Saturday 20 February was the 50th day since Boris Johnson’s Trade and Cooperation Agreement (TCA) came into effect. Anyone expecting it to settle all questions, or even most of the details, of how we will do business with the EU from now on will be mightily disappointed. The proverbial expression of something being ‘as full of holes as a colander’ is inadequate to describe the TCA. It is not so much a colander as a shooting range target full of bullet holes or, in some sectors, gaping vents left by cannon fire.
Not to be confused with the Irish Protocol, which is part of the Withdrawal Agreement treaty, and has problems of its own, the TCA was always intended to be a framework, on to which other, sectoral agreements could be bolted. In terms of content, it is similar to the EU’s deal with Canada and Japan, two countries thousands of miles away, with free trade deals with their large neighbouring markets and no land border or roll-on-roll-off ferry routes with the EU. Oh dear. Spot the first design flaw.
The government is dismissing complaints about the TCA as ‘teething problems’. In some instances, this may be true. However, there are also structural problems, and the government’s head-in-the-sand denial of their existence won’t fix them. For example, the new Brexit red tape, which Michael Gove estimated would cost business £7–15bn, is not going to disappear. This is a massive structural non-tariff barrier – a direct consequence of having left both the single market and the customs union.
While businesses may find process improvements to shorten the time it takes to complete the form-filling, they can’t magic it away altogether. When banging on about ‘alternative arrangements’ (in the form of technology) during the Irish backstop discussions in parliament, Tory MPs neglected to mention that most of this wondrous technology has yet to come into existence and the industry has forecast it won’t be available for 10–15 years.
Salient flaws in the TCA
There are certain items the TCA does not address at all. These include:
Recognition and enforcement of UK court judgements in the EU, and vice-versa
This will hurt us more than the EU, because the attractiveness of English law and English courts for dispute resolution, even if the case involves an EU component, supports our £60bn legal services industry. The remedy is to apply to re-join the Lugano Convention, which the UK has done. Approval will take a long time because each country has to give consent according to its constitutional norms, and consent must be unanimous. A protracted teething problem, then.
Third countries used London and other centres of our broadcasting infrastructure as a base for the whole of the EU. They’ve now had to physically relocate to the EU to maintain their licence to broadcast in the territory. Its omission is not wholly unexpected, as the EU has never included this in any of its previous trade deals, but another thump in the gut for poor Britannia nonetheless. Broadcasting was another of our golden industries.
Mobility The EU offered to include its standard mobility provision (a degree of freedom of movement) in the TCA, but the UK government refused, and then lied about the refusal to the public when the clamour – which is ongoing and growing in volume – arose. We’re already seeing ‘EU passport holders only’ job ads. Welcome to two-tier Britain, where those who still have freedom of movement as EU citizens have far greater opportunities to prosper.
The government is encouraging working-class voters to ‘hate’ the middle classes and feel no empathy for those whose business model or career is destroyed by the end of freedom of movement. Resist this narrative! It’s not just fancy business people who can no longer travel freely to the EU for work. Musicians and their crew, those working in fashion, creatives, those working in filmmaking, hospitality workers (receptionists, chamber maids and bar staff), tour operators, teachers, construction workers, and so on are also cut off from opportunities in the EU. These are openings working-class people have traditionally been able to take advantage of to escape the lane in which the Tories would restrict them. It’s a form of ‘know your place and stick to it’. Not exactly levelling up.
A lighter-touch sanitary and phyto-sanitary (SPS) regime
Our government could have opted for a phyto-sanitary agreement like the one New Zealand has with the EU. But no. Our exporters are subject to a full-on WTO-style SPS regime. We now have the ridiculous situation where it’s easier to export lamb to the EU from New Zealand than from Wales.
A grace period for goods’ trade
The transition period was meant to be for businesses to prepare, since preparation may involve relocation, recruitment, upskilling, reconfiguration of processes, IT system modification or even new systems. This is not something businesses can just do from one day to the next. It takes months of planning and even longer to implement. Unfortunately, our government is hostile to business. It ensured the transition to new arrangements would be as bad and brutal as it was possible to be by squandering the entire transition period to ‘negotiate’ this damaging deal. That said, the government has accorded itself a grace period because it simply isn’t ready to fulfil the third country requirements the UK had once helped to define. As a result, we are possibly in breach of WTO regulations.
There are other items the TCA addresses only partially.
Separate talks will have to be held on granting UK financial services ‘equivalence’. This is an EU system that gives single market access to the financial firms of a third country, if their regulatory environment is considered to match EU requirements. It’s not as good as passporting, as third-country firms have to seek approval in each individual member state, which adds delay and cost, but it’s far better than nothing. An outline as to how these discussions will proceed is expected by the end of March. In the meantime, the UK continues to haemorrhage businesses, assets and highly skilled people to the continent.
There was a sense that some of the more extreme Brexit elements wanted to bring the City down a peg or two. This is the ultimate nose-spite-faceism, as the City contributes 10 per cent of the UK’s overall tax take. Given that 40 per cent of the City’s revenues are derived from the EU, that tax take is now under pressure. Dominic Raab dismissed this as the EU being able to ‘nick a bit of business’ off us.
Many people might not realise that we are benefitting from a grace period in the general data protection regulation (GDPR). It ends on 30 April, but can be extended by up to two months. The EU is yet to rule on the ‘adequacy’ of our data protection provisions. It is all very well saying that, since the starting point is the same, they should just go ahead and grant us adequacy. The issue is not the point of departure, but the destination, and our government has been vociferous about its intent to diverge.
Normally, countries sign trade deals because they want to converge, not diverge. Johnson has made a song and dance about our sovereign right to diverge, without ever considering how divergence will impact trade. Indeed, this damaging divergence for divergence’s sake appears to be a complete farce. He has no clue where we could diverge and has called on business leaders to make suggestions. Some business associations have reported being ‘badgered’ by the government to come up with ideas and have actually stressed the imperative for close alignment. Not what Johnson wanted to hear, but then he’s never known enough, or been interested enough to learn, or he would have expected this response.
A former Tory cabinet minister involved in a previous red tape repeal exercise told the Financial Times: You cast around and find virtually nothing anyone wants to repeal. Then you find there was a reason it was put there in the first place.”
When we see all the division, disruption and loss caused by Brexit, we are entitled to ask, “What was the point?” Brexit was a Trojan horse. Even though they are still lying about it, our government (and especially our international trade secretary) knew full well that Brexit was not a trade optimisation strategy. They went ahead anyway because they knew it would give them cover to inflict a far-right agenda on the country. Small state, big rewards for the chosen few, low tax for the rich and corporates, skeleton public services and slavery to debt for the masses – with a large chunk of that debt being healthcare costs. Oh, but the Tories have said over and over again that our #NHS is not for sale. Yeah, and they’ll repeat that over and over again, until the day we realise that it has been sold off piecemeal, with only the brand remaining. And that is how they’ll claim that they did not sell off the NHS.
This wasn’t on the EU referendum ballot paper
Say what you will about the EU, but it strives to balance the competing demands of corporates, consumer protection, social rights and the environment. Our government wants to skew everything towards protecting only the highest echelons of society. This is why, for example, it is moving away from the ‘precautionary principle’, which placed a burden on those selling products to ensure that they were safe before coming to market with them.
The alternative is the American-style ‘evidence principle’. Don’t be fooled by the use of the positive descriptor ‘evidence’. The evidence principle shifts the responsibility to the regulatory authority to show why a product may not be sold on the market. Unlike the precautionary principle, outright bans are usually frowned on as disproportionate – in other words, a degree of collateral damage is tolerated to allow the business to operate. Too bad if you’re one of the ones who gets killed.
What hope for the future?
Can this deal be improved? Not a lot, is the short answer. It can be tinkered with around the edges and new sub-agreements might help but, ultimately, we’re stuck until the review in 2024, which is likely to come after the next general election. It could mean either closer alignment, and therefore fewer problems, or no deal. The bad news for all of us is that Johnson has put Lord Frost in charge – he of the North-Korean-style view that nothing should temper sovereignty, especially not British citizens’ happiness, prosperity and opportunities.
There is a quick fix, which would allay a lot of the problems, although not all. Only membership can do that. However, joining the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway and Switzerland, would ‘respect’ the referendum result, while restoring our freedom of movement and allowing for a more pragmatic trade and customs’ regime. Liz Truss should stop wasting time on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and consider it. But let’s not get ahead of ourselves. It takes two to tango and EFTA members have said they’d only be willing to let us join if we were willing to make a long-term commitment. They’re not about to be used as a ‘rebound’ relationship.