{"id":3743,"date":"2019-07-03T08:22:33","date_gmt":"2019-07-03T07:22:33","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=3743"},"modified":"2019-07-03T08:40:26","modified_gmt":"2019-07-03T07:40:26","slug":"no-deal-means-no-deal","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2019\/07\/03\/no-deal-means-no-deal\/","title":{"rendered":"\u2018No deal\u2019 means \u2018no deal\u2019"},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"Image03 July 2019<\/em><\/p>\n

L. Alan Winters CB is Professor of Economics and Director of the Observatory.<\/em><\/p>\n

Last week I was challenged twice for using the term \u2018no deal\u2019. There is no such thing, I was told, because, even if the UK does not ratify the Withdrawal Agreement of 25th<\/sup> November 2018, there will still be plenty of deals. At the time I thought, for several reasons, that this was wrong in substance if not literally, but more recently I have concluded that it is also dangerous.\u00a0 Like we saw in the referendum campaign, it undermines informed debate by deliberately confusing the terminology.<\/p>\n

\u2018The deal\u2019 is an agreement between the EU and the UK \u2018setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union\u2019 (Article 50 \u2013 Treaty on European Union). \u2018No deal\u2019 is the absence of such a deal. For business and the economy, \u2018no deal\u2019 has come to mean the absence of a trade agreement under which the UK and the EU trade with each other on terms better than those provided for under the World Trade Organization. The former \u2018no deal\u2019 implies the latter \u2013 as I argue below \u2013 but the reverse is not true.<\/p>\n

Both candidates for the UK Prime Ministership have promised to implement a \u2018no deal\u2019 exit on 31 October, and have more or less locked themselves into that position. Both argue that it is extremely unlikely that \u2018no deal\u2019 will actually come about because, using either their wit or their trustworthiness, they will re-negotiate the Withdrawal Agreement to the UK\u2019s advantage. This latter claim is not credible to most commentators and will come under increasing pressure as the hustings caravan proceeds through the kingdom. So what will the candidates do then? Row back? No, they will redefine \u2018no deal\u2019, and so I now fear my conversations of last week were a first step towards sanitising the idea of \u2018no deal\u2019.<\/p>\n

The first argument against the \u2018no deal\u2019 terminology was that the European Commission has put in place a series of measures to mitigate its effects<\/a>. At a formal level, these are<\/em> \u2018no deal\u2019 measures \u2013 implemented unilaterally and solely in the interests of the European Union. But setting that aside, they cover only a small subset of the disruptions to UK-EU trade that \u2018no deal\u2019 will cause and are very short-lived<\/a>. For example, for nine months UK lorries will be able to haul UK-EU trade, but not, as now, provide transport between EU destinations; thus UK transporters\u2019 commercial scope will be severely limited.<\/p>\n

The EU\u2019s measures do reduce somewhat the chances of chaos immediately after a \u2018no deal\u2019 exit, for which one supposes we should be grateful, but they do not do much, and looking beyond a year, they offer no comfort at all. On international trade, one of the key issues on which UK business urgently desires a deal, all the Commission says<\/a> is:<\/p>\n

Member States have worked closely with the EU institutions to ensure that the integrity of the internal market is preserved<\/em> by putting in place appropriate infrastructure and resources to apply custom formalities and controls as well as sanitary and phytosanitary checks of goods at the border. <\/em>[emphasis added]<\/p>\n

A second argument that \u2018no deal\u2019 does not exist is that many deals that cover both the UK and the EU will still pertain \u2013 for example, the requirements to respect WTO rules on trade or the European Court of Human Rights. True, but these international rules provide much weaker links than do EU institutions. \u2018The deal\u2019, like EU membership, is intended to go much further.<\/p>\n

The third and most extraordinary claim was articulated by Martin Howe on Sky News<\/a> 26 June. It is that even if the UK rejects the Withdrawal Agreement (and the accompanying Political Declaration), the EU will still sign a trade deal in time for 31\u00a0October, because doing so will be in its economic interest! \u00a0Even if the issue were just a trade negotiation the EU would not do this \u2013 it would not reward walking away from a previous agreement by offering a new more favourable one immediately.<\/p>\n

While the UK and the EU might be able to reach an ad hoc reciprocal agreement on citizens\u2019 rights, a UK rejection of the budget and the Irish backstop provisions in the Withdrawal Agreement will lead to the suspension of all cooperation. The Commission has stated that any agreement in the future will depend on the UK accepting these provisions, and even if this did not apply forevermore, it would certainly apply to the next few years. To claim to believe otherwise is just disingenuous.<\/p>\n

\u2018No deal\u2019 on trade will be immensely costly in economic terms but that is where the current debate is leading us. But let us at least enter it knowingly. Let us learn enough from the referendum campaign not to obfuscate with silky words and nit-picking definitions.<\/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

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Share this article: 03 July 2019 L. Alan Winters CB is Professor of Economics and Director of the Observatory. Last week I was challenged twice for using the term \u2018no deal\u2019. There is no such thing, I was told, because, even if the UK does not ratify the Withdrawal Agreement of 25th November 2018, there will still be plenty of deals. At the time I thought, for several reasons, that this was wrong in substance if not literally, but more recently I have concluded that it is also dangerous.\u00a0 Like we saw in the referendum campaign, it undermines informed debate by deliberately confusing the terminology. \u2018The deal\u2019 is an agreement between the EU and the UK \u2018setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union\u2019 (Article 50 \u2013 Treaty on European Union). \u2018No deal\u2019 is the absence of such a… Read More<\/a><\/p>\n","protected":false},"author":213,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[130195],"tags":[147855,96141,147895,147982,123634,147981,147888],"_links":{"self":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/3743"}],"collection":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/users\/213"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/comments?post=3743"}],"version-history":[{"count":4,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/3743\/revisions"}],"predecessor-version":[{"id":3747,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/3743\/revisions\/3747"}],"wp:attachment":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/media?parent=3743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/categories?post=3743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/tags?post=3743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}