Time has almost run out for Britain’s negotiations with itself over what sort of Brexit it will choose among those available. Readers may have noticed Free Lunch has stayed away from the subject for a while. The reason is my impression that nothing real has changed: most of what there is to hear is noise, and the rest is speculation.
For the same reasons as always, there are only three alternatives available at this point of deciding: leaving the EU with no agreement, leaving with the withdrawal agreement now on offer or something very close to it, and not leaving after all. Any orderly Brexit will involve a settlement on accumulated financial obligations, citizens’ rights and transition arrangements, as well as a “backstop” guarantee that Northern Ireland’s customs and regulatory arrangements will not diverge from those of the EU in a way that necessitates physical border infrastructure with the Republic of Ireland. That is to say, what has been agreed between the government of Prime Minister Theresa May and the EU, with the only possible substantial change being whether the backstop should keep all of the UK in a customs union with the EU (which the UK demanded and the EU grudgingly accepted) or just Northern Ireland (as the EU had originally proposed).
In particular, there will be no withdrawal agreement in which the UK can cancel the backstop at its own say-so. At most, last-minute talks will produce legally firmed-up reassurances that the EU does not want the backstop to apply permanently. The only alternative would be for the UK to change its policy for the future relationship, set out in the political declaration that accompanies the withdrawal agreement. If Britain aimed for a permanent customs union and close and dynamic alignment with EU internal market regulations (which the Labour party says it wants), this would not remove the need for a backstop guarantee but may prevent it from ever coming into effect. The prime minister, however, is ruling this out.
But what if the EU explicitly gave the UK the choice between two different political declarations? One can imagine two packages, the first being the withdrawal agreement and the political declaration as they are, perhaps including some extra assurances with legal force.
The second would still include the withdrawal agreement as is (including the backstop) but a rewritten political declaration that explicitly stated the parties’ intention for the UK to join a customs and regulatory union with the EU. In the latter case, the EU should be in a position to give a legal promise that such a union would satisfy the withdrawal agreement’s provisions for not applying the backstop. And, as a bonus, the commitment to negotiate such a customs and regulatory relationship would mean that under World Trade Organization rules, the UK and the EU could provisionally retain frictionless trade across the Irish border in advance of concluding the agreement. (This is the infamous WTO Article 24 that some Brexiters seem to think — wrongly — could ensure frictionless trade even in a no-deal Brexit.) That would mean the backstop would never need to come into effect; trade could continue to take place as it does today for as long as it takes to negotiate the new relationship in all its details.
Why would the EU offer this second option? From its point of view, both are acceptable, and both are preferable to no deal. So if offering two options increases the chances of either being accepted, it makes sense to do so. And the second option should command much greater support than the first from the Labour opposition — and, perhaps more importantly, from Northern Ireland’s Democratic Unionist party, which provides May with her parliamentary majority and has been a vocal opponent of the backstop. It should welcome a deal of the second type sketched out here, however, since it would explicitly keep Northern Ireland aligned with the rest of Great Britain.
But what’s in it for May? It could be a more secure route to getting her preferred deal. She could present the UK parliament with a vote on the original deal (perhaps with marginal tweaks) as planned for Tuesday, but also announce that if her deal is defeated she will present the second deal for parliament’s approval. She could then show graceful acceptance that her own deal is dead when defeated a second time (as it would be) while offering the country another (for her, worse) form of orderly Brexit because parliament declined her advice on the first. Since that second deal would be likely to gain DUP and opposition support — Labour could even spin it as a victory for them — her own Conservative party’s naysayers might find this a strong reason to vote the first deal through in the first place.
This idea of parliament choosing between two Brexit packages is, of course, pure speculation. But it is speculation that is hopefully better than sheer noise.
- The OECD publishes its Interim Economic Outlook on March 6 (with a streamed presentation). It is largely bad news. The institution has lowered its growth forecasts for the global economy this year and next, especially in the eurozone, which is forecast to grow at only 1 per cent this year, barely half what the OECD thought last November. The reason is, above all, a dismal international trade situation: the eurozone’s cross-border trade has stalled both between its own member states and with the rest of the world.
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