October 03, 2016
Hard, harder, hardest
Now we know the British government's plan for Brexit. Theresa May said as much as could conceivably be said, considering that the negotiations with the EU have yet to start. But she set out Britain's position with great clarity. The most important point is not the March 2017 deadline for triggering the article 50 procedure. It was always clear that this would have to happen either in Q1 or Q4. It is the goals and the procedures. The goal is full sovereignty from all EU institutions and laws, including the European Court of Justice. The priority will be immigration control. In relation to the single market, she is not talking about membership, but about trade. Her goal is
"to give British companies the maximum freedom to trade with and operate in the single market and let European businesses do the same here".
There you have it. This is telling us that Britain will clearly be leaving the customs union, and seek a bilateral trade agreement with the EU. There will clearly be a time gap between the date of Brexit - presumably July 1, 2019 - and the entry into force of a EU/UK trade deal, so nothing she said rules out a longish transitional period. But we doubt that this agreement could be longer than five years for political reasons. If Brexit is not fully consummated in the following parliament, the procedure may lack credibility. We would not be surprised to hear that one of the sticking points of the Art 50 negotiations will be the precise legal basis of the future trade agreement. The EU can, if it chooses to, ratify trade agreements without member state ratification, as long as the trade agreement is sufficiently narrow.
The legal method by which May will extricate the country from the EU is the repeal of the 1972 European Communities Act - which she called the Great Repeal Bill. Parliament will not get a vote on Article 50 itself - unless a court overturns this - but it will naturally have a say on the repeal bill.
We would categorise her plans as a hard Brexit - hard in the sense that it will leave the UK fully sovereign outside the EU, with a bilateral trade and investment agreement only. The Guardian talks about an advantageous relationship with the single market without joining it. This is a big call, the paper writes, and details matter. We think it will be a privileged version of a bilateral trade agreement: tariff-free trade for merchandise, and bits and pieces agreed for some industries - those that can claim regulatory equivalence. Beware, though, that two fully sovereign entities may not be able to maintain regulatory equivalence indefinitely. Democracy will get in the way.
We broadly agree with the comment by Sebastian Payne in the FT who said May made the right decision. Her government needed time to get to the point where they are now. Nobody can accuse her government of not having a plan (a criticism that seemed always unfair to us, given the complexities of the issue). Nor can anyone doubt now that Brexit will actually happen. But while the goal is now set out clearly, the process is going to be very messy.
The Guardian ended its editorial on a sad note, to which we have a riposte below:
"... it is a very dispiriting spectacle to anyone who wants the terms of Britain’s departure from the EU to contain some recognition that 48% of the electorate rejected the proposition altogether. The tone, as well as the content, of Sunday’s speeches from David Davis and Mr Johnson did little to calm the nerves of those who want the prime minister to navigate a wise course between the most extreme appetite for separation and a realistic acknowledgment that economic and diplomatic intimacy with our nearest neighbours and allies remains fundamental to the national interest."
We agree that this is bad news for the 48% who voted Remain. The referendum was a binary, winner-takes all decision. But one reason is the insane "Bregret" strategy by some former Remain advocates, who are seeking to undo the process either through parliamentary procedures, through technical obstacles, or through a second referendum. That has only reinforced the Brexiteers in their determination to lock the door and throw away the key. The Remainers should have immediately accepted the result, and provided intellectual leadership in the subsequent debate, instead of continuing the referendum campaign.