Why I am worried about Johnson getting Brexit done, short thread based on my piece in this week’s Economist./1
With a Tory majority, Parliament seems sure to ratify the Article 50 withdrawal agreement Johnson renegotiated in October in time for Brexit on January 31st./2
The psychological importance of Brexit formally happening will be profound, not least because it will kill the argument for holding a second referendum./3
Yet Brexit will still not be done. On February 1st Britain moves into a transition ending on December 31st. Johnson wants to negotiate and ratify a best-in-class free-trade deal during this period./4
The deadline can be extended by one or two years, but this has to be done before July 1st. And Tory manifesto declares in bold type that “we will not extend the implementation period beyond December 2020.”/5
Yet talks on future relationship will be far harder than Article 50, supposedly an easy first stage. A new deal must cover trade, security, data, research, student exchanges and fish, to name but a few areas./6
Such a mixed agreement under A218 needs unanimous approval and ratification by 27 national and some regional parliaments. Less comprehensive deals with Ukraine, Canada, Korea, Japan, Singapore took 4-9 years to negotiate and ratify./7
Hard for Johnson to extend deadline, and not just because of manifesto. Transition is vassalage, applying EU rules with no say. Extending time limit may have conditions eg fish, plus big budget contribution, probably without rebate./8
Johnson offers four responses to the gloomsters./9
One, he was told he couldn’t reopen withdrawal agreement, and yet he did. But analogy does not work. His big change was to accept original plan to leave NI alone in customs union. He won’t want trade deal of repeated concessions./10
Two, a good trade deal is easy because both sides start in full alignment. Yet Johnson wants to diverge from EU rules, even on state aid and public procurement. Brussels fears being undercut by a deregulated offshore competitor./11
Without a level playing-field, EU will say it has to limit access to single market. Negotiating a trade deal that erects barriers will always be harder and take longer than a normal trade deal that does the opposite./12
Three, setting a deadline is the only way to galvanise trade talks. Yet only practical option in such a short time is a bare-bones deal for goods trade alone. Such a deal might avoid need for parliamentary ratification (Singapore)./13
But (pace Javid) it would do nothing for services, 80% of Britain’s economy and half its trade. It would not cover security, data etc. And A50 lesson is that a tight deadline forces Britain not the EU into concessions, eg fish or Gibraltar./14
Four, if no trade deal can be done, leaving on WTO terms is fine. Withdrawal agreement would still apply. Yet reliance on the WTO is dodgy when entire system under threat from Trump. It would mean big tariffs and non-tariff barriers./15
And no-deal brings back worries about lorry queues, shortages of medicine and food, problems for airlines and energy suppliers. That (plus fears for the Union) is why both May and Johnson in the end shied away from pursuing it./16
No-deal at end 2020 hits economy and public finances hard (budget deficit up to 4% of GDP, debt rising again). Far from getting Brexit done, next year promises just to repeat 2019 story of missed deadlines and cliff-edges to no-deal./17ENDS
