The new abnormal
One might have hoped for some normalisation of UK–EU relations after Britain’s formal exit from the Brexit transition period with the eleventh hour signing of a Trade and Cooperation Agreement last December. But two months in and it is clear that this hard-fought ‘deal’ is already on life support while the EU thinks of ways to compromise the UK’s legal, territorial and economic independence. Now we are past the dreaded ‘cliff edge’ of 1 January with none of the threatened chaos at ports, chaos is being deliberately manufactured in the EU by bureaucratic officiousness and malevolent obstructionism. We have already witnessed the shellfish export ban, the insistence on paper processes for hauliers, the refusal to recognise British food standards, continuing disagreements over fisheries and financial services, the EU’s triggering of Article 16 of the Northern Ireland Protocol to stop a vaccine developed with British taxpayers’ money from reaching British citizens. It is not, frankly, the kind of behaviour one expects from one’s so-called friends and partners. Regrettable though this situation is, it would be prudent for us to accept it as the new abnormal and keep up our guard as we continue talks with the EU on implementing the TCA.
Does the EU intend to ratify the TCA or play games?
There is, however, a question to be answered: if we must tolerate repeated and deliberate provocations in order to safeguard a basic goods trade deal with diminishing returns (which is in any case far more beneficial for the EU27 than it is for the UK), should we not consider whether it is even worth keeping? One wonders if the EU itself is in fact contemplating eventual non-ratification, meanwhile gaming the Northern Ireland Protocol, SPS rules and negotiations on financial services equivalence to the max in order to inflict as much damage on the UK as possible in the belief that we will put up with anything because we are desperate to make the ‘provisional’ TCA stick. The EU has plenty of form in this area. Two weeks ago the French refused to ratify the EU-Mercosur trade deal on the flimsiest pretext, after twenty years of negotiations. We heard a lot about the Walloon parliament delaying the much vaunted Canada-EU deal, but it is still only provisionally in force, four years after it was signed, because just 15 EU member states have actually ratified it (France and Germany are not among them). Meanwhile, the EU benefits from zero or reduced tariffs on its exports to Canada while chapters on investment and financial services of greater benefit to Canada are yet to be brought into force.
Given this history and the EU’s visceral opposition to Brexit, it is not unreasonable to suppose that the EU will weaponise the TCA as it did the Withdrawal Agreement, in order to frustrate British independence at every turn. The UK must not follow the Brussels playbook. We must avoid getting bogged down in circular arguments while Brussels picks off various industry sectors or tries to impose a regulatory straitjacket on us that prevents us striking profitable deals with more like-minded countries (particularly with countries which export foodstuffs at world prices that could displace food imports from the EU), or succeeds in carving out Northern Ireland as a permanent EU fiefdom.
The TCA and the Northern Ireland Protocol
The appointment of Lord Frost as head of the TCA Partnership Council and Joint Committee on the Withdrawal Agreement and Northern Ireland Protocol is an encouraging start, particularly as his alleged ‘confrontational style’ has caused dismay in the Berlaymont. We need someone in the job who is not afraid to say no or to retaliate when the EU breaches its own commitments, and the fact that he chairs both committees makes the linkage between the Protocol and ratification and implementation of the TCA overt. On past experience, Brussels will surely delay progress in one arena in order to force a concession in the other. But in the final analysis, we need a Prime Minister and a government which is prepared to pull the plug and walk away – and not just from the TCA.
Failure by the EU to agree to resolve the myriad problems it has created with the totally lopsided Northern Ireland Protocol means that the British government will have to take unilateral steps to protect the UK’s internal market and the lives and livelihoods of those in Northern Ireland. The EU must not be allowed to continue using the people of Northern Ireland as pawns in a wider trade and political negotiation. There is no better example of crass insensitivity than Commission officials deciding that British bangers and mash can no longer be eaten in Belfast because they refuse to recognise UK food and SPS standards which are identical to the EU’s, nor could there be a more egregious example of bad faith than triggering Article 16 of the Protocol to try to prevent a British vaccine reaching British citizens in the Province.
Critical fault lines
The TCA has already exposed critical fault lines in the UK’s post-Brexit relationship with the EU. But the EU, and more specifically the French government (whose Macronist euro-federalist ideology requires a long and painful punishment beating to be administered to Britain pour décourager les autres), needs more time to try to carve out Northern Ireland from the rest of the UK, extract further concessions on fisheries, force financial services to relocate from the City (all the better to tax them), and bully or cajole us to support the EU’s defence and security ambitions with both money and matériel.
Both President Macron and his Europe minister Clément Beaune have made it clear in repeated interviews that Britain must not be allowed to exercise its sovereignty or benefit from Brexit. Michel Barnier’s officials gave the game away when they declared that their aim to turn the UK into ‘a colony’. No geopolitically nimble and savvy ‘Singapore on Thames’ must be allowed to spring up on France’s doorstep. Instead a captive UK market must be wrapped tightly in the EU’s sclerotic embrace and drowned in as much red tape as possible until it is ready to admit the error of its ways and return like a lost lamb to the fold. So, what is the EU’s game plan?
Playing for time
The utter shambles over the EU’s Covid vaccine procurement gives us an idea of the ‘might is right’ approach Brussels is likely to take. The EU believes that sheer population size means it will always win, however long it takes. It is likely to dig in for trench warfare as it did with talks on the Withdrawal Agreement and the TCA, hoping to extend and pretend for as long as possible. The longer it can drag out ratification of the TCA, the more benefits it will hope to extract from the UK in return for granting minor concessions on border paperwork (a complete anachronism in the digital age) or a lifting of the bureaucratic blockade the French are imposing on lorries from England (link). If the TCA remains provisional for long enough, we will be in the run-up to a vote on the Northern Ireland Protocol and the end of the transitional fisheries agreement, when quotas will be renegotiated or terminated. It would certainly suit Brussels to have some useful bargaining chips ready to deploy then. It is in any case almost inconceivable that all 27 member states will have ratified the TCA by 30 April (or even by this time next year), so we may expect repeated requests for delay while important decisions are shunted further into the future. Meanwhile, the constant niggles, the hostility, the trade diversion will continue and – if enough business can be clawed back from the UK – the TCA might never be fully ratified by the EU.
Hostages will be taken, and not just in Northern Ireland. Financial services are the EU’s principal target. There is unlikely to be any permanent equivalence even if the EU succeeds in cutting the City of London down to what it thinks is an acceptable size. So, expect at best a rolling list of temporary permissions which can (and probably will) be withdrawn at short notice. Brussels has form here too, as Switzerland can testify. A Memorandum of Understanding on financial services is supposed to be agreed with the UK by 31 March, at the same time as waivers on requirements in the Northern Ireland Protocol end. There is unlikely to be any movement by the EU on the Protocol unless it can chalk up some early wins on financial services.
The harassment of hauliers at Continental Channel ports is likely to continue – it is even affecting Irish hauliers using the UK land bridge (link). We may expect continued restrictions on UK travellers even when most Britons will be vaccinated against Covid-19 while EU citizens are not, continued refusal to grant equivalence in key areas, litigation at the ECJ if the Commission thinks it can get away with vexatious prosecutions, attempts to control subsidies, arguments over car batteries, renewable energy, the certification of goods and medicines… the possibilities for mischief-making are infinite.
It would be unwise to believe that at some point the EU will end up on the same page as the UK, wanting the same things from the TCA – free trade and friendly cooperation between equals. The deal has already served a useful purpose, in that it got us past the fateful 1 January with no major hiccups and has shown quite starkly where our future problems lie. That may indeed be as good as it ever gets. As the foundation for a lasting economic partnership, the odds are not looking great. If we now agree to the kind of sequenced negotiations the EU loves, we will never get out of the trenches – and more importantly, we may delay doing things we need to do elsewhere, hoping for a breakthrough in Brussels. It would be a fatal error. Global Britain has never been more important, and the same creativity, drive and grittiness which has allowed the UK to develop and roll out Covid vaccines at lightning speed now need to be deployed in all our dealings with the EU. Defined goals, a clear strategy and a rigorous timetable are required to manage the lumbering EU behemoth.
Some obvious “don’ts” include: not allowing the EU to set the agenda or keep extending talks and the TCA ratification timetable, not enforcing totally unnecessary checks on goods sold within our own internal market (from GB to Northern Ireland), not mirroring new EU rules, and not giving an inch on our core interests. We should be prepared to use nuclear options to protect them if necessary, and take specific retaliatory measures when the EU breaches its own laws and the terms of the TCA to disadvantage British businesses.
We should redouble our efforts to sign trade deals with other countries so we have alternative markets and suppliers, accelerate the repeal of EU law to avoid getting caught in a regulatory nightmare, and focus on forging smart Britannia, quick to seize new technological opportunities in the digital age. Some landmark measures would be welcome, like the abolition of VAT, which is a burdensome and complicated EU tax governed by reams of retained EU law. A simpler UK goods and services tax to kickstart the economy post-Covid would be a powerful signal that we intend to take advantage of Brexit to do things faster and better.
And of course, we should always be ready to cut and run if the TCA proves to be more trouble than it’s worth. When and if that should prove an attractive option will depend on how the EU conducts itself in the next few months.
Caroline Bell is a civil servant, and a regular contributor to BfB.