Sunday, 1 December 2019

So let us not talk falsely now, the hour is getting late

I haven’t posted much about Brexit on this blog. Partly this is because other people are more than happy to do so I’d just be repeating what someone else has said. But it’s also because I’m convinced that in future years, in the aftermath of a future economic crash, the level of attention devoted to something that really doesn’t change the economic fundamentals much will seem bizarre.

However, I think the leaked US-UK free trade negotiations are very interesting and do merit comment because they indicate that the form of Brexit matters. Johnson’s regulatory disalignment with the EU and liberalisation-based free trade agreements represents a definite fork in the road compared with continue customs unions membership and single market alignment (the Labour party plan) or remaining.

To recap, the leaked documents reveal that US negotiators are pushing for “total market access” to be “the baseline assumption” of the talks. This primarily means services because services are the dominant part of the British economy. And this definition includes the NHS because the NHS is considered a service.

British officials have promised to “fly the good for flag for services liberalisation”. The NHS could only be excluded if, as is the custom with trade negotiations, it is specifically exempted. And the British side has declined to exempt the NHS, just as David Cameron refused to do in the doomed TTIP negotiations between the European Union and the US a few years ago. That is extremely revealing.

Other elements of the nascent US-UK negotiations include introducing lower food standards (chlorine-washed chickens), banning any mention of climate change and establishing the right of corporations to sue the British government, without any right of appeal, for practices they regard as unfair.

The EU and total market access

But before we rush to put our bodies on the line for the status quo, it’s necessary to recall what is already happening in the absence of a newly-minted trade agreement with the USA. Because it’s eerily similar. The afore-mentioned TTIP free trade agreement (FTA) between the EU and the US was considered to pose “real and serious risks to the NHS”. There were genuine worries it could also have undermined food safety, bank regulations and environmental standards. It was negotiated in secret (you had to go into a secure reading room to examine it) and it would have established exactly the same ‘corporate court’ system as the US-UK negotiations. In fact, as a result of EU FTAs with many different countries, and also within the EU, so-called investor-state dispute tribunals are extremely common. 

In Britain, the NHS is already being privatised with mental health services on the frontline. Moreover, under EU laws on fair competition, companies such as Richard Branson’s Virgin are able to sue the NHS on the grounds of putatively poorly-run tendering processes.

However, I think there is a difference between EU free trade and a future in the US orbit. That relates to public opinion. The TTIP, which was negotiated between 2013 and 2016, is dead in the water – in April 2019, the European Commission declared that TTIP was “obsolete and no longer relevant”. Partly that outcome is a result of mushrooming governmental and public opposition to TTIP provisions as they were gradually exposed. Doubtless the European Commission would have liked to proceed, without opposition and scrutiny. But it couldn’t. The same European public opinion will influence what a future Labour government can and cannot do and what is politically possible.

The same could theoretically be said of the British government. But if Johnson wins a majority on December 12 he will take that as permission to blithely ignore public opinion for five years, by which time a US-UK FTA could be negotiated and sealed.

Not all people’s votes are the same

There is also a question here about how Brexit is negotiated which has been overlooked. The leaked negotiations revealed that a no deal Brexit (still on the cards if the UK doesn’t reach an agreement on future trade arrangements with the EU by December next year) is the US’s preferred option. Conversely if the UK is still in the Customs Union and aligned to the single market – which is Labour party policy – a US-UK FTA is seen as a “non-starter”.

So if Labour wins the election and negotiates a deal in which Customs Union membership is maintained and organises a referendum with that deal going up against Remain – as is its stated policy – that will specifically rule out any future US-UK trade negotiations which lead to the privatisation of parts of the NHS or dilution of food standards. Regardless of which side wins, it won’t happen.

However, if there is a 2nd referendum between Johnson’s deal and Remain, a future US free trade agreement – with all that that entails – is eminently conceivable. Indeed, such a scenario – propping up a minority Conservative government to allow a ‘people’s vote’ – was put forward by Lib Dem deputy leader, Ed Davey, now that Lib Dem ‘Plan A’ – revoking Article 50 – has been conceded to be pie in the sky.

Ironically, a putatively principled opposition to Brexit could result in the worst kind of Brexit happening.