Brexit deadlock challenges neoliberal trade dogmatists

Wednesday, March 13, 2019: With the British Parliament again rejecting Prime Minister Theresa May’s plan for the UK’s departure from the European Union by a huge 149 vote margin, the rapidly approaching deadline of March 29 is focussing global concern more than ever.

The Brexit political drama has global consequences, including for Australia, because a UK departure from the EU - deal or no-deal - would also have a significant economic impact on Europe, whose economy is slowing, and this in turn will impact on global markets. A no-deal Brexit would intensify the shocks because there would be no 20-month transition using current arrangements while a formal UK-EU trade agreement was negotiated.

The economic shocks involved will generate political shocks. The Brexit vote in many working class communities in June 2016 reflected in part the failure of the EU and other neoliberal trade deals to deliver promised jobs and growth, especially in the wake of the 2008-09 Global Financial Crisis. But it was led by nationalist xenophobes like UKIP’s Nigel Farage. Anti-immigrant prejudice is a key but now understated issue in the Brexit political fight.

Both the neo-liberal free trade extremism and the racism that have led to the Brexit crisis need to be challenged. Instead of trade serving the profit goals of global corporate supply chains, it must be re-oriented to serve labour rights, human rights and environmental sustainability.

Last weekend, Prime Minister May continued negotiating with the European Commission about how to avoid being in a customs union with Europe while maintaining a soft border with the Republic of Ireland. It did not work out, with UK Attorney General Geoffrey Cox formally advising his parliament that the new guarantee about the Irish border wasn’t enough. European leaders are starting to consider an extension of the deadline to allow the UK to hold either a second referendum or an early election.

The trade bottom line for the pro-Brexit hardliners in the British Parliament is the power to make new trade agreements outside the framework of the European Union. They wrongly argue that the Britain can make such deals to replace the loss of trade and investment that its economy would suffer by leaving the EU, which is the world’s second largest market after the USA.

Britain now has free trade agreements with 64 countries as part of the European Union’s treaties. Since March 2017, the May government has managed to create separate agreements with just seven of these countries, and these are all small markets – Israel, the Palestinian Authority, Switzerland, Chile, Mauritius, Madagascar, Zimbabwe and the Faroe Islands. This meagre outcome demonstrates just how long it would take to negotiate to recover all the free trade agreements the UK would lose with Brexit.

The obvious damage that any Brexit would inflict on the British people is fuelling the intense political conflict now tearing apart the Conservative Party and also having a marked impact on the Labour Party.

The Brexiteers demonstrate by their criticism of the European Union that they would dispense with environmental and human rights provisions in current EU trade agreements when trying to make quick trade agreements with Australia, India, Canada, New Zealand and the USA in a post-Brexit world.

In President Trump’s USA, the meat lobby wants the sale of growth hormone-fed beef, currently banned in the UK and EU. US Big Pharma wants changes to the NHS drugs approval process to allow it to buy more US drugs.

US farming groups say any deal should move away from EU standards, including rules governing genetically modified crops, antibiotics in meats, and pesticides and herbicides, such as glyphosate. They want lower tariffs on agricultural goods.

US technology groups are against the UK's proposed digital tax on Google, Microsoft and Amazon.

These demands have already provoked strong opposition in the UK, including from May’s Environment Secretary Michael Gove.