On Christmas Eve the Government agreed the Future Trade and Cooperation deal with the EU. How you feel about this likely depends on how you voted in the EU referendum, as few issues have been so resolutely divisive as Brexit.
This post has to be a long one but if you want a summary of this complicated 2000 page document: it is overwhelmingly better than leaving without a deal, but will still make the UK considerably less well off than if we had stayed in the EU. However, that argument was lost in the referendum.
On the whole this is quite a thin agreement that in all honesty could and should have been agreed months ago. The good bit is that we will still have tariff and quota free trade between the UK and the EU. The bad side is that there will be an unprecedented creation of red tape and bureaucracy between ourselves and the EU, as non-tariff barriers – health checks, regulatory checks, rules of origin checks, conformity assessments etc. – will now exist where they didn’t before. We will have to employ a staggering 50,000 additional customs officials to manage this. Spare a thought for those UK businesses that had to get their heads around the detail of this in time for January 1st. For most of us, we will feel these additional burdens through the price we pay for things.
The biggest omission is that we got very little on services. As the UK economy is made up of 80% services (banking, law, accountancy etc) and we export a huge amount of these to the EU, this is a real loss. EU goods sold to the UK will be tariff free, yet we haven’t secured the right to be able to sell what we do best back to the EU in exchange. This will have to be followed up in future agreements. We did not even get mutual recognition of professional qualifications which is a real shame.
On fishing, the Government basically folded. EU quotas will be reduced by 25% over a period of five and a half years, but I believe the precise amount varies for each particular type of fish. After this time, we renegotiate. However, we must always bear in mind that being able to sell fish to the EU is just as important to UK fishermen as how much they can catch.
Another big loss is in the area of crime and security. We have lost access to valuable EU-wide resources, such as the Schengen Information System, a vast database tracking terrorists and serious criminals. Again, the UK will have to revisit these in future agreements and there seems a willingness to do so. This is just sensible and should be followed up quickly.
There is a huge change for Northern Ireland. There is now a border within the UK, in the Irish Sea between Great Britain and Northern Ireland. This is a big deal for the Union, but also for us in the North West. As Northern Ireland is now simultaneously in the UK and in the EU Single Market and Customs Union, if you are say a pharmaceuticals company there is a huge incentive to manufacture in Northern Ireland as you would only need to adhere to one set of regulatory processes.
Perhaps the most intriguing aspect of the deal are the rules around the level-playing field (LPF). Euroscepticism was in the main a right-wing political movement because it was associated with a desire to plunge the UK into a race to the bottom on environmental and labour standards, making the UK less of a European-style economy and more like a US one. This is sometimes described as the ‘Singapore-on-Thames’ argument, somewhat misrepresenting how Singapore actually works. But under this deal there is little prospect of that. The agreement includes an unprecedented amount of close cooperation on labour and environmental standards, but also on tax. It gives the UK the ability to deviate from these only if willing to accept the imposition of tariffs to compensate. It is hard to see how this would ever be possible politically.
Perhaps the best way to think of the deal is this: as an EU member the UK was inside the room but close to the door – for example not in the Euro single currency or the borderless Schengen Agreement. Under this agreement, we are outside the room but standing just behind the door on the other side. The changes are real and have real costs attached to them, but this is perhaps less dramatic than was once proposed. We’ve left the EU Council and Commission, but we now have the ‘Partnership Council’ with 19 sub-committees. Much like Switzerland, we will have to be in semi-permanent dialogue with the EU in most policy areas. The EU is so big, so close to us and such an important trading partner this is inevitable. It is in all our interests to do so in good faith.
I voted for this Deal. Not because I think it’s great, but for two reasons: 1) It was this or no deal, and no deal would be catastrophic; 2) in all the areas where the deal is wanting, the question is do we stand more chance of reaching future agreements on those matters having agreed this deal, or if we left without one entirely? It’s obviously the former.
Some people have said by voting for the deal Labour MP’s will share the blame for every job loss and relocation that comes from it’s shortcomings. I disagree with that. If a car factory shuts on the back of this then it’s a certainty it would have gone under no deal. That’s the choice here. I could abstain but that’s not a choice available to the country – the options are signing this deal or choosing no deal. I can assure you we will hold the Conservative Government to account for every consequence of what they have negotiated.
I also think we must move on from the debate around the referendum. I know there are some people on both sides who do not want to, but I think most people do. The last ten years have seen very large increases in poverty in the UK, underfunding of public services, and poor economic performance. And with Covid we have suffered the highest death toll in Europe and the largest downturn of any major economy. We also face an even bigger constitutional issue, which is the level of support in Scotland for independence (I acknowledge this is aggravated by Brexit). There is a lot we need to address.
This Deal will neither wreck the UK nor lead to a new golden age. But it should focus the mind. What, as a country, do we recognise we are good at and how can we build on that to mitigate what we’re losing from leaving the Single Market? And what role do we want to play in world affairs? The world we live in is dominated by the three economic superpowers of China, the USA, and the EU, but several mid-sized countries play a positive and prosperous role within this: Australia, Canada, South Korea, Japan. This will require hard-headed and serious assessment in the years ahead, hopefully different to the hyperbole and exaggeration that has marked the Brexit debate.