Post-Brexit Deal Reached: Hooray for the Fish

Mish

Fish were the final stumbling block in a post-Brexit deal between the EU and UK. The sides reached a Christmas Eve compromise.

Fish, the Final Stumbling block

The Financial Times reports Britain and EU Poised to Announce Christmas Eve Brexit Deal.

Fish remained the final stumbling block yet the total amount of harvested fish amounts to only €650 million ($790 million) annually.

Christmas Eve Announcement Expected 

Bloomberg reports U.K., EU Set to Announce Brexit Trade Deal After Compromise.

One EU diplomat said the U.K. had made concessions on fisheries in recent hours that had unlocked the deal. According to two people familiar with the matter, Johnson has accepted that the bloc’s share of the catch in U.K. waters should fall by 25% over a period of five-and-a-half years. Britain had initially sought an 80% reduction over just three years, but in recent days had offered a cut of 30%.

The bloc had refused to accept a reduction of more than 25% in the value of fish caught, saying even that was hard for countries like France and Denmark to accept, according to officials with knowledge of the discussions.

This would be phased in over five and a half years. The U.K. previously offered three years while the EU were pushing for 10.

The EU also wants to be able to impose tariffs on the U.K. if, after the fisheries transition period, the government restricts access to its waters. In its latest compromise offer, the U.K. said it would accept tariffs on fisheries but not in other areas, such as on energy, as demanded by the bloc.

Fish Are Cheering

The fish are cheering. The EU will catch 25% less of them phased in over 5.5 years.

Hooray!

Unfair Competition

The other major stumbling block was a huge dispute over alleged "unfair competition".

There is no word yet on how that was solved but I expect Johnson did not sell the farm. By that I mean the UK will not be at the mercy of the European Court of Justice. 

There will of course be some other arbitration mechanism. As long as Johnson avoided the ECJ trap, the deal will be very minimal but also fair.

Win-Win Setup

The deal also includes tariff-free electric car manufacturing. 

That component seems to benefit the UK the most, as the deal allows parts to come from outside EU.

In the final analysis, all trade deals are a win-win setup. If they aren't perceived that way, there is no deal.

Rush is On 

Johnson will have to hold an emergency session of Parliament and the EU will have to bend some rules as there is no time for it to vote this year. 

This final outcome was easily predictable as was the length of time it took to reach it. 

As I said way back in January, then again in June, October, and November: Everything in the EU happens at the last minute if not much later. 

December 9 Flashback

A Post-Brexit Trade Deal Now Looks Likely

The New York Times reports Boris Johnson Fails to Break Brexit Deadlock in Brussels Talks

The above story is mostly rear view silliness. A key breakthrough happened yesterday when out of the blue Boris Johnson dropped a threat to break the Withdrawal Agreement.

Bluffs Cancelled

Earlier this year, the EU demanded complete fishing rights and for the UK to agree to a level playing field as decided by the European Court of Justice.

Boris Johnson responded with a bluff of his own, to break the Withdrawal Agreement in regards to Ireland. 

What I Expect

  1. Johnson will offer some fish tails.
  2. The EU will demand the whole fish.
  3. Johnson will offer fish heads and tails and if necessary, fish livers.
  4. Nigel Farage will complain no matter what part of the fish the EU gets.

Since a deal makes sense for both sides, it is far more likely than not there will be a deal. But please note that it's only December 9. 

There is plenty of time for more threats and more bluffs before a deal is reached.

Even then it will not be the "final deal". It will be a bare bones WTO agreement of some sort with provisions to haggle for years to come.

Will Anyone Be happy?

  • The hard Brexiteers will not want to give France a single fish. 
  • Nigel Farage is certain to howl.
  • The Remainers would gladly give France two-thirds of the fish and subject themselves to the ECJ as well just for the privilege of being back in the EU's clutches.
  • In the EU, France fell way short of what it wanted and Spain did not get Gibraltar.

Few will be happy with this. Relieved yes, happy no. And that will make this a fair deal. 

Pending a review of the arbitration mechanism, Boris Johnson did as well as he could have.

Yes the EU got more fish than the UK wanted to give, but look at the massive concession the UK got on cars. That was worth how many times more?

Deal Comparison

Final Thoughts

A good trade deal could fit on a napkin. Both sides would abolish all tariffs, fees, duties, etc. 

But this was the best that could realistically be expected.

Mish

Comments (30)
No. 1-14
FromBrussels
FromBrussels

Johnson did a pretty good job, especially in view of the recent dramatic developments at the borders because of the allegedly more contagious, politically exploited C19 variant....

Webej
Webej

Make light of the fish and the value as much as you like, but farmers and fish are outsize lobbies and symbols for the center right Christian social democrats that have huge (disproportional) pull in all European coalition governments as well as the EU itself.

Incidentally, eating is at the base of Maslow's pyramid.
This is a political battle, and in political battles, appearances and symbols often garner more attention and focus than any realities. Politicians and managers have to convince core constituencies at least of the appearance of doing battle for them in order to introduce changes. (Just think of Floyd)

Dodge Demon
Dodge Demon

As Mayor Daley I said, “there is nothing as wholesome as a fish”.

njbr
njbr

Has anyone outside the negotiations seen the terms yet?

2000 + pages, to be reviewed by respective parliaments and signed by both--December 31?

The following is from a blog post..."the end of the beginning"--which is where it is at now.

From an OG Brexiteer...

....therein lies the importance of having a deal. The only reason a thin deal is important is that it shaves a year or two off the process of repairing the damage of needlessly quitting the single market. In the interim it does very little for British exporters.

Much of this now rests on the the ratification and implementation process, and whatever contingency measures both sides employ, but I’m still working on the premise that third country means third country, this official controls will apply, for the most part, from the very beginning. There is, therefore, every reason to expect difficulties at the ports and problems with supply chains. UK authorities may pre-empt this and deter traffic from even setting off, thereby avoiding a repeat of this week’s chaos, but still leading to substantially reduced volumes of freight.

As to whether it’s a good deal or not is a more complicated question. It entirely depends on what you you hoped to accomplish. If your expectations are unrealistic you’re likely to be very disappointed. In any case, the deal cannot be viewed in isolation of the withdrawal agreement. One has to evaluate the whole package, which largely indicates it’s a dog’s dinner. It’s a spaghetti bowl of red tape and bureaucracy that is both dysfunctional and unsustainable, and will inevitably see us going cap in hand to Brussels to try and repair the damage.

This is ultimately the consequence of failing to plan, failing to set out coherent objectives and not having any real idea of what to do with Brexit once they’d got it. We’ve been winging it from day one....

njbr
njbr

Burning down the house...

...House Republicans on Thursday blocked a Democratic attempt to pass $2,000 direct payments to Americans, as the fate of the massive coronavirus relief package passed by Congress earlier in the week hangs in the balance....

njbr
njbr

...El Pais newspaper said earlier Spain and Gibraltar were nearing such an agreement that would mean that from Jan. 1 there would be border controls for British citizens travelling to Gibraltar, but Spaniards and Gibraltarians could freely cross the land border....

NI solution?

njbr
njbr

...Democratic House leadership said Thursday that they would bring the $2,000 question to a vote Monday, forcing Republicans to go on-record opposing what their party leader has called for.

“Today, on Christmas Eve morning, House Republicans cruelly deprived the American people of the $2,000 that the President agreed to support,” House Speaker Nancy Pelosi (D-CA.) said in a statement. “If the President is serious about the $2,000 direct payments, he must call on House Republicans to end their obstruction.”

“To vote against this bill is to deny the financial hardship that families face and to deny them the relief they need,” Pelosi added....

Johnson1
Johnson1

Pelosi and AOC now agree with Trump on the $2000. Out of the $36 Trillion in bailouts the past 12 years, citizens has received so far $300 billion. This next stimulus will be $900 billion and citizens gets $100 billion. That would means $400 billion out of $37 trillion or 1.1%.

Up this to $2000.

Mr. Purple
Mr. Purple

If the US government fails its constituents in their time of gravest need, it is time to call a Constitutional Convention.

Anda
Anda

We will have to see what concessions are made in terms of arbitrage. It's a sham anyway, because of being a big government package that cross matches different issues into a single answer. If you want to talk fish, talk fish but if you cannot then just leave it off the table and agree on what is possible to. Same NI, same Gibraltar, same customs. Trading fish for any other is corrupt, not that I have any preference on whether to trade access, or any choice of amount ceded.

"EU will have to bend some rules as there is no time for it to vote this year. "

They don't have any rules.

So we will have to wait for the details, they will probably just show a bunch of bureaucrats trying to justify their position by faux demonstration of how much they could possibly interfere in everyone else's business, and using that apparency to have others celebrate their say while following whatever "solution" of lesser interference by them is installed.

shaekhs
shaekhs

Mish, you could find details of Dispute resolution and cross retaliation details in the high level summary published here 'https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/948093/TCA_SUMMARY_PDF.pdf'

Raj Kumar
Raj Kumar

In my opinion we will see the end of the British Union over the next 5 to 10 years. The Scots will leave because they can make the same argument that Brexiters made which is 'take back control'. If Westminster can make that argument against the EU then Holyrood can also make the same argument against London.

shaekhs
shaekhs

@MishTalk "a version" of leaked full UK EU agreement https://drive.google.com/drive/folders/1QN-YgST6GEAJkhZl-cophiiIHv9fzOqH


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