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Analysis

Only answer to this rotten deal is People’s Vote. Here’s why

by Hugo Dixon | 25.11.2018

The divorce deal the EU has agreed today is bad for our power and our prosperity – and it’s going to get worse because the notorious “backstop” puts us in an awful negotiating position for the coming talks over our future relationship with the EU.

The prime minister will try to persuade MPs that they have to take this miserable deal or charge over the abyss with no deal. But that’s a false choice – and Parliament knows it. As a result, when MPs get to vote on it, probably in the week of December 10, it looks like it will go down in flames.

There will then be an intense battle over what happens next – and, indeed, over whether there should be a change of prime minister. Lots of Plan Bs will be proposed. But all are hopeless – because either MPs or the EU won’t agree to them. The only viable option then will be to ask the public whether they still want to quit the EU in a People’s Vote.

Here’s our definitive guide to why the deal is rotten.

Backstop, a virus that infects everything

The heart of the problem is the backstop, designed to keep the Irish border open in all circumstances. It is a virus that will infect whatever relationship we ultimately do with the EU. [The details of the backstop are contained in a 174 page Protocol on Ireland/Northern Ireland that starts on page 302 of the Withdrawal Agreement.]

This backstop commits us to staying in the EU’s customs union with no say over its trade policy – known in the jargon as the “single customs territory”. It commits us to following EU rules on state aid so we don’t get an unfair advantage – and “non-regression” on labour and environmental standards so we don’t undercut the EU in those areas either. This is a massive loss of power – and a massive blow to our national pride.

But the backstop only covers goods and agriculture – not the 80% of the economy which is services. It does nothing for our world-leading industries such as digital services, creative industries and finance.

The prime minister says we will never enter the backstop. But that will only be the case if we negotiate a trade deal with the EU by the end of the so-called transition period, which kicks in immediately after we quit and is designed to cushion the blow of Brexit.

What’s more, the backstop will be a core component of any future trade deal. As the political declaration accompanying the withdrawal agreement says: “The economic partnership should… build and improve on the single customs territory provided for in the Withdrawal Agreement.” [See section 23]

So the virus will still be there in our future trade deal – if we ever negotiate one.

Incredibly weak negotiating position

When the talks over a new partnership start after Brexit, we will be in an astonishingly bad position. That’s because the EU will have already got, via the backstop, most of what it wants; we will have so little of what we want; and a new time clock will be ticking madly.

Remember that the EU has a competitive edge in manufactured goods. It had a huge £95 billion surplus with us in 2017. The backstop doesn’t secure frictionless trade in goods, because there would still be regulatory checks, but it largely protects this business. By contrast, we had a £28 billion surplus in services – and the backstop does nothing for that.

This bare bones single customs territory does nothing for digital services, financial services, air transport, road haulage, public procurement, free movement of capital or services in general. These are all areas where we want a deal and which are supposed to be sorted out in the future economic partnership.

The backstop does nothing to ensure the NHS can get hold of medical isotopes to treat cancer. It doesn’t give our crime fighters access to vital EU databases. It doesn’t let our scientists participate in EU research programmes or our young people take part in student exchanges. Nor does it give our citizens the right to visa-free travel – or to those who live in one EU country the right to settle in another EU country. All that is supposed to be sorted out in our future partnership.

We will be desperate to do a deal. But the EU will be sitting pretty, waiting for us to make concession after concession.

Three demands are already clear. The EU will insist on a fisheries agreement that builds on “existing reciprocal access and quota shares”, according to a EU declaration published at the same time as the withdrawal agreement and the political declaration. This would be tantamount to staying in the EU’s Common Fisheries Policy – but without a seat round the table.

The EU will also insist  we maintain “ambitious level playing field conditions”. Level playing field conditions means rules on labour practices, environment and competition policy to ensure we don’t undercut the EU. The call for “ambitious” rules seems to indicate that EU won’t be content with the “non-regression” that we have already agreed as part of the backstop; but that it will want us to follow any new EU rules in these areas – again without any seat around the table.

And Spain will insist on concessions vis-a-vis Gibraltar.

Remember that, in our future negotiations, every single country will have a veto. So as the years go by yet more demands could be made.

We could, of course, just say no to them all. But then we will be stuck with the backstop.

Madly ticking clock

What’s more, we’ll be under extreme time pressure because the backstop is due to kick in at the end of 2020. Our chances of negotiating everything we need to by then – unless we fall over backwards and say “yes” whenever the EU demands something – will be nil.

The prime minister will say that she has negotiated the right to extend the transition by up to two years, if need be. But this isn’t quite true. All she has negotiated is the right to request an extension to the transition. And the EU is already making it clear that it will drive a hard bargain before it agrees.

First, we’ll have to pay more money – somewhere between £9 billion and £13 billion for each year, according to off-the-record briefings. And we won’t get any money back either for farmers, poor parts of the UK or science – as we will by then have left the EU’s various programmes. [See Article 132]. If we do extend the transition, the final divorce bill is likely to be £60-70 billion.

The EU is also saying we won’t get an extension if we don’t do that fishing deal first.

The government will have to decide by mid-2020 whether it wants an extension. It will face a devil’s choice: accept the EU’s demands or enter the backstop.

Why the backstop is so bad

It is worth recalling why this virus is so bad.

  • It will do nothing to help services, 80% of our economy.
  • It will gum up manufacturing because it won’t even give frictionless trade.
  • We will be part of a one-sided customs union where goods from 88 countries with which the EU has deals can come into Great Britain but where we have no automatic right to send our goods to those countries. This will put our firms at a competitive disadvantage.
  • We will be in limbo. Different parliamentary factions will fight for years over when and how we should exit the “backstop”.
  • This uncertainty will kill confidence and investment.
  • We will be stuck with a low-performance economy, which can’t generate good jobs or the tax revenue we need to pay for public services such as the NHS.
  • There will be regulatory checks in the Irish Sea to make sure goods from Great Britain don’t enter Northern Ireland and find their way into the EU by the open border in Ireland unless they meet EU product and agricultural standards.
  • Our politicians will have neither the time nor the money to address the reasons that led many people to vote for Brexit in the first place – the lack of investment in left-behind communities, public services starved of cash and the failure to better integrate migrants from outside the EU.

Brexiters are the prime culprits

Boris Johnson rightly calls the deal a “stinker”. But he and the other Brexiters are the prime culprits. They are the ones who said we would get a good deal because the EU needs us more than we need it. What nonsense.

They are the ones who blithely dismissed our historical responsibility to secure peace in Ireland.

They are the ones who pressured the prime minister to trigger Article 50 without a plan.

Sure, she should have stood up to them. And she should have been more frank with the people about our real choices – and honest now about how miserable the deal is rather than putting out a letter to the nation yesterday riddled with untruths and half-truths.

But let nobody be in any doubt. The Brexiters are to blame for this national humiliation – and they still don’t have a clue what to do.

Fortunately, there is one way out. And it is a route that Parliament is likely to take once the deal is rejected and all other Plan Bs have been exposed as hopeless. That is to ask the people whether they still want to leave. Let’s put all our energy into this coming battle.

This piece has been updated with figures for the size of the EU’s trade surplus in goods and the UK’s surplus in services, as well as the wording of the EU declaration which has now been published. 

The passage on the one-sided customs union was corrected on Nov 26 to refer to Great Britain rather than the UK

Edited by Luke Lythgoe

11 Responses to “Only answer to this rotten deal is People’s Vote. Here’s why”

  • May was asked on her radio talk-in whether this deal was better than the deal we have. She wouldn’t answer that question. What she said was that this deal was the best that would bring the country together, heal the divide, etc., etc.
    I would like to remind her that it was her policies and her language and that of her ministers which aggravated the split and to now use this as a justification for her rotten deal really takes the biscuit. So we need to take it to undo the damage she and the Tories caused!
    Better to stay in the EU and explain to the electorate just what had been done to them by a bunch of Tory shysters, crooks, Putin and their friends.

  • How can we ‘come together’ when half of us have been ignored? Her deal is a farce leaving the country far worse off than if it were in the EU. She is deluded and taking the country into isolation and oblivion. I don’t understand how they have billions available to spend on the divorce settlement when austerity is being callously imposed on the population and poverty is on the increase. I just hope MPs don’t melt into submission to her. I truly detest the Tories and resent Labour’s lack of courage in not calling directly for a PV. They all put themselves and their poxy parties ahead of the nation’s interest. Never has the stock of British politics been so low.

  • She was asked by a German newspaper if she was sad about leaving, to which she answered No. Not the sort of answer which is likely to help her through the next set of negotiations. Also rather contradicts her wanting a “close and special relationship” with the EU post Brexit.
    Also, continued with her obsession about stopping free movement, when only a proportion of the Leave vote, voted for that reason. And once again forgetting to point this cuts 2 ways. Thousands of British stopped from working, settling in Europe. So Brexit offers loss of freedom for UK citizens rather than more freedom.
    Finally, why are we doing this? What are the benefits? For the new trade deals with countries we already have trade deals with thanks to our EU membership?
    This is like expecting the corner shop to undercut the supermarket.

  • Great piece , Hugo
    Agree with Alex. How crass to say there was no sadness. May has no feel whatsoever for the issues we face.
    Two quick points which we must keep making;
    1) 38% of the electorate voted to leave, 62% didn’t—-the latest Tory ministerial mantra (e.g Rory Stewart on Friday’s Newsnight ) is “if we overthrow the referendum result, we could be stoking up dissension for 25/30 years”—-let the 62% have a say.
    2) Our currency was devalued by 15% the day after the referendum——is it likely to be revalued, were May’s ludicrous proposals to be carried by the HoC?

  • big task to come is, as at the last referendum, make being in the EU an attractive proposition in its own right. This deal and the whole process has underlined how damaging it is to leave but somehow the population has to be bombarded with all the reasons why we benefit from the EU. Those who think the EU is a rigid, inflexible institution, past its sell by date that doesn’t work (not my view but people I respect do hold that view) will have had that view reinforced over the past 2 years.

  • Now it’s May or Remain. How get there? Can People’s Vote with those options get floated? Media still don’t see obviousness of Remain.

    Of course implementing Remain once on the table has its own cans of worms.

  • As mentioned in the Independent, Brexiteering was well summarised by the poet Edward Lear

    They went to sea in a Sieve, they did,
    In a Sieve they went to sea:
    In spite of all their friends could say,
    On a winter’s morn, on a stormy day,
    In a Sieve they went to sea!
    And when the Sieve turned round and round,
    And every one cried, ‘You’ll all be drowned!’
    They called aloud, ‘Our Sieve ain’t big,
    But we don’t care a button! we don’t care a fig!
    In a Sieve we’ll go to sea!’
    Far and few, far and few,
    Are the lands where the Jumblies live;
    Their heads are green, and their hands are blue,
    And they went to sea in a Sieve.

    The water it soon came in, it did,
    The water it soon came in;
    So to keep them dry, they wrapped their feet
    In a pinky paper all folded neat,
    And they fastened it down with a pin.
    And they passed the night in a crockery-jar,
    And each of them said, ‘How wise we are!
    Though the sky be dark, and the voyage be long,
    Yet we never can think we were rash or wrong,
    While round in our Sieve we spin!’

  • This morning the dog jumped out of his basket and started barking.
    In dog language he shouted urgently “Intruder Alert! Intruder Alert! The sovereign integrity of our front garden has been breached! Take immediate action!”
    A few moments later the sound of correspondence being thrust through the letter box.
    “Rover, go back to your basket. You get top marks for your loyalty and initiative. But the postman is our friend”.
    Brexiters, we salute your patriotism and enthusiastic engagement in affairs of state. But the European Union is our friend.

  • Loved the Edward Lear Brexit poem and was reminded of another.

    L’apres-midi d’un faune is by Stephane Mallarme and is a beautiful, profound and sensual poem but it is also a kind of joke. It is a poem about the dream of a mythical creature in a painting. The joke was later extended even further with the ballet to the music by Debussy about the poem of the dream of a mythical creature in a painting.

    So (deliberately) about as far from reality as you could possibly get …. UNTIL 2016 and the leave campaign!