04 January 2021

Federal Trust: Brexit: The “Deal” is less than it seems

Throughout the month of December commentators and politicians speculated tirelessly on the likelihood of a negotiated trade arrangement between the UK and EU before the end of the year. Many expected that the personal convictions of Boris Johnson and the intransigence of the Conservative Party would prevent the conclusion of any such agreement. On 24rd December, those who took this view were apparently proved wrong.

Ursula von der Leyen and Boris Johnson announced the signing of a Trade and Cooperation Agreement (TCA) which would ensure that trade between the UK and EU could continue without quotas or tariffs. The Agreement was hailed as a triumph by the British Prime Minister, but described in distinctly more muted tones by the President of the European Commission. Of the two reactions, the President’s was the more realistic. The TCA will reduce but cannot abolish the reciprocal (although asymmetrical) damage done to the EU and UK by Brexit.

Closer inspection of the text signed on 24^th December shows that those who expected “no deal” were not entirely wrong. Many aspects of the future relationship between the UK and EU remain to be negotiated. Negotiations will continue for instance on such central questions as financial services, data adequacy, fisheries, the return of non-EU citizens and recognition of professional qualifications. The first of these two topics, financial services and data adequacy, are of particular importance to the United Kingdom’s economic well-being. Neither of them however will be easily resolved in the coming months. The implementation of the Irish Protocol moreover is far from finally agreed, with all the risks that this poses for political and constitutional instability in Northern Ireland. An elaborate structure of UK/EU committees has been set in place to consider the sectoral workings of an Agreement put together in such haste that anomalies and lacunae will inevitably emerge over the coming years. An overall review of the Agreement’s workings is envisaged every five years. The Agreement itself moreover can be renounced by either side with only twelve months of notice. This Agreement can certainly not be regarded as the final word on long term relations between the EU and UK.

The level playing field

Perhaps even more demonstrative of the Agreement’s provisional nature is the philosophy underlying its provisions on the “level playing field.” A recurrent element throughout the whole Agreement is that it envisages a range of retaliatory actions if one partner attempts to achieve what the other partner regards as an illegitimate trading advantage by the lowering of its standards.  This retaliatory action will typically take the form of tariffs or suspension of rights granted to the offending party by the agreement. The prominence of possibilities for retaliatory action in the Agreement is at least in part a consequence of the Internal Market Bill proposed by the British government in the autumn of 2019. Its blatant contradiction of the Withdrawal Agreement signed by Boris Johnson in 2018 still fuels suspicion within the EU about the reliability and good faith of the British government in its international dealings. The provisions relating to the “level playing field” are theoretically capable of invocation by both the EU and the UK. But few analysts are in any doubt that the provisions reflect concerns of the EU about the UK rather than the reverse.

It will obviously be an important touchstone for future relations between the UK and the EU how often the UK is willing to risk retaliatory action from the EU by adopting environmental, social or competitive standards that vary substantially from EU norms. It may be that such controversies frequently occur as the UK seeks to reassert its regained sovereignty in face of the supposedly dictatorial European Union; or it may be that the UK concludes that most of the EU standards with which it has lived for so long are at worst acceptable to British business and public opinion, without the need of expending scarce political and economic resources upon avoidable polemic with Brussels. This uncertainty is the latest and perhaps culminating demonstration of the intellectual and political ambiguity which lies at the heart of Brexit, an ambiguity which was central to the Leave victory in 2016.

The ambiguity of Brexit

Among those Leave voters who had in 2016 a coherent view of the UK’s future place in the world, at least two contradictory tendencies were represented; those who sought Brexit as a radical and decisive break with European political and social values; and those who were content for the UK to continue as a member of the European political and social family, while only rejecting the institutional and integrative processes of the European Union. This dichotomy was deliberately left unresolved by those campaigning for a Leave vote in 2016. They rightly calculated that it served their campaign’s purposes better for every voter to be allowed to harbour his or her own vision of Brexit.   The implementation of the TCA will over the coming years finally provide some sort of a resolution of these conflicting visions.

As ever, central to this resolution will be the continuing problems of Party management within the Conservative Party. The European Research Group showed itself surprisingly tractable in accepting the TCA, but its acceptance of the Agreement was dependent upon the future willingness of a “robust” government to limit the sovereignty-pooling implications of the level playing field. In its statement endorsing the Agreement, the ERG also meaningfully recalled that the treaty could be renounced with twelve months’ notice. There will certainly be continued pressure from within the Conservative Party for ostentatious demonstrations of “regained” sovereignty that may provoke controversy. It would be surprising if Boris Johnson were able to remain entirely immune to such pressures from within his own Party. Perhaps the most likely outcome is that until 2024 the Conservative government will oscillate between confrontation and co-operation with the EU in the application of the TCA. The day to day reality of economic co-operation and political dialogue will point towards the avoidance of unnecessary confrontation. The need to persuade the ERG and its supportive press of governmental “robustness” towards the EU will point in the opposite direction. These conflicting pressures make it almost inevitable that in the continuing negotiations to define Brexit more precisely the EU will be for the foreseeable future a more consistent and coherent advocate of its perceived interests than the UK can hope to become.

Rejoiners and Labour

Those who wish as rapid a return as possible of the UK into the European Union will naturally have every interest in hoping that friction and polemic can be avoided as far as possible in the Agreement’s development over the next four years. Their interest must lie in encouraging a constructive and realistic evolution of all the avenues for rational co-operation that the Agreement contains. Such an attitude is entirely compatible with a commitment to full British reintegration within the EU at the earliest possible moment. It is surely a vain hope of Sir Keir Starmer’s that the European issue will remain dormant over the next four years until, and even during the next General Election. Hostility to the EU is now deeply embedded in the political identity of the Conservative Party. It would be extraordinary if there were not regular issues of divisive controversy thrown up by the workings of the Agreement in the coming years. The present Conservative government has shown that it sees the nationalistic exploitation of such issues as being in its political interest.  It will make the Leader of the Opposition appear weak and ineffectual if he is incapable of responding to such controversies. Many of his natural supporters were made uneasy by Sir Keir’s decision to whip his MPs in support of the TCA. He would be ill-advised to reinforce such doubts by too resolute a silence on European issues over the next four years.

It has naturally been in the Prime Minister’s interest to exaggerate the significance of the Agreement he has negotiated. Its limitations will become apparent over the coming weeks as British exporters find themselves confronted with the barrage of new and time-consuming formalities consequent upon British self-exclusion from the Single Market and Customs Union. But it is entirely fitting that his Trade and Co-operation Agreement should also be a document that even within its own limited terms becomes ever less precise and informative the more it is examined. The Agreement is not “no deal,” but little more can be said in its favour than that. It is perhaps best regarded as a Cheshire Cat of a deal, in which the details fade and only the grin remains. That would not be an inappropriate epitaph for the entire Premiership of Boris Johnson.

 

 

By Brendan Donnelly|January 4th, 2021|Categories: Brexit, Europe, Europe, Trade|Tags: Boris Johnson Brexit, Boris Johnson Brexit deal, Brendan Donnelly brexit, Brexit, Brexit Conservative Party, Brexit deal, Brexit trade deal, featured, landing page, TCA, trade deal

Federal Trust

© Federal Trust