Brexit Institute News

The Certainty of No Deal post Brexit?

Alan S. Reid (Sheffield Hallam University)

Given that horse racing has recently returned to UK shores, the nation can once again partake in one of its favourite pastimes – taking a punt. The biggest gamble facing the United Kingdom beyond the Covid-19 pandemic is the default of No-Deal Brexit after the expiry of the transition period on 31st of December 2020. Under the terms of the UK Withdrawal Agreement with the European Union, the transition period[1] simply expires after the end of 2020, with or without a trade deal being agreed between the UK and the European Union. If no trade deal has been negotiated by that point, then future trade taking place between the UK and the EU is undertaken on default WTO terms. Such trade is more difficult and complicated than that at present, with the imposition of tariffs, quantitative restrictions (quotas) and rules of origin requirements for trade in goods and market access restrictions placed on the provision of cross-border services. Smooth, frictionless trade relations will become bumpier, rougher and more turbulent in the future.

After the UK left the EU at the end of January this year, the Brexit clock was reset and commenced a new urgent trajectory, hurtling towards the end of the year. Trade experts have lamented the narrow negotiating window of 11 months, given that on average, even basic free trade deals tend to take around one and a half years to negotiate and around double that time to implement across the globe. Specifically as regards EU free trade deals, negotiations between the EU and a prospective trade partner have, in the past, taken from over a year and a half to five and a half years to negotiate and are often accompanied by further implementation periods.

This challenging timeframe was looking incredibly ambitious five months ago, but with the events of 2020 so far, the timetable now simply looks preposterous. Covid-19 landed on the European continent even before the UK had left the EU and since then the ensuing pandemic has consumed immense amounts of political capital on both sides of the English Channel.

Beyond the immense challenges of Covid-19, the mood music from the negotiations does not bode well for a comprehensive trade deal to be struck between the EU and the UK.

Of course, negotiations always entail a certain amount of bluster, bravado and playing to the gallery. However, the pandemic has exposed, more than ever, the gulf that exists between the two sides.

On the European side, the European Union is looking less united than it has been for the entirety of the Brexit negotiations. During the Brexit negotiations, the EU faced a weak and confused UK government that had a small majority in the House of Commons and was itself unsure what outcome it desired from negotiations. This disarray emboldened the EU and securing the terms of the ‘divorce’ deal was the single objective of the negotiation, enabling the 27 member states to easily agree on and coalesce around this objective.

The Covid-19 pandemic has exposed EU member-State divisions. Problems with the supply of PPE across the EU in the early stages of the pandemic and recent disagreements over Coronavirus funding have exposed pre-existing fault lines in European solidarity.

Further disunity has been shown over the EU legal system itself and its pivotal pre-eminent status in the legal systems of the member states via German Federal Constitutional Court jurisprudence, unprecedented ECJ displeasure at the judgment and subsequent European Commission intervention. Challenges to the legal authority of the ECJ pose an existential risk to the entire EU legal integration project.

A post-Brexit trade deal with the UK is not the same priority for the EU as the divorce deal with the UK was. Notwithstanding the enormous diversion of Covid-19, the member States of the EU do not share the singularity of purpose that they had pre-Brexit. The trade deal with the UK matters more to some member states than others. For example, the issue of fisheries and access to the rich seas of the UK is of vital import to western coastal states of the EU but of less interest to land-locked eastern states.

For the UK’s part, the cracks in the EU’s defences may allow it to engage in classic divide and conquer tactics. Boris Johnson’s majority in Parliament has strengthened the UK’s negotiating hand since his government has significantly more wiggle-room to both dominate the UK Parliament and thus secure approval of its legislative programme and to more easily dismiss domestic criticism from the populace. At meetings of the UK-EU Joint Committee, the UK has adopted a markedly aggressive, bullish and confrontational tone.

Covid-19, contrary to conventional wisdom, has emboldened the UK Government rather than subdued it. The economic risks to the UK caused by a No-Deal Brexit would compound an already parlous economic situation caused by Coronavirus. In such a situation, rationalist economists would expect the UK Government to do everything to minimise the risk of further economic shock, such as seeking an extension to the transition period. However, the UK Government is wedded to the end of year deadline. The justification for doing so is based on a number of assumptions: First, the idea that global trade is already heavily negatively affected by the pandemic and thus the EU and other potential trade partners will be eager to strike a trade deal with the UK; secondly, the optics of Covid-19 mean that the economic hit to be caused by No-Deal Brexit may be successfully subsumed within already dire economic statistics and thirdly the mantra of ‘Get Brexit Done’ requires non-deviation from the deadline and dogmatic adherence to the purest of Brexits. This last reason may be the one that is the most compelling.

The deadline for agreeing a one or two year extension to the transition period expires at the end of June[2]. During this month, the next meeting of the UK-EU Joint Committee will take place on the 12th and Boris Johnson is scheduled to meet Ursula von der Leyden in the middle of the month to gauge progress. Newspaper reports stress that the talks are at an impasse and as such agreement looks as far away as ever.

Thus, at present, the odds on the UK and the EU reaching a deal are looking more like 1,000,000 to 1 than a dead cert.

Alan S. Reid is a Senior Lecturer in Law, Sheffield Hallam University. The author welcomes comments on the blog at a.s.reid@shu.ac.uk.

The views expressed in this article reflect the position of the author and not necessarily the one of the Brexit Institute Blog

Image credit: No 10, Boris Johnson Covid-19 Presser 03/06

References:

[1] Article 126 of the Withdrawal Agreement.

[2] Article 132 of the Withdrawal Agreement.

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