Andrew Farran

Brexit still not done and dusted?

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 2020are being hampered by the pandemic in the UK, which is worsening each day.

That would seem bad enough. Butthelackof trust and goodwillis also having an effect.On the British sidetraders and othersare increasinglydisappointedabout Brexit itself andinthe IT systems the government wassupposedto put in place to facilitate cross-border traffic. This included fortraffic 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 beenthe 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 itnot suit- a breach of international law in anyones language.

The absence of tariffs and quotas was, superficially, attractive to the Britishpeopleand sold as such, but these benefits are only available if goods and products satisfied the rules of origin test. Thishides a multitude of non-tariff barriersthatcan 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.

Underlyingthe EUs lackof trust are assertions that the UK is planning to create a Singapore on the Thames. That wouldturn the whole of Britain intoa 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 allowsubsidies for somesector. This would give the UK an incompatible competitive advantage over the rest of Europe, a situation that could createenormousdivisive 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 particularlyaffectsdeliveries 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 entitlementthatBritonsmay have cause to feelin Europe will have evaporated.

It appears that some economies arebecomingless inclinedto engage in tradeand arewithdrawing into their own systems and cultural patterns - afamiliarpicturetothat of the 18thcentury.AUK Changing Europe Reporthas estimatedthatina 10-yearperiod,UK exports to the EU will fall by 36% and imports by 30% compared withthe figuresbefore 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 theTrans Pacific Partnership Agreement (TPP) on terms acceptable to the existing parties (still a long shot even with President Biden) or if the UK were toseekadmission (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,eitherblaming 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 ofthe fisheries and music industries and isofferingcompensationfor both. However.the more that Brexiters call for compensation for adverse consequences, the morethey undermine their original argument. Howironic.

TheBrexit Agreement (the TCA)is alsoyet to be ratified by the European Parliament, due by late February but now extended to April, ostensibly to enable it to be translated into allthelanguagesof the EU-distrustcouldfurtherdeepenin this time. The TCA is being applied provisionally with the agreement of the European Council of Ministers.

Further evidence ofdiminishing goodwill is the graceless refusal of the UK government to grant full diplomatic statustothe EUs First Ambassador to the UKevenwhen there is still much to negotiate.

As pointed out by Professor Chris Grey in his authoritative blog, now titled Brexit and Beyond, the governments 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 UKs 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.