31.01.2020
UK vs Team 27
Brexit might have happened, writes Eddie Ford, but it will be far from plain sailing when it comes to trade talks, Northern Ireland and Scotland.
By the time you read this, Brexit will have happened - though, of course, there will be a ‘standstill’ transition period until the end of the year.
Alas, on Brexit Day itself - Friday January 31st (or national liberation day if you are so inclined) - there will be no Big Ben chiming down to 11pm, or even an emblematic lowering of the EU flag from Westminster flagpoles, but at least you will have a countdown clock projected onto the walls of No10 Downing Street. Not only that: around three million commemorative 50p coins, with the words “peace, prosperity and friendship with all nations”, will come into circulation. Naturally, new stamps marking the occasion are now in the pipeline and Nigel Farage will be hosting the party of the century in Parliament Square, with Brexiters encouraged to go in fancy dress. Possibly even better, the Conservative Party has launched a range of merchandise, bearing the words, “Got Brexit done”. Among the many tempting items is a £12 tea towel, displaying the slogan above an image of Boris Johnson flanked by a union flag and Britannia-style shield.1
Perhaps more seriously, British diplomats are now locked out of Brussels’s internal databases and denied access to the diplomatic cables from 139 EU delegations dotted around the world. For now, the great switch-off will only affect EU internal communications, as the UK will continue to have access to the EU crime-fighting databases under the terms of the transition period. But EU diplomats have received stern warnings to make sure that no British official is accidentally left on a classified mailing list and IT workers are working hard to update hundreds of webpages referring to the UK - which will now appear in a grey or beige colour on EU online maps, like Switzerland and Norway.
And, of course, at the European parliament visitors’ centre, miniature models of British MEPs are to be removed from the mock-ups of the parliamentary chamber - end of an era.
Totemic
Last week, when formally signing the EU withdrawal agreement, Boris Johnson described it as a “fantastic moment” and expressed the hope that years of “argument and division” were coming to an end. This seems extremely unlikely, as does getting a trade deal with both the EU and the US by the end of the year - it will be far from plain sailing. A price will have to be paid.
Bringing us down to earth, Leo Varadkar - the Irish taoiseach, who is facing a general election on February 8 - unarguably pointed out that the EU would have the upper hand in the post-Brexit trade talks, which formally begin on March 3, presenting a near impossible 10-month deadline to avoid a hard, no-deal Brexit. Yes, it is the return of the cliff edge. Indeed, a leaked internal document from the EU seen by The Guardian notes that, without a deal by the end of December, there will be a “cliff edge” in many areas and “no return to the status quo”.
Speaking in Dublin about the trade talks, Varadkar told the BBC that the UK “has yet come to terms with the fact it’s now a small country”, when “the reality of the situation is that the European Union is a union of 27 member-states”, whilst “the UK is only one country”. Given that the EU has a population of 450 million people compared to Britain’s 60 million, the taoiseach quipped, “if these were two teams up against each other playing football” - then “who do you think has the stronger team?” Varadkar also warned that leverage over the financial industry, where Britain has a desperate need to access Europe’s financial markets, could be used to extract concessions on fishing - a totemic issue for both Britain and the EU.
Similarly, Michel Barnier, still the EU’s chief negotiator - speaking at a joint press conference with Varadkar - stated that “team 27” will give the UK a stark challenge in the next phase of Brexit negotiations, as the bloc would continue to protect members’ interests. Apart from the contentious issue of access to fishing waters, the biggest obstacle to overcome will be the EU’s demand for a “level playing field”. Putting the cat amongst the pigeons, chancellor Sajid Javid has stated that at the end of the transition period there will be no alignment with the EU - the UK will diverge on rules and regulations, and will not be in either the customs union or the single market. No longer a rule-taker, but a free, independent nation - or so the Brexiteers imagine. Ominously for Javid and Boris Johnson, a source close to a senior EU official said the bloc “will not budge” on the issue of the “level playing field” - they “might have a conversation” about how to keep to a minimum level of standards, but “will not move on the need to have them”. They will not allow a race to the bottom.
The big problem for Britain, however, is that the EU does not have a zero-tariff, zero-quota, traditional free-trade agreement with any country in the world - so why is Britain going to be any different? Quite understandably from its own point of view, Brussels is demanding guarantees that the UK will not steal an unfair competitive advantage - so far the bloc has staked out an uncompromising position that the existing fisheries arrangements should largely continue. Exactly how Britain gets out of Europe without leaving an EU-sized hole in the economy is yet to be explained. The fact that Boris Johnson is expected to give a speech soon spelling out the British negotiating position hardly fills you with faith.
Barnier also said, during a speech at Queen’s University in Belfast, that the EU would “closely monitor” implementation of the Northern Ireland protocol - reminding the British government that it agreed to a “system of reinforced checks and controls” for goods crossing between Northern Ireland and Great Britain: the text of the agreement is “very precise” on this, he declared. The UK must now “respect” the Brexit treaty text “in all dimensions”. It may be all very regrettable, he said, but it was the UK’s decision to quit the single market and customs union that “makes checks indispensable” - there will be a border down the Irish Sea.
Of course, this directly contradicts everything Johnson has said - at one point he told supporters in Northern Ireland that they could put any new paperwork “in the bin”, because there would be “no forms, no checks, no barriers of any kind” on goods coming from the British mainland. Last week he repeated the claim, telling Sir Jeffrey Donaldson, the Democratic Unionist Party leader in the House of Commons, that it was “emphatically” the case there would be unfettered trade in either direction. An ungenerous person might call this a lie.
Johnson’s seemingly unfounded claims have led to confusion and frustration among business leaders in the statelet. The Freight Transport Association has warned that the supposedly “straightforward” paperwork that would be needed post-Brexit involves a complex form with more than 30 questions - the consequences of which have not been “well explained” to the British people. Goods going in the other direction must be accompanied by customs declarations forms with “phytosanitary checks on food products and live animals” - there is absolutely “no possibility” for frictionless trade between the EU and UK under the terms of the deal negotiated by Boris Johnson, according to the FTA.
Showing that trouble lies ahead, Pascal Canfin - a French MEP who chairs the European parliament’s environment committee - said it would be economically and politically “absurd” to allow the UK tariff-free and quota-free access to markets without ensuring it signed up to core EU standards on environmental protection, the climate emergency, workers’ rights and state aid. Otherwise that would mean “we would give more power to the UK than any member-state” - full access and divergence, clearly a complete nonsense. According to Canfin, a member of an influential MEPs “contact group” that will monitor Brexit trade talks, any deal that failed to uphold “core” standards would be rejected across the bloc - which should serve as a wake-up call to Britain.
Whether it actually does or not is an entirely different question, needless to say. Tory ministers have been giving out mixed messages on alignment and the ‘level playing field’. In separate TV interviews over the weekend, Brexit secretary Stephen Barclay said the UK “will not diverge for the sake of diverging” - echoing previous comments by the Confederation of British Industry about divergence not being an “obligation” - while the home secretary, Priti Patel, bluntly said ,“We will be diverging”. Over the next few months, the British government will be pulled in all sorts of different directions.
Brutal
At Davos recently, the Trump administration flexed its muscles as the world hegemon - giving Britain a brutal lesson in realpolitik. We are big, you are really small and at the end of the day we do not need you. Responding to British proposals for a digital tax on US tech giants, Steve Mnuchin, the US treasury secretary, demanded that the British and Italians drop their plans or face the full wrath of the White House - ie, retaliatory trade sanctions.
Mnuchin went on to tell the Wall Street Journal that Britain should take note of what happened to France over its plans for a digital tax, which effectively singles out Facebook, Google and Silicon Valley for “discriminatory treatment” - or equal and fair treatment, depending on how you look at it. Under intense pressure from the US government - and faced with sanctions on Gallic symbols, such as wine, cheese and handbags - French president Emmanuel Macron buckled, suspending the plan until the end of the year, as talks continue. Paris, of course, billed this as a “truce” - but to everyone it was a humiliating climbdown. As for Boris Johnson, he included the digital services tax in the Tory manifesto despite opposition from some in his own cabinet and assorted free-market analysts, who regarded it as “dodgy economics” - nothing must interfere with the market. Nor do we know how Trump will react to Johnson half-blocking him over Huawei - while the prime minister officially designated the Chinese company a “high-risk vendor”, he is still allowing it restricted access to the new 5G and super-fast broadband networks.
But perhaps there could be trouble stored up for the EU bureaucracy as well - at least if we believe the Tory MEP, Daniel Hannan. He said that he expected at least three countries to follow Britain out of the EU as a result of “some economic shock” or a Brexit-style referendum.2 At the moment, he would put his money on the Netherlands - with a “nod in the direction” of Denmark and possibly Italy too, if the European economy takes a turn for the worse. And that could indeed happen, especially with Donald Trump launching trade wars everywhere (plus maybe a hot war of some description against Iran).
Actually, in the scenario envisaged by Hannan, it is more likely that a Hungary or Poland would flake away, as they are not economically strong. Denmark and the Netherlands, on the other hand, are stable countries locked into the German economy - providing them a cushion in hard times. But it could be the case that Italy is the weak link in the chain.
eddie.ford@weeklyworker.co.uk