Brexit Briefing No. 63: What Comes Next (Week Beginning 3rd December 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).

After months of seemingly endless negotiations, the Brexit process enters its most crucial phase next week when British MP's vote on the withdrawal agreement.

Predictions about British politics are hard to make these days, however it is certain that significant numbers of MP's will oppose the deal. At the time of writing it looks highly likely that it will be rejected.

It is hard to overstate the importance of next week’s vote. If it passes then Brexit is guaranteed on the 29th March 2019. This vote is the last serious political hurdle Brexit has to jump. However, it will also commit the UK to a backstop (including a one-sided customs union) which it cannot unilaterally exit, effectively tying the hands of all future governments. It will also be a big gamble, as there is no guarantee that there will be a trade deal at the end of it.

If the deal is rejected, the UK could face a full-scale constitutional crisis, with the government having been defeated on its flagship policy, with no easily achievable alternative and the UK on course to leave the EU without a deal at all in just over 3 months time. All alternative options then become possible including an extension of Article 50, a general election, a no deal Brexit, and a second referendum. That in itself may provide a clue as to why the depth of opposition is so great.

Given the stakes, it is worth outlining why the deal is so controversial for many British MP's.

The main concern is the backstop, which is the joint EU/UK attempt to avoid a hard border in Northern Ireland. It is due to come into force if a trade deal has not been agreed at the end of the two year transition period, which will immediately follow the UK’s exit from the EU in March next year.

It is therefore an insurance policy, as if a trade deal could be agreed within 2 years then the backstop would never be needed.

The problem is that trade deals normally take a long time to agree as they touch upon highly sensitive sectors, such as agriculture. The EU-Canada trade deal took 7 years to negotiate and after that was almost vetoed by the Wallonian regional parliament. It is still not fully ratified.

It is therefore reasonable to assume that the backstop could well be invoked, as the only alternative under the deal is to extend the transition period which would effectively keep the UK subject to all EU rules.

Once the backstop is invoked, it cannot be unilaterally revoked by the UK. The EU has a veto over the UK exiting it under the withdrawal agreement. 

This is where, paradoxically, the Prime Ministers biggest success in the negotiations, (ensuring that the backstop is UK wide rather than applying only to Northern Ireland), is causing the government the biggest problems. Once the backstop is invoked, the UK is bound to the EU customs union and the one-sided trade access that enforces (https://www.danieldaltonmep.co.uk/news/why-staying-customs-union-bad-idea). This will leave the UK eager to agree a trade deal to escape the backstop, potentially significantly weakening its negotiating position in the trade negotiations on issues such as fisheries access. It opens the UK up to having to make concessions to any EU country that might want to take advantage of the UK’s weak negotiating position (such as Spain with Gibraltar) and crucially it will have to be better at keeping the Irish border open than a customs union is. As the EU have repeatedly stated that they don’t believe such a trade deal could ever be superior to a customs union, the UK could face the prospect of only being able to get out of the backstop if it is prepared to give up effective economic sovereignty over Northern Ireland.

This is why many are uncomfortable with the deal, however the EU will not do a deal without a backstop. If the UK had the ability to leave it unilaterally that would negate the value of the backstop altogether. The EU has always wanted to ensure that a future UK government could not unilaterally walk away and leave the EU to have to deal with the border problem, either by forcing the Irish government to put up a border against its will or by having to put customs barriers between Ireland and the rest of the EU.

This has always been the sticking point in the negotiations and if the British government rejects the deal mainly because it cannot unilaterally leave the backstop it is hard to see where the negotiations can go from there. As the Prime Minister has repeatedly explained, this is the only deal on offer. The EU won’t concede on this point, if the British Parliament will not either, then there is no chance of an orderly Brexit. Only three options then remain. Either extending negotiations (although they will ultimately end at the same point) leading to the only two real options in play - no deal or no Brexit. Neither are very palatable or politically realistic choices at this stage.

In terms of parliamentary procedure, the European Union Withdrawal Act voted through this summer sets out the next steps should Parliament reject the deal. The Government has 21 days to make a statement to the House of Commons setting out how it plans to proceed. Within seven sitting days of that statement, the Government must bring a motion expressed ‘in neutral terms’ for the House to consider.

The Commons voted this week to ensure that, if the Prime Minister’s deal were to fail, Parliament would get a say on the way forward. MPs did that by ensuring that the ‘neutral’ motion, required under the EU Withdrawal Act, would be amendable by Parliament. Those amendments would not be legally binding, so the government could, in theory, ignore them. Whether it could politically ignore them is another matter.

The international trade secretary, Liam Fox, confirmed this week that some discussions had already been conducted in view of a fourth possible option. That would be for the UK to “park” in the European Free Trade Association (ETFA) as a stepping-stone to a future Canada style trade deal. EFTA is a free trade area comprising Iceland, Liechtenstein, Norway, and Switzerland. EFTA is not a customs union, meaning that member states can negotiate bilateral trade arrangements with other countries. However, its member states have jointly concluded free trade agreements with a number of countries. Iceland, Liechtenstein, and Norway are part of the EU’s single market through the EEA agreement. Switzerland however does so through a series of bilateral agreements with the EU, which the EU does not like. All are outside the EU fisheries and agricultural policies. They all have to follow most EU law without any ability to shape how the law is made. They also all accept EU freedom of movement. (http://www.efta.int/eea/decision-shaping)

So whilst this is a possible half way house, it still does not solve the Northern Irish border problem. That would require an additional customs union and a backstop with all the problems associated with that. As the UK would need EU approval to join EFTA this path would not be a way to circumvent the political problems associated with the backstop.

Time is also running out before the March 29th deadline day.

An extension of Article 50 would be required for any further negotiations on any of the options, otherwise the UK automatically ceases to be a member of the EU on the 29th March next year.

That needs the approval of all other 27 EU countries, however the political reality is that an extension would almost certainly be forthcoming, there is zero appetite on either side for a no deal scenario. There is also the simple logistical issue that the necessary customs architecture has not yet been built at the UK’s airports and ports.

The withdrawal process itself has been under legal scrutiny this week. A group of campaigners brought a case to the European Court of Justice (ECJ) and the advocate general issued a preliminary opinion saying that Article 50 can be unilaterally revoked by the United Kingdom.

The opinion does not mean the court will agree with the legal challenge, but most judgments from the ECH later endorse the position of advocate generals. The ruling will be handed down on December the 10th, the day before the vote in Westminster. This in itself is extraordinary. ECJ cases take an average of 15 months to be concluded, this one has taken less than 2 months. Given the speed between the advocate general opinion and the final judgement (less than a week), it does suggest that the ECJ is playing a political role and confirms the suspicion that many in the EU do not want the UK to leave at all. Fast tracking this judgement to the day before the vote is clearly a political move and appears to be designed to put even more pressure on the British government.

So the next week will be momentous. Either the deal is supported by parliament, which will mean that Brexit is a done deal in legal terms, or it will be rejected and literally anything can happen.

Daniel Dalton MEP