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June 14, 2018

A Labour rebellion, really?

The House of Commons last night rejected the House of Lords' amendment for the UK to enter the EEA. The real importance of the vote is what it says about prevailing opinion within the Labour Party. 75 Labour MPs supported the EEA, against the official position of abstention. Another 15 Labour MPs rebelled in the opposite direction and voted against. One front-bench shadow minister and five parliamentary aides resigned their positions so they could defy the official party line. 

So, what does this tell us? The Guardian reports that the parliamentary whips of the Labour Party were relieved that the rebellion was not larger. Some talked about 120 votes. New Statesman reported that one of the leading rebels, Chuka Umunna, was on the verge of creating his own party. We don't think this is going to happen or, if it does, that it will have much of an impact.

Our best guess right now is that the most probable outcome of the Brexit process is a customs union, which implies full respect for single market rules for the goods affected. This is not the EEA, but it would address the main fears of those who fear big industrial shocks. It would not make any sense for pro-Remain MPs to block such a compromise in the hope that they could force a slightly better outcome because a rejection of a withdrawal agreement would risk a hard Brexit. Hard Brexiteers face similar trade-offs. There is a small chance of a political process that might end up with a Brexit reversal. They are certainly afraid that it might. Is the ability to negotiate third-country trade deals in goods that important to them? At a time when it is becoming harder to make such deals anyway? We noted that Theresa May has survived because she has managed to minimise the mean square error of parliamentary views on Brexit. No other position has more support.

John McDonnell, the shadow chancellor, is approaching Brexit in a similar spirit as May. He is not usually noted for his moderation:  

"We are trying to construct at the moment a traditional British compromise and we are trying to drag as many with us as possible both in government and elsewhere around some key elements of that compromise."

British MPs tend to treat this debate as purely domestic. The complete lack of consideration for the EU is, after all, one of the reasons why the UK is leaving. The EU would probably accept a full-blown EEA deal - as would the other EEA members. The only other agreement consistent with the Irish border backstop would be a deep customs union with full single-market compliance by the UK in respect of the affected goods. EEA would require the acceptance of freedom of movement in the current state. Labour's amendment for an EEA-minus is unrealistic for that reason. The EU would also demand freedom of movement in a customs union agreement - though possibly with some safeguards.

We agree with Nick Timothy, May's former policy adviser, that the so-called meaningful-vote amendment constitutes a back-door way to stop Brexit. While we think this is the intention, we don't see that it has much of a chance to succeed. Just consider the situation in which the main part of the amendment would be triggered: if there is no deal by February, parliament would then instruct the government to act, possibly to revoke Brexit or call a referendum. Where would the majorities for this come from? Political opinion in the UK is fragmented in too many directions.

Timothy makes a pertinent legal point. Article 50 is very clear on the consequence of a non-ratification. He quotes Lord Pannick QC as saying that the trigger of Article 50 was like a bullet that has been fired. Nothing will get the bullet back into the gun. The meaningful vote adds a confusing dynamic to this, but Timothy argues that it is unconstitutional in the UK for the parliament to micro-manage the government, whose constitutional role is to negotiate international treaties. 

We would add that there is no legal basis for such a course of action in either UK or EU law. The only legal basis we have is Article 50, which says the UK would crash out of the EU without a deal. This is also the government's position. In other words, should it ever come to this, there might be a legal process that is likely to go all the way to the ECJ. 

Timothy also notes that this procedure, if adopted, would reduce the incentive of the EU to negotiate. We don't buy this particular argument because the EU does not play these kind of games. UK politics is unpredictable, and for the EU to rely on some hypothetical events to occur, and a hypothetical legal interpretation to prevail, would be too risky. The EU's position is relatively inflexible in any case.

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