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Brexitology: the deal and the problem

The UK will probably apply lower environmental and social standards, and in exchange will have EU tariffs applied to its goods and restrictions on freedom of movement to the EU.

By Michael Smith

Britain formally left the EU on 31 January, and is now in a transition period
until the end of the year.

Boris Johnson’s shot-to-his-ownfoot deal crashes the UK out of both single market and customs union, unless there had been deal with the EU by the end of June 2020; and poses the possibility, which I have long here predicted, that the UK will reduce standards particularly on labour and the environment.

Inept Theresa May’s luckless deal kept Britain in the single market and the customs union until at least 1 July, 2020, extendable only by mutual agreement. However, her Northern Ireland ‘backstop’, which restricted the whole UK to avoid opening differences between Britain and Northern Ireland has been replaced, in Boris Johnson’s deal, with a frontstop meaning he crashes the UK out of both single market and customs union, unless there are deals with the EU reinstating them by the end of this year.
Talks, however, are deadlocked. The two sides have taken polar positions on fisheries, governance and competition.

And in what was an, apparently unwitting, big concession then, by accepting a customs border Northern Ireland will now remain aligned to
the EU’s Custom Union, but will be in the United Kingdom’s custom territory, allowing Northern Ireland to avail of future non-EU trade deals.

In practice, this means that if goods are sent from Britain to Northern Ireland, no tariffs apply. If goods are sent from Britain through Northern
Ireland to Ireland, tariffs will apply, but they will be collected at ports and airports – effectively putting a customs border along the Irish Sea between
Great Britain and Northern Ireland, something that was thought to be a bridge too far.

Annex 4 of the Theresa May Protocol – which contained references to EU laws that would apply to the whole of UK in what were called “level playing field” commitments to limit the UK’s capacity to gain what it would see as an unfair advantage by lowering standards – have now been removed.

The level-playing-field provisions were in the areas of taxation, environmental protection, labour standards, state aid and competition. They had been subject to a legally-binding agreement in the Withdrawal Agreement – it’s now stated in the Political Declaration – with only non-binding commitments.

Britain can reduce these standards and negotiate new trade agreements with blocs outside the EU, notably the US. It can remove protections
against chlorinated chicken, open up the National Health Service to commercialisation and competition and remove habitats protection
and Environmental Impact statement requirements. This is what Johnson and his mates always wanted to do though they fudged the issue like practised fraudsters.

If the UK reduces standards the EU will have to decide whether it wishes to do a big trade deal with it or whether it wants to protect its own standards
by imposing proportionately heavy tariffs and restrictions on freedoms of movement.

My guess is the EU will be reluctant to impose tariffs and restrict movement and will indulge some insidious reductions in standards, particularly those that won’t register at a border: some standards are evident from inspection of a good (chlorinated chicken); others aren’t (parental leave in the workplace). We can look forward to Tory Britain reducing labour, environmental and other standards, and to Northern Ireland specialising
in attracting jobs on the basis of such low standards. It would certainly tie in with the DUP’s ethos; and there is not much evidence that any party in the North cares much for environmental niceties.

Unfortunately the reality is that if the UK loses the EU baseline standards regulation will fall to Parliament. We know from the zeal with which the Tories undermined EU social standards and their excitement at “unleashing” new entrepreneurial zeal, that they are looking forward to deregulation. And any change in standards, even an ostensibly neutral one, opens up the possibility of lack of clarity and regulatory gaps.

To compete in attracting inward investment, especially with a Janus-like Northern Ireland benefiting from the best of both worlds, Ireland will
itself feel obliged to reduce its own standards.

And in addition to the disbenefits of reduced trade with the neighbours, and the Coronavirus slump that is why Brexit is a disaster for us, all.

Under the withdrawal treaty, the two sides could have chosen before the end of June 2020 to extend the transition for up to two years. Failing that, any extension now needs a fresh treaty and the approval of all 27 national and some regional parliaments. Brinkmanship failed. Statecraft died. Turmoil awaits.