The UK Prime Minister announced last Friday that the talks on a possible trade deal between the UK and the EU were over. He claimed that the EU was not willing to offer the UK acceptable terms. He said that, since the outset of the negotiations, all the UK had ever wanted was the same terms the EU had agreed with Canada. This was misleading. The UK asked the EU for a full no-tariff deal on all goods and services, whereas, under its deal, Canada still has to pay some tariffs and has little access for services.

Canada is an ocean away, whereas the UK has a land border with the EU. The EU and UK economies are so entangled that the UK, unencumbered by EU rules, would be much more of a threat to the integrity of the single market than Canada, on the far side of the Atlantic, could ever be. That has been explained to the UK over and over again. Boris Johnson based his dramatic announcement on Friday on the fact that the European Summit had, on Thursday, dropped the adjective “intensified” in its reference to resumed trade talks with the UK. He followed this up by rudely telling Michel Barnier, the EU negotiator, not to come to London for planned talks on Monday.

Out of nowhere

The UK minister for the cabinet office Michael Gove then demanded what he called a “fundamental” change in the EU’s stance. This all seemed to come out of nowhere. There was nothing new in the conclusions of last week’s European Summit as far as Brexit was concerned. The talks were progressing normally and had narrowed the issues down substantially.

In fact, real progress has been made under that mandate

The European Summit had given the Commission its negotiating mandate on 25 February 2020 and there had been no suggestion of any fundamental change in it since. In fact, real progress has been made under that mandate. Even Boris Johnson himself admitted on Friday that “a lot of progress has already been made, by the way, on such issues as social, security, aviation and nuclear co-operation”.

He could have added that here has also been substantial progress on trade in goods and some on services. An agreed approach to police co-operation and to road haulage had also been reached. The UK and EU positions had also come much closer on the overall governance of a future agreement, including on dispute settlement.

So how do we explain Boris Johnson’s dramatic gesture? It is about negotiating tactics and domestic politics

The stand-off about the Northern Ireland Protocol has arisen because the Joint Committee, set up to work out its implementation, had not had enough meetings and started far too late, mainly because the UK side was not ready. So how do we explain Boris Johnson’s dramatic gesture? It is about negotiating tactics and domestic politics.

The UK wants to settle everything else first and leave the most politically visible issue of all, fisheries, to the very end. Given that EU trawlers catch more fish in UK waters than vice versa, that sequence would put the EU side on the back foot.

The actual cost of bringing about a no-deal Brexit because of a disagreement over fisheries would be a hundred times greater than the value of the entire fishing industry

The EU prefers to deal with fisheries in conjunction with other open issues and refuses to be rushed. Fish is a politically sensitive national identity issue and there is nothing Boris Johnson would like more than to be able to say that he has settled everything else and is left defending Britain’s sovereign fishing grounds from rapacious foreigners. Standing up to Brussels unifies the Tory Party and distracts from the domestic difficulties about COVID-19, but it can also raise unrealistic expectations and lead to accidents. The actual cost of bringing about a no-deal Brexit because of a disagreement over fisheries would be a hundred times greater than the value of the entire fishing industry. This is true for both sides.

Tough talk now may also make it harder to sell any eventual deal in Westminster, unless it can be radically repackaged. Boris Johnson’s focus on a deadline around last week’s European Summit was a mistake. The EU heads of government continue to leave the negotiations of trade agreements to the European Commission. This is to prevent attempts at divide and rule and is one of the reasons the EU, notwithstanding its tiny budget and lack of military clout, has become a trade superpower. Even though the UK was an EU member for 45 years, it seems never to have learned that this was one of the reasons for the EU’s success as a trade negotiator. So if the UK continues to insist on a fundamental change in the EU approach to the negotiation, we are likely heading for a no-deal Brexit on 1 January 2021.

Dire consequences

This would have dire consequences for the Irish and British economies. Irish farmers would be shut out of their traditional markets for beef and dairy products. In this it would be like the Economic War of the 1930s all over again. British consumers would face higher prices for almost everything, but especially for food. Protecting the EU single market in Ireland could become politically fraught.

The COVID-19 effect will be short and sharp, with a quick recovery

Professor Tom Sampson of the London School of Economics (LSE) estimated that the economic cost to the UK of a no-deal Brexit would be three times as great as the cost to it of COVID-19. That is a lot. The COVID-19 effect will be short and sharp, with a quick recovery, whereas the cost of a no-deal Brexit would be slower to emerge and be much larger and much more long lasting. Some of this will happen even if there is a deal. But a no-deal outcome would be worse because it would involve tariffs and bad blood. It is not too difficult now to sketch out how one might avoid a no-deal Brexit, if that is what the UK really wants.

Differing standards

The level playing field issues on subsidies to industry and on differing environmental and food standards, can be settled by agreeing a fast-track arbitration system between the EU and the UK. Relying on the WTO disputes mechanism is too cumbersome as we have seen with the long-running Boeing/Airbus saga. There will have to be an independent and robust system to prevent subsidised or sub-standard goods entering the EU market across the Irish border. Trust will have to be built between EU and UK customs officials. That may take several years.

Obviously there will have to be big changes in EU fishing rights in UK waters, now that the UK has left the EU but these could be phased in over 15 or 20 years. In any event, the UK would not be able to consume all the fish it could catch in its own waters and will need to export them to the EU. Free access to the EU market for British fish could be linked to fishing quotas for EU boats in British waters.

In any event, there will be lots of small disputes, not least over customs checks in Belfast port

Of course, agreeing a trade deal would not end all controversy and a no-deal outcome would not end all negotiation. Talk would restart after much damage had been done. In any event, there will be lots of small disputes, not least over customs checks in Belfast port. With goodwill and patience, these disputes can be settled.

But deal or no deal, the EU and the UK will gradually draw further apart, as will Ireland and Britain. Irish people will need to pay much more attention to politics in Paris, Berlin and Warsaw and a little less to the English speaking world. This will involve a major psychological reorientation, with profound implications for our educational system.

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