Friday, June 4, 2021
Both the decision of the United Kingdom to leave the European Union (EU) in the 2016 Brexit referendum and 2017 invocation of Article 50 of the Treaty on European Union, and the subsequent negotiations leading up to and following the EU–UK Trade and Cooperation Agreement signed December 30, 2020 were covered at length by University of Sussex professor L. Alan Winters. In a Zoom call, Wikinews spoke June 3 with Professor Winters about both the Brexit agreement and recent developments in UK trade policy to learn more about his thoughts.
Winters is professor of economics at the University of Sussex, as well as founding director and fellow of the UK Trade Policy Observatory (UKTPO). His career spans over 15 years, including as chief economist at the Department for International Development, director of the Development Research Group of the World Bank, CEO of the Migrating Out of Poverty Research Programme Consortium and advisor for the Organisation for Economic Co-operation and Development, the Commonwealth Secretariat, the European Commission, the European Parliament, the United Nations Conference on Trade and Development, the World Trade Organization and the Inter-American Development Bank.
Three reports where Winters is listed as an author were used as reference during the interview: "COVID-19 will reinforce the Brexit shock", "The Costs of Brexit" and "Taking stock of the new UK-EU Trade and Cooperation Agreement: governance, state subsidies and the level playing field".
Winters was awarded the title "Companion of the Most Honourable Order of the Bath", styled C.B., on June 16, 2012 as part of the 2012 Birthday Honours.
== Interview with L. Alan Winters ==
You're a member of the UK Trade Policy Observatory and wrote in December 2020's "The Cost of Brexit" the British exit from the European Union "increases UK-EU costs, reduces trade between them, and requires resources for form-filling, queuing, etc" and that "Brexit will be costly for UK society" free trade agreement or not. Do you think the government made a mistake when negotiating the Christmas agreement with the EU, or that Brexit was the mistake?
((L. Alan Winters)) : Well I was certainly opposed to Brexit, and I continue to believe that it was a very poor piece of economic policy. You have to concede that there's been a little bit of sovereignty that has been won back, but actually it's very difficult to exercise, and the government hasn't got too much idea, about how it wants to exercise its sovereignty. So overall, I'm not very sympathetic over the Brexit decision but, you know, it's made, it's done.
Do I think there was a mistake with having agreed we're going to do Brexit? Did we get the right sort of Brexit? Well no, again, I think we would have been much better off economically with a tighter relationship with Europe that kept some of the trade costs lower, and therefore there would be less hits on the amount of trade that's going on.
((WN)) Now, you've indicated in a May 2020 article that you also wrote on the Trade Policy Observatory web site that issues such as an interrupted UK-EU negotiations and an increase in government debt as a result of the pandemic would "reinforce the Brexit shock". Does this hold true a year on?
((L. Alan Winters)) : I mean, we've negotiated our way to a trade agreement, which in May last year wasn't certain, by any means, so that's an issue that hasn't arisen, except that the hurry is one of the reasons it's not a very good trade agreement for us, I think. The reinforcement of government debt: I think we don't know yet. It's very difficult to sort out what's a Brexit shock and what's a COVID shock, but what certainly is the case is that the UK public finances will take a hit from Brexit, particularly given that it, I think without any doubt, activity in the financial services sector will go down, and they pay a very large amount of tax.
And so add to that that we've now sort of taken on potentially an extra three or four [billion] worth of debt; [it] is going to constrain economic policy. So in that sense, the two issues reinforce each other.
((WN)) I believe you said [in the article] somewhat along the lines of that 'you may think that Brexit and COVID are separate, but in actuality they're very interchanged, or at least the effects of it are very interchanged.' But from what you've said right now, how can you define between a Brexit shock and a COVID shock?
((L. Alan Winters)) : Yeah, well, economists are working hard on this and, you know, we don't have enough data. But, for instance, Brexit affects primarily UK trade with the European Union; it affects trade with other countries only through sort of second-order effects. So if we see trade with the EU behaving differently from trade with the rest of the world, that suggests we are starting to identify a Brexit shock.
It's also the case that we have an idea of sectors that are going to be particularly affected by Brexit that wouldn't necessarily have been particularly affected by COVID. For instance, some of the processed food trade, fishing, areas where regulations are important like some services where, for instance, the music industry. You know, we think that COVID has had a temporary—well, clearly COVID has had a temporary effect on travelling music concerts gigs, but Brexit looks set to have a permanent effect because it's changing the way in which these things can be organised.
So, we can't observe it at the moment, but two years from now, three years from now, we hope COVID will [be] behind us, and then sort of the difference between before and after 2019 [in] music, trade ought to be showing up as Brexit effects. So we try to do it, or we plan to do it by finding dimensions where one or the other is very much bigger and you use that to identify the two.
I mean I think they are interactive. I was trying to think what was this blog about, I think I remember now. It was making the point the export markets don't just sort of come and go and it's easy to move in and out. Once you've lost an export market, it tends to be rather long term. And so, losing export markets because of COVID which, at least in May , we wondered whether it was going to be worse in the UK than the EU; it hasn't turned out that way. But losing export markets in COVID, then trying to recover them when trading conditions have got[ten] worse, in a sense makes that recovery a lot less likely.
So I think it's in the sense there's also this fact that they interact with the dynamics: that you lose an export market, that's costly, it's hard to win back, costly to win back. We have got two potential hits on our export trade, and therefore, you know, each makes the other more difficult to recover from.
((WN)) You have some that would say that trade with the EU would decline, but that the UK can make up for it with increased trade with the Commonwealth or with the US, or, you know, this is an idea that some Brexiteers are in favour of: CANZUK, with Canada, Australia and New Zealand. Do you think that is plausible?
((L. Alan Winters)) : No, it's complete nonsense. Make that slightly more polite, but no look, it's just not plausible. The EU is half our trade, approximately half our trade, it's very close, it's very rich, it's very similar, we've spent forty years integrating our way into that market and prior to Brexit, we had very, very close alignment with standards in goods and fairly close alignment in standards with services. These other markets are a lot further away, we know there is economic research now that suggests that the benefit of signing trade agreements are weaker, the further away is the partner.
So, even if we could sign the same sort of agreement with Australia and New Zealand as we had with the EU, it is likely to have a weaker effect. And the point is, these other free trade agreements are nothing like as deep. They still require a lot of customs formalities, there will be standards issues that arise, there will be regulations like recognition of qualifications, and you can sort of agree you'll recognise Australian dentists, but all the rest of the professions, you know, still don't get that sort of recognition.
So frankly, it's just a myth. I think I would by all means use that: it's just not gonna happen.
((WN)) A big sticking point in the Brexit negotiations, and I would say they're still pretty debated today, is fishing, and the UK being able to determine its own fishing quotas, fish stocks, control of the fish in its own borders. Even though it's lower than Brexiteers may have wanted, the December agreement still means the UK will get 25% of EU fishing rights in its waters between now and 2026 but would still be, in some ways, bound to the EU's rules. What are your thoughts?
((L. Alan Frost)) : The EU rules get into the story in two different ways. You're exactly right that there has been a small amount of quota transfer. It's quite a complicated process, and I'm not an expert—we did produce a blog or a briefing paper perhaps in the UKTPO on fishing, I don't know, six months ago (no, maybe less than that) where a fishing expert helped us go through the numbers. You know, some of the catch quotas weren't binding, some of them spill over—there's a lot of swapping of quotas. So, once you look at it, it wasn't that 25% of the EU quota will be caught by UK fishermen.
But the way that the EU rules get into this is in two ways: one is we have agreed that we will manage fisheries with a degree of co-operation and scientific co-operation with the Europeans so that we do agree, between us, what the maximum sustainable take is, so that that's a scientific decision in principle. And so in a sense, the EU view of what is sustainable, it does feed into this.
The second issue is that, perversely, it might seem, most of the fish that the UK fishing industry catches is sold in Europe, and it can only be sold subject to EU regulations, EU standards. And because we haven't got any agreement on those, we are discovering that these things are very costly to prove that you've got, you know, you have to have a vet sign off on every consignment and that sort of thing. And so, it's not that, in a sense, Britain is obliged to stick to the EU regulations for its own fish consumed in the UK. The problem is that we now have to prove as a third country, an external member, a non-member of the EU, that our fish meet their standards.
There's been one change I gather that's been fairly unsympathetic of: shellfish, but, you know, the EU has sovereignty as well. So, it's in those ways that EU rules get into it and, you know, we have a bit extra quota, but essentially the way the trade agreement works is if we get difficult over the quota, we'll end up not selling any fish. It's a long bit of the treaty, you know, about who can hit whom, and how it all has to go on, so it was immensely sensitive. They've spent so much effort on this, for a sector that is tiny, tiny, it's the tiniest bit of the economy, but there we are, that's where we're at.
== Sources ==
"Prof L. Alan Winters" — University of Sussex, June 4, 2021 (date of access)
Michael Gasiorek, Suzannah Walmsley. "A Fine Kettle of Fish" — UK Trade Policy Observatory, March 23, 2021
Chris Morris, Oliver Barnes. "Brexit trade deal: What does it mean for fishing?" — BBC News Online, January 20, 2021
Ilara Fusacchia, Luca Salvatici, L. Alan Winters. "The Costs of Brexit" — UK Trade Policy Observatory, December 2020
L. Alan Winters, Mattia Di Ubaldo, Palitha Konara. "COVID-19 will reinforce the Brexit shock" — UK Trade Policy Observatory, May 27, 2020
"The London Gazette" — The London Gazette, June 16, 2012