We should not have been surprised by the climbdown at Chequers. Avoiding difficulties for the just-in-time manufacturers in the car, aircraft and other industries has driven the process since the start of Mrs May’s tenure as PM. Confidential undertakings were made to Nissan right at the beginning to keep up investment from Nissan and other car producers. The PM has now delivered. She is aiming to have no impediments to goods trade with the EU, no tariffs, no regulatory differences, and no border checks.
Unfortunately, this means there will probably be no trade agreements with non-EU countries either, including the USA. The USA, Australasia and South America will want to sell us hormone treated beef and GM maize, but our adherence to EU rules will prevent this.
The climbdown is irrational. It is not the sustainable long-term strategy that the UK needs. By its weakness and lack of courage, the government is about to transform Brexit into a permanent feature of the British political landscape. Instead of forging a new relationship with Europe, we now face decades of rancorous dispute and souring relations.”
We have a large deficit in goods trade with the EU, so trade without impediments helps the EU more than us. The new proposals offer no advantages to our large and growing services exporters. The EU opposes concessions on services, and we have caved in without any threat of retaliation, e.g. threatening the agricultural trade of Ireland and elsewhere in the EU27.
The short-term needs of manufacturers have instead trumped long-run interests. Since a Canada-style free trade agreement was on offer, there was no possibility of the car manufacturers facing 10% tariffs exporting into the EU. In any case the EU are examining the possibility of reducing or removing tariffs on cars in reaction to president Trump’s trade onslaught. Regulations are already fully aligned, with little possibility that we would change these in any ways that might endanger exports or cars, aircraft, pharmaceuticals or indeed any other major export.
So, what exactly are the problems that make it necessary for No.10 to propose handing over our regulatory policy, and indeed much of our trade policy and competition policy to Brussels.? Why on earth should we concede to Brussels our ability to provide state aids to disadvantaged regions?
All sorts of threats are being made from Brussels of course, not that these are necessarily credible. It was the threat to withdraw air safety certificates which really underpinned the Airbus warnings last week. The UK needs its own internationally recognised certification system and the lack of progress in achieving this has left us prey to silly threats.
Similar threats have been made on aircraft landing rights in Europe. Since this affects a service industry, the threat will implicitly still remain even with free trade in goods. Like the safety certification issue, this threat is not in any sense credible, but we do not know the extent to which Mrs May was spooked by the prospect of our planes not being able to land and our aircraft components exports being declared unsafe.
Much seems to have come down to the rather prosaic issue of queues at borders. There is no problem at most ports but the threat of chaos at Dover and other RoRo ports has been greatly played up. All of this can be handled through normal automatic customs clearing, electronic border checks and occasional physical checks in some field a few miles from the Dover seafront. Much the same applies to the Irish border where a degree of regulatory alignment for food plus checks on lorries onboard Irish sea ferries would have been acceptable to the DUP.
None of this appears to have been seriously examined by the Government even at DEXEU. One must also add that Brexiteer backbenchers have also been lax in not getting sympathetic experts to work-up a scheme that they could have publicly backed.
What now? Brussels cannot be relied upon to rescue the day for Brexiteers. The EU is unlikely to reject the UK’s position outright, but will instead keep the UK inside a “lobster pot” where it negotiates rather than preparing for no-deal. When the negotiation time runs down, the EU will then demand huge last minute concessions in return for not taking away the transition period.”
In the meantime, the likelihood is that they will push gently for a few more concessions, including on migration and Leo Varadkar may not have given up on his drive to make Northern Ireland a semi-detached part of the UK. Chequers has left the EU in a difficult position, but they are unlikely to overplay their winning hand too much.
Future Parliamentary votes on trade and customs bills might be lost if Tory Brexiteers rebels ally with labour opponents, but only at the potential cost of a general election. If reform of constituency boundaries gave Tories an extra 10-15 seats there may be some confidence in a Conservative victory, but a boundaries bill will be opposed by potential losers even among Tory MPs.
The only serious suggestion must be a leadership contest. No 10 will have calculated that the Brexiteers do not have the numbers to win, but the reality of leadership contests is that they can spin out of control. What ever path is taken, the Chequers proposals need to be overturned. If a further climbdown takes place on migration, as some expect, Brexit will indeed be a mockery and would undermine the legitimacy of our democracy.
A new leader could return to the prosaic but sustainable details of Max Fac. This will be a hard slog against a Brussels with a extra sense of loss if the prize of a compliant UK slips out of their gasp, but we now know what we are up against in Brussels. Moreover, cracks are starting to appear in the EU wall. A complaint from the German Interior Minister about security, warnings from the Austrian President and squeaks from German car manufacturers all start to reveal the realities of a negotiation that has thus far appear much too one-sided.
If there is any logic and sense of reality in the government’s present position, it can only be to win time to prepare for the likelihood of ‘No Deal on trade’, which we have consistently argued, and in detail, is infinitely better than the Bad Deal that is now taking shape.