A quick guide to the Brexit Withdrawal Agreement: Deal, No Deal or Dog’s Dinner?


If you want Marmite and I want jam on my toast, a slice with a bit of marmite and bit of jam won’t appeal to either of us.   And, it gets worse if we don’t know whether the people we are making breakfast for prefer jam or Marmite.  Then we cannot be sure what would make them happy.

That is exactly the problem with the EU Withdrawal Agreement (WA).  It’s a deal that pleases everyone a bit and nobody enough.  It’s not so much a ‘reasonable compromise’, as many Ministers are starting to say, as a Dog’s Dinner.  And it is exactly why we need a People’s Vote to clarify what we want and unite the country behind what we decide. 

I have read the WA and what people are calling a heads of agreement on our future trade relationship with the EU.  And here is what I have concluded:

Under the WA, the transition period from next April until the end of 2020 is the time when we and the EU would negotiate a Free Trade Agreement (FTA).  During those twenty one months most things would be the same as now:

  • we would continue to pay into the EU
  • there would be free movement of people and
  • goods and services would move to and from the EU without new checks

However, we would have no say in any discussions: we would be ‘observers’ at various meetings.   And we would abide by any new rules or regulations brought in during that time.

Now that is fair enough really.  Honestly, it is.  It is a stand still period during which we are out of the EU and we are in the process of agreeing a future trade deal.

The trouble is imagine what the transition years will be like. 

It will be a further 21 months of political games and uncertainty.  And we will continue to be taking our eye off the ball of other big policies that matter such as health, energy, education and social care.  

It has taken us over two years to agree what is actually a pretty straightforward WA: essentially the status quo minus influence on rules and preserving free movement.  If the transition period is extended, it will split the UK between GB and NI.  From the experience of the WA, it will take much longer than twenty one months to agree an FTA.  Maybe three years.  Maybe more.

As for the heads of agreement on the FTA, it sets out to be ambitious and comprehensive.  The aim is to have tariff free trade between the UK and the EU, as long as we share the same standards.  Both the EU and the UK teams agree this makes sense.  What does that mean?  Well if we create other FTAs – say with the USA – that alter our regulations, or we decide to change our regulations for other reasons, then there will have to be border checks and other sources of trade friction that reflect the changes.  It’s how trade deals operate.

So, the deal makes sense from the EU side but presents major dilemmas from the UK side.  We can avoid a harsh No Deal exit but that is just the beginning.  Even if we get a decent FTA we will be faced with the choice of either staying close to the EU (our biggest market) with no influence or cutting those ties and seeking growth elsewhere.   And I have to add that the irony here is that that growth could also be achieved anyhow without sacrificing our trade with the EU if we were to remain.

These questions should not be left to politicians to answer.  It’s a huge decision that will change our lives and those of our children for a long time.  That is why we need a People’s Vote: to look the decision in the eye and resolve the key questions now we know the real options.

Dr Domonic Swords

Dominic is a Professor in Business Economics and has over 25 years of international experience working with blue-chip companies around the globe. Dominic is a regular contributor to the Hope For Europe blog so watch this space.

 

 

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