After a year, we are still no clearer

  1. Courtesy Flickr
  1. Courtesy Flickr
Negotiations formally start today. The EU envisages around 22 four-week cycles to the negotiations in which each cycle addresses specific issues, with a week of preparation, a week of exchange of papers and explanation, a week of negotiation to find a deal and a week of reporting back to secure agreement with what the negotiators have agreed as potential compromises.
The 27 other EU countries want to settle first all the legal questions triggered by a country leaving the EU (rights of citizens affected, budgetary liabilities, borders) before moving onto the future relationship (on trade and many other matters) between the EU and the UK.  Britain wants these two sets of questions dealt with in parallel. The EU will get its way – Britain is the one walking out and is the supplicant in most aspects of the negotiations. But some clarity from the outset as to what Britain wants for its future relationship with the EU would be helpful.
Yet almost a year after referendum, and nearly three months after handing in the Article 50 notification, we still with no clarity as to what the badly divided UK government wants. There are essentially four main possibilties, and Britain needs to decide what it wants before meaningful negotiations start. They are:
  • to leave without a deal, with no legal issue solved and, in economic terms, immediately facing tariffs on trade with the EU under WTO rules and needing to seek rapid agreement with countries around the world to replace the ones we currently have through the EU.
  • hard Brexit, leaving the EU, including the single market and the customs union, but securing a free trade deal with the EU for most goods and some services and asking for time to negotiate new trade deals with third countries.
  • soft Brexit options (various permutations around staying in single market and/or customs union, possibly through the EEA), keeping the economic advantages of membership, but involving continued acceptance of single market rules.
  • to remain, as we can always change our mind.
Combined with these, are possible options of staying inside important technical agencies, such as the European Air Safety Agency, the Medicines Agency or the Chemicals Agency (all of which do joint testing, certification and – crucially for British industry – authorisations to place products on the market), staying in European research programmes, remaining in police and security cooperation, keeping our stake in the European Investment Bank, and much else. On none of these have we seen a single proposal from the UK government. It is not surprising that our EU partners are becoming exasperated!
Leaving without a deal is increasingly recognised as a legal and economic quagmire. Hard Brexit is widely seen (on the continent as well as in Britain) as tarnished by Theresa May’s failure to obtain the endorsement for it that she had asked for from the general election. Remain might yet come into play, but the debate at the moment in political circles is centring on the soft Brexit options.

And here the divisions within the Conservative party, between it and the DUP, and more widely in the House of Commons and the Lords come into play. Those close to industry – or simply with a greater awareness at what is at stake for Britain’s economy, for jobs, prosperity and public finances – want to at least stay in the customs union and often in the single market for the reasons I outlined last week.

But there is a risk that these divisions will be insurmountable. In which case the government may produce a fudge: a minimalist “divorce deal” that settles only the first set of questions mentioned above (citizens rights, borders, liabilities, and the date of departure) and provides for everything else to be settled in a future framework agreement to be negotiated over a three to five year period after Brexit, with the status quo remaining in place during that “transitional ” time as regards the single market, customs union, agencies, etc.

This would not be popular with the extreme europhobes in the Tory party who would hate the continued application of single market rules, with the ECJ still settling any disputes about what they say. But they would be in a weak position to actually block it.

Rather, the problem would be a wider one: parliament would be asked to buy a pig in a poke. It would be asked to vote on a Brexit deal that leaves all the key questions for the future. MPs and Lords would be voting with no knowledge of what the future arrangements will be nor their economic costs.  They would have to blindly accept or reject a Brexit deal that settles nothing.

If  David Davis, contrary to previous statements, accepts the two phased scheduling put forward by the EU, take it as a sign that that is what the government wants to do.

But even on this, we are still  not any clearer.

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