Experts warn the cliff edge would reappear in 2020by Alex Dean / November 15, 2019 / Leave a comment
Boris Johnson has defied expectations and secured a deal to “get Brexit done.” Moderates can get behind the PM safe in the knowledge that he no longer plans to lead Britain off the cliff edge. Indeed, he now campaigns with the agreement as his election centrepiece. Cabinet ministers on the campaign trail reassure anxious members of the public: a vote for Johnson is a vote for a great deal.
Yet there is something missing from this. Over recent weeks experts have warned that Johnson’s deal would not in fact take no deal off the table at all. That while it would remove the immediate risk, taking Britain into a standstill transition period, it would not prevent a different version of no deal down the line. This is because the deal handles withdrawal issues but does not firmly establish the future trading relationship. The transition gives us less than a year to negotiate that and the PM has insisted he will not seek to extend it.
If time does run out, what would happen? How would this “no deal two” differ from the no deal we have been warned about, and how serious would it be? Having discussed the issue with leading experts, they are increasingly worried about the risk.
Cabinet ministers of course are keen to downplay it. Home Secretary Priti Patel only this week suggested that a vote for Johnson was a vote to leave with a deal. The government insists that it can negotiate a comprehensive free trade agreement before the planned transition runs out at the end of 2020. The PM has said we can have a “super Canada plus” deal, like the EU’s deal with Canada but with add-ons, ready in time.
Yet many experienced figures are far less relaxed. Indeed they are alarmed about the dangers ahead. For Philip Rycroft, formerly permanent secretary in the Brexit department, “the prime minister, having endeavoured to get out of one time trap, is walking straight into another one, because by saying ‘I’m not going to seek an extension,’ he’s putting the power over time in the hands of those he’s negotiating with.” For another former official of similar stature, “If you look at the dynamics of the coming year under a majority Johnson government and with the 27’s position as I believe it to be,” then Britain falling off a second cliff edge “is clearly a substantial risk in late 2020.” In fact, “to be honest, I think it’s quite likely.” For David Gauke meanwhile, now an independent candidate but until recently a Conservative cabinet minister, “Johnson is boxing himself in… a Free Trade Agreement will not be agreed and ratified” in time.
The government insists that there is nothing to worry about. And for some a trade deal is eminently feasible in the time required. Greg Hands, a former trade minister, has insisted that a deal should not take long since, unlike in normal free trade deals where two disparate parties negotiate how to remove barriers and integrate more closely, this time the EU and the UK are already very closely aligned. The hope is that the deal will be quick because the two partners start from a close position.
But this is to fundamentally miss the point. For while Britain starts from a point of alignment, that would only make for a quick negotiation if it wanted to stay so aligned. The whole point of Brexit is to diverge, which means a fraught discussion, only instead of over which barriers to remove, over which to erect. The further Britain wants to depart the more barriers there will be, meaning time-consuming discussions on things like level playing field commitments for workers’ rights.
For Anna Jerzewska, a customs expert currently at the British Chambers of Commerce, “we do not have a lot of time before the end of December 2020… I think it will be extremely challenging despite the level of alignment. It also depends on what kind of an FTA we’re aiming to negotiate.”
For Rycroft, one year is “a really, really short space of time in which to do such a big deal.” Added to this is the problem that currently Britain must notify of an extension request by the middle of next year, shaving further months off the deadline, though some commentators expect flexibility from the EU on this in practice.
But if Britain does fall off the second cliff edge, what might that look like? The no deal we are familiar with is after all fundamentally different, as it would involve no agreement with Europe at all, causing grave uncertainties over the Irish border and the rights of EU citizens in the UK.
But if Britain had already passed Johnson’s deal, some minimum level of agreement would already be locked into an international treaty. As Rycroft put it “if we leave with no deal at the end of 2020, the withdrawal agreement would remain in place so that will have sorted out citizens’ rights and money [the ‘divorce bill’] and the Northern Ireland issue, but what we wouldn’t have is a new trading… relationship.”
He added: “in those circumstances businesses would have to move—as might have happened in a no deal if we haven’t got the withdrawal agreement—on to WTO terms and conditions overnight, and all the stack of issues that comes with that would replay itself.” It would be “very, very serious.”
Without a formal trading relationship with Europe, all the well-rehearsed WTO worries come back. New trading frictions would render some supply chains unviable virtually overnight, with the effects inevitably passed on to consumers. It would be “economically disastrous,” said Gauke.
The question then is whether such an outcome could be avoided if Johnson wins on 12th December. It is possible. Currently, there is a provision for the transition period to be extended by up to two years. This might allow enough time for a deal if the partners move quickly. But even that would be a tight timeframe: the deal between Canada and the EU famously took seven years to negotiate.
Further, the power to ask for a transition extension as currently envisioned resides with the government. If Johnson’s Withdrawal Agreement passed through parliament in its current form, parliament would have to approve a government request to extend the transition, but would not have any automatic say over whether to request extension in the first place. That means the brinkmanship of recent times could return, with anti-no-deal MPs trying constitutional innovations to force the government’s hand. Perhaps they would succeed, but clearly there is no guarantee of that.
Another possibility of course is that Johnson could perform a U-turn. Having ruled out extension he could decide to request one anyway. This would be in keeping with previous behaviour by the PM, not least on extending Article 50, but will depend on the mood of his new party, which will have signed up to a hard Brexit manifesto and may be in no mood for further delay. It would also rely on the EU saying yes, but Brussels could always choose to hold firm at least until the last minute, to exert leverage. Crucially, none of these crunch moments might come before the moment at which Britain has to ask for an extension, even if panic surfaces before the transition itself runs out.
All this means that MPs seeking to pass Johnson’s deal, under the understanding that it removes the risk of no deal, should be very careful indeed. Members of the public voting for Johnson on 12th December should bear the same thing in mind.
There is no concrete guarantee that something like this risk would not resurface in a different form under a Labour government, though it seems less likely with the party less committed to a hard exit.
For the time being, In Rycroft’s words, “my advice to businesses is ‘don’t tear up your no deal plans just yet.’”
Additional thanks to Joe Owen and Stephen Wall