Richard North, 19/10/2017  
 


As we creep towards the next stage in the on-going Brexit drama, the prospect of a "no deal" exit draws closer as Mrs May learns that her last minute appeal to the European Council will be heard in silence. 

Yet, even though a "no deal" could be so close, the media are giving only limited attention to what could well be a uniquely damaging event and then barely managing to convey even a fraction of the consequences.

Despite their inadequacies, though, something of the gravity of the situation is beginning to emerge, with a report in The Times (no paywall) telling us that British airlines are preparing to warn their customers that flights booked after March 2019 may not take off and they will not pay compensation if flights are grounded.

We are told that this move has been discussed with government and would be introduced in spring next year if Brexit talks are still deadlocked. It would apply to all tickets sold to EU destinations and up to 17 other countries, including the United States, where British airlines' legal flight rights are overseen by Europe-wide agreements.

And thus we see an official confirmation of something I first wrote about in July 2014 when I was commenting on the outcome of a "sudden death" withdrawal from the EU, with the instant repeal of the European Communities Act.

Even at that time, I noted that none of the problems we would be experiencing would arise if we went for the Efta/EEA option, keeping the UK within the Single Market. This was one of the reasons why I gave such prominence to it in Flexcit.

Now, more than three years later, the repercussions of rejecting continued participation in Single Market are becoming evident, although I've not seen any media outlet make the link. And, with Mrs May having so repeatedly rejected the option, she has boxed herself in politically and has nowhere to go.

Unfortunately, determination of the UK government to forge a bespoke agreement with the EU means that we are going to reach the end of the two-year Article 50 negotiation period without being able to formalise trade arrangements. Mrs May's "deep and special partnership" will remain an aspiration for some years yet.

Realisation of this has brought forward the talk of a "transition period", although I have already observed that there is no clarity (or consistency) in the use of terms, which indicates that the Prime Minister is less than certain as to what she wants.

What has to be appreciated, though – and I'm not sure that even the Commission has fully understood its own constraints – is that any interim deal, whatever name it is given, cannot be concluded within the framework of the Article 50 settlement.

The issue here goes to the heart of international law. As it stands, when the provisions of Article 50 kick in, with the coming into force of the withdrawal agreement or the expiry of two years, the existing treaties cease to apply. There is no provision to extend them.

For the treaty provisions to re-apply, they must be re-adopted as a separate treaty. And since such a treaty would impose obligations and rights on each of the parties, its cannot be settled under QMV Furthermore, because of its scope, it must be a mixed treaty. It will thus require the assent and ratification of the UK and all remaining EU Member States.

Crucially, any such treaty must also be WTO compliant, which means it cannot be a partial agreement (not that that would be the intention). While South American countries seem to be able to get away with partial scope agreements, it does not look as if that option is available to the EU, its Member States, or the UK. The "interim" treaty must cover substantially all trade, or it will fall foul of WTO non-discrimination rules.

From this, it should be readily apparent that the bridging treaty, between leaving the EU and concluding the longer term agreement is, in itself, not an easy option. For a start, it cannot be concluded until the UK has actually left the EU - with or without an Article 50 settlement. Given then the time required for ratification, there must be a period where there will be no treaty to facilitate trade between the UK and the EU.

That none of this seems to have been thought about when Article 50 was formulated (or agreed) is a testament to the symbolic nature of the Article. It was never intended to be used. Now that it is being used, we are finding that it is unfit for purpose. It simply does not provide a workable framework, by which we can conclude a stable exit agreement.

To overcome the inherent difficulties, the only real option within the framework of the Article would be substantially to extend the negotiating period – perhaps to as long as ten years – so that we had a fully formed treaty to jump into when we leave. But even then there would have to be a period without cover, to allow for signature and ratification – although provisional application is allowed under certain circumstances.

It takes no imagination at all, however, to appreciate that an extension to Article is not realistic, which actually leaves only one workable alternative – the Efta/EEA option. And since this has now been rejected, there is nothing left the cupboard. Deal or no deal, anything Mrs May settles on is going to hurt.

To that extent, we are in an extremely uncomfortable position. While a "no deal" scenario is obviously very dangerous and damaging, a fully negotiated settlement isn't actually much better. It is better, but not much. Without continued EEA participation, we are in a trap of our own making. There is no way out.

Purely from a sociological stance, the interesting thing about this is people's reaction to it. Confronted with an impossible situation, the natural response is disbelief. After all, between five minutes to eleven in the evening, and ten minutes past, local time on 29 March 2019, nothing physically will have changed. Dover Port will still be there. The ferries will be at their berths and there will be orderly queues of trucks waiting to board.

In the absence of tangible impediments, it will be hard to conceptualise the extent of the barriers that will have emerged, all of them completely invisible. It is much easier to go into denial and imagine that kindly officials on the other side of the Channel will see no sense in refusing passage to UK vehicles and will simply send them on their way, with a smile and a cheery wave.

Anyone with the slightest knowledge of French bureaucracy, though, will know that attempts to take any course of action where official permission is required – without the requisite paperwork and the mandatory rubber stamps - are doomed to failure. There is nothing so final in this world as a firm but polite "Non, Monsieur", when faulty papers are presented.

Sadly, therefore, any resort to denial and wishful thinking is not going to cut it. Mrs May can make all the appeals she likes – and we hear that she is to publish a Facebook page addressed to the peoples of Europe, with e-mails direct to 100,000 "EU citizens" – but if she doesn't have the right stamp on the UK's passport, we can, as a friendly gendarme might say, allez siffler.

Those who remain incredulous might ask how it is that we got ourselves into such a position where, for instance, on 29 March 2019, we will be able to jet off from any major UK airport to a huge variety of foreign destinations (if we so wish) yet, on 30 March, that facility will be denied us. Serviceable aircraft, with pilots aplenty, will remain firmly grounded, "merely" for the lack of paperwork.

But that is the reality of this modern world. What is dismissed casually as "paperwork" or even pejoratively as "red tape" is in fact the lubricant that makes things work. Even down to the modern miracle of Amazon which can deliver an amazing variety of goods to your door, without you having to move from your armchair, nothing happens until you sign into the system and press the right buttons.

And by that measure, it is useful to explore a statement from "Ultra" MP, Bernard Jenkin, cited in an evaluation of the "no deal" scenario by Malcolm Barr of JP Morgan. Says Jenkin, "There is so much tosh being talked about the difficulty and perils of leaving the EU. There is no 'cliff edge' if the UK and the EU are able to conclude a half decent agreement about arrangements for our departure – and it is inevitable that we will. There is too much at stake of mutual interest to fail in this".

Like his colleagues, Jenkin then indulges in the dishonesty of the "no-deal deal" construct, arguing that: "Some people think that 'no deal' means no customs facilitation agreements, no mutual recognition of product standards, no transition to separation of institutions like the Medicines Agency, no new aviation services agreements".

"These", he says, "need prompt no great difficulty, certainly nothing more than reaching the kind of arrangements that the EU has with a hundred or more third countries, with whom they do not have a formal trade agreement. Otherwise, the EU's largest export market, the UK, would be at risk".

Jenkin thus asserts that, "'No deal is better than a bad deal' means the UK should be ready to trade on the same terms as the US does with the EU on WTO Most Favoured Nation terms". He adds: "you have to believe the EU is completely insane if you think that they will cut the telephone lines, ground all UK flights in and out of the EU, and insist on checking every mini exported to the EU at the border, to see if it does in fact meet the EU's definition of a car'".

But, with the talks currently stalled and quite evidently going nowhere, we have real live airlines giving early warning that, from 30 March 2019, they too will be going nowhere. The "no deal" shutdown is not a figment of the imagination. It is not "Project Fear". It is not an exaggeration. It is real.

Without a deal, chemicals that do not comply with the REACH regulation cannot be exported into the EU. That applies now and it will apply to UK products which no longer comply after 20 March 2019. Medicines with market authorisations, including those invalidated by the UK's withdrawal, will not be allowed entry. And yes, cars that do not have type approval issued by an agency of an EU Member State, cannot be exported to the EU.

To imagine that we can reach agreement with the EU on such matters when we have decided not to negotiate with the EU is to defy logic. If, as Malcolm Barr points out, we do not settle such matters within the framework of formal exit talks, it is likely that any trade facilitation arrangements the EU would be prepared to discuss in advance of the UK leaving the EU would be limited to a restricted number of sectors where the EU felt the most pressing need to generate continuity in the short run.

In other words, the EU will allow what is convenient to it to allow – as long as arrangements are WTO compliant. In other areas, the UK's ability to force such agreements will be "weak".

The Article 50 process already presented us with a weak hand, and our government now seems intent on making it weaker. Thus, if we see ourselves "leaving on a jet plane" on or after 30 March 2019, we will find that we are going nowhere.






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