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Brexit – Is the UK really free from the EU? Part 3 – Nothing “free” about this free trade agreement

This series of posts takes a closer look at the Agreement that was arrived at between the UK and the EU and signed on 24th December 2020.
Editor's Note: The use of the expression, "TCA" in this series of posts refers to the "Trade and Cooperation Agreement" signed between the UK and the EU on December 24th 2020. This series of articles was first written in early 2021, so please bear in mind that some of the content may appear somewhat dated.

Philip Gegan

[Click here for Part 1]

[Click here for Part 2]

In this part I am looking at how the Brexit “Trade and Cooperation Agreement” (“TCA”) affects trade in both goods and services between the UK and the EU.

Trade in goods

In 2019 the UK had a deficit of around £97 billion in trade in goods with the EU. The EU wants to keep it that way, and the agreement provides for just that. The UK negotiators let the EU have its cake and eat it. It gave us the dubious privilege of remaining the dumping ground for surplus EU products, made possible by a gross undervaluation of the Euro. And we’ve paid for this liability by agreeing to obey all EU rules on trade in goods. That includes any changes to those rules, in which we have no say, in perpetuity. So much for regaining our national sovereignty. The EU thereby managed to protect the integrity of their precious Single Market. What did our negotiators secure for us in return?

Very little, it seems. We should not be surprised here, because the UK’s negotiators, like all mainstream politicians of any Western country, believe in the fundamental goodness of free trade. They believe that all forms of protection of the home market – tariffs, preferences, and so on, are bad. Unregulated competition from foreign countries, however, is good. Even though that may mean the decimation of home industries, the closure of factories and mines and the throwing of good working men and women onto the unemployment scrapheap.

In order for us to grasp what the TCA does for trade relations between the two parties, we have to understand what exactly free trade means, both to its proponents and to everyone who has to live with it. In the absence of clear thinking, it means different things to different people.

Any free trade agreement involves an infringement of national sovereignty. It has superficial attractions to naive career politicians, but beyond that it is just a chimera.

An unworkable system

The popular conception of free trade is of goods and services freely moving from one country to another without hindrance in accordance with the laws of supply and demand. Everyone is happy. Consumers because they can purchase goods cheaply from the source with the lowest price, and manufacturers and suppliers because they have a much larger market to sell in. That’s how ignorant politicians, economists and broadcasters see it.

But in reality it’s nowhere like as rosy as that. It’s an unworkable system. Quite aside from the depressive effect on wages, which ultimately keeps most people as poor as the poorest in the free trade area, there are restraints on natural development and progress.

If one party to a free trade agreement is more inventive than the other parties, or becomes more efficient, or less prone to wasteful practices, they thereby acquire an advantage over the others. They become more productive and therefore more prosperous and they are rewarded with a higher standard of living.

But this is at the expense of all the others who are a party to the agreement, whose standards of living, on average, will tend to fall, whose balance of payments will suffer, whose industries will wither and factories close. It causes an imbalance, and this imbalance will increase with time until the cost to the other countries is too high and the whole agreement becomes unworkable. Those other countries, if they wish to survive, will have no choice but to raise tariffs and destroy the agreement.

Further restrictions on our freedoms

But if there are bankers and financiers profiting handsomely from the free trade agreement, as they are bound to do, then there will be pressure to keep the system going artificially by destroying the ability of the successful party to be successful. Everything depends on absolute equality, including equality of poverty and equality of inefficient working practices. This leads to the stifling of any form of inventiveness or enterprise on the part of a more successful signatory to the agreement, and acts as a break on human progress.

This artificial equality is built into modern free trade agreements, and it is right there in the TCA. If a situation such as I’ve just described arises then what’s called “the level playing field” concept kicks in.

This artificial concept provides that no party should have any advantage over any of the other parties, even though such advantage has been obtained honestly and fairly by prudent investment (e.g. government subsidies), technical ability or other such property that any other party could have utilised if they had had the ability and foresight.

Under the rules of free trade, the cry will go up, just like the children in a playground where one of the participants in the game is perceived as having an unfair advantage. “That’s not fair! The playing field isn’t level!”

So it can be no surprise that there are countless restrictions on our freedom to conduct our national affairs in the TCA.

The “level playing field”

For example, any sovereign nation has the right to extend financial support to any section of its economy that is in difficulties. But if we want to do that in the future, for any section of our economy that is involved in trade with the EU, we have to abide by EU rules so as to ensure a “level playing field” and eliminate so-called “unfair competition” (TITLE XI: LEVEL PLAYING FIELD FOR OPEN AND FAIR COMPETITION AND SUSTAINABLE DEVELOPMENT). The sole beneficiary of this arrangement is the EU and its “Single Market”.

The Single Market is the EU’s own incarnation of a free trade area and the preservation of this artificial construct was one of the issues at the forefront of the EU’s considerations during the negotiations. They were desperate to preserve the status quo, so that in the event of the UK becoming more competitive than EU member-states in any area of productive industry, it would be easy for them to use the TCA to reverse the process and make it difficult to impossible for British companies to sell competitively inside the EU.

All kinds of rules, regulations, and mechanisms were therefore embodied in the Agreement to cover such an eventuality (see, for example, Title XI, Chapter two: Competition Policy). Especially in a situation where one side (the EU) is seeking to punish the other side (the UK).

Looking at the Agreement itself, you can see where various “member-states” of the EU have successfully lobbied for the protection of their own important industries during the long-drawn-out negotiations. Hence we have special Annexes dealing with motor vehicles (Germany, France), wine (France), and chemicals (Germany, Italy).

The UK negotiators have agreed on our behalf that neither side can create for itself an advantage over the other. This is the “level playing field”. Moreover, there will be a dispute settlement mechanism on state aid, with both sides able to impose tariffs unilaterally, if the “level playing field” is upset, ostensibly to protect against “unfair competition”.

“Confidentiality”

If there’s one thing the EU is famous for, other than corruption and bureaucracy, it’s secrecy. So under the TCA decisions will be the subject of often-confidential discussions, while dispute resolution and arbitration will be subject to absolute and discretionary rules of confidentiality (See, for example, Article INST.29: Arbitration tribunal decisions and rulings, and Article INST.30: Suspension and termination of the arbitration proceedings).

That’s not part of the British tradition, which places great importance on openness and transparency in all court trials and hearings, and other decisions that impact on our citizenry. Secrecy and “confidentiality” are part and parcel of the doings of the EU. They evidently don’t want the workers and management of British companies put out of business by the decisions of the Partnership Council to know the identity of the individuals responsible for it.

The “level playing field” concept illustrates the hypocrisy of the EU perfectly. It’s all for free market competition when it benefits thereby, but when it has to face the reality of not being able to compete successfully, it resorts to the “level playing field” to keep in the game. This neatly brings us to the next item to consider, which is trade in services.

Trade in services

When it comes to trade in services, in 2019 the UK had a surplus of around £18 billion with the EU. In stark contrast to goods, the EU negotiators refused to come to any agreement on services. Any future agreement would have to be sanctioned by the EU Commission, which is not known for giving consent on these matters easily.

The TCA generally makes trade in services between the UK and the EU much more problematic than it need be. For example, service agreements can no longer be between the UK and the EU. They have to be signed by the UK and each individual “member-state” affected by such trade, i.e. be on a “country-by-country” basis. This adversely affects service companies in the UK more than it does their EU counterparts.

Yes, the EU Commission don’t mind returning a little national sovereignty to each of its members if, thereby, it can gain a little revenge against the UK for its blatant defiance in going through with the result of the 2016 Brexit referendum.

There’s still plenty of scope for contrariness on the part of the EU going into the future. Under the TCA, although the EU cannot impose tariffs it can impose “non-tariff measures” to trade in services. These can be, for example, additional proposed regulations that will have to be followed if a particular service trade is to be allowed to continue. Again, it has to be said – this isn’t what we voted for in 2016.

EU threatens UK services sector

There’s more (you didn’t think that was it, did you?). If the UK government wants to make subsidies to any of its service industries, such as finance, then it will have to follow the rules of Part Two, Title II of the TCA. As we’ve observed earlier, there must be a “level playing field”. So if the EU is behind us, for example, in the field of expert advice on some aspect of concern to the construction industry, and companies and authorities in the EU wish to purchase such expert advice from a UK company, then all parties, including the UK company, will have to follow as yet unwritten rules that will be dreamed up by Eurocrats in Brussels.

The EU is being so obstructive in the matter of service industries that UK service industry chiefs are now talking openly of the need to withdraw from the EU market and seek new markets elsewhere. The resulting loss of foreign earnings will doubtless be put down to “Brexit” by Remainers, using their usual simplistic logic and ever determined to find no fault at all with the EU.

Share trading

A good example of how the EU have outflanked the UK’s negotiators is in the sphere of share trading. London has long been the largest stock exchange in the world. Before this TCA was signed, anyone wanting to trade in European equities would most likely have traded on the London Stock Exchange, regardless of which country they operated from.

Post TCA, a UK investor can choose to trade in either London or one of the EU stock exchanges, but an EU investor can only trade on an EU stock exchange. This gives EU stock exchanges a vital advantage, and investors based in the UK will invariably choose to trade in the EU, where all their portfolios can be managed from the one platform.

Our negotiators were assuming that the EU would grant the UK what is called “equivalence”, i.e. the practice and procedure would be the same as it was when the UK was still a “member state” of the EU. But the EU have refused to grant equivalence. This should have come as no surprise. Switzerland had a disagreement with the European Commission in 2019. Equivalence was withdrawn by the EU and Switzerland, having done their best to compromise, are still waiting for it to be reinstated. Woe betide any independent nation that crosses the European Union.

Professional qualifications

Next is another good example of how the EU works. I’m referring to the Mutual Recognition of Professional Qualifications (MRPQs). It is the mechanism that allows professional people such as doctors, lawyers, engineers and architects to have their qualifications recognized all across the EU.

Such an arrangement shouldn’t be necessary if the EU was run on the basis of common sense. But it can’t allow anything like that to go unhindered by rules and regulations.

So the MRPQ came into existence. It was, surprisingly, an arrangement that worked tolerably well for many years, helping to facilitate trade, mainly in the services sector. In the negotiations this arrangement should have been little more than a formality to agree on. But the EU negotiators refused to agree.

As a result, our services trade with the EU is suffering due to uncertainty over whether professionals who become involved will have their professional qualifications recognized (and therefore their services paid for) in the EU. All the TPA does (in Part Two, Heading One, Title II, Chapter 5, Section 2, Article SERVIN.5.13: Professional qualifications) is to refer the whole matter to the Partnership Council, which can then “within a reasonable time [undefined]…. develop and adopt an arrangement on the conditions for the recognition of professional qualifications” which can then be shoved in as another Annex to the TCA itself.

In the meantime most UK service industries are in limbo as far as supplying services to any country that is a “member-state” of the EU is concerned. It would probably be easier negotiating a trade deal with the Mafia.

In Part 4 I will be looking at how the TCA affects our much maligned fishing industry.

Click here for Part 5 in this series, “What we face from the EU post-Brexit”.

Brexit – where are we now?

Philip Gegan

Brexit. This post was first published in November 2019, before the General Election of the following month swept the bulk of the Remainers out of the House of Commons and gave Boris Johnson a mandate to "get Brexit done" no matter what.

Brexit – We’ve heard so much in the news about

(a) the need for a “deal”; Remainers in Parliament have even passed a law prohibiting a “no-deal” Brexit;

(b) how a second referendum would “let the people decide”; and

(c) if we do insist on leaving, the need to follow the procedure set out in Section 50.

What are we to make of all this? At this time, only two things are clear.

(a) The majority of people in this country want us to leave the EU without any further delay. This includes the “Single Market”, the “Customs Union”, the “European Court of Justice” (sic) and all the other myriad institutions and bodies set up (both before and after the 2016 referendum) in order to make leaving the EU, for any “member-state”, impossible.

(b) The Establishment is determined to prevent us from leaving. If it goes along with Boris Johnson’s “deal” then that will only be because, although considerably better than Theresa May’s deal, it is still not a genuine withdrawal.

Do we need a “deal” at all?

Contrary to what many supporters of Brexit say, we do, strictly speaking, need a deal of some kind in order to continue trading with member-countries of the European Union.

The over-riding problem is this. Over the years the EU has gradually absorbed more and more powers and functions that were formerly exercised by the sovereign nations that were foolish enough to surrender such powers. One of these powers was the ability to conclude trade deals with other countries, both inside and outside the EU (the Customs Union and the Single Market saw to that).

This power is a fundamental component of national sovereignty. Now, no member of the EU can conclude such deals; they’ve lost the power, along with their national sovereignty.

This is an unfortunate fact, but the key difference between it and what the Remainers would have us believe, is that the correct order of events should be not to negotiate a deal and then leave the EU, but to ignore Section 50, leave the EU and only then negotiate a deal.

Let it not be lost on us that individual European countries would invariably be pleased to negotiate a trade deal with us, if they still had the power. But the EU has usurped that power, and will undoubtedly use it against us instead of for the common good of all. They do not want us to thrive outside the EU, and they are not interested in giving us a deal. All they want to do is to try to coerce us into re-applying for membership.

Negotiate from a position of strength

The next problem is this. Any dispute involving two “member states” of the EU, or involving a “member state” (which is what the UK still is) on the one hand and the EU Commission on the other can only be resolved by the EU itself through its Court of Justice (ECJ).

Such a system is contrary to natural justice and to common sense. The ECJ will always rule in favour of the EU. That’s what it’s there for. For that reason alone, the procedure of trying to negotiate a deal whilst still inside the EU is madness.

We should have placed ourselves in the same position as Canada, Mexico, or Japan. That is, outside the EU, and negotiating from a position of strength, free from the jurisdiction of the ECJ.

Another tool to try and stop Brexit

There’s another important point about not leaving the EU without a “deal”. I’ve covered this before, but it’s worth mentioning again. If you go into negotiations of whatever kind loudly declaring that you won’t come away without an agreement with the other side then you seriously need certifying. Yet this is what the Remainers have done, time and again.

You have to reserve to yourself the option to “walk away”. For anyone claiming to be compos mentis to vote in favour of a law making a “no deal” Brexit unlawful is simply absurd.

In reality, these people knew exactly what they were doing. They were using all this nonsense as another tool to try and stop Brexit altogether.

Remainer hypocrisy about
a “Second referendum”

Now let’s deal with all the Remainer pressure for a second referendum.

There’s a very important reason why a second referendum should not take place. A referendum in UK politics is a very rare event, and rightly so. Up to 1975, when the first referendum took place over whether we should remain in what was then the EEC, there had been no referendums in our history.

The 2016 referendum was the first nationwide referendum in the UK to have taken place since 1975. The device has been used as infrequently as it has because it has been universally recognised that too many referendums would weaken the government and tend to make the country unstable.

It is completely unacceptable to have another referendum on the same question (whatever the question may be — not just Brexit) so soon after the original (the same applies to the proposed second referendum for Scotland on “independence” from the UK).

The reason is that if there is a second referendum it would completely undermine the whole concept of referendums. Not only that, but,

(a) if the result is the same as the first one, then it would be shown to have been a complete waste of time and money, and

(b) if the result is different then which result should prevail? And who should decide?

If the first result, then why have the second referendum at all? If the second result, that would almost certainly lead to civil unrest, as supporters of the first result will rightly feel they have been gravely wronged and deprived of the result they worked and made sacrifices for.

The end of referendums?

In either outcome, it would fatally weaken the concept of referendums (as well as democracy itself), as the next time a referendum was proposed people would be inclined not to vote at all on the basis that, “if we vote the wrong way they’ll simply make us have another one until we vote the way they want us to vote“.

And they would be right. The concept of referendums would thereby be section 50destroyed.

In any event, calling for a second referendum is intrinsically hypocritical. Had the result in 2016 been the other way round and Leavers had called for a second referendum then you can imagine the avalanche of derision and mockery we would have had to endure at the hands of the Remainers and the mass media. They would have pulled no punches in telling us to grow up and accept the result.

When the 1975 referendum produced a “Stay in the EEC” outcome, we who had campaigned to leave stoically accepted the result without calling for another referendum, even though we still continued our opposition to UK membership of what was then the European Economic Community (EEC).

Do we need to comply with Section 50?

This article was signed up to, on our behalf, by Tony Blair, in December 1997 as part of the Lisbon Treaty, which was ratified by Parliament in 1998. Blair and his government had absolutely no mandate to bind this country in such a way, and it’s especially ironic that this nonentity of a former Prime Minister now struts around pretending to be a “democrat” and telling us that we can’t leave.

The truth of the matter is that such a clause would never be upheld by an impartial court. It would most probably be held to be unnecessarily burdensome, so there was no need to comply. We could have parted company with the EU before the end of 2016.

Boris Johnson’s new deal

Now Boris Johnson has a new deal, essentially the same as Theresa May’s deal, though with a few concessions in our favour. It has got rid of the Irish backstop, but at a price. The EU will have powers to station customs officials (all of them, of course, immune from prosecution) at our ports to ensure that goods shipped to Northern Ireland (and therefore not subject to any excise duties) are charged duties as if they were going to the EU.

Only when they have arrived in Northern Ireland will they be de-bonded and the excise duties made liable to refund. Northern Ireland businesses selling their goods to the mainland will have to complete a customs declaration. What a charade!

And all, of course, subject to the over-riding jurisdiction of the “European Court of Justice”.

Ongoing obligations under the “deal” inhibit our ability to modernise industrial infrastructure and practices by requiring us to prevent them from acquiring any competitive advantage compared to similar industries in the EU.

Using this part of the “deal”, the ECJ can step in at any time and sabotage any trade deal we are about to sign with an outside country, e.g. the US. So much for regaining our national sovereignty.

It must be said, however, that Johnson has been far tougher than May (who basically agreed to everything the EU demanded). For example, at least Northern Ireland is staying within the UK’s customs territory, and not ceded to the EU as it would have been under May’s appalling deal.

The coming general election

Until recently, hopes have been high in the Brexit camp that the Brexit Party would do sufficiently well in the coming General Election to win at least several seats, and possibly hold the “balance of power”. Johnson would be forced to implement a genuine Brexit in order to save his political career.

If only it were this simple. Those of us hardened racial nationalists who were around in the heyday of the National Front, in the 1970s, know just how difficult it is for a new political party to make any impact at a General Election.

In by-elections and European elections voters are more prepared to vote for the party or candidate or party leader that they most prefer. Minority and new parties often do well.

But in a General Election it’s different. The electorate, at a General Election, vote negatively. That is, they tend to vote against the candidate, or the party leader, or the party, that they hate and fear the most. There’s too much at stake to do otherwise.

The likely outcome

It’s never wise to try and predict the outcome of a General Election. Probably most voters currently hate and fear Labour and Jeremy Corbyn most, and want to keep them out of office. Sadly, in most constituencies the only way to do that is to vote Tory. This doesn’t bode well for the Brexit Party, and Nigel Farage knows this.

That, and not wanting to risk splitting the pro-Brexit vote, is probably why he has decided not to contest seats won by the Tories in 2017. It is alleged that some other Brexit Party candidates have been bribed by the Tories to stand down at the last minute.

As a result, it looks increasingly likely that the Tories will be the largest party after December 12th, and possibly have an absolute majority. As a political party, they will be united, on the surface at least.

The pro-Brexit faction will think the UK is free from the EU, while the Remainers will smirk in the knowledge that secret entanglements prevent a genuine withdrawal, and in the meantime they will work secretly to facilitate the UK’s re-entry into the EU in a few years’ time when a suitable pretext arises.

Meanwhile, the mainstream media will be able to convince us that democracy prevailed and that the strings still tying us to the EU and neutralising our sovereignty were authorised by the Tories’ convincing win at the polls. The fact that hardly anyone knew about them until afterwards will be ignored.

Johnson’s real motives

Johnson is a chancer by nature, and he took a chance in early 2016 when, with the referendum taking place in a few months, he threw his hat into the “Leave” camp, resigning from David Cameron’s Cabinet in order to be free to campaign.

Since then he has been careful to take advantage of all the in-fighting in the Conservative Party over Brexit so as to (eventually) manoeuvre himself into the leadership of the party and, as such, the post of Prime Minister.

So for Boris Johnson it’s all about his career in politics, his position as Prime Minister, and the success of the Conservative Party in the forthcoming General Election. He’s happy for most Brexit supporters to carry on believing that his “deal” with the reptilian “European Union” is the real thing, as long as he wins the election and retains his role as Prime Minister. He’s riding a tiger and he’s betting everything he has on staying on top of it.

Hope for the future

Boris Johnson’s deal is far from being a genuine Brexit, but we can console ourselves in the knowledge that it is merely the start of something much larger. Just think – if the Remainers had won the referendum then without a doubt further centralisation of powers in the EU, and further transfers of national sovereignty and power to the EU would have swiftly followed.

Even now we would most likely have the reality of a European Army, the Orwellian “European Arrest Warrant”, and the pending abolition of sterling, to be replaced by the Euro.

Even entrenched pillars of our ancient system of common law would be eroded by now, with the abolition of such guarantors of our liberties as the Bill of Rights, Magna Carta, and Habeas Corpus (in the name of “harmonising” our laws to EU law).

So we have much to be thankful for. We have managed to avoid having the doomed Euro foisted upon us, and we also kept out of the Shengen Agreement. And key parts of our ancient liberties remain more or less intact.

Under the deal, we’ll be free of the ECJ at the end of the transition period, in January 2021. That alone is a massive blow to the Euro-federalists.

All these things, together with the Soros/Merkel backed Afro-Asian “refugee” invasion of Europe, the economic downturn the more prosperous European nations are now facing, and increasing Europe-wide opposition to Brussels, will lead to even more EU instability.

This in turn should encourage other Euro-sceptic nations, such as Hungary, Poland and Italy, to follow Britain’s example in regaining their national independence.

The days of the European Union are now surely numbered.