are only one of the new barriers to trade that Brexit has created (or revived). There are also issues such as product labelling and veterinary checks. To put that another way, we are experiencing the consequences of Great Britain being outside both the customs union and the single market. In this sense, talk from Boris Johnson and others of using Article 16 of the Northern Ireland Protocol is misplaced as the disruptions are the foreseeable result of what was agreed (the idea is flawed for other reasons, too). I’ll return to the Article 16 issue in more detail in a future post if it starts being raised as a serious possibility. For now, the point is that what we are seeing is the start of what Brexit looks like, at least when a very narrow definition of sovereignty is made the overriding priority in its execution.
What will it mean when things ‘settle down’?
This means that even when the immediate disruptions ‘settle down’, as in due course most of them very likely will, there will most definitely not be a return to the pre-Brexit situation. For one thing, some firms may not survive these immediate problems, or will permanently have lost customers. But in any case, any such settling down will merely conceal rather than remove the newly (re)instated barriers. It will consist either of firms simply not doing all or any of the trade that they used to – with knock on effects on jobs and product availability – or doing so with additional costs which will, most likely, be passed on to UK customers in the form of higher prices.
That may mean anything from a few more pence on some vegetables to many hundreds of pounds on a new car, as was announced this week by Ford explicitly as a result of the new post-Brexit terms of trade (in this case, tariffs due to the application of rules of origin). An illustration of the scale of the costs caused just by the new border friction is that “the average cost of transporting a lorryload of goods to Britain from Germany was 26 per cent higher in the first week of 2021 compared with the average for the third quarter of last year” (£).
Whether visible as disruption or hidden by being incorporated into new standard procedures, these new barriers and their consequences do not indicate that the Trade and Cooperation Agreement (TCA) is a ‘bad deal’ in itself. Rather, for the most part they would exist regardless of what was in the TCA precisely because no such agreement could prevent all the effects of leaving the single market and customs union. So they are the result of that decision rather than the TCA which flows from it, as are the even less visible impacts on services trade.
Accordingly, they are not going to be ‘fixed’ by further discussions with the EU about the TCA, or by the operation of the Partnership Council and its sub-bodies. As regards Northern Ireland, specifically, they derive from what is I think the still under-recognized fact, plain since Johnson’s Withdrawal Agreement, that Brexit has put an end to the UK single market.
So as and when the visible disruptions settle down what will emerge will be an underlying and permanent readjustment and downgrade of the UK economy (though Northern Ireland may well benefit from being by far the most attractive part of the UK for investment in manufacturing). This will not, as some Brexiter MPs are claiming, be offset by the government’s recently signed trade deals because these only (at best) replicate agreements the UK had via the EU. In due course there may be trade deals with countries that the EU does not have deals with, but that will take time – during which plenty of damage will have been done - and is highly unlikely to come close to making up for lost trade with the EU.
Beyond the immediate disruption
It would also be wrong to think that all that is at stake is a temporary period of disruption followed by a new (albeit worse) normal. That may describe the situation as regards things like customs formalities for goods trade, but coming down the line are some potentially greater disruptions. One will depend on what the EU decides to grant the UK financial services sector in terms of regulatory equivalence. The TCA only provides a temporary fix, and reaching the permanent outcome is likely to be a long, drawn-out process with, depending on what is decided, a potentially major effect on the British economy given the size of the sector.
Another crucial issue will be the EU decision on UK data protection adequacy, for which the TCA again only provides a temporary bridging mechanism pending that decision. As with the VAT issue discussed in my previous post, it is an area of great technical complexity but with a huge practical significance for a wide variety of businesses of all sectors and sizes, as well as for security cooperation. The outcome will potentially add another swathe of administrative processes and costs. There’s a good discussion of the issues by Dr Karen Mc Cullagh of University of East Anglia on the DCU Brexit Institute blog, including an explanation of the way that, as in so many other areas, Brexiter ideas of ‘sovereignty’ conflict with the practical realities of modern life.
Of course the adverse realities of Brexit are not just about trade, any more than EU membership was just about trade, even though that is how generations of British politicians have represented it. One example is losing access to the Erasmus scheme for student exchange. More generally, the many advantages of freedom of movement have now disappeared, restricting the opportunities and impoverishing the lives of those who might otherwise have made use of them.
For that matter – and it’s the reason why freedom of movement of people is one of the indivisible four freedoms of the single market – losing this freedom itself has an economic aspect, illustrated by the case of touring musicians and other performers. There was a strand of Brexit support which seemed to imagine that it would only affect people coming from the EU to the UK and not vice versa. Even if that had been so it would still have been a wretched thing, but of course it wasn’t. Hence, now, reports of the dissatisfaction of British owners of second homes in Spain.
The causes of the disruption
The main reason why the current and ongoing consequences of Brexit may not be very well-understood is that the Brexiters lied about them, and many still are.
This also partly explains why the visible disruptions are occurring. For years, businesses were told that talk of disruption was just Project Fear or, if it came from the EU, derided as a threat of ‘punishment’, rather than being a simple statement of fact. That slowed government preparations and made some businesses underestimate the scale of what they had to prepare for. And although some government preparation was done earlier, it was not until February of last year that any government minister – Michael Gove – formally admitted that there would be border frictions.
As regards the Irish Sea border, the Prime Minister and other ministers maintained it would not exist, and the Northern Ireland Secretary still is. To do so whilst also asking people to prepare for the coming changes was, to massively understate things, giving a hopelessly mixed message.
In addition to this, the government’s approach to the TCA negotiations, based as it was on taking them to the last minute in anticipation of the EU ‘blinking’, baked in the disruptions that we are now seeing. It meant that businesses had to try to absorb highly complex new processes which were not fully specified until days, or in some cases hours, before they had to be implemented. That this was over the Christmas and New Year holidays and during the deepening coronavirus crisis could only compound the difficulties. It is again an understatement to say that this was grossly irresponsible.
Alongside the lies told about Brexit, there were two other features which have contributed to the current problems which, whilst involving untruths, were not in most cases deliberate lies. One, which I first remarked on several years ago, was a pervasive sense amongst Brexit supporters that, somehow, nothing much would change as a result. That was obviously linked to the lies about how it would be quick, easy and cost-free but was different to them in treating Brexit as a symbolic act (of, perhaps, freedom) that had no connection with the taken-for-granted systems that make modern life work – for example in terms of putting food in shops or planes in the air. So you could leave the EU, and it would be a wonderful liberation, and then carry on as before. As Sally Jones, trade strategy and Brexit lead for the EY consulting firm, speaking of the re-introduction of barriers to trade, put it, “people forget just how difficult things were in the past”.
Related to this was a lack of understanding about how these systems actually worked. That’s not unreasonable – few of us understand the inner workings of our computer or our car. This perhaps explains why we do not hold votes on whether to rip out the motherboard or crankshaft in the name of consumer sovereignty. Similarly, few understand the hidden complexities of trade, customs, supply chains etc. Indeed, Brexit throws up so many technical niche areas that no one person could possibly be conversant with them all.
What is unreasonable is that Brexiters ignored or denied this, and derided those who pointed it out. For example, in March 2017 I wrote about how Brexiters almost invariably talked about trade as if it were a simple once-only movement of goods from country A to country B. We are seeing the results of the naivety now with, for example, the stories of how pan-European distribution hubs in the UK face tariffs when they re-export goods and, more generally, the problems faced by international supply chains of all sorts.
This isn’t a betrayal of Brexit – it’s the reality of Brexit
So decisions about Brexit, lies about Brexit, the way Brexit was undertaken, and misunderstandings about what Brexit meant are now having the consequences we are seeing (for a regularly updated list of them, see Yorkshire Bylines’ ‘Davis Downsides Dossier’). It’s important to keep on saying this for two reasons.
One is the way that, all too predictably, some are now already talking of there having been a Brexit ‘betrayal’, for example over fisheries and Northern Ireland (£), and of the TCA being a ‘disaster’ in particular for its limited services coverage. But these and other consequences were entailed by hard Brexit rather than being a betrayal of it. The criticism should be of the denial that there would be such consequences. It’s a crucial distinction because, without it, Brexiters can and will continue the lies by pretending that, done differently, there was a hard Brexit that avoided the consequences.
Secondly, recalling the underlying reasons matters because another prevailing reaction seems to be a general shrugging off of what is happening as if it were ‘just one of those things’. I don’t think that is just because coronavirus is the main preoccupation as it is very similar to how the collapse of sterling after the referendum vote, which would in other times have been a major crisis, caused barely a political ripple. Similarly, imagine the reaction if in the past there had been the kinds of disruptions described at the start of this post. The explanation, at least in part, is that the Brexiters have so aggressively attacked those who draw attention to such things that the media and some politicians have become cowed.
What is to be done?
As the realities of Brexit continue to emerge, it’s crucial to be honest about what it means and about how we got here. From that point of view the near political silence about what is happening, with the partial exception of fisheries, is both disappointing and – if anything about the Brexit process could be so any more - astounding.
Obviously the pandemic is the dominant issue at the moment but the significance of the Brexit-induced disruption should surely not be ignored. The government won’t, for obvious reasons, want to talk about it but the Labour opposition certainly should. Not only would it be right to do so in its own terms, simply because it is a growing crisis, but it would also be a way of setting in train what Labour’s policy towards EU relations would be if it won the next election. That could be one part of meeting the challenge to Keir Starmer, as posed by Rafael Behr this week, to “narrate a journey to a better Britain”.
So it is neither right, nor electorally prudent, to remain silent for fear of alienating ‘red wall’ voters or of inviting Johnson’s predictable ‘remoaner’ jibes. And whilst parties in Scotland, Northern Ireland and Wales are raising it, Labour as the official opposition has a particular role to play and it isn’t – with some limited exceptions – doing so. In particular, it seems truly extraordinary that Starmer did not use even one of his six questions to the Prime Minister this week to raise the extensive disruptions to trade which are occurring and their longer-term significance.
Starmer’s stance through 2020 was that it was for the government to deliver its promised deal and that Labour would hold Johnson to account for it. So now we have the deal, but where’s the holding to account? Worse, how can there be any holding to account when he has just said (£) Labour would not seek any major changes to the TCA if in power? In consequence, at least as regards the two main political parties, there is now a virtual conspiracy of silence about Brexit, compounded by Jacob Rees-Mogg closing down the cross-party committee that would have scrutinised the deal.
That said, even if it were not for coronavirus and regardless of the immediate political reaction, it is far too early to expect the kind of serious ‘national conversation’ about Brexit that we need to have. The wounds of the last five years are still too raw and the divisions too entrenched. Moreover, it will have to be informed by broader considerations than those of the current disruptions. A Chatham House report this week discussed what kind of global role is now feasible for the UK, and that is one part what needs to be considered. So too are the strategic implications of a regionalised and multi-polar world, and an understanding of the strategic issues which led the UK to join the EU (EEC) in the first place, which – as Professor Robert Saunders argues in an excellent essay - Brexit now re-poses.
Still, an honest account of the immediate disruptions is not irrelevant to that and perhaps the first step towards it. It is probably necessary to experience the realities of what leaving means in order to expose the lies of those who led us so carelessly to abandon our membership.
Subscribe to:
Posts (Atom)