|The Brexit agreement - December 24, 2020(1)|
We regain our sovereignty and have a free trade agreement - for just as long as we donít exercise that sovereignty to diverge from European norms.
In 5 years time we shall have full control of our coastal waters. Well almost. It ushers in a future where Britons will "be able to catch and eat quite prodigious quantities of extra fishĒ, as our prime minister has told us. On fishing, in a breakthrough move that unlocked the deal, the UK has conceded that the EU will need to give up only 25 per cent of its current quota by value, that reduction being phased in over the next five and a half years. After that, if we want to reduce their quota any further, then weíll have to pay the EU fishermen for their loss!
But as from 1 January 2021, we shall be able to sign up to trade deals with countries around the world and cease to be subject to the decisions of the ECJ and thus have reacquired our sovereignty. We shall have a free trade deal and no tariffs or quotas with the EU. It is the largest free trade deal ever signed by the EU and by us. It is worth £650 billion (2019 figures). That £650 billion is made up of £295 billion by way of exports to the EU and £355 billion by way of imports from the EU. Now £650 billion as a figure is big, but essentially meaningless - only 57% of our exports consist of goods (£168 billion) and so subject to the deal, while the remaining 43% (£126 billion) consist of services, not the subject of Ďfree tradeí. The export of services from the EU is worth less - £105 billion - and so only 30% of their total, spread around a number of EU countries, such as Germany, France and the Netherlands. This means that 70% of their exports to us consist of goods - £250 billion - and so considerably exceeds the value of goods we export to them. The EU therefore gains more from the free trade deal than we do. And they are less disadvantaged overall by the lack of a deal regarding services. And any disadvantage is in any event spread between 27 different countries, whereas our disadvantage is ours alone.
But it goes further. The EU was concerned that we might not continue to comply with their standards for the goods exported to the EU and so be able to undercut their producers. We have therefore reciprocally agreed to maintain at least the same standards (both now and in the future) to ensure there is no trade distortion which might have an adverse economic effect on the other party. If we donít, then we (or they) suffer the consequences by way of the imposition of tariffs - taxes. But, in maintaining those standards, we will have to continue to comply with EU law. If we donít, it is quite true that we shall not be subject to sanctions adjudicated upon by the ECJ. Instead, there will be an independent arbitral body to decide our fate but, necessarily, based upon the definition in EU law of those standards. So then, weíve taken back control!?
As far as services are concerned, there is limited unilateral recognition of some qualifications and regulation of those services by both sides. Full pass-porting in respect of qualifications has not been agreed. And by their nature, either side can withdraw those limited unilateral benefits at any time. Essentially though if we wish to continue to provide services to the EU, then we shall have to comply with European standards. Another victory for UK sovereignty!
But of course, we shall be able to escape all that stifling EU bureaucracy and red tape... Well, perhaps not. The bonfire of red tape is unlikely to burn very brightly. In fact it is difficult to see where any of the fuel for the fire will come from. To claim that goods exported to the EU comply with EU standards, it will not be sufficient to show that they have met the standard imposed here by our regulators, even if notionally the same as the EU standard. It will have to be submitted for approval to the relevant EU regulator (as well). So then double the work and cost. And then thereís the fact that this government has decided that is does not need to maintain a frictionless border. Why? Because that would have entailed remaining part of the Customs Union or the Single Market as Theresa May had proposed. In turn, that would have meant being subject to the dreadful ECJ. So then, in order to avoid this fate worse than death, we have chosen the path of even more red tape by way of customs declarations and the cost and delay which goes with that. Another triumph for Britain.
Oh, and those bilateral international agreements are coming in thick and fast. Of the bilateral agreements with third countries from which we benefited through being one of the members of the EU, we have so far managed to replicate them all, well all but 11, thanks to the sterling work of Liz Truss. We donít yet seem to have any additional agreements from which the EU does not currently benefit, but Iím sure thereíll be an announcement shortly of the much awaited British-American deal. Once, that is, Joe Biden has decided it's beneficial for the USA. We have though entered into Mutual Recognition Agreements (MRAs) with Australia, New Zealand and America. An MRA is one in which countries recognise the results of one anotherís conformity assessments. A conformity assessment is a set of processes that confirm whether a product meets the specified legal requirements. This includes testing, inspection, and certification. The MRAs replicate the effect of existing EU arrangements under which we certify that our product standards are in fact the same as those of the EU. And so what happens when we want to diverge?
As visitors, we shall have the time we can spend in the EU halved if we have no visa. How much a visa will cost and who can apply under what conditions, I donít know, but it seems that at least we shall have some sort of EHIC equivalent cover. The details though are not yet worked out. For pensioners, it is likely that existing arrangements will stay in place. To drive in the EU, the need to have the old green insurance card comes back. And Brexit also means that we lose access to: Europol, European Arrest Warrant & database of alerts about wanted/missing people, stolen firearms and vehicles. We shall therefore be less safe than we were before Brexit.
So in summary, what do we have? The first free trade agreement negotiated which imposes greater burdens on the contracting parties than they had before! We shall as private individuals have restrictions on our being able stay in the EU and, more importantly, extra costs for business because of the new border arrangements. We shall have to pay if we want to reduce the EUís fish quota further. Services are not a part of the arrangement, despite their relatively greater importance to us. Our own product certification schemes will have no validity as far as exports to the EU are concerned. We may also lose the benefit of the MRAs if we make changes to our standards. We have escaped the jaws of the ECJ, but have submitted to the jurisdiction of, not a Court of course, but instead a ĎTribunalí. As far as our manufacturers are concerned, they can deviate from EU standards in order to increase our productivity/reduce our costs in the new golden era. That though will be met by a rapid imposition of tariffs, all overseen by a Tribunal which looks very much like ECJ #2. The members of the ERG have even consoled themselves by noting that if we donít like the result of the Tribunalís decision, then we can give 12 monthís notice to bring the treaty to an end and so finally break free of the EU altogether. A triumph for the government's red lines, the British negotiating team and the British bulldog spirit!
One cheer...? Anyone...?
1. TRADE AND COOPERATION AGREEMENT BETWEEN THE EUROPEAN UNION AND THE EUROPEAN ATOMIC ENERGY COMMUNITY, OF THE ONE PART, AND THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND, OF THE OTHER PART
26 December 2020