Tuesday 18 February 2020

The Frost speech in Brussels

Details emerged last night of the speech given by Brexit Johnson's chief negotiator David Frost, at the Université libre de Bruxelles. He is reported as saying essentially what the PM himself said in Greenwich a couple of weeks ago. In fact parts of the speech sounded like they were actually written by Brexit Johnson. Usually, speeches like this are drafted by advisers and delivered by prime ministers but as we know Johnson wants to do things differently, the other way round in fact.

I am not sure what the point of it was since nothing new was said and no new positions set out.

Frost talked about a relationship of equals which must have raised a few knowing smiles in Brussels and the Irish Times report him saying:  

"The UK’s trade negotiating position with the EU, specifically its opposition in principle to regulatory alignment, is not a tactical gambit but a fundamental expression of “what it means to be an independent country”, the UK’s chief negotiator told an audience in Brussels last night.

“It is the point of the whole [Brexit] project,” David Frost said in a lecture to students and academics at the Université libre de Bruxelles.

"Mr Frost said that the UK was not seeking a bespoke deal but the same sort of trade agreement the EU has signed with similar nations such as Canada, South Korea and Japan. He insisted that they had not been expected to align their regulatory systems with the EU, and the UK would not do so either."

I think the EU might respond, perhaps more diplomatically than this, by saying the UK is now a third country and can do what it likes. But....the EU is also sovereign and we have laid out the conditions we are attaching to access to our single market specifically for you. We are also sovereign and we can do what we like. They may even be irked by a former member seeming to tell them what they can and cannot do.

Frost seems to miss the point himself. It might have been better not to deliver the speech. It looks like we're begging already. Equals don't embark on negotiations with one side whinging that the other side is being unfair or unreasonable. As several commentators have said, this is a free trade negotiation, fairness doesn't enter into it.  We've left the EU and at the end of the year we will be free to do whatever we like. We will have taken back control as the slogan goes.  

The trade expert David Henig tweeted:
Henig says it's "noticeable that the UK is pointing to the EU's distant relations [with Canada and Japan], but nothing on the doorstep. That's presumably because there's no EU-European country trade agreement the UK government likes. Now who's cherry picking?  Whether the EU is right or wrong to behave in the way they do regarding trade relations is a fair debate - for them. Not for the UK. We left. It's like concerning ourselves with Member State competences - an issue no longer of concern to us." 

What Henig doesn't say is that all the nations bordering the EU have deals with much tighter rules governing LPF and trade than we are seeking - Norway, Switzerland, Turkey, Ukraine for example - or are actually queuing up to join the EU as full members - Macedonia, Albania, etc.

Mujtaba Rahman is a bit closer to Downing Street's position and said on Twitter: "As I say, worth taking at face value what he's [Frost] likely to say & others around him in Govt are saying. How can you square Brexit project without divergence?  You can't."

He says you can't square the EU's reported position with Brexit, at least the Brexit as set out by this government. Quite. The penny has finally dropped. This is what remainers have been saying for four years. The difference between us is that Rahman, like Johnson, thinks that Brussels is being unreasonable. We think Brussels is behaving rationally and exactly as predicted. The position can't be squared because we still want to have our cake and eat it too.

The question of LPF conditions is fundamental to the EU. Without guarantees a free trade deal is not going to happen. We are about to discover the negotiation is not between equals.

The UK's position is being set by a small group in Downing Street. Business is being ignored. But we know they are keen to maintain regulatory alignment so who is divergence supposed to benefit? As far as I can see nobody. The British Retail Consortium set out the need for "regulatory and enforcement arrangements in key areas" while the Society of Motor Manufacturers and Traders go even further calling for the UK and EU to "agree a new framework for regulatory cooperation and dialogue in relation to automotive". The Aviation, Chemicals and Food and Drink sectors have also pleaded for alignment.  Johnson's position is purely ideological and serves no practical purpose.

The Times reported on the BRC paper like this:

"The British Retail Consortium said consumers will face higher costs and fewer goods without efforts to reduce the burden at borders. Almost 80 per cent of food that British retailers import comes from the EU, mostly through the ports of Dover and Folkestone, which handle almost 7,000 lorries every day. The warning from the BRC comes as new data shows that manufacturers saw a slump in export orders for the second consecutive quarter at the end of last year."

I really do not understand how businesses are supposed to grasp the 'opportunities' of Brexit by having to comply with a vast new mountain of paperwork plus manufacturing to two different standards with the added risk of tariffs or quota restrictions being applied if we diverge from LPF conditions. It makes no economic sense to me.  And we are apparently doing it on a point of principle!

In any case, why would France or Germany accept a trade deal which gives the UK an advantage? Or even the same benefits as before?

Frost also repeated the assertion that we have higher standards in the UK in many areas:

“Boris Johnson’s speech in Greenwich two weeks ago set out a record of consistently high standards of regulation and behaviour in the UK, in many cases better than EU norms or practice,” he said.

In which case why baulk at agreeing lower LPF conditions? If they set the floor, which we will always exceed there should be no problem. Yet we steadfastly refuse. Why? One can only assume, as the EU most certainly will, that we intend to lower our standards in some areas to gain a competitive advantage. The more we protest the dafter our stance looks.

While everyone thinks we are looking at just two possibilities, a trade deal with close alignment or a disastrous no-deal at all, others claim the EU is also considering a third possibility, decades of argument between the two sides. Nick Gutteridge is a reporter in Brussels and he tweeted:
He says Brussels is looking at the possibility that we trade on WTO terms. If so, EU diplomats are warning things will get much more complicated. In the medium to long-term, they see a situation in which the two sides would look to negotiate preferential access for strategic goods to each other's markets. Without an FTA this would involve going through tens of thousands of tariff lines one by one and agreeing them.

This would be an extremely laborious process with internal negotiations inside the EU27, which would all have competing demands, and within the UK Government too over regional interests. Both sides would have 'offensive and defensive tariff lines' and would need to barter them off against each other for market access for individual sectors. EU diplomats reckon that to get to anything like a satisfactory state of affairs would take 'an enormous amount of time - decades perhaps.

The disruption would be absolutely enormous but they are not ruling it out.

In the history of trade negotiations no two sides can ever have approached talks so far apart and with such mistrust.
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