Theresa May on Thursday night hammered out a British strategy for future ties with the EU — but was warned by a fellow European leader over the way ahead even before a Brexit Cabinet meeting had begun.
Meeting the British prime minister in Downing Street on Wednesday, 24 hours before the Chequers summit, Mark Rutte, Mrs May’s Dutch opposite number, urged her to ditch the idea of a “three baskets” trade deal.
This idea, floated by Mrs May in the past, seeks to divide a post-Brexit order into three areas; one where the UK maintains the same regulation as the EU; another where it uses rules of its own for the same outcomes; and a third where the UK takes a fundamentally different approach.
“It would be better to say nothing at all,” Mr Rutte said, according to officials familiar with Wednesday’s meeting.
His blunt assessment captures the fundamental dilemma facing Mrs May as she seeks to unify her government around a common line: avoiding flare-ups at home may only store up trouble in Brussels.
For Mr Rutte and other EU27 leaders, the onus is on Mrs May to set out a credible plan that is “clear” and free from hybrid constructions that mask an unwillingness to make choices.
“One has to accept the costs [of different models],” said one senior EU diplomat. “There is a tendency in the UK for politicians to mention lots of different specifics they would like. What we want is coherence, realism. I’m not saying it is easy.”
A senior French official said: “We don’t need lots of details. The issue is: can the UK government simply say they want a free-trade agreement?”
Some British ministers also favour a more conventional free-trade deal rather than a broader accord with Brussels.
On Wednesday the European Commission circulated a 58-page document to EU27 member states making it plain that whatever compromise were agreed at Chequers, it was unlikely to fly.
It includes a “staircase” chart that shows how, if Mrs May sticks to her negotiating red lines, the only option available is a traditional, unvarnished free-trade agreement along the lines of the EU deals with Canada and South Korea.
More worrying for British officials, it also suggests that even bending the UK’s position on respecting the rulings of European courts would not alone be enough to secure privileged single-market style access in areas such as aviation.
That requires the full EU’s full regulatory “ecosystem”: the institutions enforcing and supervising compliance and developing law. Meeting high regulatory standards is necessary but not sufficient.
The paper reinforces the strong view that Britain cannot cherry-pick single market membership in certain sectors. It says: “Preserving the integrity of the single market excludes sector-by-sector participation.”
Michel Barnier, the EU chief negotiator, has also pointed out that no trade deal in the world has a big section on the financial services sector.
For the Remain faction in Mrs May’s Brexit negotiation cabinet committee, led by Philip Hammond, the chancellor, an agreement based on the Canada trade agreement is not ambitious enough and he will continue fighting for a better deal.
Mr Hammond argues that Britain must have a much closer relationship, including some kind of customs union with the EU. “Hammond always says in cabinet it’s the only way we can start to address the Irish border question,” says one minister.
While many EU countries would be eager to maintain a customs union with Britain, Mrs May will find it difficult to keep the option open without enraging Brexiters.
Jacob Rees-Mogg, the leading Tory Brexiter, wrote in The Daily Telegraph on Thursday that Northern Ireland was “an imaginary problem” being presented by Remainers as to an “impassable obstacle to a genuine Brexit”.
However, Remainers believe that even if the Irish border question does not propel Mrs May towards a softer Brexit, she may be forced to do so by parliament, with pro-European Tories and Labour privately working together to keep Britain in a customs union.
“Parliament will have a much bigger voice in the final outcome than some people think,” said one pro-Remain minister.
By the time the ministerial cars headed down the Chequers driveway on Thursday night, Mrs May had cobbled together a delicate cabinet position on Brexit; whether it can survive contact with the reality of Westminster and Brussels politics is a much bigger question.
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