Wednesday 13 November 2019

Negotiating an FTA: why 11 months is impossible

Because the outcome of this election is so uncertain, I vary between thinking we'll get an opportunity of a second referendum with a good chance of stopping Brexit altogether and worrying that Johnson will get a majority and we'll be out at the end of January.  Our completely mad prime minister has said unequivocally that he will not extend the transition period beyond December next year, indeed it was this that apparently persuaded Farage to abandon 317 constituencies to help the government.

This threat is being taken seriously by David Gauke, the former Justice Secretary, who has announced he's standing in his old constituency against his former party precisely because he wants to prevent a no-deal Brexit at the end of 2020.  He says a Conservative majority would be a "bad outcome for the country" and lead to a "very hard Brexit" being pursued.

The no deal outcome he fears is because nobody believes a free trade agreement can be agreed in eleven months. Certainly David Henig, a well known expert on trade policy, doesn't think so because he tweeted this yesterday:
This thread also includes a thread from Peter Ungphakorn, another expert on international trade matters. They both include links to CETA, the Comprehensive Economic and Trade Agreement with Canada.  You can see a chapter by chapter summary of what's covered HERE.  I suspect Boris Johnson has not read a single word of it, which is why he keeps breezily talking as if he will get it all signed, sealed and delivered in just eleven months,

David Henig talks about the "spectacular level of detail in the 1,598 pages of the EU-Canada agreement" which covers rules for animal products (SPS), tariff rates, quotas and rules of origins, exemptions to what services can be provided etc etc.  But he also mentions something else which will be crucial next year, assuming we fail and Johnson gets a workable majority. This is how the UK government actually starts the FTA process. Listen to this:

"For the future UK-EU trade agreement neither side has yet consulted with business, NGOs, trade unions etc. Neither side has a negotiating mandate. The UK side has no consultation mechanism. We don't know what type of agreement this will be."

Not only has there been no formal consultation with business and industry - on either side - we have no mechanism as yet for carrying out the consultation.

Industry forums will need to be created and opinion sought on what the consensus is about each sectors needs from any agreement. This will not be a short process nor an easy one. But getting a consensus doesn't mean we will get what we will be asking for anyway. Some things, like keeping British coastal waters for British vessels only, will not survive first contact with EU negotiators. There will be plenty of others too. When this happens the consultations will have to revisit the forums and take soundings about what compromises are possible or acceptable. All of which will take a huge amount of time.

Also, we shouldn't forget that most sectors want close regulatory alignment and some influence over EU rule setting so the government itself may find they are trying to negotiate something very close to EU membership - and failing spectacularly.

The EU have committed to carrying out the trade negotiations in parallel, with many sectors being dealt with at the same time, to speed things up a bit, but even this is unlikely to allow a agreement in under a year.

In reply to David Henig, one respondent, Chris Kendall, explained that he is actually working on an EU negotiation with a third (unnamed country) at the moment and sets out what steps are involved:
His agreement was not "particularly controversial or complex" but still took 5-6 years of which only two were spent negotiating. Some steps, like legal scrubbing, could be speeded up quite a bit but with the kind of relationship we are seeking he thinks the mandates and the ratification time will be much longer.  Kendall continues:

"In brief, agreements with the EU take years, with the bulk of the time spent not on negotiations themselves but on necessary procedures to ensure democratic scrutiny and legal certainty. If we Brexit, it will take years before we stabilise the EU-UK relationship"

And:

"If the withdrawal agreement is passed and we Brexit *with* a deal, we will have a 2 year transition period. I hope I've shown how, erm, optimistic that time frame is for moving to a new EU-UK agreement. Personally I think it's hopelessly unrealistic"

Note the 'real' transition period will come after the deal is negotiated, signed and ratified.

The analogy he uses for Brexit is to think of a couple expecting their first baby, but focusing entirely on the birth itself, unable to see the big picture that after the trauma and drama of childbirth come 18 years of total disruption to their previous lives.

Unless we can stop Brexit with confirmatory vote next year, this is what we can look forward to.