13 December 2017

Paul N. Goldschmidt: Brexit: Sufficient progress? An agreement full of contradictions!

The agreement reached under maximum pressure by the EU and the UK is a paroxysm of ambiguity and hypocrisy, whose main merit is to avoid the premature interruption of the Brexit negotiations as well as to offer the main protagonists peaceful year end celebrations, writes Paul Goldschmidt.

The fudge by which the parties have agreed in full (bad) faith that “the conditions to start the second phase of negotiations have been met” is based on two affirmations which are clearly and knowingly interpreted differently by the signatories:
 
The first concerns the affirmation of the slogan “there is no agreement on anything as long as there is no agreement on everything”.
 
For the UK, it means that the payment of its acknowledged financial obligations could be put into question should the parties fail to agree on the terms of their future relationship, as was made clear by David Davis in the Commons; for the EU, it is taken for granted that the principle of the payment (rather than the amount) is definitively accepted because it is a precondition to the opening of the second stage of negotiations.
 
The second concerns the undertaking to avoid a “hard” border between Ireland and Ulster.
 
While Arlene Foster (DUP) asserts that this means “that there is no red line in the Irish Sea and that she has received clear assurances that the United Kingdom as a whole will leave both the Single Market and the Customs Union”, Mrs May has, on the other hand, undertaken that “the UK will ensure that the regulatory regime of Northern Ireland will be fully aligned on Community law. Furthermore, in the absence of agreed solutions” on a post-Brexit trade regime, London was committed to an “all-island economy” — including having Northern Ireland abide by the rules of the EU single market and customs union”.
 
It is quite clear that these two interpretations are incompatible; it would be therefore highly advisable that a suitable (unlikely) clarification be requested prior to confirmation of the terms of the “divorce agreement” to be given at the forthcoming summit. Indeed, on the basis of this agreement, it appears that the UK must choose between one among four options:
 

1. Negotiate the withdrawal of its notification under Art. 50 and retain full             membership of the Union.

 
The delivery of the withdrawal notice dated March 29 2017 initiated an irreversible process of two years leading inexorably  to the departure of the UK from the EU. This process can, however, be modulated under the terms of two agreements covering respectively the “divorce” and the “future relationship” between the parties; both need the unanimous approval of the Council and a majority vote of the European Parliament. Nothing, however, would prevent taking into account within this framework a request from the UK to withdraw its notification and remain a Member of the Union. Such a procedure would void the need to “re-admit” the UK. It is nevertheless highly likely that the conditions of membership would be revised, demanding in particular that the UK forgo its budget rebate as well as the benefit of specific opt outs such as membership of Schengen, of the EMU, etc.…).
 
This solution seems highly unlikely because it implies reversing the result of the “non-binding democratic” referendum as well as imposing new obligations on the UK. It can only be seriously contemplated if an exit without an agreement became itself unacceptable to the British, position that would need confirmation by new elections or by referendum.
 
        2.      Leave the EU but retain membership of the Custom’s Union and the                      Single Market.
                 (Extend the regime that is supposed to govern the “transition period”)
 
This option is in contradiction with previous undertakings of Theresa May. While it is in line with the commitments of the “divorce” agreement, it implies the subordination of the UK to the rules of the EU (rule taker), the inability to negotiate separate trade deals with third parties, etc. Such restrictions should be welcomed by Ulster, Scotland and Wales because the reversion of other EU powers would mainly benefit the British Government and Westminster.
 
          3.    Negotiate a Free Trade Agreement. (CETA model)
 
This option implies instituting border controls either at all external borders of the UK or between Ulster and the remainder of the UK. It is not possible to guarantee simultaneously the territorial integrity of the UK market including Ulster and the indivisibility of the market on the Irish island. Regardless, any FTA cannot confer on the UK the same privileges as those enjoyed by members of the Customs Union and of the Single market.
 
          4.    Leave the EU without any agreement. (WTO model)
 
Leaving the EU without an agreement covering the future relationship would be detrimental to both parties and carries with it the risk of judicial procedures which would jeopardise any harmonious future cooperation. It should be evident that this option is particularly dangerous in the current instable geopolitical climate which should, on the contrary, underscore the mutual benefits of a European continent speaking with a single voice in order to provide joint security and prosperity to its citizens.
 
Insofar as the commitments contained in the divorce agreement are considered to be binding, there is little room left for accommodating the UK’s preferences within a “bespoke” deal. This means that the UK should be prepared to face a series of new and unpalatable concessions as a result of the talks.
 
The situation is further dramatically complicated because the mere suggestion of reversing Brexit, however rational, will split the conservative party and bring down the government. The spectre of a Labour government under PM Jeremy Corbyn would also be highly destabilising, reinforcing by default the likelihood of the UK exiting the EU with no agreement.

Full article on Paul N. Goldschmidt website

© Paul Goldschmidt