Monday, 24 July 2017

How Brexiteers are undermining their claimed objective of a free trade deal with the EU

British politicians are engaging in what can only be seen as a self-defeating series of postures on Brexit that undermine their self-declared aim of securing a free trade agreement with the EU.

As I commented last November,( http://realfeed-intariffs.blogspot.co.uk/2016/11/why-leaving-eu-is-bit-like-building.html ),
the best that the UK can hope for in the medium term is a Norweigian or Swiss type deal that leaves us in the Single Market with at best a face-saving deal to obscure the continuation of current rules on freedom of movement.

The Government knows that the much-touted 'free trade deal' will take several years to negotiate and that if the UK left the EU without them any government in power would become extremely unpopular because of the border and business chaos that would happen in March 2019. A sense of self-preservation has forced the Government to agree to the notion of a 'transitional' or 'implementation' phase that will last at least two years (more I'm sure). 'Hard Brexit' or the notion 'no deal is better than a bad deal' was never anything more, for the Government, than a phrase used as a party management device.

This  'implementation phase' will involve a Norweigian or Swiss type deal -and that includes free movement of people from the EU to take up jobs in the UK. British politicians debate the extent to which we can choose labour market rules. But it is all farcical. It is not up to them to choose. They can either take the EU's terms - which cannot, for obvious reasons be better than Norway or Switzerland's deal - or suffer the famed 'hard Brexit'. Hence their wish to avoid political disaster by bowing to the inevitable and agreeing to a 'implementation' phase. A comment from the EU on how the UK's wishes to 'cherry pick' the Single Market are unrealistic can be seen at http://www.epc.eu/pub_details.php?cat_id=4&pub_id=7865

The Brexiteers in the Government thus have faced a dilemma - resign or accept the notion of a 'transitional' phase.
But the Brexiteers, if they seriously want a good trade deal with the EU, are their own worst enemy. This is because the last thing the UK needs in negotiating a free trade agreement is a time limit for the talks. This is a set of bargaining that only the UK really wants. The EU would be perfectly satisfied with the status quo - that is the UK continuing to belong to the Single Market. It's only the UK who want what is, in trading terms an inferior  arrangement of a free trade deal which would leave a lot of areas, including access to services, uncovered (see https://www.niesr.ac.uk/blog/services-trade-and-free-movement). The UK only want it because of the illusion that getting rid of free movement of people into the UK will do it any good.

The point is that the EU aren't going to be in a hurry to agree to the inferior position of a 'free trade' deal. So if Britain wants one quick then it will have to accept whatever terms the EU want to offer - it will not have the time to argue about it!

That is the craziness of the Tory Brexiteer vision. Either they destroy their party electorally as they take the blame for a disastrous 'hard Brexit' or they destroy the UK negotiating position for a free trade agreement. Liam Fox may be the first minister in British history to be busy negotiating for international agreements that give the UK a worse economic deal than they have already!