2. At Open Europe
BSSB.BE capx.co 25/01/2019
* “The most effective way to destroy people is to deny and obliterate their own understanding of their history.” ― George Orwell
The EU27’s second option is to simply allow a “no deal” Brexit to unfold. But for all the talk of “no deal” preparation, we know that member states are not properly prepared for such an event, even if they may suffer less than the UK.
Both in Belgium and the Netherlands, the government has been criticized for not managing to have enough customs staff ready to cope with a “no deal” Brexit at the end of March. The Irish government already admitted last Summer that it wasn’t going to manage to hire all the extra customs officials necessary for that.
In Germany, political panic about the prospect for “no deal” is abound. Both German governing parties CDU and SPD, as well as the greens, have come out stating they’re open to extend UK membership. The leader of German governing party SPD warned a “no deal” would cause “heavy turbulence for the whole EU and also for us in Germany” with also the farmers’ federation warning of the “chaos” it would cause.
Unsurprisingly, companies are not ready either. In Belgium, out of the 25,000 Belgian companies that are trading with the UK, four in five say they are not ready for “no deal”. German auto industry association VDA warned after the vote that “the consequences of a ‘no deal’ would be fatal” and “we strongly urge all relevant stakeholders to do everything possible in order to establish much needed certainty for our business and to maintain the truly frictionless trade on which our international production network is based.”
I suppose this can be translated as the German car manufacturers urging also the EU-side to get their act together.
Given the shortcomings of the EU27’s first two options,the most preferable course of events for the EU is a renegotiation of the existing deal. It may even prove to be a lesson for it on in the need for major agreements to be acceptable to both sides. If it wants a sustainable deal that won’t be challenged, Brussels should stop wasting time hoping that Labour or some Tories agree to let tthe UK stay in the customs union or single market permanently.
As strange as it would be for the world’s fifth biggest economy to permanently outsource its trade policy to the EU, it is also easy to predict that such a deal would come under fire from the moment the UK is asked to implement EU rules it dislikes without being able to vote on them.
And for fans of the EFTA-EEA option, “Norway” status means implementing legislation it isn’t able to vote on, simply because the so-called “right to reservation” that non-EU single market members have can be overruled.
In any case, there are signals coming from the EU that it is ready to consider renegotiation. Ahead of the vote, German Foreign Minister Heiko Maas said that “there could be further talks” in case of a rejection, not ruling out a renegotiation of the actual withdrawal agreement, instead saying he “doubts very much that the agreement can be fundamentally reopened”.
That is a softening of language. His predecessor, Sigmar Gabriel, even wrote that “the EU should be ready to make more concessions to the UK and to allow more time for negotiations,” adding: “the British have withstood bigger crises and will overcome this economic crisis sooner or later. But it’s by no means assured that Europe will survive Britain’s departure.”
The Netherlands and other European countries are reportedly even willing to make further concessions on the “backstop”, however under the condition that Ireland supports them. This really makes clear that ultimately, given how the backstop is at the center of the concerns among those that Theresa May needs to convince, this is a negotiation between the UK and Ireland. And while it’s clear that the UK would be hit worse economically than the EU27 in case of no deal, that is by no means clear for Ireland.
The relationship between the Northern Irish DUP and Conservative Brexiteers is not dissimilar from that of Ireland to the EU: whatever the DUP agrees to on the backstop is likely to receive support from the European Research Group of Brexit-supporting Conservative backbenchers (with the exception of customs union membership).
Some in the DUP appear to be moving on the backstop.
One of the party’s MPs, Jim Shannon, has said the party has “considered” supporting the Withdrawal Agreement if the backstop was time-limited, mentioning that “if the time-scale was one year, or perhaps even two, certainly within this term of government, I think we would certainly look at that as an option.”
As I have argued before, the EU27 could concede to meet the concerns of Brexiteers. Legally, according to the withdrawal agreement, the EU holds a veto over the UK leaving “backstop” status and recovering its trade powers, something French President Macron has reminded the UK about by threatening to use the right to keep it under the EU’s customs regime, as foreseen by the backstop, as ‘leverage’ to obtain concessions on fisheries.
In reality however, in a context where relations would have deteriorated so badly that it wouldn’t be possible to agree a trade arrangement, it is very unlikely that the UK would willingly continue to outsource its trade policy to the EU. In other words, the backstop is not the cast-iron insurance policy that it seems. An EU diplomat has also conceded this point.
Far from being fail-safe, the backstop even increases the risk of the damage it is designed to insure Ireland against. What could be a possible compromise then? “Kicking the can down the road” may also be the fudge needed here.
That could be done through an EU concession to make the backstop time-limited. This simply means that another cliff-edge will be agreed, adding to the existing cliff-edges of 29 March 2019, July 2020 (when it will be decided whether the UK will enter the extended stage of the transition) and January 2023 (when, short of an alternative deal, a lot of trade becomes illegal, as the UK enters backstop-status, thereby facing regulatory hurdles to the EU market while only being spared from customs hurdles).
Is one more cliff edge such a massive concession for the EU and Ireland? I would think not, especially as at any point during the “unlimited” backstop arrangement, the UK will have the ability to abandon the obligations of the withdrawal agreement, something it can always do with any international Treaty, by unilaterally pledging a date when it is willing to also give up the benefits of the arrangement, in case it would deem it impossible to safeguard a trade deal with the EU.
A time limit would not change the ultimate goal to replace the backstop with an alternative solution, which is likely to require concessions on all sides: from the UK – continued regulatory alignment between Northern Ireland and the Irish Republic, from Ireland – to tolerate certain loose customs checks on the border – and from the EU 26 – to tolerate the fact that just as elsewhere on the EU’s external customs border, there will be a trade-off between border protection and economic interests.
- The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: capx.co