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Brexit negotiations at the 11th hour

Rayhan Ahmed Topader :

 

The United Kingdom and the European Union have agreed on a trade deal, closing the book on more than four years of uncertainty over how the country would conduct business with its biggest export market following Brexit.It took 11 grueling months for negotiators from Britain and the European Union to hammer out the terms of a post-Brexit trade deal. But in many respects, the deal is already four and a half years out of date.The world has changed radically since June 2016, when a narrow majority of people in Britain voted to leave the European Union, tempted by an argument that the country would prosper by throwing off the bureaucratic shackles of Brussels.In those days, the vision of an agile, independent Britain free to develop profitable, next-generation industries like artificial intelligence and cut its own trade deals with the United States, China and others was an alluring sales pitch. The buccaneers of Brexit promised to create a Global Britain. Brexit was never fundamentally an economic project. It was always more about what it said on the ballot paper in 2016. Brexit was about ceasing to be a member of the European Union. Leavers understood that. Remainers, in contrast, still struggle with it. To a lot of remainers, Brexit had to be a proxy for something else: anti-immigrant feeling, maybe, economic disempowerment, or post-imperial nostalgia.

Those issues were not irrelevant to Brexit, but they were never the main point.Leaving the EU was an emotionally charged political proposition, not an economic one. It was a desire rooted in a vision of British sovereignty richly marinaded in a heady mix of nostalgia and bogus victimhood, fanned by Britain’s media, and which made the enormous error of confusing sovereignty with power. The reality of that error will come home to roost in the months and years ahead. But Brexit was never about the price of potatoes or cars. In the end, it wasn’t even about standing up for Britain’s one genuine shared diplomatic triumph of recent decades, the Northern Ireland peace agreement.What was finally agreed this week is a worse trade deal than we had as an EU member state. Britain has expelled itself from the EU because sovereignty is what really matters in Brexitland, not trade. As a result, for probably the first time in human history, these have been trade negotiations that aim to take the trading partners further apart, not closer together. That would be difficult enough with goodwill, and has been doubly difficult because of Britain’s unrealistic tactics. But that is the looking-glass world Britain now inhabits. If taking back control means giving up some of the prosperity, along with the other benefits, that went with EU membership and it certainly does then the leavers say: so be it.

It is an inconvenient and ironic truth that all trade deals, including this one, will involve a compromise of sovereignty for mutual benefit.

That is what making deals means. Ursula von der Leyen was spot on when she described pooling our strength and speaking together as what sovereignty means in practice in the 21st century. This deal is absolutely no different. This truth is, of course, being brushed over in the immediate media silliness that burst out on Thursday. But when the dust settles and MPs come back to Westminster to debate the deal next week, they will see that Britain has had to give up some sovereignty in order to be able to go on trading with by far our largest and nearest market on preferential terms.The only sense in which this amounts to a triumph for Johnson is that it completes the detachment of the United Kingdom from the EU that a majority of voters opted for four and a half years ago. That is undeniably important. It is the consummation of Johnson’s lifelong campaign of lies about the EU. It may, in fact, mean that Johnson’s premiership now has no other particular purpose. But the deal involves considerable political risk for the government, because the economics of Brexit and the politics of Brexit have always pulled Johnson in opposite directions.Johnson is nothing like as clever as he thinks he is, but he is not stupid either. He knows that geographical proximity and established supply networks matter massively in trade, and therefore that trade with the EU cannot simply be abandoned.

 

The UK was adamant throughout the negotiations that it be treated as a sovereign equal of the EU and have its independence respected. This was particularly important when it came to fishing rights one of the last issues to be resolved.There were always many  problems with this argument. As explained by the Spanish foreign minister a veteran trade negotiator a trade agreement is designed to establish interdependence rather than being an exercise in asserting independence.The EU is simply a bigger beast economically speaking than the UK. This meant Brussels was confident it could weather the disruption of a no-deal separation better than the UK. By refusing to extend the transition period despite the pandemic, prime minister Boris Johnson ensured both parties faced the same time pressure. But they did not face the same level of risk if no agreement was reached. Hence the real ringmaster of the Brexit deal was Father Time, not Johnson or Angela Merkel.Nevertheless, it looks like the UK government will claim victory by arguing that it is now able to escape the jurisdiction of the European Court of Justice while getting tariff and quota-free access for goods exported to the EU. In a statement immediately following the announcement of the deal, the UK government did just that,The deal guarantees that we are no longer in the lunar pull of the EU, we are not bound by EU rules, there is no role for the European Court of Justice and all of our key red lines about returning sovereignty have been achieved.

It means that we will have full political and economic independence on 1st January 2021.Johnson’s negotiator David Frost liked to argue that the UK just wanted a standard free-trade deal like that between Canada and the EU. In reality, the UK was asking for extras, such as mutual recognition of conformity assessment for goods and mutual recognition of professional qualifications. The EU does not appear to have budged on those. Brussels was also adamant that the deal required legal guarantees to prevent the UK undercutting the single market by using its new regulatory autonomy to lower environmental standards or employment rights. Johnson agreed in principle to this level playing field idea in the political declaration that accompanied the 2019 withdrawal agreement he got through parliament. Then, later in negotiations, he tried to renege on this pledge. In the end he u-turned again. The deal states that divergence from EU standards would lead to potentially restricted access to the single market. In a press conference on the deal, Johnson reassured “fish fanatics” there would be plenty for their dinner plates, but the deal means that for the next five and a half years EU-based vessels will continue to enjoy significant access to British waters, during the transition to a final arrangement. It’s clear that free movement of people has ended, while goods will face customs and regulatory checks.

Transport chaos around the port at Dover is therefore still a distinct possibility after January 1 if exporters fail to have the proper paperwork to cross the Channel. Given they have not done this in a generation, there are bound to be difficulties. EU-based hauliers might also opt for caution and in the short–term avoid the risk of getting their lorries stuck in the UK. The UK will also leave the Erasmus higher education exchange programme, which will come as a blow to many students although the UK now plans to launch its own Turing scheme to offer placements at universities around the world.The European Union and United Kingdom have not yet struck a deal that will give UK banks and asset managers access to European markets. EU regulators are unlikely to let London keep the benefits of the single market without its obligations. While a deal is welcome, financial and related professional services are clear-eyed about the need for both sides to continue to develop the relationship in services in the years ahead. Some outside countries receive preferential market access rights from the European Union, a standard known as “equivalence.” The level of market access is worse than what the United Kingdom currently enjoys, but it’s the best the country can hope for once outside the European Union. Major banks say they have prepared for Brexit, and the new terms of trade with the European Union won’t disrupt their operations while negotiations continue over equivalence.

Writer and Columnist

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