Complicated reality of Brexit dawns on UK
An extreme chill recently swept Britain with high risk warnings and anxiety for commuters. Some might also discern the weather to be a symbol of the ongoing uncertainty surrounding Britain’s Brexit negotiations. In this regard, after months of delay, Prime Minister Theresa May finally delivered a key note address setting out a blueprint for the UK government’s approach. With free trade under siege from a growing tide of global protectionism, there is a broader context to the negotiations.
May’s speech was important because for the first time, there was an admission that the UK needed ‘to face up to some hard facts’. She noted that in certain ways, access to each other’s markets will be less than it is now. May accepted that the EU’s structure of rights and obligations could not be sustained, if the UK — or any country — were allowed to enjoy all the benefits without all of the obligations.
The second hard fact was that even after the UK has left the jurisdiction of the European Court of Justice (ECJ), EU law and the decisions of the ECJ will continue to indirectly influence the UK. Given the significance placed by pro-Brexiteers on delinking from ECJ jurisprudence, this was a notable deviation from ideology.
The other fundamental call-out was that good access to each other’s markets had to be on fair terms. The PM noted that as with any trade agreement, the UK must accept the need for binding commitments — for example, it may choose to commit some areas of domestic regulations like state aid and competition to remaining in step with the EU’s.
The bluster about ‘Brexit means Brexit’ and ‘no deal would be better than a bad deal’ was shelved. Instead, the PM appreciated that the UK will need to make a strong commitment that its regulatory standards will remain as high as the EU’s with proportionate consequences for divergence. She was also willing to countenance associate membership of certain EU agencies in chemicals, medicine and aerospace too.
On the vexed question of avoiding a hard border between Northern Ireland and Ireland, May restated her ambition for a frictionless border through a ‘customs partnership’ with EU. It remains to be seen how this can be worked through.
What is the direction of travel then? It is clear that the reality of Brexit has begun to dawn on the UK government. The rhetoric of a hard Brexit has given way to a softer and more conciliatory advocacy. The proposition on offer is the spectre of the UK parliament looking to substantially replicate EU laws. Through this lens, the UK’s Brexit course might be distilled as coming down to the ‘narcissism of minor differences’.
Two other factors are also worth recalling. First, anxiety over immigration had played a pivotal role in the success of the Leave campaign. But, reconciling this with the strains of an ageing population and the demands from businesses has been far from easy. Hence, the recognition that an ‘appropriate labour mobility framework’ will need to be developed.
Second, the possibility of trade deals with non-EU countries seemed to be the holy grail for Leavers. Currently, there is little evidence to support claims that such deals can be struck in short order.
From a European perspective, a certain degree of smugness would be understandable. Yet it would be a folly to remain intransigent. The UK remains a significant market for the EU across a range of sectors, from automobiles to services. As Theresa May pointed out, UK located firms provided more than £1.1 trillion of cross-border lending to the rest of the EU in 2015 alone.
At least, the British PM is looking to compromise. At a time where protectionism is on the rise — witness recent US calls for increasing tariffs on steel and cars — it remains ever more important to make the case for free trade. The onus is now on the EU politicians to demonstrate pragmatism. Ultimately, the consequences of a Brexit no-deal scenario will be far worse for everyone involved.
From a European perspective, a certain degree of smugness would be understandable. Yet it would be a folly to remain intransigent. The UK remains a significant market for the EU across a range of sectors, from automobiles to services.