The EU’s Brexit ‘sanctions’ threat shows the UK should not expect them or the US to be friendly over trade

Sean O'Grady
REUTERS

I know we’re all supposed to be getting right behind Brexit and Boris Johnson has made it his personal mission to reinvigorate what he likes to call Britain’s mojo, whatever that is, but it’s really not looking that great.

It’s perfectly possible, in fact, that by the time the prime minister seeks to renew his mandate in around 2024, Britain will have no meaningful trade deals with anyone; and might even be in the midst of a couple of nasty trade wars.

First, the European Union. Everyone seems to be assuming that the UK and EU will swiftly come to a simple free trade agreement by the end of the year – no tariffs, no quotas, no dumping (exporting of products at lower than normal value). This, by the way, is what we used to call “hard Brexit”, and was dreaded, even by most Leavers. Even if the timescale is short - in fact especially because the timescale is short and the deadline hard – the political and economic pressure on both sides to settle the issues will be intense, and a “deal” will be reached, just as it was last autumn.

Maybe. It is difficult to believe it might to happen – but there may be some complications. No less a figure than Stefaan De Rynck has warned as much. Not many of us are familiar with this recherché Eurocrat, but he is the senior adviser to Michel Barnier, the EU’s chief negotiator and someone the British have reason to be fearful of. Mr De Rynck talks airily of unspecified “sanctions” that the EU can impose on Britain if the British fail to live up their obligations under the Withdrawal Agreement or the new UK-EU trade and security treaty (assuming there is one). For example there will be no “backsliding” on the border controls between Great Britain and Northern Ireland, the basis of the UK-EU Withdrawal Agreement shortly to be ratified by parliament.

I always got the impression that Boris Johnson was never really sincere about these, and might well find some way to just ignore or neglect them, and the EU would either pretend not to notice or wouldn’t anyhow care. Johnson as, after all, denied that such checks are even needed, and they will be, nominally, operated on British territory and therefore easily amendable by the British authorities. Perfidious Albion?

The smart Mr De Rynck is aware of this danger, and has already raised it publicly – and the EU’s intolerance of such backsliding. His ultimate boss, EU Commission President Ursula von der Weyen has said as much too, albeit more diplomatically. The same EU vigilance will be exercised over the rights of EU citizens in the UK, post-Brexit, if, say, they fail to meet the deadline for registration. The same also goes for various other attempts by the British to diverge from EU standards on workers’ rights, the environment and so on.

So, for the sake of argument, if the British decide to weaken workers’ rights and move to a more hire-and-fire American-style labour market, the EU might decide that that is “social dumping” – gaining an artificial and unfair cost advantage. In such circumstances the EU might feel justified in levelling the playing field back up again by sticking a tariff on certain British goods; or withdrawing permission to access certain services markets. The EU might ban UK food exports if they’ve used, say, US GM grain to make them. Such arguments might become a matter for the World Trade Organisation, but that body is basically moribund, and, even if it were not, it takes years to sort out a dispute.

What would be even worse is a simultaneous trade war with America. This is not as far-fetched as it sounds, because it is already close to breaking out. The British have shown their usual plucky defiance and declared that they will be pressing ahead with the digital tax – on American champions such as Amazon, Google and Apple. The Americans have expressed their displeasure and willingness to slap punitive import taxes on British car exports. The British have also said that they will not allow chlorinated chicken or genetically modified food into the UK – but again the US regards such practises as unfair, discriminatory and intolerable. Nor is the NHS “for sale”, apparently. There’s not much in it for Washington, is there?

“In Trump we trust” is a very poor policy for other reasons. First, you can’t really trust a man whose avowed aim is “America First” and who doesn’t like to grant you a deal that is remotely beneficial to any party except the United States. Second, he might be not last beyond the presidential election in November. Although Trump has made some constructive noises about a UK-US trade deal, but it is unclear what President Warren, President Biden or President Sanders would do.

They might take an even more protectionist view (and Congress certainly would), and revert to the same attitude that President Barack Obama showed when David Cameron famously had him over to help out on the 2016 referendum campaign: “I figured you might want to hear from the president of the United States what I think the United States is going to do,” he said.

“And on that matter, for example, I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done... The UK is going to be in the back of the queue.”

A Democrat-led America, other words, would revert to the position it has held on the UK and the EU since the 1960s – that they prefer a united Europe, and Britain as an influential ally firmly inside within the EU. America’s strategic interests are not best served by an independent UK doing its own thing, or even as a minor vassal state of America.

So, far from having our cake and eating it under Brexit, then, we may well end up with no cake at all, either for eating or keeping. As everyone keeps trying to tell the British, there will be choices, cost and trade-offs – endlessly. Sorry to say, we will never get Brexit done.

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