I returned from holiday eagerly anticipating the papers setting out the UK’s position on Brexit.
As far as I can make out, the UK’s primary idea is that the UK firmly leaves the EU…. and also, that it does not!
The UK will leave the Customs Union in March 2019. Today’s proposals relate what happens after.
The UK government proposes to then enter “a new customs union based upon a shared external tariff and without customs processes and duties between the UK and the EU.”
Hmmm. That sounds remarkably like not leaving?
Well it is not identical to not leaving. The UK also says it would be “time limited” (i.e. a transition), importantly during which they would be able to negotiate new trade deals.
The government also mentions that this is a “innovative and untested approach”, hardly a confident endorsement.
Leaving aside how reasonable this proposal is, the key conceptual error is misunderstanding what the UK and the EU mean by a transition.
- For the EU, a transition is a well-constructed bridge between where we are now and an agreed future destination. Therefore, what really matters is to agree the destination.
- The UK seems to see a transitional deal as a lifeboat. It is the resting place after we leave the EU where we decide where we are heading to.
This leaves the discussions in a precarious position. The EU has no interest in discussing the features of a bridge to nowhere.
Where are we heading?
This is the part I do not understand and I am sure the EU will not understand either. I cannot even write down the UK proposal in a way that makes internal sense, let alone decide whether it would be acceptable or reasonable.
I would instead highlight a dangerous misconception coming from the UK negotiators, often cited in the UK press, that “tariff-free trade” is the same thing as “frictionless trade”.
This perpetuates the myth that the major barriers to trade are tariffs. The major barriers to trade are regulation. The big problem with the US exporting chlorine-bleached chicken to the EU is not a tariff, it is that the process is illegal in the EU.
If the UK leaves the EU and does not abide by EU regulations, then having a zero tariff is irrelevant. The UK’s current plan to create a lower regulation environment for UK produced goods, and similarly when making trade deals with the rest of the world, to import goods which do not meet EU standards.
In this respect, the main policing of the Customs Union is not by the UK, it is by the EU to protect themselves. We may freely take all EU goods, but the EU will likely not take ours.
On the items, the EU wants to make progress on….
N Ireland (previous post – Brexit and Ireland)
So far, we do not have much of a plan. The importance of the DUP since the election, means that there will not be a border drawn between N Ireland and the rest of the UK.
Apparently, the fact there is currently no smuggling issue between the North and Republic of Ireland, means that there will likely not be one after the UK leaves the Single Market and Customs Union.
The idea seems to be that we will have a hard border, but this will not require an actual border.
Again don’t ask me to explain that one.
Brexit Bill (previous post – Settling the Brexit Bill)
The EU has asked the UK to come up with a proposed number and methodology for its calculation.
They are still waiting.
EU Nationals status
The EU proposal is that everyone retains the automatic right to stay where they are.
The UK idea is that EU residents can apply for some kind of second-class citizen status.
So far, the only UK request that makes much sense to me has been to ask for more time.
Of course, a simpler way of doing this would have been to have delayed triggering Article 50 until we had some idea what we wanted.