In Wake of Brexit, EU Will Cave In to UK Once Again

Mish

UK Prime Minister Boris Johnson took a firm stance today as expected from the beginning in this corner.

UK Foreign Secretary, Dominic Raab, told the EU today Britain Will "Not Be Aligning with EU Rules" in any Post-Brexit Trade Deal.

Dominic Raab argued agreeing to stick strongly with EU regulations would "defeat the point of Brexit".

Reports in recent days have suggested EU chiefs want the UK to continue to follow EU rules on standards and state subsidies - while accepting the jurisdiction of the European Court of Justice in any trade disputes.

Red Line Hypocrisy

Irish PM Leo Varadkar said the UK needed to commit to a level playing field to get a free trade deal.

He also cautioned against "setting rigid red lines" for the post-Brexit trade negotiations arguing "it makes coming to an agreement more difficult because the other side doesn't feel like it has got a fair deal unless those red lines are turned pink."

What a hoot. Ireland and the EU set red lines on the ECJ and other nonsensical rules then have the audacity to demand the UK not set red lines.

Just Ain't Happening

Raab said the UK would enter trade talks "with a spirit of goodwill" but added "the legislative alignment - it just ain't happening".

Johnson Caved?

That's an even bigger hoot.

The EU, led by France and Ireland caved and I called it, in advance.

Brexit Question of Trust: Who Can Trust Johnson, Macron?

Flashback Oct 26, 2019: Brexit Question of Trust: Who Can Trust Johnson, Macron?

Question of Trust

This is not a matter of Macron trusting Johnson. Rather, this is a matter or Macron trusting Johnson's agenda.

Similarly, this is not a matter of Johnson trusting Macron. Rather, this is a matter of Johnson trusting Macron's agenda.

Macron's Agenda

France is sick of this mess more than any other nation.

France does not want the UK wrecking its policy in the European Parliament (EP). Perhaps Johnson even said that to Macron.

France and Germany are at odds over many issues in the EP.

France picks up EP seats once the UK leaves. Germany does not.

Germany, especially the German car industry gets clobbered far more in No Deal than France.

The EU wanted to delay. Macron, didn't. He had enough and caved, demanding a vote or other resolution.

Never Gonna Happen?!

And who was it that changes the Political Declaration and the Withdrawal Agreement.

It was the EU, not the Easter Bunny, despite the fact that Barnier and countless EU officials said they would not do that.

Let's return to the above post for more comments.

Amazing Feat

1: Supposedly the EU would never remove the backstop

2: Supposedly the EU would never change the political declaration

3: Supposedly the Remainers would tie up the legislation forever

With one or even two hands tied behind his back, Johnson worked out a deal despite the above. He even managed a side deal with Macron (based on mutual trust) to prevent point 3.

Appearances vs Reality

Do not rule out the possibility that Farage gets this too, and has really worked out a deal with Johnson once an election is triggered.

For political purposes, and to make an election more likely, Farage and Johnson must appear as if they are on different sides.

Guess what happened? Farage did not contest a huge number of seats despite howling all the way.

Shocked? I wasn't

What About Ireland?

I am glad you asked. Let's go back further.

Flashback July 10, 2019: Today's Brexit Non-News: The “Precious” Irish Backstop Must be Defended

My lead picture tells the story.

Image placeholder title

My Comments

The EU can decide to cooperate, or not. I propose they will, for reasons mentioned previously.

Ireland will be in a world of hurt. The estimated first-year to Irish GDP is 4.1%. It would be unlike the EU to purposely throw another EU member under the bus.

Saying vs Doing

We know what politicians say they will do, but we do not know what they will really do when the time comes.

The EU never believed May would walk.

In about one month the EU is likely to find out Johnson really intends to walk.

At that point, the ballgame changes.

Foolish Talk

And now pundits tell me Johnson will cave, "again".

Other pundits say the EU has the upper hand because it's 27-1.

Please look at what actually happened.

Matter of Trust Once Again

Some people I respect disagreed with my analysis at the time but I was sure the EU would not throw Ireland under the bus and I was sure France was ready to cut the cord.

They did not trust Johnson even after the election. It's easy to understand why.

Is Johnson trustworthy? Hardly.

However, and once again, this is not a matter of trusting a politician, but rather a politician's agenda. Let's use fishing rights as a prime example of agenda trust.

Fishing Rights

Johnson cannot give up fishing rights because that is the one huge card he holds over Scotland First Minister Nicola Sturgeon.

She says EU exit justifies referendum on Scotland breaking away from UK

Nicola Sturgeon says Brexit will speed Scottish independence.

No, it won't.

If Scotland did break away from the UK, the EU would demand Scotland give up control over its fishing waters.

Few in Scotland want to do that. Add in hard borders between Britain and Scotland and you can see where Scottish independence is headed: Nowhere.

So, this is not a matter of trusting Johnson to do anything in particular except keep a huge political card over Nicola Sturgeon.

Case Closed

I believe similar logic applies to the ECJ.

Might johnson negotiate other points? Of course, and I suggest he will. But as long as he does not give up fishing rights or cave in on the ECJ, then Brexit will have been delivered.

Against All Odds

Brexit was supposedly "against all odds".

And once again, "against all odds" I expect there will be a deal. No, it won't be a "comprehensive final deal". So what?

The WTO allows for "temporary deals" while details are worked out. And WTO rules say temporary deals can last up to 10 years.

Most Likely Outcome

The smart bet is that the EU caves not that Johnson caves.

Given events in Germany (demise of cars) and France (Macron's problems at home), the EU needs a deal more than the UK.

Expect a deal, just not a comprehensive one. The EU is too pathetically slow to work out a comprehensive deal and that is another reason the UK was wise to leave.

If the EU does not cave, they will be hurt far more than the UK. So, expect them to cave.

Mike "Mish" Shedlock

Comments (12)
No. 1-5
BaronAsh
BaronAsh

UK has pretty clear sense of direction - being sovereign nation again.
EU has more work to do. Until a few months ago they were trying to reverse the 2016 referendum - and had reason to believe it might happen.

Clearly now that play is over. So the battleground switches to the 'alignment' issue. I think this is not simply an issue of 'caving' as Mish puts it, but also they need to fully wrap their heads around the idea of the UK - so close and intertwined in so many historical, cultural and economic ways - is going to go it alone. And how that independence is going to effect other marginal members. How best to play hard or soft? How best to maintain great relations with maximum mutual benefit?

I don't think they themselves internally know the answer to this yet.

So all the UK Gov has to do is hold firm, esp. at the beginning and then the EU is going to need some time to figure out their approach. They will thrash around between two poles:

  1. Trying to manipulate the UK into positions more favorable to their regulations etc.
  2. Trying to accept a true break but needing time to figure out how that can actually work without sowing seeds of their own failure as a bloc. This is no easy thing because
  3. Farage's cut-off farewell speech last week might prove prophetic in that UK's exit could mark the beginning of the end of their globalist-technocrat political union (anti nation state) project. Italy, Poland, Hungary, Denmark, Finland, Norway might readily join a parallel 'free trade without political union association.' A sane Greece should be chomping at bit to get out.

So the UK-EU negotiations is most likely going to rock the EU back on their heels and into some very intense self-reflection, and indeed prove to be much less about managing the UK per se than is currently being imagined.

Mish
Mish

Editor

The most likely outcome is a lengthy WTO agreement with details to be worked out later except no ECJ and no fishing rights.

But the EU could be stupid and end up with nothing.

tz3
tz3

Euphoria is the opposite of EU-phoria.

tz3
tz3

Utopia is the opposite of EUtopia.

Guinny_Ire
Guinny_Ire

In a world where politicians can trade away the rights of the nations they lead and in trade receive a job with the EU, the UN, or a think tank there is no having something to hold over them.