The Brexit Deal, Explained
By: Dave Olsen
Tags: Politics, Brexit, Covid 19, Economics, UK

The Brexit Deal, Explained

The UK and the EU have finally agreed to a new future relationship, which begins on January 1st. What is in the deal?

December 24th — Christmas Eve — and the UK and EU were unveiling the deal that had been haggled over for 11 long months, all the while with the pandemic that has taken over the world this year distracting the leaders on both sides.

Lord Frost and Michel Barnier, the lead negotiators for the UK and EU sides respectively, worked through the majority of the deal at speed, and yet, in the final few months of the transition period, it seemed like no progress had been made at all.

As I wrote at the exact time that a deal seemed the least likely it ever had in the process, the EU were standing firm on their demands that the EU continue to have access to British waters and that the UK either align with its standards to ensure the integrity of the single market, or face tariffs on its exports.

Despite the persistent hopes of Brexiteers — like Prime Minister Boris Johnson — that the EU would give Britain a special level of access to its markets upon leaving the bloc, the message from the EU side was as clear as it always has been: the UK could not have its cake and eat it.

The EU proposed a system of dynamic alignment, whereby, if either side wished to diverge in standards, the other side could impose retaliatory tariffs, at the normal World Trade Organisation levels. However, where the two sides were happy to continue to mirror each other in regulation, there would be zero tariffs, which has the crucial advantage to both the UK and the EU of maintaining peace on the island of Ireland by ensuring that the border checks are kept to a minimum.

As I wrote at the time, this arrangement made perfect sense — it was the only way to ensure that Britain did not crash out on WTO terms, nor become a vassal state of the EU, and to ensure the integrity of the single market and customs union, which are central to the continued existence of the EU as we know it. The level-playing field is maintained by this relationship, but Britain’s sovereignty is not compromised.

And, sure enough, the UK gave into this demand. Two weeks ago, Boris Johnson disingenuously and wrongly described the proposal to the Cabinet as Britain being made the “twin” of the EU — turning into a vampire state which had to follow the EU no matter what. Now, he’s trumpeting it as the best thing since sliced bread. And that’s because he knows that it is better than leaving without a deal, in the middle of a pandemic which has seen Britain’s GDP fall by over 11%, one of the deepest recessions in the world this year.

The UK and EU agreed, on the subject of fishing, to a five-and-a-half year transitional period, from the current arrangement of total reciprocal access into each others’ exclusive economic zones (EEZs), to an arrangement whereby the EU will have access to Britain’s EEZ, but will have to return 35% of the value of the fish caught to the UK. The UK negotiating team was holding out for 45%, while the EU wanted 25%, and so this compromise is indicative of two sides that really needed a deal for the good of their ailing economies.

The issue of fishing became symbolic for Brexiteers, who sought to reclaim sovereignty and “take back control” from the “unelected bureaucrats” in Brussels. It was rhetoric that cut through in the referendum, but many fishing communities would argue that they have been sold out by this deal, with very little sovereignty over UK waters being genuinely returned to the UK. The government, though, was probably right to compromise on this aspect of the deal, given that fishing makes up just £1bn of the UK’s £2trn GDP.

However, one aspect of Britain’s future relationship with the EU was notable in its absence from the dynamic alignment arrangement: services. Primarily, of course, trade between different countries is in physical goods rather than any kind of services, but the sector still makes up 80% of the British economy and a small proportion of its trade with the EU, with the financial services sector — Britain’s leading industry, making up about 20% of the economy — being particularly badly hit. World Trade Organisation terms will now apply to services on both sides, which could still hit the economy badly in spite of the deal on the trade of physical goods.

There are a number of other side-considerations with this deal: for example, the government has confirmed that there will be no future cooperation on defence and foreign policy, but that there will be continued security cooperation to prevent terror and human trafficking plots. However, many in the UK’s security agencies have affirmed their view that the UK will be less safe following its departure from the EU, and vice versa. It is yet to be seen whether there will be any significant impact from this or not.

And, much to the consternation of language enthusiasts and students, the Erasmus+ scheme will no longer cover the UK, meaning that British students wishing to apply to European universities will now face a tougher application process, higher course fees, and higher living costs. The government dismissed a parliamentary motion earlier in the year which called for the government to keep the Erasmus programme in place, saying that they would do so but did not want to be bound by parliament. They have defended this reversal in policy by saying that there will be a new, UK-only system to ensure that British students can study abroad, but little detail has been provided on the proposal or when it might come into existence yet.

This is the deal which the House of Commons passed with a very large majority in just five hours yesterday, and the House of Lords has too given its consent to the deal, giving it legal force in the UK. The EU Parliament will vote on ratification of the agreement later, but there will not be a gap between the end of the transition period and the start of the new arrangement, as the EU Commission has given it provisional assent.

The politics of the vote in Parliament was interesting: almost every one of the 360+ Conservative MPs voted for the deal, with only two veteran Eurosceptics abstaining, on the grounds that they thought the deal gave the UK legal sovereignty but not de facto sovereignty. On the opposition benches, the vast majority of Labour MPs voted with the party whip — to back the deal — though there were 36 dissenters who abstained, along with the former Labour leader Jeremy Corbyn, booted out of the party by new leader Keir Starmer following his downplaying of antisemitism in the party, and former Labour MP Claudia Webbe. 72 MPs voted against the deal — those of the Liberal Democrats, SNP, Plaid Cymru, the DUP, and the Green Party, along with one solitary Labour MP, Bell Riberio-Addy.

Though none of the opposition parties thought the deal was a good one, Labour took the more pragmatic stance that it was a choice between a deal and no deal, while the other opposition parties voted against to protest against the deal, safe in the knowledge that a no-deal outcome was simply not going to happen due to Labour’s support. The DUP’s opposition was significant, as a Eurosceptic Northern Irish party which believes in the Union. Their position was that the deal did too much to cut Britain off from Northern Ireland, leaving the union in a precarious position. Suffice to say, the debate over Northern Ireland’s future will continue for some time yet.

So too will the debate over the future of Scotland, after the SNP, which have most of Scotland’s seats in Westminster and are on course to win a big majority in the Scottish Parliament elections in May 2021, voted against the deal, labelling it a bad deal for Scottish fishing communities and farmers, as well as repeating their belief that the UK should have remained in the EU.

The SNP are demanding a second independence referendum, but with polls showing a consistent lead for the independence side, the government in Westminster is desperate to avoid that. The Brexit process may be over, at least for now, and the pandemic drawing to an end as the vaccines are rolled out, but the future of the union will now endure its greatest test since the Irish War of Independence.