25 August 2020

Federal Trust: “NO DEAL” BREXIT:AN ACCIDENT WAITING TO HAPPEN

In an interesting article in this weekend’s Sunday Times, its political correspondent Tim Shipman warns that the chances of a “no deal” Brexit are higher than usually assumed. He attributes this risk largely to misunderstandings by the EU and UK of each other’s negotiating positions.

“NO DEAL” BREXIT:AN ACCIDENT WAITING TO HAPPEN

Such an analysis is on the face of it persuasive. There may well be “no deal” and there are certainly misconceptions cherished by the UK and the EU about each other. But these misunderstandings are unlikely to be decisive. If there is “no deal” it will be because insufficient common ground can be established between the negotiating parties. It is far from clear that enough common ground has ever existed in the Brexit negotiations or can be conjured into existence by clever diplomatic formulae.

How the negotiations developed

It is a familiar reflection that the EU initially attributed to the British government after the Article 50 notification much greater negotiating coherence than was factually the case. It only slowly dawned on EU officials and politicians that the UK had no blueprint, no strategy and no roadmap for Brexit. The single British aspiration for Brexit was to retain as many of the benefits of EU membership as possible while shaking off what it regarded as the burdensome obligations of membership. It took several years for the British government to understand that this was a wholly unachievable outcome.

The EU, well-co-ordinated by its chief negotiator Michel Barnier, from the beginning of the Brexit negotiations was unwilling to countenance what it regarded as British “cherry-picking.“ The Union has been unbudging in its insistence that there needs to be a more radical rearrangement of rights and obligations to meet the fundamentally new circumstances of Brexit.  Successive British governments have struggled and continue to struggle with the conundrum of what this rearrangement might look like, sometimes stressing the desire to maintain benefits, sometimes the desire to be rid of obligations. Successive British governments have been inhibited in their attempts to solve the Brexit conundrum both by the deliberate incoherence of the Brexit model presented to the British electorate in 2016; and the well-grounded fear that any specific model of Brexit would highlight to the British electorate the drawbacks of Brexit when compared with the UK’s present situation as a member of the European Union. Angela Merkel’s repeated warnings since 2016 that after Brexit there must be a clear differentiation between the balance of benefits and obligations open to members and that open to non-members encapsulated the dilemma for British negotiators over the past five years .They had to produce a model of Brexit that was simultaneously better than present arrangements for domestic consumption and worse than present arrangements to make it acceptable to the EU.

The present British government, composed of and in thrall to the most radical wing of its Eurosceptics, has completed the zig-zagging process begun by Theresa May’s government, and arrived at a position whereby the avoidance of obligations towards the EU looms larger in British strategy than the maintenance of benefits. The UK will be leaving the European Single Market and the Customs Union in any event at the end of the year, with all the bureaucratic and administrative formalities that entails. The hopes of the government seem now to be focussed largely on obtaining an arrangement with the EU whereby no or minimal tariffs will be imposed on trade between the EU and UK; and no or minimal quotas will be imposed on this trade. This will be presented as a transient negotiating triumph, even if it is unlikely long to outlive the chaos at the Channel Ports in 2021 which leaving the Single Market and Customs Union will inevitably bring in its train.

Where the negotiations are going

But it is far from clear that Boris Johnson’s government will be able to avoid quotas and tariffs in its future trading relationship with the EU. The EU is unwilling to construct  such a favourable relationship with the UK without reliable assurances that the UK will not abuse this preferential treatment by what the EU regards as unacceptable practices in regard to state aid, to environmental regulation, to social standards and to taxation. Johnson’s government has been reluctant to give such reliable assurances, both for the ideological reason that it is unwilling to cede such a degree of control to the EU after Brexit; and for the practical reason that it cannot give undertakings about its future economic conduct when it anyway has no clear vision about what this future economic conduct might be. Because of its current dysfunctionality, the Johnson government wishes to preserve not merely its sovereignty towards the European Union, but also its sovereignty towards its future unpredictable self.

It may be that the European Union underestimates the profundity of the intellectual and political dilemma the Johnson government has created for itself by its internal incoherence and obsession with a narrow view of national sovereignty. There may well be over-optimism in Brussels about the British government’s capacity for eventual rationality. But it should not be assumed that the Union’s negotiating stance has been hardened or even greatly influenced by this misconception. The Union does not regard tariff-free and quota-free access to its market as being in any event a right which the British are entitled to claim unconditionally. Because the UK is geographically so near to the EU and has left the Union, it must in the EU’s view pay a non-trivial price for favourable access to the Internal Market, a price tailored to the specific circumstances of the UK. To do otherwise would be to indulge a departing member’s desire for “cherry-picking.”  The Level Playing Field, with its restrictions on future British sovereignty, is the price being demanded by the EU. The precise form and quantum of this price is capable of negotiation. But it seems inconceivable that the Union will be prepared to forego its Level Playing Field demands entirely. If the British government wishes to have any access to the Single Market going beyond minimal WTO terms it will need to respect the political commitment of the Political Declaration to an appropriate level of Level Playing Field conditions.

The official analysis of the British government is that it should still be possible to come to an agreement in September or October, an agreed stance which conceals considerable differences of view within governmental ranks. There are some Cabinet Ministers and influential backbenchers for whom “no deal” would be an entirely acceptable outcome, while others who would much prefer to make an agreement, even at the cost of compromise. Others again are pinning their hopes on the predicted willingness of the EU to retreat from its negotiating demands at the last moment, as it supposedly did in the matter of the Irish Protocol last year. If there is a dangerous misconception infecting the Brexit negotiations, it is this third attitude, which reflects more the desire of those holding it for reassurance than any externally observable reality. The EU’s “retreat” on the Irish Protocol last year was in fact a concession by Boris Johnson and the EU rightly thinks itself better prepared for a “no deal” Brexit than the UK.  The hope that the EU will compromise on vital principles later in the year is simply the latest iteration of the chronic over-estimation of the UK’s bargaining power and underestimation of its opponents which lies at the heart of Brexit.

What can Johnson do now?

It is clear that if Boris Johnson is tempted to lessen the dramatic economic effects of Brexit by concluding an agreement with the EU in the autumn, he will expose himself to significant opposition and criticism from within his own party. The accusation that he has tolerated a Brexit in Name Only (BRINO) is already being burnished by his colleagues and Party members. At one level, this accusation will be without merit. Leaving the Customs Union and the Single Market should be proof enough of the radicalism of the Brexit process to all but the most demanding. Unfortunately for Boris Johnson he and the Eurosceptic media have allowed the Conservative Party to become an intellectual and political vacuum into which the most intransigent Eurosceptic ideas can irresistibly pour. The Eurosceptic media have managed to persuade much of the British electorate over the past twenty years that they were living in a gulag imposed upon them by the EU. It should not be difficult for them to argue plausibly that any agreement with the EU containing any Level Playing Field provisions is a betrayal of Brexit. They will find a ready audience in much of the Conservative Party.

An important part of the original calculation in the 1960s and 1970s that led to British membership of the European Union was that the United Kingdom would anyway be greatly affected by the economic and political decisions of the European Community. It served therefore the British interest better to participate in the shaping of these decisions from within the organisation rather than from outside. Decades of Goebbelesque propaganda from the Eurosceptic media were however strikingly successful in undermining this rational calculation, convincing many British voters that the EU was a corrupt, worthless and ineffectual organisation, from its membership of which the United Kingdom derived no benefit whatsoever. The narrow vote of 2016 in favour of Brexit was the foreseeable result. Surprisingly for the advocates of Brexit, and damagingly for the country, the course of the Brexit negotiations and their likely outcome has shown beyond doubt the validity of the UK’s original calculation when it joined the EU in 1973. The UK held many more negotiating cards within the EU than it does outside.

Damned if he does and damned if he doesn’t

Central to the claims of those advocating Brexit in 2016 was the proposition that the EU was a weak, divided, contemptible organisation, which could easily be persuaded to accord the United Kingdom favourable trading arrangements after Brexit. The reality has turned out to be very different. The EU has shown itself united, competent and consistent. It has a considered view of where its interests lie and it will pursue these interests relentlessly.  This unity, competence and consistency has left the British government with the disagreeable choice between an economically crushing “no deal” Brexit, possibly reinforced by a second wave of CV-19; and an agreement between the UK and EU that imposes significant restrictions upon British sovereignty. If, as may well be the case, the present Conservative government opts for the first of these outcomes, this will be a conscious, if painful decision on its part. Johnson and his colleagues have however manoeuvred themselves into a position where they are politically damaged by any path they pursue. “Taking back control” through Brexit has revealed itself as simply being the ability to choose between repellent alternatives. That all the alternatives thrown up by Brexit are repellent is certainly no accident. It is on the contrary at the very core of the national tragedy which is Brexit.

Federal Trust

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