More on the Article 50 process

Kevin’s article in the Irish Times is excellent. In the post below I make some of the same points and some others.

The farce on Monday highlighted Theresa May’s political weakness. It has also, yet again, revealed that many of the Brexiteers (and also many commentators) simply do not understand what is going on.

Various UK commentators and politicians have called on the EU to compromise. For example the BBC reported that “David Davis has said the EU must be willing to give ground too if further progress in Brexit talks is to be made.” This seems to stem from a belief that the so called phase 1 ‘negotiations’ are conducted in the usual way of political negotiations, where each side gives in a little, and in the end some clever form of words is found whereby each side can claim they got their way. This is simply not the case here.

The Article 50 process is about establishing what the UK is going to do regarding their financial liabilities, citizens rights (here the UK will also want to establish what the EU intends to do), whether a hard border on the island of Ireland will be necessitated by the future actions of the UK and whether the Good Friday Agreement, an internationally binding agreement can be maintained.

It is important to remember that it is the UK that wants to deviate from the status quo, so it is up to the UK to spell out in detail what it wants to change. The EU will determine if this is satisfactory for them to move to phase 2 where the future relationship between the UK and the EU will be negotiated.

Determining whether the UK proposals on these Article 50 issues are satisfactory is a technical matter not a political one. Either regulations in the UK (or Northern Ireland) will differ or they won’t, either the UK will end up agreeing to tariffs with third countries that deviate from those in the Customs Union or they don’t. If the UK wants to move in a direction where an open border would undermine the integrity of the EU Single Market and Customs Union, then border controls will be necessary.

Whatever is agreed will need to stand up to legal challenge, e.g. when the first lorry load of chlorinated chicken or beef that entered the UK at lower tariffs than are due in the EU, rolls across the border – so some clever form of words won’t do. There can be no compromise or a la carte approach here.

What can be offered to ease some of the unfounded DUP fears, are assurances regarding the status of Northern Ireland as a part of the UK (unless of course, as is provided for in the Good Friday Agreement, a majority decide to change that).

The plea for some give from the EU side reveals another misconception among Brexiteers and that is that the UK is an equal partner in this. Instead it is by a long way the junior partner in the process.

The latest World Bank World Development Indicators shows that the UK is the 6th largest economy in the world. It slipped a place, at least in part due to Brexit, making France the 5th largest economy, but importantly the EU excluding the UK is almost six times larger than the UK in economic terms. The potential losses of a failure to agree a trade deal are also considerably more significant for the UK than the EU – over four and a half times those suffered by the EU (based on Lawless and Morgenroth, 2016, I also have estimates that put this seven times). Of course Ireland is something of an outlier but even here the impact on total trade is less than half that potentially suffered by the UK.

This coupled with the fact that the EU is the UKs largest trading partner, means that walking away from the process is a strategy that would maximise the self-harm to the UK economy, as this would mean that the UK will not get a trade deal with the EU. Of course a trade deal with the EU would be the quickest one to put in place and of course it would also cover the largest share of UK trade so it is also the most important one.

12 thoughts on “More on the Article 50 process”

  1. It is, indeed, a very good article. The answer to the question posed is yes. The UK government is moving to the position established by Keir Starmer for the Labour party.
    The immediate concern of the UK government is not, however, this issue but the terms of transition agreement. For areas such as aviation, businesses need clarity in the early part of next year. The EU26 are wary of the British seeking “temporary” continuation of the status quo in various areas and pocketing any concessions in the context of the “future partnership”. Barnier has been clear on this point.
    Commentators have overlooked the fact that May’s focus will have been on this and related issues, notably the role of the ECJ, rather than NI and the DUP.
    The issue of the ECJ is particularly pointed in relation to aviation.It cannot be excluded. Other issues are also imminent e.g. carbon trading system from which the UK risks being ejected; holding €1 billion in worthless permits!
    The UK needs an agreement to move to phase two.
    It is also worth noting that the only available solid legal basis is the Withdrawal Agreement (WA) under Article 50 on “arrangements for withdrawal” which will include the deal on the transition period. It does not require formal “ratification” by any national parliament. In short, the deal can be struck at the level of the EU institutions, a sine qua non for May.
    The “future partnership” can, at best, be a “heads of agreement” agreed by the European Council.
    It is difficult, however, to see how the strands of negotiation (i) financial settlement (ii) transition and (iii) future partnership can be negotiated in any way other than as a package.

  2. Dan Roberts of the Guardian drew attention in his column to this essential point.

    “May’s bluff has been called

    At a far deeper level, however, Monday’s rift exposes the faultline running through Britain’s Brexit strategy right from the start.

    The government has always been reluctant to acknowledge the inevitable trade-off between maintaining economic and regulatory alignment with Europe and restoring sovereign independence. But the vexed question of Northern Ireland has forced the contradictions of the cake-and-eat-it strategy out into the open.

    No longer can Downing Street pretend that one part of the country can have a different deal from the rest, so instead it will be forced to grapple with the bigger question of whether Britain as a whole should remain part of the single market and customs union instead.”

    The policy stance of the Irish government has been the essential catalyst for this salutary development, a fact largely eclipsed in the coverage in Irish media. Given the dependence of Ireland, north and south, on East-West trade, this might be seen as surprising but is just a reflection of the general insularity of the debate on Europe. One wonders if Brexit may not have the effect of changing this situation.

  3. Additionally, one point that shouldn’t be neglected is the “style of negotiation”, for lack of a better term. The British think they’re in a political negotiation. The EU is conducting, essentially, a bureaucratic negotiation. And the EU is in charge, a fact that the British are hugely reluctant to admit to themselves.

    The EU style is driven by three main elements. One is that the number of stakeholders is very high so the rules of the negotiation have to be initially set and then stuck to so that the multiple partners on the EU side stay aligned. Another is that the topics to be agreed are essentially bureaucratic in nature and not amenable to fudge or ambiguity. And the last is that the mainland European culture and the British culture are quite different on negotiation always.

    1. @hugh Sheehy – that is my point, and the Brexiteers have not understood this yet. Essentially they have to jump three hurdles to progress to the next round. The bars won’t be lowered and further refusals will mean they are eliminated.

      This is an optimal strategy by the EU. Theresa May stated numerously that they were going to leave both the Customs Union and the Single Market – a hard Brexit. If through this process (phase 1) the Brexit becomes soft, all are better off. If through the failure of the process we get a hard Brexit the EU is no worse off than if they had not tried.

      If the UK walk over the cliff and don’t like what they see, they will be welcome back in the EU and would not get a worse deal than any other member (we did not want them to leave anyway), but also no better one so they would loose the Thatcher rebate.

  4. The ‘negotiated-hard-Brexit’ option, with the UK out of both single market and customs union and into some Canada-style FTA, just auto-combusted. It is not consistent, and never was, with the avoidance of a hard border in Ireland and would have been impossible to negotiate.

    That leaves just two options, a soft Brexit with templates (EFTA plus some Turkey-style customs deal) or a crash-out, the ‘sod-off’ option promoted again this week by ex-minister Priti Patel and numerous Brexiteers. Sod-off is too costly all round and will be resisted.

    Soft Brexit it is then, accompanied by the Tory civil war the referendum was designed to avoid: no taking back control, no wonderful new trade deals outside Europe. Plus the inevitable Why Bother? debate.

    1. By the sod-off option you mean leaving the EU,including the Customs Union and Single Market,which was exactly what the 52% majority of British people voted for in the Referendum ?
      It was the outcome that both David Cameron and George Osbourne said would be inevitable should Britain vote to Leave.
      It is still the policy of the British government as outlined in the Commons today by Theresa May.
      In the general election over three quarters of Conservative-held constituencies voted to Leave, and seven in ten Labour-held constituencies,the majority with Leave votes as high as 70%.
      Opinions polls,for what they are worth,show there has been little movement in the mood of voters in these constituencies.The idea of a hard border in Ireland isn’t of that great a concern to most people in the UK whose view is why should a border crossing aimed at trade inspection rather than a military check-point be an excuse for terrorist violence ?
      If you strip away all the sound and fury of Westminster in-fighting most MPs are aware that any failure to deliver on that mandate would have severe consequences on their futures.
      I think you’re being very rash to blithely assume the core reasons why people voted to Leave have somehow changed.
      You’re wrong – they haven’t gone away,you know.

      1. Nope! The ‘sod-off’ option in Brexiteer-speak means a no-deal crash-out, not a negotiated hard Brexit.

      2. The 52% didn’t vote for a “sod off” Brexit, and many brexiteers claimed during the campaign that Brexit didn’t and wouldn’t mean leaving the single market or the customs union. There’s a beaut of a video of Hannan saying as much.

        Opinions on Brexit have, so far, changed very little and may never change enough to see a reversal of Brexit, but the reality of the options open to the UK have still not been presented to the electorate.

        And as for Ireland, it’s long been true that most British people neither know nor care about NI. That doesn’t change the fact that NI is part of the UK, that there’s a land border with the EU, and that the UK govt has committed to avoid a hard border. Those are simple facts, whether people care about them or not.

  5. @Professor Pie-Tin You are right about the opinion polls. there is no evidence that there has been any great shift. But that might simply reflect the fact that the negative impacts of Brexit have not yet been felt and that the real consequences are yet to become apparent. The consequences of Colm’s ‘sod-off’ scenario might well change that in a spectacular way.

    There is still a widespread belief in the UK that the EU will want a trade deal more desperately than the UK, but that reflects a rather distorted view of the strength of the UK and supposed weakness of the EU (the result of 40 years of EU bashing). Of course the lack of understanding of the nature of the process does not help and that lack of understanding is not confined to the UK government. They still think some deal will be cobbled together. Instead they have to meet technical criteria in phase 1. As mentioned earlier this is a bit like show jumping – the UK needs to jump 3 hurdles to get to the next round. Unfortunately, at least some on the UK side have turned up to play ping pong instead.

    If the UK can’t get past phase 1, then there is little basis for a trade deal. This has been obvious for a long time and I have written about that.

    In all of this the confrontational approach of the UK government has been a big mistake. If the UK had accepted that they are liable to a divorce bill and had guaranteed up-front a number of issues even if that meant accepting the ECJ in a limited number of areas, they would have shown that they were interested in an amicable divorce.

    I don’t think you last comment is acceptable, and hence I have deleted it.

  6. The key questions here are when will the good sense of a majority of the British public re-assert itself and how might this re-assertion be achieved. It is in everyones’ interest, of Britain, of Ireland and of the rest of the EU, if this UK government were to fall. But minority governments in Britain have in the past proved to be infuriatingly tenacious. Jim Callaghan’s ’76-’79 government hung on and on, with ailing MPs being stretchered into the lobbies, and he decided the timing of the dissolution. Similarly, John Major’s increasingly enfeebled ’92-’97 administration ran its full course. The DUP and the ardent Tory Brexiteers are prepared to wound, but not to strike. And the Telegraph’s pro-remain “Mutineers” lack the courage of their convictions. All are held back by the omnishambles that would unfold if Labour, led by the Corbyn/McDonnell duumvirate and marshalled by their praetorian guard of stalinist tankies, were elected.

    Furthermore, it is unfortunate that clear, but necessary, statements about the implications of Theresa May’s decision (egged on by her then co-chief of staff, Nick Timothy) to remove the UK from the internal market, the customs union and the jurisdiction of the ECJ (now the CJEU) are viewed by many of the British public as attacks on their ultimate and inalienable authority to decide their fate as expressed in the June 2016 referendum. And this has the effect of increasing public support for the current government.

    It makes sense for the Irish authorities to seek to extract some form of words on the border that will allow it to advise the EU institutions that it has no objection to their progressing to the second phase of the UK withdrawal process. But the Irish authorities will surely understand that any commitment given by the current UK government is worthless. Let the second phase commence and the economic illiteracy and lunacy of the UK PM’s unilateral decision to extract the UK from the internal market, the customs union and the jurisdiction of the CJEU will be revealed in all their glory.

    We can only hope this will encourage a majority of the British public to re-assert their traditional good sense. But this will need a political civil war not only among the Tories, but also in Labour. We will be spectators of this. It would be wise if the Irish authorities and their EU counterparts minimised their involvement in the education of the British public. This is something they and their public representatives will have to do themselves and too much external involvement would be extremely counter-productive.

  7. @hugh sheehy You are wrong on one point. The UK government did not commit to avoid a hard border. They said they wanted to avoid one while simultaneously stating that they would leave the Single Market and Customs Union, thereby making a hard border inevitable i.e. they want to eat their cake and have it.

    Putting the border issue into phase 1 has exposed this obvious inconsistency, and the conservative party is split between those who want the their cake and those that want to eat it. They will need to make their mind up soon.

    1. Fair, but they HAVE committed to avoid a hard border. Whatever it takes. And as someone somewhere has already written, if it walks like a customs union and integrated market, and looks like a customs union and integrated market, then it is a customs union and integrated market, whatever you call it.

      Of course this border issue and the market integration only applies to tradeable goods and (with labour mobility) physically provided services. Other services are another matter entirely. The UK could find itself entirely out of the single market there. Which would be bad for the UK.

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