January 16, 2019
And now think about this standoff from the perspective of the EU
The EU is clearly not prepared for this standoff, and initial reactions were all over the place. We agree with Jean-Claude Juncker’s assessment that the chance of a no-deal Brexit has increased. Donald Tusk seems to have concluded the opposite in a tweet: that the UK is headed for Brexit revocation. Heiko Maas, the German foreign minister, called for renegotiation. But, like so many Germans, he has not fully acquainted himself with the complex technical and political issues of Brexit. One Berlin correspondent quoted a German politician calling for an unconditional, not time-limited extension of the Brexit deadline. But that person seems not to have read Art. 50: it would be have to be requested by the UK first. And, from the perspective of the EU, it would be political madness to go down this path as it would have severe implications for the balance of power within the EU itself.
Pro-Remain UK commentators have marvelled at the unity of the EU during the negotiations, but this unity was critically premised on the assumption that the UK would never crash out of the EU without a deal. Once the realisation sets in that this may not be so, expect divergent interests to come to the surface. From a simple perspective of political risk management, Germany has no interest in exposing its car industry to tariffs from the UK as well as to tariffs from the US, especially when the Germany economy may be on the verge of a recession.
What will the EU do? First of all, the EU will need to wait for the next steps taken by the UK. If the process goes as we describe above - a continued standoff - then the EU might want to reopen the withdrawal agreement and reconsider the Irish backstop - offering legal guarantees and possibly a formal end date.
Alternatively, if Jeremy Corbyn were to come to power, the EU may agree an extension in order to negotiate a fully worked-out customs-union arrangement. It is possible that a prime minister Corbyn would formally revoke Brexit in order to negotiate a customs union agreement with the EU while the UK remains a full member. It remains to be seen whether such action is consistent with the recent ruling of the ECJ, but we note that the ECJ has given the EU little protection against abuse of the Art. 50 procedure. A renewed trigger of Art. 50 would be folded into one process with a final agreement. Art. 50 gives a two-year window, but does not preclude an earlier agreement. Change of government, unilateral revocation, followed by a renewed trigger, seem to us a plausible way forward.
As the legal journalist David Allen Green pointed out yesterday, yesterday’s vote in the Commons was not the most important vote MPs have ever taken. It was the vote when they triggered Art. 50 without having a concrete plan.