Email of the day - on Brexit In Name Only (BRINO)
Comment of the Day

November 18 2019

Commentary by Eoin Treacy

Email of the day - on Brexit In Name Only (BRINO)

Your recent comments that Boris Johnson's Brexit is really a BRINO have left me a bit puzzled. It's true that it's not the best deal, but to characterise it as worse than Theresa May's as some have done seems to me to be wide of the mark. Given the constraints of parliament, deadlines and Ireland - to mention just three - it seems to me that it's pretty good. 

I show a link below from an article by Martin Howe QC who is an informed commentator on Brexit and Chair of Lawyers for Britain. In it, he argues the case that it's not a bad deal which I think is well made. But it all rests on the Conservatives getting a good majority.

As always, thanks for your invaluable commentary and insights.

Eoin Treacy's view

The conditions of the transition agreement are the UK will honour all of its financial commitments with the EU and will not adjust tariffs and regulations to compete directly with the EU. That deal is due to expire at the end of 2020, because when it was originally negotiated there was about two years to run. Instead it is more likely there will be 11 months to negotiate a trade agreement by the time the deal is potentially approved by Parliament following the election. That is of course assuming the Conservatives win re-election with a working majority.

Here is a section from the article:

Secondly, it is vital to signal to the EU that there is no prospect whatever of any extension to the transition period, in order to force them to negotiate seriously and in a timely way. If the EU are allowed to think that they can lie around spending 3 years negotiating with us, they will take that time. If they allowed five years, they will take that time and then only do a deal at the last minute.

Recent events have shown that the EU is quite capable of doing a deal quickly if the time pressure is there. The period ending in December 2020 is perfectly adequate to conclude an FTA, given the starting point that we are currently in regulatory alignment with the EU on every sector of goods and services.

Thirdly, the EU needs to be placed under negotiating pressure to ensure that in return for zero tariff access for their goods to the UK market, they agree to continued UK services access to the EU market and also drop their attempts to impose damaging terms on the UK, such as “level playing field” clauses which go beyond clauses which are standard in international Free Trade Agreements.

The best way of achieving that is to demonstrate that on 1st January 2021, the UK will open its markets to competing trade partners, and if the EU wants to maintain its zero-tariff preferential access to the UK market, then it will need to agree to reasonable and balanced terms and give on up its attempts to turn the UK into an offshore EU colony.

The ambition to create a Canada plus agreement is all well and good but assumes the EU is amenable to that ambition. I fully agree with the author’s contention no extension to the deadline be agreement to but the other side of that equation is what needs to be conceded to in order to meet the timeline. The acceptance of a customs barrier in the Irish Sea rather than between the Republic or Ireland and Northern Ireland already suggests the price of the UK’s exit from the EU is reduced land mass.

I am fully in support of the UK’s ambition to set favourable trade terms with a global economy but investors and voters need to pay attention to what is being demanded to achieve that goal. The stability of the Pound and stock market suggest investors are willing to give the benefit of the doubt to the upside.

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