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June 30, 2017

Recurring Brexit myths

One of the reasons why EU membership did not work out for Britain was a chronic lack of knowledge of EU rules and procedures among British elites, pro- and anti-Europeans alike. The Labour Party’s latest rebellion, with 49 MPs supporting a motion for the UK to stay inside the market, is a case in point. Membership in the single market is not an option likely to be supported by the EU. The whole debate in the UK about soft Brexit vs. hard Brexit presupposes that there is the usual menu choice which the UK has been accustomed to within the EU. That is not the case as a third country. Theresa May’s Brexit mandate - exit from both customs union and single market - has been set, and the Article 50 negotiations are proceeding on the basis of this mandate. If the UK wanted to change this mandate, it would require the EU to produce a new set of negotiating guidelines. The European Council would not be keen on this. We have criticised Donald Tusk for banging on about Brexit reversal, on the grounds that it raises false hopes. But he is right that the only alternative to a Brexit on the basis of Theresa May’s mandate is no Brexit at all. 

In other words, yesterday’s amendment by the Labour rebels was pointless. All it did was to remind us of the deep splits in the Labour Party, which is as fractured on this issue as the Tories.

There may be a majority in the UK parliament for a soft Brexit, but for practical purposes this majority is irrelevant. There are only two big decisions the current UK parliament will take. The first is on the Article 50 deal. Here, the choice is simply between accepting and rejecting - where rejecting means leaving without a deal. So it is not really a choice. 

The second decision is more important: agreeing the nature and length of the transitional deal. The best result for the soft Brexiteers, and for the country at large, would be a long transition period, say three to five years, with a quasi-EEA status. But this would bring us invariably into the next parliament. It will be the next parliament that will have a say in the scope of the FTA/association agreement. The best strategy of the Remainers should thus be to support Philip Hammond in favour of a transitional deal that gets us past the next elections. It will be the next parliament, not this one, that will have the ability to shape the nature of the final settlements, or even to opt back into the EU on the basis of the Article 49 procedure.

The misjudgement about the actual Brexit process is compounded by misjudgement about UK politics itself. The UK is not used to minority governments since the 1980s. Just after the election, there was a near consensus among commentators that Theresa May would be out by now. Yesterday, the government won the vote on the Queen’s Speech by 323 to 309. This is not a large majority, and is very likely to shrink or even disappear during the five years of the UK parliament given the system of byelections. It is possible that the UK government will lose a working majority, but probably not before Brexit. In any case, the next elections will invariably be about the terms of the FTA.  

Our presumption therefore is that Theresa May will stay in power during the entire Brexit process, that there will be a transitional period, with no fundamental changes to the current arrangements, long enough to extend beyond the date of the next elections. And that the nature of the FTA and/or association agreements will depend on two factors: the progress we see in the agenda to reform the eurozone and the EU, and the next UK elections. 

We have noted before that the transitional agreement would defuse most of the disagreements on the financial settlement. And, as the next story shows, there is some tentative progress on the other big disagreement: the role of the ECJ.

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June 30, 2017

On EU citizen rights

Bloomberg reported yesterday that the EU is willing to drop one of its key demands in the debate about EU citizens rights - that the ECJ remain in place as the ultimate adjudicator. This would have been a deal-breaker. The EU is now at least prepared to contemplate an independent arbitration body with representation from both sides, as suggested also by David Davies. The EU, however, remains tough on the details of the rights of EU citizens in the UK, and rightly so. 

The Guardian and other newspaper obtained a leaked response from the European Commission to Theresa May’s offer to EU citizens. It says that this offer is not enough. As always, the issue with immigration law lies in the details, and the details are still very thin. Specifically, the Commission criticises the lack of legal certainty, lifelong protection against future change in UK law, or directly enforceable vested rights. The document also mentioned the lack of a role for the ECJ, but we are confident that the two sides will be able to find agreement. 

There are many issues that need to be negotiated and clarified. What happens if the five-year qualification period is interrupted? Will EU citizens enjoy the same preferential treatment at the UK border? The EU is not happy about the treatment of non-UK spouses, who would have to satisfy minimum income criteria. 

Christopher McCrudden has a good analysis of the pitfalls that still lie ahead. He notes the issues that arise: the rights that need to be agreed to, and the enforcement of those rights. He says enforcement is tricky, and it affects not only this issue, but other elements of the negotiation as well. In essence this is about how to enforce the agreed rights, while accepting full parliamentary sovereignty at the same time. The fundamental problem is that any agreement on EU citizens right will be under international law, not UK law. The parliament cannot bind future parliaments, which have the right to change UK law. 

“Whilst the British courts have proven themselves to be mostly reliable in applying EU law faithfully, this is only because Parliament has told them to be so. To put it crudely, but not inaccurately, any agreement with the EU is not worth the paper it is written on, if only domestic methods of legal protection are available to enforce it.”

His conclusion is that the safeguarding of EU citizens’ rights requires an effective degree of international or European judicial protection.

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June 30, 2017

On Brexodus

We noted a Bloomberg story about a Deloitte study documenting that nearly half of highly-skilled EU workers and over a quarter of all EU workers are thinking of leaving the UK in the next five years, which is interpreted as a result of Brexit. The figures reported by Bloomberg do not show any difference between EU and non-EU foreign less-skilled workers, but the difference among the highly skilled is significant. Nevertheless, nearly 40% of non-EU highly-skilled workers are also thinking of leaving the UK, and for them the conditions presumably won't change with Brexit.

Commenting on this story in the Guardian, Joris Luyendijk notes anecdotal evidence that "Brexodus" has begun, and with good reason too. It's not a matter of whether Theresa May's "fair and serious" offer on EU nationals last week is fair or serious - see our discussion above. Luyendijk admits that expecting EU nationals to keep their existing rights after Brexit, let alone under ECJ jurisdiction, would give EU nationals more rights in the UK than UK nationals. If you're an EU national already in the UK, you already have an idea of the difficulties in dealing with all kinds of public and private bureaucracies. So, the rational conclusion is that for EU nationals without firm roots, Brexit makes the UK the wrong choice of country to build a life. In that context, there is clearly a first-mover advantage for those willing to contemplate Brexodus.

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