Trade Knowledge Exchange > Commentary > Brexit – Where now?

Brexit – Where now?

Where the United Kingdom stands now

UK politics are in turmoil following the Government’s last-minute decision on 10 December to postpone the House of Commons “meaningful vote” – which had been scheduled for the following day – on the draft UK/EU Withdrawal Agreement and its accompanying Political Declaration on future bilateral relations.  Ministers had been advised that the Agreement would be heavily defeated in the Commons.  Prime Minister Theresa May subsequently announced that following strenuous attempts by ministers to drum up support for the draft documents, and to cajole further concessions out of the EU side, a Commons vote will now be held before January 21 2019. This is the date by which in law the Government must report to Parliament if no agreement with the EU has been struck.  It has been suggested that the vote could be held in the second week of January.

Because of the heavy opposition to the draft deal in her own party, Mrs. May was immediately subjected to a vote of confidence, which according to party rules must be held if requested by 15% of Conservative MPs.  Her leadership was endorsed on December 12 by 200 of the 317 Members eligible to vote, and according to Conservative Party rules this endorsement puts her beyond challenge for 12 months. But the 117 who opposed her were numerous enough to leave her position, and with it her Brexit strategy, subject to continued questioning and skirmishing. She has now promised to stand down as Prime Minister before the next General Election, due in 2022.

How did we get here?

It is worth examining just how the UK got to this point, and what the prospects for future UK/EU negotiations may now be:-

  • On November 14 2018 the UK Cabinet agreed, following what was described as an “impassioned” debate, to the draft EU Withdrawal Agreement and the Political Declaration.
  • That opened the way for the EU 27 heads of government, in a special and in the event rather perfunctory European Council meeting on Sunday November 25, formally to endorse both documents.
  • The likely content of the Withdrawal Agreement had leaked over the preceding weeks and months, provoking furious reactions among UK politicians on both sides of the divide. Brexit supporters reject the compromises which it embodies because the proposed transitional period, currently scheduled to end on December 31 2020, would keep the UK far closer to the EU and for longer than they are willing to accept and particularly if there is no solution to the Irish border problem within that time and the so-called “backstop” arrangement has to be invoked.  The backstop would maintain an open border in Ireland by keeping Northern Ireland, or even the UK as a whole, temporarily within the EU customs union pending a definitive solution.  The EU insists that the backstop must be open-ended because that is the nature of insurance arrangements; the UK insists that it must be time-limited so as to avoid locking the UK for an indefinite period into the EU customs union.
  • “Patriotic pro-Europeans”, meaning Remain supporters, also loathe the draft Agreement because although it would keep trade moving, it requires the UK to implement EU rules and regulations without having any say on their content, thus underlining what they see as the self-destructive pointlessness of Brexit.
  • The dispute was further sharpened in the last days of November by the simultaneous but independent publication by the Treasury and the Bank of England of estimates of the impact on the UK economy of different Brexit scenarios. It was carefully stressed that these were not formal forecasts, but snapshots of what might happen in different circumstances ranging from a “no deal” Brexit to the UK’s remaining within the EU.  Both the Bank and the Treasury concurred that the “no deal” scenario would be disastrous for the economy over both the immediate and the longer term.  Both also concurred that no Brexit scenario currently envisaged would be economically better for the UK than remaining a member state.  These publications were immediately denounced by Brexit supporters (but without any supporting data or analysis) as fraudulent and a revival of “Project Fear”.  Anti-Brexit commentators highlighted what they see as the absurdity of the UK Government’s engaging in protracted and complex negotiations in order to make the country worse off.
  • On December 10 the Court of Justice of the EU (CJEU) published its judgment that the UK can rescind the notice of withdrawal given under Article 50 of the Treaty on European Union and remain a member state of the Union on existing terms, and with no need for special negotiation with the other 27 members.
  • The House of Commons has also voted, in the event of parliamentary rejection of the draft proposals, to take back control of future UK/EU negotiations so as to avoid No Deal, to which there is overwhelming opposition across the House, but without clear indication of how this would be done.
  • On December 13 the European Council turned down the UK Government’s request for further concessions on the draft Agreement, and several prominent EU leaders insisted that the UK now set out a clear statement of what it wants.

Parliamentary prospects

Meanwhile the flow of (mostly junior) ministerial resignations from the Government over the withdrawal terms continues, and opposition to the draft Agreement and Political Declaration is building up. Whenever the so-called “meaningful vote” in the House of Commons takes place Labour Party members, with a few exceptions, will vote against the deal in the hope of provoking the collapse of the Government and a General Election. The Northern Ireland DUP, on whom the Government’s wafer-thin operating majority depends, will vote against because the proposed regime for the Irish border involves some elements of differential regulatory treatment as between Northern Ireland and the Republic, and in their eyes infringes the unity of the United Kingdom.  The Scottish Nationalists will vote against because having voted Remain in 2016, many Scots object to being robbed of their European identity, and anyway have their eyes on the longer-term goal of Scottish independence.  At least 100 Conservative MPs – approaching one-third of the Parliamentary party – are known to oppose the drafts, on a variety of grounds ranging from practical and procedural concerns to straightforward anti-Europeanism.  That is ultimately why Mrs. May accepted that there was no majority at present for her deal

There is also said to be no Commons majority for a No Deal Brexit because of the damage which it is now generally accepted that such an outcome would do both to the UK economy and to the EU.  But if, for the sake of argument, the Commons did vote specifically to prevent the Government from withdrawing without a deal there is no indication of what the practical consequence could be.  The only way of implementing such a vote would be to force the Government back to the negotiating table in Brussels; but that would require EU agreement and willingness to renegotiate.  European Council President Tusk, Commission President Juncker and various national leaders have stated in clear and strong terms that the draft Withdrawal Agreement is the most that an institution which rests on the balanced treaty and legal obligations of 27 sovereign governments can agree to.  The Union cannot offer business-style split-the-difference deals.  In practice, of course, it might be possible for the UK to secure a few tweaks here and there on specially sensitive points, but probably no more.

On December 5 the UK House of Lords also initiated a debate on the Withdrawal Agreement and Declaration, on motions which in particular opposed any possibility of a No Deal Brexit. The outcome of this debate was not in doubt, as the Lords are overwhelmingly against Brexit. However it is accepted that this debate was advisory, not binding on the Government, and that decisions must be left to the elected House of Commons.

It is still quite possible that after the Commons vote, whenever it now takes place, the Brexit issue and with it the Government will be cast into limbo. With no agreement on any positive settlement, an explicit or at least implied rejection of the concept of No Deal but no assurance that the EU27 will be prepared to negotiate further to avoid it, no firm ideas on any side as to where to turn next, – but, as UK law currently stands, with a firm Brexit date of 29 March 2019.

People’s vote?

The current range of possibilities for the UK is from, at one extreme, staying in the EU, to a Brexit deal secured through possible negotiated changes to the Withdrawal Agreement (unlikely), to No Deal (economically ruinous and therefore unacceptable to many).  Against this background a second Brexit referendum or “People’s Vote” looks increasingly like the only way out.  But although in principle desirable and democratic, this could not be organised and held in time before 29 March, especially since the meaningful vote has now been postponed by as much as a possible six weeks.  Special enabling legislation would be needed setting the terms for a further referendum, to repeal the date of March 29, and to permit agreement with the EU side to extend the two-year negotiating period provided for in Article 50.  However all the signs are that the EU27 would readily agree to such an extension.

But the option of a further referendum would also involve much uncertainty.  UK opinion polls have in the past two years shifted only modestly from a Leave majority towards remaining in the EU.  Crucially, there is no agreement as to what, if a People’s Vote were to be held, the question or questions might be. The choice, which in any case would need to be scrutinised for fairness by the independent Electoral Commission, would depend on the impact of a parliamentary defeat for the Government’s drafts and whether ministers then saw any future in persisting with what has been negotiated with the EU up to now.  For example, would the choice lie between (i) The current draft Withdrawal Agreement vs. No Deal?  Or (ii) the current draft vs. Remain? Or (iii) the current draft vs. some renegotiated version (though at present any serious renegotiation looks most unlikely)? Or (iv) No Deal vs. Remain? Or (v) a threefold choice between the current or an amended draft, No Deal, and Remain?  In the case of option (v) it would presumably also be necessary, in order to secure a fair and decisive result, to employ some form of transferable vote, taking second preferences into account. It would take time, and much vigorous argument, to work out the procedures for that and to legislate for it.

A People’s Vote could once again come down in favour of Leave, but while we must assume that that would settle the matter of principle in UK domestic politics, the issue of settling withdrawal terms with the EU27 would be back on the table and the EU might very well be unwilling to re-run all or part of what has already been a gruelling and time-consuming negotiation.  Especially as both it and its member states have a number of other  urgent issues to tackle. That would throw the arguments back to what has been agreed up to now. And if the current draft Agreement remained as disputed in UK politics as it is now, the prospect of stalemate and a No Deal outcome could once again become more likely.

Equally, there is no indication that a decisive majority vote in favour of Remain could be secured in the absence of determined and visible Government action to tackle the real issues of localised social deprivation and of resentment against immigration which were so important in the Leave vote in 2016.  The result could be stalemate both in UK domestic politics and in UK/EU relations for years ahead, with all the adverse economic effects which that would imply.

Negotiations on the long-term

For the moment, and for the sake of argument, let us assume that Theresa May’s draft Withdrawal Agreement and Declaration are eventually approved by the House of Commons and Brexit duly happens on March 29 or some later date that might be agreed. The disputes and tensions traced above will still form the background to the vitally important negotiation on the long-term bilateral relationship with the EU27.

Political Declaration

The Political Declaration is specified as politically binding, though not legally binding pending the negotiation of comprehensive treaty provisions by the end of the transitional period (whether in December 2020 or by some agreed later date). It has been roundly criticised on grounds such as that it is imprecise and sets out vague ambitions focused on trying to reproduce as much as possible of the advantages of EU membership.  Turning these ambitions into practical decisions will be arduous, and goodwill is heavily in deficit.

Inevitably, the fact that substantive negotiations on the future relationship cannot now make any significant progress until the UK has actually left the Union must place the UK in an even weaker negotiating position than hitherto.  It is essential that both sides should honour the objectives of principle which the Declaration sets out for deep and close collaboration and minimum disruptions to economic cooperation and trade.  However it is inevitable that along the way complications will arise.  Special interests in both the UK and EU member states will exert pressure on negotiators for special treatment.  Taking two current examples at random, the issue of fisheries rights and mutual access to UK and EU waters will be a major bone of contention.  In aggregate economic terms the contribution of fisheries to UK and EU GDP is a small fraction of 1%, but it is of major social and political importance in fishing localities.  At the other end of the scale the UK’s reluctant acceptance that it will be excluded from participating in further development of the Galileo satellite positioning system does not augur well for the sort of detailed and technological cooperation which the Declaration claims to offer.

Practicalities

The Declaration proposes practical arrangements for joint management and supervision of the partnership in a number of areas.  It proposes early assessment by the EU of UK data protection standards with a view to early determination of whether the UK standards are acceptable for a bilateral agreement.  Subject to respect for the observance in the EU of the Four Freedoms (free movement of goods, services, capital and people) and for the integrity of the Single market, it proposes negotiation of a bilateral FTA with deep regulatory and customs cooperation, no tariffs or quota restrictions on goods, and comprehensive and balanced arrangements on services trade and transport.  There would be an early assessment by the EU of UK data protection standards with a view to early negotiation of a bilateral data agreement.  These are clear objectives, and it is manifestly in the interests of both sides to sort such things out early.  Many other issues of wider import which are also specified in the Declaration, including cooperation in international fora over a wide range of topics from trade sanctions to international development and environmental protection, may be harder to operationalise.

Preparation and outlook

The Declaration suggests that preparatory work on negotiations for the new relationship should be initiated before Brexit day (currently set for March 29 next).  At the time of drafting the Declaration that was a useful proposal, because given a constructive approach on both sides, preparatory discussions could be carried out informally, in a relaxed and non-committal manner and covering a wider range of issues.  After Brexit the UK will on present form have reverted to Third Country status with the Union.  Negotiations must then take place under the formal prescriptions of Article 218 of the Treaty on the Functioning of the European Union (TFEU), and inevitably will focus, much less flexibly, on specific mandates adopted by both sides.  However the possible delay of up to a further six weeks before the “meaningful vote” can be held has now thrown all these calculations into confusion.  All the well-known problems and disagreements remain and will bedevil the holding and potentially the outcome of any eventual meaningful vote. Seen in this light, Mrs. May’s decision to defer the parliamentary vote may not only have achieved nothing in the short term; in the longer term it has quite likely made matters far worse.


About the Author

Michael Johnson

Michael
Johnson

Michael Johnson was a senior official of the UK’s former Department of Trade and Industry, where he worked on international commodity policy, UK bilateral commercial relations with developed country markets, and the UK’s input to EU external trade policy. He is in demand as an independent consultant, and has advised governments of more than twenty developing or former Communist countries on trade policy formulation and on trade-related development projects.


Leave a Reply

Your e-mail address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.