PETER FOSTER

Theresa May has argued that her draft Brexit deal is the best available for the country in the circumstances. But if Parliament rejects the deal, what are the options?

A ‘Supercanada’ trade deal

Leading Brexiteers have urged Mrs May to “get rid of the Irish backstop” and forge a “Supercanada” trade deal with the EU. However, the question is whether, in a no-deal scenario in which the UK has refused to sign up to a backstop guaranteeing no return to a hard Irish border, the EU would enter into such a negotiation.

If it were possible, trade experts like Sam Lowe at the Centre for European Reform warn that while such a deal could remove tariffs, it would fall short on services from current arrangements and still leave “frictions” at the border. Its cost to the UK is estimated by Treasury and academics at 2 to 5per cent of GDP by 2030.

Such a trade deal would also not see the UK enter into a customs union with the EU, raising the question of where the customs border would fall in Ireland – either on land or in the Irish Sea. Which brings the negotiation back to the same old problem of the Irish backstop.

Brexiteers might hope that a no-deal would force Dublin and Brussels to reassess their determination that technology cannot deliver a secure border in Ireland. But the UK would be doing this in a deeply hostile political environment. What happens in this scenario is deeply unclear.

A managed no-deal

If both sides “agree to disagree” and accept that no mutually acceptable withdrawal agreement can be concluded, would a “managed” no-deal, in which the UK guarantees the rights of EU citizens and pays a portion of the Brexit bill, be possible?

Jacob Rees-mogg, the leading Brexiteer, has talked about a “no-deal plus” scenario, in which the UK pays some £20billion (half the agreed Brexit bill) to “remain friends” with the EU and keep the trucks moving and planes flying.

The UK would essentially buy a “transition” period in which it applied existing EU rules and the common commercial policy until the end of 2020 to give time to depart on Wto-only terms, or negotiate a Supercanada deal.

But it is not clear why the EU would agree to take a half-payment of an agreed Brexit bill for such a transition deal, or how this would answer the Irish border question (see above). It is also unclear on what legal basis trade would continue, if the UK was no longer bound to follow the European Court of Justice.

In practice, officials in Brussels warn that a “managed no-deal” is going to be extremely difficult given the politics involved.

“If there is a no-deal there is no more discussion,” Michel Barnier said in evidence to the Commons in September, ruling out “minideals”. “There is no more negotiation. It is over, and each side will take its own unilateral contingency measures.” It remains to be seen if that holds in practice.

Wto-only rules

This remains the favoured option of some Brexiteers as the only way to get a “clean break” from Brussels, but the Government is clear that it would be a highly costly and disruptive way to leave the EU. The Treasury; the IMF, the global lender of last resort; and the great majority of academics all estimate the cost of such an “exit” would be around 8 to 9per cent of lost GDP by 2030, although pro-brexit economists dispute these assessments.

However, as the EU’S own no-deal planning makes clear, a hard crash out would cause “major disruption” even if EU member states take temporary measures to mitigate this.

All relevant EU legislation on imported goods would apply, including veterinary checks, custom duties, VAT, custom declarations and the possibility “to control shipments” of UK goods to the EU. Hauliers would need to apply for permits that currently cover only five per cent of traffic between the EU and UK.

Experts also warn that WTO rules do not provide the kind of protections that many Brexiteers expect, noting that they require only that countries “enter into consultations” on recognising rules, which provides a lot of latitude for foot-dragging. WTO infringement suits also can take years to come to fruition.

As Alex Stojanovic of the Institute for Government think-tank notes, the uncomfortable truth is that mitigating no-deal impacts is in the gift of the EU, not the WTO.

Flop to Norway

A final option would be temporary membership of the EEA-EFTA groups, or “Norway for Now” as its proponents call it.

This option is fraught with legal and political obstacles. As Jean-claude Piris, the EU’S former top lawyer, has pointed out, there is no legal basis for “temporary” membership of the EEA-EFTA bloc. Also, since the EEA does not provide for a customs union with the EU, it raises the same issues about where border controls will fall in Ireland, if not on the Northern Irish border. As such, an Irish backstop would still be required.

Politically it is not clear that Norway, the EU and other EEA states want a country as large as the UK in their bloc (setting up a rival to the EU) and would almost certainly require the UK to agree not to apply its “emergency brake” on free movement, thereby removing the chance to take back control of borders, as promised.