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The Financial Express

Brexit: A deal has been done


Brexit: A deal has been done

Both the United Kingdom (UK) and the European Union (EU) were engaged in negotiating a deal on trade and other issues for almost close to a year. They were locked in talks with time running out, in fact looked like both were engaged more in a game of brinkmanship. There were cautious reports of progress occasionally, also of some remaining differences. All these were happening despite Prime Minister Boris Johnson told British voters in 2019 that he had an "oven-ready" Brexit deal to submit to the EU. Political leaders on both sides said that they did not know if an agreement would emerge. They seemed to be playing a kind of shadow theatre where neither wanted to take the blame for failing to strike a trade deal between the two in case that were to happen.

After nine months of intense negotiations and just about a week left until the UK was ready to leave EU's single market and Customs Union at the end of the transition period, both sides were engaged in blame games. Michael Barnier accused Britain of putting forward "unacceptable" proposals on future fishing quotas and warned that talks could still end in a no deal. But British Brexiteers accused the EU of "cherry-picking" in their way through the conditions for concluding an agreement.

But there were two issues that were dragging the talks described as major unresolved issues by EU leaders. These were the future level of access to British waters given to the EU fishing fleet and more importantly the "ratchet clause" or what is known as the level playing field which essentially meant regulatory alignment. Fishing is a very small part of the British economy contributing only 0.1 per cent to GDP but politically very sensitive.

Eight European member countries fish in British waters and they insisted to maintain the status quo on fishing arrangement despite Brexit. The EU Chief Negotiator Michel Barnier clearly outlined the EU position last June and said, "The fisheries agreement we want with the UK would be an indissociable part of the agreement on trade and the level playing field - or to make it even more clear, there will be no trade agreement with the UK if there is no balanced agreement on fisheries".

French fishing vessels accounted for three quarters their catch from British waters. No wonder French President Emmanuel Macron was the strongest advocate to maintain status quo. But for the Johnson government that status quo must change; it was the question of British sovereignty, British waters must be reclaimed and four Royal navy ships were ready to enforce British sovereignty in the event of a no-deal Brexit which is now of course longer the case.

The idea of level playing field measures mean regulatory alignment between the UK and the EU. Such measures are designed to ensure businesses on one side do not have an unfair advantage over their competitors on the other. The EU would like the UK to follow EU rules because the single market is the most level playing field encompassing 27 member countries. So binding commitment from the UK to those rules was essential before any preferential access to the EU single market. As for the UK, the whole point of Brexit was to break away from following EU rules. The UK also asserted that it was determined to defend its sovereignty. However, both sides had agreed on a common baseline of regulations on some issues, which neither of them would go below.

The EU's position was very clear that the core of its regulatory framework needed to be retained to conclude a deal with the UK. This was necessary for the EU to negotiate trade deals with other countries. Any slackening of terms offered to the UK could be used by other countries as the base line for negotiating trade agreements with the EU and that is not very conducive to the EU's economic interests.

It must also be noted that the negotiations were not only about trade but also included issues such as police and security cooperation and access to shared data base and the EU made that clear that  those were not on offer for non-members. But a deal could help smooth the situation than no deal.

Now the UK and the EU finally agreed a post-Brexit trade and security deal on Christmas Eve after four and a half years of tense negotiations. President of the European Commission Ursula Von der Leyen said, "It is time to leave Brexit behind and continue to move forward". British Prime Minister Boris Johnson said, "We have signed the first free trade agreement based on zero tariffs and zero quotas that have ever been achieved''. He hailed the agreement with the EU as a "comprehensive Canada-style free trade deal" that would provide certainty for business.

The Brexit trade and security deal agreed on Christmas Eve runs 2,000 pages including annexes. It will enter into force once approved by both sides. The new deal will preserve tariff and quota free EU-UK trade for goods and it is the biggest bilateral trade deal signed by either party, covering trade worth around 668 billion pounds in 2019. The deal goes beyond the EU's deals with Canada or Japan.

According to the European Commission Website the deal "provides for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin". It also says both EU and UK politicians have "committed to ensuring a robust level playing field" in the next few years. Both sides have agreed on a minimum level of environmental, social and labour standards below which neither would go. There would be a review after four years to ensure the level playing field has been working. Also, there will be an overarching joint governance committee to implement and enforce the treaty.

Fishing access has been the last major sticking point between the EU and the UK and dominated the final stage of the talks. British officials say the deal will increase the British share of the catch in its own waters from about half now to two-thirds during the five and a half years of transition period and access to waters after the transition period expires. The EU also accorded the reciprocal access to its waters and resources to the British.

The agreement struck also establishes a new framework for law enforcement and judicial cooperation in legal matters, but the UK will no longer have access to the EU data base which includes criminal record information, DNA, fingerprints and vehicle registration data.

The EU called the deal a "fair and balanced agreement" while from the British perspective the country would "take back control and restore its sovereignty in full". British Prime Minister Johnson even claimed, "A deal which will if anything allows our companies and our exporters to do even more business with our European friends". But his Office for Budget Responsibility forecasts a 4 per cent decline in the country's GDP in the medium term resulting from Brexit.

A chapter in British history will close on January 1, 2021 and the UK will leave the Single Market and Customs Union and the freedom of movement will end with the EU. A new operational mode with the EU will come into effect in the form of the new "Trade and Cooperation Agreement".

In a way former French President Charles De Gaulle (1959-1969) quite rightly predicted that Britain joining the European Economic Community (EEC) - the precursor to the EU - would never end well because Westminster would struggle to "merge into a community with set dimensions and set rules".  He also said, "The nature, the structure, the very situation that England differs profoundly from those of the continent."

The EEC was formed at the Treaty of Rome, 1957 with Belgium, West Germany, France, Italy, Luxembourg and the Netherlands. Britain, of course, was notable by its absence. A statement from the French government in 1967 concluded that Britain was "not continental" and "tied to the United States" and suggested that the UK's reasons for not joining the bloc were ''understandable".

While De Gaulle had a grand vision of France to shape the destiny of Europe and thought of France as "heart and soul of Europe", yet he was realistic enough to veto the UK's application to join what was then called the EEC or Common Market in 1963. From the French perspective, to have allowed the UK to join in would have turned it into an Atlantic Alliance, dependent on America. He profoundly believed in deepening and an acceleration of Common Market integration rather than enlargement. He had deep doubts about Britain's commitment to Europe.

The UK first applied to join the EEC in 1961 and then in 1967, both attempts were vetoed by French President Charles De Gaulle. After more than 10 years of negotiation and President De Gaulle gone as President, British Prime Minister Edward Heath successfully negotiated Britain's entry into the EEC in 1972, and French President George Pompidou agreed. Finally, on January 1, 1973 the UK joined the EEC (as it was then) - also known as the Common Market.

However, Euroscepticism is nothing new in the UK. The Labour Party was always divided over Europe. During the 1975 referendum on the UK's entry, the Labour Party's Eurosceptic Member of Parliament Tony Benn argued that the Common Agriculture Policy (CAP) was a "Siege Economy" designed to favour French and harm Britain. In a speech at Parliament he referred to Charles De Gaulle's veto speech where he said the CAP would be a crushing burden on the UK economy. He then went on to say "never thought that Mr Heath would go on his knees and accept it". In fact, several campaigners including Tony Benn devoted their lives to securing Britain's withdrawal from the EU in the past as the present day ones.

There is a saying that the study of history is a subversive calling. If the UK's departure from the EU is looked from the near past historical perspective,  Charles De Gaulle very simply echoed the sentiments expressed by Eurosceptics not only in the past like Tony Benn and the likes but also the present day Eurosceptics like Prime Minister Boris Johnson  and the likes. 

De Gaulle also saw the democratic legitimacy and political energy of European institutions resting on the nation states that comprise what has now become the EU. The founding fathers of the EU did not envision a super state like the Unites States, but intergovernmental centralisation with shared sovereignty. There is something deeply disturbing about Britain under the current Conservative Party leadership of Boris Johnson. The party has in effect transformed into an English Nationalist Party threatening the integrity of the UK itself. The ebbing of British power has been on display since the end of the WWII; but with its new found "independence" from Europe may make that even more visible.

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