Brexit Briefing No. 47 - Parliamentary Arithmetic and No Deal Planning (Week Beginning 16th July 2018).

This article has been kindly given to the SSCA by Daniel Dalton MEP, Conservative MEP for the West Midlands (daniel.dalton@europarl.europa.eu).

The summer months are quiet ones in Brussels, as the European institutions effectively close down. The Parliament is on recess, there are few Council meetings and the Commission work effectively shuts down until the end of August. 

So for the next month or so there will be little in the way of Brexit negotiations after Dominic Raab and Michel Barnier meet for the first time this week.

However in London, itself only a week away from recess, the temperature has been rising to temperatures not seen since the mid 1970s, both inside and outside the Parliament.

The fallout from the Chequers agreement dominated votes in Westminster on a variety of Brexit related legislation, most notably on customs and the withdrawal agreement.

If those favouring a softer Brexit were in the ascendency a week ago, the pendulum switched firmly in favour of those wanting a more distant relationship once the legislation was voted on in parliament.

The government was forced to accept a number of amendments that will have an impact on the negotiating position agreed by the Cabinet a week ago.

The first was an amendment which will ensure that no barriers can be created between Northern Ireland and the rest of the UK. This could have an impact on the Northern Irish backstop which was supposed to kick in in the event that there is no agreement at all between the EU and UK. The EU’s interpretation of this is that such a scenario would ensure that Northern Ireland stayed aligned to EU single market and customs union rules, even if this created barriers with the rest of the UK. The UK government view has always been that this backstop applies to the whole UK, not just Northern Ireland and that is now enshrined in UK legislation.

This reinforces the UK negotiating position on this issue and is welcome clarification that Northern Ireland will not be artificially split from the UK in the event of no agreement, but it does appear to undermine the EU’s interpretation of the withdrawal agreement agreed in December and highlights yet again how far apart the two sides are on the issue of the Irish border.

The second key amendment was related to the UK customs proposal included in the Chequers agreement. This was a proposal where the UK would collect tariffs for the EU for goods destined for the EU market in order to ensure there are no customs barriers between Northern Ireland and Ireland. The amendment makes this conditional on the EU offering the UK the same, i.e. that the EU will collect tariffs on goods bound for the UK market.

This is a well crafted wrecking amendment because there is no way the EU would agree to this. They have already ruled it out on many occasions. This amendment therefore effectively scuppers one of the key parts of the Chequers agreement, even though it is on the surface, eminently reasonable. It’s not really viable for the UK to agree to collect tariffs for foreign governments without reciprocation.

However the government managed to defeat (by just 6 votes) an amendment which would have kept the UK in the customs union if no agreement had been found with the EU. This amendment would have effectively destroyed the government’s negotiating position and would, according to government sources, have led to a confidence vote in the government.

The government managed to keep its strategy intact, just. However they lost amendments to keep the UK in the European Medicines Agency (something which is only possible for EU or EEA members) and to keep the UK out of the EU VAT zone, something which appears to be at odds with the withdrawal agreement commitments to ensure no hard border in Ireland.

The overall impact of this is hard to predict, although the government won the most important votes. It therefore sends a strong message to Brussels that despite the challenging parliamentary arithmetic, the government can probably get the final deal agreed with the EU through Parliament.

However it accepted some amendments which appear to undermine the Chequers agreement and others which commit the government to both staying close to the EU and being more distant. It appears certain that some aspects of this will need to be revisited after a deal has been agreed with the EU due to these inconsistencies.

The government will take the package to Brussels and seek to use it as the base to start negotiations. Dominic Raab, the new Brexit Secretary of State visited Michel Barnier in Brussels this week to try to get those negotiations restarted.

The EU reaction to the Chequers agreement has so far been non-committal. Eager not to shoot down the proposal immediately, EU leaders have cautiously welcomed it as a way to start the negotiations. However this doesn’t mean that they like the proposal. The general feeling has been that it is not a viable end point but a good basis on which to get everyone into a room to at least start negotiating. In that respect the Chequers agreement has been a success because its main aim was to reset and restart the stalled negotiations.

However the key challenge is how much further both sides can go. They are both probably at the limit of what they can offer yet still the two sides seem miles away from an agreement. Given the lack of remaining time (an agreement needs to be reached by the end of October in order for an orderly Brexit to take place in March next year), thoughts on both sides have turned to what happens if this cannot be done in time.

The Irish Taoiseach Leo Varadkar warned that British planes would be banned from EU airspace in the event of no deal, meaning that not only could they not fly to Europe, but they also could not fly over Europe to reach other destinations. It is similar to a tactic Gulf nations have been using in their trade war with Qatar.

This is a threat which would hurt everyone but is the legal situation if no deal is agreed. Yet it is more significant than that because Irish and British airspace is jointly managed by British air traffic control authorities as it is effectively the only air route from continental Europe to North America and stretches for hundreds of miles out from the island of Ireland into the Atlantic. It appears therefore that the Taoiseach is also proposing to end the bilateral UK-Irish management of this corridor which would hugely impact all transatlantic travel and not just hurt the UK.

This is one of the great challenges of the ‘no deal’ debate. When people call for ‘no deal’ what they really mean is no trade deal or a limited deal, i.e. the UK adopts WTO rules for trade but that the EU and UK agree on the other areas that govern modern relationships such as visas, aviation, security etc.

However this seems ambitious. If there is no trade deal then the most likely scenario is that at the end of March there is no deal at all, on anything. This is particularly true given the EU mantra of “nothing is agreed until everything is agreed”.

A real ‘no deal’ no deal would mean that all agreements between the EU and UK would fall. The UK would be the only country in the world without any legal relationship with the EU on anything. This would cause legal uncertainty on both sides and force the UK to try to rely on previous bilateral agreements with individual countries. However in most areas the EU has taken over full control, meaning there would be no legal base for interaction at all.

Travel is a good example. The ability to travel at all between the EU and a third country is governed by visa relations and without a visa agreement UK citizens could only travel to the EU with a Schengen visa, normally obtained at a cost and only after an interview at the EU embassy in London. Even armed with a visa, planes can only fly if the EU and UK have an aviation agreement, which governs the number of flights allowed between different countries, often stipulating how many flights can be flown to which cities by which airlines. Even if that is agreed, EASA (the European aviation safety agency) have to approve the British authorities’ safety standards to allow planes registered or certified in the UK to enter European airspace.

Now in any rational situation these would be agreed quickly, as the alternative is disastrous for everyone. However there has to be a positive agreement on these points otherwise air travel will effectively stop on the day the UK leaves the EU. Similar examples abound in virtually every other area of EU/UK interaction and virtually every industry.

Yet given the rhetoric on both sides and increased talk of “no deal” such a scenario is eminently possible. The Taoiseach’s comments this week suggest that the EU is willing to flirt with this and the UK government is preparing to send 70 technical notices to households and businesses with information on how to prepare for a no deal Brexit. Several EU countries have been doing similar things for some time.

However this is most likely to just be posturing on both sides, a version of political game theory.

The most likely outcome remains that an agreement will be found, probably at the very last minute. What that agreement looks like is still very much open for discussion and quite how any agreement gets through the British Parliament will also be fascinating to watch.

However this week’s events suggest that we are still on course for an orderly Brexit. The government has survived its biggest Brexit test to date, and has been prepared to tweak its strategy to address concerns from both remainers and leavers.

The next few months will see the focus return to Brussels and the negotiations with the EU. This will be no less challenging for the government, but the likelihood is still that an agreement will be reached, probably at the last possible moment. At that stage the final acts of this political drama will play out in Westminster as that agreement goes through the domestic approval process. The government will be cautiously optimistic given the events this week. However the truth is that no one knows or can accurately predict how this will end.

The Brexit Briefing will return in late August unless there are significant developments over the summer which need reporting on.

Daniel Dalton MEP