We are being softened up for a no-deal Brexit.
The rhetoric about leaving without a deal has fluctuated. At first it was a hubris-inflected “See if I care!” with an aura of slammed doors. It was accompanied by talk of offshore tax havens. Sometimes there would be a Michael Howard gunship in the background.
It quietened down as the Government realised it had to pretend to start negotiating even if it had no idea how to do so. But now the topic is back in the news, the tone has become only marginally more civilised, and two white papers on trade policy and customs which declare the Government’s readiness to prepare, among other things, for Brexit without a deal have been published.
On Wednesday (11 October) the Today programme featured an interview with two businessmen, Karan Bilimoria, CEO of Cobra Beer, and Christopher Nieper, CEO of David Nieper, the womenswear company. They were asked what they thought would be the effect on their businesses of “crashing out” of the EU. Mr Bilimoria said it would be very difficult, because the huge and tariff-free market to which he at present exported “seamlessly” would be gone. Mr Nieper said it would make no difference, it might even be an opportunity because the fall in sterling would help him to export even more. Mr Nieper’s view is shared by only 2% of UK businessmen, but the BBC wasn’t going to tell us that.
An eight-page paper by Nick Clegg, International Trade and Brexit, published in September 2016, gives a bleaker view of what would happen under “no deal.”
He lists the effects with which we are now gloomily familiar – immediate tariffs on exports to the EU, bureaucratic customs checks, loss of passporting rights, non-tariff barriers – but also notes:
“It is, for example, hard to see how any significant animal and animal product exports to the continent could continue, given that imports to the EU have to pass through designated Border Inspection Posts, of which there are precisely none on the other side of the Channel… ”
He provides a link (http://leavehq.com/blogview.aspx?blogno=128) to the website of the Leave Alliance, which gives a grimly fascinating insight into exactly what border checks can mean when the paperwork has ceased to be valid: “Your container inspection is typically about £700 and detention costs about £80 a day for the ten days or so it will take to get your results back. Add the testing fee and you’re paying an extra £2,000 to deliver a container into the EU.”
It won’t work simply to drop our own tariffs to the EU to zero and challenge it to reciprocate. For one thing, says Clegg, the EU couldn’t; WTO rules would compel it to apply the Common External Tariff. For another, if we drop tariffs on EU imports to zero we will be obliged to do the same for every other country in the world, and bang goes our negotiating capital.
Nor is it possible to put in place a simple, “quick and dirty” FTA covering essential sectors and leaving others for future negotiations. “The WTO rules require any FTA to be ‘comprehensive,’ covering ‘substantially all’ the trade between the transacting parties.”
Clegg concludes that an interim trade deal with the EU has to be in place by the time Britain leaves the EU. That will take several years and we haven’t started yet.
That we haven’t started yet is being blamed on the EU. It is accused of being rigid and unimaginative. The reality is that our negotiators cannot negotiate their brief.
The talks are stalled. There has again been no progress this week. M. Barnier is using the word “deadlock” of the financial settlement. Something is stopping the negotiations like the swinging pendulum of a hypnotist. And stopping them at the earliest stage. We are nowhere near getting to the trade talks for which the Government is desperate. Three matters – money, citizens’ rights, the Irish border – have to be dealt with first, and although the first two are tricky they are not impossible. Yet all that happens is a tidying-up around the margins.
It’s as if the real cliff-edge exists, not on the other side of a failed negotiating process, but within the minds of the negotiating team. At a certain point in the thinking, the ground gives way. A chasm appears. It cannot be bridged.
And this, I think, is the truth. The negotiations throw up difficulties of two different kinds. The first kind is a political problem, and it affects the financial settlement and citizens’ rights. The Government does not want to give ground on these issues because, after all its high-sounding talk, it doesn’t want to present a compromise to the British electorate. With intelligence, honesty and political courage, progress could be made. We do owe money. EU citizens here should be given an unconditional guarantee. But the Government is lacking in those three qualities.
The second kind of difficulty is a logical problem and it concerns the Irish border. This the Government cannot solve because it is insoluble. A border will come into existence, de facto, when the UK leaves the EU, but it has to be at the same time invisible and immaterial for the purposes of keeping the peace in Ireland, and visible and material for the purposes of keeping the EU’s customs union inviolate. Any solution will be a fudge of one kind or another; since it is a fudge it will, under pressure, fall apart (which in the circumstances is highly dangerous); and for all these reasons the proposal won’t get past the EU anyway.
Together, these difficulties compose a Himalayan range of which the negotiations are still pottering around the foothills.
The Government’s main tactic for dealing with the impasse, apart from sending out a snowstorm of official papers which do not grapple with any of the difficult points, is to blame the EU for everything. It calls on it to be “flexible,” by which it means the EU should abandon the negotiating position that has been agreed between 27 member states for their common survival. Following Theresa May’s damp squib of a speech in Florence, it declares that the ball is now in the EU’s court.
It has one other tactic. It has tried to meld the Irish border issue with its customs union proposals, perhaps hoping to bamboozle the EU into talking about customs when the EU has said it won’t, or at least to muddy the question of whether the border has been sorted out or not. The EU has refused to play. Rightly: if it allows the UK to blur the lines on this, the UK will do it again, and the talks will descend into a fog in which everything becomes something else.
Fortunately, this makes it possible to blame the EU again.
So the team representing the national interest sits in Brussels angry, checkmated (self-checkmated) and effectively twiddles its thumbs. Time passes. Nothing terrible has happened yet. Something will turn up to save it. Perhaps, it thinks, walking out without a deal will save it.
And it will: it will save both its skin and its face. That is why no deal is becoming increasingly inevitable. But there is a vertiginous price to pay for no deal. It is not just trade that will go over the edge: everything will, starting with the lives of more than four million people who will find themselves, overnight, plunged into chaos because they have woken up in the wrong country.
That may not matter too much to some Brexiters, but, when the cost becomes apparent, it will destroy the Conservative Party.
What could break the paralysis?
The only thing that can unlock the Irish problem is for the UK to stay in the customs union, but the Government is pledged not to do that. Or it could keep Northern Ireland in the customs union and move the border to somewhere in the Irish Sea. The DUP won’t allow it to do that.
The pendulum swings.
On Tuesday the Prime Minister gave an extraordinary interview on LBC radio which in any other circumstances would have signalled the immediate demise of the politician who gave it. Asked three times by Iain Dale whether, if there were a second vote, she would vote for Remain or Leave, she started by saying she didn’t answer hypothetical questions and, after much prevarication, evasion and hesitancy, stammered out, “Iain, I could sit here and I could say I’d still vote Remain or I’d vote Leave just to give you an answer to that question.
“I’m being open and honest with you.
“What I did last time around was I looked at everything and came to a judgement and I’d do exactly the same this time around. But we’re not having another referendum, and that’s absolutely crucial.”
She then said twice more, clearly seeking refuge in the statement, that we were not having another referendum.
Throughout this stumbling but dogged refusal to endorse her own policy, she looked terrified.
She is still Prime Minister, and the transcript of the interview has vanished from the website of the Guardian, which published it in full.
This unreal stasis cannot last. The pressure of the real world is growing. The hypnotist’s fingers will click, the patient will wake up. The house will fall down.