This week’s blog was written on May 8, 2018
As of today, May 8th, the day after a long, hot, holiday weekend, it is difficult to see Brexit ending well.
It is difficult to see how it even makes it to March 29th, 2019, the date on which the UK is due to leave the EU, with, it hopes, a signed Withdrawal Agreement providing for an orderly exit.
The fault for this state of affairs lies not with the EU but with the UK itself and particularly with the UK government.
Close to two years after the June 2016 referendum, thirteen months after informing the EU that it planned to leave, and with just over 10 months before it actually does leave, the UK cabinet is still debating the nature of the future trading relationship it wants with the EU.
Debating is too kind a word. Hand-to-hand, combat to the death between different factions more correctly describes it.
On one side is the Prime Minister, Theresa May, and supporting ministers who favour a “customs partnership” with the EU. On the other side, are the hard Brexiters demanding an arrangement known as “maximum facilitation”, or “MaxFac” in the jargon.
A customs partnership would remove the need for new customs checks at the border. The UK would collect tariffs set by the EU customs union on goods coming into the UK on behalf of the EU. If those goods didn’t leave the UK and UK tariffs on them were lower, companies could then claim back the difference.
George Parker of the Financial Times describes the customs partnership as a plan that
… represents the best efforts of Britain’s top civil servants to craft a solution that bridges the ideological gulf in the Conservative party. It would combine the frictionless trade of a customs union with the promise of an independent British trade policy — on the proviso that technology can be developed to track goods from port to consumer.
Maximum facilitation (MaxFac) would seek to minimise customs checks rather than getting rid of them altogether, by using new technologies and things like trusted trader schemes, which could allow companies to pay duties in bulk every few months rather than every time their goods cross a border. One Irish wag has described the concept as nothing more than “crazy computers and sanctioned smugglers”.
Last Sunday, the UK Business Secretary, Greg Hands, told a TV interviewer that jobs would be at risk if the “customs partnership” was not agreed with the EU. He hinted that Toyota could decide to invest elsewhere in the absence of “frictionless trade” between the UK and the EU, putting some, 3,500 jobs in play. And where Toyota goes today a lot of corporate Japan will follow tomorrow.
This morning, the ultra-Brexit Daily Mail carries an interview with the Foreign Secretary, Boris Johnson, is which he describes the proposed customs partnership as “crazy”, saying it would create “a whole new web of bureaucracy”.
Johnson told the Mail:
“If you have a new customs partnership, you have a crazy system whereby you end up collecting tariffs on behalf of the EU at the UK frontier… If the EU decides to impose punitive tariffs on something the UK wants to bring in cheaply there’s nothing you can do… That’s not taking back control of your trade policy, it’s not taking back control of your laws, it’s not taking back control of your borders and it’s actually not taking back control of your money either, because tariffs would get paid centrally back to Brussels.”
If the scheme is crazy then the prime minister who is pushing it must be crazy but her office confirms that she has “full confidence” in Johnson. So much for collective cabinet responsibility. Welcome to the politics of Brexit: “All for one and one for one”. Reckless Opportunists as Aeron Davis describes them.
Given the stark “day and night” differences of opinion between cabinet ministers how are they going to reach agreement on the way forward? It is doubtful if they can without resignations. Both sides can’t win.
But even if they could find some fudge formula, there are three problems with the two options being discussed:
- The technology to make either option happen simply does not exist. It would seem that there may be various bits of technologies that could be strung together to make a system, but that could take five years minimum, beyond even the end of the proposed “transition” of the UK out of the EU at end 2020. Simply out, the UK has not done the work to allow it to exit the customs union. Border bedlam beckons unless the timescale is changed.
- It is unclear if the votes exist in the House of Commons to back either approach. While no one can be certain until it actually comes to a vote, what the majority of the House appears to want is for the UK to stay in the EU’s actual customs union, and, probably, also the single market.
- Even if the cabinet could agree, and then get the backing of the House of Commons, the EU has already told the UK government that neither approach is acceptable to it. As Tony Connolly of RTE reports “The partnership model would only have been considered by the EU if it meant Britain staying de facto in the customs union for years to come, and remaining aligned with the rules of the single market.”
So, it would appear that the UK cabinet is locked in a life or death political struggle over two plans neither of which have any chance of being accepted by the EU.
Those of us who have spent a lifetime in labour negotiations recognise the scenario. You tell the other party that certain options are not on the table. They ignore what you say and spent an inordinate amount of time discussing the impossible among themselves. Then they are completely shocked when they present their demands and you say no, we already told you we are not going down that road.
To make matters more difficult the EU has told the UK that it wants a clear commitment by the date of the June summit on the issue of a border in Ireland. All sides have said that they want to prevent the re-emergence of a hard border on the island between Ireland and Northern Ireland. The absence of such a border at the moment is made possible by the fact that, along with the common travel area, both parts of the island are members of the EU’s customs union and single market.
While May hopes that her proposed customs partnership would go a long way to solving the Ireland issue it would only do so if, as Connolly reports, the UK effectively stays in both the customs union and single market. The Brexiters know this, hence this vehement opposition to the idea.
Their “Angloism” (see last week’s briefing) puts the ability to negotiate trade deals at the heart of their vision of free-trading Global Britain after Brexit. Continued customs union and single market membership makes that all but impossible. If Brexit can’t make Britain great again, then what is it for?
One of the fallacies of life today is that there is a solution to every problem, if only we look long enough, or believe hard enough. There is always a “win-win, getting to yes” answer available. But that is simply not true, especially when deep issues of competing interests are involved. Sometimes there are only win-lose answers on offer.
There is a knock on my door and a stranger says that he would like to buy my house. I tell him my house is not for sale. He insists that he wants to buy it. How much do I want? I tell him that the house is not for sale at any price. He tells me that I am being unreasonable and that we should enter into negotiations about the sale of the house. I tell him that the answer is again no. There is no win-win solution available. One side or the other has to give. There is no middle way. There is no “getting to yes”.
That is where the UK cabinet is today.
One half wants a “customs partnership” with the EU. The other doesn’t. The party in parliament is split along the same lines, but probably with a majority in favour of a customs arrangement that looks very much like the existing EU customs union.
Take it all together and it is clear that Mrs. May is in something of a bind. The next European Council meeting is on June 28th and 29th. Before then she needs to tell the EU what she wants as regards the “framework” for the future EU/UK relationship. But as soon as she says clearly what it is she wants she risks splitting the Conservative party, not to mention the House of Commons.
In any event, whatever she wants has to be such as to meet the commitment to prevent the re-emergence of a physical border in Ireland.
If she doesn’t tell the EU how she wants to move forward then the EU will insist, as the price of any Withdrawal Agreement and transition arrangement, that the UK government signs on, as part of the Withdrawal Agreement, to the “backstop” on Northern Ireland. This would leave Northern Ireland largely within the EU custom union and single market, probable necessitating some form of border check on goods moving from the UK into Northern Ireland.
For the Northern Ireland Democratic Unionist Party (DUP), on whom May depends for her Parliamentary survival, that would be a border check too far and they would not support such a deal. Neither would the hard Brexiters.
None of this was preordained. It was Mrs. May who made the choice when she became an accidental prime minister that “Brexit means Brexit” and “meaning” Brexit meant cutting all institutional ties with the EU, out of the single market, the customs union and the jurisdiction of the European Court. Difficult to complain when you arrive at a roundabout and find all the exists are shut off by roadblocks you yourself put there.
Since we started writing this Briefing our mantra has been: “Hope for the best but prepare for the worst”. We are now inclined to rewrite that to say: “Prepare for the worst, because there is little hope for the best”. Never say never in politics but the chances of the UK burning all its bridges with the EU and leaving with no deal next March must now be hovering in the 70/30 range.
Why might it come to this, all bridges burnt? Because there is a large, albeit minority, faction in UK politics that believes in “Angloism” and wants it to come to this. Out, with no way back.
But by far the bigger reason is that the majority of those involved in political life in the UK have never understood the EU nor taken the time to do so. Even today, most can’t explain the difference between the customs union and the single market or why you can’t have a deal with the EU that lets you pick and choose the bits you like while rejecting the bits you don’t like.
They are trying to leave something they never understood, in ways they can’t explain, for a destination they don’t know. And on autopilot, because no one is flying the plane.
The EU is far from perfect. Very far. But, as the Liverpool FC manager Jürgen Klopp, himself a German, put it:
“The EU is not perfect, but it was the best idea we had. History has always shown that when we stay together we can sort out problems. When we split then we start fighting. There was not one time in history where division creates success. So, for me, Brexit still makes no sense.”
(As a Manchester United guy it breaks my heart to be kind to any Liverpool manager… but Klopp calls it right).
Maybe Joni Mitchell put it better:
Don’t it always seem to go
That you don’t know what you’ve got
Till it’s gone.
They paved paradise
And put up a parking lot