How soft is the Chequers Brexit deal?

There has been a lot of heated rhetoric over the weekend about the Chequers Brexit deal. The daily telegraph has it as “the weekend the Brexit dream died“. Jacob Rees-Mogg intends to vote against it. There has been much tweeting about betrayal and treason.

Let’s recap: Two years after the Brexit referendum and 15 months after triggering article 50, and just nine months before we leave, the UK Government has finally decided what is it going to ask for by way or a trade deal from the EU.

The staggering incompetence that has allowed the can to be kicked down the road for so long does not inspire much confidence in the new proposals (because that is all they are). But what kind of a deal is it? Let’s ignore the commentators for now and and look at the Chequers statement in black-and-white. Much is still unclear. There will be a white paper later this week. Then there will be negotiations with the EU. But let’s just take a careful look at the starting position before we all go off on one.

This is not BRINO (Brexit in name only). It does not involve staying in the Customs Union or the Single Market. It is essentially a roll-your-own version of EFTA, with freedom of movement, and trade in services, excluded. The European free Trade Area, A.k.a a “Norway-style deal” means being in the Single Market but not the Customs Union.

Now, EFTA was never my cup of tea, but it was the preferred option of a number of perfectly respectable long time Eurosceptics (e.g. Christopher Booker, Daniel Hannan MEP). An EFTA-type arrangement means being a rule-taker, but only for a fraction of the rules that apply to a full EU member. Theresa May has rejected EFTA because it includes a commitment to freedom of movement. And taking account of the fact that the UK has an economy over twice the size of the EFTA countries combined, it makes perfect sense to seek a bespoke EFTA-style agreement.

A customs union is defined essentially as applying a common external tariff. Under these proposals the UK would be able to apply its own tariffs (possibly zero-rated) to goods that were not intended for ongoing export to the EU. For EU-destined goods we would charge the EU tariff, meaning that no further checks would be required at UK-EU borders (including the tunnel, ferries and the Irish border). Presumably paperwork would be issued, and this would be spot-checked in transit (as paperwork is checked anyway for compliance with all kinds of regulations), but with no new infrastructure needed.

“The UK and the EU would maintain a common rulebook for all goods including agri-food, with the UK making an upfront choice to commit by treaty to ongoing harmonisation with EU rules on goods, covering only those necessary to provide for frictionless trade at the border.”

The bolded words are my emphasis, because I have seen only one commentator address their meaning. I think this is crucial, but the plain meaning is that it should apply only to goods intended for export to the EU. We have already seen there will be two kinds of goods coming into the UK: those intended for export to the EU and those not, and these will need to distinguished and treated differently. Presumably those not intended for the EU do not need to meet the standards of the common rule-book, if the UK has agreed a different standard with the originating country. Presumably then, UK-produced goods not intended for export to the EU do not need to meet them either, where the UK has adopted a different internal standard. The logic seems to be that as our internal rules diverge from those of the EU we will need to put measures in place to ensure that only EU-compliant goods are able to be sent to the EU, and the cost of doing so will be borne by the UK. Some kind of EU kite-mark with associated paperwork would seem to be the obvious idea. The details will vary depending on the type of product.

At least that is what those words should mean, and that is what we need to watch out for in the white paper and the ongoing negotiations. If the “common rule book” were to apply to all UK-produced goods indefinitely that would be unacceptable. But if it applies only to goods on which we have not chosen to diverge, or when we have diverged, only on those produced for export to the EU, I’m entirely relaxed about that. When British manufacturers produce goods for the US market they must meet US standards, and similarly for the EU market. And if the ECJ ultimately has the final say in what the EU rules mean that is also fine. Who else? Just as UK courts will have the final say in what UK standards mean. It is only if the ECJ continues to have a say over the UKs internal affairs there will be a problem.

The danger here of course is that the Chequers proposal will be further weakened during negotiations until it turns into BRINO. But as of now, that is not what it is.

Another part of the Chequers statement that seems to have been missed by some people is the renewed emphasis on planning for “no deal”. My guess is that this is one reason why the cabinet Brexiteers have stuck around. The Chequers proposal may not be seen in the longer term as a defeat for Brexit, but rather the last chance for a close alignment with the EU. If the EU rejects it there is nowhere else to go but WTO rules (a.k.a. “no deal”). The job of Brexit supporters in the Conservative party now is to make sure that the Chequers proposals are not watered down any further, and if the Government is pushed too far then no deal (and no money) is the order of the day. The UK has not played its cards well so far. But we still have them in our hand.

 

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