Monday, February 26

Analysis: Johnson is hurtling towards a humiliating Brexit crisis

Boris Johnson’s promise to Get Brexit Done has proved a powerful election slogan, but the prime minister’s critics claim it masks the fact that if he wins the election Britain faces a tough and potentially humiliating trade negotiation with the EU.

Michael Heseltine, former deputy prime minister, called it the great delusion, while Ivan Rogers, Britain’s former ambassador to the EU, warned last week of the crisis that is likely to confront us at the Christmas yet to come Christmas 2020.

Mr Johnson and fellow ministers have so far brushed aside any idea that a post-Brexit trade deal with the EU would be anything other than simple. Most of the work has already been done, chancellor Sajid Javid claimed.

But by insisting that a deal must be done by December 2020, Mr Johnson has set a highly ambitious some say impossible timetable for talks. His critics claim Britain is heading for another economic and political Brexit crisis if he is returned to Downing Street.

What does Mr Johnson want to do?

The prime minister says the UK will leave the EU by the end of January and then negotiate a trade deal as a third country within 11 months. We will not extend the implementation period beyond December 2020, the Tory manifesto says, referring to the deadline set by the withdrawal agreement negotiated with Brussels.

Mr Johnson claims a deal would be easy because London and Brussels are aligned on regulations on day one. But the question is not where Britain is now but where it might end up. Divergence from EU regulations and standards is the essence of Mr Johnson’s Brexit deal.

The prime minister proved this point on Friday when he said Britain would diverge from the EU on state aid rules, offering to make it easier to prop up ailing industries. Trade experts warned that this could distort the level playing field upon which any trade deal with the EU would be built.

Sir Ivan said last week that Mr Johnson thought Britain could enjoy autonomy and trade and regulation, on both goods and services, and on migration policy, but not suffer any downside in terms of access to the EU’s market.

This is clearly untrue, he said at Glasgow university. “It does not get any truer through endless repetition. Sir Ivan said that Mr Johnson, by creating a new cliff-edge next Christmas, had made it more likely Britain would get a bad deal.

Can a deal be done by December 2020?

David Henig, a former British trade negotiator, says simply: “I can’t see it.” EU officials warn that Brussels and the UK may have as little as five months to strike a deal, given the time needed to legally check it, translate it and ratify it.

It took four months and 10 days to prepare a draft EU/Japan trade deal for ratification — including “legal scrubbing” and translation into 24 official EU languages — and this is viewed in Brussels as an example of the bloc moving at breakneck speed.

Michel Barnier, EU chief negotiator, says the time available is “exceptionally short” and that “a first moment of truth” would come in the summer of 2020. Mr Johnson has until July 1 to seek an extension of the transition period, if no trade agreement is ready.

What sort of trade deal could the UK secure in a matter of months?

Mr Barnier says the EU’s objective will be to strike a trade deal which provides tariff-free and quota-free access on goods, as sought by Britain. But Brussels has said little about what might be on offer on services, an area where international trade agreements tend to achieve less in terms of market access.

Observers note this approach could be mainly to the EU’s advantage.

It would help maintain trade in goods, where the EU enjoyed a £94bn surplus in 2018 in trade with the UK. It might do little or nothing on services, where Britain has run a trade surplus with the EU in every year since 2005.

Sir Ivan says Mr Johnson’s plan to end free movement would lead to Brussels retaliating by making it harder for British professionals to work in Europe. “Firms are only just waking up to the huge implications on professional mobility,” he said.

Any deal would require “level playing field” undertakings from the UK — covering state aid, labour law, the environment, and tax. Mr Henig says EU member states would have their own demands, for example Poland might insist on free movement and the Dutch on fishing rights to UK waters — likely to be one of the most contentious areas in future negotiations.

Could Mr Johnson extend the transition deal?

The Tory manifesto, in bold type, says No. But Mr Johnson’s “die in a ditch” rhetoric on his previous promise to take Britain out of the EU on October 31 amounted to nothing; it has led some to speculate he might renege on this promise too.

Under the EU exit deal negotiated by the UK, Mr Johnson could ask to extend the transition until 2022, keeping Britain in a “standstill” arrangement with the EU, described by the prime minister and other hard Brexiters previously as “vassalage”.

David Gauke, former Tory justice secretary, predicts that if Mr Johnson did that then Tory MPs would try to topple him and an ambitious Brexiter Tory minister could quit the cabinet, eyeing a leadership bid. “It has been done before,” Mr Gauke said.

What happens if no trade deal is in place by December 2020?

Unless Britain agrees to extend the transition period possibly precipitating a political crisis for Mr Johnson it could instead face an economic crisis if it left the EU without a trade deal and defaulted to basic World Trade Organization rules.

Mr Johnson has refused during the election campaign to countenance a “no deal” exit from the transition in December 2020, knowing that such a prospect would alarm business and scare Remain-leaning Tory supporters.

But a WTO exit would see the erection overnight of new trade barriers, quotas and tariffs. Mr Johnson has instead simply insisted the deal will be done. “Not perhaps the most compelling argument,” said Lord Heseltine drily.