The EU is right. If in future it changes its social laws and we don’t change ours; and if then it slaps tariffs on our exports, and raises non-tariff barriers too, this in no way lessens our sovereignty. We do what we like. The EU does what it likes. Brexit is uncompromised.
Having cleared that up, on to present obscurities. The texts of a possible treaty, which some claim is “95 per cent done”, haven’t been made public.
So few outside the negotiating room, and certainly neither this site nor its readers, are able to pronounce authoritatively on exactly who or what is preventing agreement – assuming that disagreement is real, a supposition we’re inclined to make – or why. Or whether a deal will have been agreed by December 31, the real deadline.
Nonetheless, the general contours of the difference between the two sides of the table in this negotiation seem clear enough.
As far as can be seen, both accept a level playing field based on “non-regression” – in other words, that neither party should lower the social standard, as it were, that existed within both the UK and the EU on the day that Brexit took place.
But what happens if either side in future wish to raise that standard? The EU wants “dynamic alignment”. The UK does not. And they disagree on whether the non-binding Political Declaration includes commitments to it.
The EU reportedly wanted arbitration in the event of either the UK or the EU raising its social standard in future. It seems that the UK resisted this particular arbitration proposal, though other reports suggest that the Government is not opposed to arbitration per se – and indeed that a potential solution may now be taking shape.
At any rate, it is agreed that the EU then went further – proposing that it be entitled to respond unilaterally if it raised its own standard and the UK didn’t follow. It is this change in approach that plunged the talks into their recent crisis, which has not been resolved as we write.
Did Emmanuel Macron raise the stakes, mindful of his own domestic elections – and convinced that the UK would crack under pressure? Was Angela Merkel actually the key mover?
Was it the Government’s declared intention to break international law that made the difference, inflaming EU fears of the unpredictability and waywardness of Boris Johnson? (And if so, why – given that the EU itself is, as Ambrose Evans-Pritchard has pointed out, a “serial abuser of international law”?)
Such are the most convincing explanations we have of how we got where we are on the crucial issue of a level playing field – leaving the other main ones: state aid and fishing policy.
Fear on both sides is clearly a key factor. The EU sees itself as offering the UK unique quota-free, tariff free access to its Single Market, and worries that we will get the best of both worlds – privileged access and lower standards.
As Catherine Barnard pointed out on this site last week, this reflects a curious lack of confidence in the coherence and power of the Single Market.
Meanwhile, the UK would say in response that such an arrangement suits the EU just fine, since it runs a trade surplus with us, and is offering nothing on services. And that the EU seems set on using its economic muscle to pressure us into becoming an imperial outpost rather than Global Britain.
This, by the way, suggests a point that runs in the opposite direction to Barnard’s. If the UK is confident in its own trading future, why not simply take the hit from any EU reprisal measures, and use our new freedoms as we think fit?
Our answer is that the Government should not, repeat not, settle for accepting a proposal that is manifestly unfair – in other words, one that would give the EU the right first to change its social laws and then, were we not to follow suit, to decide for itself both the width, speed and depth of retaliatory measures.
Such would be the classic bad deal – and, as Theresa May’s original formulation rightly has it, No Deal is better than a bad deal. But we don’t suggest for a moment that the consequences would be an easy ride.
In the long-term, what shapes a country’s economic future is its tax system, its spending control, its regulatory framework, the quality of its workforce, its education system, its capacity for innovation, its openness to investment, its relationship between labour and capital – and so on. Not tariff and non-tariff barriers.
In the short-term, we are not so sanguine about the consequences of disentangling the UK, in the event of No Deal, from an EU with which it has been merged for the best part of 50 years.
In other words, No Deal would present the likelihood of short-term pain (the interplay with Covid; shortages; lower investment; scraps over fishing; damaged co-operation on crime and terrorism) against that of long-term gain, if we get our economic framework right.
Nonetheless, No Deal also has the potential to cut both ways, as John Redwood suggests on this site this morning. For example, a fall in the pound could more than make up for the effect of tariffs.
Much will depend, if it happens, on how agile Rishi Sunak and Alok Sharma are response. Meanwhile, No Deal would hit our EU neighbours hard, too. In particular, it would be a political and diplomatic defeat for Ireland, in the wake of its win in the Withdrawal Agreement over the land border.
In the first few days after No Deal, the Cabinet would rally round the Prime Minister; so would Conservative MPs; so, beyond a doubt, would ConHome’s panel of Party members.
The EU and, in particular, France would be blamed by the Tory press and many voters. The effects wouldn’t simply spill over into fishing and the North Sea. Potentially, they would menace the security co-operation of the only two substantial military powers in western Europe.
We are less sure of what would happen in week eleven than week one. We would put money on the response of Tory members hardening, together with that of some Conservative MPs.
However, we wouldn’t slap down a bet on all the Cabinet behaving in the same way. The institutional interests of the Treasury and BEIS are against No Deal. Michael Gove will be exposed if it happens, as the Cabinet Minister responsible for the UK’s response.
Our sense it that there would soon be stories of splits between Cabinet “hawks” and “doves”. And Tory MPs, many of unfamiliar with normal Parliamentary proceedings and unprepared for unpopular decisions – how would they respond?
That would ultimately depend on their constituents, the British people – and the clash between what David Goodhart has called the Anywheres, gainers from globalisation who identify with similar gainers abroad, and the Somewheres, who are less mobile, more rooted and have a stronger sense of national identity.
One point is certain. We have decided to quit the EU twice over. First in the 2016 referendum. Then in the election of almost a year ago.
So in the event of No Deal, there will be no going back. No political party or movement of any significance is suggesting rejoining the EU (which would now take place on less favourable terms than before.) Which means that the best way of dealing with No Deal, if it has to happen, is to treat it less as a problem than as an opportunity.