IT is difficult to shake off the impression that, as the idea of the UK leaving the European single market looks ever more foolish, this Conservative Government becomes ever more determined to pursue this exit, come what may.
Not only that but, instead of doing the right thing and kicking the whole Brexit folly into the long grass by extending the transition period by the maximum two years, the Conservatives actually seem to be increasingly at pains to portray the departure as a good idea.
There is often a real “doth protest too much” vibe about the whole thing from a variety of senior Conservatives.
The reality is plain for everyone to see. The extent to which people want to see it in many cases depends, unfortunately, on ideological factors. And the Brexiters have shown over years now that their ideology is a sticky thing – they either will not or cannot shake it off as evidence mounts of the damage arising from the 2016 vote and its aftermath. Not to mention the major negative Brexit effects that are yet to come.
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The characteristically enthusiastic tone from the Tories over the UK’s post-Brexit future has been evident this week.
Much has been made by the Conservative Government of the start of trade talks between the UK and US yesterday. These are being conducted by video-conferencing amid the coronavirus crisis, and are due to last for a fortnight. We are being told there will be 100 negotiators on each side, with more rounds of talks to follow.
It is perhaps unsurprising the Tories seem keen to highlight these talks. After all, they appear to have singularly failed in recent years to make any headway with the supposed big trade deals they signalled countries would be rushing to do with the UK as a result of Britain’s Brexit drive. There is no sign of meaningful success in terms of delivering anything additional to what we have enjoyed on the trade front as part of the European Union.
The Conservatives’ lack of progress in achieving anything significant in the years leading up to their technical Brexit on January 31, in the form of a substantive plan as opposed to fine words about potential giant deals, has been noteworthy.
However, in recent weeks, the world has changed dramatically with the developing coronavirus tragedy, which is rightly occupying the minds of governments around the globe. You would not expect this to be the time for doing big trade deals. The focus, in the UK and other countries, is and should be on minimising the death toll from the Covid-19 crisis.
On the Brexit front, the last couple of weeks have seen the UK Government grump and gripe about the EU’s attitude towards Britain, in the context of talks between the two sides on their future relationship once the cushion of the transition period runs out on December 31.
This cushion remains so important to the UK, in terms of saving it for now from the big realities of Brexit by keeping the country in the European single market. This insulation has become even more important amid the coronavirus pandemic and its huge economic consequences.
The UK seems to believe the EU is not viewing it sufficiently as a “sovereign state”. Even though membership of the EU never made the UK any less “sovereign”.
What is clear is that there are major differences between the two sides in terms of negotiating the future comprehensive free trade agreement the UK Government claims it wants with the EU.
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The clock is ticking loudly, in terms of the Conservatives’ repeated assertion that they will not seek an extension to the transition period. It is a stance which beggars belief. And it is a stance that has rightly fuelled fears of a no-deal departure from the European single market even further.
There seems at times to be a concerted effort by the Conservative Government to downplay the importance of the EU as a trading partner. At the same time, the UK appears keen to big-up the importance of the US as a trading partner. These contrasting approaches at times give the impression of an “anyone but the EU” attitude from the Conservatives.
Hopefully, this is a misplaced impression, and all the noise from the Tories is just an ill-judged strategy towards negotiations with the EU. This might not seem like a positive scenario. However, it is better than the alternative possibility: that the Tories somehow actually believe that a trade deal with the US is more important than what the UK currently still has with the EU in terms of frictionless trade with a huge bloc.
In this context, comments from the US Chamber of Commerce yesterday were interesting.
While making the case for greater UK-US cooperation, the business organisation said: “US firms have invested more than $750 billion in the UK, and the American business community has a significant interest in ensuring the future stability and growth opportunities of the UK economy. Many of these investments were made in order to access the larger EU single market.
“With that in mind, it is vital that the UK secure a [favourable] trade agreement with the EU as quickly as possible. A continued lack of certainty about the way forward will continue to constrain inbound investment and risks limiting prospects for bilateral trade negotiations between the US and UK. We continue to believe it makes sense for the UK to reset its relationship with the EU before it turns to setting the terms of its trade ties with other trading partners.”
Surely the sensible thing for the UK to do right now is extend the Brexit transition period and enable both itself and its EU neighbours to return to the question of the future relationship once the worst of the coronavirus tragedy has passed. And once we are much further down the road in terms of trying to foster some kind of economic recovery. A period of reflection also seems important, in terms of the changed reality.
The world in which Brexit was dreamed up is different from the world we are now in. Decisions should be taken based on where we are, and what the future now holds, rather than on the ideologically driven Brexit folly that dominated UK politics before the coronavirus crisis.
Extending the transition period would also enable the UK, if it still for some reason thought it was a good idea to leave the European single market after the dust had settled and lose the benefits of free movement of people and frictionless trade, to seek new trade deals against a less-difficult backdrop. That is not to say the UK Government would necessarily have much joy in calmer times – the Tories’ track record on this front since 2016 would suggest a lack of success. Lots of overseas visits and glad-handing by Conservative ministers followed the June 2016 vote but nothing of substance appeared to emerge from this.
It was interesting to hear Prime Minister Boris Johnson’s spokesman refer to the US as the UK’s “biggest single trading partner”.
This is true, in terms of an analysis of individual countries. But it may cause some people to form the wrong impression – that the US is a more important destination for UK exports than the EU. Brexiters might be more susceptible to such an impression.
In actual fact, 45% of UK exports went to EU countries in 2018. The US accounted for 19% of UK exports. Seven of the UK’s 10 largest export markets in 2018 were EU countries.
By country, the US is the biggest destination for UK exports, accounting for £120.9bn in 2018. But it is followed, based on these 2018 figures, by Germany (£56bn), the Netherlands (£44.3bn) , France (£41.7bn) and the Republic of Ireland (£35.1bn), highlighting the importance of individual countries within the EU but crucially the value to Britain of having frictionless trade with this huge European bloc. Crucially, UK exports to the EU as a whole in 2018, at £291bn, were nearly two-and-a-half times the level of those to the US.
Secretary of State for International Trade Liz Truss, who is leading the UK’s talks with the US, has signalled her view that the negotiations are “essential”.
But the UK Government has noted in a paper on its sought-after trade deal with the US that such an agreement could, in the longer term, boost UK gross domestic product by around 0.07% or 0.16% under two different scenarios. These are tiny percentages relative to what the UK stands to lose from Brexit.
Even before the coronavirus pandemic, there were plenty of signs of growing protectionism in terms of international trade against what was even at that stage a challenging global economic backdrop, albeit one that people would now seize with both hands given how grim things have become since.
Grim times tend to fuel protectionism.
President Donald Trump has hit pause on applications of foreign nationals seeking permanent residence in the US because of the coronavirus crisis.
He declared: “It would be wrong and unjust for Americans laid off by the virus to be replaced with new immigrant labour flown in from abroad.”
Mr Trump talked about putting “unemployed Americans first in line for jobs” as the country reopened.
This all signals challenges for the UK as it endeavours to strike a comprehensive trade deal with the US. That is even before we get to specifically difficult-looking UK-US trade issues, such as those around agriculture and food.
Mr Trump has talked about wanting a “very big” trade deal with the UK. Mr Johnson has talked about driving a “hard bargain” but in a seemingly much more conciliatory tone than that adopted by the Tories to the EU.
Mr Johnson’s spokesman said this week of the US talks: “Both sides have expressed their willingness to make progress as quickly as possible, so we look forward to a constructive two weeks of talks. We want to strike an ambitious free trade agreement with our biggest single trading partner.”
But such trade deals are not based on one-liners, or bold declarations of intent, regardless of how friendly the tone. They tend, historically, to take a very long time to complete. The negotiations between the UK and US are at a very early stage. The number of negotiators would tend to highlight the complexities involved. And, in reality, the backdrop against which both countries are trying to negotiate a future deal could hardly be more difficult.
The UK Government should, rather than embarking on big new adventures at this current difficult time, take stock of what it has got with the EU. It should recognise and communicate the importance of the EU bloc as a whole in terms of UK trade. And it should extend the transition period.
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