Theresa May has set out her plans for Brexit – she wants a free trade agreement (FTA) with the EU but to leave the single market and the customs union. She will trigger Article 50 and commence talks on departure in a few weeks. Many of the details remain uncertain, however. In a new CER policy brief ‘Mrs May’s emerging deal on Brexit: Not just hard, but also difficult’, Charles Grant analyses the options still open to the UK as it forges a new relationship with the EU.
He explains why many EU leaders and top officials expect Brexit to end in tears. Some reckon that arguments over Britain’s budget contribution could lead to it crashing out of the EU without a legal separation agreement. Others worry that the ‘transitional arrangements’ – required to cover the many years between when Britain leaves and when the new FTA takes effect – will be too difficult to negotiate. The EU will insist on free movement and the jurisdiction of the European Court of Justice during the transition, which the UK may reject. The British would have nothing more than World Trade Organisation rules to rely on when leaving the EU, at considerable economic cost.
EU leaders observe the pressures on May from the hard-line eurosceptic politicians and the media and see little push back from those favouring a softer Brexit. They think this may prevent her from making the compromises required for agreements on the divorce settlement and future trading relations. Grant explains the fear of EU leaders that the British over-estimate the strength of their negotiating hand. Once Article 50 is triggered, the clock is ticking and the British have two years to strike a deal before they must leave.
Yet in London, many politicians believe that the UK has strong cards to play, such as its contribution to European security, the arrival of Donald Trump, the strength of the City of London, the UK’s trade deficit with the EU and the threat – made explicit in Theresa May’s Lancaster House speech – to transform the UK into a low-tax, deregulated economy akin to Singapore. Grant examines these cards one by one, concluding that few of them give the UK a great deal of clout in the negotiations.
Finally, Grant offers advice to the May government on how it can best achieve a satisfactory deal. Given the weakness of its hand, it needs goodwill on the part if the 27. And that requires ministers to be serious and courteous, and to avoid grandstanding. They need to test-drive EU policies on a wide circle of experts and advisers. And they must be very careful how they handle Donald Trump.
As Grant writes:
“The more that British ministers cosy up to Trump, and avoid criticising his worst excesses, the more alien the British appear to other Europeans, and the more the UK’s soft power erodes.”
Charles Grant is the director of the Centre for European Reform, the full paper can be found at http://www.cer.org.uk/sites/default/files/pb_grant_May_20feb17.pdf
