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The Third Rock Forum - Economics

Article Title
The worst negotiation since the Faust/Devil deal
Paul G
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Submitted : 24-11-2018 21:58
Amended : 21-12-2018 19:38
Status : Approved:  
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I’ve read the EU's UK Withdrawal Agreement. 

The first thing that struck me was that it seemed to be the document that the EU might have drawn up before negotiations started - a kind of EU, ‘have our cake and eat it’ wish-list.  There’s an almost complete absence of reciprocity.  It’s all about how to ensure the EU loses as little as possible of the benefits they derive from the UK’s membership, despite the fact that we will no longer be a member. There is no balance in the allocation of rights and responsibilities and almost nothing about what the UK might gain.

Now, if the withdrawal agreement is to be seen as the terms dictated by the EU to a member who has seriously let the side down and is lucky not to have been cast utterly into the wilderness, it makes sense.  But if it is an attempt to set out fair and reasonable terms on which we leave the club, it is deeply insulting. 

It has been estimated that over the years we have made a net contribution of £180 billion (£180,000,000,000) to the EU.  Throughout that period the EU has pursued its ambition of ever closer union, with the formation of a European super-state as its ultimate goal. Given that the UK has never wanted to be a part of a European super-state, we have persistently tried to persuade the EU to follow a different path. David Cameron’s pre-referendum effort to persuade the EU to change course (to concentrate more on economic competitiveness rather than on political union) was just the most recent example of our failed attempts.  Despite these failures and the EU’s determination to pursue ‘ever closer union’, we have continued to finance the development and expansion of the EU.

Fair enough!  Although we weren’t told it when we joined the EU, ever closer union was in the Treaty of Rome, so we shouldn’t be surprised there is now a single currency in most of the EU and that there is talk of forming an effective EU army.

But equally, the EU shouldn’t be surprised that, albeit belatedly, the UK has said “Enough is enough!”.

Given this history of our relations with the EU, you might think the EU would view our departure with regret (which they do) and show the UK some gratitude and respect for our very substantial contribution (which they aren’t). And, if they don’t show some gratitude and respect, we should demand it.  After all, as one of the main net contributors, we’ve paid for much of the EU.

So how have we ended up with the entirely one-sided Withdrawal Agreement, that leaves the UK still paying vast sums of money to the EU for an indeterminate period, but now without any say in  EU laws and directives, despite still being indefinitely subject to many of them - and, worst of all, unable to leave the EU completely without the EU's permission, however onerous the conditions that the EU imposes on us?

Well, let’s be honest.  The negotiations have been almost unbelievably mishandled.  Any half-competent negotiator would have refused the EU’s demand that we agreed the terms of withdrawal before we discussed our future relationship with the EU.  We should have said that, following the referendum, the EU must now see and deal with the UK as an independent country, an independent country that is the fifth or sixth biggest economy in the world and already a major trading partner of the EU.  We should have said we will be leaving in March 2019, if need be on WTO terms, but that our door is open for discussion about a free trade agreement. 

We should have added that, of course, there is also a need to sort out the terms and mechanics of our departure but these should form a relatively minor issue in determining something much more important - our future relationship with the EU.

That’s what we should have done, but we didn’t.  Instead, we have allowed the EU to dictate the terms of our withdrawal, as though we were ashamed of our decision to leave.  Having read the withdrawal agreement, I have to wonder what our negotiating team has been doing over the last 18 months.  Whatever it is, there is little evidence of it in the Withdrawal Agreement.

What should we do now?  First we must not accept the Withdrawal Agreement.  While we are a member of the EU, there is a mechanism for leaving. If we sign the Withdrawal Agreement, it will have the status of a treaty which means there is no way out without the agreement of the EU. In other words, in this and many other ways, the Withdrawal Agreement is far worse than being a member of the EU (which, given the EU’s wish to keep us as a member, is no surprise).

Secondly, we should go back to the EU and say that since we cannot accept the withdrawal agreement, as things stand, we will be leaving the EU on WTO terms on 29th March next year.  However, given the dislocation of trade this will cause to both parties, we would like a one year postponement of our departure, on the understanding that we and the EU spend that year making every effort to negotiate a free trade agreement. If the EU refuses to allow a one year extension of the current arrangements or to discuss a free trade deal, we have to be prepared to leave on WTO terms.  We should also make it clear that there should be a review of any estimate of what we should pay on leaving the EU, and that estimate should be based on what we are legally obliged to pay (I believe that is nothing) and how much, out of the UK’s goodwill, we are prepared to contribute (which will depend on how reasonable the EU is during the proposed trade negotiations).

Yes, it’s a mess. And the mess is largely the fault of the UK Government by embarking on a failed, sycophantic negotiating strategy. Let me be frank.  In promoting the Withdrawal Agreement, Teresa May is peddling half-truths in order to fool the public, desperate for a resolution of the situation, into accepting an appallingly flawed deal.

She should be ashamed of herself. And she must not succeed.


Status: Approved
Reply Date : 26-11-2018 19:24
Author : georgebundle
Negotiate not exterminate!

The worst negotiation since the Faust/Devil deal

            The analysis presented in this analysis is entirely supportable - from the point of view of the UK.  There is a problem with it - however. The negotiations involved another party, the EU. As all negotiations between two parties need to be conducted with the understanding of both party's position by both parties, the negotiation between the UK and the EU did not have this requirement. Unfortunately, the Government, the Civil Service and the population of the UK simply do not understand the position of the EU.

            In a nutshell, the EU has an existential problem which can be summarised thus:

A quick check on history of the idea of the United States of Europe indicates that this idea came into the horizon twice, each time after turmoil developed between European countries. First it was suggested in the middle of the 19th Century in Vienna. Nearly 100 years later, after WW2, Winston Churchill suggested it as a way of stopping European countries killing each other.

The clue is in the turmoil aspect. Adenauer, De Gaulle, Schuman and others started the process with the European Coal and Steel Community which was then followed by the Treaty of Rome in 1957. Their generation believed in the concept but they are now dead. They left it to Junker’s generation to bring the United States of Europe about. They are now also on their way out.

Meanwhile, the current generation of the peoples of Europe who do not know about or experienced wars look at the idea with a different set of values or priorities.   Consequently, the EU is facing an existential problem which is getting worse as one of the contributing States, the UK, is leaving. They need a good trade deal with the UK – desperately – whatever their negotiating strategy is.

            Now, if you negotiated on behalf of the EU, you would create a negotiating programme and terms which the analysis describes as:

            "The first thing that struck me was that it seemed to be the document that the EU might have drawn up before negotiations started - a kind of EU, ‘have our cake and eat it’ wish-list.  There’s an almost complete absence of reciprocity.  It’s all about how to ensure the EU loses as little as possible of the benefits they derive from the UK’s membership, despite the fact that we will no longer be a member. There is no balance in the allocation of rights and responsibilities and almost nothing about what the UK might gain."

            As it was the British PM who negotiated (or rather Ollie Robbins) it was her task in the first instance to understand the position of the EU right at the start of negotiations. There is no sign of that understanding. If that understanding was there at the outset, the UK position could have been and should have been much more decisive and firm in relation to the entire programme of the negotiating process. The EU would have had to concede to a more pragmatic and sensible order of decision making and agreement progress. This did not happen. In fact, the EU negotiators quickly realised that the British side will agree to whatever they propose until such time as they get their actual negotiating position sorted. This ended up to be a series of reactions to the EU propositions, rather than presenting the British position. To be accurate, the EU side requested several time during the past year that the UK should tell them what the UK wants.

            The UK should have made counter proposals in the form of clear programmes and objectives and the way they should be discussed. This would not have been very welcome by the EU but they would see that they did not have much choice if they wanted to have the final beneficial agreement that they desperately need.

            There is no gratitude involved in this situation, only existential necessities. Nor is there the possibility of discussing the future relationship with the EU while we are members of it. The EU discusses relationships not with existing members but with third countries. That is logical.

            So, what should happen now? The withdrawal agreement should be rejected by Parliament. The EU will analyse the debate that will end in rejection and will understand that they will have to deal with the objections effectively if they wish to have a good deal and a unique future relationship with the UK. They NEED this relationship to minimise their losses and to avoid their imminent collapse as a political entity. Almost no-one in the UK see this dilemma the EU has. No-one puts themselves in the position of the EU.

            It is not too late to allow the EU to save themselves and create a mutually beneficial trade and political relationship with the UK.