Issue 261: 2021 01 07: The Trade Deal

07 January 2021

The Trade Deal

An extraordinary achievement.

By John Watson

With the ink now dry on the new trade deal between the UK and the EU, the next stage of the domestic politics has begun.  It is true that by coming to an agreement which avoided tariff barriers on goods the Government has shot a number of foxes.  UK food prices are not going to go up and the Good Friday agreement will not be jeopardised after all.  Still, there is plenty to cavil at.  The absence of tariffs does not prevent there being more bureaucracy at the ports.  UK fishing rights at 25% are below those which might be expected for a sovereign nation.  The whole question of financial services is still open.  Plenty of ammunition there for Ed Davey, leader of the Liberal Democrats, to refer to it as a “bad deal” and to say that the British people deserved better; plenty for those who still hanker to challenge the wisdom of the referendum decision itself.  Noise there will be aplenty as Mr Johnson and his supporters claim a triumph, while those who do not care for Brexit proclaim a disaster.  Your correspondent has nothing to say on the economic or political issues but it is interesting to look at the deal as a simple negotiating achievement.

In judging whether the deal is good or bad, one has to begin with the starting position.  That is the electorate’s original decision to go for Brexit, something which the negotiators had to accept.  Given that decision, could the Government and its advisers have negotiated a better treaty?  It is hard for anyone who has not been involved in the negotiations to be sure, but there are certain points which stand out.

First, the UK’s negotiating position was not a good one.  Economically speaking we are far smaller than the EU who must initially have reasoned that we could not afford a “no deal” outcome and that accordingly they could, to some extent, dictate terms.  True, “no deal” would badly damage the EU’s fishing fleet and the German car industry but if the UK could not afford that answer those threats were hardly real.  The first objective of the UK negotiators must, therefore, have been to persuade the EU that “no deal” was not an empty threat and as far as one can see they did it successfully.

The second difficulty must have been how to handle expectations at home.  Sir Keir Starmer has said that the deal done is not the deal which the British people had been led to expect.  Well, it wouldn’t be, would it?  If the Government had led the public to expect its true bottom line on, say, fishing, it would have blown its own negotiating position by revealing it to the EU.  The position which it promised domestically had to be the same as the line which it took in negotiations.  Naturally, that line was better than what was ultimately delivered.  Of course it was.

The third point to note is the timing.  The Government forced through an agreement by a staggering show of brinkmanship, and it was essential to that dynamic not to allow extensions of time.  Anyone who is involved in difficult commercial negotiations will tell you that agreement is often driven by deadlines and that without deadlines negotiations can go on more or less for ever.  If the Government had not stuck with its deadlines – and oh how seductive some of the suggestions that negotiations should be postponed until after the covid crisis must have sounded – we would be drifting around in no man’s land for the foreseeable future.  Whatever one may think of the Government’s performance, they have spared us that.

The more one looks at the difficulties faced by Lord Frost and his team, the more one is amazed at their competence in bringing off an agreement at all.

Looking at the other side, there is another figure who deserves plaudits.  Ursula von der Leyen, Chairman of the Commission, stepped into the negotiations just when it seemed that they had slid into an inevitable ‘no deal’.  It was no ordinary position.  Any agreement which she reached with the UK had to be sold to France and a number of other EU maritime states anxious to preserve their fishing industries.  In each case the leaders of those states have a public to whom they are politically responsible.  To bring off an agreement in these circumstances is an enormous political achievement and must have required shuttle diplomacy of a very high order indeed.  If Ms von der Leyen’s performance here is indicative of her general ability, the EU has made a good choice for its new leader.

None of this of course indicates whether or not the new agreement will be a success for Britain or indeed the EU itself.  Still, as the inevitable carping gathers pace it is worth bearing in mind that reaching an agreement at all is a remarkable achievement and that the story has its heroes as well as its villains.



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