Article 50, Brexit, British Government

“Repeal and Replace”: Difficult to do on both sides of the Atlantic #Brexit

Written Sunday September 3rd 2017:

Capture“Repeal and replace” makes for a great political slogan. For Republicans in the US, who minted the phrase, it meant repealing and replacing the Affordable Care Act (“Obamacare”). In January of this year, President Trump told ABC news that “he wanted “good coverage at much less cost” and “a much better healthcare plan at much less money.” Over recent months President Trump has found that while “repealing” might possibly be easy, replacing is a lot harder. To date, the Act has been neither repealed nor replaced.

Now, Brexiters in the UK never used the phrase “repeal and replace”, but that is what they meant.

“Repeal” the UK’s membership of the European Union and “replace” it with a relationship with the EU at much less cost and with much better benefits.

That is, in effect, the prospectus they offered the people of the UK. As Boris Johnson, now the Foreign Secretary, put it, the UK “could have its cake and eat it”.

It would be all gain and no pain. Leaving the European Union would be easy. As soon as the UK voted to leave, the EU would bend over backwards to offer it a deal. German car companies, Italian prosecco producers and French cheese makers would pressurise their governments to pressurise the EU to cut a deal. Except they didn’t and even if they had tried they would soon have realised that the members states of the EU regard the integrity of the EU as far more important than the economic interests of any particular business sector.

As Natalie Nougayrède, a former editor of the Paris newspaper, Le Monde, put it in an article in the Guardian on September 2nd, the “EU is an existential, not a transactional project (here).” The EU exists for reasons far beyond commerce and will not be reduced to a simple economic zone. The UK has never understood this.

But unlike the Americans, the Brexiteers have managed to “repeal” the UK’s membership of the European Union with the serving of the Article 50 notice. But like the Americans, they are finding the “replace” bit very difficult, if not impossible.

During the 2016 referendum campaign, the Brexiteers suggested that leaving the EU could be done with the stroke of a pen. Appealing to the sense on the part of a great number of UK citizens that the UK was “exceptional” and not really “part” of Europe, the debate was often emotional rather than rational. There was no discussion of the dense web of economic and legal relationships that had grown to bind EU members together over the forty years of UK membership. Or the benefits that those relationships have delivered.

Only after the vote, and when the UK prime minister defined Brexit as leaving not just the EU but also the internal (single) market and the customs and commercial union as well, did some of the implication start to become clear.

As Steve Bullock, a former UK and EU official and a firm anti-Brexiteer, put it:

Who knew… that leaving the apparently obscure Euratom Treaty would jeopardise not only the UK nuclear industry, but also the supply of medical isotopes for cancer treatment?

Did anybody realise that the work needed to establish a new customs IT system was unlikely to be done in time, and what that would mean?

Was everyone already aware that UK airlines like easyJet would need to set up in the EU27 and Ryanair might move its planes to EU27 countries due to the UK leaving the Open Skies Agreement? (The full article can be found here.)

As the truth “comes dropping slow” that the UK’s membership of the EU cannot be “repealed and replaced” on improved terms and that the UK will not be better off outside the EU than inside, Brexiteers seek comfort in denial. Trade deals yet to be negotiated with countries far away will compensate for the loss of trade with neighbours in Europe.

Then it turns out that because of time and resource constraints the best that the UK can do in the immediate future is to “copy and paste” the EU’s existing trade deals and then to renegotiate them sometime in the future. Has the UK asked the other parties to these EU trade agreements if the UK can “copy and paste”? The answer may well be yes, but subject to certain changes, such as, for example, increased access and visas for Indian or Australian citizens to come and work or to study in the UK.

“Realists” realise the dangers ahead and call for a “transition” from EU membership to non-membership to be spread over a number of years. During the transition they would accept all EU obligations, but not be part of the EU’s governing processes. Membership of EFTA and the European Economic Area have been proposed as the basis for such a transition deal.

But now comes a devastating analysis from Jean-Claude Piris (here), a former head of the EU’s legal service, which says that EFTA/EEA membership for the UK is all but impossible for political and legal reasons. Presumably, similar legal barriers exist to temporary UK membership of the customs and commercial union and other EU structures and agreements such as Euratom and the Open Skies Agreement, mentioned by Bullock, after the UK leaves the EU.

It appears that the UK can only negotiate its future relationship with the EU after it has left. All that can happen in the Article 50 negotiations is that note is taken of the framework for that future relationship but the terms and conditions for the relationship itself cannot be discussed.

David Davis, the UK’s Brexit negotiator, inadvertently summed up the situation in a TV interview on Sunday, September 3, when he said: “They [Europeans] won’t talk about the future, they’ll only talk about so-called divorce proceedings.”

The “Europeans” don’t need to talk about the future. They know what their future is. It is the continuing development of the EU and frictionless trade in goods and services within the internal market and the customs union. And free movement for its citizens. What Davis means is that the EU does not want to talk about the UK’s future unless and until the UK accepts that it has financial commitments it entered into as a member of the EU. And puts money on the table to discharge those obligations, not to “buy” access to EU markets in the future.

So, the UK is caught in a Catch 22. It has to leave before it can negotiate a new relationship with the EU. But it needs that new relationship in place so that it can leave, without the economy hitting the wall. Yes, the UK crashing out of the EU without an agreement in place will be damaging to the EU but nowhere near as damaging as for the UK.

The UK cannot blame the EU for the difficulties it finds itself in. It was the UK that decided to leave the EU. Choices have consequences. The great pity is that these consequences were not clearly explained to the British people before they voted in June 2016.

It is looking more and more likely that come Brexit day in 2019, there will be no deal in place.

While it is still worthwhile hoping for the best, for businesses preparing for the worse becomes more and more imperative.

As one European colleagues put it recently: “…like most continental Europeans I have given up on trying to guess whether there is a pilot in the Brexit plane.”

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