A reader was kind enough to ask for a Brexit update. I hadn’t provided one because truth be told, the UK press has gone quiet as the Government knuckled under in the last round of negotiations.
It is a mystery as to why the hard core Brexit faction and the true power brokers, the press barons, have gone quiet after having made such a spectacle of their incompetence and refusal to compromise. Do they not understand what is happening? Has someone done a whip count and realized they didn’t have the votes if they tried forcing a crisis, and that the result would probably be a Labour government, a fate they feared far more than a disorderly Brexit?
As we’ve pointed out repeatedly, the EU has the vastly stronger negotiating position. The UK could stomp and huff and keep demanding its super special cherry picked special cake all it wanted to. That was a fast track to a crash-out Brexit. But it seems out of character for the Glorious Brexit true believers to sober up suddenly.
The transition deal is the much-decried “vassal state“. As we and others pointed out, the only transition arrangement feasible was a standstill with respect to the UK’s legal arrangements with the EU, save at most some comparatively minor concessions on pet issues. The UK will remain subject to the authority of the ECJ. The UK will continue to pay into the EU budget. As we’d predicted, the transition period will go only until the end of 2020.
The UK couldn’t even get a break on the Common Fisheries Policy. From the Guardian:
For [fisherman Tony] Delahunty’s entire career, a lopsided system of quotas has granted up to 84% of the rights to fish some local species, such as English Channel cod, to the French, and left as little as 9% to British boats. Add on a new system that bans fishermen from throwing away unwanted catch and it becomes almost impossible to haul in a net of mixed fish without quickly exhausting more limited quotas of “choke” species such as cod….
Leaving the EU was meant to change all that….Instead, growing numbers of British fishermen feel they have been part of a bait-and-switch exercise – a shiny lure used to help reel in a gullible public. Despite only recently promising full fisheries independence as soon as Brexit day on 29 March 2019, the UK government this week capitulated to Brussels’ demand for it to remain part of the common fisheries system until at least 2021, when a transition phase is due to end. Industry lobbyists fear that further cave-ins are now inevitable in the long run as the EU insists on continued access to British waters as the price of a wider post-Brexit trade deal.
The one place where the UK did get a win of sorts was on citizen’s rights, where the transition deal did not make commitments, much to the consternation of both EU27 and UK nationals. Curiously, the draft approved by the EU27 last week dropped the section that had discussed citizens’ rights. From the Express:
Italy’s Minister of Foreign Affairs and International Cooperation, Angelino Alfano, demands EU citizens’ rights be protected after Brexit….
The comments from Italy’s foreign minister come after the draft Brexit agreement struck between Britain and the EU on Monday was missing “Article 32”, which in previous drafts regulated the free movement of British citizens living in Europe after Brexit.
The entire article was missing from the document, which goes straight from Article 31 to Article 33.
MEPs from the Conservatives, Liberal Democrats, Labour, Greens, SNP and Plaid Cymru have written to Brexit Secretary David Davis for clarification about the missing article, while citizens’ group British in Europe said the document failed to provide them with “legal certainty”.
A copy of the letter sent to Mr Davis seen by the Independent said: “As UK MEPs we are deeply worried about what will happen to British citizens living in EU27 member states once we leave the EU.
This issue has apparently been pushed back to the April round of talks. I have not focused on the possible points of contention here. However, bear in mind that EU citizens could sue if they deem the eventual deal to be too unfavorable. Recall that during the 2015 Greece-Troika negotiations, some parties were advocating that Greece leave the Eurozone. A counterargument was that Greek citizens would be able to sue the Greek government for their loss of EU rights.
The UK is backing into having to accept a sea border as the solution for Ireland. As many have pointed out, there’s no other remedy to the various commitments the UK has already made with respect to Ireland, as unpalatable as that solution is to the Unionists and hard core Brexiters. The UK has not put any solutions on the table as the EU keeps working on the “default” option, which was included in the Joint Agreement of December. The DUP sabre-rattled then but was not willing to blow up the negotiations then. It will be even harder for them to derail a deal now when the result would be a chaotic Brexit.
The UK is still trying to escape what appears to be the inevitable outcome. The press of the last 24 hours reports that the UK won’t swallow the “backstop” plan that the EU has been refining, even though it accepts the proposition that the agreement needs to have that feature. The UK is back to trying to revive one of its barmy ideas that managed to find its way into the Joint Agreement, that of a new super special customs arrangement.
Politico gives an outline below. This is a non-starter simply because the EU will never accept any arrangement where goods can get into the EU without there being full compliance with EU rules, and that includes having them subject to the jurisdiction of the ECJ and the various relevant Brussels supervisory bodies. Without even hearing further details, the UK’s barmy “alignment” notions means that the UK would somehow have a say in these legal and regulatory processes. This cheeky plan would give the UK better rights than any EU27 member. From Politico:
The key issues for debate, according to one senior U.K. official, is how the two sides can deliver “full alignment” and what the territorial scope of that commitment will be — the U.K. or Northern Ireland.
The starting point of the U.K.’s position will be that “full alignment” should apply to goods and a limited number of services sectors, one U.K. official said.
On the customs issue, the proposal that Northern Ireland is subsumed into the EU’s customs territory is a non-starter with London…
The alternative would be based on one of the two customs arrangements set out by the government in August last year and reaffirmed by May in her Mansion House speech. They are either a customs partnership — known as the “hybrid” model internally — or the “highly streamlined customs arrangement” known by officials as “max-fac” or maximum facilitation.
The hybrid model would mean the U.K. continuing to police its border as if it were the EU’s customs border, but then tracking imports to apply different tariffs depending on which market they end up in — U.K. or EU. Under this scenario, because Northern Ireland and the Republic of Ireland would share an external EU customs border, as they do now, it would remove the need for checks on the land border between the two.
The complexity and unprecedented nature of this solution has led to accusations from the Brussels side that it amounts to “magical thinking.”
The “max-fac” model is simpler conceptually but would represent a huge logistical effort for U.K. customs authorities. It would involve the use of technological and legal measures such as electronic pre-notification of goods crossing the border and a “trusted trader” status for exporters and importers, to make customs checks as efficient as possible.
While the U.K. will present both customs arrangements as possible ways of solving this aspect of the Irish border problem, one senior official said that the “hybrid” model was emerging as the preferred option in London.
The UK is already having trouble getting its customs IT upgrade done on time, which happens to be right before Brexit. As we wrote early on, even if the new programs are in place, they won’t be able to handle the increased transactions volume resulting from of being outside the EU, and I haven’t seen good figures as to what the impact would be of the UK becoming a third country but having its transition deal in place. In other words, even if the “mac-fac” scheme were acceptable to the EU (unlikely), the UK looks unable to pull off getting the needed infrastructure in place. Even for competent shops, large IT projects have a high failure rate. And customs isn’t looking like a high capability IT player right now.
So the play for the EU is to let the UK continue to flail about and deliver Ireland “solutions” that are dead on arrival because they violate clearly and consistently stated EU red lines. The UK will then in say September be faced with a Brexit deal that is done save Ireland, and it then have to choose between capitulating (it’s hard to come up with any way to improve the optics, but we do have a few months for creative ideas) or plunging into a chaotic Brexit.
The EU27 reaffirmed the EU’s red lines in the most unambiguous language possible. From their “Guidelines” published March 23:
6.The approach outlined below reflects the level of rights and obligations compatible with the positions stated by the UK…
7. In this context, the European Council reiterates in particular that any agreement with the United Kingdom will have to be based on a balance of rights and obligations, and ensure a level playing field. A non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member.
The European Council recalls that the four freedoms are indivisible and that there can be no “cherry picking” through participation in the Single Market based on a sector-by-sector approach, which would undermine the integrity and proper functioning of the Single Market.
The European Council further reiterates that the Union will preserve its autonomy as regards its decision-making, which excludes participation of the United Kingdom as a third-country in the Union Institutions and participation in the decision-making of the Union bodies, offices and agencies. The role of the Court of Justice of the European Union will also be fully respected.
8. As regards the core of the economic relationship, the European Council confirms its readiness to initiate work towards a balanced, ambitious and wide-ranging free trade agreement (FTA) insofar as there are sufficient guarantees for a level playing field. This agreement will be finalised and concluded once the UK is no longer a Member State.
The EU also reaffirmed the obvious, “Nothing is agreed until everything is agreed.”
The EU nevertheless has relented in its negotiating tactics. The EU’s initial approach was to put the most contentious issues up front: the exit tab, Ireland, freedom of movement. You will notice it has achieved closure only only one of those issues where the EU’s initial position had been that they had to be concluded before the two sides would discuss “the future relationship,” as in trade. This is the opposite of the approach that professional negotiators use, that of starting with the least contentious issues first to establish a working relationship between both sides and create a sense of momentum, and then tackling the difficult questions later. The EU has now allowed the UK to defer resolving the messy issue of Ireland twice, and it is not clear if any progress has been made on the citizens’ rights matter.
The UK is clearly past the point where it could undo Brexit. There was pretty much no way to back out of Brexit, given the ferocious support for it in the tabloids versus the widespread view that a second referendum that showed that opinion had changed was a political necessity for a reversal. Pundits and politicians were cautious about even voicing the idea.
As we’ve pointed out, coming up with the wording of the referendum question took six months. In the snap elections last year, the Lib Dems set forth the most compact timeline possible for a Brexit referendum redo which presupposed that the phrasing had been settled. That was eight months. And you’d have to have a Parliamentary approval process before and a vote afterwards (Parliament is sovereign; a referendum in and of itself is not sufficient to change course).
Spain has been making noises about Gibraltar but they aren’t likely to mean much. I could be proven wrong, but I don’t see Spain as able to block a Brexit deal. Article 50 says that only a “qualified majority” vote is required to approve a Brexit agreement. Spain as a lone holdout couldn’t keep a deal from being approved. And I don’t see who would join Spain over the issue of Gibraltar. In keeping, Spain joined with the rest of the EU27 in approving the latest set of texts.
The UK still faces high odds of significant dislocations as of Brexit date. All sorts of agreements to which the UK is a party via the EU cease to be operative once the UK become a “third country”. These other countries have every reason to take advantage of the UK’s week and administratively overextended position. Moreover, these countries can’t entertain even discussing interim trade arrangements (new trade deals take years) until they have at least a high concept idea of what the “future relationship” with the EU will look like. Even though it looks likely to be a Canada-type deal, no one wants to waste time negotiating until that is firmed up.
Like it or not, May is the ultimate survivor. Politico described the method in her seeming madness:
May has lasted in office longer than many pundits predicted she would because, weak as her grip on power may have been since she lost her parliamentary majority last year, she has timed her surrenders cleverly.
It looks chaotic and undignified, but the prime minister has hunkered down and let pro- and anti-Brexit factions in her party shout the odds in the media day and night, squabble publicly about acceptable terms for a deal, leak against each other and publish Sunday newspaper columns challenging her authority.
Then in the few days before a European summit deadline for the next phase of a deal, she has rammed the only position acceptable to Brussels through her Cabinet and effectively called the hard Brexiteers’ bluff.
But what kind of leader marches her country into at worst an abyss and at best a future of lower prosperity, less clout, and no meaningful increase in autonomy? Like it or not, the UK is a small open economy, and its leaders, drunk on Imperial nostalgia, still can’s stomach the idea that the UK did better by flexing its muscle within the EU that it can ever do solo.