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Wake Up and Smell the ‘Brexino’?

By Janice Morphet, University College London

How far have the events since the beginning of November, or perhaps since Theresa May’s failure to meet the European Council deadline for the completion of phase one of the Brexit negotiations in October, moved the probable outcome into a new space? Brexino or ‘Brexit in name only’ may now be a likely result of the Brexit treaty.

This position has appeared more visible after May’s defeat in parliament on amendment seven of the Brexit Bill on 13th December 2017 – that is to require the UK Parliament to have a meaningful vote on the proposed EU-UK arrangements, prior to it being signed off by the EU and implemented by the UK. However, this is just the latest in a long line of discernible shifts over recent weeks that have signalled a potential Brexino.

There has been a change in mood in the UK that has been apparent as the groups requesting special treatment have increased. These are now comprised of towns and cities like Grimsby, and counties, regions and nations, like Cornwall and Wales, each asking for their specific circumstances to be maintained, even where the people of that place voted for Brexit. Added to this group, there are the specific sectoral lobbies asking the Prime Minister to make special or continuing regulatory and supply chain relationships for them post-Brexit. These important groups include the automotive industry, pharma and financial services. Thirdly, we have specific sectors seeking special agreements for their labour force such as the hospitality industry (including, ironically, Wetherspoons whose owner is an ardent Brexiteer), and also the construction and agriculture industries. The latter sector is already exhibiting a visible Brexit impact, as produce has gone to waste in the fields due to the fact that there are  fewer and fewer EU workers to pick it. Meanwhile, business leaders are strongly arguing that the confusion and delay surrounding the delivery of Brexit is reducing investment and potentially the UK’s long-term economic stability. Taken together, these interest groups have contributed to an increasing chorus of despondency.

Other events are also narrowing the UK Government’s options in negotiations. The potential for a closer trading relationships with the US has run into a range of political and practical problems which have become increasingly apparent. While the relationship between the US and UK will survive the current turbulence caused by President Donald Trump, his recent comments about the Prime Minster following her rebuke of his Britain First tweets have reduced the public acceptability of the US as a trade partner. There are also deeper uncertainties that surround the US’s relationship with the WTO and the likely request to open up much more of the UK public sector to US competition.

Potential trade relationships with the Commonwealth have also been explored. Here Australia and Canada have shown their preferences for arrangements with the larger EU market first. New Zealand has been concerned about the way the UK and EU are proposing to divide existing trade quotas which appear not to offer any net additionality to the total already agreed. When it comes to the World Trade Organisation (WTO), any new arrangements that the UK wishes to negotiate with the EU and other countries will need to be approved by all 163 other members while the head of the WTO has indicated that such a process will likely take many years. What is also interesting is that this message is being given to readers of ardently pro-Brexit newspapers[1] who have also more recently reported the Rand Corporation study that all Brexit routes will have disadvantages for the UK[2]. Further, it is already clear that if the EU offers the UK a better trading deal than exists for other third countries, these countries will object to it.

All of these issues were apparent before the realities of the existing agreements for the island of Ireland emerged as a major obstacle to hard Brexit ambitions for the UK government in November 2017. While it has long been clear to all those aware of the implications of Brexit for the Good Friday Agreement (GFA), for Whitehall it was an ‘out of sight, out of mind’ issue, of far lesser importance than agreement on the so-called ‘divorce payment’ and the continuing rights of EU and UK citizens. The agreement that the UK has made, guaranteeing no ‘hard border’ on the island of Ireland, cannot easily be copper-fastened without single market and customs union agreements that ensure there is continuing regulatory alignment between Northern Ireland and the Republic of Ireland.

The scale of the implications of such an agreement on future trading frameworks on the island of Ireland have subsequently become apparent to Brexiteers, as they always threatened to. The immediate attempt to row back on the agreement made on 7th December, came from pro-Brexit UK Cabinet Ministers the next day. This culminated in the Secretary of State for Leaving the EU, David Davis MP, stating that the agreement made between the UK and EU is not legally binding. There followed a swift and strong response from Michel Barnier, Leo Varadkar and others. These statements angered the EU (and Irish leaders) and reduced their trust in the UK to the point where they are requiring a treaty before stage two talks on transition can commence after the European Council meeting in late March 2018. The EU, through all its negotiating leads for Council, Parliament and Commission are clear that the only way to prevent a hard border will be a continuation of the same or proxy arrangements for the single market and customs union as spelled out in their background reports for the European Council.

The UK has so far agreed with almost all the Brexit terms set out by the EU and where there are UK changes these have not been significant to either side. Prime Minster May’s red lines have already become a faded pink and may further fade to neutral in the coming months. So, if faced with Brexino, as many are suggesting in the UK, why have an inferior deal to that enjoyed at the present?

8 January 2018

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