Home Flexcit Impact Assessments Monographs Contact Archive

Brexit: behold a bear

2020-02-05 06:29:04

If you are incautious enough go out alone and unarmed into the wilds of an Alaskan forest, there is a chance you will be mauled by a bear. Should that occasion arise, there would be little point in those who call themselves your friends complaining about the bear. That is what it does.

Similarly, if we plan to go out into the wild to negotiate a treaty with the EU, then there must be certain fixed expectations of the outcome. The EU is nothing if not a creature of habit, driven by its own institutional biology. It has certain fixed policies defined in accordance with its own rules, to which it adheres with some tenacity.

Furthermore, the EU is prolific in broadcasting, in advance, its intentions and in recording its actions. It will proudly tell you, if you are bold enough to search for the requisite source, that since 2014, it has published 6,000 of its trade documents online, and shared 1,200 working documents every year under access to document requirements.

Thus, anticipating generally what the EU's demands might be when dealing with the UK's trade negotiations is not exactly rocket science: it has broadcast its intentions long and often enough. The only real problem might arise from having to wade through the sheer volume of policy documents a difficulty, one might say, that will never arise with HMG's output.

The big mistake that the UK might make is in believing that it is unique and that it will be dealt with separately, with the EU willing to prepare an instrument which addresses its precise needs, wishes and requirements. For the Union, policy is something of a continuum.

Furthermore, divorced from the pressures of democracy and the electoral cycle, it is one of the very few trade blocs of substance that is able to think (and act) strategically. It can then plan over a period of decades rather than the few years allowed to elected politicians who must constantly refresh their mandates such that they are.

And it is by broadening the timespan, and going back in time, that one can get a better idea of the EU's intentions. We can start in 2006 when the EU published a document called Global Europe: Competing in the World, which came in the aftermath of the collapse of the WTO Doha round.

Up until then, the EU's global trade policy had been largely built round the multilateralism embodied in the WTO agenda but, with the failure of the WTO talks, it was forced to think again. In particular, while it had been lukewarm about extending its network of bilateral and regional free trade agreements (FTAs), it was driven to reconsider their roles.

Any enthusiasm, however, was tempered by concern for the risks. FTAs, the EU thought, could complicate trade, erode the principle of non-discrimination and exclude the weakest economies.

To have a positive impact, it argued that FTAs must be "comprehensive in scope, provide for liberalisation of substantially all trade and go beyond WTO disciplines". The EU's priority, it said, "will be to ensure that any new FTAs, including our own, serve as a stepping stone, not a stumbling block for multilateral liberalisation".

In other words, far from seeing FTAs as an end in themselves, the EU saw them as a means to an end a way of pursuing the multilateral agenda. If approached with care, it said, FTAs can build on WTO and other international rules by going further and faster in promoting openness and integration, by tackling issues which are not ready for multilateral discussion and by preparing the ground for the next level of multilateral liberalisation.

Through this means, it would not only "tackle non-tariff barriers through regulatory convergence wherever possible", it would also seek to include provisions on good governance in financial, tax and judicial areas.

With that, the EU decided that many key issues, including investment, public procurement, competition, other regulatory issues and IPR enforcement, which remained outside the WTO, could be addressed through FTAs. But the greatest prize was "strengthening sustainable development". This could include "incorporating new co-operative provisions in areas relating to labour standards and environmental protection".

From this stemmed what are called the "New Generation" FTAs, which so far have embraced South Korea, the Colombia-Peru-Ecuador grouping, the Central America Association Agreement, Canada's CETA and Japan.

More than ten years after its 2006 report, the Commission was able to say that, while FTAs were "major drivers of economic growth", they were also devoted to the pursuit a range of additional objectives, both general and specific. Through these, they were able to promote their values, such as the protection of human rights, labour rights, the environment and the fight against climate change.

Thus, while Johnson and his allies, in the pursuit of a free trade agreement with the EU, bridles at the EU's determination to include so-called "level playing field" provisions regarding these as unnecessary encumbrances they are missing the point.

Far from being peripheral to any agreement, the EU regards them as core issues, a crucial way of extending its global reach through the exercise of soft power.

This is now so deeply embedded in the EU's political DNA that, when it came to writing its 2016 Global Strategy on its foreign and security policy, it repeated what had become the mantra. "We will use our trade agreements to underpin sustainable development, human rights protection and rules-based governance", it declared.

With an ongoing programme of FTA negotiations one of the latest being with Australia and its expansion into Eastern Europe, concluding Deep and Comprehensive FTAs with Georgia, Moldova and Ukraine, the EU is going to be very chary about cutting a special deal with the UK. Any weakening of the "package" which it now offers virtually as standard, might be exploited by other partners, prejudicing the programme as a whole.

Despite the investment, it was not prepared to dilute its "rules-based trade agenda", when the US-EU Transatlantic Trade and Investment Partnership (TTIP) ran aground. "Living up to our values will determine our external credibility and influence", the EU said, and although it talks of "principled pragmatism" it will not easily compromise on what it believes are its core values.

Of itself, the EU says it "will be guided by a strong sense of responsibility". It adds that, "We will engage responsibly across Europe and the surrounding regions to the east and south. We will act globally to address the root causes of conflict and poverty, and to promote human rights". It believes its credibility hinges on this adherence to its values, in a world where, it argues, its interests and values "go hand in hand".

Nor is there any sense that the EU's commitment to using trade as an instrument to promote its values is in any way diminishing. In its 2019 16-page pamphlet on "EU Trade Policy at Work", it talks of having "placed sustainable development at the centre of its trade policy".

This means, it says, "ensuring that trade policy also promotes social justice, respect for human rights, workers' rights and high environmental standards". It goes on to say that: "All comprehensive EU trade agreements since 2014 include a trade and sustainable development chapter, with means to enforce it and a commitment to public scrutiny".

One can understand how any sensible sociopath such as Johnson - who most certainly seems to lack anything that could be taken as core values might find this extremely difficult to understand, but the EU's rhetoric cannot be dismissed lightly.

On the other hand, it is easy to appreciate how the EU might recoil in horror at the prospect of a free-booting "Singapore-on-Thames" on its doorstep. But, more so, for the EU to endorse or in any way facilitate such a development could easily be seen as it breaching its core values, weakening its global standing. If it gives way to the UK too easily, it could find that promoting its values elsewhere becomes that much more difficult.

As much to the point, having claimed an unbroken run of success in promoting its "sustainable development" agenda externally (to the extent that it has not compromised its values), the EU is a bloc with its own internal stresses, and particularly on enforcing its climate change agenda in the Eastern European enlargement countries. 

Too weak a stance with the UK could not only weaken its global standing, therefore, it could have a significant impact on its internal cohesion and what is, in reality, a rather fragile unity. 

Ironically, Brexit so far has been instrumental in reinforcing Member State solidarity and the EU is unlikely to sacrifice this just to give the UK an easier ride in the trade talks. Johnson could be in for a rougher time than he expects, especially if he intends to go for a walk in the forest without a gun.