British leaders prepare citizens for a post-Brexit trade agreement with the European Union that brings more pain than benefits.
By Jolyon Howorth*
British Foreign Secretary Boris Johnson famously quipped that “my policy on cake is pro-having it and pro-eating it.” Brexit, he implied, would allow the United Kingdom to enjoy a custom-designed trade relationship with the European Union and unfettered access to global markets. But the European Council has denounced the UK’s negotiating stance as “cherry picking,” and Prime Minister Theresa May discovers that the politics of cake is leading to the worst of all worlds. The cabinet cannot agree on the recipe, and Parliament lacks a majority on any approach. The country has no consensus, and the EU shows solid determination to ensure that Johnson’s policy on cake will prove to be half-baked, with no cherries either.
The “agreement” reached this week confirms that there will be a transition period until December 2020, offering some relief to business. On the most vexed issues – Northern Ireland, the UK’s “three baskets” and customs-union membership – the two sides are anxious to avoid a breakdown at this stage and kicked the can down the road. On fisheries, the UK cannot totally escape EU regulations. A Scottish conservative MP remarked: “It would be easier for someone to drink a pint of cold sick than to sell this as a success.” The UK is permitted to discuss trade agreements with third countries during the transition, but the EU is confident that this will demonstrate to London just how difficult such negotiations will prove to be.
From the onset, the EU rejected UK cherry-picking. Instead, the EU insists that the UK faces a choice: Either it remains, like Norway, a full member of the Single Market, in which case it continues to accept all EU rules and regulations and pay into the collective budget as rule-taker rather than rule-shaper, with no voice at the table. Or it negotiates a free-trade agreement with Brussels, such as that between Canada and the EU, giving it some trade with the Single Market but denied most other benefits — including “passporting rights” for financial services, a lion’s share of the UK economy – allowing firms to operate throughout the bloc without securing a license from each member country. A third option, building steam, is for the UK to remain a member of the European Union Customs Union, whose members trade without duties, taxes or tariffs among themselves, and charge the same tariffs on imports from outside the EU. The Labour Party has embraced this option, as have significant numbers of Tory MPs. But members of the Customs Union cannot negotiate free trade agreements with third countries. None of these options is acceptable for hard-core Brexiteers, and May has ruled out all.
In a 2 March speech, the prime minister finally recognized that the country needed to “face up to some hard facts.” These included, she noted, restricted access to the UK’s hitherto most lucrative market; the continuing influence of the European Court of Justice over many aspects of British legislation; and clear constraints on the UK’s ability to depart from European regulatory standards. For most hardline Leavers, these “facts” are unpalatable, calling into question the rationale for Brexit. Yet the government’s own internal calculations – immediately leaked to the press – demonstrate conclusively that, under any of the Brexit scenarios, the UK will be worse off than it would have been had it not voted to leave. It is gradually dawning on Britons that there are no winners from this process.
May nevertheless indicates that the UK has every intention of cherry-picking. The plan is to divide UK trade with the EU into three baskets. In the first would be sectors such as pharmaceuticals, cars and aerospace where London would continue to abide by EU regulations, including acceptance of oversight by the European Court of Justice. In the second would be sectors such as financial services with special ad-hoc arrangements worked out between London and Brussels. In the third would be sectors, such as agriculture, where the UK would remain free of EU constraints. Such an approach is non-negotiable in Brussels, dismissed by Council President Donald Tusk as “out of the question.” Yet the UK government continues to assume that it can persuade EU negotiators to accept the unacceptable.
The reason lies within the deeply divided Tory party. The Tories are far from reaching consensus on what exactly the UK is attempting to negotiate. Recognition of “hard facts” is a nod to Remainers who predicted doom and gloom and a message to the British people that life would not be the land of milk and honey promised by Brexiteers. Acceptance of EU rules and regulations for sectors in the first basket is a form of soporific cake for Tory Remainers such as Chancellor Philip Hammond, who can continue to hope that all is not yet lost. Moreover, all but the hardest Brexiteers are growing nervous about the prospect of total exclusion from European markets. But May’s reiteration of the government’s red lines on free movement of people and the UK’s determination to negotiate trade agreements with third countries pacifies the true believers in a hard Brexit. In other words, the “strategy” is to avoid making any strategic choice since that would precipitate the moment of truth when the Tories would appear to all the world as without strategy.
May’s approach is a creative charade, fooling nobody in Brussels and seen by increasing numbers of commentators as a self-inflicted wound. During the referendum campaign, May supported the Remain camp. After the result was known, to become prime minister, she went with the flow of British opinion, embracing “Brexit means Brexit.” To show determination, she precipitated declaration of Article 50, prematurely triggering the two-year time-frame for discussions. To boost her negotiating position, she called a general election – and lost. She did not need to take these steps. The sensible course would have been to explore what the outlines of a viable Brexit might be, both within the UK and in EU discussions. If such an arrangement proved palatable to both politicians and people, Article 50 could then have been triggered, the entire process conducted sensibly and consensually. Instead, May finds herself in an impossible bind. She recognizes that most Britons, particularly those in the industrial wastelands who voted fervently for Brexit, will be worse off after the UK leaves. She appears to consider it her duty to ease citizens’ transition towards this somber new world. Asked point blank whether she personally thought Brexit would prove worthwhile, she could not answer.
Commentators agree that May cannot remain in power much longer. There are several scenarios for the succession. A palace coup mounted by disgruntled Tories seems unlikely in the near term for the simple reason that none of the potential challengers could secure loyalty of a majority of the party. Most analysts see the crunch coming when the government finally reveals the package negotiated with the EU, assuming that it succeeds in doing so.
At that point, a 2017 House of Commons decision dictated that “the people” should have the last say. That implies one of two options. Either the House will be called upon to vote on the package, which will not satisfy the Brexiteers. It seems unlikely that the government could secure a majority for that package. And if not, there would have to be a general election. At that point, May would be replaced as Tory leader with most pundits predicting a win for Labour. The prospect of ushering Jeremy Corbyn into Downing Street is sufficiently horrifying for most Tories that the alternative option – a second referendum on a known package – would be preferable.
A new Tory leader could put the question to the people. If they voted it down, that leader might resign in favor of yet another leader, but the Tories could cling to power. Thus, history would repeat itself, the second time as farce. David Cameron called the first referendum to strengthen his power base. He failed miserably and the country paid the price. The second referendum would be called for precisely the same reason. The outcome would be uncertain, little would be resolved, but the Tories could hope to continue in government. King Alfred, it is said, burned the cakes. The Tories are setting fire to the kitchen.
*Jolyon Howorth has been a visiting professor of political science and International affairs at Yale since 2002, dividing his teaching among the Political Science Department, the Jackson Institute and Ethics, Politics and Economics. He has published extensively in the field of European politics and history, especially security and defense policy and transatlantic relations – with 15 books and more than 250 journal articles and book chapters. He is the Jean Monnet Professor of European Politics and Emeritus Professor of European Studies at the University of Bath.