July 21, 2016
May goes to Berlin
Theresa May and Angela Merkel met in Berlin yesterday - a meeting that went as well as it could given the circumstances. May is officially keeping all her options open for now - including an option of British membership of the single market - i.e. an EEA deal - though this would clearly conflict with the goal to bring down annual immigration to below 100,000. Merkel assured her that Germany would not want a sudden break - which is reassuring in the sense that it would make a non-EEA option viable. A trade deal cannot be negotiated and ratified in two years, and would require an interim period during which the UK would enjoy single market access as today, but with no controls over immigration during that period. It is our working assumption that the UK would formally leave the EU in early 2019, move into a time-limited EEA arrangement, and then leave the EEA with a negotiated FTA.
May's timetable is acceptable to Merkel - and by extension to the EU in general - though any delays beyond the beginning of next year would be difficult. In any case, that would be difficult for May as well, as she has an incentive to conclude the Brexit negotiations well before the general elections scheduled in 2020. We noticed that commentators are giddy with excitement about the fact that Owen Smith, the only remaining challenger to Jeremy Corbyn as leader of the Labour Party, is promising a second referendum. With the electoral timetable as it is, a second referendum would have to relate to an Art 49 process of Britain re-entering the EU. But this would have to include membership of Schengen, the euro, and no British budget rebate. We doubt that this is what Smith has mind.
One of the many decisions to be taken between now and the end of the year is whether Art 50 can be triggered by Royal Prerogative, or whether it requires a vote in the House of Commons. There is an ongoing legal procedure on this question, which should be completed by November.
Another important legal question is whether Scotland can veto the Art 50 process. The answer is: No. Formally, under the rules of devolution, Westminster has the final authority over any foreign policy related issues. The only constitutional avenue Scotland would have at its disposal would be an argument that a policy decision impacts the political balance between Westminister and Scotland. Such an argument, too, could be overridden by a reference to exceptional circumstances, so in the end, the threat of a effective Scottish veto is remote. The Scottish first minister, Nicola Sturgeon, also recognised this recently.
Scotland's position is weakened further because it cannot count on a majority for independence in a hypothetical referendum. We noted a comment from Malcolm Rifkind who gave three hard arguments against independence: the collapse in the oil price has made independence economically less viable; Scotland would have to adopt the euro if it were to join the EU as a separate country; and the Scottish/English border would become a customs post.
The Brexit debate, meanwhile, continues to decline from a very low level. A comment from Bloomberg's editorial board shows the degree of confusion about EU law and EU politics:
"The EU's leaders insist that free movement of workers is indivisible from the other freedoms it provides. All they really mean is that, up to now, they have decreed it to be indivisible. Nothing is stopping them from lifting that decree, and letting Britain remain in the single market for trading purposes while granting it a measure of control over movement of people."
Freedom of movement is not a decree. It cannot be revoked by decree. It cannot be limited by appeal to exceptional circumstances. The freedom of movement of workers is a fundamental right deeply enshrined in EU treaties since the beginning of time. It can be changed only through a treaty change that would require a unanimous vote, and referendums in several EU members. This is only going to happen in the parallel universe of British political commentators. Comments like these remind us that Brexit happened for a reason.