9 December 2020

Boris must keep the EU at arm’s length – or he’ll regret it

By

Epicharmus, a Greek comic writer of the fifth century BC, had this maxim: “Stay sober and remember to be sceptical.” It is as good a piece of advice as we are likely to deploy at present.

We are at a time of flux and flex in the Brexit talks. Helpfully, Michel Barnier has reportedly now figured out how to get his Zoom working. Less helpfully, he did so in time to find out that his less obstructionist team had almost agreed a Brexit deal. So we are back to the uncertainties that will shortly leave a handful of overconfident guessers unjustly passing themselves off as superforecasters. The reality is that we are still dealing in probabilities.

Ultimately, we are facing one of five prospects. The first is the last minute delivery of an extensive deal, a developed FTA superseding and correcting the flaws in the Northern Ireland Protocol. This seems unlikely. The second is an extensive deal but with gaps, explicitly or implicitly acknowledging the Protocol as the standing default. This seems like one of the two primary scenarios in play. The other is that talks on the current text collapse.

In that scenario, it is perfectly plausible that a quick fix partial settlement might then be thrown together. Clauses could be legoed into a text constituting more than the “mini-deals” that Barnier has bluntly insisted (for obvious tactical reasons, but without apparent authority) will not happen. There are very many examples of treaties the EU has signed that fall between an FTA and mini-deal-dom: indeed I count 25 different models as individually named by the Commission itself, such as the Framework Agreement on Commercial and Economic Cooperation (Canada pre-CETA) or the Comprehensive and Enhanced Partnership Agreement (Armenia). My take is that this scenario is still undervalued.

The fourth of our five options is that no such agreement is reached, and that a No Deal follows, though quite plausibly with a number of aspects of basic yet meaningful administrative mitigation. Finally, it is statistically possible that matters unexpectedly escalate diplomatically; an infuriated Boris pulls down Barnier’s pants, paddles him with a wiff waff bat, and a full-blown trade war ensues. I would rule out the possibility of any meaningful extension of deadlines except on limited administrative lines.

Self-evidently, the likelihood of these scenarios varies massively. The core question for anyone reflecting on the durability of any agreement that does emerge is a ‘horizontal’ one that cuts across all of them: what then happens to the Withdrawal Agreement? Are its known flaws corrected and superseded? Is it baked in and allowed to go off? Or is there licit or illicit space to take unilateral remedial action, of the kind that gets surrender monkey lawyers twitching, in some “very specific and limited way”?

It is a critical question but not the only one. The Centre for Brexit Policy has helpfully put out a scorecard neatly summarising the key fault lines threading across the negotiations, and while they might perhaps be expanded upon over some specifics, they capture the salient points. I strongly recommend cross-checking that list against end delivery. 

It is useful to reflect on before then, because of the remarkable levels of slack that Barnier’s team have been given in the UK. I can’t recall similar levels of unthinking support for a foreign government, or indeed intellectual unilateralism, since the Cold War days. But we need to understand, this week above all others, that it has been absurdly unmerited.

The EU has refused to engage in meaningful discussions about the service sector, an area of UK economic interest, just as it has historically dragged its feet on developing what was supposedly one of the Single Market’s supposed Four Freedoms. It has declined to negotiate with the UK without us first surrendering our inherent rights to a due share of the physical assets. It has demanded rights for EU expats without acknowledging those of UK ones. It has breached its precise commitment to formally have signed off a fisheries deal by July. It created the unsolvable problems of the Northern Ireland border by refusing to first agree on the form of border that a protocol would be in a position to fix, with the intent to corral the UK into a regulatory and customs union. It still demands the UK lock in the ECHR, despite knowing full well the public outrage at the unfixable absurdities of Strasbourg rulings. The negotiating mandate itself even includes a bid to claim back the Elgin Marbles.

At times the self-interest has been naked and brazen. In his speech to the EESC on 10 June, Barnier said, “Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?” These may be what one might expect from a competitor, but they are certainly not the words of a friendly, avuncular negotiator, and no alert UK commentator should be applauding or sympathising with them.

This is the context in which we should now consider the terms that the EU side offer. There will be dangers in the small print.

The EU appears at least to have stepped back from requiring ‘dynamic regulatory alignment’ into just wanting ‘non-regression’. That would mean keeping the fax democracy but just switching the machine off, along with the reams that have been pouring through over the years. Let’s for a moment put to one side the risk of activism via the Luxembourg Court, especially through an administratively Venn-diagrammed Ulster. Let’s also overlook the EU is in the midst of an economic crisis, is embracing centralised bailout liabilities, is pushing back against recalcitrant Poland and Hungary, and is on the point of running another constitutional convention, with all the financial demands and regulatory adrenaline that will flow.

Even with firewalls, ‘non-regression’ would still mean locking in the years of accrued business costs designed to make British exports to the EU more expensive, at the very time when we need to look at global competition. Annex B in this document provides examples of EU red tape that business groups have been particularly complaining about over the years and have every right to see binned now.

The UK needs to be free to diverge, wherever business finds it advantageous. Remember too that it is the EU side that has the track record on dodgy divergence. The EU has pursued both environmentalism and ‘health and safety’ when precariously grounded on the fears and suspicions of the Precautionary Principle. The EU forced the Social Chapter onto the UK, not merely in spite of it having an express opt-out, but by farcically recategorising it to get round the British veto. The European Parliament, as a gathering of aspirants and federalisers, inherently lends itself to the industry of silver plating.

Forget the official sanitised EU lexicon in all this. The Single Market is a Regulatory Union. The ‘Level Playing Field’ as dishonest a description as Metternich saw in the term ‘Holy Roman Empire’. It is a protectionist compromise between corporatists and socialists, designed to add burdens to anything that can outcompete high-cost home suppliers.

So a complex treaty that forgets what the EU is strategically intended to do, fails to address the drivers of bad regulation, and does nothing to correct bad laws past and future, will only store up trouble if it is leaky. 

How big will the holes be? Have those still left in the Withdrawal Agreement been plugged? For now, commentators can only speculate. The risks are proportionate to the gains and inverse to their immediacy. The downsides of a bare bones deal are immediate but improve with time; those of a complex treaty allay immediate concerns but will stud the lawn with mole hills in the years ahead.

Lucian reminds us of these words of Pericles: “Men are bold through ignorance, whereas reflection makes them cautious.” Today, it is knowledge of the EU and its corrosive system of governance that should embolden us towards pursuing a simpler but more stable FTA and arm’s length association. We shall otherwise have plenty of occasion for future reflection, and very possibly regret.

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Dr Lee Rotherham is Director of The Red Cell, a Brexit think tank

Columns are the author's own opinion and do not necessarily reflect the views of CapX.