Richard North, 27/02/2020  
 


If there was any doubt about whether coronavirus was having an effect on Brexit, all one had to do is look at the front pages of the national media yesterday. Without exception, all were dedicated to charting the latest developments in the global spread of Covid-19.

When it came to the publication of the EU's negotiating mandate – which one might have thought was quite important – this barely got a look in. Between the growing epidemic, the floods, Harvey Weinstein, and even the violence in Delhi, Brexit was crowded out of the news agenda.

What hasn't helped either is that the top line "level playing field" issue has been done to death over the last few weeks. With even the trade wonks all over the place, there was no easy narrative for the media to follow, especially as Johnson has gone to ground depriving the hacks of their usual dose of personality politics.

And the situation has hardly improved overnight. Although Michel Barnier has delivered another of his speeches in Brussels, expanding on and explaining the mandate, this has been given very little coverage.

For this, though, there may be a more sinister reason. Today, we are to see the UK publish its own negotiating mandate, in the form of a White Paper, with Johnson using the opportunity to ditch major parts of the Political Declaration, relying on its status as a document which is not legally binding.

He will thus - we are told - insist on the right to take full control over rule-setting in the key level playing field areas of labour law, competition and state aid, and the environment, arguing that the declaration he has agreed contains only "aspirations and priorities".

This news is given more detailed treatment in the fanboy gazette, where we learn that the prime minister has made it clear that he will not be bound by the Political Declaration. Downing Street, it is said, regards its provisions as having been superseded by promises made in the Tory election manifesto.

While Johnson is right in believing that the Declaration is not legally binding, it still signifies an agreement which, as its description implies, has political force. Unilaterally to change its terms – especially when the other party has invested considerable energy and political capital into the agreement – is bound to be seen as an unfriendly act. And while it might not attract legal sanctions, it is bound to have political consequences.

Without then being aware of Johnson's specific intentions, in his speech yesterday Barnier nevertheless made it clear what those consequences might be. The EU, he said, entirely understands that the UK wanted its own rulebook, and it respected that choice – the UK's sovereign choice.

But, in leaving the EU, there was a simple logic to what followed. If you are a member of the EU, Barnier said, you get frictionless access to a market of 450 million consumers. If you have no preferential trade agreement with the EU, you get access like any third country under the standard WTO regime. If you're somewhere in between, you get something in between.

As of January 2021, Barnier warned, there will be real, tangible change in every domain - in very important areas, such as trade, transport, energy or our mutual security. Many of these changes, he said, will be mechanical, automatic. So we will need to rebuild a relationship – one that is different to what we had before, because the UK is no longer a Member State.

In this context, he added, "the more the UK seeks to distance itself from the common framework of rules that we had built together over the years, the more our relationship will be distant, across sectors".

Here, without equivocation, Johnson is making it clear that he intends to distance the UK from the common framework of rules. The inevitable consequence will be that the UK's relationship with the EU will be distant.

In terms of specifics, even with the best of outcomes, from 1 January 2021, there will be checks and controls on all UK goods entering the Single Market.

As part of these, the EU will need to pay the greatest attention to rules of origin. Inevitably, without agreed procedures that will come with a comprehensive trade agreement, the checks will have to be extremely rigorous: the EU cannot take the risk that the UK becomes an assembly hub for goods from all over the world, allowing them to enter the Single Market as British goods.

Also on 1 January 2021, UK firms will lose the benefit of the financial services passport. No firm from a country outside the Single Market has such a passport. This means that UK financial services firms will no longer be able to offer their services in all EU Member States based on their UK authorisation.

In a well-founded negotiation, the UK would be looking for some measure of agreement which would allow London to retain its primacy as a hub for wholesale financial markets - without becoming a rule-taker of European regulation.

But, says Barnier, "Why should we accept that the profits stay in London while the EU carries the risks?" The UK may not want to be a rule-taker. But the EU doesn't want to be the risk-taker.

When the next financial crisis strikes, who will foot the bill, he asks, averring: "I doubt the UK will foot it for the EU". That is why, he adds, the EU must take the responsibility for its financial regulation, supervision and stability. And without a comprehensive trade agreement, there will be no place for the UK in that arrangement.

And it gets worse. On 1 January 2021, as a third country, the UK will no longer be able to grant marketing authorisations for pharmaceuticals or type-approvals for cars for the EU market. In addition, goods certified by UK bodies will no longer be allowed to be placed on the EU market.

Says Barnier, the EU cannot accept, whatever the sector, to be reliant on the UK – as a third country that is no longer participating in the internal market – for key regulatory, supervisory and certification tasks. This is especially the case when very large volumes are involved. And even more so when we are talking about critical products, such as medical devices.

One really does wonder whether Johnson and those close to him have any understanding of the nature of the shitstorm that is going to hit the UK once the transition period ends, without the cover of a comprehensive trade deal with the EU.

When a "senior Conservative source" tells the fanboy gazette that the manifesto "is very clear about the Government's intention, which is to get a Canada-style trade agreement and take back control of our borders, laws and money".

But do the Johnsonites not realise that, even with such a deal, our goods will be subject to checks at the border, that rules of origin will apply, that our financial services will only have very limited licence to operate in the EU and that we will have to rely on the EU for certification and approvals for a wide range of important goods?  

Since Johnson's line is to reject entirely the level playing field provisions, the UK will be out on its own. Barnier has said that the EU is ready to offer to the UK "super-preferential access" to its markets – a level of access that would be unprecedented for a third country.

This, however, will only come with firm guarantees that the UK will respect the level playing field. Without that, Barnier says, we cannot offer that degree of access. "We want competition in the future but it must be fair – fair and free", he declares.

When it comes to a trade deal with the EU, therefore, Johnson is taking a huge gamble. He is in effect, burning his ships (or burning his bridges, if you prefer) in the hope that this daring stroke will bring him rewards. And while that might have worked for Caesar, such stratagems rarely succeed the second time round. The prime minister might find he has a long swim home.






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