Why aren’t Brexiter ministers going nuts over Theresa May’s Brexit plans?
Wow.
That was my initial thought when reading the government’s statement on the proposal it will put to the European Union next week for a future trading relationship with the EU.
Because although it is more-or-less identical to the plan I disclosed on Tuesday would be put to the cabinet on Friday, the official confirmation that ministers have signed up for it represents an enormous moment.
How so?
Well it a massive distance from the kind of so-called “clean” break with the EU that most Brexiters either expected – or fought for in that momentous referendum of 2016. It represents, to use a word detested by the prime minister, a strikingly “soft” Brexit.
It envisages the UK permanently collecting tariffs at our borders on behalf of the European Union, adhering to EU standards for the manufacture of goods and the production of food, and – in the case of disputes about whether those standards are being followed – deferring to the European Court of Justice.
Now it is true that there would be a role for the UK in having “oversight of the incorporation of these [EU] rules into the UK’s legal order” (in the words of the government’s statement). And in theory parliament could choose not to adopt an EU rule it did not like.
But, as the government says, if parliament said no to a new EU regulation, that would have “consequences” – namely it would damage the UK’s ability to trade with the EU, it could have a negative impact on security co-operation with the EU and it could introduce “friction” at our borders, with potentially destabilising effects on peace and stability in Northern Ireland in particular.
Or to put it another way, parliament’s genuine power to design or influence vital rules affecting the quality and safety of the goods we make and buy, or the food we produce and eat would be very limited indeed.
And to state the bloomin’ obvious, this was not how those who led the Brexit campaign, like Boris Johnson and Michael Gove, said it would be.
So the prime minister has achieved something quite astonishing. She has persuaded the cabinet to sign up for a proposed deal with the EU that would entail a loss of UK sovereignty perhaps not as great as what pertains to Norway’s relationship with the EU via membership of the European Economic Area. But it is not a million miles from that.
And just for the avoidance of doubt, although the government insists that the European Court of Justice would not be the ultimate resolver of trade disputes between the UK and EU, and that there would be an independent arbitration system, it also accepts that in the interpretation of EU law – which after all we would be adopting – the ruling of the ECJ would be absolute. Any independent arbitrator would defer to the ECJ in respect of the meaning of the new “common” rulebook.
I am sorry to harp on about this, but I would be staggered if parliament’s True Brexiters, led by Jacob Rees-Mogg, don’t find this an alarming prospect.
And there’s more.
Again as I mentioned earlier this week, the UK would in a tax-collecting and technological sense, if not in an economic sense, remain in the customs union through a Facilitated Customs Arrangement. This would see the UK collecting customs due to the EU on goods destined for the EU on trade with countries that are not in the EU. This would obviate the need for tariff collection at borders with the EU, and again would help multinational manufacturers that ship parts to and from the EU and would also underpin the frictionless open border between Northern Ireland and the Republic.
Now the putative magic of the Facilitated Customs Arrangement (FCA) is that it would also permit the UK to have an independent trade policy and set its own tariffs with non EU countries – which is not allowed for formal members of the EU’s customs union.
The point is that under the FCA, the UK could levy a different tariff from the EU’s on goods destined only for the UK. But the UK could not have this freedom immediately. The UK would only be able to do this when reliable robust technology is available to “facilitate” seamlessly the tracking of goods when they arrive in the UK – to verify that if they have paid the UK tariff rate they then stay in the UK or if they have been registered as destined for the EU they end up there.
And what matters is that this technology is not considered reliable or robust quite yet. So the government is basically conceding that the UK will stay in the customs union, and not have an independent trade policy, for an indeterminate period. Which again will presumably upset ardent Brexiters.
So why didn’t the likes of David Davis, Boris Johnson and Michael Gove quit the cabinet on Friday?
Well for two reasons.
First is that this plan does at least achieve something they would dearly want. If it is accepted by the EU, it means the UK is out of the EU on March 29 2019 and gives up a kind of semi-membership at the end of a 21-month transition on 31 December 2020.
If the EU were to sign up for Mrs May’s deal, there would not be a need for a controversial backstop to keep open the Northern Ireland border – which some Brexiters saw as a Trojan Horse to keep the UK in its half-membership transition state forever.
But there’s the rub – and the second reason why the Brexiters are cutting up less rough than perhaps might be anticipated. The EU may well be profoundly unimpressed by the UK’s plan, and reject it – because it tramples on a number of EU principles, most importantly that the UK wants freedom of movement for goods, but is not signing up for freedom of movement for services or people.
They are taking comfort from the final paragraph of the statement – that preparations for a collapse of negotiations with the EU and a no-deal Brexit “should be stepped up”.
It may yet come to that.
PS There are a few other nuggets in the statement.
One is that the UK government is not envisaging making payments to the EU’s budget for access to the single market for goods – which seems a naïve hope.
Second that the UK is seeking accession to the Trans-Pacific Partnership for trade, a trade deal largely involving Asian and Australasian countries – which would definitely upset the US and President Trump, who cancelled US membership of the TPP.
Whether Mr Trump would negotiate a trade deal with the UK if we join the TPP is moot.
Thirdly the government accepts that service businesses will suffer a reduction in access to the important EU market – and will not enjoy the same privileges as manufacturers.
Some will see this as economically nuts, given that the UK is a service economy – some 80% of our output or GDP is services. And our services are global winners: unlike in goods, the UK has a surplus on its services trade with the EU, and that could be imperilled.