The warnings from Brussels are clear: Mrs May’s red lines will have to turn pink
The shape of Theresa May’s preferred customs plan after Brexit is now becoming clear, but while some Brexiteers cry “betrayal” at home, in Europe exasperation is rising to the point where there is open hostility at her attempt to find a middle path.
Players on the EU side say Mrs May’s “third way” customs proposals will get a chilly reception when the White Paper comes out next week; if the ideas are watered down even further by Friday’s Chequers summit, that could turn into outright rejection. She is touring Europe to beg fellow leaders not to order a summary execution of her plans, but to at least agree to talk them over. This may be a forlorn hope. EU leaders are facing challenges on migration, the eurozone and Donald Trump’s trade policies that are at least as existential as Brexit to the future of their Union. On Tuesday, Mrs May saw Mark Rutte, the Dutch prime minister, who warned at last week’s European Council that the EU could not accept British “cherry-picking” – and that’s an ideological soulmate speaking.
She sees Angela Merkel today, but the German chancellor has travails at home and has always said Brexit must carry a visible price. Indeed, she required persuading that the UK needed a transition deal at all. So after three months watching the British Cabinet argue about “cake and eat it” solutions that ignore the EU’S own red lines on “à la carte access” to the single market, patience is in short supply.
The warnings in Brussels could not be clearer: Mrs May must “pink” her own red lines – or else. But or else what? Her plan is a streamlined, reheated version of her “customs partnership” that the EU has already rejected as too costly, too cumbersome and – perhaps more importantly – too advantageous to Britain. By avoiding friction on goods but staying free to diverge on services, the EU argues the UK will get privileged access to its markets and regulatory advantage.
Maybe – but the UK will still lose out in access for services and, as the EU well knows, is willing to sign up to strict provisions to ensure what they call a “level playing field”, as well as a strong indirect role for the EU courts and harmonisation on regulations. The reality, as HMRC made clear, is that nothing will be ready for at least five years, which leaves time for a “temporary customs arrangement” to be turned into something that can work for everyone, even if it is not Mrs May’s faintly fantastical solution.
And while no one wants to talk about it now, money in attractive quantities will be on offer when the transition runs out in 2020 and Britain needs to smooth its way over the next cliff-edge. It is true Mrs May cannot say a lot of this, but you don’t need to be a mind-reader to see she is “pinking” her red lines; the European side just needs to be prepared to read between those lines, secure in the knowledge it has the whip-hand. In the end, Mrs May is seeking a Swiss-style confection of access agreements: it is not that such a recipe does not or could not exist,
‘A moment of hard choices is fast approaching but this applies to the EU too. This is a last call for realism’
rather that the confectioner simply doesn’t want to make them.
And if we are honest, it’s not difficult to understand why, in the current climate, Brexit is a pain for the EU. But Europe must consider the alternative. At the moment it’s offering Mrs May a non-choice. She must accept full single market membership (including free movement) or a Canada-style Free Trade Agreement (FTA) which will cost business dearly on both sides and divide the UK by putting a new trade border in the Irish Sea. The EU thinks the UK can be boxed into accepting a bare-bones FTA while it “dedramatises” the Irish Sea border that hives off part of the UK into the EU’S regulatory orbit. But even if these Versailles-like terms could be imposed, they will never be politically durable. This is a divorce where geography requires the EU and the UK to live as neighbours. To do that there needs to be a fair settlement that respects the EU’S concerns over the level playing field, but also the fact there was a democratic vote in the UK.
To that end, Mrs May would be wise not to propose something provocative in the White Paper, and to level with Brexiteers about what is needed to have any chance of delivering on free movement of people. A moment of hard choices is fast approaching but this applies to the EU too. This is a “last call” for realism. If the EU gives Mrs May no realistic choices, she may be unable to argue against the catastrophic rupture that both sides say they want to avoid.