After 18 months of negotiations, the UK government and the remaining 27 EU member states have finally reached a deal on Brexit. The draft Withdrawal Agreement (WA) was published on November 14. After all the debate, argument, counter-argument and occasional fury, a settled basis for the exit of the United Kingdom from the European Union should in theory be welcomed. Individuals, businesses, and government agencies need certainty in order to plan, invest and get on with their lives and operations.
Unfortunately, the WA does not provide that certainty. It instead prolongs the uncertainty by kicking the can down the road and failing to resolve any of the internal British disputes on its future relationship with the European Union. In essence, the WA simultaneously reduces British negotiating power in any future trade negotiations with the EU and shifts the cliff’s edge moment at which Britain leaves the single market to the end of the transition period, all while leaving Parliament and the public entirely unclear as to what Britain’s final relationship with the EU will look like. This has appropriately been dubbed the “Blind Brexit,” and it’s a deal that Parliament will almost surely reject, despite all the government’s heavy lobbying.
Many of the Brexiteers who oppose the WA have not helped their own case in opposing the deal. They have ploughed into the WA’s 500 pages of legal text and come up with a range of claims and reasons for agitation, which range from the bizarre (tax immunity for British ex-EU officials) to the misguided (concern over the continuing jurisdiction of the European Court of Justice), while comprehensively missing the point.
The key point is that the WA sets no course for the future EU-UK trade relationship and puts London in a much weaker position to negotiate those trade issues once it comes into force. Aside from dealing with citizen’s rights (of EU nationals in the United Kingdom, and UK nationals in the European Union), existing financial obligations, and Northern Ireland, the WA provides for a transition period. The transition period continues the application of EU law and keeps Britain in the single market and the customs union after March 29, 2019, until December 31, 2020 (extendable once to December 2022). However, during the transition period the United Kingdom will no longer have any representation in EU institutions, in the EU Council with other member states, or in the European Parliament. Essentially, London will be bound by EU rules but not have any representation in their making.
The reason for seeking a transition period is clear enough: the British economy is so deeply tied into Europe’s that the economic damage inflicted by a sudden exit would be immense. Supply chains would be disrupted, Britain’s huge services export machine would be unable to properly function, and many of the smaller single-market-focused businesses would go to the wall. However, all the WA does to deal with these dangers is to move that market access cliff edge to (at most) the end of 2022.
But there is no way a trade agreement with the European Union can be negotiated by December 31, 2022. The Canada-EU Free Trade Agreement, for instance, took seven years to negotiate. Whatever Theresa May and her counterparts in Brussels are saying now, the practical reality is that the transition period will have to be extended.
Alternatively, the two sides will have to enter a temporary Free Trade Agreement as close as possible to the transition agreement, while the final free trade agreement is being negotiated. Meanwhile the United Kingdom will be subject to EU rules but with no influence over them for most of a decade. That is not the end of the difficulties London will face. The very reason for the transition period, the fact that the British economy is deeply integrated into the European economy, remains. In effect the WA is putting off the British debate on its future relationship with the European Union until after Britain has left, when it will be in a much weaker negotiating position vis-à-vis Brussels.
If the United Kingdom cannot resolve the debate on its relationship with the European Union now, the danger is that it will enter into Brexit limbo and remain stuck in some form of transition indefinitely. It is worth remembering that when Norway entered the European Economic Area (EEA) agreement in 1993, it was supposed to be a temporary arrangement. Twenty-five years later, Olso is still subject to EU rules for which it has no substantive input (though the EEA does at least give Norway some institutional oversight rights over the legislative process, unlike the WA). Although the WA only provides for one extension period of the transition agreement, Brussels has significant incentives, not least disruption of the rest of the single market, to provide further extensions, which a desperate British government will be eager to sign up for.
No. 10 is lobbying MPs of all parties on the grounds that the deal provides certainty. It does not. Its main achievement is to kick the can down the road. The underlying failure of the WA reflects the failure of the British government, because of internal political divisions, to set a course for any future relationship with the EU which would provide that certainty.
Luckily for the United Kingdom, the British government is already facing grave difficulties in mustering a majority in the House of Commons to push the WA through. It has managed to range the entire opposition against the deal, including its erstwhile allies in the Democratic Unionist Party. In addition, both the pro-Remain and the ultra-Brexiteer wings of the parliamentary Conservative Party are opposed to the agreement. In such circumstances, despite furious lobbying by the whips and the government machine, it is very doubtful that the WA can pass.
If the agreement is rejected by the Commons, what then will happen? Parliament, it is clear, will not countenance a “no deal” scenario that would see the country crash out of the European Union. One of two scenarios is likely: Either the government goes back to EU negotiators and seeks a permanent EEA (single market) plus customs union solution, or it seeks to hold a new referendum. The WA can be seen as a waymark to a referendum, in that its contents illustrate the inability of Britain’s political class to arrive at a consensus on Brexit. In such circumstances, the only real solution is to hand the matter back to the people.