Friday 31 August 2018

TRADE DEALS FOREVER IN THE BALANCE

There is a bit of a lull in the Brexit process, what with the August holiday season in Europe and the impasse the PM has spoken about. So, I thought I would give a bit of thought to an aspect of Brexit that I have yet to see aired in the press or elsewhere. There is increasing talk of a second referendum as the People's vote campaign gets underway but if there was one I'm not sure it would put an end to uncertainty about our relationship with the EU. I can see this going on for years and years. 

We are split down the middle on Brexit, there is no doubt about that. But how will it all play out?  We may leave the EU next year or in 2020 but I don't believe for a moment the pressure to rejoin will go away.  Our relationship with the EU will be a constant sore for generations.

What will this mean for our putative future trading partners? We know that countries with existing FTAs with the EU are waiting to see what happens between us and Brussels before starting to considering any renegotiation of Tariff Rate Quotas or other aspects. Our position in or out of the customs union and in or out of parts of the single market will make a huge difference to our trading relationship with other countries.

And it will be exactly the same with countries that we want to strike new trade deals with. A vague outline in the withdrawal agreement will not be enough for them to assume a position. 

Negotiations are likely, are virtually certain, to extend beyond the transition period and the uncertainty will go on. But even then, assuming a settled, legal agreement is eventually reached, perhaps in 2023-25, the truth is that we - the UK population - will probably still be split down the middle or more likely increasingly moving towards the EU. Remainers will be calling for a new referendum and the risk, as far as our trading partners will see it, is that some political party will eventually get elected that will offer one. The result would be certain (in my opinion) to produce a majority to rejoin and render the years of trade negotiations useless. Other countries can read the polls as easily as anybody else.

When I see Davis, or Gove, or Jenkin, Cash, IDS and the rest on TV, I don't see the slightest recognition of this shift in the polls or of the population changing it's mind in future. Are they blind to the problems that Brexit is throwing up and to the widespread perception that Brexit is all going disastrously wrong?  Perhaps. Or maybe they're gambling on the voters blaming the EU, as some no doubt will. But this is dangerous ground for them. Their brainchild is going to become quite poisonous eventually.

I see increasing talk among the chatterati that it's better to crash out without a deal and then somehow negotiate a softer Brexit, perhaps even membership of the EEA. Meanwhile, others are proposing the opposite, that we accept anything that we can get, as soft as you like, provided we get out next March, and negotiate something harder afterwards. I see both these suggestions in print recently by Brexit supporters. I am not convinced either scenario is likely or possible. But the Brexiteers seem to have got a taste for change and seem to want us in a permanent state of negotiation with the EU.

On the first idea, put forward by blogger Richard North (leave without a deal and soften it later), I honestly don't think the majority of people in this country would see a chaotic no deal crisis as a stepping stone to some sunlit uplands. Brexit will get a very bad name and the clamour would surely be to go back to what we had; membership of the EU. Most people only see in or out and if out means chaos, food and medicine shortages and so on, surely they would opt for in, not pressing on to yet another unknown destination? 

And on the second, suggested by a Deputy Chairman of the Conservative party (HERE), that we can agree a soft exit, then break the treaty and go for the real hard stuff after Brexit has happened. Apart from the fact that people are already getting sick and tired of Brexit, I don't believe the EU would think we are negotiating some sort of temporary, flexible arrangement that we can begin to renegotiate as soon as the ink is dry on it, so are they prepared to start all over again?  I doubt it.

The uncertainty will go on and on. Trade deals have to be based on firm foundations. Nobody wants to spend five years working through thousands of pages of detail in a trade agreement only to find it was a waste of time.

We have opened a Pandora's box and closing the lid will take a very long time.