Tuesday, 3 March 2020

A journey with no destination

June is the very latest the EU can opt to extend the transition. If it doesn't look like there is broad agreement on a "CETA style framework" the UK, we are told, "could walk away from trade talks with EU and go for 'Australia-style' deal (no trade deal)". 

But then the media isn't in the habit of checking its assertions for faction accuracy any more than the Tory party. Though there is no overarching FTA the Australian model comprises a mixture of sectoral and trade facilitation agreements, bolstered by a framework agreement and a number of political declarations. It's unclear if this could be achieved before the end of the transition and how far the EU is willing to entertain it. Barnier has clearly not examined the option in that he describes it as essentially no deal.

What we can take it to mean, therefore, is that if there is insufficiency progress, then the UK will request whatever mitigating instruments it can get without making any hard and fast commitments in other areas. The EU will have its own unilateral contingency measures, ready to adapt from the previous cliff edge. Essentially we are then in "managed no deal territory" whereby at the end of the transition the UK will face a raft of third country controls and will be excluded from a number of lucrative markets. 

As it happens, there is not much in it either way at this point. Were we to secure a CETA style deal, it is likely to be only the scaffolding without much of the brickwork. (CETA) is a living agreement. In more specific terms, as the Ecologic report has it;
CETA is a living agreement. This means that CETA is designed as a dynamic agreement that allows the Parties to respond to changing circumstances and needs. To fulfil these objectives, CETA establishes a new and comprehensive institutional framework for cooperation between Canada and the EU and sets primarily procedural obligations. In many cases, CETA does not set detailed and hard obligations that predetermine a specific outcome. This also applies to regulatory cooperation, where CETA introduces various procedural obligations (e.g. obligation to exchange information and to consult) but no hard obligations on substance. CETA also establishes a new institutional framework for regulatory cooperation which consists of the Joint Committee (JC) and the Regulatory Cooperation Forum (RCF).
Personally I don't think a direct copy out of the institutional framework, done in a hurry, is a particularly good idea, and in all likelihood, not doable in time. But to make it more than a mixture of trade facilitation instruments and vague aspirations, there would need to be a far longer transition with more detailed talks. Consequently, even if all went well according to Johnson's artificial deadline, the actual difference (as regards to non tariff barriers) between a "Canada style deal" and a cobbling together of mitigating measures, is not vast. As regards to tariffs (should there be no deal), Tories are probably still working on the assumption that the EU will fold on GATT 24. Which is not going to happen without other binding assurances.

The Ecologic report, however, echoes my own estimations that a CETA style deal is a "journey with no clear destination". The content of CETA varies between chapters where in some circumstances there are future ambushes (such as equivalence) but in others, it is limited to vague declarative statements where the outcome is really contingent on how serious the parties are about further cooperation. Securing a "Canada style deal", therefore, does not necessarily lead to a more comprehensive relationship. The potential is there for future administrations, but a bare bones deal will likely remain a bare bones deal while the Tories are in power.

Whether or not the Tories are serious about a deal is debatable. We could infer from the ramping up of zero carbon rhetoric and the removal of blocks on onshore wind subsidies, that they are sending signals to persuade the EU that more stringent level playing field provision on the environment are not required. The EU, though, may rightly wonder if it's a bait and switch tactic. It's all a matter of trust when, given the signals Johnson is sending on the Northern Ireland protocol, there is no basis for trust whatsoever. 

I don't care to place any bets on the actual outcome, though confidence is not running high. Asking for a Canada style deal, with with contentious adaptations to suit the UK was always a big ask in the time-frame imposed on it. The only way the EU could ever go that far is if they'd already drafted it according to their own agenda (which they have) and then it's really up to the UK to decide whether they accept the ultimatum or not. Being that the Tories believe a "managed no deal" tackles the worst of the non-tariff barriers, they are far more complacent than they have any right to be.

Whatever the outcome at the end of the transition there will be unfinished business. Instead of a managed departure, this is a cut and run strategy leaving much damage to be repaired in the future. The economic costs will be high for us, but the political cost could be devastating for the Tories. All the political strategising now is geared toward blaming the EU and covering their backs. Taking responsibility, it seems, is no longer a core conservative value. 

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