RiFew can be enjoying the resurgence of the Irish border conundrum, least of all Boris Johnson – so why bother with the trade deal bluster?
It is a 310-mile headache that destroyed Theresa May’s political career and threatens to derail Brexit trade deal talks. The Americans do not like it either – the Democrats at any rate. In a grim reminder of Barack Obama’s warning to British voters in 2016 that we would be at ‘the back of the queue…’ if we voted to leave the EU, Nancy Pelosi has warned that her Party would block any trade deal between the U.S. and U.K. that (in her assessment) threatens peace in Northern Ireland. With a Biden Presidency possibly only months away, Boris must tread carefully.
So, with so much at stake, what is he playing at? Is it a high-stakes bluff to bribe the EU into compromise in trade talks? Is he playing to the (Brexit) crowd to save his skin as talks fail to deliver a deal? Is he simply telling it how it is and preparing the country and markets for a bumpy end-of-transition? Or as anti-Boris pundits like to say, just a load of Boris-Bluster from a rudderless PM? Here is the background…
The Bill itself sets out to enshrine in law a ‘mutual recognition’ principle that goods entering into or produced in the United Kingdom can be sold or bought anywhere in the United Kingdom: if I make a widget in Belfast I can sell it in Brixton. This might not seem to be a particularly outrageous expectation for a sovereign nation – but under the terms of the withdrawal agreement that the PM signed last year, the EU has the ability to impose a full-scale trade border down the Irish sea under the terms of the Northern Ireland Protocol.
Michael Barnier has announced that if Britain is to receive what the EU calls a ‘third-country listing’, it needs to provide guarantees on the UK’s animal hygiene regime. The ‘third-country list’ includes countries such as Andorra, the USA and South Korea and it enables them to export food to EU member states. The UK Internal Market Bill (if law) would provide domestic legal justification to continue to export British food into Northern Ireland (even if against international law).
The British are exceptionally fond of holding themselves to high principle when it comes to respecting international law. However, the British – and the EU – both have form here. In 2015, the EU funded unauthorised Palestinian buildings in areas placed under Israeli control by the Oslo Accords. More than 400 EU-funded Palestinian homes had been erected in Area C of the West Bank, which was placed under Israeli jurisdiction by the international agreement, to which the EU was a signatory.
The Palestinian buildings, which have no Israeli permits, came at a cost of tens of millions of euros in public money, a proportion of which came from the British taxpayer. This raised concerns that the EU was using valuable resources to take sides in a foreign territorial dispute. The claims were said to be made by Regavim, a right-of-centre Israeli NGO, which had closely been documenting the construction. Its findings were backed by senior international lawyers and two MEPs.
The EU is playing hard ball by effectively threatening to break up the UK if Boris does not relent on fishing waters and the ‘level playing field’. The stakes are high for both sides, but it is worth remembering that EU businesses – from Italian washing machines and scooters, to Dutch cheese and tulips (the British spent £1.1 billion on Dutch flowers in 2019) – would suffer badly from the imposition of tariffs from.
Numbers from CIVITA show that EU exporters would face the combined sum of £12.9 billion in UK tariffs – more than double the other way around. Germany alone will have to deal with the impact of £3.4 billion of tariffs (including £1.8 billion on its beautiful cars alone) and French vintners and cheese makers will no doubt balk at the prospect of £1.4 billion in tariffs.
Boris clearly has a strong hand – the tariffs for Britain are eye watering – but small beer compared to the damage a no-trade-deal scenario would cause to EU exports.
It is, of course, shocking that a British Prime Minister would sign a document that left any room for doubt about the United Kingdom’s territorial integrity – which shows that his ‘Get Brexit Done’ oven-ready deal wasn’t even ready for the microwave. But he did sign it: a superb example of political expediency. Yet in doing so he handed the EU an open goal.
The EU will not blink…
The EU calculates that the political costs of tariffs are far less damaging than losing fishing waters for angry French fishermen and having to face a competitive UK market with flexible light-touch regulations and lower taxes. A flight of business and talent from EU countries to a cheaper and more competitive UK would be very bad for the EU – worse than tariffs.
It is likely that Boris is calculating that by passing the law (it has already passed the first reading), the government can do two things. First, it serves to pressure the EU to secure a good trade deal that delivers on the two British red lines: fishing waters and the ability to operate as a globally outward looking free trading and competitive nation. History shows us that the EU is unlikely to blink and unlikely to put the poverty of the average man on the street before the integrity of the political project. Secondly, it provides the Prime Minister with a failsafe – no mater how distasteful to many – to protect the integrity of the UK single market at all costs.
The Prime Minister’s beleaguered predecessor is avidly fighting this Bill in the House of Commons. This is sweet revenge for her. But, like her failed remainer colleagues from across the House, she may see the Prime Minister somehow just about pull it off – he certainly has form.