The Brexit saga was a fight between sections of the ruling class in Britain. The noisier jingoistic faction, sustained by its media supporters retailing its false facts, won the day, a familiar story of bourgeois elections. Irrespective of the UK’s withdrawal from the European Union single market and customs union, the needs of British capital are the centre of this factional struggle within the ruling class. JAMES MARTIN reports.
The noise emanating in four years of discussions between the sides, was mostly designed to manage their respective chauvinists, whose allegiance was important for the governing parties to retain power. Behind this lies the need not for as much ‘freedom’ as possible but for as much continuity as is possible, so zero tariffs and zero quotas. To escape EU tariffs ‘British’ products will see their EU inputs and processing counted as UK inputs, with reciprocal arrangements for EU products containing UK content. However, barring provisions for mutual recognition, UK products sold to the EU will now have to obtain and pay for certificates to prove EU standards. Thus, the freedom from many types of non-tariff barriers, removed with the EU’s single market in 1992, is now lost.
Competition between capitalist powers tolerates no truce, and Johnson was unable to obtain agreements on services. The EU can be satisfied with the present arrangement. It pushed aside Johnson’s shameless negotiation threat to breach the EU (Withdrawal) Act 2018, through his United Kingdom Internal Market Bill.* The 24 December 2020 UK-EU Trade and Cooperation Agreement (T&CA) gives immediate precedence to the EU’s agricultural and industrial interests. Chancellor Sunak misleadingly claimed that Brexit will help ‘reinforce the UK’s position as a globally pre-eminent financial centre’ (see box).
The ruling class bitterly resents constraints on its freedom to accumulate more capital. It fights to reduce or avoid standards which obstruct expanding its wealth. Under the UK-EU T&CA, workers’ legal rights and the environment are no longer, practically, subject to the limited protections given by EU treaties eg the UK may continue to export plastic rubbish. On 19 January 2021, a post-Brexit review of UK employment law was announced.
Johnson’s cabinet of reactionary chancers had been singing hymns to a ‘no deal’, that did not suit what remains of British manufacturing industry. This resulted in pressures on the government to go for continuity. However, to date, the EU has refused to grant ‘equivalence’ rulings (in about 59 areas) to most of Britain’s financial services industry to ease cross-border sales. Britain’s recognition before Brexit, of UK equivalence for 28 areas of EU business, such as exchanges, and credit rating agencies, failed as negotiation bait. Huge gaps exist in the recognition of legal, accounting, architectural, audio-visual and other such services (80% of UK GDP). The nebulous European Union (Future Relationship) Act 2020 passed on the 30 December 2020 incorporated much of this ‘Agreement’ without parliamentary scrutiny.
Drawing attention to fishing was a distracting card for Johnson to play. Fishing is economically insignificant in Britain, and most UK licences – and hence profits – are held by foreign companies. This makes the slogan ‘control of our waters’ meaningless, but Johnson stole the Brexiteers’ dead fish stunts for his own purposes, and the buffoon Rees-Mogg declared that the remaining live ‘British’ fish were now ‘happier’. Two weeks after the deal, the Scottish Fishermen’s Federation, vocal Brexiteers, denounced Johnson’s trade agreement as ‘desperately poor’. Scottish fishing companies accounted for 70% of UK landings of EU quota species. They had higher expectations. The Federation now naively accuses the Prime Minister of deception and betrayal. The Brexit campaign helped Tory candidates defend and win seats in Scottish fishing communities in the 2017 and 2019 general elections, but this will certainly change in the forthcoming May 2021 Holyrood parliamentary elections.
Reams of red tape
What cannot be ignored is that the Tory nightmare, ‘red tape’, has now been piled in reams on ‘free’ British citizens. By mid-January freight distributors were announcing suspension of services to the EU for at least a week at a time, facing backlogs caused by incorrect customs paperwork. Our ‘free’ British citizens are no longer automatically ‘free’ to work, study, have qualifications recognised, start a business or reside in the EU, or even take sandwiches and fruit to these ‘foreign’ places. However, UK Google users are now ‘free’ from more robust EU data protection measures – as their accounts move to US jurisdiction – and ‘free’ to accept the reimposition of mobile phone roaming charges, whilst TV streaming services subscribers can no longer watch live sport and some other programmes, apps and web players, when travelling in the EU.
Under the Northern Ireland protocol, the Six County dependency falls into the new mixed category of being in the EU single market for goods, but not in the EU. Muddying the picture further, the Dublin government will assure access to the European Health Card and the Erasmus University Exchange Programme for the Northern Irish. The ‘invisible’ trade border, an inspection point between Britain and its contrived Six County ‘Province’, is effectively identical – to the horror of Unionists – to that between Britain and the Republic. The Republic’s freight transport industry warned of ‘huge disruption’ to key supply chains, via the Six Counties, and directly to and through Britain. The Republic’s significant agricultural and pharmaceutical sectors risk long delivery delays because of new red tape. The Six Counties’ supermarkets have an initial three-month ‘grace period’ where the EU sanitary rules will not be enforced on the currently reduced – if not suspended – foodstuff and other items that are being sent to the ‘Province’ from Britain by M&S, John Lewis, Fortnum and Mason, Waterstones and other suppliers.
Negotiations on services still to come
Meanwhile, critical discussions on services are booted out of the lime-light. Brexit will now become a long, arduous struggle to define trading conditions for services, essentially financial and associated operations, with mutual threats of ‘remedial measures’, ‘rebalancing’, perpetual ‘consultations’ and ‘arbitration’. Brexit is more like Botch-it. A stronger Franco-German effort is inevitable to deepen and strengthen the Eurozone’s own financial markets. Johnson’s gamble relies above all on US financial imperialism’s use of its London base, without which the City would decline, and this explains his toadying to Trump and his anxiety over Biden’s comments on Ireland. The British ruling class has thrown itself unconditionally into an even closer orbit with US imperialism. Amidst all this, the new leadership of the Labour Party has shrunk back in mute concession.
The whole purpose of joining the European Community (EC) in 1973 was to remove obstructions to trade with the bigger European states, which had overtaken the British per capita standard of living, but which offered a huge market for service exports, notably financial services. Such a step was essential in the economic doldrums of that decade. However, progress in the free trade of services was negligible. It was only by first changing its financial markets’ rules in the 1980’s that London attracted sufficient US, German, Dutch and other bank capital, to be able to force open new European Community banking agreements through discussions from 1986 to 1992. Thus, Britain, condemned to trade with Europe, had to play a leading role in the creation and economic consolidation of the EU of 1992, but its ruling class was never ready to yield final powers to an evolving European state.
British financiers have since used their place in the EU to offset the relative weakening of the competitiveness of much of Britain’s industry. Nevertheless, domestic capital assets have constantly been sold off to non-resident owners on a large scale, to balance the country’s international payments. This slowed the deepening polarisation of income across the population, but it could not prevent it. On the contrary, the bourgeoisie were faced with the fact that their ‘growth’ had to lead to greater numbers of employed workers living in poverty, with some of the worse deprivation in the EU.
To do this, British capitalism must take every opportunity to do deals that no longer need to meet even mediocre EU standards, and to return to an openly opportunistic position of ‘free trade and friendly cooperation’. It is no surprise that EU politicians are alarmed at the likelihood of British business abandoning standards to create cost advantages. Who can question the fact that British business must seek – as Johnson’s foreword to this agreement states – to ‘take full advantage of the freedom of action’ now obtained? There can be no doubt that these changed circumstances are intended to force British capital to fight more aggressively for its existence on the global stage, further despoiling the environment and robbing workers worldwide, even when competing with the EU’s own predatory trade deals. Brexit in its current form leaves the British bourgeoisie with more obstacles to their European peers, less influence upon them, and yet still in a fundamentally interdependent relationship with them.
Fight Racism! Fight Imperialism! 280 February/March 2021
* See ‘British economy: Covid, Brexit, Crisis.’ In FRFI 278 October/November 2020 for discussion.
