Articles - November 2018

A Race Against Time: The Deadlock Over Brexit and What Happens Next

Chequers has been the week-end country retreat for British prime ministers since 1921. A stained glass window in the house calls it “a place of rest and recreation for (Britain’s) prime ministers for ever.” But this summer, Chequers, a 1,000 acres of Buckingham countryside 41 miles from Downing Street, became the focus of tough negotiations. It was here that Prime Minister Theresa May persuaded leaders of her Conservative Party to accept her proposed exit deal with the European Union.

In what has become known as the Chequers Proposal, the British government will leave the EU customs union, allowing it to make trade deals with other countries, but wants to keep access to the EU market on tariff-free terms, as before the impending divorce. To make this more palatable to Brussels, Prime Minister May proposed to continue to accept EU regulations for industrial goods and agricultural products. The deal will also mark the end of an open borders policy, thus shutting off free access to the U.K. for European immigrants, which was one of the major drivers in the vote for Brexit. The deal also calls for the restoring of English law and ending the jurisdiction of the European Court.

Two of May’s ministers, Foreign Secretary Boris Johnson and David Davis, the UK negotiator with the European Union, opposed the Chequers deal as falling well short of a real Brexit, and promptly resigned, making May’s already shaky position as prime minister and leader of the Conservative party even more tenuous.

Worse, in September, May presented her deal to the European Union at a summit of leaders of the 28 member states. Downing Street called it “the only plan on the table,” but the European Union wasn’t impressed. May’s request effectively to retain a privileged position in the single market was rejected, increasing the likelihood of no agreement being reached by the March 29, 2019 deadline. The European Union argued that non-members couldn’t enjoy the same access as members. Jean-Claude Juncker, president of the European Commission: “If you leave the union, you are of course no longer part of our single market, and certainly not in the parts of it you choose.”

Observers say the September meeting showed that, with the Chequers deal dead in the water, the positions of the United Kingdom government and the European Union remain far apart. The two remaining fixed key dates in the negotiation schedule are a final EU summit in mid-October to complete and approve a withdrawal agreement or treaty, and then, of course, Brexit Day, March 29. All of which means that the May government will have had little time to go back to the drawing board.

If an agreement could be reached, Prime Minister May would have to spend the intervening months pushing it through a deeply divided British parliament. The European Union, for its part, would need to secure the approval of at least 20 out of the 27 member states. But at the time of writing, pessimism was growing that a “crash out” of the European Union was the most likely outcome.

With no deal by March, Wall Street Journal columnist Walter Russell Mead predicted that “onerous trade barriers will snap into place. The likelihood that post-Brexit Britain will suffer severe economic shocks and dislocation is growing.”

Not surprisingly, pro-Brexit members of May’s government blame EU intransigence for looming failure of an amicable divorce. “The intransigence of the (EU) commission is pushing us towards no deal,” lamented Liam Fox, the British secretary for international trade. But European Union leaders, even those who sympathize with the U.K., fear that if Brexit terms were too favorable other member states might be tempted to follow and the union will be inexorably weakened.

An extension of time for further negotiations seems unlikely because of the EU’s insistence on Article 50, which sets the time table of a withdrawal from membership at two-years.

Some see a glimmer of hope in the shape of a withdrawal treaty covering the issues already agreed (payment of the 39 billion pound - $51 billion – settlement, disengagement from the European Court’s jurisdiction, closing borders, etc.) – but leaving a trade deal to future negotiation. Although the question is, will this compromise formula be acceptable to either the hard-Brexit (complete divorce) supporters in the U.K. or the hard-liners in Brussels?

One unresolved issue is how to deal with the two Irelands, the Irish Republic, which is, and will remain an EU member, and Northern Ireland, a component part of the United Kingdom. The May government is opposed to setting up a customs border between the two parts of the Emerald Isle because it would be divisive. The EU fears that the open border would give access to duty free EU goods to the UK through an Irish “back door.” One proposal, which still has to be agreed upon, is to hold customs inspections at sea of goods destined for Northern Ireland.

The British had to fight hard in the 1960s to be finally admitted to what was then called the European Economic Community; 45 years later, they are having to fight just as hard to make a satisfactory exit. President de Gaulle stalled Britain’s application because he believed that admitting the British would lead to undue U.S. influence. He was convinced that Britain was more Atlanticist than truly Europe. The present European Union leadership is determined to not allow the Brits to have their cake and eat it, too.

The uncertainty has continued to give shape to the notion of a second Brexit referendum, which many either feel - or hope - will reverse the original decision to leave the EU. At its annual party conference in September, the opposition British Labour Party, which has been steadily gaining support as the Conservative Party has declined and could win an election if one was held, voted overwhelmingly for a motion making a second referendum an option.

EU officials pour cold water on the likelihood of another referendum. One Eurocrat called it “not a solution to anything,” and told Reuters news agency, “The first referendum is still keeping us busy. And will (the Brits) want to have a third one in two years?”

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