THE BREXIT DETAILS EDITION

In this edition: The terms of the Brexit deal were made public last week. Some quick takeaways. While messy and still blurry, the deal will pass and it represents something like a win for PM Boris Johnson. Is it a win for Britain? Not so much.

Share The Stringer by Daniel Mollenkamp

Brexit: a messy and still blurry divorce settlement

 

The terms of the Brexit deal were made public in the last few days, narrowly escaping a “no deal” and immediately launching a PR battle over who had weaseled more concessions out of whom. 

 

The British parliament will sit to ratify the deal on December 30th, but everyone expects a favorable vote since the Labour Party has said its MPs will support it. It is worth noting that the standstill period ends on December 31st.

PM Boris Johnson had promised a comprehensive and enticing free trade agreement. This is not that. The deal itself appears more like a mutually unsatisfying compromise which will, nonetheless, be embraced as out of fear of a “no deal.” Indeed, it seems more messy than most divorce contracts. What is striking about the deal are the gaps, the omissions, the lack of clarity. It seems probable, moreover, that this deal will negatively impact the British economy in the years to come, not to mention the tangled cobwebs of new cross-boarder regulations that will ensue. 

 

However, this may represent a win for Johnson. Not only did he avoid a no deal, which he can always spin the exact— or inexact— details of, but he also lowered economist predictions of the deal’s negative impact. Early predictions held that the deal would hurt the GDP by something near 8-9%; now those predictions are closer to 4-5%.

Different visions of international politics

In the larger context of international politics, this raises the question of “sovereignty.” The twenty-first century vision of sovereignty is split between proud nationalists, on the one hand, who believe in the supremacy of a nation’s ability to write laws, and the internationalists, on the other hand, who believe in a post-sovereignty period, characterized by cooperation, joint agreements, and unions. This bitter disagreement has racked international politics over the past few years, especially, speaking from the U.S., with figures like Donald Trump who pulled the U.S. back from UN cooperative efforts. Whether this deal will allow these cleavages to scab over in Britain remains to be seen.

 

Takeaway details:

As described by the Economist, the first pass consensus of most analysts who have read the 1,255-page deal (released on the 26th) is as follows: 

  • Northern Ireland remains in the jurisdiction of the European Court of Justice and remains part of the single market and customs union, while Britain is out of it; 

  • The EU walked back its “unilateral retaliation” in the event that Britain reneges on its environmental, state-aid, or labor commitments;

  • No tariffs/quotas on trade across borders;

    1. What about barriers to trade that are not tariffs/quotas? PM Boris Johnson has commented that the deal does not necessitate any. This seems risible; an avalanche of new paperwork and customs runarounds likely await businesses that trade across the EU/Britain border.

  • Britain apparently got a five and a half year transition period for fisheries.

Significant omissions:

  • Financial services (Britain’s largest export);

    1. The EU has not yet issued an “equivalence ruling” on financial regulations, which is necessary to keep cross-boarder businesses operating

  • Data adequacy

    1. The EU has also not issued a ruling on personal data crossing borders, which many businesses rely on. Personal data has become a prominent issue for the EU in recent years.

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