Last reviewed 26 June 2020
Almost exactly four years after the day the UK voted to leave the European Union (23 June 2016), Boris Johnson confirmed that the referendum decision would finally be made definite on 31 December 2020. At his June 2020 summit meeting with the three EU Presidents (Charles Michel (Council); David-Maria Sassoli (Parliament); and Ursula von der Leyen (Commission)), the Prime Minister endorsed the position set out by his lead man in the Brexit talks, Michael Gove, that there would be no extension of the transition period. However, he did not walk away from the negotiations, as he had several times threatened to do if the two sides were deadlocked.
An exchange of idioms
Instead, Mr Johnson seemed to indicate that with a little extra effort, real progress could be made in the few months remaining before the latest, and surely final, deadline. Revealing both his linguistic prowess and his age, the Prime Minister told his friends from across the Channel that what they needed to do was to put “un tigre dans le moteur”. Whether the European Council President recognised this Esso slogan from the 1960s seems doubtful but he responded in kind by saying that his fellow Europeans were prepared to get behind efforts to complete a deal but they would not be buying “a pig in a poke”.
More formally, the official statement after the event said: “The parties agreed that new momentum was required. They supported the plans agreed by their chief negotiators to intensify the talks in July and to create the most conducive conditions for concluding and ratifying a deal before the end of 2020.”
Behind the diplomatic language, this means that exactly half the period allowed for the two sides to reach agreement on their future dealings in areas including not only trade but also energy, security, fisheries and future participation in EU research and cultural programmes has gone – and there has been little or no agreement on any of the main topics.
Having urged the Europeans to greater efforts in the months remaining, the Prime Minister then spelled out how difficult the task ahead will be. He told reporters: “We can't have the involvement of the European Court of Justice in this country. We can't have a system whereby we continue to have to obey EU law, even when we're out of the EU. And we've got to get a great deal for our fish.” With the EU representatives being equally adamant that they are not prepared to give way on their demands for the UK to maintain parity with EU employment and environmental standards, where is the hope for any sort of deal? A group of UK MPs think they may have the answer.
Give a little
A cross-party report, agreed unanimously by Parliament’s Committee on the Future Relationship with the European Union, outlines what needs to change if a deal is to be agreed. On one point, the MPs are certainly knocking on an open door: they want an end to video-conferencing and both sides to the talks have agreed that the restrictions caused by the coronavirus have severely hampered recent discussions with face-to-face meetings likely to return.
The report then looks at the main points of disagreement and suggests, with regard to the contentious issue of the “level playing field” for example, that an agreement should take as its starting point the de facto alignment of the UK and the EU when it comes to current rules and standards, with future market access dependent on continued adherence to these standards. Instead of insisting that the Court of Justice must adjudicate on any disagreements, the Committee argues, the EU should then accept the establishment of an independent body.
Blueprint for compromise
Available at https://publications.parliament.uk/pa/cm5801/cmselect/cmexeu/458/45802.htm, the report urges the Government to make good use of the additional six months it has in hand following its decision not to immediately impose customs restrictions on imports from I January 2021. With extensive consultation and discussion, the Government must ensure that the new arrangements work for everyone involved, including HM Revenue and Customs (HMRC), port authorities, businesses and logistics firms. At the same time, the report highlights, the Government must consider the needs of UK exporters, who are set to face full controls from 1 January with additional documentation and costs. It was noticeable, in this context, that the Commission did not respond to the Government’s decision not to impose checks on imports with a reciprocal delay regarding inspection of UK exports.
The Government must also prepare a plan in case an agreement is not reached, the report insists. This should include what support it intends to give to sectors that would be particularly affected, for example, by the introduction of tariffs on certain products. It should also set out the preparations it believes are needed whether or not an agreement is reached and publish an assessment in the Autumn of both how far advanced these preparations are and of the likelihood that they will be completed in time.
Defending on two fronts
With his fondness for quoting Churchill, the Prime Minister will presumably be aware of the military maxim that it rarely makes sense to fight a war on two fronts. That is the position he will face, according to another group of MPs — the Commons Public Accounts Committee (PAC) — if he takes the UK out of the Union without a deal while the economy is still on life support after the impact of the Covid-19 pandemic. In “EU Exit: Get ready for Brexit campaign”, available at https://publications.parliament.uk/pa/cm5801/cmselect/cmpubacc/131/131.pdf, the PAC warns that businesses will not have the capacity to cope with two sets of messages and instructions.
The original “Get Ready for Brexit” campaign was launched on 1 September 2019 with a budget of £100 million and the aim to ensure that everyone was prepared for a potential “no-deal” outcome. Despite spending £46 million of taxpayers’ money before aborting the campaign on 28 October, when an extension to the UK’s membership of the EU to 31 January 2020 was agreed, the Cabinet Office has, the PAC claims, been unable to demonstrate that the campaign led to people being better prepared for the UK leaving the EU. The report questions whether the Government could do better if it again needs to prepare businesses for a no-deal Brexit, at the same time as expecting them to cope with the coronavirus. Especially, of course, as there is no guarantee that the new leaving date will not coincide with a winter return of the virus.
Don’t forget Northern Ireland
It has not featured greatly during the talks but at some point the two sides will need to agree on implementing the Northern Ireland Protocol. According to the EU, this was signed and agreed by Mr Johnson; according to the Prime Minister, the wording is subject to interpretation. A Cabinet Office paper, “The UK’s approach to the Northern Ireland Protocol” is available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/887532/The_UK_s_Approach_to_NI_Protocol_Web_Accessible.pdf reminding businesses that, when the Protocol does come into force, there will be changes to the way goods move between the two parts of the UK.
As to whether individual firms will be affected, the answer is, according to HMRC, that they will be if they answer yes to any of the following questions:
Do you move goods between Great Britain and Northern Ireland?
Do you move goods between Great Britain and Northern Ireland on behalf of someone?
Are you based in Northern Ireland and currently receive goods from Great Britain?
Do you send parcels between Great Britain and Northern Ireland using Royal Mail or an express operator?
There’s always the WTO
Resorting to the rules of the World Trade Organisation (WTO), has always been a reasonable fall-back position according to the present Government. Leaving aside the fact that the WTO is currently hampered by a United States President intent on weakening its influence, and by the increasing protectionist measures introduced by its members in the face of ongoing trade disputes and the impact on supply lines of Covid-19, would it really be a viable alternative to a Brexit deal?
Not according to think tank UK in a Changing Europe which has published “What would trading on WTO terms mean?” in which it argues the WTO option would significantly disrupt trade between the UK and the EU and even some UK trade with other parts of the world. Available at https://ukandeu.ac.uk/wp-content/uploads/2020/05/Revisited-What-would-trading-on-WTO-terms-mean-1.pdf, the report concludes that the direct impact would be to reduce UK GDP and income per head by 3.3% over 10 years. However, with plausible estimates of the indirect impacts—in particular, the hit to productivity resulting from reduced international trade—it would rise to 8.1%.
It is worth noting that this estimate is broadly consistent with the Government’s own impact assessment, which estimated a negative impact of 7.6% of GDP. This decline is of course dwarfed by the economic impact of the pandemic but whereas it is hoped that the impact of Covid-19 will be relatively short-lived, the impact of Brexit will not.