What Should the UK Do Now?
Under No Account Should the UK Accept the Withdrawal Agreement
The WA is a bad agreement. It ties the UK closely to EU rules. In the transition period until the end of 2020 and perhaps up to another two years, the UK will remain fully within EU rules and under European Court of Justice [ECJ] jurisdiction without any say in drawing up the rules or any possibility of independent arbitration in disputes. New trade agreements would be restricted. Limits would be placed on subsidies to agriculture and hence aspects of the CAP would continue to apply. We would continue to pay around £10 billion a year to the EU and would have promised a further £19 billion. There would be no control over EU migration. There would be no tangible benefits to show from Brexit.
The second phase, the so-called backstop which will begin either on January 1st 2021 or one or two years later, is also bad for the UK. As the Agreement is presently constructed, the UK can only escape from the backstop if a replacement agreement meets the needs of the EU including Ireland. Any replacement agreement is likely to be much the same as the backstop itself. We should thus regard the backstop as essentially mandatory and permanent.
The UK will be bound to a wide set of EU standards and regulations including limits on state aid. An undemocratic Joint Committee, plus a tangle of associated committees, will manage UK:EU relations. This includes the power to ‘ensure consistent surveillance of state aids in the UK’ with reference back to the ECJ where necessary. These bodies will not be responsible to parliament, the electorate or the British courts. They will not even be subject to international legal arbitration.
The Withdrawal Agreement ties down the UK to a future within a customs union and bound by single market regulations. The accompanying Political Declaration states that any final trade deal that is agreed between the UK and EU should ‘build and improve on the single customs territory provided for in the Withdrawal Agreement which obviates the need for checks on rules of origin’. This implies a permanent customs union, thus ruling out the UK having an independent trade policy to enable us to improve relations with our rapidly growing markets.
This outcome practically guarantees years of uncertainly, constant friction with the EU, and perhaps most dangerous of all the further aggravation of present political divisions. This is not a solution: it is a prolongation of the agony.
No Deal is Not a Big Deal
Although the government has been remiss in not fully preparing for a ‘no deal’ scenario, the arrangements now in place can cope with a degree of friction in leaving the EU. The UK has a series of (albeit temporary) side-deals with the EU on important matters including aircraft landing rights and safety certificates, financial trading and truckers’ licenses. A clean break is now possible without the ‘cliff-edge’ consequences so loudly predicted by Remainers.
Customs arrangements to minimise border frictions are largely in place on both sides of the Channel including for food and other safety checks. Firms will need to fill in customs declarations but those trading beyond the EU already do so. The difficulties are not greater than completing existing VAT returns. Customs experts tell us that electronic customs clearing and transit notifications can avoid the need for new border infrastructure in Ireland. Some temporary disruption is likely as new systems bed in but it will not be catastrophic (even the FT now admits this) and it is worth enduring to secure a meaningful Brexit and avert the long-term economic handicaps imposed by the WA.
Without a free trade deal, UK companies will need to pay EU tariffs to export into the EU and EU firms may also face UK tariffs into the UK. For most UK exports these tariffs are small and in the light of the post-referendum 15% depreciation of sterling are hardly onerous. Exports facing tariffs of over 10% comprise only 4% of total exports and just over 1% of GDP.
The main problems are in meat, dairy and some other food exports. Many of these producers are already heavily subsidised and the subsidies can be increased until a long-term solution is devised. UK tariffs on many imported foods can be removed to reduce prices for UK consumers. Beyond this, temporary disruption may occur in a small number of industries reliant on just-in-time production, notably some automotive manufacturing. State aid can be extended to help these industries adapt.
While requiring some adjustments, a ‘No Deal’ also offers immediate opportunities: cutting unnecessary tariffs, reducing costly regulation, saving on budget contributions, and signing beneficial trade deals.
What Should We Do? ‘WTO Plus’ then a Free Trade Agreement.
The effects of ‘no deal’ are manageable as preparations are being now made by all governments. Taking this ‘off the table’ foolishly allows the EU to dictate the deal. The EU will continue to offer only the WA for as long as possible, perhaps with a weak codicil or other unsatisfactory means of seeming to sweeten the bitter pill. We should resist this. Instead the UK Government should propose a binding undertaking to begin free trade negotiations soon after leaving and in the meantime accept those side deals already offered by the EU. Undertakings on citizen’s rights can be unconditional but offers on the ‘divorce bill’ payments should be tied to a satisfactory future free-trade agreement. Undertakings can be made for no new infrastructure on the Irish border.
If this offer is refused, we should leave with side-deals alone and with no transition period. It would be in the EU’s future interest to accept a Free Trade Agreement instead of WTO Plus, though of course they might refuse to do so.
The government and the House of Commons must follow a firm and rational policy that serves the national interest. The WA does not do this. Nor do deceptive tactics to reverse or sabotage Brexit, which undermine the UK’s economic future and threaten its national stability and cohesion.
Rt Hon Sir Richard Aikens, PC, former member of the Court of Appeal, and former Vice-President of the Consultative Council of European Judges, Visiting Professor at Queen Mary University of London and King’s College, London
Mr Robert Agostinelli, co-Founder Rhône, board member and former chairman of National Review
Dr Anna Bailey, political scientist
Professor David J Betz, Professor of War in the Modern World, King’s College London,
Professor David Blake Professor of Finance and Director of the Pensions Institute, Cass Business School, City University of London
Professor David Coleman, Professor of Demography, University of Oxford
Professor David Collins Professor of International Economic Law, The City Law School, City, University of London
Dr Philip Cunliffe Senior Lecturer in International Conflict, University of Kent
Professor Angus Dalgleish, Professor of Oncology, St George’s, University of London
Mr Alexander Darwall, Jupiter Fund Management.
Sir Richard Dearlove, KCMG, OBE, former head of the Secret Intelligence Service, former Master of Pembroke College, Cambridge, and Chair of the Trustees, University of London
Baroness (Ruth) Deech, former chair of the Human Fertilisation and Embryology Authority, and former Principal of St Anne’s College, University of Oxford
Professor Robin Dunbar, Professor of Evolutionary Psychology, University of Oxford
Lord (Maurice) Glasman, Labour peer, political theorist, and Director of the Common Good Foundation
Dr Graham Gudgin, economist, Centre for Business Research, Judge Business School, University of Cambridge
Professor Robert J Jackson, Distinguished Professor at Carleton University Ottawa
Dr Lee Jones, Reader in International Politics, Queen Mary, University of London
Dr Ruth Lea, CBE, economist
Sir Peter Marshall, KCMG, former Assistant Secretary-General of the
Mr John Mills, Chairman of JML, Chair of Labour Leave and Labour Future
Dr Thomas Mills, Lecturer in Diplomatic and International History, University of Lancaster
Dr James Orr, Faculty of Divinity, Cambridge
Professor David Paton, Professor of Industrial Economics, Nottingham University Business School
Professor Gwythian Prins, London School of Economics, visiting professor, École Spéciale Militaire de Saint-Cyr
Professor Michael Rainsborough, Professor of Strategic Theory, King’s College, University of London
Dr Andrew Roberts, historian, Visiting Fellow at the Hoover Institution, Stanford University.
Mr Patrick Robertson, founder of The Bruges Group
Professor John Tasioulas, Director, Yeoh Tiong Lay Centre for Politics, Philosophy, and Law, The Dickson Poon School of Law, King’s College London
Professor Robert Tombs, Emeritus Professor of French History, University of Cambridge
Mr Edmund Truell, co-founder, the Pension Superfund
Professor Richard Tuck, FBA, Frank G. Thomson Professor of Government, Harvard University
Professor Michael Vickers, Emeritus Professor of Archaeology, University of Oxford.
Professor Philip B. Whyman, Director, Lancashire Institute for Economic and Business Research, Lancashire Business School
Dr Ian Winter, Senior Lecturer, Department of Physiology, Development and Neuroscience, University of Cambridge
Sir Andrew Wood, GCMG, former UK Ambassador to Yugoslavia and to Russia