Over the next eighteen months our airwaves will continue to be filled with a relentless bombardment of mindless jargon as the media report on the progress of the negotiations between the EU and the UK Government on the terms on which trade between them will be carried on after Brexit. (Right now, the UK has left the EU in name only). Words and phrases like ‘free trade’, ‘competitiveness’ and ‘regulatory alignment’ will be bandied about without anyone who uses them explaining what they mean. Quite often the speakers themselves will not know. All this ‘white noise’ makes it difficult for the ordinary person to understand what is actually going on.
This is just how politicians like it. The fog of jargon means that truth and reality are hard to spot, so they can interpret statements and developments whatever way they want. Outcomes of negotiations of particular issues can be reported as victories for common sense and British interests over the unreasonable demands of greedy and cunning continentals.
So what will really be going on?
The first thing to understand is that this is familiar territory for blue-blooded Conservatives, who have always believed that few things in life and politics very much matter, and that nothing at all matters very much. Although himself no aristocrat, Boris Johnson has absorbed this view of the world and is now perfectly placed to exploit it. He is not a ‘serious’ politician, anxious to do good. He is an entertainer, keen to harvest popularity and applause. And he is very good at that. His carefully calculated manner is that of the buffoon, who invites his audience at first to laugh at him and then to laugh with him. He does not even pretend to be serious. The object of all his showmanship is of course to win re-election. He will keep voters amused for the next five years, and then ask them if they really wouldn’t prefer more of the same than switching to his earnest, dull and boring opponents.
Offstage, what are the negotiations going to be about? A simple way to understand what is happening is to think of the UK Government as being in the position of a golfer who has resigned his membership of his golf club. He really can’t get on with his fellow members, but he does want to continue to be able to play on their course and to take part in competitions. The other members have no objection in principle, because he is a good player and quite affable. It has taken almost three years, but they have eventually persuaded him to pay his bar bills, (the ‘withdrawal agreement’), before being allowed to resign. But they draw the line at the idea that this now ex-member should continue to enjoy the same rights of access to the course as themselves without paying membership fees and without sticking to the club’s rules. Among the rules the ex-member especially doesn’t like is one which says that all club members must use equipment of a standard size and weight. When playing against other members he wants to be free to use heavier clubs and faster balls, thus giving himself an advantage.
Having the same rights and privileges as others, but not having to pay for them is what Boris Johnson calls ‘cake-ism’, something he always likes. It means having your cake and eating it. He has the same idea about his economic policies for the UK. He wants the Government to spend more, especially on big projects like HS2 that will win him votes in the North of England, while at the same time cutting taxes without increasing government borrowing. Anyone familiar with the rules of elementary arithmetic will know that this is a challenge.
Does all this matter? Would it make much difference if we didn’t negotiate a ‘trade deal’ with the EU? Yes, it does. It’s true that tariffs (i.e. taxes on imports of industrial goods) are generally very low throughout the Western world, so removing them wouldn’t make much difference. But many countries, wrongly believing that imports are bad and exports are good, try to ‘protect’ themselves with selective regulations of one kind or another designed to keep out imports from other countries. Without trade agreements to limit such regulations, trade between countries would be greatly reduced, to the detriment of households everywhere. Economists don’t agree about much, but one thing they are unanimous about is that restrictions on trade are a bad thing for everyone.
Recognising this truth, right after World War II the victorious Western powers, led by the United States, set up an organisation called the General Agreement on Tariffs and Trade (GATT). (Later it changed its name to WTO). Its purpose was to establish and enforce common trade rules for all the countries who joined, large and small alike. In its first five decades, the GATT oversaw a progressive reduction of the barriers to trade between countries, a process that we now call globalisation. It has resulted in an explosive growth in the living standards of ordinary people, first of all in the Western world and more recently in Asia and Africa.
But within the last four years, a number of larger countries, again led by the United States, have stepped back from these arrangements that obliged them to treat all their trading partners equally. They began to bully smaller countries, like Canada and Mexico, into agreeing less favourable terms by imposing restrictions on their exports. So a common international set of rules is being replaced by bilateral trade deals between pairs of countries or regions. The outcome of a trade negotiation between two countries of unequal size is like the result of an arm-wrestling contest. The man with the stronger arm always wins. Since the UK is one fifth the size of the EU, two conclusions follow. The first is that in a trade negotiation with the UK, the advantage must lie with the EU.
The second and more important conclusion is that, when negotiating trade deals with third countries like the US, China, India or Japan, the idea that the UK can exert greater bargaining power than if it had remained part of the EU, when the EU would have been negotiating on its behalf, is delusional, to put it very politely. So we can expect in future a much closer alignment with the United States in trade, like that which already exists in defence and foreign policy. Many of those Brexiteers who most fervently resisted political union in Europe welcome closer political union with the United States.