We have not posted any other analyses of the Agreement because they are relatively all the same and available throughout mainstream media. This is one of the only exceptions.
The Full Brexit steering group comprises Christopher Bickerton, Philip Cunliffe, Mary Davis, Maurice Glasman, George Hoare, Lee Jones, Costas Lapavitsas, Martin Loughlin, Danny Nicol, Peter Ramsay, Anshu Srivastava and Richard Tuck.
Cross-posted from the Full Brexit website
The deal struck between London and Brussels does not represent a decisive breakthrough for popular sovereignty. But it does eliminate some of the worst aspects of EU membership, and create space for the emergence of a real alternative to the neoliberal order.
The Trade and Cooperation Agreement (TCA) between the United Kingdom and European Union does not represent a decisive breakthrough for popular sovereignty. Indeed, it contains some of the elements of Britain’s member-statehood, which could continue to limit democratic control over our society and economy. But it does eliminate some of the worst aspects of EU membership, and extend legal and political space for the emergence of a real alternative to the neoliberal order.
The Problem of Member-Statehood
Since 2018, The Full Brexit has developed a distinctive analysis of the Brexit process, hinged around the notion of “member-statehood”. As this analysis determines our appraisal of the TCA, it is worth briefly rehearsing it here.
Developed by James Heartfield and Chris Bickerton, the concept of “member-statehood” highlights the transformation of European states from nation-states to member-states of the European Union. Nation-states are vertically integrated political units: political elites draw their legitimacy and policy inspiration from efforts to represent domestic interests. Member-states are horizontally integrated political units: political elites draw their legitimacy and policy inspiration from their relations with their European counterparts.
The shift from one to the other, and the accompanying democratic deficit, was not caused by the creation of the European Union. Rather, as Peter Mair argues in Ruling the Void, the EU is better seen as the expression of the withering of political representation within the nation-state. Mair charts the mutual disengagement of elites and citizens across the continent during the neoliberal era. Elites have increasingly abandoned their task of aggregating and representing distinctive social forces, as this task has become increasingly complex, instead becoming “catch-all” parties appealing to the “centre-ground”, with substantive policy differences between parties disappearing. Disaffected citizens have increasingly withdrawn into private life, with active political participation collapsing along with mediating institutions like trade unions and civic associations.
Sensing their dwindling popular legitimacy, political elites have withdrawn into the state itself and into their relations with their foreign counterparts. Decision-making has increasingly shifted to unelected bodies – quangos, regulators, courts – and to transnational policy networks. The latter work not through the creation of supranational bodies able to intervene directly in states’ domestic affairs, but rather through the creation of transnational regulations, with member-states transforming themselves to impose these rules on their domestic populations. The EU is the most advanced manifestation of this tendency, which increasingly affects states worldwide (see also Analysis #1 – The EU’s Democratic Deficit: Why Brexit is Essential for Restoring Popular Sovereignty).
The weakness of more conventional understandings of the EU as a sort of supranational bureaucracy, bossing around the member-states, is that they cannot explain why it has been so difficult to extricate Britain from its clutches, or why, with the dead hand of “Brussels bureaucracy” lifted, a gloriously buccaneering, free-trading “global Britain” has not surged into being. Conversely, as we have shown, the rise of member-statehood explains both the result of the 2016 referendum and the extreme difficulty Britain has experienced in implementing it.
In the decades before 2016, the “void” between rulers and ruled was both widely recognised and generating political unrest. Amid well-founded popular complaints that politicians were “all the same”, heedless of popular – especially working-class – concerns, and offering no real choice at election time, voter turnout was collapsing, while citizens hungry for change turned increasingly to populist parties, which flourish in the void – notably the United Kingdom Independence Party (UKIP). This threat was sufficient for David Cameron’s Conservative government to offer a referendum on EU membership. Thus, far from being a “Tory” or “ruling-class” project, Brexit was actually a symptom of political decay.
Likewise, the 2016 vote was widely understood as a revolt against the political establishment, with Leave voters prioritising concerns about sovereignty and democracy – reflecting their concern that politicians were no longer representing their interests (see Analysis #6 – Why Did Britain Vote to Leave the EU?). Immigration was also a significant flashpoint, as it symbolised for many the disjuncture between their preferences and the policies imposed by a heedless political elite, stiffened by EU rules on the free movement of labour.
However, the British member-state has struggled mightily against implementing the majority verdict of 2016 (see Analysis #9 – Why is Brexit Proving so Hard to Implement?). Some 85 percent of parliamentarians had campaigned for Remain, backed by the business, cultural and intellectual establishment, the state apparatus (which sent a pro-Remain brochure to every household and issued doom-laden warnings of the economic consequences of a Leave vote), the international financial institutions, and the then US president, Barack Obama. Powerful sections of this alliance have never accepted the referendum result and many actively campaigned to overturn it (see Analysis #18 – British Politics in Chaos: Brexit and the Crisis of Representative Democracy). Theresa May’s weak Conservative governments, dominated by Remainers, had ostensibly accepted the result but, lacking the experience and enthusiasm for representing the popular will, struggled to develop a coherent and forceful Brexit policy, preferring to maintain many of the trappings of member-statehood.
The core difficulty of the Brexit process has been that the referendum expressed a democratic moment, but not a democratic movement. There was no organised political force capable of subordinating political representatives to its will (see Analysis #22 – Who Shall Rouse Him Up? Brexit: The World Turned Upside Down). After decades of demobilisation and atomisation, there was just the aggregate fact of 17.4 million votes. The “void” remained unfilled, birthing another populist challenger: the Brexit Party (see Analysis #27 – The Brexit Party: Creature of the Void; Analysis #28 – The Brexit Party: Vital Stop-Gap, But No Solution). Only this threat of electoral defeat was enough to terrorise the Conservatives into dumping May in favour of a truly pro-Brexit leadership.
Nonetheless, the political deadlock was broken only through the 2019 general election, which saw working-class voters – who had voted overwhelmingly for Brexit – lend their support to Johnson, who promised to “get Brexit done” (see Analysis #43 – The Workers’ Revolt Against Labour). Slowly, wrenchingly, the political elite was being disciplined to represent the voters who elected them.
The TCA: Elements of Member-Statehood
The deal eventually struck between the Johnson government and the EU Commission nonetheless retains some dangerous elements of member-statehood. This is not surprising from the perspective of member-state theory. In themselves, neither the 2016 vote for Brexit nor the 2019 election affirming the original decision resolve the underlying problem of member-statehood: the breakdown of relations between the political class and the citizenry. While old loyalties have been shattered and the Tories must now wrestle with the problem of how to serve their new electoral coalition, the basic void remains unfilled.
The very fact that the overwhelming political focus since Brexit has been on the outlines of international trade deal indicates that the depoliticised status quo retains its grip. There has not yet been any similarly serious attention to Britain’s domestic political economy: to productivity growth, infrastructure development, regional policy, skills training or housing policy. Nor has there been any effort to remedy Britain’s internal democratic deficit: the hollowing out of local government, the broken system of devolution, an electoral system which impedes the emergence of new forces, and the absurdity of an unelected head of state and legislative chamber. Perhaps now that a deal is done with the EU, a new politics will develop. But that will require a much more serious effort to engage with the needs of Britain’s working-class population, one neither of the major parties seems to show much capacity for.
The Labour Party, in particular, has learned nothing at all from the Brexit saga. Labour has consistently favoured tight alignment with EU rules, including state aid regulations that effectively preclude the party functioning even as a traditional social democratic party. Nor do academia or the civil service show much sign of assisting in the hard work of developing a politics orientated to the needs of their fellow citizens. Both groups are habitually oriented towards transnational policymaking and harmonisation.
Consequently, it is understandable that elements of member-statehood feature in the TCA, notwithstanding the British negotiators’ efforts to unpick others. The treaty contains commitments to continued cooperation across many policy domains, well beyond trade, from climate change to human rights, illustrating the dense thicket of transnational regulations with which political elites have tied their own hands in recent decades. The Agreement also contains hundreds of pages of economic rules to which both sides agree to be bound.
This is a feature of all contemporary trade and investment agreements. Although the government is trumpeting the TCA as the first ever EU agreement to feature zero tariffs and quotas, the truth is that tariffs and quotas have been gradually eliminated for most goods through successive rounds of World Trade Organisation (WTO) talks. The most prominent barriers to trade are now “behind the border”, in the form of various regulatory standards, rules and bureaucratic procedures that can be used to impede imports or inward investment. Since they must address these in order to liberalise economic interaction, contemporary agreements are intrinsically intrusive, reaching deep into parties’ respective domestic regulatory environments in an attempt to reconfigure them in the interests of “fair” competition. The TCA’s lengthy commitments on regulatory standards, state aid, and so on, are an expression of this. As noted earlier, the EU is only the most advanced form of this transnational regulation of domestic politics. Not all “member-states” are necessarily member-states of the EU.
The most prominent feature of member-statehood in the TCA is the creation of a Partnership Council (PC) as the main institutional framework for future UK-EU relations (Part One, Title III; Annex INST). The PC is co-chaired by a British minister and a representative of the EU Commission, and has a large number of specialised committees, covering all the areas of the agreement. It creates forums for continuous negotiation between the two sides, as EU institutions previously did. However, it is not unique to the TCA: a similar Joint Committee was established to oversee the 2018 Canada-EU Free Trade Agreement (CETA, Art. 26).
The PC’s many committees are needed, in part, because much remains unsettled: many areas, particularly relating to trade in services, have only “framework” agreements, with concrete details yet to be fleshed out. But these committees also exist to discuss, oversee and develop the TCA’s implementation, and – crucially – the further development of the Agreement itself. Like the CETA Joint Committee, the PC is empowered not only to take “decisions” and make “recommendations” based on the existing TCA, it can also amend the treaty. Despite commitments to “consult” civil society and advisory groups, there is no requirement for parliaments on either side to scrutinise or ratify the PC’s “binding” decisions. This effectively empowers executives on both sides to revise the Agreement by fiat. Even CETA made decisions “subject to the completion of any necessary internal requirements and procedures” (CETA, Art. 26.3(2)). Moreover, although PC meetings “may” be held in public, the default presumption is secrecy, though minutes will be published.
While not unique among contemporary FTAs, then, the PC does replicate some of the most objectionable features of the EU. It empowers the executive and unelected technocrats at the expense of the legislature, and provides a forum for secretive decision-making. It is essentially a perpetuation of the negotiating structure of the TCA itself, which has involved secretive negotiations and no real parliamentary involvement until the last-minute presentation of a fait accompli – with legislators across the continent being bounced into accepting a 1,255-page treaty at short notice, with no real possibility of scrutiny, amendment or rejection. Indeed, the PC is even worse, insofar as it potentially allows British ministers to make enormous regulatory commitments with no role for parliament at all.
The only saving grace is that the PC must operate by mutual consent: decisions cannot be imposed without British government agreement. This is an important deviation from EU practice. The EU has increasingly used norms of collective agreement to persuade individual governments to subordinate any particular objections they may have (and hence the interests of their own electors) to the need to maintain European “unity”. Qualified majority voting has also become increasingly commonplace. The PC effectively institutionalises a UK veto over all decision-making within, and amendments to, the TCA.
The crucial question, however, is whether a future British government will robustly represent its citizens in this forum – wielding its veto as necessary – or whether it will be drawn more deeply into the practices of member-statehood. As our analysis makes plain, the EU does not involve member-states being bossed around by unelected bureaucrats, nor are key decision-making powers taken out of the hands of elected officials themselves. The EU Council, comprising national ministers or heads of government, remains the most important body. Rather, the EU involves political and institutional arrangements that encourage member-state officials to develop policy in concert with one another, not in dialogue with their national populations; they then present these policies as a fait accompli that their citizens must accept. This allows them to evade accountability for decision-making and to develop policies that would otherwise be politically unacceptable (see Analysis #2 – Popular Sovereignty and “Taking Back Control”: What it Means and Why it Matters).
The PC creates a similar possibility for the British government. Confronted with demands for social or economic change, it is easy to imagine British ministers referring the matter to the relevant working group of some PC committee, where radical proposals – if presented at all – will be shaved down to size. It is similarly easy to imagine a general presumption among officials against any real change, on the assumption that it would create friction with or be vetoed by our “European partners”. For decades, the EU has served as a useful scapegoat for a general lack of vision and laziness among our political and bureaucratic establishment. The PC could do the same.
Compared to the EU, the PC’s institutional structure does have the advantage that any British government using it as an excuse for inaction would be totally exposed and isolated. It could not cite pressure from other governments or the need for “EU unity” for its decisions. There is less room to hide. Given its power of veto, it would clearly be responsible for any decision emerging from the PC. The key question, then, is whether a British government would face sufficient popular pressure to avoid making obnoxious commitments.
Ultimately, this returns our attention to the primarily political and domestic – not institutional or European – nature of the problem of member-statehood. In the absence of serious political pressure for change, British politicians and bureaucrats will tend towards the sclerotic practices of member-statehood. Confronted by forceful demands, they will be more minded to demand space for domestic experimentation and resist EU regulation by stealth.
Generating these demands, and popular organisations capable of conveying them, remains an urgent political task. As we have always argued, Brexit was never going to be a panacea that solved all our ills; it was just the beginning. The TCA is merely the end of the beginning. The steadfast determination of the electorate to see real change enacted – the only reason we have left the EU at all – does give some grounds for cautious optimism. The Conservatives, at least, recognise that if they do not deliver meaningful change, they will be punished at the ballot box.
In the short term, the most obnoxious features of the PC should be mitigated by domestic democratic practices. The Bill tabled to ratify the TCA provides for amendments to the Agreement to be effected by regulations. These provide for a parliamentary vote only if they entail changes to primary legislation; other changes take effect without parliamentary affirmation unless MPs can be mobilised to take the initiative and table a debate, which is difficult to achieve without agreement from the Government. Parliament will undoubtedly be bounced into ratifying the deal, but it must rein in these unacceptable executive powers and limit the most pernicious aspects of the PC. It must ensure the establishment of a new scrutiny committee to replace the EU Scrutiny Committee, with a remit of overseeing anything emerging from the PC and with a simple majority vote triggering an automatic parliamentary debate. Parliament could also legislate to require the UK government to request that PC meetings are routinely held in public.
Of course, to do this, parliament would have to be committed to representation and accountability. The evidence of the last few years suggests otherwise. The fact that the vote on the TCA will occur remotely only symbolises the fact that, unlike supermarket checkout operators and Amazon delivery drivers, British members of parliament do not consider their work so essential that they must undertake it in person (see After Brexit #1 – COVID-19: We’re Not In Control).
Economic Regulation and Policy Space
It is obvious that the TCA involves higher barriers to trade than EU membership, notwithstanding government rhetoric. But for anyone on the left, free trade is hardly an appropriate lodestar – wailing about “just-in-time production networks” notwithstanding. Our interest in Brexit was instead about breaking free of neoliberalism. The EU’s single market effectively created an economic constitution for the continent, locking in market competition and the free movement of goods, services, capital and labour. As TFB supporter Wolfgang Streeck commented, “we used to have markets within states, then we had states within markets”. It is therefore important to evaluate how far the TCA allows us to establish greater democratic control over the economy.
However, it is worth underscoring that The Full Brexit has consistently differed from most “Lexit” analysis in absolutely refusing to make support for Brexit conditional upon prompt enactment of socialist policies. Our analysis is premised on the recognition that the contemporary left is exceedingly weak and politically misguided; one of our goals (not successfully realised) has been to try to correct this. The neoliberal era, the political void between rulers and ruled, and the emergence of member-statehood are all predicated upon the crushing defeat of the left in the 1980s. It was this that enabled the rise of identikit political parties peddling different shades of neoliberalism, and the crisis of representation that ultimately led to Brexit. Consequently, it was always foolish to imagine that Brexit would be led by, or lead directly to, an empowered left, ushering in socialism. The case for Brexit was instead that it would help to create the necessary preconditions for the left to rebuild itself. The EU has clearly been disastrous for any politics of emancipation across the continent; left revival within a neoliberal straitjacket was simply never going to happen. Conversely, expanding the space for renewed political contestation offers the possibility of reinvigorating British democracy. This has certainly happened, though the Labour Party is so wedded to member-statehood that it has systematically failed to take any advantage of the situation.
From this perspective, the key question is not whether the TCA offers the prospect of immediate improvement, but whether it opens up legal and political space in which alternatives to neoliberalism can begin to be articulated and pursued, without the kinds of legal and institutional impediments embedded in the EU. Here, again, there is no decisive rupture with the neoliberal status quo, reflecting the sclerotic nature of British politics after decades of member-statehood, and the lack of a democratic movement associated with Brexit. Nonetheless, in some important respects, sovereign controls have been restored that do open up space for democratic alternatives.
Investment
The TCA is not merely a trade deal, it is also an investment agreement. Here, the free movement of capital still reigns supreme. Both sides agree to continue treating each other’s investors just the same as their domestic firms. The Treaty also forbids the imposition of various conditions upon foreign investors, including: the use or purchase of domestic inputs; forced technology transfer; compulsory joint ventures; or targets for research and development or employment. These are all standard clauses in contemporary bilateral investment treaties, reflecting the domination of capital in the neoliberal era. There are few exemptions: the parties are allowed to offer incentives to direct investors to particular regions, to train or employ workers, to provide services or construct particular facilities, or carry out research and development (Part Two, Heading One, Title II, Ch. 2). This does provide some space for activist industrial policy, though clearly a limited one, based on incentivising businesses to invest. A state like China, for example, imposes far tougher conditions on foreign investors in an attempt to leverage greater local benefit. The TCA’s failure to do this, however, clearly reflects the limited appetite on either side for anything that would disturb the hegemony of international capital. That said, the dispute settlement mechanisms around investment (discussed below) are less egregious than in other similar treaties.
State Aid
The TCA’s main substantive purpose is to create “fair competition” between the UK and EU as the basis for respective market access for trade and investment. This entails various restrictions on the economic policymaking of each party, to avoid “distorting” markets. Notwithstanding the basic neoliberal orientation of any such agreement, the TCA’s restrictions are considerably weaker than those found in the EU’s single market and customs union.
This in large part reflects the British government’s insistence on sovereign control over key aspects of state aid. This signifies an important political realignment produced by the Brexit process. The TCA is focused heavily on trade in goods. It is exceedingly thin on trade in services, with no special privileges for Britain’s financial sector, and only “framework” commitments on lowering barriers to services trade, the mutual recognition of professional qualifications, and so on. This partly reflects the fact that trade in services was, in reality, never fully liberalised within the EU. But it also reflects the Conservatives’ new class coalition.
Traditionally, we would have expected a Tory government to prioritise the interests of the City and other large-scale, internationally oriented business in the services sector: prominent donors and the dominant segment of its ruling coalition since the 1980s. Historically, the Conservatives have favoured European integration precisely to limit British government policy, locking out socialist nationalisations and policies – one reason why, until the 1980s, the left largely opposed EEC/ EU membership.
However, to the EU’s bafflement during the negotiations, the Johnson government has prioritised regaining the power to intervene in Britain’s domestic economy. Its resilience on state aid suggests that recognition of the Conservative’s shifting electoral base runs deeper than Dominic Cummings. The party – now bolstered by a “Northern Research Group” comprising representatives of former “red wall” constituencies – apparently recognises that it must deliver major infrastructural and economic development for the “left behind” working-class and small-town areas that now underpin its electoral success (see Analysis #45 – How Boris Johnson Broke the Brexit Interregnum; Analysis #48 – How Will the Tories Rule? Understanding Boris Johnson’s Political Project). While state aid could also be used to perpetuate the crony capitalism witnessed in the procurement processes during the COVID-19 pandemic, if it is used exclusively for this purpose, the Tories are unlikely to survive electorally.
Consequently, although the TCA contains many restrictions on state aid, and economic policy more generally, these tend to concern commercial, profit-oriented actors, rather than activities undertaken for reasons of public policy. For example, the TCA: forbids the use of subsidies to help companies win export markets unfairly or mandate the use of national goods and services; rules out infinite debt guarantees, and requires any bailouts of failing companies to be accompanied by restructuring plans to ensure long-term commercial viability (Part Two, Heading One, Title XI, Art. 3.5). The TCA also insists that any subsidies must be proportionate and limited to the specific “market failure” being remedied, and any positive contribution must outweigh any negative effects, particularly in terms of bilateral trade and investment (Part Two, Heading One, Title XI, Art. 3.4). It also bans subsidies contingent on the use of national goods and services (Part Two, Heading One, Title XI, Art. 3.5). Other parts of the treaty seem to restrict sectoral nationalisation by prohibiting limits on the number or type of entities engaged in a particular form of economic activity (Part Two, Heading One, Title II, Art. SERVIN 2.2). State-owned firms engaged in commercial (i.e., for-profit) activity are also required to act in line with commercial considerations (Part Two, Heading One, Title XI, Art. 4.1(d), 4.5). These are clearly anti-socialist policies – but then we are very far from having a socialist government.
In the meantime, however, the TCA specifically carves out loopholes for important public policy initiatives. The highly restrictive provisions of Article 3.4, for instance, only apply to “economic actors assigned with particular tasks in the public interest, including public service obligations” insofar as they do “not obstruct the performance” of their assigned task (Title XI, Art. 3.3(1)). That is, as long as the government can argue that state aid is necessary to conduct “tasks in the public interest”, state aid restrictions need not apply. Similarly, state-owned enterprises or monopolies not engaged in “profit-making” activities, and “service[s] supplied in the exercise of governmental authority” are exempt (Title XI, Art. 4.1(1(a)), 4.2(2)). Subsidies to failing companies are also allowed to avoid “social hardship or… severe market failure, in particular with regard to job losses or disruption of an important service” (Art. 3.4(4)). A supplementary EU-UK Joint Declaration on Subsidy Control Policies also describes areas where subsidies are allowable, including “for the development of disadvantaged areas”, transportation infrastructure, and research and development activities (pp. 5-6). Moreover, the EU can object to subsidies only if there is a “negative effect on trade and investment” (Title XI, Art. 3.8). The TCA thus opens up substantial space for a more interventionist approach to economic governance.
From Constitutionalism to International Law
The provisions for handling disputes over state aid (and other matters) also signify an important break from EU member-statehood. EU treaties and law have “direct effect” in member-states. They are enforced by domestic courts — even against elected governments. EU structures therefore create a de facto constitutional order for Europe, one which cannot be challenged democratically, and where the procedural barriers to change are deliberately immense (see Analysis #23 – The Folly of “Remain and Reform”: Why the EU is Impervious to Change; Analysis #29 – “Remain and Revolt”: A Lame Variation on the Bogus “Remain and Reform”). As Richard Tuck has argued, to reject any objectionable aspect of the EU’s constitutional order, one must reject it in its entirety.
Conversely, the TCA’s dispute settlement mechanisms are far closer to those used in traditional international legal agreements between sovereign states. Although the exact provisions vary across different areas of the agreement, generally speaking, the parties must try to resolve their differences through the relevant PC committee and, if no resolution can be found, refer the matter to an arbitration panel appointed by mutual consent. The context for decision-making is international law, not EU law, and there is no role for the European Court of Justice (ECJ). The only exception is with respect to EU programmes in which the UK has opted to participate.
For example, in a dispute over state aid, the UK and EU commit to negotiating a resolution through one of the PC’s committees (Part Two, Heading One, Title XI, Art. 3.8). If no agreement can be reached, the EU’s recourse is very limited. It can no longer sue the UK government in a British court or the ECJ, using EU law. It would have to try to intervene in a British court case. The Treaty requires Britain to empower courts to review, suspend or reverse subsidies and award damages, but the legislative regime – including determinations over who can sue the government and whether the EU would even be allowed to intervene in cases – is entirely for Britain to decide (Part Two, Heading One, Title XI, Art. 3.10). It is therefore possible for Britain to legislate a very permissive domestic state aid regime. As arch-Remainer George Peretz QC observes, “State aid rules from retained EU law could simply and quietly be revoked.”
The EU’s final recourse, in cases where there is “reliable evidence” of a “significant negative effect on trade and investment”, would be to impose unilateral “remedial measures” (i.e. a proportionate punishment in the form of some withdrawal of cooperation under the TCA), then refer the dispute to an arbitration tribunal (Part Two, Heading One, Title XI, Art 3.12). They can only refer the matter to another institution, like the WTO’s Dispute Settlement Panel, if it concerns a commitment also made to that organisation (Part Six, Title I, Art. INST.11-12). Arbitration panels for state aid comprise three members, appointed by the PC, granting substantial political control over their composition. Moreover, the tribunal’s jurisdiction would be limited to very specific forms of state aid: unlimited state guarantees, corporate bailouts, export subsidies, and subsidies contingent upon the use of domestic goods and services (Part Two, Heading One, Title XI, Article 3.12). Moreover, if one side refuses to accept a tribunal’s judgement, the only recourse available is again unilateral retaliation by suspending its relevant obligations under the treaty (Part Six, Title I, Ch. 3).
Another substantial departure from EU practice, and indeed the provisions in many contemporary bilateral investment treaties, is that the only parties permitted to launch a dispute are the UK and EU themselves. In the EU, any legal entity can sue a government under EU law in its own courts. The TCA requires disputes to be initiated by the parties to the treaty. Assuming that the UK government adopts a robust legislative regime that shields democratic decisions from subsequent legal challenges in its domestic courts (as it should), this will give it vastly more room for manoeuvre. The only issues that would reach an arbitration tribunal would be those sufficient to cause an international dispute. To be sure, corporations often lobby states to initiate such disputes, including at the WTO, but this is more complex and difficult than directly suing a government. As well as departing from EU practice, this differs from the investor-state dispute settlement provisions in many contemporary bilateral investment treaties (including CETA). These allow corporations to sue governments directly, including through arbitral courts based in other jurisdictions. The TCA does not permit this.
Cutting through the legalese, then, it therefore appears that the UK has subtly liberated itself from swathes of EU law and regulations, opening up a considerable amount of policy space. Admittedly, this is not as much space as would arise from no deal – though trading on WTO rules would also involve deep commitments to “fair competition”, including some state aid provisions. Nonetheless, with sufficient political will and legislative creativity on the British side, it does not seem that anything in the treaty would forbid the development of a new industrial policy, targeted aid to specific regions or sectors, the nationalisation of public services, the creation of regional policy banks, and so on, except under quite narrowly defined circumstances. And, should the EU object, it has limited recourse except to impose retaliatory measures. A determined government could simply accept this as the price of deviating from neoliberal orthodoxy.
Yet again, much hinges on political, not legal or institutional, questions. The opening of legal and political space guarantees neither the emergence of a substantive programme for economic renewal, nor the political will necessary to see it through against possible EU objections. As with the PC, it would be possible for politicians and officials to hide behind the Agreement’s economic provisions to avoid significant policy innovation. The fact that the treaty is framed by international law, not EU law, while an improvement on Britain’s EU membership, also provides a means to evade domestic accountability. As we have seen with the pearl-clutching over the government’s Internal Market Bill, which derogated from the UK-EU Withdrawal Agreement, a symptom of member-statehood is to imagine that international law should automatically trump the needs and wishes of elected governments. We are still very far from a truly sovereigntist mode of politics, which would insist on the primacy of domestic democratic legitimation over that provided by international agreements between states. As Richard North comments, we may be free of the EU, but pushing at the “second coffin lid” of international law and transnational regulation remains an unfinished task.
Conclusion
Ultimately, the UK-EU Trade and Cooperation Agreement reflects the political problems that drove the Brexit process from the very beginning. Britain’s transformation into a member-state explains why millions of people voted against continued EU membership, why it has been so difficult for Britain to actually extricate itself from the EU, and why the UK-EU relationship will continue to be characterised by dense institutional networking and thickets of regulatory limitations.
To have avoided ending up here would have required a different starting point. It would have required not just a democratic moment, but a mass democratic movement, hungry for popular sovereignty and therefore a clean break with the EU and all the trappings of member-statehood. But we have not seen such a movement. Working-class voters, in particular, have remained true to their 2016 decision, wielding their votes ruthlessly to ensure it was enacted. But beyond this, citizens have not organised en masse to demand a new dispensation. A brief populist eruption in the form of the Brexit Party disciplined the Tories, but it was little more than a temporary coalition, lacking real mechanisms for popular participation and consequently leaving no lasting legacy (see Analysis #44 – The Limits of Populism). No other major parties have emerged, nor have existing ones revitalised. British politics remains characterised by the masses’ withdrawal from active political participation between elections.
Given this context, arguably it is remarkable that we have come as far as we have. At many points it appeared that the Remainer establishment would triumph and overturn the referendum result. Equally there was the constant risk of a “Brexit in name only”, with EU institutions retaining significant formal control of UK law. The end result could have been much worse. British diplomacy has secured some real gains – but the EU has always found it easier to squash poorer developing countries than stronger states.
Under the circumstances, the TCA is probably the best that could be achieved by a member-state struggling to transform back into a nation-state. No treaty can solve what are fundamentally domestic political problems. The process of breathing life back into our democracy is only just beginning. The TCA at least creates more space for that to happen than continued EU membership or a “soft” Brexit.
Should Britain’s democratic renewal eventually generate a left government worthy of the name, with a programme that rubbed up against the TCA’s restrictions, it is worth remembering that it is substantially easier to amend or quit the TCA than to leave the EU. To reiterate, the EU is a constitutional order: it cannot readily be amended, so one accepts it all, or one has to leave. The TCA is an international treaty that can be amended by mutual consent. Either party can also terminate the Agreement after giving one year’s notice.
Arguably, the arrangements secured by the UK may be considerably more attractive to other European member-states than those prevailing elsewhere, particularly for non-Eurozone countries. Why remain a member of the European Economic Area or European Free Trade Association, directly subject to around a quarter of EU law and the jurisdiction of the ECJ, when you can secure many of the benefits of market access with greater sovereignty? The TCA could become a template for other countries, especially those in EFTA, to pursue a looser arrangement with Brussels. Indeed, Norway’s Centre Party has already said as much. Although sentiment favouring EU withdrawal has ebbed across the continent in light of Britain’s travails, if we manage to thrive under these new arrangements, this could well be reversed. We could then look forward to a future based on friendly international cooperation between sovereign peoples, rather than the anti-democratic constraints of cooperation among member-states.
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