01.03.2018

Theresa May’s à la carte menu

Three-course dinner or a packet of crisps? Eddie Ford looks at the latest Brexit developments

Last week the high farce known as Brexit took another turn when the ludicrously named ‘war cabinet’ held an eight-hour discussion at the prime minister’s country retreat in Chequers.

According to one of those present, Theresa May played a “blinder” and persuaded seemingly incorrigible Brexiteers to shift their position - though we still wait to see the evidence. The prime minister is due to set out her position on Brexit yet again in a heavily touted major speech on March 2, which doubtlessly will resolve absolutely nothing - rather just intensify the tensions and conflicts afflicting both the government and the Tory Party.

Anyhow, in between their sweetcorn soup, Guinness short rib of Dexter Beef and lemon tart with raspberry sorbet, the ministers unanimously agreed to the almost Maoist-sounding ‘three baskets’ approach - or “managed divergence” - that May initially sketched out in Florence last September, although then it was called the ‘three buckets’. In the first basket, or bucket, are those parts of the British economy which are intimately interlinked to the European Union either because they have highly complex supply chains, like car manufacturers, or are heavily regulated, like chemicals or medicines. For these sectors, Britain would accept EU regulations and the rulings of the European Court of Justice (rubbing away Theresa May’s previous ‘red line’ that judges in Luxembourg would “play no future role” in British life).

In the second basket would be other goods and services, including data and financial services, where the UK would consent to common regulatory goals, but would keep some flexibility to set its own rules - with a system of “mutual recognition” of each other’s rules and the creation of a “dispute resolution mechanism” to theoretically ensure a level playing field. Britain would underpin this “special partnership” by promising to abide by high European standards in areas such as labour protection, environmental rules, consumer law, etc.

The third basket would include those areas where there is little or no European law, such as robotics or driverless cars - ‘frontier technology’, as some like to call it - which we are supposed to believe will see Britain bestride the world with the sort of entrepreneurial, buccaneer spirit that once made the country so great.

Of course, there is something slightly surreal about the Chequers get-together, given that the EU has already totally ruled out any pick-and-mix approach to the single market. Or, as Janan Ganesh wrote in the Financial Times, “Which leaves us to wonder why a cabinet of experienced ministers, already chastened by Europe’s refusal of impossible demands over the past year, would again ask for something so fanciful.” He came up with the fairly obvious answer that at least the plan “sees the riven Conservatives through another month or so” and “postpones the moment of rupture”: that is, when Tories “must decide between the two stark destinies” of either a “mere trade deal with Europe or some form of customs union” (February 26). The former would lead to some kind of hard border with Ireland, as they know, whilst the latter would hinder Britain’s ‘sovereign power’ to negotiate trade with third parties - thus negating the whole point of Brexit.

Europe’s response to the revamped ‘three baskets’ idea was utterly predictable. Indeed, we read that EU leaders were left “incredulous” by the emerging reports of the Chequers meeting. Wasting no time, Donald Tusk, the European Council president, stated that the present position of the British government is based upon “pure illusion”. Tusk went to remind May that it has been a “set principle of the EU27 that there cannot be any cherry-picking of single market à la carte” - this will not change. Maybe Theresa May will now get the message - or perhaps not.

However, it does appear that EU leaders have decided not to have a row about the “three baskets” and “managed divergence” for the time being, as they want to get through the next EU summit on March 22-23, where May hopes to secure agreement on a two-year transition period extending beyond the official Brexit date of March 29 2019. By all accounts, she plans to get that transition phase by backing down on her previous suggestion that EU citizens arriving in Britain after March next year would not enjoy the right to remain in the country - a position that was instantly shot down in flames by the EU. Therefore expect more climbdowns from the May administration, showing you the reality of the power relationship between the British government and the EU - it hardly takes a genius to recognise who is in the driving seat.

Bespoke

Piling the pressure on the prime minister, on February 26 Jeremy Corbyn demonstrated that Labour’s stance on Brexit is “evolving” by coming out unequivocally for a new and permanent customs union with the EU - though that is not the same as remaining in the customs union. He said Labour would be seeking a “final deal that gives full access to European markets” and “maintains the benefits of the single market and the customs union”. Meaning that Britain, according to the Labour leader, “will need a bespoke relationship of its own” that includes “full, tariff-free access and a floor under existing rights, standards and protections” - adding that Labour “would also seek to negotiate protections, clarifications or exemptions, where necessary, in relation to privatisation and public service competition directives, state aid and procurement rules and the posted workers directive”.

For Corbyn, “we cannot be held back, inside or outside the EU, from taking the steps we need to support cutting-edge industries and local business, stop the tide of privatisation and outsourcing or prevent employers being able to import cheap agency labour from abroad to undercut existing pay and conditions”. Hence Labour, he said, would want to “negotiate a new, comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland”.

Jeremy Corbyn’s commitment to a “new, comprehensive UK-EU customs union” after Brexit was praised by the Confederation of British Industry and the Institute of Directors (IoD), as well as the former Conservative chancellor, George Osborne - the latter complaining that the Tories had offered Labour an “open goal” by making no customs union a red line and Corbyn had “just kicked the ball into the back of it”. The CBI’s director general, Carolyn Fairbairn, thought Corbyn’s commitment to a customs union would “put jobs and living standards first by remaining in a close economic relationship with the EU”, although she was not quite so happy with the “rhetoric on renationalisation.” Stephen Martin, the director general of the IoD, which is calling for a partial customs union, said Labour had “widened the debate” and manufacturers would be particularly pleased. We are now in the paradoxical situation where Labour, despite having its most leftwing leader ever, is almost the preferred party of big business, at least when it comes to Brexit.

Of course, on one level, Corbyn’s new position is just warmed-over Mayism - even down to talk of “bespoke” arrangements, and so on. In a cruel but justifiable quip, the Liberal Democrat leader, Sir Vince Cable, tweeted that, while Corbyn’s tweaked customs union stance was a “small step to sanity”, he is still following Theresa May’s “cake and eat it policy” - only he “wants red cherries rather than blue raisins”. But the big difference between the prime minister and the Labour leader, as pointed out in The Guardian by Rafael Behr, is that Corbyn “has room to manoeuvre” - the Labour leader’s “greatest advantage has been the time and space to amend the trajectory” of his Brexit policy, unlike Theresa May, who, “under pressure from her party”, has “pedalled harder and faster towards the impossible” (February 25).

Fairy godmother

Perhaps significantly, Jeremy Corbyn’s Brexit readjustment lays the foundation for a joint platform with anti-hard-Brexit Tory MPs. When the government’s trade bill returns to the Commons, MPs will vote on an amendment proposed by a group of ‘remain’-minded Conservatives (Anna Soubry, Nicky Morgan, Sarah Wollaston, Stephen Hammond and Jonathan Djanogly), as well as Labour’s Chuka Umunna, calling for a continued customs union. With at least four other Conservatives likely to back the amendment, it could pass if Labour supported the measure - unless Theresa May turns it into a vote of confidence, in which case the Tory MPs would probably baulk.

But in a hung parliament, power quickly drains from a government that loses votes, and Labour’s customs union certainly has parliamentary arithmetic on its side. Showing how worried they are, Tory MPs are seeking legal advice as to whether the amendment to the trade bill - if it was passed - is legally binding or not. One lawyer has suggested that the wording, which calls for it to be a government “objective” to ensure Britain can participate in a customs union after leaving the EU, is sufficiently vague enough that the prime minister could accept it, but then argue that the outcome was not achievable in negotiations. Desperation is setting in.

Naturally, Liam Fox, the international trade secretary, has huffed and puffed about how Corbyn’s post-Brexit customs union would be a “complete sell-out” and a “betrayal” of Labour supporters who voted ‘leave’. But, rather embarrassingly for him, and the Brexiteers in general, his former boss at the trade department, Martin Donnelly, made his own intervention into the Brexit debate - caustically telling the BBC’s Today programme, if the poor reader can bear yet another food analogy, that leaving the EU is like “giving up a three-course meal …. for the promise of a packet of crisps in the future”. Any possible trade deals in the future outside the EU, he remarked, “aren’t going to compensate for what we’re giving up”. Donnelly, who was permanent secretary at the international trade department until last year, described the EU as “the only functioning market for services in the world” and key to Britain’s prosperity as an advanced service economy. “The challenge if we choose not to stay in the single market,” he said, “is can we negotiate equal access in all those areas of services without agreeing to obey the same rules as everybody else?”. Answering his own question, Donnelly bluntly stated: “I’m afraid I think that’s not a negotiation, that is something for a fairy godmother. It’s not going to happen.”

Theresa May’s continuing headaches over Northern Ireland got even worse on February 28 when the EU published its 120-page draft Brexit strategy that effectively keeps the Six Counties in the single market and customs union. Under the plan, the territory of Northern Ireland would be considered part of the EU’s customs territory after Brexit, with checks required on goods coming in from the rest of the UK. A raft of single-market legislation would also apply to ensure the province stays in step with laws of the Republic of Ireland that are relevant to the north-south flow of trade.

The EU document, which has 168 clauses, two protocols and an annex, puts into legal terms the commitments made in a joint report between the UK and the commission last December, under which three options for avoiding a hard border were proposed. The draft paper leaves open the possibility that a future free-trade deal or some bespoke technological solutions could make the plan for full regulatory alignment null and void. But it focuses on “operationalising” the final, and most controversial option, of keeping Northern Ireland under EU law. Quite rationally, the European Commission has said that this is currently “the only viable option”.

An outraged Theresa May, though she must have seen it coming, declared that she would not sign up to “anything that threatens the constitutional integrity of the UK”. Conservative Brexiteers have immediately denounced the EU draft document as “completely unacceptable” - some luridly claiming that the EU is seeking to “annex” Northern Ireland. As for the Democratic Unionist Party, which is currently propping up the fragile May government, it claimed that the draft treaty has “fundamentally breached” an agreement reached in Brussels last December and would “undermine” the constitutional status of Northern Ireland in the Good Friday agreement. If the Tories agreed to the Irish Sea becoming a trade border, then the DUP would withdraw its support for the May government.

As the bust-up over Northern Ireland reveals, the Brexit stakes are getting high and Theresa May’s position is looking more perilous by the day.

eddie.ford@weeklyworker.co.uk