If you thought December was Brexit's rocky peak of political torture, bear in mind that we only survived the grassy foothills. We took six months to resolve literally three issues; we now have ten months to address closer to three hundred. Here is what we can look forward to in 2018.
First—and this may seem obvious—the government is going to have to decide what it wants, both for the supposed two-year transition and the final deal. Although little should surprise us anymore, you may raise an eyebrow over the fact that 18 months after the EU referendum, and nine months into the Article 50 negotiating process, neither of these positions has been remotely finalised. While the government is negotiating with itself, it cannot negotiate with anyone else.
The good news is that the government appears to be slowly forging a consensus. The bad news is that ministers' demands are legally, politically and practically impossible.
The key to the transition period will be to start calling it a transition, not an implementation period. There will be nothing to implement. Astonishingly, Theresa May and David Davis still insist that we will be able to negotiate a full, bespoke trade deal by October next year, which will then be applied over two years. The EU's deal with Canada—which is less comprehensive than the agreement demanded by the UK government—took around five years, and did not also involve untangling 45 years of economic and political integration. David Davis, however, thinks that a deal he compared in complexity to the moon landings can be completed in ten months. The EU has categorically ruled out the possibility of negotiating such a deal before we leave, but the prime minister will not be deterred. The fact that such an overtly absurd position is costing us almost every inch of trust, credibility and leverage we still have does not seem to trouble her in the slightest.
“The key to the transition period will be to start calling it a transition, not an implementation period”If we assume that the government eventually backs down on the nature of transition, and the impossibility of negotiating a full deal by October, we will come to the content. Currently certain members of the government (it seems tiresome to mention Boris Johnson by name) are insisting that any new areas of EU legislation introduced during this period will not apply to the UK. The EU insists that they will. We know how this dispute ends, so let us move on.
The transition talks must be effectively concluded by March, for the sake of business certainty and so the Council can trigger trade negotiations at its next summit. The transition is therefore a phenomenal waste of time to negotiate because it eats up months we do not have, when we should be focusing on the far more important final deal. Part of the reason it will take so long is that a standstill transition can never really be a standstill transition. The UK will be, in legal terms, a third country, and that has consequences. The EU's chief negotiator Michel Barnier highlighted some of those on 20th December, asserting, for example, that the EU's 750 international agreements—from the blockbuster trade deals to obscure fishing accords—will automatically exclude the UK after March 2019. On top of the ten months to negotiate our deal with the EU, we have fifteen months to negotiate hundreds of deals with the rest of the world.
Numerous issues closer to home must also be negotiated. Key to this will be the bodies and instruments outside the key economic planks of the single market and customs union. As EU members we belong to dozens of decentralised agencies, from the Community Plant Variety Office to the European Medicines Agency (which is of course now leaving its London base).
Our status in these agencies is currently unclear. Even if we maintain transitional membership roughly similar to now, we will be excluded from management decisions—which could necessitate individual negotiations about the exact extent of our involvement. In some of these agencies, such as Europol, highly sensitive discussions will have to take place about our direct access to data. Other instruments, such as the European Arrest Warrant, do not currently include any non-EU members. Norway, for instance, ratified its participation in 2006, but the necessary ratification by all EU member states has still not taken place, and so Norway remains excluded. It perhaps does not help that countries such as Germany do not generally permit the extradition of their citizens outside the EU.
Assuming this can all be resolved by the spring, the fun then really starts—because we start talking about trade. The Cabinet has now resolved to negotiate a “more ambitious deal” than Canada's (the so-called “Canada plus plus plus”). The EU, on the other hand, has (repeatedly) informed the UK that the options are a Canada model or Norway model, and Barnier emphasised the point in his interview with this magazine. Certainly, both the models can be adapted, but a substantial improvement on Canada's access, while stopping short of Norway's freedom of movement, will be seen, correctly, as the kind of British cherry-picking which has already proved so alienating and counter-productive. If the EU improves the Canadian format, it will also be compelled, under the terms of the Canada deal, to extend the same improvements to Ottawa—unless the UK remains in the single market.
“The question is whether Theresa May will be prepared to put the country's future ahead of her own pride”After we have resolved this issue, we then reach the most intractable problem: how, without the aid of magic or science fiction, we might reconcile the government's signature policy of leaving the customs union and single market with the terms of December's UK/EU joint report, which guaranteed an open Irish border and “full regulatory alignment” on matters pertaining to the Good Friday Agreement and island-of-Ireland economy. On 8th December, I argued in this magazine that the joint report all but mandated a soft Brexit, and terminated any prospect of meaningful third-country trade deals. Numerous EU and member-state officials privately agree. If there is a genius in London or Brussels who has any answer besides changing the name of the UK/EU single market and customs union, now would be a good time to make themselves known to the negotiators.
The truth, of course, is that we must extend Article 50. We will not be ready to leave in October even if we execute a status-quo transition. The question is whether Theresa May will be prepared to put the country's economic and political future ahead of her own pride. If not, she may find more truth than she realises in her recent observation to MPs that those who voted Leave “worried we were so bogged down in the tortuous negotiations it was never going to happen.”
The only surprising element of last week's European Council summit was the news that Angela Merkel had initiated a round of applause for Theresa May. The prime minister survived 2017, and wasn't Boris Johnson, and that was good enough for her colleagues. But while other leaders fall victim to policy, circumstance or the electorate, May is in the process of succumbing to all three. The defining story of 2018 will be her battle not with the mountain of phase-two negotiations, but with basic truth and fact.
She deserves nothing less, but the British people deserve better.
Brexit Britain: the future of industry is a publication which examines the future of UK manufacturing through the prism of the recently released Industrial Strategy White Paper. The report features contributions from the likes of Greg Clark MP, Miriam Gonzalez, Richard Graham MP and Frances O’Grady.
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