Brexit: Sajid Javid’s contentious claims fact-checked
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Your support makes all the difference.The chancellor, Sajid Javid, made a number of statements about Brexit on the Today programme that some would see as contentious.
They centre on whether the UK will be able to include a trade deal with the EU, having left the EU; what form that trade deal might take; and how quickly it could be finished.
Mr Javid expressed confidence a new deal would be completed by 31 December next year.
Will the UK leave the EU on 31 January?
Yes, in formal terms, provided the Conservatives win the election and get their legislation through the House of Commons – both still uncertain.
Will Brexit “get done” by 31 January?
Again, technically yes. The UK will cease to be a member state on that date.
It will then enter into a “transition period” which lasts until 31 December, next year. In this time nothing will practical change and all existing UK-EU arrangements stay in place whilst the new world is invented.
There is an option to extend the deadline, but British ministers have ruled out, so far, taking up that option.
What will be far from “done” is the new relationship between the UK and the EU, covering economics and trade, but also security cooperation, movement of people and other important matters. EU to UK and UK to EU immigration. The points based system, for example, is not discussed at all.
Will a new comprehensive trade deal be negotiated by 31 December next year?
No, only the “divorce” will be sealed.
The new trade deal is mostly simply an expression of aspiration. The deadline for that is 31 December next year, or later, by agreement.
The closest things to a concrete basis for trade are the clauses in the UK-EU Withdrawal Agreement (the so-called divorce agreement) relating to the status of Ireland and the Northern Ireland border, which are legally binding.
Otherwise, there is only the joint UK and EU Political Declaration, which covers a lot of ground but is not is not legally binding.
Will a new comprehensive trade deal be negotiated by January 31st 2020?
Mr Javid says so, however there is the possibility of a no-deal Brexit if the talks fail to conclude and the UK and/or EU refuse to extend the talks.
Mr Javid said this outcome is “extremely remote”.
What does the political declaration suggest will happen?
It was slightly renegotiated by Boris Johnson from the one already agreed with Theresa May.
There is a lot of ground to cover for the officials in the next year or so, if Brexit goes ahead:
- “An ambitious, broad, deep and flexible partnership across trade and economic co-operation with a comprehensive and balanced Free Trade agreement at its core, law enforcement and criminal justice”;
- “Ambitious customs arrangements”
- “should aim for substantial sectoral coverage…including professional and business services, telecommunication services, courier and postal services, distribution services, environmental services, financial services, transport service and other services of mutual interest”;
- “free movement of capital and payments”;
- “intellectual property rights”
- “visa-free travel for short-term visits”
- Judicial cooperation in matrimonial, parental and other related matters
- Aviation, road and rail transport
- “Fishing opportunities”
- “level playing field for open and fair competition”
- “law enforcement and judicial cooperation”
- Data exchange
- Law enforcement cooperation
- “Ambitious, close and lasting co-operation on external action t protect citizens from external threats, including new emerging threats, prevent conflicts, strengthen international peace and security…”
- Intelligence exchanges
- Cyber security
- Illegal migration cooperation
- Counter terrorism cooperation
- Dispute settlement
When Brexit was due in March 2019 it was still a tight schedule; now it is even more scorching a pace.
So how long will a new trade and security treaty to be negotiated?
Recent major deals between the EU and Canada and Japan, respectively, took many years to strike and ratify.
According to Mr Javid the UK-EU trade deal would be a much easier affair because we start from complete alignment.
Yet of course the UK will be moving away from complete alignment, towards unpredictable divergence, that being the whole point of Brexit. This has never been attempted before.
The EU is wary of the British introducing new easier regulations on companies in order to gain a competitive advantage, or an “unfair competitive advantage”, in their opinion. They would thus resist such moves; or seek compensatory, counteracting measures to redress them.
In an extreme case they might impose quotas or tariffs or other restrictions on UK access to the huge EU single market if the British insist on pursuing their own course of action in some areas.
In reality there will be a series of trade-offs across the field.
Greater security co-operation, for example, might be offerd in exchange for being allowed to offer state aid to some industries. Or extra EU access to UK fishing waters could be battered for the UK being allowed to operate as now in the market for EU financial services, with reciprocal recognition of qualifications and rule books. For banks, say, the EU might not allow a licence for UK-based banking activity in the EU or for EU entities if the EU feels the UK rules are not tough enough on required levels of reserves.
What if there is no agreement on these complex issues by 31 December next year?
The EU and UK agreed an optional one-year extension to 2022 and could of course negotiate a longer or a shorter one (just as was experienced over the “divorce” agreement with frequent postponements and extensions during the three years after the referendum).
What are the chances of Brexit (including the new trade deal) being “done” by the end of next year??
Given that it will take some weeks after 31 January (formal Brexit day) for the EU to frame a formal negotiating mandate, and the latter part of the period runs into next Christmas it is certainly challenging.
Mr Javid said: “By the end of 2020, we will have agreed and finalised the trade deal, a very ambitious, deep, comprehensive free trade agreement. And we will get that done also by the end of 2020.
“In the time that we’ve been negotiating over the last 100 days or so, it wasn’t just the exit agreement ... we have also negotiated and worked and agreed the outline of the ambitious free trade agreement.
“There is not a single doubt in my mind that it can be agreed within months, and we can get it through parliament by 2020.”
Mr Javid claimed the new EU trade commissioner, Phil Hogan, also said it could be done by the end of 2020.
Mr Hogan was more nuanced. He said in October: “We’re not starting from scratch with the UK in relation to a free trade agreement.
“I think we can do a deal more quickly than other trade agreements but it may take a little bit longer than December 2020. But hopefully it’ll be a lot shorter than the normal five years.”
This is impossible to prove or disprove, being in the future. Past experience suggests it will be a demanding timetable.
What about other trade deals?
It is possible the UK’s deal with the EU would pre-empt the proposed UK-US trade deal, or at least complicate matters where product regions, services rule books and standards have to be aligned either with the US or the EU.
The same goes for new trade deals with China, India, Japan and so on. Thus, the Chinese might not feel any need to object to government subsidies for farms, banks or factories; but the US might do so.
The UK has suggested simply adopting the existing deals those countries have with the EU, if they exist, but again the possibility of contradictory commitments exists.
Even so, many countries and trading blocs manage to frame trade deals with various other countries without too much conflict.
What about going to World Trade Organisation terms?
This is what the Brexit party would like to see initially at least, and the possibility of a no deal Brexit at the end of next year means it remains a live option.
However, the WTO is currently in a poor state of health, and is extremely weak in its ability to make and enforce rulings on trade rules (because the US refuses to appoint judges to its court). So WTO trade rules may prove an unreliable future basis for trade with anyone.
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