Friday 22 March 2019

Richard Curran: 'Backstop noise aside, Brexit is now a swamp with no way out'

On the pig's back?: Some British politicians are divided on how best to deal with food imports, such as pork, after Brexit. Photo: Reuters
On the pig's back?: Some British politicians are divided on how best to deal with food imports, such as pork, after Brexit. Photo: Reuters
Richard Curran

Richard Curran

Brexit has become a swamp. The British political classes charged into it. Ireland has been dragged into it. But nobody really knows how to get out of it.

The Brexit process has lost all forward momentum, if indeed it ever had any. It is now completely bogged down in the rhetoric of past glories for Britain, past political border nightmares for Ireland and as things stand this may be just the beginning.

Take away the distraction of the backstop debate and virtually no progress has been made in the UK on the substantive issues of what Brexit will lead to. Some progress has been made through Irish efforts on securing all of the rights connected with the Common Travel Area between Ireland and the UK.

But most of the substantive work conducted between the EU and the UK on the withdrawal is tied up in a wider agreement that now looks like a dead duck.

Agreements reached on the value of the so-called divorce bill, the rights of EU citizens living in the UK, etc, are part of a deal that has no realistic chance of progressing in the short-term.

On the wider economic issues, there is no more clarity today than there was 24 hours after the referendum result in June 2016.

In the days after the vote Brexiteers played up the value of free trade deals around the world to the British economy. Brexit was not about turning their backs on free trade by leaving the largest international single market in the world but embracing global trade.

Whither the global trade miracle now? It pops up from time to time such as in a comment piece on the 'Daily Telegraph' last Thursday. It said: "The best route to prosperity for post-Brexit Britain is to use leaving the EU as a chance to become a world leader on trade. To that end, it would be a powerful and symbolic step to host a 'Manchester Round' of multilateral free trade negotiations, kickstarting the latest round of talks that stalled in 2015 and emulating the spirit of the great 19th century northern industrial free traders."

At the start of the Brexit EU negotiations former British Brexit secretary David Davis, said a deal with the EU could be done quite quickly. Shortly after that the UK could use its new freedom from the EU to negotiate new free trade deals around the world, on better terms which would increase trade.

When Remainers highlighted the threats to Northern Ireland farmers from exiting the EU, Leavers like the DUP's Jeffrey Donaldson pointed to new beef export deals with places like Egypt, or wider free trade deals with the likes of Brazil.

These half-baked plans aren't even being quoted anymore, but instead the focus is on getting rid of the backstop and the "constitutional threats" to what Theresa May has referred to as "our beloved union".

The British government is struggling to convince major trade partners to even roll over existing EU trade deals with the UK after it leaves, never mind cut better deals. Bear in mind the UK exports more to Ireland than it does to India, Brazil and Russia combined.

We have seen with Japan where Prime Minister Shinzo Abe has indicated he would like to get a better deal for Japan than it currently has with Britain through the EU.

EU Commissioner Phil Hogan was in Australia this week saying that when it comes to trade, size matters, and the UK will not be able to get better terms on trade deals if and when it goes it alone.

Trade deals mean give and take. Better deals mean giving more to get more. The realities of this problem for a post-Brexit Britain were shown starkly in two ways in recent weeks.

Firstly, the EU has 54 separate trade agreements with outside countries and the UK is seeking to re-arrange those deals, or better them, on a bilateral basis. Just a handful have been concluded as the March 29 deadline looms.

Secondly, British trade secretary Liam Fox is said to favour cutting tariffs on food to allow British consumers to enjoy cheaper food prices after Brexit.

If the UK crashes out in a few weeks, food prices will rise almost instantly. Senior food industry executives, including the head of the company that makes Birdseye fish fingers, has said food prices will rocket by 20pc.

Brexiteers might argue this would be a short-term consequence of a no-deal exit and the country would be free to negotiate new trade agreements to replace that temporary arrangement.

That is where a 'cheap food' policy could be pursued to the benefit of British consumers, they might argue. Yet, Michael Gove, environment secretary and leading Brexiteer in the referendum campaign, said he will protect British farmers by using tariffs.

In other words, make sure that foreign food coming into the country is very expensive so the produce of British farmers would be more competitive. Any loss of international markets for British farmers, would be offset by them selling more British produce in Britain.

Logical? Fantasy? Contradictory to a Brexit world view of increasing trade through new deals?

There is absolutely no policy cohesion even among Brexit-backing Tory ministers sitting around the Cabinet table more than two and a half years after the referendum.

In Ireland we are reminding ourselves of the tragedy of border violence in the past and thereby backing our Government's tough stance on the backstop. In the UK economic debate is splintering, fracturing and if anything getting worse. Behind the backstop rhetoric, nothing is moving in British politics.

There is a compelling political logic in the Irish Government pursuing the backstop. I say that as somebody who stands to be greatly affected by a crash out no-deal Brexit. I live just minutes from the Border and cross it at least a dozen times a week.

At the same time, it has come to dominate the Brexit debate on both sides of the Irish Sea. All the while, politicians in the UK are slugging it out in the Brexit swamp.

Airbus management has warned about the serious implications for the UK of a no-deal Brexit. Car manufacturers are delivering stark warnings about their future investment plans.

News this week from Honda that it is to close its Swindon plant with the loss of 3,500 jobs is a Brexit story, despite the company saying it was not Brexit-related. The logic for pulling that plant out of Britain is very clear without Brexit.

There are global factors in the sector and an EU/Japan trade deal enables the Japanese to sell cars made in Tokyo directly into the EU market.

But, as commentators have pointed out in the UK, the Swindon Honda plant had never really delivered what it promised for the Japanese car maker. Yet, despite the disappointments, it stuck with it. Brexit has been a factor in heightening business uncertainty for major investors and that is where the Brexit factor come in.

We are constantly told that businesses can handle adversity but prolonged uncertainty is what gets them in the end.

If you look at the Brexit swamp today, there is a clear and logical chain of events that leads to a no-deal Brexit in which everybody gets remains stuck where they do not really want to be. Equally, British MPs might not let that happen. They could opt for a delay or time-out, but then what?

They would use that additional time to achieve what? Workable or realistic scenarios are hard to find.

It is far more difficult to see the clear logical sequence of events that leads to a soft Brexit or a reversal of Brexit. It isn't impossible but it is more difficult to construct a future narrative that ends with something less painful for Ireland.

Despite the British government actually agreeing a comprehensive withdrawal agreement, when you strip out the backstop noise, the political establishment in London is no further on than it was in June 2016. The UK may not crash out next month, but Brexit is only getting started.

Indo Business

Also in Business