Chris Johns: UK’s Brexit trade stance is madness without method

Offer of tariff-free access to British economy looks clever but strategy is flawed

The British position is that nothing will change on the day of Brexit: the Border, from their perspective, will remain exactly as it is today. Photograph: Paul Faith/AFP/Getty Images

The British position is that nothing will change on the day of Brexit: the Border, from their perspective, will remain exactly as it is today. Photograph: Paul Faith/AFP/Getty Images

 

Brexit occasionally elicits light-hearted moments: one such is recent speculation that the British negotiating stance is too chaotic, too inept, to be taken seriously: channelling Blackadder, there must be a “cunning plan”.

Brussels diplomats, used to dealing with British civil servants who may be many things but never underprepared, are heard to wonder about what is coming next, what does Theresa May have up her sleeve? There must be method behind the madness, surely?

The UK’s first Brexit position paper, on the customs union, amounted to an exploration of the use of definite and indefinite articles. The UK wants to leave the customs union only to remain a member of a customs union.

The difference is easy to spot: everything stays exactly the same apart from the way in which the new customs union gives Liam Fox, the UK trade secretary, something to do, namely to negotiate trade deals with other countries – something that will be permitted by a customs union but is against the law in the customs union.

This is definitely madness without method. Why would the European Union agree to this? It’s a good question. But, at risk of looking too closely at all of this, there is, perhaps, the merest hint of a strategy behind the apparent chaos. The clue lies with the desire to leave the EU in a formal sense but with as little as possible, in practical terms, changing as a result.

Border

A similar theme emerges in the paper that grapples with the Border. Again, the British position is that nothing will change on the day of Brexit: the Border, from their perspective, will remain exactly as it is today with complete freedom of movement of both goods and people.

This approach allows the British to claim that if anything goes wrong, it won’t be their fault. Any problem at the Border will be the consequence of Brussels and Dublin putting up obstacles.

It would be a mistake to dismiss this as an empty threat. Just imagine the day after Brexit – particularly the rock-hard variety, the one that involves the UK crashing out without a deal. Imagine the British living up to their promise: no border controls, no customs checks, no change at all.

As a matter of EU law, all of the infrastructure necessary to police this new customs frontier between the EU and the rest of the world would have to be placed on the Irish side of the Border.

Think about that for a second and appreciate the ironies, the discomfort and the expense. All of the border checks inside the Republic. Nothing on the UK side.

Somebody in Whitehall is willing to bet that the Government will put pressure on Brussels to compromise, to do anything to avoid this outcome. Have the British finally discovered some negotiating leverage?

The “no change” idea has broader appeal to the hard Brexiteers. Some members of this club know that there is an economic cost to Brexit – the denials are quieter and less frequent these days.

So the tack has changed: minimise the costs by changing as little as possible, give the world (not just the EU) tariff-free access to the British economy and dump all of the consequential blame on Brussels.

This could, at a very long stretch, be described as a well thought out strategy but for one simple problem: it’s nuts.

WTO rules

As Ian Dunt, a leading Brexit critic, points out, under World Trade Organisation rules once you eliminate your tariffs with the EU you have to do the same for everyone else. The other option, simply reverting to WTO rules – advocated this week by the right-wing Institute of Economic Affairs – looks mild-mannered by comparison but would involve the UK having to build customs infrastructure on their side of the Border.

The idea that Britain could unilaterally open its (trade) borders to everybody is being pushed by free-market fundamentalists trapped in a 19th-century way of thinking.

Product standards and labour market rules are but two out of many areas where 21st-century regulations are much more significant than Victorian-era tariff barriers.

At the very least, what’s left of British manufacturing would be eviscerated by dropping all existing tariffs. Which is but one irony since many Brexit voters were precisely those left behind by the shrinking of the UK’s traditional industries.

If there is serious thinking going on it is well concealed. But all of the pointers are to a growing acceptance that there will be an economic price to be paid for Brexit. Serious people are trying to figure out how to keep these costs down. Unserious people are pinning their hopes on “no deal” and tariff-free trade.

That’s the ship of fools, the one Socrates eerily described millennia ago, where everyone wants to steer the boat, no one knows how, but all stand ready to cut down anyone who actually can navigate treacherous waters. Mutiny and madness are the inevitable results.

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