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11 July 2018

May’s Chequers Deal is just about better than No Deal

by Daniel Hannan

Originally published by Conservative Home.

No deal is better than a bad deal. It’s true as a general maxim, and it’s true in the specific context of Brexit. While no deal would be traumatic for both sides, certainly in the short term, there are worse things in the life of a nation than temporary economic disruption. If, for example, the EU were to offer us appreciably harder terms than the EFTA states, or if it were to insist on prejudicing the constitutional integrity of the United Kingdom, we’d be better off walking away.

So the question that faces us, and that most immediately faces Conservative MPs, is this. Are the terms of the Chequers plan better than a complete rupture? The question is not whether the Chequers proposals are ideal – no one, not even the Prime Minister, is trying to claim that – but whether, on balance, a Brexit that recovers legal sovereignty but cedes some day-to-day control to Brussels is preferable to a short-term disruption in our supply lines.

It’s a finely balanced question. The package offered in Chequers is the result of a series of negotiating blunders on our side over the past two years. First, there was the premature triggering of Article 50 before proper contingency plans had been put in place – in defiance, by the way, of a commitment made by Vote Leave during the referendum, which had promised: “Taking back control is a careful change not a sudden stop – we will negotiate the terms of a new deal before we start any legal process to leave”. Then there was the general election, which weakened the government in Parliament. Then there was the extraordinary “Irish backstop” agreement in December – a concession that stunned even our Europhile mandarins – which put Britain in the impossible position of being responsible for what the Irish government does on its side of the border.

Worst of all, our preparations for no deal have appeared grudging and perfunctory. Few in Brussels believe that we are prepared to walk away. They may well be wrong: it is an age-old British trait to switch from emollient complacency to sudden resolve when it is almost too late. But our behaviour to date – make an offer, be dismissed by a smirking Michel Barnier, rush forward with more concessions – has convinced EU negotiators that we will ultimately swallow whatever they put in front of us.

So, is the proposed deal better than no deal? Just about. I am more relaxed than some Eurosceptics about regulatory alignment in goods. Standards in manufactured products are largely set at a global level, and no one seriously imagines that Britain is going to start producing, say, dishwashers to a different specification. I don’t like the inclusion of agri-foods, which means that we shall have to apply the EU’s unscientific bans on Argentine and Australian beef. But I can live with an agreement on common sanitary and phytosanitary standards provided we are clearly outside the Common Agricultural Policy and able to source our food without EU tariffs and quotas.

The biggest problem with the proposed agreement concerns the customs arrangements. Here, Britain really is putting itself in the position of a colony, agreeing to collect and hand over EU tariffs without any reciprocity. There are legal as well as practical objections to the scheme. About the best case that can be made for it is that, without it, the pro-EU majority in Parliament might insist on full customs union membership – which would be a truly calamitous outcome, as even some of the Labour MPs pushing the idea privately admit.

Most ministerial Leavers have taken the view that getting out on poor terms is better than risking Brexit altogether. And, on the basis of these terms – imperfect, but not punitive – they have a point. The United Kingdom would end up with a status vaguely comparable to that of Switzerland, which manages to flourish on the basis of a single market in goods but not services (and whose financial services sector, incidentally, is twice the size of ours in per capita terms). The main difference is that the Swiss wouldn’t accept anything as insulting as the proposed customs partnership, despite being wholly surrounded by EU territory. Still, there is a case for getting out and then improving those arrangements over time. At least our laws would again be supreme on our own soil.

So were David Davis, Steve Baker and Boris Johnson wrong to walk? We’ll find out very soon. Their fear is that these terms, barely acceptable, will be watered down even further. They, more than anyone, have seen the pattern repeated over and over again: red lines drawn and then scrubbed out in the face of a disdainful Brussels “non”. If the EU insists on imposing harsher conditions than these – full customs union membership, acceptance of all social and environmental standards, perhaps a mechanism for the automatic harmonisation of future laws – then the calculus would change. No deal would be better than what would unquestionably be, in those circumstances, vassal status.

The concern of the departing ministers is that, whatever the government’s public pronouncements, it is not emotionally prepared for no deal, and would rather push through a one-sided and disadvantageous agreement with Labour votes than become a third country vis-à-vis the EU. Quite apart from legal and economic consequences of accepting such an arrangement, we would risk splitting our party as Labour was split in 1931.

We shall discover at the EU’s October summit whether the resigners were right. My guess is that Eurocrats will indeed turn the screw tighter, leaving Britain with a choice between no deal and, in effect, non-voting membership. Preparing for no deal ought therefore to be our national priority. By “preparing for no deal”, I don’t just mean buying lorry parks near Dover or making sure that our driving licences will work abroad. I mean making the kind of preparations that will keep Britain flourishing through any disruption: cuts in corporate and personal taxes, removal of regulations, openness to global business. So far, alas, we have been going in the opposite direction. In Brussels, they have noticed.



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