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Sean Rickard - Independent Economic Analysis
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Desperately grateful for the support she has received from our European partners regarding Russian skulduggery in Salisbury, Theresa May, apparently without any sense of irony, continues to insist that the UK’s global influence, if not the economy, will be buoyed by Brexit.   Yet all the evidence points in the opposite direction.   Revealingly, when asked the BBC’s Laura Kuenssberg if Brexit would be ‘worth it’ May replied that there would be ‘opportunities’!   She and her ministers, in their trips around the world, have discovered that Brexit is viewed as incomprehensible, if not madness, and overwhelmingly expert studies show that the opportunities will be trounced by the economic costs.   For the past eighteen months, our Prime Minister has chosen to elevate Tory unity above the national interest but time is now running out.   Between now and the end of the year she will have to face up to reality.    

 

Mrs May’s tactic of just getting to the exit date by a combination of limited compromise, obscuration and deception if not downright lies, will not survive the autumn.   Using ambiguity to keep ‘kicking the can down the road’ is a modus operandi that is approaching the cliff edge.   Self-respecting MP’s will want clarity, not vague wording, regarding the post Brexit EU-UK relationship and the Good Friday agreement before passing the withdrawal bill.   To do otherwise would be a serious dereliction making a mockery of a ‘meaningful vote’ and the government’s claim to be providing ‘greater certainty’.   By the late autumn, statesmanship demands that the country is provided with a clear outline of the trade relationship she – or Liam Fox – will be negotiating with the EU.   The problem for Theresa May is that greater clarity will reveal the UK’s weak negotiating position – which will be even weaker after exit day – and the impossibility of negotiating the details of our withdrawal within twenty-one months.   Mr Fox’s disgracefully deceptive claim that we will be negotiation new trade deals with third countries during the transition doesn’t stack-up once the scale of the EU transitional negotiations is appreciated.

 

The first point to grasp is that the UK will have to negotiate not only a new trade agreement with the EU but also with some, if not all, of the 60 countries eg, Canada, Korea and Japan, with whom the EU has trade deals.   With his typical disingenuous jocularity, David Davis stated that these agreements would continue to apply during the transition.   However, they may not apply at the end and in fact; the actual position is that the EU has agreed only to ask those countries with which it has trade agreements to treat the UK as a Member State.   There is nothing to stop these countries asking the UK to make concessions in order to continue to enjoy tariff free access to their markets.  

 

The second is that according to the FT, the UK will have to negotiate some 759 separate EU bilateral agreements covering areas as diverse as landing planes to the movement of nuclear goods.   These agreements are not part of the trade negotiations and some are more critical than others but all must be addressed to guard against unexpected consequences.   Indeed, additional UK bilateral deals, outside the EU framework, may also need to be revised if they make reference to EU law.   The logistics are mind boggling.   Each agreement would need to be reviewed, meetings arranged and negotiations completed — all against the ticking clock of the transitional period – and to complicate matters further many countries may want to know the outcome of EU-UK negotiations before making their own commitments.  

 

That anyone with a modicum of understanding can believe that a twenty-one month transitional period will afford sufficient time to negotiating completely new, ambitious trade deals with third countries defies belief.   Far from attempting any new deals, the UK’s overstretched and inexperienced negotiators will struggle to maintain the status quo regarding the EU’s trading partners as they reassess their enhanced power and influence relative to a weakened UK let alone gaining leverage against the EU’s proficient negotiators.

 

Despite her rhetoric Mrs May knows the UK is in a vulnerable, if not desperate position.   Her refusal to stand up to the zealots has only weakened her negotiating position.   However strong Mrs May’s desire to go on fudging she will have to be more honest with Parliament and the nation than heretofore.   The EU will repeat what it has said many times, that if Mrs may sticks to her red lines regarding the customs union and single market the only trade deal it is prepared to negotiate during the transition period would be along the lines of its agreement with Canada.   Mrs May has already said such a deal would not be good enough and in her heart she knows it would undermine her commitment to uphold the Good Friday peace agreement.  

 

Once MPs, particularly those representing northern industrial constituencies, realise the potential damage to the economy she will be forced to drop her red lines and tell the EU she is prepared during the transition to negotiate a much closer relationship with the EU.   I wrote last month about the so-called Jersey option; namely, staying in the customs union and accepting the single market’s rules for trade in physical goods.   I believe the EU would be open to such a negotiation and if so it ticks a number of boxes.   Manufacturing, farming and Ireland would enjoy continued frictionless trade.   The UK might be forced to accept free movement under the Jersey option but the government is well aware that the economy needs productive immigrants.   Of course, the Tory zealots would not accept such a negotiating position but they do not have a Parliamentary majority.   The time is fast approaching when Theresa May – and the Labour leadership – will need to act in the interests of the country rather than her party and call out the zealots by giving Parliament a free vote on the Jersey option.

 

 

T I M E  T O  C A L L  O U T  T H E  Z E A L O T S

28th March 2018

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