The humiliations of Brexit continue to rain down upon us, but it took Donald Trump to remind the British government that negotiating trade deals is a long, painful and necessarily complex business that would only be made harder by Theresa May’s plan for leaving the European Union.
For a long time, the most ardent Brexiters have done their best to maintain the pretence that some kind of magic kingdom will take shape post Brexit, in which we somehow make up for the loss of trade with the European Union by conjuring up a series of new deals with the rest of the world.
They have always had difficulty explaining how trade with our closest geographic neighbours can be easily replaced by trade with countries thousands of miles away. And it is self-evident to anyone with an ounce of understanding that deals with the likes of the US, China, India, Australia, Canada or New Zealand will take years to complete and require us to make difficult choices on issues such as higher immigration and lower food standards.
But Trump was, for once, talking perfect sense when he pointed out another flaw in this policy. If we enter the transition period immediately after Brexit on 30 March next year, we will still be bound by all EU rules – without having a say over them – for a period of at least 21 months. The prime minister herself has begun to suggest that this transition period will need to be extended and article 132 of the withdrawal agreement says this extension could last until 31 December 2022. This would mean that for almost four years, the UK would have to follow all EU trade rules and stay inside the customs union.
While it may be possible to begin negotiating a new trading relationship with some countries if they were interested during the transition, nothing could be implemented before the transition period had expired. Nor is it clear that there would be anything to negotiate beyond that point, if there is no solution to the Irish border question. That’s because the backstop is deployed in the absence of a solution, so the UK remains in the customs union indefinitely. None of this would make negotiating a notional trade deal with the UK a high priority for other countries, including the US.
Worse still, for those who dream of the UK becoming some sort of North Sea Singapore, regardless of the length of transition, the political declaration on the future relationship agrees that Britain would closely follow EU standards and rules affecting competition. This is the so-called “level playing field”, the terms of which are contained in article 79 of the political declaration on the future relationship.
We would essentially have our hands tied, unable even to contemplate lowering our standards to comply with the demands of Trump, who in any case may not be president beyond January 2021.
Brexiters have also claimed that we could simply “roll over” existing trade deals that we enjoy today through our membership of the EU. However, no non-EU or “third” country with which we trade today through our membership of the EU is under any obligation to offer us any kind of deal on the same terms. And why would it offer a market substantially smaller than the EU – the world’s biggest trading bloc – the same access?
On any conceivable test, this proposed Brexit is worse than the deal we already have inside the EU, where Britain is a global trading nation with new deals coming onstream with Canada, Japan and Singapore. May’s plan does not allow the UK to pursue any kind of independent trade policy that would enable the UK to strike the new deals once promised by Brexiters. Instead, it offers only years of uncertainty for business as the push-pull of Brexit continues while we lack any say in the rules.
The problem with this deal is not the prime minister so much as Brexit itself. It is not that May won’t deliver on all the promises or fulfil all the expectations that were made for life outside the EU, it is that she can’t. No one can make sense of contradictory promises that are, essentially, nonsense. I am naturally sympathetic to those in my party who want to negotiate a better Brexit – a “Brexit that works for you” – but it will inevitably trip over the same obstacles.
Alternative Brexit deals are all a trade-off between deep economic costs and loss of sovereignty or control. As the analysis by the National Institute of Economic and Social Research published this week showed, almost any model of Brexit – including that negotiated by May’s government – will mean a catastrophic loss in trade and lower living standards. An option of staying in the European Economic Area, like Norway, may mitigate much of this economic damage but would leave the UK with no influence over the laws we would have to follow – and would leave voters asking, “what’s the point?”
Those who claim any form of Brexit would at least mean everyone can stop talking about it are selling yet another fantasy. The difficulty in agreeing trade deals with the US or anyone else, as well as the inevitable unpicking and restitching of future relationships, would mean the debate will continue for years to come.
On all these counts (and I can hardly believe I am writing this sentence) Donald Trump is right.
• Peter Mandelson is a former cabinet minister and European Union trade commissioner
