It is a sign of how low expectations have fallen that UK and EU officials privately flagged it as positive that Boris Johnson did not stage a walkout from Monday’s talks on a new trade relationship. That the prime minister and his counterparts publicly agreed “new momentum” was needed in negotiations is a step forward — even if Mr Johnson’s July 31 deadline is fanciful. The chances of no deal by the year-end have receded, a little. That should not obscure the fact that any accord achieved is set to be a pale shadow of the “comprehensive agreement” the government touted after Britain’s 2016 In-Out referendum.
Both sides sorely need an accord to preserve at least some elements of frictionless trade when Britain’s post-Brexit transition phase ends in little over six months. For the UK government, heaping new costs and regulatory burdens on to British businesses already fighting to survive the economic devastation caused by coronavirus would be grossly irresponsible. That remains true even after the government’s pledge last Friday to introduce only light-touch border controls, deal or no deal. Claims that the costs of no-deal would simply be lost amid the broader economic malaise of the pandemic are disingenuous.
EU states battling to stabilise their own economies and the single currency have a strong interest, too, in avoiding disruption. Failure to agree on mutually beneficial terms with its closest partner would, moreover, be a gift to those who would like to see the bloc weakened, such as China’s Xi Jinping and Russia’s Vladimir Putin.
Despite the slow progress to date, the outlines of at least a minimal deal remain discernible, involving no quotas or tariffs on manufactured goods. The UK would have to submit to more stringent arrangements on rules of origin than it has pushed for. On the vexed issue of state aid, a compromise can surely be found to ensure the continued “level playing field” the EU demands, with rules enforced by some kind of independent agency rather than directly by the European Court of Justice. On fisheries, a fudge is likely to allow arrangements to continue broadly as before but with a nod to Britain’s need to claim sovereignty over its territorial waters.
Rather than being straight with voters on the trade-offs, however, Mr Johnson is recreating the same narrative he used to cloak the compromises (notably on the Northern Ireland border) he made to secure the UK’s exit accord last year. The way to bring Brussels round, he says, is to set a deadline and threaten to walk away. Whatever he has to cede, Mr Johnson will claim any deal as a victory for his hardball tactics — though, weakened by his mishandling of the pandemic, he might find it more difficult to sell the result this time to his own disgruntled troops.
Yet the resulting deal will be thin gruel. A no-tariff agreement will protect manufacturers and, in some ways, the much bigger service economy: the retail and hospitality trades will benefit from no increase in import costs. But such a deal will offer precious little help to exports of services, by far the largest and most dynamic portion of the total.
It will constitute, however, a necessary first step in the renegotiation of Britain’s EU relationship, which will preoccupy governments for years to come. Failure to achieve a deal now would poison the political well, leaving the UK forced to re-engage eventually with an even weaker negotiating hand. Even a minimal deal would provide at least a platform of co-operation on which to build future talks. In that respect, a bad deal really is better than no deal.
