Storm Before the Calm?

Much ink is being spilt over the outcome of the UK general election; we expect this to continue for some time yet, at least until (or if) some semblance of order is restored. In this post we focus on some possible consequences for Brexit. Order restored-3

The Economist has been a fervent opponent of Brexit since last year’s referendum was announced and the term was invented. Although the newspaper’s bias is evident in much of its reporting, the arguments are sufficiently substantial to merit a response from committed Leavers. The Economist (TE) is a suitable place to check how Remainers view the prospects for Britain’s future out of the EU.

One article in this week’s edition, titled “Why May will have to compromise on Brexit”, offers some questionable advice and some alternative facts.

The first paragraph gives what we can regard as an oxymoron: “…the EU’s timetable is oblivious to elections. Mrs May’s letter invoking Article 50 was sent 11 weeks ago, and a negotiating mandate has been given by the other 27 countries to Michel Barnier at the European Commission.” Oxymoron-1

In fact the European Commission has issued a Directive (capital D) to M. Barnier, approved by the European Council, the European Parliament and by all 27 remaining member states. To describe this as a “negotiating mandate” is, at best, to be oblivious to its title of ‘Directive’. It is indeed a mandate – a detailed specification of the process and expectations for the outcomes of the ‘negotiations’, from which M. Barnier and his team cannot deviate without formal approval from each of the groups just mentioned. This is not a framework for a negotiation but a Directive of what is to be achieved and how (see our Divorce Guidelines, Mercury Rising and the EU’s Directives themselves).

The term ‘negotiation’ does not fit here. We are surprised that so few commentators have picked up this contradiction. Whatever ‘guidelines’ are given to the UK negotiating team, if they are as hard and fast as the EU’s, with as little room for manoeuvre, then there can be no negotiation, merely statement and counter-statement from two opposed parties (we are assuming that the British team will not be guided to agree with the Directives as they are). Negotiation-2

The negotiations have opened as we write and it is already clear that the British side have accepted the directive to hold the talks in sequence not in parallel. If the UK’s negotiating position is to accept the EU line on each of the three main areas under discussion in the ‘divorce proceedings’ then an agreement may well be reached, though it will not be agreeable to many on this side of the Channel. Otherwise, any proposal will bump up against a directive and, if it doesn’t conform, will be rejected as there doesn’t seem to be any room for compromise. Indeed M. Barnier said as much in his speech after the first day of talks. David Davis remains “optimistic”.

TE points out that the electorate did not give the Prime Minister a mandate for a “hard Brexit”. The Labour party proposed to retain all the benefits of the single market, a majority of MPs in both Conservative and Labour parties were Remainers and Scottish Tories under Ruth Davidson want an “open Brexit” (parties other than the DUP can be neglected for this discussion, though before the election the SNP said they wanted a second referendum on Scottish independence because a majority of voting Scots wanted to remain in the EU).

Customs union-1

“Some Remainers want Mrs May to switch to the softer option of staying in the single market and customs union … it would be wise to keep open both the single-market and customs-union options.”

This is often stated as a desirable outcome but is obviously not compatible with Brexit because the single market and the customs union are for EU members only (plus EEA access to the single market); they are features of the Union and cannot be opted into or out of independently. These are not options for a departing Britain. Opt-outSurely TE is aware of this, in which case it is puzzling that they should seem to promote it, at least without reference to the EEA option, although Mrs May appears to have closed that off.

The election result has made it impossible for a minority Conservative government to impose a singular view (if it had one) on the country. Internal negotiations, in Parliament, will be difficult and messy as few MPs (including some Tory MPs) will be motivated to help the government.

TE concludes from all this that a transition arrangement will be necessary to avoid the UK falling off a cliff-edge, the simplistic term preferred by journalists if no deal is agreed. Cliff edge-3

“…the only plausible transition on offer will be to keep the status quo, which implies continuing free movement of people, budget payments and the ECJ.”

This is a strange interpretation of ‘transition’, which should mean an arrangement by which the UK leaves the EU over time; “keep the status quo” surely means remaining in the EU, which is of course TE’s preferred outcome. This statement may result from careless editing but it shows the bias clearly, and a willingness to mislead its readers and risk its reputation as a reliable newspaper.

And then TE repeats the earlier error: “But it might equally be a softer Brexit into a relationship more like Norway’s or Switzerland’s, which could mean retention of either or both the single market and customs union.”

This too may be an accident but it is more likely to be a deliberate obfuscation, as neither Norway nor Switzerland are members of either the single market or the customs union, though both have relations with the EU’s single market through their membership of EFTA. This is not mentioned by TE in the article but membership of EFTA is a possible option for the UK (assuming its present members are willing to accept the UK as a member). EFTAAny form of relation with the single market would involve considerable negotiation which, by the Directives, cannot start until “sufficient progress” has been made in the divorce ‘negotiations’. A successful application for EFTA membership would be the simplest way to retain some form of relationship with the EU’s single market as it would not involve direct negotiations with the EU itself (this assumes that the EU would not terminate EFTA if the UK becomes a member). 

TE ends with another oddity: “In a year’s time, there could just be a better chance of compromises that suit all sides.”

Discontent-3

The EU has made it clear through its Directives that it is not open to compromise so TE must be referring to compromises, internal and external, to be made by the British. This is Remain-tinged wishful thinking. If it comes about then ‘capitulation’ may be a more appropriate term than ‘compromise’.

TE’s use of “chaos” is probably over-stating their case; ‘severe uncertainty’ may in due course be replaced by ‘moderate uncertainty’ as talks proceed (we nearly said ‘progress’ but that may not happen). But ‘certainty’ is not on the horizon, despite ill-considered pleas that it should be.

 

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