So the EU/UK talks are back on again, after all. There seems to have been a change in the negotiating method, but the underlying reasons for the UK initiated suspension still remain. A No Deal outcome is still possible. The UK Prime Minister said last Friday that the talks on a possible trade deal between the UK and the EU were over because the EU was not willing to offer the UK acceptable terms. He said that, since the outset of the negotiations, all the UK had ever wanted was the same terms the EU had agreed with Canada.
This was misleading.
The UK asked the EU for a full no tariff deal on all goods and services, whereas, under its deal, Canada still has to pay some tariffs , and has little access for services. Canada is an ocean away, whereas the UK has a land border with the EU. The EU and UK economies are so entangled that the UK, unencumbered by EU rules, would be much more of a threat to the integrity of the EU’s single market, than Canada, on the far side of the Atlantic, could ever be. That has been explained to the UK over and over again.
Boris Johnson based his dramatic announcement on Friday on the fact that the European Summit had, on Thursday, dropped the adjective “intensified” in its reference to resumed trade talks with the UK. He followed this up by rudely telling Michel Barnier, the EU negotiator , not to come to London for planned talks on Monday. The UK Minister, Michael Gove then demanded what he called a “fundamental “ change in the EU’s stance.
This all seemed to come out of nowhere. There was nothing new in the conclusions of last week’s EU Summit as far as Brexit was concerned. The talks were progressing normally, and had narrowed the issues down substantially. The European Summit had given the Commission its negotiating mandate on 25th February 2020, and there had been no suggestion of any fundamental change in it since .
In fact, real progress has been made under that mandate. Even Boris Johnson himself admitted on Friday that “a lot of progress has already been made , by the way, on such issues as social, security, aviation and nuclear cooperation”. He could have added that here has also been substantial progress on trade in goods, and some on services. An agreed approach to police cooperation, and to road haulage had also been reached. The UK and EU positions had also come much closer on the overall governance of a future agreement, including on dispute settlement.
The stand off about the Ireland Protocol has arisen because the Joint Committee, set up to work out the implementation of the Protocol, had not had enough meetings, and started far too late, mainly because the UK side was not ready. So how do we explain Boris Johnson’s dramatic gesture? It is about negotiating tactics……and domestic politics.
The UK wants to settle everything else first and leave the most politically visible issue of all, fisheries, to the very end. Given that EU trawlers catch more fish in UK waters than vice versa, that sequence would put the EU side on the back foot. The EU prefers to deal with fisheries in conjunction with other open issues, and refuses to be rushed. Fish is a politically sensitive national identity issue, and there is nothing Boris Johnson would like more than to be able to say that he has settled everything else, and is left defending Britain’s sovereign fishing grounds from rapacious foreigners.
Standing up to Brussels unifies the Tory Party and distracts from the domestic difficulties about Covid 19. But It can also raise unrealistic expectations and lead to accidents. The actual cost of bringing about a No Deal Brexit, because of a disagreement over fisheries would be a hundred times greater than the value of the entire fishing industry. This is true for both sides. Tough talk now may also make it harder to sell any eventual deal in Westminster, unless it can be radically repackaged.
If Boris Johnson eventually makes a Deal, it will be a limited one because the UK insists on leaving the Customs Union and the Single Market. So there will be a lot of disruption…. delays, queues of lorries and annoying bureaucracy. If he makes a deal with the EU, Boris will “own” that disruption. If he makes no deal, there will be even more disruption, but he will find it easier to balame that on the EU, at least in the short term.
The UK never really worked out what it wanted to do with its new found freedom after Brexit. Different factions in the pro Leave coalition had different ambitions. Some wanted a less regulated economy, some a more regulated one. Some wanted to government to leave business to do its own thing, others wanted the state to take the lead. The argument about the EU’s demand for strict level playing field rules goes to the heart of these unresolved dilemmas.
If Boris Johnson gives specific commitments to the EU on the level playing field, he will have to disappoint one section or another of his pro Leave coalition. He will not want to do that. So he may find it politically easier, in the short term, not to make a deal with the EU, and contrive a situation in which he can blame the EU for that disaster, and thereby avoid dividing his own party.
Boris Johnson’s focus on a deadline around last week’s EU Summit was a mistake in terms of negotiating strategy. But it might make sense as part of a narrative the end point of which is blaming the EU for a No Deal outcome.
The EU Heads of Government continue to leave the negotiations of trade agreements to the European Commission. This is to prevent attempts at divide and rule, and is one of the reasons the EU, notwithstanding its tiny budget and lack of military clout, has become a trade super power. Even though the UK was an EU member for 45 years it seems never to have learned that this was one of the reasons for the EU’s success as a trade negotiator.
So, if the UK continues to insist on a fundamental change in the EU approach to the negotiation, we are heading for a No Deal Brexit on 1 January 2021. This would have dire consequences for the Irish and British economies. Irish farmers would be shut out of their traditional markets for beef and dairy products . In this it would be like the Economic War of the 1930’s all over again. British consumers would face higher prices for almost everything, but especially for food. Protecting the EU Single Market in Ireland could become politically fraught.
Professor Tom Sampson of the LSE estimated that the economic cost to the UK of a No Deal would be three times as great as the costs to it of Covid 19. That is a lot. The Covid effect will be short and sharp, with a quick recovery, whereas the cost of a No Deal Brexit would be slower to emerge, and be much larger, and much more long lasting. Some of this will happen even if there is a deal. But a No Deal will be worse because it will involve tariffs and bad blood.
It is not too difficult now to sketch out how one might avoid a No Deal Brexit, if that is what the UK really wants. The Level Playing Field issues on subsidies to industry, and on differing environmental and food standards, can be settled by agreeing a fast track arbitration system between the EU and the UK. Relying on the WTO disputes mechanism is too cumbersome, as we have seen with the long running Boeing/Airbus saga. There will have to be an independent and robust system to prevent subsidized or sub standard goods entering the EU market across the Irish border. Trust will have to be built between EU and UK Customs officials. That may take several years.
Obviously there will have to be big changes in EU fishing rights in UK waters, now that the UK has left the EU. But these could be phased in over 15 or 20 years. In any event, the UK would not be able to consume all the fish it could catch in its own waters, and will need to export them to the EU. Free access to the EU market for British fish could be linked to fishing quotas for EU boats in British waters.
Of course, agreeing a Trade deal would not end all controversy. And a No Deal would not end all negotiation. Talk would restart after much damage had been done. In any event, there will be lots of small disputes, not least over Customs checks in Belfast port. With goodwill and patience, these disputes can be settled . But, Deal or No Deal, the EU and the UK will gradually draw further apart, as will Ireland and Britain.
Irish people will need to pay much more attention to politics in Paris, Berlin and Warsaw, and a little less to the English speaking world. This will involve a major psychological reorientation, with profound implications for our educational system.
John Bruton is former Taoiseach (Prime Minister) of Ireland and former EU Ambassador to the United States.