BREXIT ANALYSIS

Think it’s all over? Brexit could run on for the next decade

‘If Brits offer a nice deal for wine, that is not much use for Ireland’

Wrangling over a trade deal with the UK will be tricky, possibly causing friction between the 27 EU partners, writes Colm McCarthy

INTERVIEWEES on television have for some years past insisted on appearing in front of a backdrop identifying their organisation or pushing their product, and the fashion has spread to political parties. Boris Johnson’s backdrop at the recent Tory party conference was the simple slogan ‘Get Brexit Done’ — his incessant mantra of recent weeks and designed to reinforce the central delusion of Brexit, that it is simple and a onceoff event. The sloganising is called ‘message discipline’ by the political consultants and has doubtless been road-tested on focus groups. It plays nicely into public irritation with the unending political indecision, but it is a further deception.

Brexit, especially the hard version Johnson has chosen, will be a long, painful and costly process for the United Kingdom. A more honest slogan would have been ‘Get Brexit Started’.

Johnson has recruited Europhobic Tory MPs through material changes to Theresa May’s thrice-rejected version, which entails a more disruptive fissure with the European Union. Provisions in the withdrawal agreement have been modified in order to avoid a hard border in Ireland and these have understandably attracted most attention in our media coverage. But some key passages dealing with the UK’s ultimate economic relations with the EU have been excised. The political declaration has also been modified, substituting ‘hard Brexit’ intentions for more emollient language in the earlier version. The consequence is the UK is embarked on a future relationship with the EU which will be less economically disruptive to Ireland in the north-south dimension but could be more damaging to the far greater east-west trading volumes.

From November 1, if everything goes smoothly for Johnson — later if there is a need for an extension to tie up the legalities — the UK will leave the EU under the terms agreed in Brussels last Thursday. The new dispensation will not be the New Jerusalem promised by Brexiteers, never plausible under any likely form of Brexit, but could instead become a Gethsemane of unending, fractious disputes with the UK’s neighbours about the new economic relationship. Johnson’s new deal makes this never-ending Brexit far more likely than need have been the case.

Every European country outside the EU has chosen some form of economic linkage, rather than third country non-member status. Norway, Iceland and Liechtenstein have chosen alignment with the single market, Turkey with the customs union and Switzerland a comprehensive set of bespoke arrangements designed to minimise trade frictions. The UK has now chosen, after a no-change transition phase of just 14 months, the fully detached status of a third country, like Russia or Brazil, with the important difference that most of the UK’s trade for the foreseeable future will be with Europe or with countries locked into trade agreements with Europe.

The UK is a large modern economy to be sure, but not large enough to go it alone, in the opinion of every credible trade expert to have pronounced on the matter. The UK will commence negotiations soon — as an ex-member set on third country status enjoying no significant trade deals with anyone — with an EU-27 almost six times larger in GDP terms and with trade deals in place around the world.

The 14 months of transition could be extended but could also end in failure to negotiate a free trade agreement at all, leading to non-membership in circumstances no different from a no-deal crash-out; deferred rather than avoided.

The UK’s counterparty in the free trade negotiations will be EU Commissioner Phil Hogan, who is on record to the effect that it will take up to eight months to assemble his negotiating team and “a number of years” to finalise what would be the most important free trade agreement the EU has ever undertaken.

Whatever deal emerges will need the unanimous consent of all 27 EU members. Last week saw the commencement of new US tariffs on Irish exports of Kerrygold butter and Baileys cream liqueur, imposed in retaliation for French subsidies to the Airbus aircraft company in Toulouse. These are felt by President Donald Trump to compete unfairly with US subsidies, whose very existence he denies, to Boeing in Seattle. Quite what this has to do with Irish booze and butter is unclear and finance minister Paschal Donohoe spent some time in Washington last week seeking clarification.

When the negotiations about a UK-EU trade agreement get going, there will be divergent interests between and within the 27 EU members. If the French would accept a favourable deal on British aircraft components but want barriers to British financial services, this creates an internal political row in both France and Britain.

If the Brits offer a nice deal for wine, that is not much use to Sweden, or Ireland, who will expect a quid pro quo from the French on something else.

Last week the Irish fishing industry expressed concern about their possible exclusion from UK waters. Some Irish politician will at some stage have to face unwelcome trade-offs: is access for dairy products more important than fishing rights; how do you compensate losers and how do you balance your position with the competing interests of other member states? There are reasons why big international trade agreements take five, seven and 10 years.

There could be conflict over climate policy too. The Johnson version of the political declaration reverts to the Britannia Unbound ambitions of the Leave campaign of which he was such an important part. The UK is to be free to dilute European product standards and environmental protections, the better to aid UK business, while simultaneously demanding untrammelled access to European markets. This will simply not be conceded, as Michel Barnier has pointed out repeatedly in uncoded language.

While UK civil servants have no doubt explained the realities to Boris Johnson and his colleagues, the public expectation has been created that the UK will depart the EU, acquire the freedom to compete without constraint on product, labour and environmental standards, while suffering no consequences from an accommodating European Union. That this is utterly unrealistic was pointed out by the UK’s resigning representative in Brussels, Ivan Rogers, as long ago as January 2017.

The unilateral imposition of tariffs by the USA on EU countries follows the initiation of a trade war with China which has already been judged by the IMF to constitute a threat to the world economy. President Trump is dismissive of free trade, preferring what he judges to be ‘fair’ trade, and has declared his intention to weaken the institutions of the world trading system, starting with the World Trade Organisation. He has also encouraged Brexit and is ill-disposed to the United Nations, the World Bank and the IMF. In addition to its unrealistic expectations about a third-country free trade agreement with the EU, Johnson has placed great store on the prospects of a favourable deal with the USA, whose unilateral tariffs on Scotch whisky came into operation last Friday.

The sense of relief that a land border with Northern Ireland has been avoided needs to be tempered with an understanding that the Johnson version of Brexit could usher in a decade of trade battles. Don’t get bored with Brexit — it hasn’t gone away, you know.