Article What Now: The UK Still Not Getting It

BY MATHIEU LOHR

Article 50 will be triggered in March, the initial domestic legal obstacles are overcome, and we are slowly becoming wiser about the challenges facing the  upcoming negotiations. This begs the question whether any of the international and national constraints on a post-Brexit deal have changed: will the UK government get what it wants, and does it now get how it can get it? The short answer is no.

The EU, specifically the European Commission, negotiates trade-agreements for its Member-States (MS) , but the EU is neither independent of its MS, nor is it the only institution that has substantial leverage in these talks due to the institutional framework of the EU. For example, the European Parliament (EP) has made it clear that unless they are involved in negotiations, they will veto any deal. UK MEPs aside, the EP has pushed successfully for UK citizens to have an ‘opt-in’ for EU citizenship at the end of negotiations. Clearly, not all of the EU is an evil bureaucracy seeking to swallow the UK whole.

However, this good-will doesn’t extend much further. The UK government has vexed EU partners repeatedly, and the resulting tit for tat has at best hardened the view that Brexit is more than just an economic breakup, but fundamentally a political one. Brexit ultimately is not simply about the UK and the EU’s future relationship, but about the EU’s future itself, and how it wants to constitute and assert itself in the region and in the world. The signal many want to send is that a MS cannot simply break away without facing economic and political consequences, ie: Britain must face repercussions.

This view has been mirrored by some reports asking businesses in Germany, for example, about their view on ‘punishing’ the UK for its break-away: so far, they are ready to shoulder a certain burden. Even so, Theresa May and hard-Brexiteers are pushing for a Brexit that will value nationalism over its economy, and threatening to simply become a European Singapore. This again has been counteracted by several EU countries and in general social-democratic leaders advocating to not allow for the UK to simply opt for a low tax regime at home under the eventual Brexit agreement.

Moreover, whilst the government may try to sell the image of having a strong-hand in the negotiations, this view is not shared on the other side of the pond. The EU is the UK’s single largest export market, at 44% of exports in goods and services but to the EU, the UK would only become the largest single export market at 16% of its exports. The UK’s strong-hand here is that there is a saying that the EU exports goods to the UK, and the UK in turn exports services to the rest of Europe. However, even so, we are talking about 27 countries, of which the largest, Germany, is only exporting 8% to the UK, overall.

With the UK relying for 80% of its GDP on services, it is both vulnerable and at a potential advantage in negotiations on this point. This rings especially true given the EU’s inability so far to create a unified service-sector, but is again opposed by statements by France and others to take away from the UK’s prevalence in the service and banking sector.

A further complication are the 30 national and regional parliaments that will have a final say on this, many through referendums. The amount of actors involved and their decision-making processes to cast their final vote create severe side-constraints for any ‘simple’ deal. Moreover, with German, French, and other elections looming this year, some may see a political need to be more forceful in their positions than they otherwise would be

Whilst this shouldn’t preclude that some seek to be sympathetic,  it shows that the most likely outcome of the 2 years that Article 50 gives to negotiations can at best result in a transitional-deal. Another variable putting immense time-pressure on any negotiations lies with the time needed for all 30+ entities involved in the process. Instead of 24 months, 14-15 are much more likely, further constricting what can be achieved in that short amount of time.

It is true that negotiations can be extended, but that procedure requires unanimity as well, meaning the UK could also simply ‘crash’ out of the block. Given that these are European-level negotiations, it can be expected that transitional-deals are struck, but either way the essential complication remains: the UK has more to lose from this than the EU. Given the national political sentiments the UK government is inflaming, one can only wonder how they will sell having to continue paying into the EU budget for several years whether there is a hard-brexit or not (due to previous multi-year long commitments), and the ever more apparent need to continue cooperating with different regulation-bodies.

Finally, something most British people seem to not know is that the EU’s single market is built on ‘4 Freedoms’: freedom of movement of goods, people, services and capital over borders. Some Brexiteers argue that especially freedom of movement for people is not absolute, yet that is what the treaties of the EU say, and the current EU MS will not allow to be conceded. Countries such as Norway pay into the EU budget, and have to accept any EU regulation that applies to their trade-relationship with the EU without having a say in crafting them. How the UK government will want to sell a non-hard Brexit that would have to include this kind of undermining of ‘sovereignty’ is hard to imagine. Given the depth of entanglement with EU-law, ‘ex’-EU law would de-facto continue applying to the UK, with UK democratic procedures and civil-service capacity limiting what EU regulation-bodies can be replaced.  Either way, the UK cannot expect similar concessions as it has seen in the past.

What all this comes down to is that little has changed, and the complexities of the negotiations ahead promise little hope for a non mutually disadvantaging deal. The UK government may play to its national audience, but its international message is often riddled with factually wrong statements, and the internal leaks from the civil service show the gap between expectations and reality will not be bridged. The eventual result will be a transitional deal that will eventually lead to some sort of trade-deal that will see the UK having to accept some EU regulation, but will also include some symbolic if ultimately mostly irrelevant concessions. Clearly, the UK (government) is still not getting it.

 

(Image by Tjeerd Royaards (Netherlands) View more of this artist’s work on Cartoon Movement)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s