The EU appears to be intimidated by the idea that a near neighbour, and ex-member, of their club might become commercially successful. To prevent this they are taking a hard and inflexible stand in the Brexit negotiations.
“I think that on trade issues or on the measures for our future relationship that we are going to discuss, we are going to start on, we are going to rip each other apart,” French* Foreign Minister, Jean-Yves Le Drian, told a conference in Berlin on Sunday (16 February). This is typical of senior French politicians, there must be winners and losers in the negotiations. No! We disagree, both sides should seek mutual benefit, anything else is intrinsically unstable. Push things too far and resentment builds, that is how they “lost” Britain. Trade agreements are supposed to enhance cooperation to boost trade and prosperity, as the EU treaties require [1], they should not be seen as the outcome of a ‘zero-sum game’ where one team gains at a cost to the other.
Shadow Trade Secretary, Barry Gardiner, argued on BBC Newsnight on Monday that normal trade agreements bring the parties’ arrangements closer whereas the UK Government wants to diverge and that is why it cannot be treated like other deals the EU has struck. It reminds us of the joke attributed to Irish comedian Dave Allen about asking for directions from a fellow countryman, “I wouldn’t start from here if I were you”.
It seems our pathetic little country is regarded as a substantial threat by the EU. Having previously offered a Canada-style trade deal, now that Britain has asked for exactly that, with no cherries on top, M. Barnier says our geographical proximity makes it impossible. Whereas the UK abuts EU territory only in Ireland the USA has a much longer land border with Canada – and anyway, the Irish border has been rendered invisible under the new Withdrawal Agreement (which raises some interesting possibilities; see below). The USA does not require Canada to ‘dynamically align’ with its own rules and impose judgements by US courts. In its deals with Korea, Japan and Canada the EU agreed to lift most tariffs without requiring any of the others to abide by its regulations and all future changes it makes to them.
In place of the fearful foursome of May, Hammond, Hunt and Rudd/Javid (all Remain voters) we now have Johnson, Sunak, Raab and Patel in the Cabinet’s principal offices of state (all Leave voters). From the Civil Service, in place of Olly Robbins we have David Frost leading the UK’s negotiators so we can hope and expect a more robust response to EU intimidation. “To think that we might accept EU supervision on so-called level playing field issues simply fails to see the point of what we are doing,” Frost said in Brussels this week, adding that London might set higher standards (as it already does in some areas) but wouldn’t expect the EU to have to follow them. So far the words are fine but so were May’s, to begin with.
The French intend to make fishing rights a primary stumbling block in the negotiations. Common Fisheries Policy fishing quotas were awarded on an unfair basis during Ted Heath’s desperate bid to join the EEC in 1973. Ninety percent of Cornish fishermen voted to leave the EU despite the fact that most of their catch is sold to EU states who eat species not much favoured by British consumers. Perhaps our fish and chip preferences can be refined, some of us have already discovered how tasty gurnard can be.
The majority of the EU’s trade surpluses are with the UK, it’s largest single market for goods—that should give us a lot of clout. To endanger such surpluses would jeopardise the EU’s economy and therefore its survival. Some free trade economists believe the UK should prioritise its consumers by offering unilateral free tariff access to all countries but making such a decision at this stage would strip David Frost of all his bargaining chips. Perhaps Le Drian is right—although we should not need to fight it seems we will have to.
Despite the fact that part of the UK will not be free from the jurisdiction of the ECJ and will have some controls at its border with the rest of the nation, Northern Ireland has gained a potential advantage. It will be able to export goods without tariffs to both the EU and GB. With assistance from the UK Government, such as aligning NI corporation tax with the South’s rate of 12.5%, the province could become a magnet for investment. Eire has had low corporate tax rates since the 1950s, well before it joined the EU, which has helped transform its previously agrarian economy by attracting high-tech international companies to set up there; it now has a higher GDP/capita than the UK. The EU could not legitimately argue against levelling the economic playing field on the island of Ireland, although its turnaround on a Canada-style deal shows that hypocrisy would not stop it trying. The EU has been pressuring Ireland to level up its rate, perhaps it should change its mind about remaining a member of this bullying, anti-competitive Union.
Finally, what regulations might the UK change? Perhaps the ones designed to hinder Dyson’s vacuum cleaner sales or replacing Directive 2010/31/EU with BS4814 as the mandatory standard for cladding buildings, which might have avoided the Grenfell Tower tragedy [2]. Examples where UK standards are higher than the EU’s include maternity pay, minimum wages, the use of coal power stations—Germany has just opened another.
The EU is offering continuity, which benefits the few but not the many. What the Prime Minister has called the Australia deal—that is, no deal—may soon become the best deal.
*It has been said by native speakers that Le Drian was using a French colloquialism similar to the English ‘I could murder a pint’ or ‘I’m so hungry I could eat a horse’; in other words he meant negotiations would be tough. Nevertheless our point is still valid, the EU leadership, and especially the French, seek a knockout rather than mutual gain.
[1] For example, the Treaty on the Functioning of the EuropeanUnion has Article 198 in relation to overseas (i.e. ‘third’) countries:
“In accordance with the principles set out in the preamble to this Treaty, association shall serve primarily to further the interests and prosperity of the inhabitants of these countries and territories in order to lead them to the economic, social and cultural development to which they aspire.”
[2] Shorties-10
This EU Won't Work 