Department for International Trade (DIT) tweets are easy to distinguish from those of other government departments by their exuberant use of emojis. “Good to speak to my counterparts from across the EEA EFTA states about our live negotiations on a new trade deal,” tweeted junior trade minister Ranil Jayawardena after the meeting on February 25th. For the benefit of those who haven’t kept up with which country belongs to what trade association, he preceded this sentence with the emojis of the union jack and the flags of Iceland, Norway and Liechtenstein. Switzerland, you see, is in European Free Trade Association (EFTA), but connects to the European Economic Area (EEA) via its own bilateral treaty.
More emojis preceded the next sentence. A pile of money, a chart with a sharply upward trajectory and a green box with a big white tick in it. Gosh. Other government departments must be consumed with jealousy at these colourful communications. “We all want a comprehensive, high-quality FTA to turbocharge the £27bn of trade between our businesses and people!”
“Turbocharge”? That’s so Jeremy Hunt 2019 failed Tory leadership bid. What will Ranil say next? “As an entrepreneur…” has to be the hot favourite. The words he did use were depressing enough though, as they show that neither he, nor indeed the Department for International Trade, have learnt a thing from the commercial carnage we’ve witnessed in the first two months of Brexit.
‘FTA’ is one of the most mis-used acronyms in the UK today, and the phrase it stands for (free trade agreement) one of the worst understood — possibly deliberately, in certain sections of the mainstream media. What’s in a name? Framing. It’s like Johnson calling himself ‘Boris’ in public and ‘Al’ in private (or even ‘Sasha’ with his Russian pals). The World Trade Organization (WTO) phrase, ‘preferential trade agreement’ (PTA), is far more honest and accurate.
PTAs are agreements between two or more countries to trade on terms that are superior to WTO terms. The only sense in which PTAs are ‘free’ is in zero per cent tariffs for trade in qualifying goods and zero quota on the amount of trade in such goods, i.e. no limits. To be deemed as qualifying, a product must fulfil the rules of origin specified in the deal, and that’s where things get complicated, as dozens of British industries will attest.
A PTA/FTA does not replicate membership of a single market and/or customs union market. Yet first VoteLeave, then our dishonest government – both aided and abetted by our supine press – convinced many voters that an FTA would give us all the benefits of EU membership with none of the obligations. In other words, something for nothing. I wonder what emoticons Ranil would use to express that level of naivety?
If I could have had a pound for every time a Brexit backer exclaimed, “Japan has just signed an FTA with the EU, and they don’t pay any membership dues” I might be able to retire right now. “Yes”, I hurled into the social media void, “that’s because Japan doesn’t have the same degree of privileged access to a market of over 500 million of the world’s better off inhabitants that we had as members. For Japan, a PTA was a step up from WTO terms.”
If there’s one thing I hope the British public learn as a result of this tragic experiment in economic vandalism, it’s the difference between a single market and a PTA. For us, a PTA is a step down, back towards the WTO terms we had managed to improve upon in some style as members of the EU. Johnson’s deal takes us so far down that we are barely hovering above WTO terms. Indeed, several industries have experienced his sketchy Brexit as if it were no deal.
There is a hierarchy of trade deals. As you move up from WTO terms, through various types of trade facilitations, on to PTAs (or FTAs, if you must), and finally to customs unions, of which the single market is the most advanced manifestation, so the amount of trade friction and customs red tape declines and prosperity increases. The trade-off is integration, manifested in mutual recognition of qualifications, harmonisation of regulation and common standards. The single market has the highest degree of integration, which decreases as you go back down the ladder towards WTO terms. It’s all to do with trust. The more parties converge, the greater the degree of trust, and the more parties diverge, the lower the trust.
What do we get in exchange for this catastrophic downgrading of trading terms and loss of trust with our nearest market? Sovereignty. We already had it, but we get a teensy-weensy bit more. As we are no longer integrated, we can make our own rules and diverge from the common standards — to a certain extent. I say ‘we’, but of course I mean our government, and only a select few of them: Johnson, Gove, Raab and Frost.
Have you experienced more sovereignty since Brexit? No, of course not. Our personal sovereignty has been greatly diminished. We’ve been stripped of our freedom of movement rights, and we still only get to vote in a general election once every five years. If anything, our government is going all out to reduce participative democracy, grabbing powers from the lower levels of our democratic architecture to centralise it in the executive (government). New planning rules are a case in point, with local people and local authorities having no say in some decisions.
Do MPs have more sovereignty since Brexit? Non plus, as the French would say. They still vote with the whip. This is particularly disturbing when Tory MPs are whipped to vote against parliament’s interests to reduce parliament’s powers, as happened recently when the vast majority voted against parliament having proper scrutiny of trade deals. Only a few braved the whip to stand up for their role as parliamentarians.
What does Boris Johnson intend to do with this new-found sovereignty? He doesn’t have a clue. He put out an appeal to businesses to come up with EU regulations to repeal. That’s the problem with these pesky EU regulations. They tend to be well-thought-out, rather good and often written by Brits. The majority of businesses don’t want to ditch them. By following EU standards, which are increasingly considered to be the gold standard of regulation around the world, global market access is assured. Companies don’t want the extra costs that come with having to meet a variety of differing standards.
So far, in the first two months of Brexit, the following industries have indicated that they have been harmed:
Aerospace; Airlines (especially cargo, charter and leasing); Architecture; Art and Antiques; Beer; Bees; Cattle and horse breeding; Charities; Cheese; Chemicals; Cars; Classic Cars; Construction; Cosmetics and Perfume; e-Commerce; Fabrics; Fashion; Ferry services; Film and TV production; Financial Services; FinTech; Fishing (especially far fishing, salmon, and shell-fish); Food and Drinks; Fresh fruit and vegetables (especially carrots and Scottish seed potatoes); Gin; Hauliers; Horticulture (especially seeds, soil, flowers, ornamental plants and trees); Logistics; Meat exporters (beef, pork and lamb); Music of all kinds; Musical instruments (especially guitars); Pet food; Pharmaceutical; Plastics; Retail; Shoes; Sport (from cycling to football to horse racing); Steel; Theatre; Travel; Universities; Whiskey; Wine and Zoos.
If you don’t believe me, just check out this long and growing Twitter thread, put together by an American professor at Rutgers University (New Jersey), R. Daniel Keleman, tracking all the things that have gone wrong since the start of the year.
The normal practice is to dismiss this sort of news as ‘carping’, or proof of ‘teething problems’, or as something that is only happening to the middle classes, which, bizarrely, makes it acceptable in the eyes of Tory MPs and the press. That will not wash this time. There are millions of working-class jobs being supported by those industries, and with chambers of commerce reporting half of their businesses being impacted, governmental denial and obfuscation won’t do. Mind you, the government is giving it a good go. Paid *infomercials* about how all this new Brexit red tape and newly-erected Brexit trade barriers are helping companies to thrive and grow have been appearing in popular newspapers. It’s taxpayers’ money that is funding this obscene propaganda. Insert an infinity mirror of eye-rolling emoticons here, please, Ranil.
What businesses want is frictionless trade and less red tape. Re-joining the EU isn’t on the cards as long as we have a Tory government, and possibly not in the first five years of a Labour government either. The former, due to ideology and the latter to Keir Starmer’s fear of the reaction of ‘red wall’ voters who abandoned Labour in 2019 -most by staying home, but a small fraction by voting Tory. Besides, it is unlikely that the EU would want us until there is a majority in both major parties for ‘rejoin’ and our creaking, antiquated democratic system has undergone reform. Never again must we be able to undertake such all-encompassing constitutional change which harms not only ourselves, but also others worldwide, on the basis of a narrow majority vote (never to be revisited, despite new information) tainted by interference.
We can’t wait a decade or two. We have to stop the Brexit bleeding now. There is another option, far quicker than an Article 49 process to rejoin the EU, that would alleviate the problems businesses, particularly small businesses, are facing: join the European Free Trade Association (EFTA). That would respect Brexiters’ desire to leave the EU, but provides a solution that Remainers could live with, and which would protect British trade from some (but by no means all) of the ravages of Boris Johnson’s disastrous bare-bones deal. (No, ‘disastrous’ is not an exaggeration when people are losing jobs and businesses, and being driven to despair.)
EFTA would re-admit us if we considered it a long-term solution, but not on the rebound as a ‘Norway-for-now’ stop-gap. The accession process is relatively simple. According to Article 56 of the EFTA Convention, “Any State may accede to the Convention provided that the EFTA Council decides to approve its accession, on such terms and conditions as may be set out in that decision.”
Would George Eustice champion EFTA-membership today? Is DIT sensible enough to consider this possibility? At the moment, no. Eustice will toe the party line. Meanwhile DIT is far more interested in haring off after membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which won’t solve a single problem that our businesses are currently experiencing due to Brexit, or provide sufficient opportunity to compensate for what our government has casually sacrificed on the altar of its destructive Brexit ideology. We already have PTAs with all but the two smallest CPTPP countries, so joining is far from urgent. It’s a nice to have, not a need to have. Furthermore, joining EFTA would not bar us from later joining CPTPP.
The UK’s entire trade policy is built around selling off our orchards of apple trees for the golden apple of sovereignty. Upon delivery, we find it’s just a regular apple covered in golden paint that’s still wet, and inside it is riddled with worms. One day government will have to face up to the truth that its rotten Brexit apple is inedible.
