Why Theresa May’s deal is the best Brexit available
I remember many predictions that the EU would never offer such a bespoke deal.
British Prime Minister Theresa May gives a press conference at the end of the European Council meeting in Brussels, Belgium, 25 November 2018. The leaders of the 27 remaining EU member countries (EU27) have endorsed the draft Brexit withdrawal agreement and approved the draft political declaration on future EU-UK relations in a special meeting of the European Council on Britain leaving the EU under Article 50. EPA/OLIVIER HOSLET
There is an infallible way to identify politicians and commentators who have not read Article 50 of the Lisbon treaty. What gives their game away is the complacent and mistaken assertion that a no-deal Brexit is impossible on the grounds there is no majority for it in the House of Commons. The reality is that a campaign to undo the 2016 referendum is virtually impossible without the explicit support of the government.
When British cabinet ministers resigned hours after the publication of the withdrawal agreement between the UK and EU, they could not conceivably have read it, let alone digested its finer points. Many of the MPs who denounced the much shorter political declaration did not read that either.
If they had done so, they might have discovered that this is actually not such a bad deal at all. There can be no deal with the EU based on the opposition Labour party’s six tests. You cannot be in a customs union with full immigration control. Nor could there be a deal without an Irish backstop.
The UK could have chosen different post-Brexit relationships: a full customs union, or the often misunderstood Norway model, which guarantees access to the single market together with membership of the European Free Trade Association. But the UK parliament decided on this particular version of Brexit when it agreed the European Union (Withdrawal) Act, which repeals the 1972 European Communities Act and requires the UK government to ensure the continuation of north-south co-operation on the island of Ireland.
A good way of thinking about this agreement is to look at it from the other side. You may be surprised to find that not everybody in the EU is happy either. This is the “Canada-plus” option the EU at one point said it would never agree to: a free trade deal inside a wider association agreement; it will keep the UK closely aligned to the EU, but with no jurisdiction of Europeans courts; and it allows the UK to set up an independent immigration policy.
The eventual free trade deal will not have the full benefits of a customs union. But it will also not come with the same obligations. It was a choice for the UK to make. The future trade deal will still maintain industrial tariffs at zero, and reduce administrative hassle at the borders. I remember many predictions that the EU would never offer such a bespoke deal.
The EU even compromised on the Irish question when it agreed to an all-UK backstop. From the EU’s perspective, this is potentially problematic. It is a period during which the UK would no longer be a member of the EU. It would not contribute to the EU budget, and yet it will have frictionless trade inside the customs union. It is the ultimate having your cake and eating it type interim solution. It is delusional to think that the EU wants to keep the UK in the backstop purgatory forever. On the contrary, it is far more likely that a future UK government might conclude that the backstop is a rather cozy place to be. More comfortable than the colder climate of a free trade deal.
From the perspective of Remain supporters, the withdrawal treaty keeps several options open that would otherwise close in four months. One is a formal customs union. Or membership of the European Free Trade Association on the Norway model.
More importantly, it would also be consistent with a return to full EU membership. If you are really intent on a second referendum, this is the one go for - not a referendum to frustrate Brexit, but to rejoin the EU. A post-Brexit referendum would give the pro-EU campaign the unique opportunity to do what they failed to do last time: make a positive case for EU membership - one based on identity, citizenship, civil rights and the future of our children, as opposed to the single passport for banks. If a second referendum succeeded, the EU may even fast-track the membership talks. But this would only be possible for as long as the UK has not deviated from the EU’s regulatory regime.
A no-deal Brexit, however well managed, will kill this option for a generation. Hard Brexiters act perfectly rationally when they favour no deal. Not only do they get out, they also slam the door shut. If there is no deal, EU rules would cease to apply in the UK from 11pm on March 29 2019. There would be a hard customs border between France and England. Tariffs would be collected. There would have to be a customs border between Northern Ireland and the Republic of Ireland as well. The regulatory systems of the EU and the UK would diverge quickly. A no-deal Brexit would constitute a real break.
Anyone who disagrees with this extreme version of Brexit should consider their strategy carefully. It would still be rational to disagree with Brexit, but not to reject this surprisingly robust agreement.
Wolfgang Münchau is an FT Columnist