The UK’s Brexit Shoddy Deal Surrenders More Than It Receives

Photograph Source: Mike Finn – CC BY 2.0

“Everything that the British public was promised during the 2016 referendum and in the general election last year is delivered by this deal”.

– Boris “BoJo” Johnson

Faced with the grim reality of leaving the EU without a deal, Boris Johnson was always going to hail any “least-worst” deal as a “victory”. And so he did. A jubilant BoJo, ever the lying blusterer, claims his deal is everything the electorate voted for in the 2016 referendum and in last year’s general election. It certainly isn’t, if one scrutinizes the details.

BoJo’s “oven ready” Brexit deal was always premised on a con— the UK would be able to cast aside the EU politically but continue to enjoy all the economic benefits.

The newly completed deal leaves many loose-ends that will only be resolved through micro-negotiations. Meanwhile, jobs will be lost as the UK economy loses capacity due to the deal’s terms.

The government’s own independent forecaster, the Office for Budget Responsibility, expects Brexit to reduce GDP by 4% in the medium term.

From 1 January, most UK nationals will lose the right of free movement within the EU. UK nationals will no longer be free to work, study, start a business or reside in the EU. Visas will be required for any stay over 90 days. British business travellers and workers posted to an EU country (i.e., someone staying in the EU to work for a limited duration) will face fines unless they get advance authorization once the UK leaves the EU.

UK businesses will face substantial extra costs in doing business with its biggest export market. Although these businesses will have tariff-free and quota-free access to EU markets, the UK will officially be a “third country” to the EU, and so traders will face increased costs incurred by this new status and its accompanying customs checks and paperwork for hauliers at the border.

This “thin” tariff-free and quota-free arrangement is also contingent on UK businesses complying with EU standards (as well as those existing in the UK). There will be checks and inspections, with the requisite costs to business, on such compliance.

The deal is also intended to ensure people and goods can pass relatively unimpeded between the Republic of Ireland and Northern Ireland. In fact, it is going to be more difficult for goods to pass between Northern Ireland and the rest of the UK since a virtual single market will exist between the EU-member Republic of Ireland and its UK-member to the north.

The groundwork is being laid, however unevenly, for a time when then reunification of Ireland will make increased economic sense (if it does not do so already). Further rounds of micro-negotiations are expected before the issue of the Irish border nears resolution.

The quantity of fish that EU fisherman can catch in UK waters is reduced by 25% over the next 5.5 years (the UK had demanded 80%). From 2026 the quotas will be negotiated annually. If the UK imposes requirements the EU finds too stringent– e.g., a too large reduction of quotas– the EU can impose import taxes on UK fish products intended for the EU market, and can also impose sanctions in other sectors.

Representatives of the UK fishing industry were not impressed by this part of the deal, saying they were “bitterly disappointed” in the quantity of fish the UK could catch.

Barrie Deas, head of the National Federation of Fishermen’s Organisations, said the UK accepting a 25% repatriation of quotas, amounted to “justice deferred, justice denied”. Obviously, fishing rights will continue to be a contentious issue.

Financial and other services (80% of UK GDP) are not covered by the deal. Hence the EU can decide unilaterally which services it grants equivalence, and Brussels will also be able to revoke this status unilaterally. The UK would not of course be in this weakened position if it remained in the EU.

France managed to exclude the audio-visual sector from the deal. The UK has around 1,400 broadcasters, about 30% of all channels in the EU. Britain’s TV and video-on-demand service providers will no longer be able to offer services to EU-domiciled viewers unless they transfer part of their enterprise to an EU member state. This represents a major blow to this flourishing sector.

Automatic recognition of the qualifications for doctors, nurses, dentists, pharmacists, veterinarians, engineers, accountants, and architects will cease. These individuals will now have to apply for recognition in the EU-member-state they want to practice in.

The UK’s subsidy-regime for its industries was a potential sticking-point for the EU, which feared the UK could use subsidies to gain a completive advantage over EU manufacturers. While the UK will establish its own subsidy-regime, it is required to ensure that this regime accords with key principles specified in the deal. The treaty also allows both parties to resort to remedial measures if there is evidence that domestic invigilation has failed to uphold the shared principles. These remedial measures have not yet been agreed-upon. Micro-negotiations will be needed to determine them.

Both sides agreed to a base level of environmental, social and labour standards, the so-called “level-playing” field, below which neither must fall. There will be a review after 4 years to ensure this protocol was working.

The EU’s insisted initially on an “evolution clause” that would allow the EU to apply unilateral tariffs on UK goods should such standards deviate over time. If one side upgraded their regulatory framework, the other would have to conform, or face penalties.

The EU compromised on this issue by dropping its immediate penalty-clause requirement. Instead, there will now be scope for a “rebalancing” review, which allows either side to ask for a review of the economic sections of the deal, including the minimum standards.

Penalties will only be imposed if one side obstructs or delays agreement on a new set of standards. If this occurs, the other may apply tariffs, provided these are approved by an independent arbitration body. This will involve yet another tier of bureaucracy, which the UK’s Brexiters, knowing they were lying, said leaving the EU would reduce.

The EU also feared the UK would import cheap goods manufactured in other countries, slap a “made in Britain” label on them, before sending them on to the EU market.

The EU therefore insisted on an agreed-upon determination of what is required for a particular product to count as “made in Britain”.

The EU agreed that EU materials and processing should to be registered as British input when the completed products are exported into the EU market.

A product would therefore only be subject to tariffs if more than 40% of its pre-finished value did not originate in the UK or from a non-EU country such as the US or Brazil.

Even if British products included items from a country having a trade agreement with both the EU and the UK, these products would not have a “made in Britain” designation.

The UK will be excluded from the Erasmus student exchange programme, relied on heavily by UK universities to give their students access to European-language teaching and to courses of study not available in the UK. A replacement scheme named after Alan Turing, and earmarked for 35,000 students, will cost £100mn/$136mn in 2021/22, with funding for subsequent academic years to be determined in future spending assessments.

Sceptics have said 35,000 students participating in a scheme costing only £100mn will work out at only £2,850/$3865 each—probably enough to pay for accommodation and living costs in another country but little else.

Unlike the Erasmus scheme, the Turing version has no provision for funding students to come to the UK, this being a significant source of income from British universities. A group of education and business leaders said earlier this year that this would cost the UK’s economy £243mn/$330mn a year.

Cooperation on security and law enforcement will be weakened, as the UK will be kept out of key exchange programmes. Cross-border police investigations and law enforcement can continue, but the UK will forfeit membership of the European Arrest Warrant system, and it will not be a full member of Europol or Eurojust. However, arrangements are being made to allow UK “cooperation” with these entities.

The UK will have a “mechanism for access” to the Schengen Information System (SIS II), an automated database disseminating police alerts on stolen goods and missing persons.

The UK will also have access to the Passenger Name Records, which provides live data on the movement of air and ferry passengers, and the Prüm database of fingerprints, DNA and car number plates of suspects. These are key tools in responding to terrorism.

Setting up a protocol for dispute resolution was difficult to achieve, since it will have to resolve trade disputes in the coming decades.

If either the UK or EU believes trade is being distorted, it can seek remediation after consultation. An arbitrage panel will meet within 30 days in order to adjudicate. If the measures taken were later deemed flawed or disproportionate, the affected party can take compensatory measures.

Steps are being taken to create an overarching UK-EU governance committee, assisted by subcommittees, to implement and enforce the treaty.

The Brexiters promised Brits “sunny uplands” when the UK left the EU. There will be no such thing.

Few in the UK will be pleased by this botch of a deal.

Twenty MPs belonging to the hardline Brexiter Europe Reform Group of the Tory party have already threatened to vote against the deal (though this could just be hot air). For them a No Deal would have been preferable, since, in their view, BoJo’s deal still keeps the UK tethered to Brussels, and therefore vitiates the mythical “sovereignty” they’ve yelped about in the last 5 years.

The deal won’t go down well in anti-Brexit Scotland. The Scottish National Party has made it clear that BoJo’s deal relinquishes the benefits of EU membership without gaining anything in return for Scotland. The Scottish argument for independence will now come to the fore, with the economic argument as its pivot.

The UK has always been tied-up in a Gordian Knot over the EU.

The EU is an unreformable institution—pretty much everyone, both Left and Right, acknowledges this, albeit for hugely different and incompatible reasons.

The Ukanian Right is prey to rebarbative post-imperial fantasies (a “new global Britain”, a “Singapore on the Thames”, ruling over the metaphorical waves of a conjured-up digitized business empire, a pale facsimile of the actual heaving waves traversed in bygone imperial days), and blames the EU for standing in the way of a sought-after realization of these atavistic delusions.

The Left, correctly, regards the EU as the primary European vehicle for neoliberalism and globalization. The EU stands unyieldingly in the way of any genuinely socialist project undertaken by its member nations.

For this reason alone, the EU was much more at ease dealing with the neoliberal BoJo– despite all the bogus huffing and puffing at the 11th hour as a deal was being hammered-out– than it would have been with a Labour government under Jeremy Corbyn committed to a socialist agenda never previously seen in the EU’s history.

Corbyn’s successor, the Blairite opportunist Keir Starmer, mindful that his strong Remainer record will probably endure as a bad memory for voters in the Leave-voting seats that Labour lost to the Tories in the 2019 election, changed his stripes and ordered his MPs to support the deal when it is put to a vote in parliament on December 30th. A few Labour MPs, representing constituencies with a large number of Remain voters, have said they will abstain rather than back a bad deal.

So far, Ukania’s botched response to the pandemic has resulted in over 70,000 deaths by Christmas Day.

Adjusting for population numbers, the UK death toll would be the equivalent of 350,000 Covid deaths in the US.

So far 60 countries have closed their borders to the UK because of its mishandling of the pandemic.

This will not be a propitious situation in which to begin post-Brexit trading in a few days’ time.

Kenneth Surin teaches at Duke University, North Carolina.  He lives in Blacksburg, Virginia.