Brexit is about to get a whole lot more complicated
Thorny problem for Johnson to solve if he is to be able to claim that he has ‘got Brexit done’, writes Brian Monteith
Last week marked the moment it became clear there is still much to be settled before the UK government can say in all honesty that Brexit has been “done”. In truth, just as Welsh Secretary Ron Davies said “Devolution is a process, and not an event”, the same goes for Brexit.
There shall be seminal moments when the process evolves: the referendum decision to leave the EU; the failure of Theresa May to win parliamentary support to take us out of the EU on 29 March, 2019; the Conservatives being reduced by the Brexit Party to only 9 per cent support in the European Parliament elections; the subsequent fall of Mrs May and her replacement by Boris Johnson; Parliament agreeing to his modified Withdrawal Agreement last December; the legal departure of the UK on 31 January, 2020 – and today the beginning of the new negotiations on the future relationship.
The EU and the UK published their negotiating positions last week and they have little in common. the most significant, and to my mind encouraging, difference between Mr Johnson’s approach and that of Mrs May is his willingness, and that of his cabinet, to embrace the concept of diverging from the EU. The Prime Minister, the UK’S chief negotiator David Frost and Michael Gove have all emphasised the purpose of Brexit is to be able to make our own laws – “It is the whole point,” Frost has argued.
Divergence is prized by the UK government because it allows far greater flexibility to respond to what standards are appropriate for our own country – what works better for us than the lowest common denominator agreed previously between 28 member states. That is not to say Uk-based businesses exporting to the EU market will not have to meet EU standards; self-evidently they shall, just as they must meet Japanese, Indian, Chinese or US standards if they export to those countries. They shall not, however, have to meet EU regulations different from our own outside trade in, say, employment, taxation or the environment. Probably more importantly, the vast majority of businesses that do not export, either to the EU or anywhere else in the world, shall no longer be subject to these laws.
We shall be free to set higher standards ( just as we already do in employment rights, where the UK has often led the way) or we can innovate and use new practices the sloth-like EU has not got round to adopting (such as allowing chicken to be washed in lactic acid as a prevention against bacteria). Having a more flexible response allows us to be more dynamic, establishing lucrative trade deals and become a magnet for greater domestic and foreign investment.
There is another bonus, however, that is little understood but needs to be welcomed. For the majority of Scots, divergence will be a good thing because it shall also make the likelihood of secession from the UK far less likely. The greater the UK diverges from the EU, the harder it will be for Scotland to avoid having border checks for goods travelling either way along the A1, the A68 and the M74 – or by rail, sea or air.
Scotland’s greatest export market is the UK, at 60 per cent against 18 per cent to the EU. Were Scotland to abandon the UK, it would be isolated outside its customs border and – until it negotiated terms to join the EU – would be standing alone outside its customs union too. The UK might look kindly on Scotland (although there would be
no necessity for it to do so) and agree a free trade agreement based upon World Trade Organisation rules that could reduce border friction between the countries. If, however, Scotland were to try to join the EU, it would have to adopt new laws that would immediately put it on the wrong side of the EU’S customs border with the UK. The more the UK diverges from the EU, the greater the potential for trade friction with an independent Scotland – only a free trade agreement between the UK and the EU would reduce the friction growing at the Scottishuk border Nicola Sturgeon has admitted would become reality.
This border would not be limited to goods but could develop in services (especially if the EU adopts various ideas for financial transaction or IT taxes) and would apply to the movement of people unless Scotland remained outside the EU’S Schengen agreement
– in which case it would have to have border and passport checks with the EU, just as the UK and the Republic of Ireland have now.
While it is likely that the Prime Minister has stumbled across this bonus rather than cunningly planned it, the more divergence that follows between the UK and EU, the harder it is for Scotland to enjoy any economic benefits or comparative advantage from being independent. Indeed, being inside the UK offers Scotland far more flexibility for trading with the US – which is Scotland’s second most important market, after the UK.
There is, however, a paradox, that Mr Johnson must seek to solve, for while divergence from the EU strengthens the Union between Scotland and the UK, it weakens it with Northern Ireland. Thanks to the Irish Protocol in the Withdrawal Agreement, there will be some customs checks between Northern Ireland and the rest of the UK – and the more the UK diverges from the EU (and therefore Ireland), the more these checks will grow. That is why many Northern Irish businesses and politicians are looking for as little divergence by the UK – which is the province’s largest “export” market by a factor of four-to-one. Northern Ireland can only leave the protocol by a vote in Stormont after a period of at least four years with a transition period of two years with any dispute to be settled by the EU’S very own European Court of Justice. Leaving the protocol will therefore present significant challenges.
If Mr Johnson is to ensure Scotland remains in the UK, then divergence with the EU should help him, but if he wants to keep Northern Ireland in the British family the reverse is true. It is this paradox he has to find a solution to and it shall take some skill and guile.
The likelihood of the Irish protocol lasting for a significant period of time cannot be dismissed lightly and might could easily outlive the life of this government – and the next.
● Brian Monteith is managing editor of brexit-watch.org