For Canada, the CETA deal was a slight improvement over WTO but for the UK, the TCA is a massive new hurdle.
In regulatory terms we are perfectly aligned with EU law in a way that South Korea or Japan or Canada is not. The border friction now being felt is not only self-imposed, it is entirely artificial and totally unnecessary. Our regulations are identical and our tariffs only marginally different. In a normal world, the next step for nations so closely aligned would be to form one common market. We are beginning a journey in the opposite direction.
So, the question of divergence is a big one for us all, but especially for the government and I think it's proving far trickier that Johnson ever imagined. All those years spent writing nonsense stories in Brussels about mythical EU regulations have gone to his head. They may have been well received at The Telegraph and gleefully picked up by The Mail and The Sun but were they true? Err.. no.
Unfortunately for the PM though, many people, leave voters believe they were and are. I know from many street stalls this idea the nation is buckling under the weight of pointless EU regulation is a strong one, even if nobody (nobody I have ever spoken to anyway) can come up with anything specific. It's a sort of 'feeling' that they must be there somewhere, lurking on the statute book and making everyone's life a costly misery.
Ever since 2015 leading Brexiteers have spoken about being 'free of EU shackles' but even they seem to struggle to announce anything. Successive trawls through British law have come up with tiny bits of legislation that can be repealed or modified but nothing to speak of.
This problem is now coming to a head.
In January, during a zoom call with 250 business leaders, Johnson asked for ideas about which regulations (the non-existent ones he was writing about 30 years ago) could be repealed. Not surprisingly they couldn't think of any. Now the FT report that business groups are being "badgered" to come up with something.
It is notable that the newly formed 'task force' under IDS, the TIGRR, has nothing in it's terms to call for any rules to be scrapped. The word 'repeal' isn't mentioned once in fact. It talks about "opportunities to reduce barriers to entry in specific markets" and "opportunities to reduce administrative barriers to scaling up productive businesses." Tailoring "necessary processes to the needs of UK start-ups and SMEs while maintaining the Government’s commitment to high environmental standards and worker protections" is mentioned, but this is hardly meat and drink is it?
So, the big question for me is how much of this tinkering at the edges, for that is what it amounts to, could have been achieved inside the EU. I suspect quite a lot.
Next, the TCA has the most onerous level playing field conditions ever imposed by the EU. This provides the EU with the wherewithal to retaliate if we diverge too much, beyond what a joint committee thinks is reasonable. This will limit our freedom to manoeuvre considerably. We may give one sector an advantage by damaging another.
Hence, the government has a problem. If it diverges too much there will be a penalty to pay and unless it diverges enough, people will wonder if all the damage being inflicted on fishing, farming and finance is worth the candle.
The barriers erected in January are not conducive to foreign direct investment (FDI) either. If you were a foreign company why would you build a plant to serve the EU market in the UK? You wouldn't, not when you can see the current exodus of manufacturing and distribution is going in the opposite direction, into the single market.
You might invest in the UK for the UK market but not as a base to export into Europe. Apart from the present barriers, the TCA can be cancelled by either side with 12 months' notice and the LPF retaliation is a constant sword of Damocles hanging over your export business with the threat of tariffs or quotas.
Industry does not want change. They prefer the EU regulations. It makes their lives easier and reduces duplication and extra costs.
So, I suspect we are going to go along for years and years with more or less the same regulations but with maximum border friction. Crazy. This position can only favour EU businesses and member states have an incentive to apply the rules as strictly as possible. Holland is particularly grateful for all the new jobs we're sending their way.
The BBC are reporting that 1000 finance companies from the EU are considering moving to the UK which some Brexiteers have picked up on - as we have on companies moving the other way. Holland alone have 500 more UK companies considering a move so it works both ways.
But the UK has already unilaterally recognised EU banking rules as equivalent to ours so the need to move is less pressing. In fact, this only demonstrated that companies are prepared to move and see the need to do so. And since the EU has more member states, a bigger population and a larger market it's obvious which side will be the winner at the end.
