Author: Kevin O’Rourke

CHAPTER 8: BREXIT

1. Young (1999), p. 483.
2. The speech is available at https://www.margaretthatcher.org/document/113686.
3. Young (1999), p. 479.
4. Grob-Fitzgibbon (2016), pp. 438–9.
5. The speech itself, as well as a superbly useful range of accompanying documents, is available at https://www.margaretthatcher.org/archive/Bruges.asp.
6. Young (1999), p. 423.
7. Grob-Fitzgibbon (2016), p. 451.
8. Grob-Fitzgibbon (2016), p. 453; https://www.nybooks.com/articles/1990/09/27/the-chequers-affair/.
9. A reference presumably to the European Commission’s Commissioners.
10. Cited in Seldon and Collings (2000).
11. Young (1999), p. 362.
12. https://www.margaretthatcher.org/document/108234.
13. http://www.britpolitics.co.uk/speeches-sir-geoffrey-howe-resignation.
14. http://news.bbc.co.uk/2/hi/uk_news/politics/1701003.stm.
15. Young (1999), p. 433.
16. I have put the word ‘victory’ in inverted commas to highlight the way in which much of the British political class and media have traditionally portrayed EU negotiations in terms of victory and defeat, rather than compromise and mutual benefit.
17. The origins of these numbers, which seem arbitrary, are murky. On one account the 3 per cent figure is, like VAT, a gift from France to the world: see https://www.latribune.fr/opinions/tribunes/20101001trib000554871/ a-l-origine-du-deficit-a-3-du-pib-une-invention-100-francaise.html.
18. Which is why I and 38 other Irish citizens were able to stand for election in the French municipal elections of 2014. And it should be noted that there were also 389 British candidates; see http://www.lefigaro.fr/politique/le-scan/decryptages/2014/03/19/25003-20140319ARTFIG00358-d-o-viennent-les-candidats-etrangers-aux-municipales.php.
19. See Eichengreen and Wyplosz (1993) for a detailed account of the EMS crisis of 1992–3. Like all the Brookings Papers it is freely available online at https://www.brookings.edu/project/brookings-papers-on-economic-activity/.
20. Young (1999), p. 369.
21. Both statements are equally true of the Clinton years.
22. https://www.bbc.co.uk/news/uk-politics-37550629. 23. Shipman (2017), p. 6.
23. Kenny and Pearce (2018). 25. Ibid., pp. 131, 145.
24. Shipman (2017), p. 7.
25. Ibid., p. 8.
26. Delors’s statement is available at https://core.ac.uk/display/76794060; the quotations in the text are taken from pp. 17–18.
27.   Gstöhl (1994).
28. Shipman (2017), p. 15.
29. Available at http://www.consilium.europa.eu/media/21787/0216-euco-conclusions.pdf.
30. Shipman (2017), pp. 588–9.
31. See O’Toole (2018).
32. See for example https://www.cbc.ca/news/world/boris-johnson-european-union-hitler-1.3583108.
33. Although I was a member of the Centre for European Reform’s Commission on the UK and the Single Market, I declined to sign a resultant letter to the newspapers on what the UK ought to do, as well as similar subsequent efforts, for two reasons. First, I’m not British, and I know from the Irish experience how irritating it is to have foreigners telling you what to do at times like this. And second, it wasn’t at all clear to me that economists’ letters were particularly helpful. On that score at least, I think I was (unfortunately) right.
34. The statement led to a sharp rise in the British pound and a bigger subsequent collapse, all of which helped certain lucky investors to make a lot of money (Shipman 2017, pp. 432–4).

I am reading Hugo Young’s wonderful This Blessed Plot (is it really possible that it is out of print? How could that possibly be?). He agrees that de Gaulle behaved “monstrously” in vetoing the UK application to join the EEC in 1963, but also makes a good case that Macmillan deserves a share of the blame too. Macmillan’s approach to the negotiations was “conditional and tentative, creeping in a state of high suspicion towards this moment of historic destiny”; the UK made it clear that it wanted to “unpick” the Treaty of Rome in certain ways and wasn’t “necessarily willing to accept the acquis communautaire” — although it was offering nothing in compensation for this. Macmillan went out of his way to emphasize the fact that the Commonwealth and the UK’s relationship with the US were central concerns for him, strengthening de Gaulle’s view that the UK did not really belong in the EEC. Nor did the UK show any great enthusiasm for joining that organisation, in case this might weaken its bargaining hand. All of this merely served to strengthen European suspicions about the UK, and not only in France, and made it much easier for de Gaulle to eventually veto the UK application (just as UK diplomatic ineptness had made it easier for him to veto Plan G some years previously).

The story is not irrelevant today. Imagine that the UK had said, in June or July 2016, that given the closeness of the vote it would seek the closest possible relationship with the EU. Imagine that it had said that avoiding a hard border in Ireland was a major priority, but that it also wanted to avoid the emergence of trade barriers within the UK. Imagine that it had said that, therefore, it would be seeking to remain within a UK-EU customs union, and that it would unilaterally commit to remaining fully aligned with all EU regulations regarding goods. Imagine that it had said that, self-evidently, this would require it to abide by all relevant ECJ rulings, and that it would naturally be willing to make a contribution to the EU budget (but nowhere near as big a one as at present, of course). And imagine that it had said that it would also be willing to sign up to a broader set of guarantees ensuring that it would not try to steal a competitive march on the rest of Europe by undermining labour and regulatory standards more generally.

It might have been quite difficult for the EU to reject such an offer outright, and there might even have been reasons for it to welcome it. The EU could have made it clear that under these circumstances there would not be free access to the EU market for services, and that this might have very negative implications for various manufacturers based in the UK for whom the provision of services to their clients is an important part of their business. It could have added that these difficulties might be surmountable if the UK accepted all four freedoms of the Single Market and paid more into the EU budget. The UK might have objected to these objections. But at least there might have been a basis for negotiation.

It seems as though the UK government may finally be inching towards a situation in which it finds itself proposing something very like the hypothetical offer outlined above. There are still mad aspects to what is supposedly being suggested, notably the proposal that the UK collect customs duties on behalf of a customs union of which it is not a member, and that goods destined for the internal UK market should potentially be allowed to face an entirely different set of tariffs. And yet, the UK is apparently proposing to remain harmonized with EU regulations for goods. We are slowly getting there.

But only very slowly, and only in the face of enormous domestic political resistance. The UK did not proactively propose the solution suggested above – it is being dragged there, kicking and screaming, since it is finally coming to realize that there is no sensible alternative (other than accepting not only a customs union but all four Single Market freedoms, or not leaving the EU at all). Its government has worked, not to build up trust, but to destroy it. Its ministers have made no secret of their disdain for the EU. The UK government has made it clear that it really does want to do free trade deals around the world, and that it really does want the freedom to regulate – or deregulate – as it chooses. Even if Her Majesty’s Government is forced by circumstances to sign up to something that precludes this, we know that this would be only reluctantly: it is quite obvious that the UK does not want this solution. And we also know from experience that its government is capable of signing a document one day, and denying that it means what it says the next.

And what this means is that there is no trust on the other side of the table; nor should there be. And that implies that even if this British government eventually comes to accept that it needs to sign up to full customs union membership, as well as full compliance with EU regulations as regards goods, an offer along those lines may not be acceptable to the EU. Indeed, it seems almost certain that it will not be.

But it is still worth asking what would have happened if clear minds and strategic thinking had prevailed in London in June and July 2016, and such an offer had immediately been proposed without any strings being attached. There would still have been those who, like de Gaulle in 1963, would have wanted to reject it, and they might still have gotten their way. (They might even have been right: I am not implicitly comparing them to de Gaulle, who clearly behaved badly.) But I am willing to bet that it would have been more difficult for them.