Some Reflections on the Current UK and EU Positions on Brexit

Chloé Papazian (DCU Brexit Institute)

On 20 September 2018, Mr David Lidington, the UK Minister for the Cabinet Office, who is the de facto No 2 in the UK Government’s “chain of command” after Prime Minister Theresa May, visited the DCU Brexit Institute. The Minister spoke at a roundtable discussion which gathered a small group of participants and which took place under Chatam House rules.

At the same time, on 19 and 20 September, the EU held an informal summit in Salzburg with the Member States’ head of state or government. In both his opening and concluding remarks, the President of the European Council, Donald Tusk confirmed the full unity of the EU 27 on the line of negotiations followed by the EU Chief Brexit negotiator, Michel Barnier. The summit was also the occasion for Theresa May to present for the first time publicly to all the EU Member States, through a ten minutes speech on Wednesday evening, the Chequers Agreement concluded last July, as well as the stance of the UK Government on the process of withdrawal. The summit also featured on Thursday a meeting of the 27 EU leaders who discussed not only Brexit but also issues related to migration and internal security.

Because the roundtable discussion and the Salzburg summit offer an up-to-date picture of the current UK and EU positions as regards the UK exit from the EU, they constitute an opportunity for us to review, and comment on the state of the Brexit negotiations. While timing considerably constrains the negotiating process, two major hurdles must be overcome for there to be an orderly Brexit: (1), a solution for the Irish backstop to prevent a hard border between Northern Ireland and the Republic of Ireland and (2), an acceptance and recognition by the UK of the four fundamental freedoms of the single market.

1. Timing: a tight calendar

Since the beginning of the Brexit negotiations, Michel Barnier has repeatedly underscored the constraints posed by the ticking clock as entailed by Article 50 TEU. Four weeks before the EU summit on 18 -19 October, and six months and nine days before the UK exits the EU on 29 March 2019, the withdrawal process of the UK from the EU has entered a thorny ‘make it or break it’ phase. Both events were the occasion for the EU and the UK to clarify the timetable for further negotiations.

The UK Government and the EU27 recalled that a legal text on the withdrawal agreement, as well as a joint political declaration between the two blocs represent a precondition for further discussion on the future EU-UK relationships. Both the legal text and the political declaration might be concluded and presented during an emergency EU summit in mid-November. Originally, the EU October summit had been presented as the final chance to seal the UK divorce from the EU through a legally binding document and a political statement. Yet, as already seen in the last weeks, the time may be too short for Theresa May to reach the necessary compromises; the EU summit will take place only two weeks after the Conservative Party Conference during which one will likely witness significant controversry over the UK’s White Paper and Theresa May’s line of negotiations. Unexpectedly, however, the EU made the November summit conditional upon the presence of progress in the Brexit talks before the October European Council. Donald Tusk made particularly clear that he would not call an extraordinary summit in November to finalise and formalise a withdrawal agreement in the absence of a solution for the Irish border issue. Such a precondition puts considerable pressure on the UK Government to propose, or agree on, a workable alternative to the Irish backstop.

Should the EU and the UK conclude a withdrawal agreement in November, the agreement would still need to be ratified by Westminster and the European Parliament before a transition period starts after the exit of the UK on 29 March 2019. The transition period during which the EU and the UK are expected to reach an arrangement on the form of their future relationships should last until 31 December 2020. The general elections in 2022 in the UK, as well as the urgency of other matters with which the EU must deal with, could constitute two arguments – yet fragile – for setting a deadline to the temporary arrangement.

2. The Irish backstop: promoting peace and avoiding uncertainty

Should the UK successfully reach the transition period, a temporary regime would apply while the two blocs negotiate the future of their relationships. In December 2017, the EU and the UK Government jointly agreed to introduce an Irish backstop to prevent a hard border between Northern Ireland and the rest of the island. The backstop would apply if an alternative arrangement cannot be found after Brexit. It would remain in force if the future EU-UK trade agreement cannot guarantee frictionless trade at the border between Northern Ireland and the Republic of Ireland.

Uncertainty over this temporary customs arrangement would seriously put at risk cross-border healthcare services. It would also endanger the economic stability of SMEs and of companies employing foreign persons and relying on cross-border services, or on integrated supply chains between the UK and Ireland.

Both the EU and the UK recognize the unique situation of Northern Ireland where the peace process is still fragile, as well as the complex history shared between the UK and Ireland. In this context, the UK Government remains committed to the Belfast agreement, its institutions and the preservation of an invisible border between North and South. Finding a solution to avoid the re-establishment of a border constitutes the priority for the UK Government and the EU 27.

In her Salzburg speech, Theresa May reiterated that the White Paper proposals represent the only solution to prevent a hard border between Northern Ireland and Ireland. By abiding by a common rulebook on goods and agri-food products with the EU and by collecting customs duties on behalf of the EU at its border, the UK would preclude regulatory checks taking place between the UK and the rest of the EU. Arrangement over the future relationships between the two blocs should, nevertheless, not be part of the withdrawal agreement. The UK Government has not yet proposed a short-term solution that would apply in the absence of a deal, or during the implementation period of the new economic partnership.

According to the legal text proposed by the EU on the backstop, Northern Ireland would stay within the Customs Union and the Single Market. Such solution may nonetheless require the imposition of a border on the Irish sea between the UK and Northern Ireland. Most recently, Michel Barnier has attempted to improve the proposal, as well as to ‘de-dramatise’ the extent and array of checks that would be conducted across the Irish sea. The EU Brexit Chief negotiator pointed out that most checks would take place in companies’ premises, at airports and ports. Additional customs and value-added taxes declarations could be dealt with while transiting, or before being shipped.

While we are still waiting for a text laying down the new EU proposals, Theresa May overtly rejected the EU proposal. It would undermine the constitutional integrity of the UK and violate paragraph 49 of the December 2017 Joint Report. Furthermore, leaving this choice to the people of Northern Ireland would necessitate an amendment of the Northern Ireland Act.

3. The UK White Paper: “Serious and workable proposals” or “cherry-picking”?

As the clock is ticking, divisions between the two blocs appear more salient: not only the absence of a constructive UK proposal on the Irish backstop but also the approach adopted by the UK Government within its White Paper are strongly criticized by the EU as “cherry-picking”. Speaking on behalf of the EU27, Donald Tusk recalled that the EU will, under no circumstances, compromise on the four fundamental freedoms and the single market.

The European Council President admitted that there were some positive elements in the Chequers Agreement and affirmed that the EU remained sceptical about the Chequers proposal without rejecting it in its entirety. Yet, it appears that the EU, relying on the unity of its 27 Member States on the process of withdrawal is not ready to move or alter its solidly rooted stance. It therefore seems that the UK would have to offer further compromises or change its strategy. Theresa May countered that since the UK has put forward “serious and workable proposals”, it would have expected flexibility and conciliation from the EU.

The roundtable with Minister David Lidington and the Salzburg informal summit saliently revealed the major remaining divergences between the EU and the UK Government. While Theresa May had hoped that the summit would create a momentum and give her some support as she goes into the Conservative Party conference next week, the EU27 adopted a rather strict and uncompromising tone. At the same time, the position of the UK Government remained unyielding: it waited for a response in kind from the EU after having significantly moved its position with the July White Paper. Certainly, the words continuity, alignment, concessions, conciliation and compromise were at the heart of the discussions between the two blocs. On the one hand, Theresa May confirmed that the UK stayed strongly committed to the peace process, and by the same token to the maintenance of an invisible border on the island of Ireland. The EU, on the other hand, acknowledged the presence of positive elements in the Chequers plan. Yet, the UK Government presented the White Paper as the only possible route to avoid a hard border, whereas the EU27 rejected its main content.

Amidst severe critics within Theresa May’s own party on the Chequers Agreement which cost two major Cabinet resignations over the summer, the UK Government may not survive should it accept to further compromise with the EU to conclude a withdrawal agreement. The UK may therefore refuse to move its stance. On the other side, the EU leaders, despite an alleged spirit of compromise, used a harsher tone. They made the Brexit calendar conditional upon the realisation of maximum progress. Moreover, they turned down the White Paper without reserve. Interestingly, rather than focusing on the technicalities of the proposals (i.e. whether these proposals are feasible and realistic), the EU rebuffed the document on principle, arguing that a cherry-picking approach would considerably jeopardize the roots of the European project.

Like in a prisoner’s dilemma, both the UK Government and the EU might want to obtain the maximum outcome of the negotiations and refuse to cooperate. By choosing this route, however, they may be confronted to a lose-lose situation rather than a win-win situation. It might be dangerous for the EU to adopt a too inflexible approach especially in a context where the multilateral trading system is at risk and trade wars are looming worldwide. As for the UK side, the Government should perhaps start thinking of discarding parts or the entirety of the Chequers plan and reconsider its negative stance vis-à-vis an EEA type proposal.