Monday, 19 November 2018

My assessment of the Withdrawal Agreement


I wanted to wait a little while before offering my thoughts on the draft withdrawal agreement (WA) negotiated between the UK and the EU. This is partly because I wanted to weigh up some of the existing responses on both sides and partly because I expected instant developments like resignations and a confidence motion to interrupt proceedings somewhat. A brief moment of quiet now seems quite an opportune time for me to share with readers my comments.

Before I begin, I would like to thank Holger Hestermeyer for this highly useful contents document, which makes the 585 page agreement a lot easier to break down and digest. Holger has my appreciation for his efforts. More than make perusing the agreement easier, the breakdown also captures both the magnitude and scope of the deal. We are dealing with an impressive piece of text which has clearly resulted from enormous care and consideration.

My two main takeaways from the substance of the WA are as follows. Firstly, the deal is clearly anchored on a commitment to end free movement. Second, it reflects the impossible position the Prime Minister found herself in, trying to balance demands and red lines on all sides of the equation. It may well be this or no Brexit at all, and as such, neither May nor the agreement deserve the intensity of criticism that they are currently receiving.

The first of these observations is clearly earmarked from the government's comms strategy in the post-agreement period. Ending free movement, something I'm not excited about because I don't consider it much of a success, has taken centre stage as the key 'benefit' of May's deal because it was most stringently warned about during the referendum period. Forget about whether or not the issue of free movement has lost some of its salience since 2016 (it has), just end it and we'll be fine.

One problem with flying the free movement banner is that when the port of Dover becomes clogged up after the transition period is over, calls to re-apply the EEA framework to the rest of Britain (in order to mitigate the friction) will be much harder to meet, being that full market participation is a balancing act between rights and responsibilities. It seems to me that lingering ideas of instead pursuing the EEA as a landing spot are made trickier by the free movement question.

Plus, the four freedoms are worth protecting in and of themselves. My biggest issue with the negotiated deal is that it effectively discards the immeasurable benefits of the single market, at least as far as Britain is concerned. To me it was the very fact of EU membership and the four freedoms being separable that weakened the case for EU membership back in the 1990s. I think at least three of the freedoms will be missed dearly and the UK could spend years regretting the decision to abandon them.

I think May believes that her legacy in large part rests on her ability to remove free movement from the statute books. To her this would symbolise great victory. This was her one real red line from the beginning and everything in Brussels flowed from it. That is why I don't argue that this deal is the best we could possibly have gotten - because as this blog has made clear, I would prefer a relationship framed around the EEA. Rather I think what we have is imperfect but amending or besmirching it may not be in our interests either.

Which brings me to the second of me key observations. It appears to me that while the WA is not by any means ideal, it amounts to slightly more than I was expecting and I am pleasantly surprised by this. It is okay, not brilliant. And it is workable. Extreme language should play no part in any realistic summary of the nature of the agreement because its contents do not merit it. The EU, to my shock, reneged on their commitment to avoid an all-UK customs territory within the remit of the backstop. This was May's major backstop victory.

For the EU, the issue is avoiding a scenario in which the UK lingers in its customs territory for long enough that it can begin to tamper with things and undercut it. This is precisely the reason the backstop was initially designed to apply only to Northern Ireland; a NI-specific customs union with deeper single market provisions. What we have arranged instead is an all-UK customs territory, which to me is preferable and a significant negotiating concession.

In one of the more sobering and thoughtful articles on the WA, my friend Roland Smith observed:

"Leaving ‘Remain’ & Political Union behind should be Brexiters’ biggest consideration and achievement, rather than now over-reaching themselves in a quest for something better."

This is a key point which must factor into any astute analysis of the deal. It is why I have been reluctant to criticise the agreement in ways that others have not. The thing about the quest for something better is that it is a) incredibly hard to define and apply in practice, especially given the wildly disparate views on the topic in the Tory party and cabinet, and b) such a quest can easily lead to the breakdown of negotiations and a no deal.

We know that FTAs are not sufficient for mitigating Irish border friction because they facilitate a change in enforcement regime whereby the UK leaves the auspices of all EU regulatory agencies. This means checks are relocated because, with few exceptions, they can no longer be coordinated at the point of production. Any pursuit of an FTA-based relationship would inevitably take the form of 'Canada with a far more pronounced NI-specific backstop.'

At the very least the WA narrows checks between Northern Ireland and Britain to standard third country sanitary and phytosanitary procedures. These will mostly take the form of routine consignment checks at Border Inspection Posts (BIPs) and these checks would be based, as ever, upon track record and information sharing. There will also be scope for a more targeted veterinary agreement further reducing the regularity of the checks.

I tweeted last week that for soft Leavers, the WA is a last chance saloon of sorts. Some of the feedback I got correctly pointed out that the agreement is not soft in the sense that it does nothing for services and free movement is left behind. This is true. My last chance saloon reference was, though, more an observation that this deal acts as a barrier to a no deal scenario, which I have been at pains to point out is no appropriate way to modify 40 years of integration - it is an unmitigated disaster. 

My opposition to a no deal has helped to frame much of my thinking since early 2017 when I began to grasp some of what it entailed. Nothing will encourage me to support a no deal. After any no deal scenario, future British governments are likely to be a lot more desperate for enhanced cooperation. This will result in an even weaker negotiating position and those in Downing Street would be more inclined to accept speedy bilateral deals set on less favourable terms.

This is why we are much better off engineering a deal which borrows elements of Turkey, Switzerland and Ukraine. It is better to negotiate from a more stable platform than a desperate one, even if we do end up conceding on some CJEU jurisdiction and adoption of non-regression rules concerning various environmental and social policies like carbon pricing. It was never going to be the case that a WA would make the UK look like a million bucks and to that extent pockets of this deal do not surprise me.

The transition is also not worth crying over. We are entitled to a one-time extension of the transition period, leading up to 2022, and I think it is highly likely this will occur. The transition period will be a time for massive preparation of our customs infrastructure, including in particular investment in BIPs in Northern Ireland and at the ports of Dover and Hull, and the development of e-systems like our Customs Declaration Services (CDS), which remains in need of rapid maturation.

We need to make what we have agreed work because without doing so the options are bleak. This isn't the deal that I wanted but I am prepared to defend it on multiple fronts, even if it means attracting criticism. The deal is not as bad as is being suggested: it honours the referendum mandate in that it gets us out, it honours financial commitments and the Belfast Agreement. It ends budgetary payments and repatriates controls over swathes of domestic policy making.

We should be grateful for what we have. This could have been far worse.

3 comments:

  1. Thank you, a well judged and reasonable take as always. I do have one question, and a follow up:

    Is there any realistic likelihood the backstop could trap us in a perpetual CU, CET, ETC? If so would you still sign up to the WA?

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    1. There is a possibility of it and if it were to happen I would rethink things. Though as this blog has pointed out on many occasions, the CU is made less important by the fact that tariffs are a less significant component to trade policy. So I don't think remaining in a CU is as bad as might be suggested...

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