Giovanni Zaccaroni (Brexit Institute)
The post-Brexit transition is a complex process with multiple variables, affecting horizontally a number of different sectors, from the environment to pharmaceuticals and – of course – finance. The result of the US elections brought to power the 23rd US president-elect of Irish descent, raising questions about how and whether the incoming president will change approach to international trade with the EU and the UK.
The narrowing end of the post-Brexit transition was a short-living truce between the EU and the UK, and the result of the US election is likely to have accelerated the rush in favour or against a deal. In this short piece I will try to explain why, until recently, a hard post-Brexit transition was the only reasonable outcome of the Brexit process and how this approach might be affected by the post-Brexit isolation that the UK is likely to live. Three main scenarios were likely to have appeared in the minds of those advocating for leaving the EU in 2016.
Scenario 1: the UK as a rule-taker in an increasingly Franco-German centred Union
This scenario, which arguably dates back to 2001, has seen the UK becoming increasingly disinterested in EU economic and monetary integration, remaining outside of the Banking Union and outside of the expensive post-economic crisis as well as, more recently, the post-pandemic recovery mechanism. The UK has also been incapable of reacting to the Franco-German alliance that seems to drive the current process of European integration. The growing gap between EU and non-EU Member States, as well as the absence of valuable techniques of differentiated integration, also played a part in this. This scenario has been mentioned by Sir Jonathan Faull as the likely reason for the UK’s disengagement towards the EU that culminated in the 2016 referendum.
Scenario 2: the UK as a rule-taker with a deal that respects the EU market rules
This second scenario would have seen the UK outside the EU with a softer process, after an exit referendum and a smooth transition phase, with the UK negotiating a horizontal deal and perhaps even various sectorial agreements in line with the EU Internal Market. The UK would have been ultimately driven under the influence of the EEA and EFTA EU satellite market integration systems, where, with the notable exception of Switzerland, the other partners (Lichtenstein, Iceland and Norway) behave as rule-takers of the EU system with only a limited influence on the process in Brussels. This would have at least given the possibility to the UK to opt out of the EU agricultural policy but would have eventually transformed the UK into a satellite country of the EU with the aggravating circumstances that the UK is not in the same position as Norway (whose economy relies largely on oil) and Switzerland.
Scenario 3: the UK outside the EU without a deal
The third scenario is the closest to the one we are currently living. The UK completed the withdrawal from the EU after a troublesome process and several extensions to the final Art. 50 deadline. It negotiated a Withdrawal Agreement and a Political Declaration that largely compels both sides to find a horizontal or several sectorial deals in EU terms. However, there is not enough time to negotiate any of these deals and the likely outcome is that from the 1st of January 2021 EU law will simply stop applying to the UK. Aware of that, the UK government approved a UK Internal Market Bill that unilaterally derogates from several parts of the Withdrawal Agreement and the Political Declaration. This looks more like an attempt to resonate with EU law. In the meantime, the UK is attempting to reach deals with other international partners, such as Japan, to try to compensate for the lack of participation into EU international trade policy. This scenario was the only reasonable outcome of the withdrawal process as it is the only one where, even without a deal at the end of the transition period, the UK would have hoped to ‘take back control’, perhaps in a ten years time-frame, with sectorial international agreement based on the Swiss model, i.e. relying on the power and influence of its massive baking sector.
This last scenario, however, seems to have lost much of its original appeal. The attempt of unilaterally derogating from several provisions of the Withdrawal Agreement and of the Political Declaration, that was embodied in the UK Internal Market Bill, was largely an attempt to buy time to set the stage in the event of a shrinking WTO system under the lead of a second Trump presidency. It was also, simultaneously, an attempt to adjust the UK devolution system, prioritising and strengthening the needs of the Union (intended as the United Kingdom) over the regional needs of the devolved nations. It seemingly ended up damaging the devolution system and leaving all the regional partners, including Wales, feeling disgruntled.
The result of the US presidential elections is also not so reassuring for the UK government in the post-Brexit transition. Even though Joe Biden might not be so pro-EU as many believe, he is a committed social democrat of Irish descent, and has already made clear that under his presidency he would not tolerate a post-Brexit Irish solution that would endanger the Good Friday Agreement. This was the underlying spirit of the UK Internal Market Bill, a bill that now seems to lack the international support that was needed to bring it to success. We now know that there were three elements that created the perfect background – and made reasonable – a post-Brexit transition without a deal: a) the disengagement of the UK from the EU integration process since at least 2001, b) the need to re-adjust the UK devolution process and to keep the devolved nations under control and c) an isolationist US political and commercial partner.
Had the UK swiftly completed the Art. 50 process and left the EU without a deal, it might have had enough time to negotiate a deal with the US before the end of the Trump presidency. Now the situation seems far more hazy and very likely to end up with a last minute horizontal ‘skin and bone’ deal that would bring the UK slowly but steadily under the EU-EEA-EFTA influence (thus becoming an EU satellite state) or without any deal, but also without the necessary political support of the new US presidency. Of course, this is not the end of the world either for the UK or for the EU: both sides will find a way to survive without each other. However, a hard post-Brexit transition was the only reasonable outcome of the Brexit process, to avoid the UK from becoming, one way or the other, a rule-taker. Now that the possibility to end the transition period without a deal is much less appealing, the UK seems likely to pay the price of its historical isolationism. A last minute deal might therefore still be foreseeable.
Giovanni Zaccaroni is a postdoctoral researcher in EU law at the Brexit Institute, Dublin City University. The author writes in personal capacity. Republished from Sussex Law School’s European Law and Policy Research Group
Image credit: David Frost has a dinner with Michel Barnier inside Carlton Gardens, in London, July 2020. Flickr No 10 via a CC BY-NC-ND 2.0 licence