Brexit - Hard Brexit the Reality

 

Is a no deal better than a bad deal?
It has often been said by Theresa May that no deal is better than a bad deal. As we stand now we'll be either accepting a bad deal or no deal whatsoever. A good deal is no longer on the table. The government, having spent the greatest part of the negotiation period arguing amongst themselves, are now at a point where they will have to accept the terms laid down by the EU. To negotiate one of the most complex processes in the history of the UK and not have a plan before starting the project is beyond irresponsible. It borders on the insane. Whether you are a remainer or a leaver there is no way that the handling of the process can please you. As laid out in the section Triggering Article 50 the starting point for even a medium sized project should be created in minute detail. If planning a medium sized project where the delivery time was, like Brexit, two years, you could not begin the project until the final deliverable had been agreed. Even then, many well planned projects fail due to external circumstances or simply because the delivery team lack capability. The timescale for delivering Brexit of 2 years was always ambitous (hence the transition period) and it was imperative that prior to submitting article 50 that we had all deliverables understood and lined up, with as much prior preparation carried out as possible as well as a plan for every minute detail of the 2 year leaving period once A50 had been submitted.

This section looks at what is on the table at the moment. As we stand we only have no-deal or bad deal left on the table This section outlines what the remaining two outcomes mean for the UK, as well as giving further insight into what it means when the government talks about "WTO Terms". Elsewhere we detail what a good Brexit could look like, although obviously many would argue that there is such thing as a good brexit

The sections have been prepared with the use of the videos "3 Blokes in the Pub - Talk NO DEAL Brexit" Where the 3 blokes (in the pub) make a statement, it was cross checked with other sources to check accuracy. Their assertions are accurate.

No Deal
This is crashing out at 11pm 29 March 2019. This is where we will stand at that point:

WTO Tariff Schedule

 * The World Trade Organisation (WTO) has 164 member countries
 * Tariff schedule agreed between all members lays out what the tariffs will be for all goods traded between members of WTO
 * The tariff schedule has 4500 product groups
 * Within each product group their are many products. For example in the steel product grouping there are 3200 different types of steel plate
 * Each product within the product groups has its own schedule of tariffs to be charged under WTO terms
 * The UK as part of the EU is within the Commons Custom Tariff (CCT)
 * The EU looks at all products made within its borders and sets the tariff under CCT to place high tariffs on goods it makes and low tariffs on goods it needs to import into the union
 * Items that we cannot make or grow within the UK, but are made or grown in the EU, as part of the EU we have tariff free trading. For example vegetables and fruit that we buy from Spain, which we can't grow in the necessary volumes in the UK.
 * The UK will need to go through all 4500 product groups (and products within those groups) and decide what tariffs to charge on what products
 * This is a highly complex process because the UK will need to balance off the issue that we need to import some products while we also produce the product domestically. Getting the balance right to ensure the domestic production survives and we can still import the additional product needed to meet our needs will take years of negotiation with supply countries.
 * The sheer number of products will mean not only will the negotiation period with other countries take years, creating the schedule will take years also
 * We cannot simply copy the CCT into our tariff regime as we no longer are part of the EU and so cannot measure in the tariff free supply we presently benefit from
 * This also means we will lose trade agreements with 60 other countries as well as the EU, as our trade is carried out with these countries under EU agreements. With no tariff schedule, no way of measuring or collecting tariffs this will mean that we will not be able to trade with 87 countries that we do 90% for our export business with
 * As the UK will have no trade agreements with countries and will have no Common Custom Tariff (CCT) agreement with the WTO we will be termed as having "third country status" with the WTO
 * Third country status means that tariffs will be charged at the highest rate until a trade agreement is in place
 * UK trade agreements will be put in place during the transition period. No deal means no transition period. Effectively upon leaving the EU, UK goods will cost 20 to 30 percent more to importing countries than they do today
 * This would be a no win situation for the UK as we would need to set our tariffs as low as possible to continue receiving goods, but we couldn't apply that to a just the EU. Under EU rules we would have to apply the same level tariff to all WTO member countries
 * We are protected from for example the EU using its internal zero tariff regime to damage the UK market by the CCT agreement. This would no longer be the case
 * Othe WTO member countries could not offer us zero percentage tariffs as this would mean they would have to offer it to all other WTO member countries, destroying their own internal markets
 * Pretty much all major trading partners have refused UK proposals to the WTO on trading quotas
 * Refusal of the terms means the UK has to re-work the whole proposal, get agreed by the EU and re-submit it to the WTO. This proposal may still be rejected by some countries meaning that the whole proposal will be refused
 * The UK presently exports 417 million GBP of manufactured goods per day. This will instantly stop. Even if these markets can be reopened at some point, the UK will have lost their market to foreign competitors.
 * The workforce associated with building 417 million pounds worth of goods per day is very large. These jobs will be lost. Likely many of the workers will emmigrate to work for companies that take up the slack rather than starve

Bad Deal Brexit
There is one thing that the UK and EU agree on and that is "no deal is better than a bad deal." However both parties in the process have completely different reasons for holding this view. In the case of the EU a bad deal (such as chequers) would mean that they would sign up to agreements that broke their own laws and would also put mean that their trading partners could take them to the WTO for breaking the terms of agreements they had made with them. In the case of the Conservative government it is a foolish bloody mindeness that means that they think they should be tough negotiators in order to secure a deal.

Chequers can be defined as a "bad deal" brexit. In reality it can be defined as a no-deal brexit. It cannot legally be passed by the EU and there appears to be little chance of any of it surviving negotiation with the EU. It does beg the question, if those so called members of the government that say they support a soft brexit are sincere, why did they vote for a white paper that is blatantly undeliverable? The only conclusions that can be arrived at is that they are making noise simply so that they can protect their own voter base when the UK crashes out of the EU.

The [[Media:CHEQUERS STATEMENT - FINAL.PDF|statement]] released from the Chequers meeting was heralded as a major breakthrough. The fact that it was released in July 2018, 15 months are article 50 was submitted should have raised major alarm bells. Generally however it was accepted as a step forward. The statement was in short a repeat of earlier demands placed on the EU that had already been rejected out of hand. It may be fair to state that the EU is rejecting these proposals out of hand because it wants to teach the UK a lesson or at least taking some pleasure in the fact that it can't grant UK wishes due to a legal framework. Whether that is the case or not, it is fair to say that the EU holds the whip hand and any proposals that the UK come up with will be rejected unless they meet that legal framework. This proposal did not

The [[Media:The future relationship between the United Kingdom and the European Union.pdf |white paper]] was approved in parliament in July 2018 with an amendment that undermined its credibility even further. The original white paper stated the following in 17b:


 * The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue. On the basis that this is likely to be the most robust approach, the UK proposes a tariff revenue formula, taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK. However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK. The UK and the EU will need to agree mechanisms, including institutional oversight, for ensuring that this process is resilient and verifiable.

The above paragraph may have been possible to gain agreement on with the EU, however this is not what formed the final approval in parliamment. However the European Research Group was able to add the following amendments to the paper:


 * 1) HM Revenue & Customs could not collect duties or VAT on goods on behalf of the European Union unless there was a reciprocal arrangement
 * 2) Make it illegal to have a customs border in the Irish sea
 * 3) The EU must offer reciprocal tariff collection for the UK
 * 4) The UK government would need further legislation to form a customs union with the EU

Amendment 1 ensures that the EU cannot enter into a customs union within the UK and amendment 2 ensures that the backstop for the Irish border cannot happen. As the EU cannot provide amendment 3 as it would be impossible for them to measure such things and would not be interest of member countries to add an extra layer of bureaucracy simply to meet the needs of a UK political decision. Amendment 4 cynically recognises the short timescales and kicks the process far enough down the road to be unachievable.

So this deal is a bad deal for the both the UK and the EU. This ensures that it could only be ratified by the other 27 EU countries if it was changed radically. It is difficult to see a situation where it could be changed radically while meeting the red lines that the Conservative government has put in place. The red line that there will be no Irish border in the Irish sea is written into law. It is also written into UK law that there will be no Northern Ireland / Ireland border.

In summary the EU now agrees fully with the UK government that a bad deal is worse than a no-deal for them.