The authoritative source for independent research on UK-EU relations

25 Jan 2021

Relationship with the EU

After the Trade and Cooperation Agreement (TCA) between the UK and the EU was signed on 24 December, Nigel Farage proclaimed ‘The war is over.’

The UK Government published a Table of Victories that listed nearly three times as many wins for the UK as for the EU. The jingoistic message was clear: Another V-day! Brexit done – Brexit won!

The dawning reality is more sobering. On closer inspection, the TCA turns out to be a creaky drawbridge with quite a few loose planks.

The TCA has been praised, less for what it contains– one minister even confessed that she had not read it – but that a last-minute agreement was possible at all. The brinkmanship, and the increasingly frantic threats that a no-deal might be imminent, turned out to be nothing but dextrous expectation management.

The substance of what was agreed on 24 December had been on the table back in October, but moving to ratification then would have given both the UK and EU parliaments a chance to tear the agreement apart – as the House of Commons had done with Theresa May’s text.

Better to corral British MPs into approving it in one day without any scrutiny, and postpone ratification by the EU Parliament until the new Agreement was already in place.

Three features stand out in the TCA.

There are surprisingly detailed specifications on dispute resolution. After the British Government had publicly announced it was prepared to tear up crucial articles of the Protocol on Northern Ireland (‘breaking the law in a very limited and specific way’), the EU cast an eagle eye on compliance.

Suspicion and mistrust have become deeply rooted. The British Government’s word is no longer its bond.

The three key areas of state aid, working conditions, and environmental protection contain elaborate provisions for dispute resolution, with each side reserving the right to retaliate with punitive measures if agreed standards are undermined.

The UK has regained the freedom to regulate its national economy independently, but at a cost. The Sword of Damocles (the re-imposition of tariffs) remains hanging over its head.

The UK and the EU will be tied together by a closely woven network of joint institutions. The TCA creates a Joint Commission, 19 Special Committees and four Working Groups.

The UK and the EU will be bound into a permanent negotiating process, and Switzerland provides a warning that this gives rise to resentment and recriminations. Sympathy for the EU among Swiss voters is plummeting.

All this leaves the UK Government with an awkward choice.

It can exercise self-restraint and keep its national legislation aligned with the EU Single Market (this is what May’s Common Rule Book sought to do). But, freed from legal constraints, it will eventually realise that economic realities can be just as painful and limiting.

Or the UK can deviate from EU standards, but then it risks retaliatory tariffs or other restrictions on its access to the Single Market. Such a path would fan nationalist flames in Scotland, and deepen the divide in the internal market between Great Britain and Northern Ireland – which would be slowly torn ever further apart.

As long as Boris Johnson is Prime Minister, this is the path he is likely to pursue. He refuses to keep his country ‘orbiting within the gravitational pull of the EU’.

But this would mean that trade with the EU, which currently accounts for 45% of all British foreign trade, could fall to about 30% within a decade. Either this trade volume will simply be lost or it will have to come from beyond the EU.

The trade agreement with the USA, lionised by President Trump as almost imminent in 2018, looks tricky. President Biden can hardly be more accommodating if he seeks to win back those voters that approve of greater protectionism.

Australia and New Zealand have just concluded two regional free trade agreements: CPTPP in 2018 and RCEP in 2020. They are unlikely to bend over backwards to reinvigorate trade with a country that sold them out less than fifty years ago and plunged them into a deep economic structural crisis.

In the 1960s, Australia and New Zealand directed 40% of their exports to the UK. Today, that share has shrunk to less than four percent.

But as the seventh-largest economy in the world, could the UK not be able to fend for itself? Seventh place among almost 200 nations is certainly reassuring. But figures can deceive.

GDP per capita in the UK actually ranks 24th in global terms (behind France, Canada, Australia and Belgium), and adjusted for purchasing parity the UK slips to 29. The challenge is not moving up the rankings again, but containing the downward slide.

Strangely, what the TCA delivers has not yet been properly measured against what was promised in the Brexit debates five years ago.

Such a scorecard would show that despite all those grandiloquent promises about sovereignty, economic opportunities, finances, migration, and cutting red tape, very little has actually been achieved – and at a cost that still remains to be determined.

The recent reactions from fishers, hauliers and even prominent Brexiteers give rise to some doubt. On top of all this, the security of Europe has also been hit. The European Arrest Warrant no longer applies in the UK, and information sharing about terrorism and organised crime will be more bureaucratic and can’t take place in real time.

Mutual recognition of court judgments and professional qualifications will be severely restricted. In defence, weapons systems will diverge again as the EU is gradually expanding its joint procurement, and the UK is increasingly relying on US manufacturers again. And with divergent economic interests, the security horizon between the EU 27 and the UK will diverge.

The present framework for cooperation will accelerate the estrangement between the EU and the UK. The EU will become more centralised, bureaucratic, and with more projects financed and regulated by Brussels. The EU will lose its appeal even for those who voted Remain.

The UK will move in the direction of a Singapore-on-Thames, with low taxes and sparse regulation, and – as in Singapore – with a Government that is highly interventionist in structuring the economy.

There is no hope for a rapprochement between the UK and EU for at least a generation – at least as long as the Johnson faction of the Tory Party is effectively an English National Party.

The enduring legacy of Brexit is a massive loss of respect and sympathy for a country that for centuries was admired as a bastion of pragmatism and liberal values. The UK is losing soft power faster than hard power.

The voices of Cabinet Ministers claiming that their country is much better than every single one of those EU countries, and that its fish will now be happier for being British, seem like an incongruous echo of the smug, dogmatic utterances from governments of communist countries last heard in the 1970s.

By Dr Rudolf G. Adam, lecturer at the University of the Federal Armed Forces Neubiberg (Munich) and author of Brexit Revolution.

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