Brexit besieges May at home and away

By Andrew Hammond

The UK Government begins in earnest this week the process of securing approval for its EU Withdraw Bill at second reading in the House of Commons.  Consideration of this important legislation comes at a time when Prime Minister Theresa May is besieged -- domestically and internationally -- over Brexit with a difficult Autumn ahead.

Domestically, May is attempting to prevent major rebellions over the EU legislation ahead of the first House of Commons votes.  Weakened by June’s General Election result, which removed the absolute majority of the ruling Conservatives, she is concerned that some within even her own party will table or support potentially crucial amendments to the bill that will undermine the Government’s Brexit vision.

Yet, it is events in Brussels that are of potentially even greater concern right now.  With an October crunch point looming, the third round of Brexit talks last month made no decisive progress.  Political risks over the negotiations, especially over agreeing the multi-billion pound divorce bill, could only grow in coming weeks with the Euro currency already at eight year highs against the pound.

Indeed, despite growing talk in London of a soft Brexit, centred around a significant transition period, the irony is that odds could be increasing significantly of a hard, disorderly exit of the EU.  

Scrambling to show progress, the UK government started last month issuing a series of negotiating position papers on issues from the post-Brexit Irish border to future UK-EU judicial cooperation, yet these have been criticised by European Parliament Chief Negotiator Guy Verhofstadt as a “fantasy”.  More diplomatically, Chief EU negotiator Michel Barnier asserts that London is still failing to recognise fundamental issues like "frictionless trade is not possible outside the Single Market and Customs Union" given the EU’s commitment to the four freedoms of goods, capital, services and labour. 

Some of this rhetoric is aimed at turning the screws on London in negotiations, and EU decision makers need also to engage much more constructively. Yet, public infighting in the UK Cabinet has definitely sent signals in the last few weeks that its Brexit plans are in disarray, and that it has still not reconciled many key negotiating ‘trade-offs’ by apparently wanting close, favourable post-Brexit ties without the costs.

To counteract EU accusations of UK unpreparedness and failure to set out a clear enough vision for its planned exit, May is seeking to seize back the initiative. At stake in September is whether enough momentum is perceived to have been secured to persuade October’s meeting of the European Council that the second phase of Brexit talks should be started on the future new UK-EU relationship, especially over trade. 

This decision is one for European decision-makers alone to make underlining the in-built strengths of the EU’s position in the two year Article 50 process. And Barnier recently indicated the growing likelihood of second phase talks being kicked out, potentially to December or even 2018, given his assessment that discussions of so-called “separation” issues -- including the UK’s ‘exit bill’ for EU exit -- have not seen enough progress yet. 

If such delay happens, as now seems likely, prospects increase of no final deal and a hard, disorderly Brexit, as these second phase discussions may be reduced to 10 months or less. This is because Barnier wants talks wrapped up by October 2018 to allow for any finalised agreement to be ratified before March 2019 when the two years of the Article 50 period end.

May has acknowledged that there is still “a lot to be done” in negotiations, and is planning to make a set-piece Brexit speech this month to try to set the agenda.  Moreover, ministers are also seeking to break the impasse in talks through publication by the end of the month of approximately a dozen of the negotiation issue papers. 

Thoughtful as some parts of these publications are, however, they sometimes lack realism. To be sure, May is right to be “ambitious” in the negotiations, as is Brexit Secretary of State David Davis to put “forward imaginative and creative solutions”, but these need plausibility to represent a serious pathway forward.

Take the example of the UK government’s assertions of how digital solutions can help ensure that the Irish border remains a soft one, post-Brexit, even if the United Kingdom leaves the European Customs Union.  This UK faith in technology has already been panned by some industry experts and senior Irish politicians including Taoiseach Leo Varadkar and predecessors such as Bertie Ahearn. Without question, digital technology can play a growing role in border tracking and management, but the nature of the Irish border casts significant uncertainty over whether current IT solutions can completely resolve this issue given the several hundred crossing points which an estimated 177,000 lorries, 208,000 vans, and 1.85 million traverse each month.

Given the complexity of these and other issues, much more constructive dialogue and pragmatism is now needed from both sides if the outlines of a final deal are to be reached in coming months.  Here there is some encouragement from the fact that the UK Government appears slowly, but surely, to be opening the door for compromise, including the red-line May flagged of “bringing an end to the jurisdiction of the European Court of Justice (ECJ) in Britain”.

The UK’s position paper on post-Brexit judicial cooperation softened this language pointing to ending the ECJ’s “direct” jurisdiction, but not necessarily ending its jurisdiction outright in the United Kingdom. This apparent technicality reflects the prospect that this issue risks blocking a final deal, and the UK publication now creates room for negotiating manoeuvre in resolving future UK-EU disputes, for instance over any new trade agreement agreed, which could now potentially involve application of ECJ case law, or European judges.

Taken overall, very significant distance still needs to be bridged if UK-EU negotiations are to remain on track.  With UK ministers doubling down on efforts to start second-phase talks in October, breakthroughs remain possible, but odds are otherwise growing of delays which would tighten already tough timelines, increasing prospects of a hard, disorderly Brexit. 

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