The Road From Brexit to Becoming a Settled State

The European Union and the U.K. concluded a post-Brexit trade deal last year, but things haven’t gotten off to a smooth start. There have been trade frictions, vaccine nationalism and a simmering dispute over the Northern Ireland Protocol.

At least Britain’s cabinet ministers are all singing from the same hymn sheet. That wasn’t the case in 2016, when Theresa May became prime minister and appointed David Davis as the country’s Brexit Secretary to head up a new government department charged with negotiating the U.K.’s departure. Davis resigned as Brexit Secretary in July 2018, saying the U.K. had given away too much in the negotiations. The Department for Exiting the European Union (DExEU), which Davis led, was dissolved by Boris Johnson. What follows are lightly edited excerpts from a live remote interview at the Warwick Economics Summit earlier this month, that touched on what went wrong in those early stages and where Britain goes from here.

Therese Raphael: What were your expectations for the negotiations when you started out? You always seemed supremely confident and chipper. Was there anything that kept you awake at night as this whole thing started?

David Davis: The answer was nothing kept me up at night. Philip Hammond, who in a way was a sort of bête noire for me in the cabinet — bear in mind he’s an old protégé of mine — was talking about my attitude on these things last week and he said, “You could knock nine bells out of him with an iron bar and you’d find him 20 minutes later in the pub, laughing and chuckling about it.” Well, as a negotiator that was almost precisely what I tried to maintain.

The biggest difficulty of the negotiation was in many ways not the EU; it was the schizophrenic nature of the British establishment at that point. The real division between the so-called Brexiteers and the Remainers, was that the Brexiteers were always asking what are the opportunities we could build out of this, and the Remainers, though not all of them, were saying this is a terrible mistake and asking how can we minimize the damage. The prime minister was in that second category really.

I said the battle of the summer would be over the sequencing of the negotiations. When we got back to Downing Street after the 2017 general election, the Downing Street negotiating team had given sequencing away. So from that point forward, I knew we had an uphill battle to actually get us back to a position where we could actually exercise some leverage.

And therefore, to come back to your question about always looking chipper, I thought well, we’ve got to make them look unreasonable by being reasonable, and you also have to look confident at the same time.

TR: You had no idea that the concession had been made on sequencing? That was something May had agreed and you had to work with that.

DD: Basically, yes.

TR: You had argued at the time that when it came to the actual negotiation over the future trading relationship “creativity would dominate” — the 27 nation states would want to advance their own trading interests and the negotiations would play to the U.K. strengths. That didn’t happen. Were you surprised by the unity shown by the EU and the way they approached these negotiations?

DD: Not really. The European Union and the Commission are always very good at holding the pack together. You may remember that right at the beginning I also said the first three years would matter less than the last three weeks. That was right.

Two things changed the course of those negotiations. One of them was the sequencing. The other one is quite hard to characterize but let me try. At the beginning, I was always conscious that Northern Ireland, our only land border with the EU, would be an issue. Both the head of the Irish revenue and customs and the head of British customs told us we would be able to maintain an invisible border just as we do now by using the techniques we do now. That changed quite sharply toward the end of 2017.

One Sunday, Theresa rang me up at home in early December and said “we’ve come up with a new form of words on the Irish issue.” I hadn’t even known that No. 10 [Downing Street] were engaged in negotiations that week. The key was that she said we’d agreed full alignment between Northern Ireland and southern Ireland on regulation. I said, “Theresa, that’s contrary to your own speeches on this matter.” She said, “Well it only means full alignment of outcomes.”

There’s a huge difference between full alignment of regulations and full alignment of outcomes and it’s an ideological and practical difference. Of course it caused something of a fuss in Northern Ireland to put it mildly. To my amazement, the House of Commons welcomed the deal to get us to the next stage of negotiations.

That was the point at which the whole pivot of the negotiations turned. Because once you started down that route, you end up inevitably with the Withdrawal Agreement we had, with all the links with Northern Ireland, which are now causing trouble in the current arrangements. And from there, came the argument over the right to diverge, which ended up with me resigning.

TR: What convinced you that May’s approach was doomed?

DD: Earlier in 2017, we’d had a general election. The intention was to give her a sufficient majority in parliament. If you believed the polls, we should have won by over 100 seats. But the way she ran the election failed and she lost most of her majority.

That led to a number of other things. She got rid of her two advisers — Nick Timothy and Fiona Hill. Timothy in particular was a very strong Brexiteer. He had a very clear idea on what he thought Brexit should look like and she relied on that. The result [of their departures] was she surrounded herself with what you might think of as normal Whitehall apparatchiks. Whitehall’s mindset, its zeitgeist, was built around continuing in the EU. She was suddenly surrounded by people who were trying to deliver Brexit but from a complete risk-minimization point of view. That really made the whole negotiating strategy very cautious.

I think under other circumstances Theresa would have made a very good prime minister, but under these circumstances, the sequences of events led to the position where she wasn’t sure what she wanted entirely.

TR: Now that we have a deal, are we likely to see it result in closer relations with the EU or do you expect a continuation of contentiousness?

DD: It’s going to go on for a couple of years at least. But let me explain why it will settle down.

From the beginning of this exercise, everybody sort of assumed we were going to cancel all the rules that governed the car industry, chemicals industry. We were never going to do that. Regulatory changes, if anything, will be just simplifying; they won’t change outcomes. We aren’t going to make cars less safe or food more hazardous to eat.

What I would expect to see in all sorts of new industries — artificial intelligence, genetics and the downstream industries of those technologies — are slow changes in regulation to try to get the best outcomes. You might see frictions (they may not want our self-driving cars) but that’s a few years down the road. Where we are now, there is a rather gritty sideways movement toward some stability.

TR: And what opportunities do you see arising from the Brexit deal?

DD: Out of this will come a completely different national strategy. We have already said we’ll effectively double R&D spending in this country. We’re going to have to start doing things like building an MIT of the north. We’re going to have to start reengineering the classroom. There is a whole series of things we have to do that aren’t necessarily written into the Brexit agenda, but they’re made necessary by the fact that Brexit has happened.

TR: Is your argument not that EU membership prevented Britain from doing any of these things but that it changes the U.K.’s mindset and creates an imperative to do things differently?

DD: [Citing the U.K.’s speedy vaccine approval] If we’d still been in the EU, the pressure would have been on us to be part of the whole deal, not just the EMA [European Medicines Agency] but the vaccines acquisitions arrangement and we’d probably be a few million vaccinations behind where we are now.

The other thing that that’s going to change about the world economy in the next 20 years is the status of the West vis-a-vis China and Russia. America at the moment is the biggest economic and military power. It won’t be in 20 years’ time. It will need to be a moral leader of the rest of the world. Europe, I can tell you now, will be softer than us and the Americans in some of the dealings with Putin’s Russia and with China. So we’re going to have to make up our own mind.

TR: How do you respond to claims that Brexit is financially hurting the average British person?

DD: Remember when Zhou Enlai was asked what he thought about the French revolution, he said it was too early to tell. That’s certainly true of some aspects of Brexit right now. In terms of the longer run, I don’t think that there will be an economic penalty for Brexit if we do the things I’m talking about, along with the economic policies to go with it — no increases in taxes, some deregulatory work.

TR: Some would say that the arguments for Brexit run the other way when it comes to Scottish independence. The Scottish National Party is making a similar, values-based case that Brexiters made.

DD: The impact on Scotland of leaving the U.K. would be pretty difficult financially. That’s not the biggest argument against it; the biggest argument is about our common culture, and our common civilization and the contributions they make. I’ll make a selfish argument too: I want them to stay because it’s important to us. And I think all those arguments get listened to. So I wouldn’t jump the gun on what’s going to happen either in the Scottish elections coming up or indeed in any referendum that comes afterwards.

Canada went through a really difficult time when the Quebecois wanted to leave and then it settled down — partly because they have a more federal solution than we have. One of the things we have to think hard about is whether we can develop a federal solution that does a better job than the one we have now. We have got to learn as a United Kingdom to get ahead of the argument and not to trail behind. That is the Canadian example. They got ahead of the argument and now Canada is a settled state.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Therese Raphael is a columnist for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.

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