When talks finally turn to the future relationship, the EU will ask what we want. And the truth is we don’t knowby Ian Dunt / November 24, 2017 / Leave a comment
If you have been following politics of late, it will not have escaped your notice that progress in the Brexit negotiations has been painfully slow. Eight months on from the triggering of Article 50, Britain has managed to stumble over every imaginable hurdle. It has been like watching a car crash in slow motion.
Britain is desperate to move on from simply discussing exit terms—it wants talks on the future trading relationship. But the EU has maintained that it will not move in this direction until the UK offers some clarity on EU citizens’ rights, the Irish border (a nightmarishly complex issue), and the Brexit “divorce bill” to settle the UK’s financial obligations.
Until recently, there had been no progress on the UK side whatsoever. But now, after months of huffing and puffing, it looks like the UK may be about to make the much-needed breakthrough. On the divorce bill, at least, there have been more positive noises coming from No 10, with Theresa May doubling her offer from £20bn to £40bn. There is a chance, if things move further still, that the EU will decide “sufficient progress” has been made at its December summit and that talks on the future relationship can begin.
Great news, you might think. You’d be wrong. The problem with entering phase two of Brexit talks is that Britain has no idea what it wants out of a future trading relationship. The prime minister doesn’t know what she wants, cabinet doesn’t know what it wants, parliament doesn’t know what it wants and the public don’t know what they want. If you thought phase one was bad, you ain’t seen nothing yet. Here’s why.
When Britain enters phase two, it will be confronted with a simple choice: do we want trade or control? And we don’t know the answer to this question. Indeed, we haven’t even accepted it’s a choice we’ll have to make. But the reality is that if we want lots of trade, we have to give up some control. If we want lots of control, we have to give up some trade. It’s as simple as that. This is why it is so unhelpful to hear politicians pretend this choice does not exist. You cannot have your cake and eat it. Each bite of the cake you consume means there is that much less cake on the table.
Global free trade is about cooperation on regulation. This fact has driven most British free trade advocates mad. They’ve been fed a daily diet of “Brussels red tape strangles UK business” for decades. In their minds, the word “regulation” signifies a restriction on free trade. But in reality, cooperating on regulation facilitates trade. It means two countries can ship goods between them without long checks at the border to make sure they satisfy domestic legal requirements. The EU single market is the absolute pinnacle of regulatory cooperation. It melds economies together so tightly that any service, good, person or money can flow freely, as if national boundaries did not exist.
“Brits have been told they can have total control and total free trade—they can’t”
Britain has said that it wants to leave this market. Outside it, there are three basic approaches to cooperation: harmonisation, equivalence and mutual recognition. Harmonisation agrees the exact same standards and how to reach them. Equivalence is slightly different. It means you have the same standards, but allow for different ways of reaching them. Mutual recognition is a much less significant tool. These are agreements, usually between government bodies, which basically say that they trust each other to do the tests for their respective countries.
Here’s the problem. Brits have been told for nearly two years now that they can have everything: total control and total free trade. They can’t. Britain will have to make important decisions about these approaches, representing different levels of control for different levels of free trade. Mutual recognition hardly gives up any control, but then it hardly gets you any trade. Harmonisation gets you lots of trade, but gives up lots of control. There is no total control, outside perhaps of North Korea.
The truth is Britain is pretty much alone in the direction it is taking. The rest of the world is consolidating regulatory arrangements, not severing them.
Brexiters love talking about the World Trade Organisation, which they see as a free trade paradise. But when we sit there independently, we will be presented with two monstrous infringements on sovereignty: The Agreement on the Application of Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade. These two documents commit WTO members to basing their national regulations on relevant international standards.
All trade deals involve a similar loss of sovereignty. If we manage to maintain frictionless trade with Europe, it will be because we signed up to their regulations. Or we can turn our backs on Europe and sign a free trade agreement with the US. But as US commerce secretary Wilbur Ross made clear earlier this month, that involves signing up to their regulations.
If we really are intent on Brexit, we need to start talking realistically. How much control do we want and what kind of control should it be? How many jobs are we prepared to lose as a result? Will we sign up to European standards or American ones?
But these conversations are not happening. They are not happening among the public, who are barely aware of any of this. They are not happening in TV or radio studios, where producers run away from technical discussions. They are not happening in parliament, where MPs seem to be mostly motivated by tribal hysteria. They are not happening in cabinet, where Theresa May has literally banned discussion of them. And they are not happening in the prime minister’s head, given that she does not appear to understand them.
Britain should be concerned by the possibility of moving onto the next stage of Brexit talks. Because when we do, EU negotiators will ask: “What do you want?” And the truth is, we don’t know.