Surprisingly both Johnson and Farage are right about the Brexit deal (and impact on a US deal) – Johnson that in theory it doesn’t prevent a US trade deal, Farage that in practice it probably does. This is the Brexit debate to come if the Conservatives win… 1/ thread
Facts as known. If the Conservatives win a majority we leave the EU on 31 January. There’s a standstill / transition period to December 2020, which can be extended for two years. For Northern Ireland a minimum of six years of frontstop. 2/
So no UK-US trade deal can take effect before the US election in 2020. This may be what Trump means by no trade deal. Possibly before 2022. Northern Ireland may not be covered in the same way as the rest of the UK. But countries have FTAs with US and EU so in theory we can… 3/
A 1st cautionary note. The same MPs and pundits who said the UK held all the cards with EU, Northern Ireland wasn’t a problem, and alternative arrangements could solve the border, are now saying the Brexit deal is fine, future FTAs can happen. Their track record is poor… 4/
So on to substance. As is now widely reported the US and EU have a regulatory competition globally. The EU is winning. The US is particularly annoyed with the EU signing trade deals which protect exports of EU geographical indications e.g. parma ham, feta cheese… 5/
Thus the US cannot export their versions of parma ham or feta cheese to 3rd countries with EU trade deals. In their new deals the US are fighting back, seeking e.g. review clauses. But guess what the EU managed to get in the Withdrawal Agreement? 6/
Now the US could sign a trade deal with the UK without their Geographical Indication / GI provisions – but that means creating a precedent for other deals – which they probably don’t want to do. So we’re already in difficult territory. 7/
US farmers must benefit from their trade deals. If no GIs they have to remove barriers to e.g. chlorinated chicken. That’s already controversial in the UK, but equally the EU are well aware of the game and may not want the competition, especially so close, so… 8/
Let us say the EU offers the UK an FTA in which they give us special access to financial services, and type approval for cars, but in return we have to align food rules to theirs. The pressure from UK business on the UK Gov to accept will be strong 9/
And the US cannot make the UK a similarly generous offer on regulation in their FTA. Not just precedent. Their regulatory system doesn't work in the same way, with fiercely independent regulators and state level differences. Government procurement is also protectionist. 10/
This is why the EU is beating the US in the trade agreement game. They simply have more to offer, and can use this to beat whatever the US can offer, which often isn't much. There are also sticks though – no tariff free offer without such alignment 11/
So ultimately the EU can make the UK an offer that we will find difficult to refuse, and the US cannot make such a generous offer. For some the US FTA symbolism is all important. But for others there are deep suspicions. Even without mentioning the NHS 12/
In practice anything other than a no-deal Brexit (and possibly even that) starts the UK down a process of developing a close relationship with the EU as non-members. That’s geography, but it’s also the lack of better offers. Trump doesn't believe in trade… 13/
Farage is therefore right that Johnson’s deal is not pure-Brexit. The ERG have been persuaded it could be in the future, or it is this or no Brexit if no-deal isn’t an option. All quite logical. But ultimately that logic starts immediately going away from pure Brexit 14/
And when the Brexiteers claim we can have special mutual recognition or whatever from the EU, yes, but at a cost which they don’t want to pay, in terms of links. And with Northern Ireland now protected the EU is prepared to play the long game, Johnson blinked before after all 15/
So the question is then whether Johnson is prepared to have no FTA with the EU in exchange for a US FTA, or whether the US or EU give us special treatment (spoiler: very unlikely). At the moment therefore the EU FTA looks more likely, and a US FTA therefore very difficult 16/
None of this is easily digestible campaign fodder. Easier to talk about the US buying the NHS or the EU deal being done in a week. But Brexit reality is we face difficult choices between economic super-powers. And choosing the EU looks more likely 17 / end
PS what I think likely in UK-EU-US relations is not the only view on trade twitter. Obviously we don't know exactly how the negotiators will proceed - but also agree that in theory FTAs are possible, the practice may be different
In article form - the difficulties in the UK Government's Global Britain vision encompass-europe.com/comment/the-uk… for @EncompassEurope
@EncompassEurope PPPS worth noting I'm discussing a UK-UK FTA not a Johnson-Trump mega-epic-great deal which could conceivably be agreed without much real trade policy substance. That can of course be consistent with an EU FTA
