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Boris’s Brexit Bear Trap

If you are the kind of person who believes everything you see written on the side of buses, then you probably believe that voting Tory next month will bring “closure” to the Brexit saga.  This undoubtedly will be the Johnson line going into the 12 December general election.  Having set the stage by framing the election as a battle between “the people” (conveniently represented by the Eton and Balliol educated Alexander Boris de Pfeffel Johnson himself) versus Parliament; Johnson will be at pains to prevent the opposition parties from drawing attention to the anything but populist track record of a Tory Party that has been in government for nearly a decade; and whose austerity policies are widely believed to have caused the Brexit vote in the first place.

The “Withdrawal Deal” (the clue is in the title) negotiated by Johnson (in reality dictated by the EU negotiating team) is largely a re-heated version of the EU’s opening proposals back in 2017.  It was considered so poor at the time that even Theresa May rejected it; since it required a border down the Irish Sea that would ultimately lead to Northern Ireland becoming detached from the rest of the UK.  May’s own deal, in which everything was to remain the same until everything was agreed; had the benefit of keeping Northern Ireland in the Union without the need for a hard border with the Republic of Ireland.  The drawback was that the deal included a “backstop” clause that meant that Brexit could only finally happen if both the EU and the UK government agreed.  This was too much for the head bangers who have since taken over the Tory Party; who believed that the EU27 (who actually want the UK out of the EU in order to strip away our current rebates and opt-outs) would use the backstop to keep Britain in the EU.  The result was the unholy alliance between Remain-supporting opposition MPs (who opposed any deal) and a large bloc of no-deal Tories, which delivered the biggest parliamentary defeat in history on May’s ill-fated deal.

Having rebelled against May’s deal, Johnson and his supporters could hardly reheat it prior to the 31 October deadline.  Instead, they had little choice other than to revive the original deal which May had already rejected.  The fact that MPs actually voted for it is a measure of the pressure they are under to bring an end to the Brexit debacle.  In practice, of course, the opposition MPs – including the expelled Tories – voted for it to have a “second reading” in order to amend it later on; most likely to include a customs union with the EU27 and – more importantly – to put the agreement to a confirmatory referendum with an option to remain in the EU.  Since Johnson and his no-deal Tories could not tolerate this outcome, they needed to engineer a general election for much the same reason that May held – and lost – one in 2017.  A Tory majority government would – they believe – be able to force through the deal without amendment.

More worryingly, though, the Johnson deal is designed to give the Tories all of the negotiating leverage in the UK parliament while giving away all of the leverage over the final Brexit trade deal to the EU27.  The reason for this is simple; Johnson’s deal – which brings an end to Britain’s EU membership – requires that Britain secure a trade deal with the EU by the end of December 2020.  If it cannot, it must choose between becoming the only state on the planet to trade solely on World Trade Organisation (WTO) terms, or request an already fixed – two year – extension.  And, of course, if no deal can be secured by December 2022, Britain will be forced to trade on WTO terms.  As Ambrose Evans-Pritchard – hardly an arch remainer – explained recently in the Telegraph:

“So we await Brexit cliff edge number two at the end of next year. Even if Parliament backs Boris Johnson’s deal, we will have to go through this grim ordeal again because the Withdrawal Agreement merely permits the UK to start talks on a trade deal. It lets us pay (£33billion) in order to play. Less has been resolved than most commentary seems to suggest.

“I fear a horrible moment of disappointment when people discover what this means. I fear too that hopes of a post-deal economic boomlet and a surge of pent-up investment will come to little…

“We will again be faced with the choice of submitting to these [EU] demands or retreating to World Trade Organisation terms, made harsher by the punitive loss of fast-track procedures for customs clearance and rules of origin…

“We will be vulnerable to the same diplomatic and economic blackmail. In the words of Sir Ivan Rogers, the former UK Brexit negotiator, the EU’S aim has always been to ‘maximise leverage during the withdrawal process and tee up a trade negotiation after our exit where the clock and the cliff edge can again be used to maximise concessions from London’.

“Sir Ivan is brutally honest – and correct – about the character of the EU and its proto-imperial reflexes. While he may not have intended it, his analysis leads to two conclusions: revocation of Article 50 or a traumatic no-deal rupture that reshuffles the pack entirely. Anything in between these two is not a stable political equilibrium and is ultimately unworkable.

Those on the political right who told you that securing a trade deal with the EU would be the easiest thing in the world were either fools or liars.  Their reference to the UK starting with “regulatory alignment” (i.e. having the same laws and regulations) with the EU27 was mendacious because the logic of Brexit is that British law and regulation will diverge from EU law and regulation after we leave.  After all, Brexit makes little sense if the aim is to abide by EU law and regulation in order to secure a quick trade deal with our main trading partner.

The sad truth is that trade deals take a long time to secure precisely because trading partners wish to maintain separate regulation in some areas of the economy.  Even when both parties are keen to secure a deal – as was the case with the Canada-EU trade deal – it can take years to finalise an agreement – the Canadian deal took seven years, as EU and UK trade negotiator Roderick Abbott explained earlier this year:

“Well, the first thing is that I am not absolutely sure that what the media reports about how long it takes is really very accurate because you can break it down. You start — after you’ve got a mandate to negotiate with Canada or with Japan or anyone else — you start with a preparatory phase with things like impact assessments, which is designed to give you domestic legitimacy. That could last a year or two. We’re going through that at the moment between the EU and Australia and New Zealand. It’s a preliminary phase.

“Then you actually get across the table with those you are negotiating with and that might take two or three years. I don’t know if it’s often more than that. It depends on how different the regimes are, as they have to be somehow brought together. Then at the end, you have a ratification process. And you remember in the case of Canada that was very complicated because of the Belgian situation [the Walloon parliament initially rejected the CETA deal]. But if you take CETA, and they quote you seven years, I would break it down into two years of preparation work, three years of actual negotiating, drawing up texts and things, so the policy side, the text side…and then probably two years for ratification.”

Even assuming the UK does not encounter some equivalent of the Belgian objections to CETA – for example, Spain throwing a spanner into the works over Gibraltar – the three years negotiating and two years ratifying are likely to be the best the UK can expect from an EU27 who have no obligation to treat the UK any more favourably than any other third country.  Indeed, if the transition period set out in Johnson’s deal collapses acrimoniously, the EU27 may send the UK to the back of the queue behind Turkey and Ukraine.  Either way, negotiating the future trading relationship between the UK and EU27 by December 2022 – still less December next year – is simply not credible.

Nor can Britain expect an early trade deal with the USA, despite Johnson sucking up to Donald Trump.  Whatever else Trump might be, he is a hardened negotiator who will make the UK pay a high price for free access to US markets.  Moreover, if the Democrat Party holds onto the congress next year or – a lot less realistically – manage to defeat Trump for the presidency; they have already stated that they will refuse a trade deal if the Northern Ireland peace process is threatened – something which is inevitable if the UK is forced onto WTO terms.  And even if the US government decides to prioritise a trade deal with the UK, we would still be looking at years rather than months between openning negotiations and securing a deal.  As Rosamond Hutt the World Economic Forum explained at the time of the referendum:

“The Peterson Institute for International Economics (PIIE) has crunched the numbers on how long it has taken the US to agree 20 bilateral trade deals.

“The answer? One and a half years, on average. And more than three and a half years to get to the implementation stage.”

Even the most favourable UK-US trade negotiations would still leave the UK out in the cold for a couple of years.  Moreover, as with the EU, the USA could be expected to use this period of maximum leverage to push a deal that is unfavourable to the UK; for example opening the National Health Service to the US insurance and pharmaceutical racketeers who have crippled healthcare on the other side of the Atlantic.

Even if Johnson is elected with a majority on 12 December, there is no guarantee that this will be sufficient to push his deal through the new parliament.  The DUP – who Johnson sold out last month – will not support the deal.  And while the new government will include far more UKIP 2.0 MPs; there will still be a rump of centrist Tories who will baulk at the prospect of a no-deal Brexit and a series of unfavourable post-Brexit trading arrangements.

If you are the kind of person who believes things that are written on the side of buses, you will no doubt dismiss this as yet more project fear.  But if you are foolish enough to vote Tory in the belief that this will finally draw a line under Brexit; I fear you are about to be gravely disappointed.

As you made it to the end…

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