Article 50, Brexit, David Davis, Irish border, Michel Barnier, Negotiating

The #Brexit Delusions of Davis?

This article was written on April 16th 2018

DavisHaving your chief negotiator on top of their brief should be a given. Knowing all relevant facts and figures is usually helpful, as is being familiar with the procedures that are to be followed.

Having some insight into the thinking of the other party is recommended as that can stop the negotiator making rash promises that cannot be delivered.

All of this holds true, no matter what the negotiation.

It is even more true when it is a negotiation of unequals, with one side holding most, if not all, of the cards.

In such circumstances for the lead negotiator of the weaker party to unilaterally announce what is going to happen, how it is going to happen and what will be the outcome is foolhardy and unwise, to say the least. Unless there is some unknown, ulterior motive for so doing.

When this happens, the stronger party, to put it in diplomatic language, is likely to raise an eyebrow at the approach being adopted. More prosaically, they are likely to ask one another: “Is this guy for real? Is he nuts? What planet is he living on?”

No doubt, words to this effect were muttered in Brussels last week by members of the Art50 team in the light of decisions and statements attributed by several newspaper articles to UK Brexit Secretary, David Davis.

The Times reported that David had won a battle with Ollie Robbins, who heads up the Brexit task force in the office of Prime Minister, Theresa May, over how the next phase of the Brexit negotiations should be approached.

Apparently, Davis wants the full nuts and bolts of any future trade arrangements between the EU and the UK agreed by the coming October and issued an instruction to all Whitehall departments to put teams together to prepare for around 50 strands of detailed negotiations with Brussels. Davis then, presumably, planned to block-book a Eurostar to send these several hundred civil servants to Brussels to, in a favourite Brexiteer phrase, “get on with the job”.

Robbins, on the other hand, because he had been listening to what Brussels had been saying, had argued that it was probably best just to focus on getting the framework for future trade negotiations in place by October, leaving the UK with maximum flexibility in discussions when talks really get under way during the transition period, March 30th, 2019 to December 31st, 2020.

Robbins knew that Brussels was never going to agree to Davis’s “50 shades of negotiation” plan and that when the several hundred civil servants got off the Eurostar in Brussels they wouldn’t get much further than Sam’s Café at Gare Midi because there would be nowhere else for them to go. Doors in the Berlaymont were not going to swing open.

Sure enough, Friday April 13th, the usually well-informed Peter Foster in the Telegraph wrote:

The European Union has squashed David Davis’s hopes of nailing down a detailed outline of the future UK-EU trade agreement before the Brexit deadline expires.

“There will be no negotiation strands, no ‘hundreds’ of British negotiators,” one EU diplomat told The Telegraph, referring to the Brexit Secretary’s plans for expansive pre-Brexit trade talks.

“Trade negotiations will not start properly until after 29 March 2019. Before that we must get the fundamentals right,” the source said.

To get one thing so badly wrong in a week would be too much for most people. But not for Davis. Speaking at a WSJ Conference in London on Thursday, he warned that the House of Commons may be reluctant to sign off payments to the tune of €45bn without a trade agreement framework in place.

“We have got to have the substance of the future relationship nailed down,” Davis told the Wall Street Journal CEO Council in London, according to press reports.

“The withdrawal agreement involves payments of up to £39bn – that’s a lot of money – and Parliament is unlikely to sign off such a thing unless we know pretty substantively” what that trade offer looks like.

But at the same conference, during a question and answer session, he said he believed British and EU regulators can now treat the agreement on transition as if it is legally binding. “We think we have got it to the point where the (banking) regulators say, this is going to happen,” he said.

Now, the two positions that Davis adopted on Thursday cannot be true.

If the transition agreement is to be now regarded as “legally binding” then that implies that what was agreed last December is also binding, if not yet nailed down in a legal text. What was agreed last December involved the payment of €45bn and that payment is not conditional on the “substance” of a trade agreement being agreed between the UK and the EU before October of this year.

If as Davis warns, the EU parliament votes down the Withdrawal Agreement because of the absence of detail on future trade terms then the transition arrangement falls as well. So, until Parliament votes, notwithstanding what Davis said, nothing can be regarded as legally binding.

If Parliament does vote it down then the UK will leave the EU on March 29th, 2019, without any transition arrangement in place and World Trade Terms on matters covered by WTO agreements will kick in while the shutters will come down on non-WTO matters, such as data transfers, “open skies” for air travel, services of all sorts, but particularly financial services. Chaos can be an overused word but that is what it will be.

But Davis is probably wrong that Parliament will vote down the Withdrawal Agreement. There is no majority in the House of Commons, still less in the House of Lords, for the UK “crashing out” of the EU without any future arrangements in place.

And when it comes to being wrong, Davis has form.

Recall how, in Spring 2017, he told all and sundry that he was going to insist on parallel track negotiations with the EU? One track would cover the terms of the Withdrawal Agreement, while the other track would focus on the future trade agreement.

Unfortunately for Davis, the EU’s position was that the negotiations would be done sequentially, first the terms of the Withdrawal Agreement, then the “framework” of the future EU/UK relationship and then, when the UK has left the EU, and only then, the details of the future trade deal.

Davis then promised that there would be the “row of the Summer” when the EU wouldn’t agree to his terms for side-by-side talks. He folded within an hour of the opening of negotiations.  This is not surprising because prior to being appointed Brexit Secretary Davis had exhibited as astonishing ignorance about how the EU works and what members can, and cannot, do. In July 2016 he said:

“So be under no doubt: we can do deals with our trading partners, and we can do them quickly. I would expect the new Prime Minister on September 9th to immediately trigger a large round of global trade deals with all our most favoured trade partners. I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months.”

In the first place, EU member states, of which the UK is still a member, are not allowed to conduct trade negotiations with “third countries”. Further, he failed to grasp that no rational “third country” would want to open negotiations with the UK until such time as it had sorted out the terms of its own relationship with the much bigger and richer EU with whom most of the countries Davis planned to target would prefer to deal.

Add in the fact that the UK in 2016 had no experienced trade negotiators of its own, begging the question as to who exactly was going to do the nitty gritty work of negotiating such deals?

Not surprisingly, no such negotiations have been opened, much less concluded. In fact, what discussions there have been with third countries have been in an effort to convince those countries to “roll-over” with the UK existing deals they already have with the EU. The UK is trying to get this done without the other countries without asking the UK for new terms. Begging just to stand still.

Less we forget, Davis also said:

“We are too valuable a market for Europe to shut off.  Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.”

NB: Merkel’s door is still standing.

Davis, like Liam Fox, is obsessed with taking the UK out of the EU’s Custom Union because of his desire to negotiate trade deals with the rest of the world. He believes that such deals will more than compensate for the loss of business with the EU that will result from Brexit.

The fact that he is wrong about this is well demonstrated in this Twitter thread.

We have previously argued in this Brexit Blog that the emerging strategy on the part of Prime Minister May and her close advisors appears to be to get to March 29, the day the UK leaves the EU, with as many options as possible left open as to how future trade relations between the EU and the UK should be structured. After March 29, May will be able to say that she has honoured the referendum mandate to leave the EU.

Thereafter, what will be in play is the future terms of trade between the UK and the EU. For the moment, May is constrained by her “red lines” of leaving the Customs Union, the Single Market, and the jurisdiction of the European Court.

The only reason to leave the Customs Union is to be able to negotiate Davis’s and Fox’s beloved trade deals with far away countries. However, the government’s own analysis shows that these would add little of value to the UK and certainly won’t compensate for lost EU trade.

In any event, what chances of such deals being signed if the US, for instance, insists on the UK taking chlorinated chicken and opening the NHS to private operators, Australia on exporting hormone treated beef, while India wants a significant increase in UK visas for Indian citizens? Popular reaction in the UK to such deals would be fierce and swift.

So, post March 29th, could May be prepared to ditch the Customs Union red line?

But seamless, frictionless trade between the UK and the EU is only possible if the UK also remains in the Single Market. A customs union simply eliminates tariff barriers within the union. The Single Market, pushed hard for by the UK in the 1980s, seeks to eliminate non-tariff barriers and also facilitates trade in services.

The problem for May with staying in the Single Market is two-fold. One it requires acceptance of the free movement of people within the EU. Second, it requires acceptance of the jurisdiction of the European Court.

To take the second issue first. If the UK is in the Single Market but outside the “political” EU then, for the UK, the European Court becomes little more than a trade tribunal ruling on commercial matters. Could continued acceptance of the European Court in such circumstances be framed as: “We are outside the political/human rights remit of the court, only within its commercial jurisdiction?” with a British judge sitting on the court for commercial issues alone? Never say never.

As for free movement the number of EU citizens moving to the UK is already dropping. Free movement never was “unfettered” movement and it would be just as open to the UK to apply controls in the same way as, for example, Belgium does. Free movement may be a disappearing problem.

However, as we write, a political and diplomatic storm is gathering over the treatment of the “Windrush” generation of Caribbean immigrants which may cause the EU to revisit the text in the Withdrawal Agreement on the rights of EU citizens in the UK post-Brexit. Just how far can the current Home Office be trusted to keep its word when it comes to matters of immigration? The shadow of the European Court looms large.

However, if the UK were to find a way of staying in the Customs Union and Single Market this would leave the UK as a “rule taker”, having no say in decisions affecting either. But if involvement in decision making were to be seen as a matter of procedure rather than a matter of principle, “how can it be done” rather than “it can’t be done”, solutions could be found.

Where there is a political will there is a way. After all, as Pascal Lamy has said, what is happening for the EU is not a negotiation, it is damage limitation and when you are trying to limit damage all options should be examined.

Davis, a Brexit true believer, may sense that this is the game that is afoot and wants to shut it down. The more pragmatic see that if Davis has his way there will be no Withdrawal Agreement and no transition unless the UK accepts the backstop on Northern Ireland, i.e. keeping Northern Ireland de facto in both the Customs Union and Northern Ireland.

Keeping all trade options open could avoid this by allowing the UK to accept the backstop in the Withdrawal Agreement hoping to subsequently make the Irish problem disappear through continued UK membership of the Customs Union and the Single Market.

Davis may be delusional about the benefits of Brexit for the UK, both now and in the future. But that does not make him “nuts”.

Like many a revolutionary before him he may well believe that only out of the wreckage of the present can the promised new future be built.

Never underestimate the guile of the true believer.

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