BEERG Brexit Blog

The Impossibility of a Peter Pan #Brexit

This was written on August 14th, 2017

“Take care, lest an adventure is now offered you, which, if accepted, will plunge you in deepest woe.”                                                                                                         J.M. Barrie

This will not end well for the simple reason that it is impossible for it to end well. When you promise the impossible it is impossible for it to end well.

The current UK Conservative government has led the British people to believe that leaving the European Union (EU) will come at no economic cost and that UK citizens will be able to trade with, and travel to, EU countries much as they can now. Brexit has been defined as the UK exclusively controlling its borders and immigration, walking away from the jurisdiction of the Court of Justice of the European Union (CJEU), ending payments to the EU for membership of the bloc, and being free to negotiate its own trade deals with non-EU countries. After Brexit, the UK will be outside the EU’s single market and customs union.

But, the narrative continues, the UK will be able to replicate all the benefits of the single market and the customs union through a “bold and ambitious” trade agreement with the EU.

The only problem with this narrative is that the EU has said it is not going to happen. But then debate about Brexit is conducted in the UK, and particularly in the Conservative party, as if the EU 27 were bystanders.

But the EU and the other 27 member states are not bystanders. They will determine the nature of the relationship that the UK has with the EU post-Brexit. Not the other way around, as many in the UK appear to think. Further, as the UK has given notice to leave it is the EU which will determine what happens immediately after March 2019. It will not be decided by negotiations between Conservative ministers.

Speaking to the EU’s Economic and Social Committee last July, the EU’s chief Brexit negotiator, Michael Barnier, said that the UK cannot leave the EU single market and keep the benefits. He added that he had warned the British government there was no cost-free way to leave the single market and said some people in the UK had not understood that Britain cannot leave the EU without losing out.

“I have heard some people in the UK argue that one can leave the single market and keep all of its benefits. That is not possible,” he said.

Clearly, the UK government wasn’t listening. In the Sunday Telegraph (13/8/2017) two key government Ministers, Philip Hammond, the Chancellor and Liam Fox, the International Trade Secretary, from the “soft” and “hard” Brexit wings of the Conservative party respectively, are quoted as they appeared (I highlight key phrases in bold):

“We respect the will of the British people – in March 2019 the United Kingdom will leave the European Union.

We will leave the customs union and be free to negotiate the best trade deals around the world as an independent, open, trading nation.

We will leave the single market, because there was a vote for change on June 23rd and that is what we will deliver.

“We want our economy to remain strong and vibrant through this period of change. That means businesses need to have confidence that there will not be a cliff-edge when we leave the EU in just over twenty months’ time.

“That is why we believe a time-limited interim period will be important to further our national interest and give business greater certainty – but it cannot be indefinite; it cannot be a back door to staying in the EU.

“And it must ensure a smooth and predictable pathway for businesses and citizens alike. We are both clear that during this period the UK will be outside the single market and outside the customs union and will be a ‘third-country’ not party to EU treaties.

But we are also clear that during this period our borders must continue to operate smoothly; goods bought on the internet must still cross borders; businesses must still be able to supply their customers across the EU and our innovative, world-leading companies must be able to hire the talent they need, including from within the EU.

“Once the interim period is over, we want a permanent, treaty-based arrangement between the UK and the EU which supports the closest possible relationship with the European Union, retaining close ties of security, trade and commerce.”

The question surely is this: if the UK leaves the EU in March 2019, is outside the customs union and the single market, on what legal basis does it expect that its borders:
….continue to operate smoothly; goods bought on the internet must still cross borders; businesses must still be able to supply their customers across the EU and our innovative, world-leading companies must be able to hire the talent they need, including from within the EU?

What is described in the above paragraph is precisely the way the single market and customs union work. If this is what the UK wants, even if only for a couple of years, then it will have to accept all EU laws, free movement, the jurisdiction of the CJEU and make payments into the EU. But as it will have left the EU it cannot expect any role in EU governance. No commissioner, no MEPs, not attendance at Council of Minister meetings and no judge on the CJEU.

Further, we are not told how the UK expect, during this transition period, to be “free to negotiate the best trade deals around the world as an independent, open, trading nation.” What other country is going to want to negotiate with the UK until the final terms of its long-term relationship with the EU is finalised? Unless, the US who have the best honed team of negotiators in the world while the UK is scrabbling to establish a team, having not played the game for 40 years. Not a good place to start if you want a result, as the Director General of the British Chambers of Commerce has suggested. Manchester United v Accrington Stanley.

The Hammond/Fox article quoted in the Sunday Telegraph appears to assume that all the UK need to do is to state that it wants a transition period on the above terms and the EU will simply agree. Perhaps it will, but it will have to be negotiated with the EU. It is not a given that because the UK now realises that it needs a “transition” that the EU will agree. The EU did not create this mess. The UK did. But the EU will only even consider it after the Article 50 issues of citizens’ rights, the Irish border and financial liabilities have been settled. Agreement on these issues is a long way off, as of today.

Hammond/Fox implicitly accepts that there will be no long-term agreement between the EU and the UK in place by March 2019 and that crashing out of the EU would be enormously damaging for UK businesses. They must therefore accept that de facto if not de jure participation by the UK continues in both the single market and the customs union during this period, contrary to the impression given in their article on 6 August, while the long term deal is being negotiated. Can we now take this to mean that the UK government accepts that “no deal” is the worst possible outcome? Transition may well bring business and trading continuity, but at the loss of all political influence within the EU.

Even if the EU agrees to a “transition period” for the UK there is no guarantee that any long-term deal can be reached during the transition. “Crashing out” might just have been postponed by a couple of years. If a deal is reached then it will be on lesser terms than the UK will enjoy during the transition, if there is a transition. Barnier, as quoted earlier, has made that clear.

Ultimately, for a country such as the UK the choice is binary. You are a member of the EU or you are not. There are no “half-way houses”. If you are not a member the best you can hope for is a hard fought trade deal. But such a trade deal will never replicate the benefits of membership. Brexiteers argue that what the UK will lose from walking out of the world’s biggest and richest market can be replaced by the benefits of trade deals to be negotiated with countries far away. Tinkerbell politics: close your eyes, clap your hands and truly, truly believe… and it will happen. In fairy tales maybe…

“Of course the Neverland’s vary a good deal. John’s, for instance, had a lagoon with flamingos flying over it at which John was shooting, while Michael, who was very small, had a flamingo with lagoons flying over it. John lived in a boat turned upside down on the sands, Michael in a wigwam, Wendy in a house of leaves deftly sewn together. John had no friends, Michael had friends at night, Wendy had a pet wolf forsaken by its parents…”

J.M Barrie