The Brexit debate has always been about politics, not economics. So it was no surprise that December’s UK-EU Trade & Cooperation Agreement (TCA) was the first trade deal in history to actually increase barriers rather than reduce them.
The reason is that Brexiters are focused on a very narrow concept of “sovereignty”. And last week’s appointment of David Frost as minister in charge of EU relations confirms that the UK’s hardline during the TCA negotiations is likely to continue.
The new rules and paperwork have already forced many online stores to stop trading between the UK-EU. Many cross-border courier services will no longer take parcels – and those parcels that do arrive often have large amounts of duty/VAT added to the cost.
- Financial services, key to the UK economy, are gradually moving into the EU
- Amsterdam has replaced London as Europe’s main share trading hub
- Agriculture has been hit with seafood exports blocked by the new rules
- The UK is also set to introduce its own border controls between April-July
There is already a new border down the Irish Sea between Great Britain and N Ireland. British supermarkets can no longer export chilled meat such as sausages and burgers, and plant exports are also banned.
Then there are the problems with the fashion industry and music/arts tours:
- 451 leading figures from the UK fashion industry wrote to premier Johnson to warn that unless there is “a radical overhaul of customs arrangements and VAT, British brands will die“
- There are also issues related to the skilled EU workers who staff the industry’s workshops, as new immigration rules make it unlikely they will get work visas
- New immigration rules are also causing chaos for bands and theatres, due to the new need for visas. Even the National Theatre has announced it can no longer afford to tour
- Elton John and others petitioned Parliament to accept the EU’s offer to allow 90-day visa-free touring, but the UK refused to relax its immigration rules for EU citizens touring the UK
- The UK’s plans to implement additional checks on imports from the EU, with some set to start in April and others in July, are likely to create additional crunch points
For committed Brexiters, none of this matters. Sovereignty for them is a means of operating under their own laws, with no interference from “foreign courts” such as the European Court of Justice. And controlling immigration is another key Brexiter priority.
As a result, the UK is now a rule-taker as far as the EU is concerned, with no voice at the table when decisions are being made. And Frost’s appointment makes it likely UK-EU trade will become more difficult in the future as the TCA is implemented.
Frost might seem to be an unlikely choice for this key role, as a former middle-ranking ambassador and whisky lobbyist. But his power comes from being associated with the most hardline elements of the “sovereignty” debate, as the Financial Times reports:
“The problem is that Frost’s modus operandi with the EU has always been confrontation. He seems genuinely to believe that this is the best way to extract results and officials with close experience of working with Frost say he’s looking to ‘keep it confrontational’“.
Nobody should therefore be too surprised if Frost continues his hardline policy on Brexit, now he is in charge of making the TCA work.
The chemicals industry is likely to find itself early in the line of “friendly fire”, forced to spend £1bn to develop a UK version of REACH, even though companies have already paid to produce the same data for the existing EU REACH.