Aussie rules Brexit? Only if we scrap the Withdrawal Agreement
The UK government are at risk of failing to deliver the Brexit that the British electorate voted for. If the UK truly wants to be free from the ties of the EU, we must scrap the Withdrawal Agreement and Northern Irish Protocol, writes Professor David Collins.
Re-branding a 'no deal' exit from the EU as the 'Australian' option was a brilliant PR coup. For the average British voter, Australia immediately brings to mind images of sun-soaked beaches, sizzing barbecues and cuddly koalas. It's definitely a much easier sell than 'trading on WTO terms.'
After all, the WTO doesn't sound too much different than the WHO – and we know where they got us with Covid. If no deal Brexit is like an episode of Home and Away – bring it on.
An Australian-style Brexit means that the UK will trade with the EU on non-preferential terms, like any country with which the EU does not have a Free Trade Agreement (FTA). Australia could be substituted for any number of such countries, with the US as another example (but that wouldn't have sounded as good). The EU's average tariffs on manufactured goods for all these countries are fairly low (around 4 per cent) although they are somewhat higher on agricultural products and on some composite goods, such as automobiles.
Even without an FTA, international law (the law of the WTO, of which the EU, UK and Australia are members) prohibits unreasonable restrictions on trade in the form of excessive certification procedures as well as subsidies that distort trade. To be sure, trading with the EU without a preferential FTA like Canada (hence the term 'Canada-style') would be sub-optimal, but it would be far from the disaster that many have fumed about for the past few years. The EU's portion of UK's total trade declines every year and only a fraction of British businesses export there.
But as a new report from the Centre for Brexit Policy demonstrates, thanks to last year's Withdrawal Agreement (WA) and Northern Irish Protocol (NIP), it looks like we may have been mis-sold on this Australian-style no deal Brexit.
The WA/NIP are legally binding international treaties which have direct effect and supremacy in UK courts over UK laws. The WA also includes a Ukrainian-style arbitration clause in which a 'neutral' tribunal must refer all questions of EU law to the European Court of Justice (ECJ) and thereafter be bound by ECJ rulings. The NIP comes into force automatically at the end of the Transition Period unless it is replaced by a separate long-term UK-EU FTA.
Under the terms of the NIP, Northern Ireland must apply all EU laws on goods as they now stand and as they are changed by the EU in future. All these laws are under the direct jurisdiction of the EU Commission and ECJ. Add to this the fact that the UK must observe EU regulatory controls on goods imported into Northern Ireland from Great Britain to ensure conformity with EU rules, even where the goods are not at risk of moving on into EU. Yes, this means checks at the Great Britain / Northern Ireland border! While notionally part of UK customs territory, Northern Ireland will be subject to EU tariffs on goods from Great Britain if the goods are not proved to be "not at risk" of going on into the EU.
Northern Ireland will also be subject to EU tariffs on goods from Great Britain if processed within Northern Ireland, undermining benefits of lower UK tariffs for NI businesses and consumers.
If this isn't enough to sour the public, Northern Ireland will be subject to direct EU's state aid control by the EU Commission. These rules could end up applying to the whole of the UK if any UK government support might theoretically affect trade between Northern Ireland and the EU, as determined, of course, by the ECJ.
Taken together, this set up could harm UK chances of signing FTAs with third states as the legal complications would be unattractive to potential treaty partners like the US. It could frustrate the UK's accession to the Trans-Pacific Partnership if one of the TPP's existing members was dissatisfied with part of the UK effectively being carved off, as would be the case for Northern Ireland. This is not how Australia trades with the EU- it is Brexit in Name Only – a colonial style arrangement where many of the economic benefits of a true Brexit will be impossible to realize.
With the WA/NIP remaining in place, the government will not be able to deliver its Brexit election promises and the advantages of a no-deal Brexit will not be forthcoming. To avoid this outcome, the government must either agree to a 'Canadian-style' FTA that simultaneously replaces the WA/NIP (which now seems unlikely), or less optimally but still viable, leave the Transition Period on genuine Australian terms by rejecting the WA/NIP on the grounds that the EU has breached its commitments under these treaties by not negotiating for an FTA in good faith. Make no mistake, this approach will be met with much resistance at home and could harm the UK's reputation abroad.
It could also lead to legal action from the EU. But the alternative, leaving these agreements in place, would be a betrayal to the British public.
In another popular TV series, Wanted Down Under, Brits contemplate selling up for a new life in Australia. But to get there – to get that big house in the sun – they have to give up their family and friends. So too, it seems, with an Australian Brexit. If we truly want to cut free from the EU and enjoy the benefits of an independent trade policy and regulatory freedom, it means dropping the WA/NIP and facing the consequences. In the long run it is worth it.
