A bit more flexibility is what’s needed on Brexit

There is a hybrid model that would let some British industries opt into the EU, without tying Britain down

No one likes losing. But learning how to do so is part of growing up. It’s a long overdue lesson for those Remainers still trying to overturn the referendum, whose most recent strategy is to cast doubt on the result due to questions about Vote Leave’s spending practices. It won’t work.

While the refuseniks are wasting all this time and energy, however, the Brexit cogs are slowly turning. The battle lines drawn by serious players are now becoming clearer. Most people agree that it would be just splendid if Theresa May gets the deal she has outlined. The real question is, what happens if she doesn’t?

On the Remain side, a cross-party alliance is trying to raise support for a plan to stay as part of the European Economic Area (EEA), keeping us inside the single market in most fields. Despite little evidence in their favour, Leavers still insist that preparations to embrace “no deal” are proceeding apace and, if needed, will be ready in time. Neither of these options is very palatable and it’s not clear that either has the numbers to get through Parliament. But if both sides can agree to be pragmatic, there is a hybrid model that could deliver something very close to Mrs May’s design.

The centrepiece of her plan involves opting in to EU rules and agencies where and when it suits us, in return for gaining the smoothest market access. The Government has said that this would include pharmaceuticals, aviation, chemicals and car-making, and the idea makes sense. Pharma companies, for example, are unlikely to keep choosing Britain as the prime destination for expensive new drug trials if getting approval here doesn’t also get them access to Europe. In return for following these EU rules, Britain will ask to be involved in the technical workings of the EU agencies concerned, which is a good avenue for influencing policy. In other areas, such as fisheries and financial services, the UK intends to go its own way.

The EU, of course, insists that Britain has to choose: either we’re in or out of the single market. This isn’t quite true, however. The EEA is a pick-and-choose system and it was designed that way in the Eighties to accommodate countries that had doubts about signing up to the full EU project. Norway, Iceland and Liechtenstein, the three states in the EEA but not the EU, retain full control over their fisheries, resources, tariffs, agriculture, justice and home affairs, and taxation policies. And they, along with Switzerland, have their own judicial institution to govern economic relations, the European Free Trade Association (Efta) court, rather than the European Court of Justice.

A large number of MPS would like to see Britain sign up to this model, but it has major problems. It allows only for a weak control on immigration, an “emergency brake”. It encompasses systemically important industries over which Britain must retain autonomy, like financial services. And it includes such a broad range of industries that it would limit the scope of an independent trade policy. In other words, it isn’t a very satisfactory way of honouring the referendum result.

Can Britain take the pick-andchoose elements of this model and adapt it to our needs? One compelling answer has come from an unexpected quarter: Carl Baudenbacher, the outgoing president of the Efta court. His proposal goes by the obscure name of “docking”.

In this scenario, rather than signing up to the single market and exempting a few industries such as fisheries, as Norway does, Britain would choose to opt in for particular industries such as aviation and medicines. In these areas, rather than creating a new UK-EU court to police the arrangement, as Mrs May has proposed, Britain would “dock” itself to the Efta court. In other areas, such as immigration, the UK would regain total control.

This idea has several advantages over the Government’s plan. First, it would allow Britain, like EEA countries, to have an advisory input into EU policymaking at an early stage, when proposals are first discussed by the European Commission. Secondly, it could allow Britain to stage a partial takeover of the Efta court. This court is already friendlier to our legal system than the ECJ, because it is staffed by three judges selected by countries that, like Britain, use common law, rather than Roman law. It would be reasonable, says Mr Baudenbacher, for Britain to negotiate the right to appoint two more judges, meaning the court’s legal culture would be likely to develop in tune with our own.

But the third and greatest advantage of docking is that it delivers Britain’s aims and is a proposal that the

EU might actually accept, unlike Mrs May’s current proposition. To understand why, consider the EU mentality. Eurocrats believe they are engaged in an important statebuilding exercise. They hate making exceptions, as the Government’s model would require, but love precedents. The docking model was first proposed by European officials themselves in the Eighties, but was abandoned when half of the states interested in it ended up joining the EU instead. This means its pedigree is kosher in the minds of Brussels’ apparatchiks. It is a way of having cake and eating it that doesn’t taste so offensive to Eurocrat palates.

The model is not without its disadvantages. It doesn’t solve the Irish border issue. It would be less flexible than the Government’s vision, in which future Parliaments could more easily diverge from the EU even in aligned industries such as pharma and aviation. And, most unappealingly for Eurosceptics, the Efta court is expected to cede to the ECJ in situations where the courts conflict, potentially crossing a Government red line. In practice, however, this situation rarely arises, in part because the Efta court is more efficient than its larger cousin and tends to set precedents by deciding cases first.

It is also not so different from the compromise Mrs May has signalled she would accept, in which certain of our industries would be subject to EU law and the whole agreement arbitrated by an international panel.

As negotiations progress, the Government is boxing itself into a more and more difficult position. It has accepted a transition arrangement and an Irish fallback option that sign away our sovereignty. Brexiteers have been patient, but could still bring down the talks later this year. In Parliament, No 10 seems to have the numbers neither for a surrender nor for a “no deal”. That means it cannot afford to reject creative ideas. The docking model might not be perfect, but if both sides are prepared to show a bit more flexibility, it could be the Government’s best bet.