Desperate Boris will settle for a ‘virtual Brexit’ trade deal with EU
DURING the pandemic we have virtual conferences, virtual meetings, virtual fitness sessions and virtual pints with friends. A virtual Brexit may be next.
Commentators in the UK have noted a definite change of tone from British prime minister Boris Johnson following what just so happened to be a virtual meeting with senior figures from the EU side last week.
According to British newspaper reports, the British government will hammer out a new plan this week aimed at getting failed Brexit negotiations going by identifying areas where they believe they can compromise.
Up to now the main sticking points – and they are very big points – have been around the role of the European courts in any disputes, ensuring a level playing field between the UK and the EU around standards, state aid and labour laws.
The EU is not prepared to give up on its principles of no free trade without a level playing field on standards.
But Johnson has injected a new element to the dialogue aimed at breaking the stalemate. It first appeared in ‘The Spectator’ magazine, which he used to edit from 1999 to 2005: Allow the UK to reserve the right to diverge from EU standards, but if it actually did diverge it would then have to pay tariffs.
Is this the basis for some kind of breakthrough and what might it mean for Ireland?
Firstly, the suggestion implies it is more important for the Brexit Tories to retain the “right” to do something than to actually do it. There may be some basis in this as Johnson’s government wants something it can sell to the British public.
If it comes up with a formula which enables it to tell voters they have won their freedom from EU standards, courts and regulations, it just might work, even if in reality it chooses to adhere to most of those rules and standards all the same.
Take fishing, for example, which accounts for 0.2pc of British GDP. It is tiny but is symbolic and tangible. Any kind of win here or rhetoric which says we have taken control of our fishing waters is job done, even if there isn’t a whole lot different afterwards.
When it comes to the EU side, fishing rights is one area in which the EU is likely to compromise from its position of maintaining all existing access.
Brexit negotiations have been all about the art of the possible up to now. Johnson has been forced to give ground on the big issues. The UK needs a trade deal with the EU, its largest trading partner. The EU wants a trade deal with the UK mainly for sectoral interests such as financial services and German car exports.
But there are numerous problems with the “virtual Brexit” solution. The EU doesn’t trust the Johnson government and therefore would have to put in place very complex governance measures to verify no deviation from standards which, if they occurred, would warrant the introduction of tariffs.
The British may want to cherry pick on the tariffs they would end up paying. So, for example, they diverge from EU standards on certain issues knowing it would trigger tariffs on their exports to the EU on specific products, and they are prepared to take that hit.
The virtual Brexit solution won’t strike the EU side as solid and stable, but more likely as fluid and uncertain. It might also look too attractive for other would-be leavers of the EU.
Most of all, it lobs a grenade into UK trade talks with other countries such as the US, Australia or China.
What impact would this adherence to EU standards, while retaining the right to diverge at a cost, have on the UK’s ability to strike new trade deals with other countries? That would all have to be worked out.
Few people actually believe Brexit was ever really about freedom to trade with other countries but rather Brexiteers taking back control of their own waters, borders, courts and regulations.
Once they have established that, they may well choose to leave most things as they are.
Such an outcome would be good for Ireland. It would ensure quota and tariff-free exports to the UK. It would minimise the disruption of Brexit and deliver a much better outcome than a no-deal crash out in December.
Johnson is on the back foot. The shine has gone off his landslide election win and he is now under pressure on his handling of the pandemic, Dominic Cummings, the economy and lots more. The UK borrowed £62bn in April alone.
Suggestions that Johnson would simply opt for a Brexit transition extension were wide of the mark. Suggestions that he is ready for a no-deal crash-out, because Covid-19 has already delivered the economic shock, are also looking wide of the mark. Johnson is desperate for a deal.
The mood is changing. And it might be an OK outcome for us.
Brexit negotiations have been all about the art of the possible
Allow UK to reserve the right to diverge from EU standards, but pay tariffs if it does