Brexit has not worked, even for its adherents. The next British government must find a way back to Europe. Establishing a customs union with the EU is a first step; signing on to core single market disciplines the second. Sectoral agreements will be negotiated for other policies. The EU must adapt itself to accommodate the British, allowing the UK a QMV vote in the Council on important single market legislation.
A new start
The next general election in Britain is scheduled for late 2024. It may be much earlier. The likelihood is that the new government will be led by Keir Starmer, leader of the Labour party. Given the scale of Britain’s economic problems, his room for manoeuvre on the domestic front will be limited. Starmer’s greater opportunity lies in Europe — specifically, in repairing the UK’s shattered relationship with the European Union. The Trade and Cooperation Agreement (TCA) concluded between the European Union and the United Kingdom on Christmas Eve 2020 is open for general review in 2026. The new government should take every advantage of that review.
At the Labour conference in September, Starmer said he wants to “make Brexit work”. And he told the Centre for European Reform in July that “under Labour, Britain will not go back into the EU. We will not be joining the single market. We will not be joining a customs union”. Unwilling to revisit the old battles of Brexit, his priority will be to facilitate the application of the Northern Ireland Protocol:
“Outside of the single market and a customs union, we will not be able to deliver complete frictionless trade with the EU. But there are things we can do to make trade easier. Labour would extend that new [Northern Ireland] veterinary agreement to cover all the UK, seeking to build on agreements and mechanisms already in place between the EU and other countries – benefiting our exporters at a stroke.”
This is a very low level of ambition. Prime Minister Starmer should prepare to go much further in transforming relations with Britain’s largest and closest trading partner. There is no reason to think that an attempted reconciliation with Brussels would be unpopular. The Scottish and Welsh Nationalists, Liberal Democrats and Greens will all be campaigning for closer (if ill-defined) convergence with Europe. Every effort made by the new government toward building a cross-party consensus around the notion that Brexit has failed will reassure Brussels of its European credentials. All opposition parties should pledge to ditch the sovereignty obsession of the Tories.
At the same time, the Labour leader will have to be dissuasive about rejoining the EU as a full member state. Any attempt to rejoin the EU without the sanction of a referendum would jeopardise the UK’s constitutional integrity. Since campaigning in vain for a second referendum in 2019, Starmer accepts that another referendum to overturn the decision of 2016 would be hugely divisive — with no guarantee of a positive outcome.
It is also clear that the launching of a new application by the UK to join as a full member state would not be warmly welcomed by the EU. Rather, it would encumber the Union with yet another complication to its fragile neighbourhood strategy. The imperative of EU leaders today is to prevent further disintegration. Enlargement is no longer a key political objective. In so far as Brexit has left the Union weaker, smaller and poorer, it is deeply resented by EU capitals and institutions. The legacy of distrust and disappointment will take years to overcome and will in any case require concrete evidence of political stability in Britain. If there were to be a new Article 49 negotiation for full accession, the UK would certainly not be granted the luxury of retaining the opt-outs and cop-outs it purported to enjoy while a member state. There would be no more budget rebate. Sterling would be expected to join the euro. The package of damaging concessions made by Donald Tusk to David Cameron in 2016 — which were in the event rejected in the referendum — will remain a distant bad memory.
Brexit is not working
However, to accept that the UK will not be a full member state of the Union (at least in the foreseeable future) does not mean we should be content merely with “making Brexit work”. On the contrary. Even on its own terms, Brexit has failed. Leaving the customs union and internal market was supposed to free Britain from the shackles of the EU’s internal regulations and its common commercial policy — notably its free trade agreements. But the TCA ignored many of the realities of trade. Freedom to negotiate UK specific free trade agreements came at a massive price: the reintroduction of customs checks and controls on all British exports to the EU. As is normal in all such agreements that seek to ensure a level playing field, the TCA imposes strict and cumbersome rules of origin requirements on UK merchants trading in the EU marketplace. And of course British producers are still obliged to meet the EU’s high regulatory standards if they sell into the European market. Health, food safety and animal welfare controls are applied to all agri-food consignments coming from the UK, leading to further cost and border friction.
In effect, beyond the hype, the TCA is little more than a minimal free trade agreement for goods falling way below the levels of connectivity and interdependence that existed previously. In place of free movement of services across the EU, British service providers are now subject to national policies and charges in each member state. British citizens can no longer work or study in the EU as they would wish. Mutual recognition of professional qualifications has stopped. Visas are needed for long stay visits and, as everyone now knows, all passports have to be stamped tediously. Leaving the single market has meant the erection of new obstacles and higher costs in the fields of transport, aviation, energy, fisheries, social security and science.
Meanwhile, Britain’s home-grown regulatory system, hastily put in place to fill the vacuum left by the departure of the European Commission and its agencies, is not fit for purpose. The Food Standards Agency, the Competition and Markets Authority and the Health and Safety Executive are struggling to manage their new responsibilities with limited resources. The UK Border Force is stretched beyond capacity. Environmental pressure groups, such as the National Trust, the Royal Society for the Protection of Birds and the Wildlife Trusts, lament the loss of serious monitoring of the UK’s ecology. The government’s latest proposal to ‘sunset’ all retained EU law by the end of 2023 is causing additional costs and uncertainty for business and regulators as they struggle to fill the void.
Although the TCA contains provisions that seek to minimise overall economic disruption, the steep decline in the volume of EU-UK trade since 2019 speaks for itself, courtesy of the Office for Budgetary Responsibility in March 2022:-
In so far as any of the claims of the Brexiteers have come to fruition, little attempt has been made by successive Tory governments to exploit their new-found regulatory freedom. ‘Singapore on Thames’ has sunk with Liz Truss.
In one of the most vaunted Brexit ‘benefits’, the EU’s international trade agreements which bound the UK while a member state are in the process of being painstakingly renegotiated. In most cases these have been simply rolled over, with equal or inferior terms to those inherited from Brussels. In one case, Australia, the UK government agreed terms highly disadvantageous to British producers merely to secure an agreement. No wonder then that the economic benefits from these British free trade agreements are negligible, being far outweighed by the new costs imposed on EU trade.
Not the least of the disadvantages of the Brexit agreements is the situation of Northern Ireland. In theory, the province retains membership of the EU single market for goods despite being outside the Union. But this compromise raises undeniable (and entirely foreseen) problems especially for trade between Great Britain and Northern Ireland across the newly created Irish Sea border. The Northern Ireland Protocol to the Withdrawal Agreement has never been accepted by the powerful, reactionary Democratic Unionist Party although a majority in the province votes for parties that endorse the Protocol as a pragmatic solution to the Brexit conundrum.
Britain’s new Prime Minister Rishi Sunak is a Brexiteer in thrall to the nationalistic Conservative party. However smart Sunak may be, he will still be trying, like his three predecessors since the referendum, to make Brexit work. Only a non-Tory government after a general election can chart a roadmap that returns Britain to Europe.
There is plenty of scope, therefore, for an incoming UK government to improve on Boris Johnson’s Trade and Cooperation Agreement. A fresh start implies a British initiative to revive political cooperation. The new government should concentrate on injecting trust and optimism into what has become a tense and fractious relationship between London and Brussels. In concrete terms, the first decisive step would be for the UK to establish a customs union with the EU. This would not be to rejoin the EU customs union but to create a parallel customs arrangement. The line of least political resistance also provides the quickest route to helping out citizens and the business community, including small traders, on both sides of the Channel and of the Irish border.
Building the customs union, brick by brick, was the early achievement of the original European Community (whose later perverted transformation into the European Union was, as far as Brexiteers are concerned, the original sin). Joining the customs union lured both Tory and Labour governments, and Britain profited for decades from its membership and respected the rules and processes that underpinned it.
The EU, therefore, should encourage the UK to establish a customs union with it as soon as possible, the model for which could be the draft updated customs union with Turkey. This will require the UK to pay a modest financial contribution to the EU budget for specific programmes. As long as all products are included in its scope, it will eliminate customs checks at the borders. Alongside agreements on plant and animal health (following the Swiss precedent) and VAT, most of the Brexit barriers to trade would be lifted. A UK customs union with the EU will be of particular help to Northern Ireland. It will not in itself settle the regulatory problems or guarantee the level playing field, but the dispute mechanisms established for the customs union are well tried and tested. Customs union membership does not mean the automatic free movement of workers, nor does it allow for unlimited free trade in services. The UK will need to align with key aspects of the EU’s common commercial policy as far as goods are concerned, including tariff rates, but will retain flexibility to negotiate agreements in other areas, such as digital trade.
Rebooting customs cooperation in this way, if heralded beforehand in Britain and well prepared in Brussels, will be an easy win for the new government — certainly reducing the worst of the friction caused by the TCA. But it is clear that the main economic reverses resulting from Brexit cannot be overcome unless the UK — as a non-member state — applies for privileged access to the EU single market and accepts all the contingent obligations. This would oblige the UK once again to accept the principle of, and act to ensure, the free movement of goods, persons, services and capital with the EU. The neuralgic problem of Northern Ireland would be resolved. In return, the UK would gain guaranteed participation in EU programmes (notably Horizon), the automatic free movement of much-needed workers, a return to near frictionless trade, and a revival of free trade in services. The UK would be able to participate again in the numerous agencies and regulatory authorities that manage and monitor the conduct of EU policy.
The new association agreement, if limited in scope, would be subject to a qualified majority vote (QMV) of the Council and the consent of the European Parliament. It could focus on the core provisions of the internal market, covering the customs union, workers’ rights, the right of establishment, services, capital and payments. The internal market regime is underpinned by common rules on competition policy, including state aid, taxation policy and the necessary approximation of national laws. The agreement would also have to include the provisions on common commercial policy (Article 207) and on the negotiation and conclusion of the EU’s international agreements (Article 218). Helpfully, affiliation to the common commercial policy would tie the UK into the EU’s sanctions policy (Article 215).
Beyond these core, common-sense provisions, the UK should decide at a future stage to opt for fuller integration, sector by sector, leaving behind the minimal arrangements for sectoral policies found in the TCA. For example, logic implies the UK’s early additional commitment to EU common transport policy, research and development including space, and the emerging energy union. Financial services may have to wait till last. And immigration policy could be tempered according to the degree of integration in each sector. One assumes the UK would choose to absent itself from the common agricultural and fisheries policies and to stay aloof from economic and monetary union.
During the Article 50 negotiations much attention was paid to a graphic escalier produced by the EU’s chief negotiator, Michel Barnier. This supposed a climbing scale of EU association agreements on offer, at least in theory, to the UK. The staircase climbed from the World Trade Organisation at the bottom to the European Economic Area (EEA: Iceland, Liechtenstein and Norway) at the top, via Canada, Japan, Ukraine and Switzerland. It was a colourful device, if slightly misleading because it mixed up the regulatory and trade aspects of dealing with the Union. The UK package deal we propose here would have something of Turkey, Ukraine and Switzerland — and some unique to itself. With respect to governance, the 2014 Ukraine association agreement provides a useful basic template.
The EEA option attracted some support among British Remainers, although it never commanded a majority in the House of Commons. The main obstacle to EEA membership for Britain was its inflexibility and lack of democratic engagement, with single market laws directly affecting EEA members being made without their consent. The supposed democratic deficit was one of the many factors behind Britain’s vote to leave the Union. Hostility to ‘fax democracy’ was prevalent even among Remainers who, like Theresa May, sought an accommodation with the EU in a form of ‘soft Brexit’.
The EU already accepts that officials from neighbouring states associated with the development of the single market acquis are informed and consulted during the legislative process. They also play a part in the comitology that manages the uniform implementation of adopted EU law. In my view, however, those arrangements, while important and necessary, do not meet contemporary acceptable standards of democratic accountability.
If the British government decides to return to the disciplines of the internal market, therefore, it should demand the right to vote in the Council on all relevant draft EU law. This right should be restricted to those matters subject to qualified majority voting under the ordinary legislative procedure. The UK would not have a national veto. Britain would participate in Council, for example, in the case of Article 114 concerning the approximation of national laws to sustain the single market. The same would apply to Article 207 on the opening and closing of a trade agreement with a third country or international organisation.
Westminster parliamentarians should also sit as observers on relevant legislative committees of the European Parliament. The European Court of Justice should welcome the return of British lawyers to Luxembourg.
We note that constitutional discussions are taking place, initiated by the European Parliament but blocked by the Council, about extending the scope of QMV. The UK should encourage reform in the federal direction. Britain has no interest in affiliating with an EU that does not work well because it is paralysed by outmoded unanimity rules or disrespect for the rule of law. I have fleshed out the concept of affiliate membership in my latest book (open access), Constitutional Change in the European Union.
The package proposed here for the UK amounts to a deep and comprehensive free trade agreement, a customs union, privileged access to key elements of the EU internal market, a commitment to dynamic alignment in those parts of the Union acquis included in the deal, and partial participation in the EU institutions and budget. Close political cooperation between the UK and EU in foreign and security policy is clearly on the cards. British collaboration with the EU’s system of police, civil and criminal justice will be within reach.
Diehards for orthodoxy in the Union (they really exist) will oppose the overt cherry-picking that is implicit in building such a privileged partnership for the UK. EU realists, however, will argue on the contrary that Britain is indeed a special case because of its geo-political status, economic size, geographic proximity, cultural ties and historical legacy. They will rightly warn that a belligerent nationalistic Britain would be a great nuisance as a neighbour, serving only to threaten the Union’s cohesion, security and prosperity. Europe should prepare itself to welcome the return of the British wanderer.
The EU is bound in any case to have greater resort to differentiated integration — either by way of variable inclusivity among member states in particular policies or through its rich variety of association agreements and partnership associations with neighbours. The UK is an important addition to that list. The constitutional innovation necessary to accommodate a more advanced special relationship with Britain should be a pathfinder for wider EU reform.
Affiliate member states voting in Council on laws to which they will be subject should not be so shocking to an EU polity growing in confidence and assuming more responsibility for the wider Europe. If the prodigal Brits are led back towards the internal market on preferential terms, the EU will have effectively extended its normative power and at the same time enhanced its democratic credentials. The UK precedent may very well be followed by Norway and Iceland, which are still labouring under the fairly unequal EEA treaty dating back to 1993. Ukraine might be another country for which affiliate membership is well suited, at least as a staging post to full accession.
All this means amending the EU treaties — which, as we know, is very difficult. Every time treaty change is mentioned, tension rises among member states of different sizes and inclinations while competition breaks out between the institutions. But Brexit should trigger some critical self-assessment of how the Union is governed as well as highlighting the need to revise the Union’s neighbourhood strategy.
Pro-Europeans in Britain, meanwhile, in and out of parliament, must begin, once again, to make the case for the European Union — well prepared, coherent, and consensual. The country needs a government that can lead, and not just follow, on the European question. That government must excel in diplomatic skill as it goes back to Brussels, acknowledging the demands that its return makes on the EU.
Andrew Duff is a federalist and a former British Member of the European Parliament. @AndrewDuffEU
 Committee of Public Accounts, Regulating after EU Exit, 19th Report 2022-23, HC 32, 12 October 2022.
The views expressed in this blog reflect the position of the author and not necessarily that of the Brexit Institute Blog.