8 December 2017

Finally a Brexit divorce agreement. But now what?


So, we have an agreement to move the Brexit talks on to include Phase II discussions about the UK’s future relationships with the EU, including trade talks. Everyone’s referring to a Phase I “deal”, but one of the key aspects of the “deal” at this stage is that it isn’t a “deal” yet.

As the text states (twice): “Under the caveat that nothing is agreed until everything is agreed, the joint commitments set out in this joint report shall be reflected in the Withdrawal Agreement in full detail. This does not prejudge any adaptations that might be appropriate in case transitional arrangements were to be agreed in the second phase of the negotiations, and is without prejudice to discussions on the framework of the future relationship.”

So what May’s team has secured is an agreement to move on to Phase II talks without anything from Phase I being set in stone. In particular, there’s no agreement that any of the financial settlement provisions imply the UK owing thing that it will pay even if there is no deal. And that’s a good job, because the Chief Secretary to the Treasury and the Prime Minister have both told the House of Commons that there would not be an agreement to pay anything unless it was part of a satisfactory overall agreement that meets the objectives set out in Theresa May’s Florence Speech.

If that hadn’t been true, and instead the UK had agreed to pay up unconditionally (as multiple papers reported a week or so ago), May’s position would have been untenable. The latest speculation puts the size of the financial settlement at around €40bn to €45bn. That is the amount that many of us have been proposing for months. As the UK government has attempted to signal, it is an amount that be acceptable as part of a good final agreement that includes a trade deal. There’s nothing there to upset Brexiteers. In essence the EU has accepted the offer the UK was making from the start: a conditional €40bn.

On EU citizens’ rights, the UK’s initially wanted EU citizens to have the same rights as British citizens, but nothing more than that. If May had played things properly from the start, unilaterally guaranteeing EU citizens living in the UK a right to reside and work in the UK post-Brexit, she may have achieved this. Instead, the UK will grant EU citizens extra rights, in line with the rights they had as EU citizens while the UK was a member. It’s undoubtedly a compromise and it would have been better if EU citizens simply had the same rights as British citizens, but it’s hardly a deal breaker.

There were suggestions that the ECJ should, indefinitely, be the ultimate arbiter of the rights of those EU citizens. Instead, it has been agreed that UK courts will have due regard to relevant decisions of the ECJ – i.e. those that help interpret what the rights of EU citizens were when the UK was a member. Since the ECJ is currently the ultimate arbiter of what EU citizens’ rights are, it makes sense that the UK courts should in future pay due regard to the ECJ in working out what EU citizens’ rights were at the time we were members.

For eight years, British courts will also have the option of asking the ECJ to help interpret what EU citizens’ rights were prior to our departure. All of that makes perfect sense and is something Brexiteers should have wanted, rather than something they might regard as a compromise, let alone object to fundamentally.

On the Irish border question, there is agreement that there will be nothing done that creates any “new regulatory barriers” between Northern Ireland and the rest of the UK except insofar as the Northern Ireland regional assembly itself chooses to establish distinct rules (which is of course in line with the UK’s domestic principles of devolution). The UK guarantees that there will not be a hard border between the Republic of Ireland and Northern Ireland.

The text continues as follows: “The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all island economy and the protection of the 1998 Agreement.”

The only part of this that seems potentially problematic is that it does not say “the United Kingdom and European Union will maintain full alignment of”. It shouldn’t be the UK alone that is charged with upholding the Good Friday Agreement; Ireland has an equal duty to do so.

There has been a great deal of fuss made about the word “alignment”. But “alignment” of various sorts was what the UK itself proposed in its Northern Ireland and Ireland position paper. It said that one of the options for avoiding a hard border was “a new customs partnership with the EU, aligning our approach to the customs border in a way that removes the need for a UK-EU customs border”.

Elsewhere the UK has proposed such a solution in regards to measures to protect humans, animals and plants from diseases, pests or contaminants: “One option for achieving our objectives could be regulatory equivalence on agrifood measures, where the UK and the EU agree to achieve the same outcome and high standards, with scope for flexibility in relation to the method for achieving this. An agreement on regulatory equivalence for agri-food, including regulatory cooperation and dispute resolution mechanisms, would allow the UK and the EU to manage the process of ensuring ongoing equivalence in regulatory outcomes following the UK’s withdrawal from the EU.” On the all-island Single Electricity Market (SEM), the UK stated “The SEM is in the process of being reformed to ensure full alignment with EU trading arrangements.”

Thus, various forms of alignment were part of the UK’s proposal for addressing the Irish border issue. Alignment here does not have to mean the UK accepting the Single Market’s rules and regulations wholesale — and of course that would be unacceptable unless we decide (as seems unlikely) to remain in the EEA. The wording is vague, largely in line with pre-existing UK proposals, and contains little for Brexiteers to object to.

Theresa May and her team have largely secured British objectives. We’re moving on to trade talks with no agreement that the UK will accept ECJ jurisdiction long-term, no agreement that Northern Ireland will remain in the Single Market even if the rest of the UK leaves, and no agreement that the UK owes tens of billions of euros that it will pay even if there is eventually no deal.

The final issue here is what happens to May. She deserves credit for this agreement, and there is a case for staying on until March 2019 and see out Brexit. But I think we now have a small window of opportunity to try something better. Some Conservative backbenchers – and apparently a few frontbenchers too – still advocate that the UK remain in the EEA and Customs Union. The Labour Party – insofar as it has a coherent Brexit policy – agrees. And so, it would be better for the Conservative Party to have it out internally. Candidates should run for leader making clear whether they would support EEA membership, or both the EEA and customs union, or for leaving those and having an FTA instead, or – who knows? – walking away without a deal.

The Conservative Party should argue it out amongst itself, get its members to choose what path it takes, and then rally round whatever line is chosen. If it’s to be EEA and customs union, or no deal at all, instead of an FTA, let those advocating that argue for it now and win. Then the rest of us will know where we stand. The Conservative Party needs to be one party on Brexit, backing its leader. We have a Phase I “deal”. It’s time to decide what we want to do next.

Andrew Lilico is an economist and political writer