{"id":3195,"date":"2019-02-13T08:34:53","date_gmt":"2019-02-13T08:34:53","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=3195"},"modified":"2019-09-05T09:24:04","modified_gmt":"2019-09-05T08:24:04","slug":"a-spoonful-of-sugar","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2019\/02\/13\/a-spoonful-of-sugar\/","title":{"rendered":"A spoonful of sugar"},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"\"13 February 2019<\/em><\/p>\n

Dr Michael Gasiorek is a Senior Lecturer in Economics at the University of Sussex and a fellow of the UK Trade Policy Observatory.<\/i><\/p>\n

Currently, there is much focus on the politics of getting some version of the Withdrawal Agreement through Parliament. This requires a political resolution to the inclusion of the \u2018backstop\u2019 in the Withdrawal Agreement. The strategy appears to be to come up with \u201calternative arrangements\u201d which will be acceptable to the UK Parliament and to which the EU can agree. A spoonful of sugar might help the medicine go down.<\/p>\n

However, even if this can be achieved the fundamental issue will not have been resolved. \u00a0<\/p>\n

The future trading relationship with the EU is not part of the Withdrawal Agreement. This is to be negotiated during the transition period.[1]<\/a> Whatever is negotiated will then determine what form of border controls may be needed. These are typically required for two principal reasons. First, when the external tariffs between the partner countries are different. Second, to ensure that goods crossing borders meet the required standards.[2]<\/a> Unless the UK and the EU come up with an arrangement which obviates the need for both of the preceding, then the backstop will be invoked.<\/p>\n

While Mary Poppins\u2019 employer, Mr Banks, might have preferred not to \u201ccloud the issue with facts\u201d<\/em>,\u00a0 options for the future trade relationship being mooted, such as Norway+CU, or CETA+++, do not solve the need for border controls, and therefore the need for a backstop. There is, of course, one simple solution: have the same tariffs and regulatory regime as your partner country. For the UK, this means applying the EU\u2019s common external tariff, and being part of the single market. No other solution or alternative arrangements have yet been found. However, that simple solution is currently unacceptable to the UK government (because it does not allow for an independent trade policy); and is unacceptable to the EU so long as the UK insists on controls over labour mobility.<\/p>\n

So, what can the UK Government be thinking? One answer is that irresponsibly and perhaps astonishingly (although it is increasingly hard to be astonished) it is just trying to kick the can down the road, at least to get past March 29th<\/sup>, such that Brexit happens even if there is no coherent plan how to avoid the backstop.\u00a0 There may be some truth in this, at least for some. The alternative is that the Government does actually have a plan.<\/p>\n

\"\"<\/p>\n

To see what this plan could involve, both the Political Declaration\u00a0and Theresa May\u2019s response to Jeremy Corbyn\u2019s letter are revealing:<\/p>\n

In the Political Declaration (which is not a legal document) we read:<\/p>\n

\u201cthe Parties envisage comprehensive arrangements that will create a free trade area, combining deep regulatory and customs cooperation, underpinned by provisions ensuring a level playing field for open and fair competition\u201d<\/em><\/p>\n

\u201cthe Parties will put in place provisions to promote regulatory approaches that are transparent, efficient, promote avoidance of unnecessary barriers to trade in goods and are compatible to the extent possible\u201d<\/em><\/p>\n

\u201c\u2026with ambitious customs arrangements that.. build and improve on the single customs territory provided for in the Withdrawal Agreement which obviates the need for checks on rules of origin\u201d<\/em><\/p>\n

\u201cfacilitative arrangements and technologies will also be considered in developing any alternative arrangements for ensuring the absence of a hard border on the island of Ireland on a permanent footing\u201d<\/em><\/p><\/blockquote>\n

And in the response to Jeremy Corbyn, Theresa May writes:<\/p>\n

The Political Declaration explicitly provides for the benefits of a customs union – no tariffs, fees, charges or quantitative restrictions across all sectors and no checks on rules of origin\u2026 , it also recognises the development of the UK’s independent trade policy beyond our economic partnership with the EU..<\/em><\/p><\/blockquote>\n

So, what can the Government be thinking? The hope still appears to be to use a combination of technology and \u2018facilitative arrangements\u2019 to enable the required paperwork, inspections, etc, to be done some way behind the border \u2013 and preferably on-site at business premises. This picks up on the \u2018facilitated customs arrangements\u2019 (FCA) floated in last summer\u2019s White Paper, which at least from the Government\u2019s point of view is clearly not dead. It is through that combination of technology and the FCA (which will no doubt be renamed and rebranded) that the Government is hoping for \u2018the benefits of a customs union\u2019<\/em> while only taking on the responsibilities of a Free Trade Agreement, which would allow the UK to be able to sign Free Trade Agreements on goods with third countries. Note, that as we have previously argued this also does not even address the issue of services trade.[3]<\/a><\/p>\n

As Bert suggested:\u00a0 \u201ca bit of magic. It’s easy. You think. You wink. You do a double blink. You close your eyes… And jump\u201d<\/em>. \u00a0Alas for the Government, it cannot simply do a double-blink. As discussed in previous blogs, there here are many practical reasons why some form of FCA is scarcely possible, at least for the foreseeable future, and also why it would be difficult for the EU to agree to this – and we have discussed this in previous blogs.[4]<\/a> \u00a0It will also not be possible to jump. A customs union alternative has been ruled out, so unless it can convince the EU that (FCA style) alternative arrangements are possible \u2013 there will have to be a binding backstop.\u00a0If that proves unacceptable to the UK Parliament, it increasingly looks like there will be no deal. Delaying Article 50, as supposedly mooted by Olly Robbins, does not change this.<\/p>\n

<\/h4>\n

Footnotes<\/h4>\n

[1]<\/a> See, https:\/\/ukandeu.ac.uk\/explainers\/what-are-the-options-for-the-uks-trading-relationship-with-the-eu-after-brexit\/<\/a><\/p>\n

[2]<\/a> See, for example, https:\/\/blogs.sussex.ac.uk\/uktpo\/2019\/01\/17\/a-free-trade-agreement-will-not-solve-the-irish-border-problem\/\u00a0<\/a><\/p>\n

[3]<\/a> See, https:\/\/blogs.sussex.ac.uk\/uktpo\/2018\/10\/01\/goods-in-services-out-can-the-uk-walk-on-one-leg\/<\/a><\/p>\n

[4]<\/a> See,\u00a0https:\/\/blogs.sussex.ac.uk\/uktpo\/2018\/10\/17\/heres-another-nice-mess-youve-gotten-us-into\/<\/a>; https:\/\/blogs.sussex.ac.uk\/uktpo\/2018\/07\/23\/decoding-the-facilitated-customs-arrangement\/<\/a>; and https:\/\/blogs.sussex.ac.uk\/uktpo\/blog\/page\/2\/<\/a><\/p>\n

Disclaimer:<\/em>
\nThe opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.
\n<\/em><\/p>\n

Republishing guidelines:<\/em>
\nThe UK Trade Policy Observatory\u00a0believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement.\u00a0For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons\u00a0license. This means you CANNOT republish our articles online or in print for free.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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