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Brexit: Mrs May's kiss of death

2018-07-07 06:18:15

There is only one thing remarkable about the statement released by the government in the wake of yesterday's cabinet meeting. And that is compared to what we were led to expect that it is completely unremarkable. It is exactly as predicted.

What went on at Chequers, in terms of the arm-twisting or whatever else was needed to get agreement to the statement, is of absolutely no interest. If this sets the terms for the UK's proposal for a formal agreement with the EU, covering also the Irish border question, then it spells the end of any expectation that we might have had of a negotiated settlement.

Who will pull the plug, and when and under precisely what conditions it will be pulled is a matter of detail. Like as not, the European Commission which holds the front line position will play the long game. This would involve it passing the decision as to whether to reject the expected White Paper on to the European Council in October.

In the meantime, the odds are that it will not say yes and it will not say no. It will keep the talks grumbling along at officer level, keeping statements as anodyne as possible and not making any statements that can be regarded as definitive.

The precise reasons for the EU's rejection, when it comes, will not be at all difficult to work out. Firstly, at the core of the proposal is "the establishment by the UK and the EU of a free trade area for goods". This supposedly entails the UK and the EU maintaining a "common rulebook" for all goods including agri-food, but it will cover only those areas "necessary to provide for frictionless trade at the border".

The government, says the statement, would then "strike different arrangements for services", the criterion being that it is "in our interests to have regulatory flexibility". And, on that basis, the government recognises that "the UK and the EU will not have current levels of access to each other's markets".

This, as I have already pointed out, is cherry-picking at two levels. At one level, the UK is retaining the option to extract service provisions from the Single Market and, at the second level, the UK is deciding to apply only part of the acquis, on grounds of its own choosing.

Yesterday, even as the cabinet was meeting, Michel Barnier was speaking at the Institute of International and European Affairs, declaring that the Single Market was the EU's "main economic public good".

Said Barnier, "We will not damage it. We will not reverse what we achieved with the UK". Thus, he said, "we must find solutions that respect the integrity of the Single Market".

Yet, right up front, in attempting to split off services from goods, and then cherry-picking the goods, the UK is challenging the integrity of the Market. If this was to proceed, the acquis would become precisely the la carte menu that the EU has refused to entertain.

The next objection will be found in a sleight of hand by the UK government, on the way EU law is to be adopted. The statement says that the UK will make "an upfront choice to commit by treaty to ongoing harmonisation with EU rules on goods" something which would be essential in any agreement.

But this apparent commitment is then substantially watered down by the assertion that, where the UK had chosen to apply a common rulebook, "Parliament would still have a lock on incorporating rules into the UK legal order". It could choose not to pass the relevant legislation, accepting that this "would lead to consequences for market access, security cooperation or the frictionless border".

What this means is that the UK is planning to put to the EU a proposition that it will select those parts of the Single Market acquis that it wants, but even then will reserve the right to refuse to adopt individual measures within the groups that it chosen.

This could be couched in terms of "safeguard measures", with a defined procedure as in the manner of Article 112 of the EEA Agreement, but the more likely response of the EU in the unlikely event that it was still on board would be to demand a guillotine provision, similar to that adopted by the Swiss.

Any such provision would mean that a refusal to adopt a measure would effectively terminate the agreement, thereby to all intents and purposes negating the Parliamentary lock. What might be just acceptable to the EU would surely by overturned by Parliament.

The next major and probably insurmountable hurdle is that proposal that the UK and the EU "would also agree to maintain high regulatory standards for the environment, climate change, social and employment, and consumer protection meaning we would not let standards fall below their current levels".

Here, one has to read between the lines, although deciphering is not too difficult. What has to be appreciated is that a significant (and increasing) part of the Single Market is law on environment, climate change, social and employment, and consumer protection.

Taking that at face value, the UK is proposing to set a further level of cherry picking and, although not directly stated, is rejecting regulatory alignment and going for equivalence. This is yet another departure from the Single Market ethos and one which is probably so significant that the EU would almost certainly reject market access over a whole range of goods.

Then we have the statement glibly asserting that the UK and the EU "would work together on the phased introduction of a new Facilitated Customs Arrangement". This, the government says, "would remove the need for customs checks and controls between the UK and the EU as if a combined customs territory".

But the point here is that, at a pinch, it might just remove the need for customs checks, but would not eliminate other border controls in particular the sanitary and phytosanitary checks that apply to third country goods. A "facilitated customs arrangement", therefore, would not deliver frictionless trade and thereby avoid a hard border between Northern Ireland and the Republic.

There is also an assumption that only goods might need to be checked at the border, allowing services to be controlled at the point of delivery. But this is a false assumption, based on the government's limited view of the nature of services.

Imagine, for instance, that an aero engine is removed from an aircraft at Dublin airport and then sent by road to Belfast for servicing. Barring any parts used, this would be a services transaction, with the return of the engine to the Republic entirely dependent on conformity with EU law.

At a more pedestrian level, we might see ordinary cars driven across the border for servicing, as well as tractors and other agricultural machinery, and even small marine craft, to say nothing of electrical appliances and the like. Without an agreement on the provision of services, customs officials might even find themselves examining the maintenance books of ordinary cars, turning back those where work has not been done in accordance with EU law.

The accumulation of checks, not allowed for in this statement, means that the requirement to avoid a hard border would not be satisfied. The "backstop" would have to apply. However, in the statement, there is the confident assertion that the "backstop" solution as part of the Withdrawal Agreement "would not need to be brought into effect".

This would doubtless constitute yet another insurmountable hurdle, as there seems an absolute certainty that the EU would demand the application of the "backstop". Especially, it would refuse to allow the remaining Withdrawal Agreement issues to be rolled into the wider, post-Brexit trade agreement.

Without going into more detail, and for example assessing the dispute resolution proposals, and the nature of the institutional framework, there are already more than enough serious impediments for the EU to reject this proposal out of hand.

The indications from Brussels, though, is that the EU will play the long game. It is said to have given up any hope of reaching an agreed Brexit settlement, and has already discounted this latest mad endeavour on the part of Mrs May.

But there are many arrangements to be sorted out, to minimise the potential damage caused by the UK crashing out of the EU, so the Commission and Member States will want to take their time, only pulling the plug at the last possible minute, if they are forced to do so.

We can, therefore, expect a fairly muted response to the UK White Paper, when it finally appears. If it follows the form of this proposal, M. Barnier will not say yes, but he will not say no, either. Instead, after low-level talks through the summer, it will be left to the October European Council to do the deed which may even delay the final rejection to the New Year.

Either way, it is at this point that we must consider any meaningful negotiations to be over. Mrs May, in pandering to her cabinet, has ignored the only parties that matter in these talks the EU institutions and the Member States. Whether wittingly or otherwise, she has given a rational Brexit the kiss of death. Chaos will necessarily ensue.