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

#Brexit: “Sometimes it seems like they haven’t thought all this through”

This article was written on 17th Nov 2017

Hammond BoJoAnother week, another seven days that leaves us little wiser as to what happens next. With each passing day it becomes ever clearer that the UK government fundamentally misunderstands the position it has placed itself in as regards exiting the European Union.

This misunderstanding is such that, as of today, there would appear to be only two possibilities open to the UK.

The first is to leave the EU in March 2019 without an agreement as to its future relationship with the EU and, therefore, obliged to conduct trade with the EU within the framework of the World Trade Organisation (WTO) rules.

The second possibility is to accept a free trade agreement modelled on the agreement the EU has recently signed with Canada. That agreement basically covers trade in goods, resulting in a reduction in tariffs of some 98%, and mutual recognition in regulated professions such as architects, accountants and engineers, and easier transfers of company staff and other professionals between the EU and Canada.

However, it has little to say about services, such as financial and legal services. As such services constitute a significant portion of the UK’s trade with the EU the “Canadian model” is of limited value, certainly as compared to the access the UK enjoys today to European markets through membership of the internal (single) market and the customs union.

It is the UK government that has put itself in this position with its decision that Brexit had to mean not only leaving the EU’s political structures but also meant leaving the internal market, the customs union and common commercial policy and putting itself outside the jurisdiction of the Court of Justice of the European Union (CJEU). It didn’t have to be that way but the UK’s prime minister, Theresa May, decided that such an ultra-interpretation of the Brexit referendum vote was the best way to manage the internal politics of the Conservative Party.

As has become clear since, this choice may well have resulted from a complete ignorance of the way the European Union is constituted and how it actually works. Those UK cabinet members actually charged with managing the UK’s exit from the European Union have very little actual experience of dealing with the EU. David Davis, the UK’s chief Brexit negotiator, spent 20 years on the back benches in parliament before being appoint Brexit Secretary in June 2016.

Such was Davis’s lack of understanding of the EU when appointed that one of his first announcements was that he planned a trip to Berlin to negotiate a trade deal with Germany, seemingly unaware that individual EU member states cannot negotiate trade deals with non-EU member states. The EU does that on behalf of all its members.

But Davis’s lack of understanding on trade matters merely speaks to a greater lack of understanding on the part of practically all UK politicians as to the constitutional nature of the EU, not helped by the fact that very few of them speak any European languages. The EU is a rules-based, legal order with complex decision making processes. This is the only way a bloc of 28 member states can work. Politics cannot trump this legal order. Legislation, once enacted, cannot be disregarded for the sake of some short-term political expediency. The CJEU ensures that decisions and legislation conforms to the Union’s legal and constitutional order.

The UK’s concept of parliamentary sovereignty is very different. Whatever parliament decides, it decides. Adverse decisions of the courts can be quickly overturned. A UK government with a solid parliamentary majority can do pretty much anything it wants.

This leaves UK politicians believing that, in the end, politics will always trump legal considerations. This belief has informed their approach to the EU exit process. They see the process as a classic “give and take” negotiation. I compromise, therefore, you must reciprocate with a compromise.

Davis said as much in a BBC interview on Friday last. He told his interviewer that the UK has “been offering some creative compromises and not always got them back”, insisting that “nothing comes for nothing”. He suggested there needed to be more give-and-take from the other side. “I want them to compromise, surprise, surprise, nothing comes for nothing in this world,” he said. “But so far, in this negotiation, we have made a lot of compromises. On the citizens’ rights front, we have made all the running.”

The problem for Davis is that the EU does not see the UK exit process as a negotiation in the same way as he does. They see it as something to be managed, as damage limitation, as the protection of the legal order.

For example, the UK continues to see the EU’s insistence that it settles its financial obligations, obligations the UK signed up to as a member of the EU, as something to be bargained against a future trade arrangement. The EU sees it as paying what you already owe and will not allow the UK to “double bubble” that money, buying future benefits with money owed from past obligations.

Likewise, when it comes to future trade relations between the EU and the UK. By now, even if they have never said so explicitly, it is clear what the current UK government wants: a trade deal that gives the UK de facto membership of the internal market and the customs union but without the financial and legal obligations that come with membership.

As Davis put it in a speech in Berlin last Thursday night:

“We will be a third country partner like no other. Much closer than Canada, much bigger than Norway, and uniquely integrated on everything from energy networks to services. The key pillar of this will be a deep and comprehensive free trade agreement – the scope of which should beyond any the European Union has agreed before. One that allows for a close economic partnership while holding the UK’s rights and obligations in a new and different balance.

It should, amongst other things, cover goods, agriculture and services, including financial services. Seeking the greatest possible tariff-free trade, with the least friction possible. And it should be supported by continued close cooperation in highly-regulated areas such as transportation, energy and data.”

Where does this “deep and comprehensive free trade agreement” actually differ from membership of the internal market and the customs union? The answer lies in the words about holding the “UK’s rights and obligations in a new and different balance”, code for the UK wanting three of the four freedoms of movement – goods, capital and services – while closing down the free movement of people. Except if you are a banker, for whom Davis has promised to negotiate a special free movement deal (here). Too bad if you are a Polish plumber.

The UK does not just want to cherry pick the single market and the customs union, it is asking for the whole cherry orchard.

Even if the discussions between the UK and the EU get beyond the three Article 50 issues, then the UK is going to have to face the reality that best that will be on offer is a Canadian-style free trade agreement. The EU will not compromise the integrity of the single market and the custom unions for the benefit of a third country, the UK.

To paraphrase some words from Davis’s Berlin speech: the EU will not put EU prosperity at risk for the sake of UK politics. 2018 looks like being a long, slow, steep learning curve for the UK that short-term political choices made in the interest of party management can have long-term adverse economic consequences.

But the discussions may not get beyond the Article 50 issues. Ireland wants a written commitment that there will be no hard border on the island after Brexit. The UK has committed to this but doesn’t know how to deliver on it. As the Irish Taoiseach, Leo Varadkar said on Friday after a meeting with Theresa May: “Sometimes it seems like they haven’t thought all this through”.

Not just on Ireland, but on all things Brexit, that becomes more obvious by the day.

 

 

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”.

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Brexit, British Government, Brussels, Negotiating

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.

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Brexit, British Government, Brussels, Negotiating

We are no nearer to knowing the future of #Brexit

Written July 27th 2017.

downloadAnother week and we are no clearer as to what is going to happen. Last weekend the UK newspapers were filled with stories that the government had come to a consensus that a “transition” or “implementation” phase would be needed after March 2019, when the UK is scheduled to leave the European Union. The only disagreement between government ministers appears to be over the length of such a transition. Should it be two, three or four years?

But agreeing to a “transition” is a bit like agreeing to go on a “journey”. It says nothing about where you are starting from or where you are going to end up. After two rounds of negotiations between the EU and the UK we are no wiser as to how matters may unfold.

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Brexit, British Government, Brussels, Juncker

Election Disappointment for Conservatives Complicates Brexit

Date: June 2017

EXITPOLLNever have the words of former UK prime minister, Harold Wilson, sounded so true: a week is a long time in politics. Last Monday, the current (for now) UK prime minister, Theresa May, was confident of returning to parliament this week after last Thursday’s general election with an increased majority, allowing her to remake the government in her own image. She expected to face a crushed and broken Labour Party across the aisle. Instead, she is the one who is crushed and broken, losing her previously slim, but workable, majority in the House of Commons, leaving her dependent on the votes of the Democratic Unionist Party (DUP) from Northern Ireland. How long this political arrangement will last is anyone’s guess.

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