In practical terms for businesses and households, very little is likely to change between now and 31 December, the deadline for a comprehensive trade and tariff deal to be approved by all the remaining 27 EU member states and when the agreed transition period comes to an end.
Dream on, say many close to the negotiations: it is hopelessly optimistic. It looks likely that many difficult issues will be kicked into 2021 and beyond. Hopes that goodwill and bonhomie would infuse the early weeks of talks have been jolted by new French demands presented at closed-door European Commission meetings that Britain must grant EU countries access to UK fishing waters for 25 years after Brexit if it wants a free trade agreement with Brussels.
As if the uproar this would spark among angry Scottish fishermen is not enough, the Commission has said it would like a fisheries policy agreement by the beginning of July. Dream on, indeed.
Such is the hissing snake that presents itself on this crowded, tumultuous board of Brexit snakes and ladders now before us. From regulatory issues to quota agreements, work permits to border checks, health and safety protocols to defence and security matters, the Bright New Dawn of Brexit risks being followed by a dense bureaucratic Darkness at Noon. That the Holyrood parliament has agreed to keep the EU flag flying over the Scottish parliament and government buildings is set to prove less a fit of pique than a statement of constitutional reality for as far ahead as we can see.
Yet amid the pitfalls and the hazards there are ladders of opportunity for Scotland as well, and it would be churlish not to take advantage of them. It is not only Scots fishermen and farmers who merit close involvement in negotiations between the EU and Brussels, but many other interests that could see a significant boost to growth.
First, a rough outline of the timetable ahead. The European Commission is working on a draft mandate for negotiations in the coming days. The hope is for formal negotiations to start at the end of February. To allow time for any agreement to be ratified, negotiators will have until late autumn to reach a draft agreement. And there is a deadline of 1 July for a decision to be made on whether an extension to the transition period will be required. Security and defence co-operation, the economic relationship and, of course, fisheries, are likely priority areas.
If negotiations continue into 2021, the UK will be outside the single market and customs union by then, and that, say officials, “will be a much more stressful environment”. For example, the UK played a key role in setting up a new super-database of seven different systems intended to protect borders and stop terrorists or organised crime gangs slipping through the net. But after Brexit, it risks being denied access to this. Fears have also been raised over the loss of access to European Arrest Warrants (EAW) and Europol, the EU’s law enforcement agency. Agreement here may seem logical, but that doesn’t make it easy, because the EU is a legal entity more than it is a political club.
Fishing may seem a politically minor area – as it was treated in the approach to the 1973 Treaty of Accession. But EU countries land about €600 million-worth of fish in UK waters. There are half a dozen or so EU member states, including France, with a powerful interest in maintaining access. And France is determined to secure a 25-year agreement as a total shut-out, the country’s fishermen’s lobby argues, would see a fall in revenue of up to 50 per cent.
Although EU fishermen take nearly five times as much fish from UK waters as UK fishermen take from EU waters, nearly three-quarters of all the fish caught by British fleets is sold in the EU, handing the Commission significant leverage in the negotiation. Hence the speculation the UK will trade access to its waters in return for a deal on financial services. Downing Street has dismissed this, but the EU remains confident that it can extract big concessions from the UK.
So where are the ladders in this daunting board? Currently the UK is obliged to follow EU VAT rules, but this will end after the transition period. The government is already committed to ending VAT on sanitary products, but VAT rates could be reviewed more generally. Possible areas include domestic property improvement and extensions, currently taxed at the full 20 per cent VAT rate, while new build is zero-rated. VAT reductions on town centre refurbishment could also be put on the agenda.
Another ladder is the introduction of free ports to boost growth in run- down, disadvantaged areas. Firms would be able to import materials without paying customs duties or other taxes. Outside European state aid rules, the government would have more freedom to make such ports attractive to investors.
And then there is the boost to UK coffers. According to Office for Budget Responsibility estimates, the UK’s net contribution to the EU ( that is, after allowing for EU money spent in the UK) last year was £7.1 billion, a figure it calculates will rise to £9.1 billion this year. That may seem a small ladder in the context of the UK’s infrastructure spending ambitions, but it would be enough, for example, to wipe out Scotland’s budget deficit.
In all this, it is important not to lose sight of the over-riding issue that compelled a majority across the UK to vote for Brexit in the first place: less the granular detail of cross-border trade and regulation than that of sovereignty. The UK will be able to make its own laws, through the majority of its elected representatives, in line with the wishes of voters. A civil service and judiciary able to make its own decisions and no longer subject to qualified majority voting of laws made by an external body: a vision hardly alien to many in Scotland today.
Amid the hissing snakes, we should not lose sight of the opportunity that the ladders bring within reach.