Brexit: WTO to WTF?
What the hell just happened?
May’s announcement on Brexit negotiations last Friday was much awaited. Scheduled for 1.45pm, it ran about 15 minutes behind schedule because “there was no power in №10” (you don’t say). Humour aside, this was an extremely important speech. With only 6 months until the deadline for an agreement on leaving the EU, we were expecting something big.
At last May approached the lectern a little after 2pm with a wry look on her face, alternating between smirking and scowling, and looking like she was the one with the upper hand, when every word that came out of her mouth said otherwise. There have been a number of options on the table over the past two-and-a-quarter years, yet the revelations of yesterday afternoon were shocking, but not a surprise.
We went into the negotiations with the following five possibilities:
1. Stay in the EU
2. Stay in the EEA & Customs Union, but cut all other ties (the ‘Norway model’)
3. Opt for a Free Trade Agreement, but not freedom of movement (the ‘Canada option’)
4. The Chequers deal, w̶i̶t̶h̶ ̶f̶r̶e̶e̶ ̶u̶n̶i̶c̶o̶r̶n̶s̶ ̶a̶n̶d̶ ̶g̶o̶l̶d̶-̶p̶l̶a̶t̶e̶d̶ ̶p̶o̶r̶k̶ ̶p̶i̶e̶s̶ which retains all the benefits of EU membership except freedom of movement, oh and we don’t pay the EU any fees for the privilege.
5. No deal, we’re out on our ear with no trade deals, no bargaining power, grounded flights, and food and medicine shortages.
Theresa May gleefully gave us the news that we were going for…. Option Five.
We — we’re… what?
I suppose we should have known from the start. Once appointed Brexit Secretary, David Davis proceeded to do literally fuck-all. I’m being serious, he was grilled by the Brexit Select Committee a full 18 months into the job about what impact studies had been carried out for different parts of the British economy, a task that should have been the bare-minimum requirement of him, and his answer was, um, they haven’t.
In the following exchange from December 2017, Davis nonchalantly admits that he’s not done his homework, and is met with disbelief from the Committee Chair, and laughter from the reporters’ benches:
We are all doomed.
Davis stayed in his role as Brexit Secretary until July 2018, when he was replaced by Dominic Raab. It’s not clear what else he did during that time, but it’s apparent that his commitment to the project was, um, a little lacking.
Anyway, back to the current disaster. The first four options were untenable for the following reasons:
Option 1 — Stay in the EU
Theresa May had already informed the nation that “Brexit means Brexit”, that we would have a “People’s Brexit”, a “red, white and blue Brexit”. Is that clear? Good.
This is the question that was posed to the British people in June 2016. No mention of trade deals, free movement, customs arrangements, cross-border collaboration, funding or licensing of products and medicines. It was just a simple stay/go choice.
We voted to leave by 52% to 48%.
In their incalculable wisdom, the government decided that the marginal result of this advisory referendum would now be written into law, and we’d have to just put up with the complexities and hardships of unpicking a 40-year relationship and rewriting laws and processes in virtually every sector. Not to mention the sudden severing of funds and supply lines.
We are fucking doomed.
Britain’s Cushy EU Rebate
In spite of what the British media and parliament have been telling us, the UK actually has it far better in the EU than we fairly should. We have royally taken the piss since we joined the EC in 1973. It took since 1957 for the rest of Europe to agree to let us in — and ever since, politicians of all parties have been trying to get us out again, much to the chagrin of their pro-EU colleagues.
We had a stay/go referendum in 1975, in which we voted to stay, but the charade continued up until the present day, with Britain neither here nor there on its EU commitments. We have gained many benefits from being in the EU, yet these have not been sold very enthusiastically to the British public. However, if there’s a way to bash the EU in the media, the press and government are all over it.
The rest of Europe looks on in bewilderment and disgust, while we needle for exemptions and rebates, technically a full member but only when it suits us. We’ve opted out of the single currency, and negotiated a whopping 66% rebate on our net contributions to the EU. Oh, and we still get all the funding and pooling of resources and legislation that a full member does, at a knock-down price.
But that’s still not good enough for us, apparently.
Option 2 — The ‘Norway’ model
Norway is part of the EEA, but not the EU. This means they pay a reduced fee to the EU, get fewer benefits and no negotiating power, but they are members of the single market and allow free movement across their borders with other EU nations (they have a small border with Russia, that has stricter customs arrangements).
This isn’t a completely terrible choice, we’d technically leave the EU but wouldn’t suffer too many adverse effects. However, hardline Eurosceptics have influenced the negotiations, and refuse to accept free movement across our EU borders. You can’t have free trade without free movement, so the Norway model is off the cards.
The Irish Border
Like many parts of the world which Britain trampled over with its imperialist feet, there are long-lasting consequences of our presence in Ireland. Northern Ireland has been part of the UK since 1921, and much of the time since then has been marked by violence over its status. Relative peace was established in 1998 with the Good Friday Agreement (GFA), following a 30-year period of sectarian battles.
The GFA set the status of Northern Ireland into law in a way that was amenable to both sides of the conflict. It recognises the self-determination of the people of Northern Ireland, and includes a mechanism for reunification of Ireland if a majority in both states wants it. However, until that day comes, the agreement also rules that the present status of Northern Ireland as a British territory is accepted. Free and seamless movement across the Northern Irish border is just one element in the agreement that is threatened by Brexit. Many more complications would arise, including the status of Irish nationals in Northern Ireland and Britain.
A hard border between Britain and the EU would mean a hard border in Northern Ireland, which breaks the agreement and would likely see a return to hostilities, and/or the swift reunification of Ireland.
A soft border, like the one we have now with no customs checks or border controls, is unacceptable to the EU, because Northern Ireland would act as a potential backdoor for non-compliant goods to enter the EU. The pro-Brexit campaign sees a soft border as a possible route in to the UK for illegal immigrants. It would preserve the GFA, but make our position in Europe impossible.
A hard border in the Irish Sea would isolate Northern Ireland from the rest of the UK and risk ceding the territory to the Republic of Ireland. The whole Brexit question itself has inflamed tensions in both Northern Ireland and Scotland — regions that both voted to remain in the EU. The referendum result, and the way the British government has chosen to act, has raised the possibility of breaking up the Union. There’s the whole problem with the Irish border, and now Scottish Independence is being sold on the basis of Scotland re-joining the EU.
So Brexit actually harms British sovereignty rather than “reclaiming” it (where do we think it went?).
Option 3 — The ‘Canada’ option
This would be a free-trade deal with the EU that removes tariffs on most things and allows some services to cross over the border without barriers. There would be no free movement of people, and we’d contribute and receive nothing to/from the EU budget. We’d also be subject to EU regulations on a ton of stuff, but we’d have no say on those regulations, unlike now. It would complicate customs arrangements — particularly at the Irish border — and require regulatory checks on anything crossing our borders with the EU. So while there might be no tariffs, we’d have to scale up our border controls. A lot.
This won’t work. Aside from the enormous cost and need to recruit thousands of border agency staff within the next 6 months, there is an even bigger hurdle. This option would require either a hard border between Northern Ireland and the Republic of Ireland, or in the Irish Sea, which is unacceptable to the UK.
The EU insist that for this option to be possible, we would need to choose one of those two border options, and we’ve already decided that we can’t. So that one’s a no-go as well.
Can Britain set its own trade deals?
Not exactly, but we don’t have a good reason to actually do this (unless you’re a multi-millionaire business owner looking to cut costs and exploit your staff — like many in the Cabinet). Our trade with countries within the EU is tariff-free and has to meet common standards that apply in all EU countries, including our own. Trading with countries outside the EU, we find that the same standards are applied to anything coming in — we can’t negotiate a separate deal for substandard goods to enter the UK. This is good for Britain — it ensures that anything we import is safe and fit for purpose.
If we do leave the EU, we can negotiate all the trade deals we want. All of them individually, with no power to get a fair and profitable deal, and from a position of disadvantage. Our government has convinced many people that we will get better deals by going it alone, but the evidence suggests otherwise. The EU does, technically, prevent us from setting up our own trade deals. But why would we want to? Trading across borders as part of the EU, rather than as an individual nation, means that the deals have already been made, and the paperwork simplified immensely. If we wanted to strike a deal with a country separate from the EU trading bloc, it would be unlikely to benefit us. The issue has been distorted, much like the myth of bendy bananas, into an anti-EU message, that they are refusing to allow us to trade separately from them. The reason we don’t is obvious, but don’t let that ruin a good headline.
Option 4 — The Chequers deal
or “have your cake and eat it too”
Theresa May attempted to create a Brexit deal that would please everyone, and ended up pleasing no-one. Leave supporters think it’s too soft, and Remain supporters think it’s too hard. It also disregards the needs of the EU, a 27-country trading bloc with a damn sight more power than us. It promised:
- Access to the Single Market and Customs Union without Free Movement
- No hard border in Ireland or the Irish Sea, and free movement within Ireland
- Cessation of payments to the EU
- Alternative customs arrangements with external countries, circumventing the EU bloc’s tariffs
After the whining and posturing, the 66% rebate, the outright lies about what the EU does and is for, and the mere existence of Nigel Bloody Farage; there is no way on this earth that the EU would ever agree to such a lopsided deal in our favour. Even if we hadn’t shat all over everything it stands for over the last four decades, this would still be an outrageous ask. It’s not happening.
Reverting to WTO rules, which is what would happen if we left the EU with no deal in place, is not as simple as it has been made out to be by Brexiteers. It is a starting point, a framework for establishing the bare minimum. Every member of the WTO, be they a single country or trading bloc, set their own schedule of import tariffs and quotas. Tariffs need to be set so that they are the same for every country that trades with the host nation.
The EU set their tariffs as if they were one nation, and there are no tariffs, quotas or customs checks across borders inside the EU. Other countries, however, do have to pay to trade with any EU member state. If we fall back upon WTO rules, we will need to pay the EU’s tariffs, which range from 2% to 35%. And that is what they charge to any country outside of the EU. They cannot give a preferential rate to Britain or any other country — and nor can Britain.
We could lower our tariffs, to 0% even, but that then risks undercutting British businesses. And British exporters will have to pay the high tariffs for trading with other nations, including the ones for which we once had a 0% rate.
And so we are left with Option 5 — No Deal
Much of the discussion has been around securing a trade deal, but there is far more to be agreed than just that. We need to find alternatives to pre-existing agreements around science, the law, technology, healthcare, aviation, the nuclear industry, qualifications, travel, data, education, and just about every area of civic life. Without an agreement, the first thing that would happen is that the UK would be cast adrift. There’d be no extended transition period, because there’s no agreement on what to transition to. This would effectively mean severing ties immediately on 29th March 2019.
Trade with other countries, including the EU, reverts to WTO tariffs, and any manufacturers still in the UK will be dealing with higher export costs as a result. This will hit the economy one way or another, because firms will either move operations abroad to avoid the additional cost, raise prices to consumers, or go out of business.
Any trade negotiations will begin from square one. Saying that we will fall back on WTO rules is not enough — if we have no trade deal with anyone, and our tariffs are unfavourable to importers, then they simply won’t trade with us.
Immigration rules would change, and based on our governments track record they could become very restrictive. EU citizens already living here are said to be protected, but we have no guarantees. The millions of Brits living abroad, including within the EU, have no certainty over their fate — if we are no longer in the EU then our right to reside there no longer applies. British residents in EU nations are at the mercy of their host’s generosity (and I would not rely on that, given the UK’s treatment of the EU).
Industries that rely on cross-border collaboration and movement of goods and people are going to find themselves in a right pickle. Flights could be grounded, medicines may not be able to cross our border, data may become inaccessible. British Standards and British qualifications may no longer be recognised alongside EU equivalents, severely restricting individual and national ability to compete for contracts.
Existing EU laws would be written into our laws, but after 29th March 2019, we’d be updating our laws alone. We would also not be bound by the European Court of Justice, but we would be bound by the European Court of Human Rights (contrary to popular conservative opinion). So for all those bleating about human rights as if they weren’t their own rights they were talking about, quitting the EU doesn’t affect that. We still have those very same rights that they think we shouldn’t.
All money we send to the EU, and everything we get in return, would be cut off immediately. That would affect any collaborative projects (like expansion of the broadband network or enhancing town centres) and any industries receiving subsidies (farming will be badly hit). We would need to fund projects by ourselves, without the combined knowledge, resources and scale of the wider EU — so we will be worse off.
The EU will demand a hard border in Ireland. It’s not as simple as saying that we’ll do what we want because we’ve left — this is a common border between them and us, and even if we care not for their rules, they will still make us abide by them. It’s not known what will happen to the Republic of Ireland if we refuse to comply, but we do know that whatever we do there will be trouble.
Scotland’s independence debate will flare up again, and might even lead to a ‘yes’ vote if the UK suddenly drops out of the EU. Scotland overwhelmingly voted to remain in the EU, and will be worse off if they’re not in it.
With no deals to export goods, and no alignment of flight safety protocols, the transport network would grind to a halt. It’s estimated that Kent will become a giant car park with tailbacks up to 13 miles long waiting for lorries to clear customs. Fresh produce will just rot while it’s in the queue waiting to leave. Travel between the UK and EU would be subject to more checks, and if common agreements over airspace and shipping regulations are torn up, that travel may not be able to happen in the first place.
Shops will start running low on food within a few days as produce struggles to enter the country. Much of the fresh food we import will perish en route, meaning that our overall diet will change shape — quickly. Food will become more expensive, even that which we produce ourselves. Rationing may be necessary. Medicines will begin to run out after about two weeks, putting lives at risk and delaying treatment and procedures.
And this is the best deal our government could come up with.
So what now?
Well, that sounds horrendous, only a fool would choose to do that to their people, right? A fool or a tyrant. They say that malice is indistinguishable from incompetence, so maybe we will never know which. I suppose that reiterating the fact that we are completely and utterly fucked as both a nation, and as individuals, would sum it up quite nicely.
There is no way on God’s earth that the EU would even consider May’s list of demands — it is a selfish and mean-spirited attempt to stamp our feet over the EU, but our shoes aren’t as big anymore. The right-wing media in the UK paints the Chequers deal as a bold rebuttal to the EU’s stronghold over us, when in reality it is just another prod of the hornet’s nest. Britain is no longer a superpower, and much of our success since the end of WWII has been as a result of our EU membership. We are mocking them by sending them details of the Chequers plan, and they have run out of patience with our shenanigans. They already told us what they are prepared to accept, and in order to serve the interests of all 27 remaining states, they can’t budge on that. We are asking them to concede ground they do not have.
May spoke with conviction and bravado in her announcement last week. The PR moves were obvious. She lowered the tone of her voice, had a smirk on her face, and looked slightly away from the camera. She concluded each sentence with a firm tone, as if to show that she meant business and would not back down. Some in the media were describing it as her ‘Falklands moment’, but they couldn’t be more wrong. She said that “We Stand Ready”, but we are woefully underprepared. Believe it or not, Thatcher was actually popular at one point, and the best thing going for Theresa May is that she’s the lesser of a very long list of evils.
May says that we have treated the EU with respect and they should do so in return — but if they reciprocated with the same level of respect that we’ve shown them, we’d have been booted out of the EU years ago. We’re a laughing stock internationally, and it’s not just the EU that is shunning us. Countless firms have moved their operations out of the UK due to our crass stupidity and wrongful belief that we are still rulers of the world. We are destroying our country over an ideological split in the Conservative Party, and we’ve convinced ourselves that we’re doing this to liberate us from a malign foreign power — when they are what’s propping us up.
When the UK was asked a simple yes/no question to a highly complex problem, nobody expected the catastrophe that was the Brexit negotiations. Sure, there’d be problems to thrash out, but that’s what we elect the government for, right? They’re highly skilled in these things — it’s their job. And yet, they don’t seem to have a grasp of reality. UK politics is very different to that on the continent, not in terms of political leanings (there is a wide variety of left, right, centre and not-even-on-the-scale governments in the EU), but in terms of how politics is actually done.
EU politics is more straightforward than ours, with less pomp and more pragmatism. In Europe, they at least say what they mean. Their politics is more accessible to ordinary citizens, which is why Continental Europeans are more politically engaged than us and think that British politics is weird. In the UK we act like the European Project is some sinister conspiracy to strip us of our ‘Britishness’ via the deployment of multiculturalism and artisan cheese, whereas on the continent they recognise the benefits of combining resources and political power to create something far greater than the sum of its parts. We have a sense of cultural defiance, that Wartime Spirit, the gung-ho bullshit that will not die. We think we can go it alone, when there is no logical reason to do so.
When the referendum was called, it was an elaborate piece of political theatre, aiming to put the question of EU membership to bed once and for all. But it went horribly wrong, and we got the answer that no-one had banked on. Our government has dealt with it exactly as well as you’d expect a government that had no intention of actually going through with it in the first place. Our only two options are to stay in the EU, and hope they don’t tell us where to stick our budget contribution, or to leave cutting all ties — the hard Brexit option. Nothing in-between those two extremes will be accepted by the EU, and contrary to popular British opinion, they are the ones with all the power. This is a mess of our own making, and somehow our elected representatives are just going along with it, ignoring all advice from industry, qualified experts, and the EU itself.
I don’t know how we will, or should, decide between staying and going; but we need someone brave enough to stop engaging with populists, who will do what is right for our country — and I don’t know where we’re going to find them.
Did I mention that we are doomed?