T he agreement reached with Australia this week is celebrated by the UK government as a landmark trade deal – the first that isn’t a rollover of old European Union membership terms. But that honour surely belongs to a treaty that was signed by Boris Johnson in December 2020. It is the trade and cooperation agreement (TCA) covering the exchange of goods between Britain and 27 other nations.
But those nations constitute the European single market, which Mr Johnson does not appear to count as a valuable trading partner, despite its proximity.
Disruption caused by the pandemic makes it hard to measure the impact of Brexit. Treasury analysis from 2018 estimated the long-term cost of a deal along the lines of the one concluded by Mr Johnson at around 5% of GDP. In March this year, the Office for Budget Responsibility estimated that the fall in trade with the EU under the TCA would shave around 0.5% from GDP in the first quarter of 2021. And that is at a time when “grace periods” are still easing border friction.
Optimistic accounts of the benefits of a free trade deal with Australia envisage it adding 0.02% to GDP. In the government’s view, such paltry compensation for retreat from EU markets is beside the point. The beauty of the deal is that it was signed with all the sovereign powers that Brexit has reclaimed from Brussels. In the Brexit hierarchy of values, sovereignty is priceless.
It is also evanescent. Parliament was supposed to be the beneficiary of powers “repatriated” from the EU, but MPs have had no meaningful input into the deal with Canberra and will have precious little control over its passage into law. As an international treaty, it can be ratified by royal prerogative power. MPs can use procedure to obstruct that process, but the Commons has nothing close to the powers of scrutiny and veto that the US Congress or the European parliament have over trade policy. If MPs representing rural seats decide that the government has signed away the livelihoods of their farming constituents in favour of cheap Australian meat imports, there is not a lot they can do. As with so much of Brexit, the small print of a pledge to “take back control” turns out to vastly empower the executive branch of government at the expense of the legislature. Scottish and Welsh governments will also complain, with justification, that the new post-Brexit trade regime deals over the heads (or behind the backs) of devolved institutions.
The situation is more complicated regarding Northern Ireland, which remains de facto part of the EU customs space under the terms of the Brexit withdrawal agreement. That is already a point of severe political and diplomatic friction. More non-EU trade deals on the Australian model are likely to effect divergence of British and European market conditions, increasing the burden of checks at Irish Sea ports. David Frost, the Brexit minister, on Wednesday told MPs he has asked the EU to delay the full implementation of some restrictions due to come into effect at the end of this month. Mr Johnson has threatened to abandon his treaty obligations unilaterally if he judges that implementation is getting too burdensome.
The prime minister is making a habit of casual perfidy regarding Northern Ireland. He is willing to abet unionist resentment of his own deal if the ensuing tensions – and threat of sectarian conflagration – put pressure on Brussels to make concessions. Such recklessness regarding the Good Friday agreement has been noted in Washington, and is one reason why Joe Biden is not rushing to complete the bilateral US-UK trade deal that his predecessor envisaged and that the Conservative party craves. Such a deal would be worth more than the Australian one, but not on a scale to rival seamless access to the vast continental single market on Britain’s doorstep. That is the enduring awkward fact about Mr Johnson’s trade policy. The biggest and most consequential deal is the one he has already done; the first one that he conveniently forgets when keeping count. And it made Britain poorer.