Two and a half years after the United Kingdom voted to leave the EU, the end of the Article 50 negotiations has been reached, pending ratification of the deal on both sides write Larissa Brunner and Fabian Zuleeg. On Sunday 25 November the EU27 leaders signed off the Withdrawal Agreement and the draft Political Declaration on the future EU-UK relationship. UK Prime Minister Theresa May now has to defend the deal at home, with a meaningful vote in the House of Commons scheduled for 11 December.
Regarding content, the Withdrawal Agreement offers few surprises. The most challenging sticking point was the Irish backstop. EU and UK negotiators resolved the issue by agreeing to effectively keep the entire United Kingdom – and not just Northern Ireland – in a customs union if no other solution to prevent a hard Irish border can be found by the end of the transition period. But, contrary to the wishes of many in the British debate, there will be no unilateral exit clause from the backstop for the UK. This compromise has angered Conservative Brexiteers, as well as the DUP, which, due to closer regulatory alignment, still sees a differentiation for Northern Ireland from the rest of the UK.
The Political Declaration – comprising a mere 26 pages compared to the withdrawal agreement’s 585 – is legally non-binding but highly symbolic for May. It intends to square the circle: keeping open the option of a close EU-UK relationship while recognising both sides’ red lines and core principles. It promises an “ambitious, broad, deep and flexible partnership” and goods trade “that is as close as possible” – but, notably, it does not use the term ‘frictionless’. Overall, the language is encouraging but does not commit either side to anything. It cannot conceal the hard choices that still need to be made.
The document also refers to an “independent trade policy” for the United Kingdom. This may reassureBrexiteers somewhat, as trade is the last remaining potential economic benefit from Brexit for the UK. However, any hopes of a ‘Brexit dividend’ thanks to more trade or better terms will soon be disappointed. Since the backstop effectively keeps the United Kingdom in the customs union, London could only agree trade deals that cover services – which few countries will be willing to do. In the end, the only realistic alternative to the backstop is likely to be a ‘Norway plus’ model involving single market and customs union membership – which requires that the United Kingdom has no independent trade policy and would mean the UK is still bound by EU rules, infuriating the Brexiteers further.
If Parliament votes against the deal on 11 December, as appears very possible, most likely Parliament will send May back to the EU Summit on 13/14 December to ask for further concessions. Such last minute requests will be refused flat out by the EU27, triggering political and economic chaos in the UK, which might be enough for some MPs to change their minds and support the deal in a second or third reading. If this is not the case and the House of Commons is unable to agree on an alternative, with neither a General Election nor a People’s Vote currently commanding a sufficient majority, the UK would move slowly but inexorably towards a catastrophic and chaotic no deal Brexit, by default, not design.
While Sunday was an important milestone in the Brexit negotiations, the process is thus far from over with real danger now looming in Westminster. But even if the deal is signed off, there are effectively no upsides for the UK. It is a loss of economic integration, and thus growth and jobs, as well as political power. The next phase in the negotiations will be even more difficult, given that this will be the worst trade deal in history with no benefits from increased trade but only costs from the disintegration of the existing common market.
The cliff edge looms again at the end of the transition period, creating intense pressure to find a deal, also to avoid the backstop. But time is too short to define a credible and workable long-term relationship. The extension of transition to potentially end 2022 is thus a game changer: while it is still not enough time to reach a deal, it will alter political calculations in the UK, with the end of transition only coming after the next General Election.
This an executive summary of a paper published by the European Policy Centre (EPC). The full paper can be found here – http://www.epc.eu/documents/uploads/pub_8857_brexit_compendium.pdf?doc_id=2070