David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the 2019 general election.
The conclusion of the negotiations over a free trade agreement between the UK and the EU has never been inevitable. The economic logic of the situation has always suggested that the parties would compromise and reach a deal but, a handful of days from the end of the year, we still cannot be certain that, for once, economic logic will prevail.
I have been in the minority in arguing that the political risks for Boris Johnson in accepting the only type of deal on offer – one which satisfied the EU that its fundamental interests were protected – were high and that the risk of no deal was, therefore, under-priced. In the end, the Prime Minister would have to make a choice – does he make a number of substantial concessions but declare victory, or does he leave without a deal and blame the EU for the ensuing chaos?
No one, in my view, could have predicted with certainty which way the Prime Minister would jump because, for a very long time, it was apparent that Johnson did not know the answer to this himself.
Even at this very late stage, the outcome is not inevitable. A desire to protect the interests of about half of a very small industry – fish – might still cause the talks to collapse.
But it does now appear that the Prime Minister has reached the conclusion that he wants a deal and is willing to do what it takes to get a deal. He has left it late – excruciatingly so for many businesses – and by leaving it late the risks of an accidental are material. But the likelihood is that there will be a thin deal before the end of the year.
The key concession has been on the level playing field provisions. It was not that long ago that the UK position was that it would be intolerable to us to leave ourselves open to the economic risk of retaliatory tariffs if we diverged from EU standards or, in the words of Lord Frost “chose to make laws suiting our interests”. Very sensibly, the Government has abandoned this position in the negotiations.
There are two very good reasons for it to do so.
The first is that the original position implicitly assumes an incoherent and unworkable interpretation of sovereignty. There is an argument to be made that it is a matter of sovereignty that important decisions are made by people who are directly accountable to the British public. But the principle of sovereignty does not mean that such decisions will not have consequences. It is an act of sovereignty, not an abnegation of it, to sign up to a set of rules which involves sanctions if those rules are broken. If such a position is unacceptable in principle, then one would have to object to rollover trade deals with third countries signed by Liz Truss, or even membership of the World Trade Organisation.
The second objection to the Government’s original position is that it is obviously absurd to claim that the threat of tariffs and quotas in future is an appalling economic risk, but embracing tariffs and quotas on 1st January – which is what happens without a deal – whilst the country is ravaged by a pandemic and there is little time to prepare, would be ‘wonderful’ and that we would ‘prosper mightily’.
Contrary to the position earlier in the year, non-regression clauses are now acceptable. ‘Dynamic alignment’ is out, but ‘managed divergence’ is in. Either way, if the EU changes its standards, we either follow or face consequences. The EU, meanwhile, has moved on the process – no ‘automaticity’, no European Court of Justice, limits on the cross-sectoral retaliatory measures. There will probably something else, perhaps a ‘freedom clause’, which will give the Prime Minister some cosmetic cover.
Assuming the deal is reached, the Prime Minister must have concluded that he can sell the deal to the country and his backbenchers. There are three reasons why his optimism may have increased.
First, Covid. Both the good news – progress on the vaccine – and the bad news – the rise in infections – has taken the wind out of the sails of lockdown sceptics. To criticise the Prime Minister for imposing restrictions at this point looks eccentric and irresponsible. The pressure from the backbenchers has abated.
Second, timing. Any deal will be rushed through. There will be no time to pick over concessions to the EU (cynics think this is why we do not already have a deal) and the public will be more focused on disinviting granny for Christmas. The country is not in the mood for a row about whether the level playing field provisions are too stringent.
Third, the US. A mini-deal with America would lift the hearts of Brexiteers who want to see progress towards the UK disengaging from the EU. Many already seem very excited by rollover deals with small countries that replicate existing deals with the EU (it turns out the EU was not quite so insular, after all). A new deal – however small – with a major economy will be a cause of great rejoicing. An announcement next week would be very convenient.
So the Prime Minister has the space to get a deal, even if that means he rows back on much of what he has previously said. Many of his Parliamentary colleagues will live with it, but see this as a staging post, not the final destination.
For some, Brexit has simply been about leaving the EU institutions but for others it has always been about the country setting off in a different direction, away from what they see as a bloated, bureaucratic, dirigiste, social democratic behemoth. In their eyes, Brexit is about re-orientating the country towards the rest of the world and a different economic model. Divergence is the whole point.
The free trade agreement will not have delivered all that they want, at least, not all at once. But Johnson can argue that it will give them the opportunity to go further in future.
The deal will, in truth, be a very hard Brexit. Many of us will question the cost of our negotiating strategy prioritising ‘sovereignty’ over practical concerns for businesses; tariff free and quota free is all very well but little will have been achieved on rules of origin. Trade with the EU will involve much more friction and with that comes additional costs and inefficiencies. Services get next to nothing. This will not be the comprehensive deal the country needs.
Quite quickly, the outlines of a new debate will begin to emerge. Some will argue for a closer relationship with the EU, pointing to the inadequacies of the Johnson deal. Others will argue that, having come so far, we must go further in disentangling ourselves from the EU.
Even if a deal is reached – as it probably will be – that debate will not yet be settled. Our relationship with the EU will continue to be one of the biggest questions facing the country. And that is why, at one level, Brexit will still not be done.