What would a good Brexit look like?

By Mike Phipps

What was once unthinkable is now normal. The government has persuaded enough of its backbenchers to vote for a piece of legislation – the internal market bill – that breaks an internationally binding agreement.  Tory MPs caved in, once they were assured they would get a parliamentary vote before those powers in the bill that break international law were invoked.

The media has focused primarily on the damage this does to Britain’s international reputation. They should also focus on the danger of the Northern Irish peace process unravelling, with the potential reintroduction of a hard border in the island of Ireland. Joe Biden tweeted, “We can’t allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit.”

Clearly, either Boris Johnson had no intention of adhering to his “oven-ready deal”, produced more for electoral purposes than as a lasting solution to our future relationship with the EU, or he didn’t understand it. Or he has decided to renege on it now, because he can: he has a large, pliant majority today, compared to a year ago, allowing him more freedom. Equally the cost of a No Deal Brexit can be buried more easily beneath the rapidly expanding budget deficit resulting from the COVID crisis.

There are some who say that none of this really matters: it’s just the Johnson government playing hardball to put pressure on EU negotiators. Well, maybe.  But that presupposes that the UK government actually wants a deal. But does it?

To believe it does, argues Aron Bastani, “may be incorrect: the leaked trade negotiations between Britain and the US, disclosed by Labour in the final weeks of last year’s election campaign, seemingly exposed how a precondition for any trade deal between Washington and London was the absence of a customs union between Britain and the EU. As the document itself clearly stated:  ‘USTR (United States Trade Representative) were also clear that the UK-EU situation would be determinative: there would be all to play for in a no deal situation but UK commitment to the customs union and single market would make a UK-US FTA (free trade agreement) a non-starter.’”

So there may be good reasons for the government not to fear a No Deal Brexit, if it makes a US deal easier. That said, it would also make it easier for the US to drive the hardest possible bargain – forcing down environmental, labour and food standards, and requiring Britain to be a party to binding corporate courts – all dangers I have highlighted elsewhere.

The fact that Brussels would prefer a softer Brexit is greatly to the advantage of the Johnson government. Its default argument that what Brussels wants must be bad for the UK shores up the Tories’ nationalist base and allows it to push for a far more detached relationship than most people envisaged four years ago.

Optimists argue that a No Deal Brexit today is not the scenario that might have occurred a year ago. Back then, the UK crashing out of the EU without an agreed deal would have been hugely disruptive to many aspects of everyday life. That danger faded when the UK left the EU under a ratified Withdrawal Agreement this year. Its provisions — on the financial settlement, citizens’ rights, and Northern Ireland — are now protected under a binding treaty. But it is this treaty that the government is now threatening to break.

A No Deal remains a strong possibility because of the slow progress of negotiations on a range of detailed issues, including fishing quotas.  This slow progress has repeatedly been spun by the government as a reason to prepare for No Deal. And now the coronavirus crisis complicates issues further.

One commentator noted: “On what the EU sees as the core issues — fisheries and level playing field — both sides still seem to be talking past each other. Brussels insists it wants more clarity on London’s future state aid rules to unlock the talks, to ensure the U.K. does not undercut the EU in the future. But Downing Street is determined to have leeway on state subsidies to assist its coronavirus recovery, and refuses to set out its new regime according to the EU’s timetable.”

Indeed, state aid has suddenly overtaken fishing rights as a major issue. Paul Mason noted, “A Britain which for ideological reasons has always opposed public support for the private sector has suddenly discovered the desire to subsidise tech companies.”

Government intervention is now being harnessed as a key tool for maintaining Britain’s leading global position, delusional as this belief might be. That may explain why Michael Gove spent much of a recent speech extolling the virtues of the 20th century’s most famous interventionist, former US President F.D. Roosevelt.

The government may be ready for a No Deal Brexit, but the economy is not. Economy activity would contract significantly. Already, international firms have shifted their investments from the UK to elsewhere in the EU, fearful that supply chains will be disrupted. Capital invested in the other 27 member states has grown by 43% since 2016, while the UK has seen a 30% drop. London’s role as a global financial hub could also be in jeopardy – and financial services provide 11% of the UK’s tax revenue.

The UK exports 46% of its goods to the rest of the EU, making it by far the largest UK export market. And over half of all UK imports come from the EU.

Currently trade with the EU is tariff-free.  Without an agreement, 90% of the UK’s goods exports to the EU would be subjected to tariffs. The bloc’s average tariffs are 11.1% for agricultural goods, 15.7% for animal products and 35.4% for dairy. British car makers would be hit with a 10% tariff on exports to the bloc, which would increase the average price of a British car sold in the EU by €3,000.

No Deal would mean the imposition of border checks from January, with long queues predicted.  Between 50% and 85% of lorry drivers would not have the necessary documentation to enter the EU via France. British businesses would have to spend £15bn extra a year on paperwork.

The human impact would also be significant. The status of the 3.2 million EU citizens living legally in the UK, as well as that of the 1.3 million British citizens living in EU countries, is still not fully resolved. UK students studying in the EU and EU students in the UK especially face uncertainty.

Fresh vegetables and fruit will become scarcer.  The government’s own report predicts a rise in energy prices, as a result of an expected fall in the value of the pound and cutting ties with EU energy markets.

What does the left have to say about this mess? Very little, unfortunately. Brexit may have stoked passions in the past, but since Labour’s general election defeat, socialists have been largely silent about it, save to argue over just how much Labour’s position at the 2019 election may have cost it seats.

The debate about whether to leave or not seems over, but few people are engaging with the crucial discussion about the terms on which the UK should leave. Once-ardent Remainer Keir Starmer seems to be keen to “get Brexit done”, so the issue that proved so divisive for Labour last year is safely put to bed ahead of the next general election. Rachel Reeves agrees.

It would be churlish to point out – as Aron Bastani does – that when Jeremy Corbyn proposed getting on with Brexit after the 2016 referendum vote to Leave, he was accused of being a secret Brexiteer and faced a leadership challenge. Now he is no longer leader, members of the Shadow Cabinet can turn 180 degrees on the issue, with much support in the media, although voters may take a bit more convincing.

In reality, the new parliamentary arithmetic makes Brexit unstoppable and Starmer’s recognition of this can be portrayed as pragmatic.  “It’s all about competence,” said one ally of the Labour leader. “He’s done it because he wants to get into Number 10,” former MP Gloria De Piero was reported as saying this week.

That’s understandable. But does getting Brexit out of the way mean Labour rubber-stamping any deal at all that the government salvages from its botched negotiations? One thing is for sure: if the left doesn’t speak up about what a good deal might look like, it won’t have any influence on any of these critical debates.

At the minimum, the left must be ready to campaign against any deterioration in labour, food and environmental standards. A deal guaranteeing future customs and trade arrangements is critical. And notwithstanding ‘Brexit fatigue’ and the desire to “get Brexit done”, No Deal must be relentlessly exposed as a disaster for working people.

Image source: Brexit auf Wegweiser. Author: Christoph Scholz, licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.