09 May 2017

LSE: What Macron’s victory means for Brexit

During the tetchy drama of the presidential TV debate, Macron was at pains to explain to Le Pen that leaving the EU – which she had threatened to do by calling a British-style In/Out referendum – inevitably carries a large exit bill. In other words, the new French President can be expected to support a hard line on this aspect of the Article 50 negotiations. Here France will be singing from the same hymn sheet as Germany: both Merkel and her rival for the German chancellorship, Martin Schulz, insist that a settlement of the UK’s liabilities to the EU is a precondition for talking about a new free trade deal.

Another reason the UK may find itself at odds with France under Macron concerns the status of the border arrangement covered by the 2003 treaty of Le Touquet. It is this treaty that allows UK authorities to be based at French ferry ports in order to carry out passport checks; a similar rule applies for the Channel Tunnel. In effect, this system means the UK border authorities can filter out travellers without proper documentation, thereby reducing the number of people able to claim asylum upon landing on British soil. That is a big advantage as the French authorities may otherwise have an incentive to allow people to transit to Britain, because then they become someone else’s responsibility.

The Le Touquet Treaty is a bilateral agreement that has no relation to the EU or EU law. In principle, nothing stops this arrangement from continuing after Brexit. What it depends on is the willingness of the French government to stick to the deal and Macron is on record as saying he would seek to renegotiate this agreement. The deal is unpopular with the French public and several candidates made it a topic in their campaigns. Whether the new president is prepared, with the electioneering out of the way, to take a stance contrary to UK interests remains to be seen.

The problem, from a British perspective, is that the Brexit talks offer more avenues where France could play hardball. That would certainly be in line with Macron’s overall philosophy on the matter, which is best captured in his campaign quip that “the best trade agreement for Britain is called membership of the EU”. He has also made no secret of coveting the relocation of bankers and EU agencies, such as the European Banking Authority, from London to Paris. Indeed, the official EU negotiating stance is that the UK needs to cover the costs associated with moving agencies back to a member state.

Equally, discussions over a UK-EU free trade arrangement to replace EU membership will provide Macron with broader scope for promoting French interests. Issues of regulatory equivalence, the term used to designate mutually agreed standards for selling goods and services, will be central to this deal. It is thus quite plausible to imagine that the new French president will seek terms of equivalence that reduce the UK’s ability to deregulate in areas such as financial services. That would be a way to protect French banking and encourage a maximum degree of job relocation to Paris.

[...] Although a former minister to Hollande, Macron is keenly aware that he cannot make the same mistakes as his predecessor. Brexit offers the new president a chance for France to regain its standing in the EU system, which is why the UK government will need to stop focusing all its attention on German politics.

Full article on LSE EUROPP blog

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