Brexit: The ‘Australian Option’?

Yves here. We’ve covered most of the Brexit issues presented here, but this is a very useful high-level take that could be helpful as a recap of the state of play for curious friends and colleagues.

By Nick Dearden, director of Global Justice Now. Originally published at openDemocracy

The fallout of coronavirus only adds to Britain’s problems as the country tries to extricate itself from 40 years of EU membership. We already know that Boris Johnson, rather than taking the easy route and remaining part of institutions which can ensure air travel safety or facilitate approval of new medicines – at least until such institutions can be created anew in the UK – is risking the most extreme version of Brexit imaginable. Even British membership of the European Convention on Human Rights, has been thrown into doubt by Johnson’s team, an institution which has nothing to do with the EU, and in fact includes Russia and Turkey.

Johnson has said he wants a ‘Canada style’ trade deal with the EU, but he wants such a shallow relationship with the EU that he will accept a no deal Brexit (now referred to as an ‘Australian option’) if that falls through. By the government’s own reckoning this would wipe between 5% off the UK economy in the government’s best case scenario, and up to 9% in the event of no deal.

Not content with negotiating one immense deal this year, Johnson has set himself a second mammoth objective – a trade deal with the USA. Some suggest that this is a negotiating ploy – to play off the world’s two biggest trading blocks against one another in their desire for a deal with Britain. Sinn Fein pointed out the “glaring contradictions” in “publishing their objectives for parallel talks with the US”. They’re right in that it isn’t possible to do deep trade deals with both the EU and US – let alone in a year. That’s because modern trade deals are less about the tariff reductions most people associate with ‘free trade’, and far more to do with how a government regulates its economy. EU and US regulations are very different, and as a relatively small country, broadly speaking, Britain needs to decide which system it will adopt, which block it wants to be closer to.

If this is all a negotiating ploy, Johnson has massively overplayed his hand. The EU would love a deal with the UK, but it cannot breach fundamental principles of the block, and neither can it offer Britain significantly better terms than it would any other third country. If Britain moves towards the US ‘market know best’ economic model, the EU will only be able to offer the lightest of trade deals. On the other side, Trump’s real interest in a trade deal with Britain is precisely to weaken and thumb his nose at the EU, which he sees as America’s main trade competitor. For him, unless Britain accepts the US regulatory model, a trade deal is of no interest to him, something his negotiators have said clearly in the papers from the preliminary trade talks leaked before Christmas.

So it’s a choice. And from what we’ve seen to date, Johnson has already made up his mind which path he prefers. Never before in history must trade talks have begun amid the levels of distrust and hostility that currently exist between Britain and the EU. Speeches by Johnson and his lead negotiator David Frost went out of their way to irritate European negotiators. Far from the normal warm words, Frost’s speech was a lament to an outdated vision of national sovereignty in which he quoted extensively from Edmund Burke and seemed to imply the EU was the ultimate toxic outgrowth of the French Revolution.

The British approach to Trump has been quite different, although even here Johnson seems to have underestimated just how difficult an operator Trump is. His decision to adopt Huwei technology led to a temporary breakdown in relations between the two sides, and civil servants were said to be aghast at the level of Trump’s anger.

But that aside, Johnson clearly favours the transatlantic relationship. And this shouldn’t surprise us. After all, a central driver for Brexit for a section of Britain’s ruling class has always been that the EU is an over-regulated bureaucratic nightmare akin to a communist dictatorship. Brexit, for them, represented a desire to break free from Europe, slash regulations and become a free market US proxy floating in the North Atlantic.

A trade deal is a key mechanism for locking in this right-wing dream, and for fundamentally and irreversibly shifting power away from ordinary people and towards international capital.

That’s precisely because trade deals today are really about so much more than ‘trade’. Indeed in many ways trade rules are the fundamental laws of the global economy. And unlike international agreements on human rights or climate changes, they are highly enforceable.

By their nature, they’re largely written behind closed doors, especially in post-Brexit Britain where we have no accountability mechanisms. MPs have no rights to vote on the government’s objectives, no ability to properly scrutinise the negotiations, and can’t even stop a trade deal when it’s been agreed. Ironically, while our potential trade deal with the EU would have to be passed through the European Council and the European Parliament, and in all likelihood member state parliaments and even regional assemblies in Belgium, our MPs will have no power over that deal.

‘Science-Based’ Chlorine Chicken

Chlorine chicken has become a symbol of a US trade deal, and this isn’t as frivolous as it might sound. Rather these poor birds are a great symbol of the downward pressure which modern trade deals exert on our hard-fought for rights, standards and protections. How does it work? Imagine I’m a chicken farmer in the US. I think my chicken is just as good and just as safe as British chicken, but I farm it in a different way. I see British food standards, which don’t allow me to wash my chicken in chemicals like chlorine, as simply a form of trade protectionism. So I lobby my government to ensure that in the trade deal my chicken is seen as ‘equivalent’ to British chicken, and can enter the British market even though it’s made in ways not allowed here.

This might be acceptable if the chicken genuinely was the same. But US food standards are radically different to those practiced in Britain. US agriculture is dominated by massive corporations, farming animals on an industrial scale, with intensive use of antibiotics, hormones and steroids to promote rapid growth and prevent illness in what are often extremely unpleasant and unhealthy conditions. It isn’t the chlorine that’s the problem per se, more that it conceals a non-existent animal welfare system.

Chicken is just an example. Across the board, big business has subverted the US system of consumer protection, animal welfare and environmental sustainability. Small farmers have been decimated by this system. Astonishingly, it’s a model that has become known as ‘science-based’, in contrast to the ‘precautionary based’ model practiced here, which takes a cautious approach to health risks and bans foods where there’s a substantial and credible risk to health. A good example of what this means in practice is that lead-based paint, banned in most of Europe before the Second World War, was not prohibited in the US until 1978.

Worryingly, Johnson has endorsed this ‘science-based’ approach. Food standards here will change. And farmers, unable to compete against the lower standard food being imported here, will have to themselves push for lower standards. This is how trade deals exert downward pressure on regulations.

Regulations aren’t the end of it. There’s been much talk of the NHS in relation to US trade talks. Is it on the table? In a word, yes. This doesn’t mean a US multinational will come over and buy up the NHS lock, stock and barrel. It means that modern trade deals embed the liberalisation of services across the board. For the NHS, this means locking in and ‘ratcheting up’ (an actual trade term) liberalisation. Renationalising privatised services can become nearly impossible.

Medicine prices are a core element of many trade deals which extend the monopoly power of big pharmaceutical corporations. Already so bloated as to be dysfunctional, as we’ve seen in the current Coronavirus crisis, modern trade deals give Big Pharma longer patent terms, make them easier to extend and keep their research secret, making medical collaboration impossible. And Big Pharma isn’t alone. Increasingly trade deals give similar privileges to Big Tech companies, and even incorporate special ‘corporate courts’ which allow foreign investors to sue governments for any policy they don’t like. In one recent case an energy multinational took action against the Netherlands in one of these ‘courts’ for daring to announce a phase out of coal power.

As far as the US government is concerned, this is all ‘on the table’ – it’s there in black and white in their own mandate or in the leaked version of those censored trade papers which Jeremy Corbyn held up during the general election.