Johnson is heading for the elephant trap he has dug himself

UK Prime Minister / OGL 3 (http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3)
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Sir Ivan Rogers was our ambassador to the EU (known as UKREP) until Theresa May forced him out in January 2017 for having the temerity to suggest she should have a clear plan ready before triggering Article 50. Since then he has made a series of incisive speeches, all of which have proved remarkably prescient. If Dominic Cummings wants a superforecaster, he might want to give Sir Ivan a call.

As the latest round of negotiations begins in Brussels today, it might be worth looking back on his last major intervention, which came in November 2019 in a lecture at Glasgow University where he said the Johnson was digging himself some “elephant traps” by setting a tight deadline, and that the EU would “fully exploit UK desperation” to get something over the line. He suggested the EU would “take advantage of yet another prime minister who has unwisely boxed himself in.”

Now Anton Spisak at the Tony Blair Institute for Global Change has written a similar article: The UK Falls Into an Elephant Trap of Its Own Making on Brexit. Both men believe we are headed for a stark choice between a very bad, bare-bones Canada minus deal, or none at all.

Rogers forecast that we would end up with zero tariffs and quotas, but with extensive “level playing field” conditions permanently attached.

The former UKREP said the inevitable EU response to the UK ending freedom of movement of people was the termination of free movement of services, plus the ending of mutual recognition of professional qualifications, critical to the cross-border mobility of UK professionals. As he put it, “reciprocity works both ways, as the UK is about to find out.” 

Unfortunately this means services, the 80 percent of our economy where we enjoy a considerable surplus with the EU, will be excluded. Meanwhile the EU will get tariff-free access to the UK market in goods, which can only add to the huge deficit we have with them.

On fishing, another sticking point in the negotiations, where Johnson has vowed to take back control of British waters, Rogers said it was very hard to see why the eight fishing member states would be prepared to see any losses as a result of Brexit or, if they did, why the deal would pass their legislatures. He added that their moment of maximum leverage on fish would be in 2020, and the EU knows it.

All of this has come to pass.

Spisak, a former UK government Brexit official, is in agreement with Rogers and says:

“If there is one lesson that the prime minister and his advisors ought to learn from the tortuous saga of the Brexit years, it is that Brussels excels at dominating the process. It will shy away from making any big concessions until the clock runs out. Then, when it confronts the prime minister with an oven-ready treaty text prepared in advance by EU lawyers, Boris Johnson will find himself facing a stark choice between accepting a bare-bones trade deal — asking the UK to commit to rules on state-aid but without any quid pro quo on the UK’s offensive interests — and a disruptive no-deal.” 

Anton Spisak, Tony Blair Institute for Global Change, August 2020

He adds that rejecting a poor deal would expose a clear failure of the UK’s negotiating strategy and call into question the government’s general competence. Boris Johnson needs a deal, even a bad one.

We are approaching the elephant trap that Johnson has dug himself (a trap so obvious, that only a fool would fall into it) and the only escape is through a deal, any deal, no matter how bad or how thin. The trap can be seen clearly in an article by trade expert Sam Lowe setting out five compelling reasons why even a “basic trade deal” is better than nothing.

To add weight to that, Politico has a piece with quotes from EU sources that Brussels now thinks it has the upper hand given the UK-US trade talks appear to have stalled; a second article lists eight Johnson U-turns in the last eight months, something he is making a habit of it seems.

Whatever the outcome, by January next year we will be in the bizarre position of being in perfect regulatory alignment with the EU but with serious friction at the border. In addition, unless we reach an agreement on trade, crippling tariffs will be payable on some imports and exports into the bargain.

A tweeted link to the government’s Check, Change, Go campaign claims that at the end of the transition, “the UK economy can prosper under rules and regulations designed around the needs of our industries”.

But is that even true?

Back in June, the research group UK in a Changing Europe (based at Kings College London) published a paper, Manufacturing and Brexit, which examines the impact of Brexit on UK manufacturing, described as a key part of the economy. The paper focused mainly on food, pharmaceuticals, aerospace, chemicals and the automotive sectors. It contains a substantial section on regulatory alignment (pages 21-25), asking how manufacturers see the pros and cons of regulatory divergence versus continued regulatory alignment.

It is clear that these sectors see no advantage in divergence and would prefer the “rules and regulations designed around their needs” to be exactly the same as EU rules and regulations:

On the broader question of regulatory divergence (regardless of whether it entails the lowering of some standards), the [Chemicals] industry is virtually unanimous that there would be no benefits from this. This is not surprising given that incumbent firms have invested heavily to meet current standards, but is similar to industry views in other sectors that have high trade volumes between the UK and the EU and closely integrated supply chains.

UK in a Changing Europe – June 2020

However, they may be forced to adopt different regulations in order to justify the friction. Divergence almost becomes politically essential. This is because, if the UK retains all or most of the EU standards, we will perversely be trading with our largest overseas market under conditions of near maximum friction and considerable paperwork, for no reason. Sooner or later people will begin to question why.

Leaving the single market and the customs union in effect means there is little advantage to remaining in alignment. Essentially, we will have to diverge – regardless of the damage to our own industry.

And government’s protestations that all we are seeking is a ‘Canada style’ deal is challenged by many experts, who say the UK is asking far more than an ‘ordinary’ free trade agreement. In fact it goes even further than that. Chapter 21 of CETA – the Canadian agreement – deals with regulatory alignment and contains at least five clear references to “convergence” and the “promotion of convergence”. What the UK wants, as Barnier has pointed out several times, is actually much more than CETA while demanding to diverge from EU rules.

The moment of truth is coming very soon.

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