Professor Amelia Hadfield, Director of the Centre for Britain and Europe, Department of Politics, University of Surrey
The engines are ticking over, the course is clear, the rules have been read out, and the race into Phase 2 of the UK’s withdrawal from the European Union is upon us. Phase 1 moved us through the quagmire of nailing down UK-EU financial obligations, committing to a range of reciprocal treatments regarding UK and EU citizenship, and most contentious of all, reconstituting border relations between a new non-member state (UK) and a member state (Republic of Ireland), set against the different forms of customs union, and single market entities. What follows is a quick SWOT analysis of the two sides’ bargaining positions, as they’ve emerged in the past couple of weeks.
Strengths
The Johnson government goes into the negotiations with a sense of confidence, to be sure. Boosted byaParliamentary majority, and a clearer initial bargaining stance than previous iterations and governments, Number 10 has been working to eradicate not merely residual senses of Brexit uncertainty but to do away with the term ‘Brexit’ entirely, preferring instead ‘2019 deal’ or ‘Canada-style free trade agreement’.[1] Certainly both semantics and optics are important at this stage of the game. The success of Johnson’s Brexit Deal for example rested on the transplanting of sections committing the UK to a level-playing field regarding shared rules and obligations from the legally-binding Withdrawal Agreement (WA) into the legally-non binding Political Declaration, as well as overhauling the (literal) placement of border issues relating to Ireland. These relocations suggest the UK is intent on beginning robustly in its negotiations with the EU.
The direction of that robust approach however needs some attention. The UK’s chief negotiator, David Frost, has certainly come out swinging, with a recent speech at Université Libre de Bruxelles (ULB) in which he made clear that a distant relationship with the EU is an entirely possible outcome, and not one that would be viewed negatively by the government.[2] Establishing the UK’s opening position, Frost’s argued for an off-the-shelf EU-Canada setup, which abolished the majority of tariffs and managed a few basic agreements on services, but ultimately left behind much by way free trade friction. The good news is this type of deal at least exists, and there is both a template and a precedent for it. Frost however made clear that this was the only deal in town, and that Team UK was not remotely interested in a bespoke trade deal in which the particularities of EU-UK trade and services would be worked out on the basis of enhanced market access in return for a high degree of alignment.
Weaknesses
The UK faces the same slick EU negotiating team as before: unified, prepared, long on details and short on corporate imagination. Impatient observations by Barnier that “the clock is ticking” will be replaced by swift insistence that agreed “level playing field” issues ought to be deeper, not shallow, and rest ultimately in the legally-binding section of the final Withdrawal Agreement. Second, the EU will make clear – on behalf of the Republic of Ireland (in terms of contiguity), and France, Belgium, Germany and the Netherlands (in terms of proximity) – that if tariffs are to be imposed and goods checked, then border controls have to be clearly implemented. In particular, goods moving from the British mainland to and from Northern Ireland which would be subject to some form of customs scrutiny, so that the border between the Republic of Ireland and Northern Ireland can remain fully open.
Where the EU may falter is in pitting legal details against increasingly nationalist flourishes of the UK team. Lead UK negotiator David Frost for instance observed that the UK was driven by the motivation to be treated as a sovereign equal with the EU, specifically in asserting its rights to set its own standards and regulations without reciprocal threats from the EU of reduced access to the single market. Frost’s observation however was made doubly difficult by his next suggestion that trade and democracy are innately connected in negotiations such as these. Indeed, Frost’s argument was of a “bold connection between a trade agreement and democratic consent” which would ultimately shatter if the UK were to abide by EU rules.[3] This undermines at a stroke clear axiom of negotiations, i.e. both sides work out co-owned compromises that both sides can live with. It also ratchets up the pre-negotiation rancour unnecessarily, possibly tempting the EU to defend its own sense of union and market sovereignty by responding with an even tougher line. As RTE’s Tony Connelly rightly observes, the EU itself has clearly accepted in its preparatory documents that the UK cannot be approached as a “rule-taker”. Such intemperate rhetoric makes for a poor start.
The UK government’s own weakness lies in being able to sell the brutal message to businesses and citizens alike that the costs of Brexit in general and a no-deal outcome in particular are worth it. Are the range of inter-connected public and private sectors alike truly capable of absorbing enhanced trade friction, and is there enough time and support to prepare? There is certainly a sense that ‘no-deal’ is back on the table, but that politics must on this occasion have the whip hand over economics. With Parliament no longer able to vote on the outcomes of the final negotiations, and with the prospect for a public consultation on the economic impacts of Brexit now receding into the distance, Frost’s talk of the UK’s democratic mandate is hard to find in any real sense in Britain itself.[4]
Opportunities
Wins for the UK range from resetting the national interest in terms of security, free trade, and diplomacy with Europe, to carving out a whole new ‘Global Britain’ mode of engagement with the wider world itself. At present, these opportunities rest on the UK’s ability to remake border management via new customs controls – whether very real in the case of Dover, or somewhat ‘artefact’-like in the case of Ireland, as creatively suggested by former DExEU Permanent Secretary Philip Rycroft. The contours of a new immigration system based on high-skills-driven migration are also emerging, as are repeated references to dumping the need for a level playing field with the EU (or to use Number 10’s preferred parlance, ‘avoiding trade distortions’). The latter represents the central and deepest division within the proposed free-trade agreement that the UK is intent on wresting from the EU. In essence, the Johnson government believes it ought to be able to negotiate and obtain precisely the same level of market access as the EU-Canada deal (which is pretty considerable), for the same level of regulatory alignment (which is lower than the UK has now).
However, as the EU – and many others including Canada, have pointed out – the UK is in fact not Canada.[5] The UK and its market are far larger, far closer and far more deeply intertwined with a host of European supply chains entailing interconnected goods, services, capital and labour. Decoupling the UK from the EU renders it a competitor with the EU. The lower the alignment, the stronger the competition. The EU naturally will argue for fairer competition, on the basis of stricter and tighter (or least no looser) regulatory alignment for the UK, for essentially the same market access as Canada. Getting the EU to acquiesce to a Canada-style FTA is therefore the single greatest opportunity for the UK.
In addition, the opportunity to play off the EU against the US in an Avengers-style free-trade knock-out seems appealing to the government. Buoyed by repeated messages from the US that Washington is ready, the Office of the US Trade Representative (USTR) notified Congress as early as 2018 of its intentions to negotiate with the UK, EU and Japan. Having been lobbied heavily since by sectors from big farming to big pharma, the basic contours of America’s position (including contentious issues on the import of genetically-modified crops and beef, animal welfare, etc.) are beginning to emerge. Timing is crucial. A trade win that Trump can get through Congress in the final days of the November election would play well with his base. The would require him to submit a trade agreement to Congress for a non-amendable up-or-down vote, preventing the House and Senate from pulling the deal apart on the details. However, as this is precisely what happened with the recent U.S.-Mexico-Canada Agreement (USMCA), Trump may prefer to use the enhanced trade authority delegated by Congress recently to the White House to nail down a mini trade deal. The UK may therefore be facing an EU that wants a complex, bespoke approach to a long-term multi-sectoral deal, versus a quick and dirty ‘mini’ trade US deal driven by an election-fevered Trump.
Threats
The ultimate threat is getting it all badly wrong. The UK government is already chancing its arm with increasingly robust statements about two major areas. First, its insistence on non-alignment and a Canada-style deal. The EU has unsurprisingly responded by insisting on toughening, rather than loosening the overall level of regulatory alignment (and likely the degree of customs checks on UK goods entering EU ports). Second, recent statements that the UK government is not actually building or implementing any of the required infrastructure necessary for customs checks on goods between Great Britain and Northern Ireland. Why? Presumably, any such customs checks are viewed by No 10 as a microcosm of EU rules and regulations, from which Johnson “wants freedom from EU standards and promises [such that] there won’t be checks in the Irish Sea”.[6] Given that this IS a legal requirement, firmly written into the WA, this is a legal nonsense at best and an invitation to a no-deal precipice come 31st December at worst.
These and other threats could outweigh the opportunities. Indeed, in the eyes of many, this ship has already sailed, hence punchy talk about cutting off the negotiations in mid-stream in June should significant progress not be reached from the UK perspective. Johnson himself, the preferred approaches of Number 10, a quiescent Cabinet and a restrained majority together suggest that the preferred UK end state is far closer to a WTO-style deal. This is a ‘thin deal’: permitting the least degree of alignment with the EU, and damn the consequences, from tariffs to a protracted economic downturn. Despite ongoing sectoral and business pleas for continuity and long-term planning, there is presently little political incentive for the UK government to aim for a soft, EU-friendly deal.
Johnson and other ministers’ statements of late suggest that
at this point, there IS no great economic prize, because and deal still comes
at the expense of an increasingly hardened interpretation of what Brexit now
means. In brutal terms, the EU-UK negotiations are now premised on a no-deal. The
question is simply therefore whether to avoid, or muddle through the economic
and social disruption and border chaos that will accompany a no-deal outcome.
In less brutal terms, a de minimus
free trade agreement will produce increased tariffs on a slim range of goods,
sidestepping tricky decisions about overall alignment until 2021, when
sector-specific deals will likely be worked out, allowing both sides to move
forward in piecemeal fashion, and permitting the UK to commence FTAs with other
markets, including the US. Let’s see who blinks first.
[1] https://www.huffingtonpost.co.uk/entry/leaked-brexit-memo-no-deal_uk_5e57a8c1c5b66137fb5e82bc?zd9
[2] https://www.rte.ie/news/brexit/2020/0217/1115882-trade-brexit-uk-eu/
[3] https://www.rte.ie/news/brexit/2020/0218/1115982-david-frost-speech/
[4] https://www.huffingtonpost.co.uk/entry/no-deal-brexit-boris-johnson_uk_5e582798c5b60102210e395d
[5] Take it from me as a Canadian, there are a number of clear differences between the UK and Canada. I may explore these in a later blog.
[6] Evening Standard, 27 February 2020, p. 16
