Not a Done Deal

‘A conversion from the death penalty to a life sentence’ is how former Deputy Prime Minister and conservative politician Michael Heseltine described the UK-EU trade deal struck on Christmas Eve.^[1]

Despite a palpable sense of relief that any deal was agreed, there was no great Christmas joy among pro-European Brits. Markets, politicians, traders and consumers soon returned to the post-holiday realisation that this, if anything, was a Pyrrhic victory.

It could have been worse

Yes, it could have been worse. By early December, we were told the most likely scenario was no deal at all, reverting to WTO trade rules and the highest possible tariffs. Compared to this doomsday scenario, the deal reached between Boris Johnson and Ursula von der Leyen on Christmas Eve seemed like salvation. It was hailed by the government as huge success – but is it?

First, there is a likelihood that the threat of a no-deal Brexit was always a hoax, designed to lower expectations for a deal and allow the government to avoid any serious scrutiny. If so, it succeeded in deceiving many, including most Labour MPs who were so relieved they endorsed the deal with barely enough time to read it.

Second, there is the simple fact that no post-Brexit trade deal, however generous, could replace the benefits of EU membership. Unprecedented in the history of international trade agreements, the deal that was so painstakingly negotiated over so many months, will make both trading partners poorer than they were before. Usually, international trade agreements are meant to increase welfare on both sides.

Third, a much better deal for both sides could have been struck. Compared to alternative proposals, e.g. the one brokered by Theresa May in 2018 (remember?), this is a bad deal. It is the outcome of a series of political choices by a hard-line Brexiteer government which has nothing to do with the ‘will of the people’ – nobody in 2016 voted for a hard Brexit which will damage our economy and political cohesion for decades. Nobody voted to leave both the Customs Union and the Single Market, the Erasmus study programme or the EU security cooperation. The UK could have left the European Union and still kept all this – the Conservative government chose not to.

In economic terms, even without tariffs, the loss of the Customs Union means that trade in goods and agricultural products will be subject to unnecessary bureaucratic red tape, delays and higher costs. In the midst of a pandemic which has hit the UK harder than most of its neighbours, this is not just a question of lost money, it will cost livelihoods and lives. Trade in services – including the hugely important financial services – is hardly covered by the deal and will be subject to further lengthy negotiations.

From a rule-maker to a rule-taker

In political terms, Britain will be reduced from a rule-maker to a rule-taker, with her ability to influence European and global politics greatly reduced. We will no longer sit at the table of the world’s biggest bloc of democratic nations. And, by effectively installing a new customs border between Great Britain and Northern Ireland, the new arrangements – inevitably – also threaten the integrity of the United Kingdom. While these may be consequences of Brexit rather than the post-Brexit trade deal, they should not be forgotten when we read triumphant press statements about ‘taking back control’.

Last but not least, in human terms, the loss of freedom of movement, the automatic right to live and work in 27 other countries, will hit young people the hardest. Skills and qualifications will no longer by guaranteed transferable, and the outstanding Erasmus and Erasmus+ programmes will be scrapped. Nor will the UK be any safer: without (full) access to the European Arrest Warrant or the Schengen Information System database, it will be harder to fight cross border crime and bring criminals to justice. And many of these issues are still to be decided, or subject to unilateral decisions by the EU.

To plunge the country now, at the peak of the second Covid wave, into this unnecessary and self-inflicted additional misery, is nothing short of criminal. Under the circumstances, it would have been easy enough for Boris Johnson to extend the transition period at least until the economy has started recovering. The fact that he chose not to do so can only be explained by his calculation that while the health crisis continues, he can blame any Brexit fallout on Covid. Or, more callously still, credit Brexit for health achievements, such as the early regulatory approval of Covid vaccines. A miscalculation: minutes after the boastful announcement that ‘newly sovereign Britain’ was first to approve the Pfizer-BionTech vaccine, it was clarified that the British regulator had only been able to do so under (still applicable) EU legislation. It remains to be seen whether a vaccine developed in Germany and the United States and produced in Belgium, will actually survive the new border controls at British ports. The fact that military helicopters are on standby doesn’t bode well.

This is the great tragedy of Brexit: at a time when international cooperation and multilateral decision making have become more important than ever, Britain has erected new borders and cut itself off multilateral organisations, information networks and scientific cooperation. A tragedy also for those world class British organisations that have in the past played an important role on the global stage. Oxford university, to name but one, in cooperation with scientists around the globe developed and tested the Astra Zeneca Covid vaccine. Will scientists and academics still flock to British universities when visa restrictions and higher costs of living make that a less attractive choice? Will aspiring British scientists still be able to study and research in EU institutions? Rather than a done deal, the UK-EU trade agreement leaves many questions to be answered, many more issues to be negotiated, and many more deals to be struck.

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