Money

Calm down, Brexit trade deal can be done


FT subscribers can click here to receive Brexit Briefing every day by email.

Brexit can be frustrating, particularly when the debate is often all heat and noise. In lieu of policy dissection, politics and emotion take hold and obscure what can be achieved. This is happening again as the EU and UK are limbering up for negotiations on a trade deal.

Strip out the optics — Boris Johnson’s blustering metaphors, Michel Barnier’s steely demeanour — and the mandates of both sides show a steep path towards a deal: a basic one perhaps, but something that can be brokered this year. The initial cries that all is hopeless and we’re heading straight towards no-deal at the end of 2020 may be premature. 

A Brexit deal may be done because Britain is not asking for much. By pushing for a Canada-style arrangement, the Johnson government has accepted the implications of what leaving the EU means. It is not asking for a deep partnership by cherry picking the benefits of membership without the responsibilities, as seen in those long-forgotten Chequers proposals.

Mr Johnson has accepted one of the key consequences of leaving the bloc: friction. Whereas his predecessor Theresa May pushed for “frictionless trade”, he has accepted that paperwork and customs will come into force once the UK exits the single market and customs union at the end of 2020. This means the primary aim of the talks is to reduce tariffs and quotas as much as possible.

Still there are challenges. Whether a deal can be done rests on three preconditions: level-playing field, the role of the European Court of Justice and fishing. Britain’s position is all over the place, making it difficult to know how pragmatic Mr Johnson is going to be. If you listened to his Greenwich speech this week, a deal is plausible. If you read the anonymous government briefings at the weekend, it is not. If you read the UK’s mandate for talks, it is possible but difficult. 

On fishing, Mr Johnson has insisted he will not “sell out” British fishermen. Yet in the Greenwich speech, he said he is ready to do a deal based on “annual negotiations with the EU”. It was the first time the prime minister referenced fishing quotas, which would mean sharing UK waters with the EU. The latter’s mandate said it wants “stable quota shares” too. 

Fair competition depends on how Mr Johnson defines sovereignty. He boldly stated he does not want to drop below EU standards on environment and food, but he also wants flexibility without pencilling it into a treaty. Finding a compromise on non-regression might be a way through this, possibly through some form of dynamic alignment, but it will depend on whether he accepts the need to put the provisions into law. If he does, there is a way through.

The ECJ could be the most problematic. The EU’s mandate outlines a dispute resolution body, which will be binding and shared by both sides. But it also states that the ECJ will be a backstop for any questions on EU law. That is going to be tricky for the UK to accept, given the Johnson government insists there will be no future role for the court. Whether a resolution body provides enough distance from the court is the deciding factor. In fact, the principle was already accepted in the political declaration of Mr Johnson’s new Brexit deal. 

But if those three areas can be resolved, the rest could be relatively straightforward. 

As Sam Lowe, a research fellow at the Centre for European Reform think-tank, puts it, “the negotiation will be over preconditions. There will be some tough issues, but there is nothing fundamental in the mandates to stop a deal. If those key issues get resolved, the trade agreement will pretty much write itself.”

Of course, politics could destabilise the whole thing. Inflexibility and belligerence could halt a deal at those first hurdles. But reading both mandates carefully and trying to look for the light and signal, the fundamental differences are few. If Mr Johnson is serious about compromise this year in the same way he was in 2019, then a Brexit trade deal appears achievable.

Further reading

John Bull Both Barrels
© James Ferguson

The UK is about to shoot itself in both feet
“There is in brief much disagreement over the nature of the prospective relationship and very little time in which to agree. A likely result is no deal. If so, the greater the ensuing disruption, the more the Johnson government is likely to try to blame it on the EU. It might even seek revenge, possibly by trying to ally itself with the US against the EU. Above all, remember this: a limited free trade agreement would be better than no deal; but it will still hurt.” (Martin Wolf, FT)

Budget raises tensions between Javid and Cummings
“Boris Johnson’s allies have a nickname for Sajid Javid: ‘Chino’, or ‘chancellor in name only’. As tensions rise ahead of Mr Javid’s Budget on March 11, the emphasis is now placed on the last syllable: ‘He’s always saying no,’ said one Tory official. Mr Javid has been at loggerheads with Dominic Cummings, Mr Johnson’s powerful chief adviser, for months, but relations are now severely strained ahead of a Budget that will define this government.” (George Parker and Sebastian Payne, FT)

Composite image of Dominic Cummings and Sajid Javid outside the UK prime minister's residence 10 Downing Street in London
Ever since Dominic Cummings sacked Sajid Javid’s adviser Sonia Khan in August, without telling the chancellor first, the two men have been engaged in a power play and a battle for the prime minister’s ear © FT montage

What Macron wants in the post-Brexit negotiations (John Keiger, The Spectator)

A second Scottish independence referendum? (Michael Keating, The UK in a Changing Europe)

The problem of Britain taking back control (Tom McTague, Atlantic)

Hard numbers

HS2: the arguments for and against UK’s biggest infrastructure project
Boris Johnson, the prime minister, is expected to decide within days whether to give the go-ahead for construction of Britain’s biggest infrastructure project since the second world war — the 250mph HS2 high-speed railway from London to Birmingham and on to Manchester and Leeds. Experts and politicians are deeply divided on whether the scheme is worth the estimated price tag, which has almost doubled to more than £100bn even before construction has started. Read more

Map showing the route of HS2 lines and a chart showing the projected journey times of the new routes

FT UK Politics podcast — live recording

Join presenter Sebastian Payne and guests for a live recording of the FT’s UK Politics Podcast, a weekly in-depth discussion of political news and views. Robert Shrimsley, Miranda Green and colleagues have prowled the corridors of power for years without losing their fascination with SW1, policies and personalities. Now they want to hear your questions. On February 26 at 6pm at Bracken House, 1 Friday Street, London EC4M 9BT.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.