Brexit still not done and dusted?

Jan 28, 2021

The lies and misrepresentations spun by Brexiters (and the UK government) ever since the 2016 Referendum are coming home to roost. While niggles and irritations were expected, they were seen as transitional. But major consequences for the British economy are heaping up.

When it comes to the day-to-day implementation of Brexit, delays in cross-border travel and low-level friction were expected on both sides. However, the misjudgments and the poor preparation in finalising the deal are resulting in serious consequences for the British economy.

The adjustments required following the Trade and Cooperation Agreement (TCA) concluded on the last day of 2020 are being hampered by the pandemic in the UK, which is worsening each day.

That would seem bad enough. But the lack of trust and goodwill is also having an effect. On the British side traders and others are increasingly disappointed about Brexit itself and in the IT systems the government was supposed to put in place to facilitate cross-border traffic. This included for traffic passing from the UK mainland to Northern Ireland – which is now part of the EU internal market for goods and agriculture, subject to the Northern Ireland Protocol pursuant to the earlier Withdrawal Agreement.

For the EU, particularly galling has been the absence of any remorse on the part of the UK in enacting a law to allow it to cancel a key part of the Northern Ireland Protocol (a treaty commitment) should it not suit – a breach of international law in anyone’s language.

The absence of tariffs and quotas was, superficially, attractive to the British people and sold as such, but these benefits are only available if goods and products satisfied the ‘rules of origin test’. This hides a multitude of non-tariff barriers that can negate a trade benefit in the first place.

A product that is the compound of inputs of both home and foreign origin may be assessed as being largely foreign and therefore not eligible for tariff or quota free treatment. The calculation can be complex and a cause of friction for both parties.

Underlying the EU’s lack of trust are assertions that the UK is planning to create ‘a Singapore on the Thames’. That would turn the whole of Britain into a free port without tariffs or quotas, without inconvenient ‘rules of origin’ in the formation of goods, and without constraints on the deregulation of product and labour standards and allow subsidies for some sector. This would give the UK an incompatible competitive advantage over the rest of Europe, a situation that could create enormous divisive pressures within the EU.

Meanwhile, both sides are causing friction at the borders by insisting on compliance with new documentary and health requirements that many long-haul truck drivers either do not understand or cannot handle. Some are therefore refusing to carry goods one way or the other if it means they might find themselves stranded on the wrong side or left with empty or half-filled containers for the return journey.

This particularly affects deliveries of perishable food (especially seafood), checks on chilled meats, household materials, and industrial parts and components integral to supply lines. Cross-border service industries, apart from those that can be accommodated within the digital world, are falling apart.

And tourism, when the virus is defeated, will look very different from before. Any sense of entitlement that Britons may have cause to feel in Europe will have evaporated.

It appears that some economies are becoming less inclined to engage in trade and are withdrawing into their own systems and cultural patterns – a familiar picture to that of the 18th century. A UK ‘Changing Europe’ Report has estimated that in a 10-year period, UK exports to the EU will fall by 36% and imports by 30% compared with the figures before Brexit.

Where and how might these reductions be made up? By the US? By Australia? We might in time be dealing with a different world if the US sought to re-enter the Trans Pacific Partnership Agreement (TPP) on terms acceptable to the existing parties (still a long shot even with President Biden) or if the UK were to seek admission (which might be more likely if it had successfully negotiated an FTA with Australia).

Brexiters are still reluctant to take blame for the negative consequences of Brexit, either blaming the EU for acting unreasonably at every opportunity or blaming Brexit ‘Remainers’ for continuing to sow discord and exaggerating the visible consequences.

Prime Minister Boris Johnson is aware of the suffering of the fisheries and music industries and is offering compensation for both. However. the more that Brexiters call for compensation for adverse consequences, the more they undermine their original argument. How ironic.

The Brexit Agreement (the TCA) is also yet to be ratified by the European Parliament, due by late February but now extended to April, ostensibly to enable it to be translated into all the languages of the EU – distrust could further deepen in this time. The TCA is being applied provisionally with the agreement of the European Council of Ministers.

Further evidence of diminishing goodwill is the graceless refusal of the UK government to grant full diplomatic status to the EU’s First Ambassador to the UK – even when there is still much to negotiate.

As pointed out by Professor Chris Grey in his authoritative blog, now titled “Brexit and Beyond”, the government’s justification was that the EU is not a ‘nation state’ but ‘an international organisation’.

“Yet for years the Brexiters’ core complaint was that the EU had become a super-state, making the UK’s membership sovereignty-sapping in a way that was quite different to its membership of other international organizations. So as the costs of Brexit rip through our country, revealing all the lies told of there being no costs, it is tacitly admitted that this was another lie. Indeed, it was the foundational lie.”

 

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