23 August 2018

The UK’s No Deal plans will strengthen its Brexit negotiating hand


This week the Government is finally beginning to release over 80 technical documents, setting out contingency measures if negotiations with the EU based on the Chequers draft break down.

This is extraordinarily prudent. The consistent track record of the European Commission has been to grossly misjudge the public mood, and it is correspondingly highly likely that team Barnier will see the Chequers position as a starting point for demanding far greater concessions. These the May team will have to either concede (and provoke a political crisis), or reject and proceed on the basis of fall back plans.

The very existence of these documents, however, itself reinforces the UK’s negotiating hand. No one who actually wants the Chequers Deal can possibly complain at their release, or their likely content. Reporting in the Telegraph suggests that certain of the original drafts supplied by the Treasury were reviewed when the “tone” was seen to be far too “upbeat” about current talks and far too “negative” about No Deal baselines.

The underlying problem I would suggest is that the Treasury has been basing its analysis upon an entirely different No Deal scenario than much of the rest of Whitehall, where an Atlantic blockade is in force. It also hasn’t shaken off the tinge of Project Fear; an asbestos legacy from George Osborne’s occupancy.

The release of technical notices that are more neutral in their aspect, and more pragmatic in offering work-arounds, is a significant moment. From the leaked list of headings, the imbalance across the subject matter titles is itself revealing. Some headings cover major policy groups, while others are isolated issues. This detail acts as a reminder that problem areas from across EU competences are somewhat concentrated.

If we treat Brexit as an EU accession in reverse, the UK is actually quite close to closing four fifths of its 35 de-accession chapters. From an inverted perspective, this compares for example with the 11 chapters provisionally closed and 16 partially resolved for Iceland’s accession talks before Reykjavik withdrew its membership application.

The reality of contingency planning is that the options vary in form, and scale, and effectiveness. Moreover, default planners cannot escape a level of uncertainty, since in a number of cases achievable and uncontroversial work-arounds are deliverable yet formally dependent upon bilateral sign off rather than being automatic.

Thus any No Deal landscape that might be painted is subject to further mitigation from talks that will continue even if the Chequers Plan falls apart. Each of the dossiers has the capacity to be individually and collectively affected in this way. There’s the baseline.

Some will refer to existing intergovernmental backstops at Council of Europe, WTO, or global institutional level. Some will refer to international treaties where the EU is one party, and the UK will accede in its own right. Some will be bilateral arrangements where the UK will seek to become a third party and the other parties have already signalled their assent.

But then, looking beyond what is likely to be in these technical papers, there are the possibilities of localised bridging deals. Some will test the willingness of the Commission to generate something that while new, cannot be accused of ‘free riding’ on the Single Market by avoiding its costs and burdens.

Some will be sui generis and we can predict seeing the Commission being demanding negotiators at best. Some arrangements might be permitted in areas of concern for specific EU states if they are only transitional – a “reverse derogation”. Some will aspire to deeper agreements than currently exist. The more ambitious the attempt, the greater the risk of non-delivery.

A number, meanwhile, will evoke horizontal principles, whereby if a localised agreement can be reached in one area it has consequential effect on another. For example, consent reached on simply continuing to recognise Alternative Dispute Resolution mechanisms in the energy sector, which should be uncontroversial, has direct carry-across application in the telecoms sector and in financial services.

Or taking this further, recognising each others’ veterinarians as still qualified to certify whether a particular herd is officially PRRS-free also unlocks the broad principle that other state-certified professionals can continue to be recognised, such as driving examiners, or Civil Aviation Authority evaluators. It helps that international agreements already underwrite much here.

But the objective in many cases will be simply to pre-emptively remove any slight hint of ambiguity for when a document lands in front of EU27 suburban officialdom or DG Paperclips. Very many of these clarifying memorandums of understanding, if they are even considered legally necessary, will be very low hurdles indeed.

All of which goes to say that following a Chequers proposal collapse, there will then be a lot of lego pieces still left on the table, in which these technical papers only play a part. So they are a valuable addition — to transitional planning, to the negotiators’ armoury, and to designing the ground floor of a more developed default for when the Chequers deal hits a wall.

But we should not take them as a complete and definitive picture of what happens next. Yanis Varoufakis, in his troubling volume Adults in the Room, recalled his own discussions with colleagues in Athens about coming up with proposals and plans. At one point, he is in discussion about leaving it to the ECB to provide a solution;

“You keep making the mistake of thinking of a solution as something they give us,” I replied. “That’s not the right way to think about it. They need a solution as much as we do. It’s not something they hand out. We must extract it from them. But this requires that we have a credible threat.”

A similar principle holds true of Brexit. While prepping for No Deal should not be seen as a threat, it is a pragmatic backstop for when the Commission forgets it is involved in a two-way process. It now helps that there exists such a fallback.

It will also help focus minds on real issues that do need to be worked around rather than phantoms. As Dominic Raab said at his press conference with Barnier on Tuesday, “Some of those hair-raising scare stories are very far from the truth,” continuing, “We are leaving on 31 March of next year, we will be prepared for all eventualities.”

Mr Raab also pointed out in that press conference what were the components that would generate an encompassing agreement. These were ambition, pragmatism, and compromise. These are not a given with the Commission. It pays to be well prepared.

Dr Lee Rotherham is Director of think tank The Red Cell, Executive Director of Veterans for Britain and Chairman of the appeal to establish a Museum of Sovereignty.