Trade continued to be trending amongst the Brexit topics this week. Most importantly, the EU Parliament finally – and clearly grudgingly – ratified the Trade and Cooperation Agreement (TCA). TCA is now officially the basis for trading relationships between the UK and the EU for the next five years.
It is to be hoped that the ratification will encourage both sides to work on a constructive relationship. There were some encourage news in that respect. Thus, it also emerged that the UK would finally recognise the EU ambassador to the UK – ending a childish manoeuvre that had created bad blood for no good reason. There were also news that – despite continue problems with red tape at the UK-EU borders, trade was down merely 2 per cent in March 2021 compared with March 2020, which constitutes a recovery from February figures (these figures are based on the amount of traffic however, not the amount, type, or direction of goods that are being transported between the UK and the EU).
Politically, turmoil in the Democratic Unionist Party (DUP) in Northern Ireland and the various scandals surrounding the Brexit government have made the question of political accountability and responsibility for Brexit rise to the top of the news cycle. An issue that has gained further relevance due to more and more groups in society speaking of their betrayal by the Johnson government, most notably this week fishermen.
Fisheries: Taking back control in a multilateral world
Last week, angry French fishermen told British fishermen to ‘keep their fish.’ This week ended with the Norwegian government telling the UK government that they want to keep theirs. Indeed, the week finished with some really bad news on the trade agreements front. On Friday morning the media reported the breakdown on Thursday night of negotiations between Britain and Norway over access to each other’s fishing waters.
The breakdown of negotiations means UK fishermen have no access to Norwegian waters for the rest of the year. Radio 4’s Today programme on Friday 30th April interviewed Jane Sandell – CEO UK Fisheries Ltd in Hull – who owns the long-distance trawler Kirkella and is particularly reliant on cod-fishing in North Norwegian waters. UK Fisheries Ltd declared on its web page that the UK government has just sunk the ‘British distant waters fleet’ leaving hundreds of crew members out of work.
What Sandell had to say (BBC Radio 4, Today 30 April 2021 at 6:16am) was both heart-breaking and very revealing of one of the key features of the Johnson government. Namely, that – in spite of all the populist rhetoric, the ‘one-of-you’ theatrics, and in spite of making fisheries THE key sticking point over which the government seemingly was willing to sacrifice a Brexit deal – when it comes to it, the last thing the Johnson government cares about is the ‘ordinary (wo)man’ (as Chris Gray has nicely illustrated this week referring to that photoshopped Bullingdon Club photograph).
Sandell’s interview illustrates what ‘ordinary people’ are facing after Brexit. She said to be completely surprised and shocked by the ‘absolutely devastating’ news, which meant her fishing opportunities were 60% down due to the failed negotiations. She continued “We just don’t understand why the Government has failed our crews. […].” Asked about the future of the Kirkella, she replied: “What would anyone do with a multimillion-pound investment? We can’t leave it there in the hope the Government - that so badly let us down – does something. […] At the moment we are in total shock. We never believed that this would actually happen.”
Asked whether the government getting a deal done next year would allow UK Fisheries to keep the Kirkella, her answer was: “The government has so disastrously let us down, that, can we take that chance that they will rectify this? Defra has failed to deliver on all of the deals that we’ve previously had through the EU with countries. So, Faroe and Norway the deals have failed. Greenland they didn’t even bother starting. […] The Secretary of State needs to be explaining to each and everyone of the crew exactly why they have been let down so badly and why they don’t matter.”
These strong words are striking. But the full extent of the feelings only becomes clear when put in the context of the optimism that UK Fisheries and other Humber voices expressed before Brexit, about the opportunities presented by leaving the EU. In an article in the Hull Daily Mail, from June 2018 – a month before the Kirkella was delivered – the same Jane Sandell is quoted as ‘hailing a bright future’ for her company and the UK fishing industry. In 2018, the paper explained: “As a member of the European Union, the UK currently has to rely on negotiators from Brussels to determine the amount of fish it can catch in Norwegian waters. Outside the EU, ministers will be able to strike their own quota deals with Norway after taking back control of British waters.“
On April 30th, 2021, Brexit reality has kicked in for the Hull fishing company and its crew. Ministers’ ability to strike the promised deals has been confronted with the harsh realities of the trade negotiation world outside the bloc. Here it should be noted that this episode does not involve the EU in any capacity. It was a negotiation between the Norwegian government – not an EU member – and the sovereign UK government. It will be difficult to blame the EU for the failure of the negotiations. Indeed, this was one of the many deals that was meant to show that the UK is in a better bargaining position outside than inside the EU. And yet, even when negotiating a fairly simple deal (over just one product: fish), with a country of 5.5m people, the UK government failed to reach a deal that was “balanced and in the interests of the UK fishing industry” (the government’s self-declared criterion for not walking away from the negotiations). It does make one wonder what this implies for negotiations with the USA, India, and Australia among others.
One may argue that this is just one company – Fisheries UK Ltd. – suffering from a Brexit whose benefits ultimately will far outweigh such individual anecdotal stories. That argument, of course is not entirely false in the sense that we should not overly rely on individual cases. It will take time to systematically compile the comprehensive data needed to assess what exactly Brexit is doing to the UK economy. But for now, the negative anecdotes are ‘piling high’ to use one of the PM’s phrases.
Britain’s competitive advantages – What’s happening with services?
The lack of including services in the TCA also increasingly turns out to be disastrous for people working in this industry. Thus, in the 30 April episode of Radio 4’s Today programme (@6:20am) a UK-based conductor was interviewed about the travails that UK musicians are facing following a Brexit deal that does not cover their profession. What used to be a very straightforward thing to do while we were a member of the EU – namely go on tour in Europe – has become an administrative nightmare for musicians and orchestras. Indeed, each EU member state applies different rules for work visas, with some limiting the number of days a national from a third country can reside in the country to 90 days in any 180 days period, others to 30 days etc. Rules also vary by nationality of the person seeking the work permit, which makes – as one can imagine – the organisational aspects of a tour with an orchestra unmanageable. There are also stories of musicians having to turn down work, because they knew they would otherwise overstay their visa.
Asked whether the UK could negotiate a deal on services with the EU that would apply one rule to all EU countries. David Henig of the European Centre for International Political Economy rightly pointed out that no third country had such a deal with the EU while staying outside the single market. Indeed, the EU did not have any strong reason to seek such a deal with the UK. As the world’s second largest service exporter, the UK is ‘a super power’ and the EU will not see much benefit in granting extensive market access without receiving anything significant in return. The UK Government – on the other hand – still according to Henig – currently does not show much interest in striking extensive service deals with other countries, which is surprising – given that this is where the UK’s real competitive advantage lies - and not surprising – given the government’s (lack of) understanding the nature of post-Brexit trade world – at the same time.
Regardless, the failure of the Norway deal on fishing water access is a big blow for the people concerned and once more illustrates the lack of pragmatism of the Johnson government. Those of us whose livelihoods are not directly affected by the latest post-Brexit trade negotiations disaster may be forgiving for hoping that something good will come out of it. Namely, that another key part of the pro-Brexit faction will realise who they have put their trust in. Indeed, it may be hoped that fishermen (and women) from Devon to Yorkshire who feel betrayed by the Brexit government, will stop supporting this brand of nationalist-populist conservatism. Feelings of betrayal do seem to be an antidote against the Brexit delusion, as developments in Northern Ireland this week seem to show.
Brexit accountability 1: The Irish Sea boarder betrayal
Early in the week, it emerged that DUP members of the Northern Ireland Assembly and DUP Members of the Westminster Parliament had signed a letter of non-confidence in DUP leader Arlene Foster. By Thursday, she had announced her resignation.
The revolt against her was to an important extent attributed to her role in the adoption of the Northern Ireland Protocol, which de facto meant border checks between Britain and Northern Ireland, instead of border checks between NI and the Republic.
While some observers may feel some satisfaction about one key actor in the Brexit tragedy paying the political price for the unfolding disaster, it is far from clear whether Foster’s departure will make things better or worse in NI. The front runner to replace Foster is NI agriculture minister Edwin Poots. It is possible that he will take a hard-line stance on the NIP, thus creating further problems for the implementation of the NIP. Irish sources even consider it possible that the current Stormont assembly may break down over the issue, leading to early elections. It remains to be seen what will happen in the DUP leadership contest, but it might well be that Foster’s being held to account may make Brexit more difficult still in NI.
Brexit accountability 2? The May 6 local elections and the Brexit success
Some observers have recently expressed the view that the Johnson government may eventually be held accountable – if not for Brexit, then for breaches of the ministerial code and other inappropriate behaviours by the PM and his ministers. I see very little evidence for that happening anytime soon. Indeed, ahead of next week’s local elections, it looks like the Tories are pulling further ahead of Labour and Johnson will be rewarded rather than punished. Much of this may have to do with the successful Covid19 vaccine roll out, which really has gone very smoothly (I got my first jab last week. Well ahead of my three-year older sister back in Switzerland – not an EU member state by the way. So, no, it’s got nothing to do with the EU!).
But Johnson’s reward at the ballot box next week is not only due to the vaccine, but also because many of the people who voted for him and for Brexit remain convinced that Brexit was a success. To understand this – to me flabbergasting – assessment, I have tried to read through some articles by Brexiteers published this week.
One Billy Stokes – writing for the Conservative Woman – penned an op ed entitled ‘A common man’s fanfare for Brexit.’ The author summarises his reason for supporting Brexit in the following way “‘How can 28 countries, all different socially, economically, historically and culturally, fit into one rulebook without the strong bullying the weak?’ He goes on to suggest, that the reasons why the EU cannot work is human nature and in particular the tendency of the stronger to bully the weaker. The – involuntary? – irony in the piece is priceless: here is someone justifying their support for Brexit and – presumably – for Johnson – the PM who refused to sack one of his senior minsters despite evidence of bullying – with an aversion towards bullying!
But more importantly, Stoke goes on to argue that the EU cannot function because ‘a Greek youth grows up in a different social way, with different attitudes, from a German, Polish youth or British youth. Economically the difference in development of youth into adulthood will have differing economic implications on what is important to spend money on. Yes, some similarities exist, such as smartphones and fashion, but after that a gulf in what is important for our futures comes into the equation.’ Undoubtedly, such differences between EU members states do exist; but by that logic the UK should not exist either of course! After all, a Scotsman (or woman), a Welshman, an Englishman, and a Northern Irishman all grow up in different social ways and have different attitudes to many things. Indeed, even a person from Newcastle will have grown up with very different attitudes and economic realities from someone from Plymouth, Slough, or London. That’s precisely why political systems – such as pluralist and liberal democracies – exist that put in place protections of minorities and allow for diversity rather than requiring homogeneity. But such a liberal understanding of democracy is of course far from a Brexiteer’s mindset, which is based on the view that any political community has to be homogenous. It is no coincidence that the Brexit government seems to value the Union so little. For Brexiteers, pluralism (or even worse ‘multiculturalism’) are aberrations. Therefore, they cannot understand them.
The answer to Billy Stoke’s question (how can 28 countries live together without the stronger bullying the weaker?) is of course fairly easy to answer in the case of the EU, i.e. unanimity voting. The veto right of every member state (however big or small) over important issues forces the big bullies to compromise and listen to the minnows. That’s one – of many – ways in which a heterogenous political union can protect its weaker members.
But Brexiteers remain unperturbed by any arguments and confidently declare victory over project fear five months after real existing Brexit. Thus, a piece in the Spiked declared that Remainers had been wrong about literally everything. The piece contains the usual assembly of statements about politics (such as the prediction that Change UK may be a success) and economics (such as predictions about post-Brexit investments) made by all sorts of people at all sorts of moments in the Brexit debate. The author then picks a handful of facts or events that seemingly contradict these predictions to conclude: “Elite Remainers thought they had a right to rule. They thought their knowledge of politics, economics and the EU made them superior. But events since the referendum have shown how divorced these people are from reality. They should never be allowed to forget it.”
Clearly, the author has had enough of experts – which he calls ‘know-it-alls’! But of course, the true expert is someone who precisely does not pretend to know it all, but is very much aware of the limitations of any predictive model. Any real expert will acknowledge the limits of their knowledge and will carefully avoid conclusions that cannot be supported by evidence at hand; any prediction will always be prefaced by a statement about margins of errors and ceteris paribus (all else equal) conditions. That’s what distinguishes an opinion from a scientific insight.
In that sense, contrary to the author at Spiked, I am pretty confident that no serious Remainer ‘know it all’ will ever have predicted that investment in the UK would drop to zero post-Brexit or that there would be a complete exodus of firms from the UK. Only if those had been the predictions, would the counter argument provided by the Spiked author that Remainers were wrong because Nissan decided not to close down their Sunderland plant and the fact that 1000 new finance firms have applied to operate in the UK since Brexit, be valid.
Of course, there will be good news stories. Nissan’s commitment to Sunderland is one of them. But even such good news stories will ultimately be affected by the new economic reality that Brexit created. Indeed the viability of Nissan’s electric vehicle plans for the UK crucially depends on the UK’s ability to increase its production capacity in batteries. The fact that Nissan’s CEO has committed to Sunderland for now is not evidence that Brexit is working. Only if the Sunderland plant is thriving in the long run; and thriving more than it would have with the UK inside the EU would that be the case.
Of course, there will also continue to be inwards investment into the UK in other areas. Indeed, new trade barriers may encourage such inward investment: Wherever the flow of goods and services across border are hampered by new trade barriers, incentives are created for firms to set up shop in the market behind the barriers to avoid them. Thus, where German firms previously may have serviced the UK market through trade from their German plants, it may now make more sense to establish a subsidiary in the UK to avoid the barriers at the border. So, like I wrote back in February, as a large consumer market with 66m people, there was always going to be some increased incentive to invest in the UK post-Brexit.
Now, the problem is this: trade is a two-way street. The same incentives that may make EU companies choose to set up shop in the UK after Brexit, will make UK-based companies move to the EU, rather than service the EU market from their UK base.
The question for the success or otherwise of Brexit is what it will all mean on balance: Will there be more companies setting up shop in the UK, than will be leaving to establish shop inside the EU? One key factor here is the relative market size: the EU post-Brexit has a population of around 400m people. The UK has 66m. Moreover, many foreign companies established operations in the UK, because it was an English-speaking country with access to the EU market and as such an attractive location for European operations. While some of them may not be deterred by border controls and red tape, and while some may stay to just service the UK market, in future any company looking to establish operations in Europe will have one less reason to choose Britain. That will not mean an immediate collapse of the country and its economy, but it is a freely chosen competitive disadvantage that may cost dearly in the long-run.
But again, like I wrote last week, I should not even engage with these arguments about Remainers having been wrong and hence Brexit being a success. The premises is simply wrong: Even if – which undoubtedly is the case – some Remainers were wrong on some of the predictions they made (which incidentally often were warnings about the ‘no deal scenario’, which thankfully did not come to pass and is hence irrelevant as a benchmark), that of course does not make Brexit a success. We should be measuring the success of Brexit compared to the Brexiteers promises, not the Remainers warnings.
What about the promise of frictionless trade? What about the promise of bonfire of red tape? Why did we get more red tape not less like we were promised? Why do newspapers now celebrate as a success the fact that the ADDITIONAL red tape is not having a negative effect on trade in some goods, when we were promised there would be LESS red tape and MORE trade?
But this is the reality that Brexiteers have created with their rhetorical strategy that has turned a politico-economic question into a question of identity; allowing them to shirk any responsibility for the situation we are in. Facts do not matter anymore, because it’s a question of us (the hardworking little people) versus them (the arrogant, know-it-all liberal elite). It seems impossible to convince anyone who voted for Brexit to look at the facts and listen to the arguments. Instead, we are stuck in a sterile battle of words where the same flawed arguments have to be rebutted over an over again.
Johnson and his government will not care. They are set for yet another show of electoral strength next week. He will be encouraged to continue pursuing his current strategy and behaviours both as a politician and privately. Betraying the ‘little people,’ shirking his big responsibilities and causing more damaging to UK politics, the economy and society. Unless Johnson suddenly decides that he has had enough of politics, we may be stuck with his pernicious government for a long time. Ahead of the local elections, one voter was interviewed for Radio 4’s PM programme on April 30, 2021. He said: ‘I’ve got a lot of time for Boris. I think he has done the best he can.’ Sadly, that is probably true.