Softest form of hard Brexit
Theresa May’s ‘hard facts’ will only bring a temporary cessation of war between the rival Tory factions, writes Eddie Ford
For some time now we have had to put up with total nonsense from the likes of Liam Fox that a post-Brexit deal with the European Union would be “one of the easiest in history” - with one glorious bound Britain would be free to become a super-Singapore in the rain, doing free trade deals everywhere in the sort of buccaneering spirit that once painted the map pink.
But Theresa May has finally introduced a note of reality. In her heavily publicised Mansion House speech on March 2 to a mainly diplomatic audience, she said that the British people will need to “face up to some hard facts” - primarily that “life is going to be different”, because “our access to each other’s markets will be less than it is now”.1 After all, she continued, “how could the EU’s structure of rights and obligations be sustained if the UK or any country were allowed to enjoy all the benefits without all of the obligations?”
Possibly worse - at least if you are a hard-core Brexiteer raised on a diet of tabloid xenophobic propaganda - even after Brexit the “jurisdiction” of the European Court of Justice (ECJ) will “continue to affect” the UK. And in practice UK and EU regulatory standards concerning goods will be “substantially similar” in the future, especially when you consider that many of them are themselves “underpinned” by “international standards set by non-EU bodies”. This also means, she said, that the UK may choose to remain “in step” with various other EU regulations in areas like state aid and competition in order to get “good access” to markets.
Other “hard facts” sketched out by May included the acceptance, or recognition, that banks located in the City of London will lose their ‘passporting’ rights to trade across the EU without country-by-country approval - therefore a new system will be brought in to allow “the same regulatory outcomes over time”. Then there was the need for associate membership of EU chemical, medicine and aviation agencies - accepting their rules and making “appropriate” financial contributions. There will also be continued participation in EU science, education and cultural programmes, a close relationship with the European Atomic Energy Community and continued participation in the EU’s internal energy market, etc, etc.
On the increasingly contentious issue of Northern Ireland, the prime minister said very little except that Britain must take “responsibility” for avoiding a hard border. But she would not accept anything that would “damage the integrity of our precious union”. No indication, in other words, of how the circle of a frictionless border can be squared with a hard Brexit - apart from a rather implausible reference to the use of “advanced IT solutions” (the exact nature of this miraculous technology is still a mystery) and “trusted trader” schemes to do away with the need for customs checks.
Naturally, May insisted that Britain’s desire for a “deep and ambitious” partnership with the EU was not the same as cherry-picking - or if it is then every trade deal is an example of cherry-picking, she argued, as every free trade agreement allows for “varying market access, depending on the respective interests of the countries involved”. We are all cherry-pickers. She went on to say that Britain would “not accept the rights of Canada and the obligations of Norway”. That is, Britain wants a deal going further than the deal signed between Canada and the EU (which took over six years to clinch2) but stopping short of Norway, which is a member of the European Economic Area - something else ruled out by the Brexiteers. More squares and circles.
Perhaps one of the most striking features of the speech, in the opinion of professor Jonathan Portes of the UK in a Changing Europe research group,3 was that it failed to make any economic case for divergence - “managed” or otherwise: “It was the complete triumph of the convergers from an economic and analytical point of view,” he writes in the Financial Times. “There wasn’t a single argument for why the UK would benefit from diverging from the EU in any sector” and there was “nothing to suggest that new free trade deals would outweigh the costs of reduced market access to the EU” (March 2).
Of course, textual analysis aside, Theresa May’s 45-minute speech - which apparently took months to prepare - was far more about the Tory Party and its internal divisions than about the EU and Brexit: a “delicate attempt to unify both wings of her governing Conservative party” (Financial Times March 2). This in no way means, it almost goes without saying, that what the prime minister put forward in her speech is what we are going to get or even what she is actually going to be prepared to stand on. Forget it. The pitch is what matters, not the reality. The press, essentially correctly, greeted the speech as the ‘softest form of hard Brexit’ possible - her previous red lines have become very blurred indeed.
From that perspective, May’s attempt to bridge the chasm between the rival factions inside the cabinet and the Conservative Party itself seems to have had its effect - at least for the time being. For the most part, both the hard Brexiteers and their opponents seemed to be happy to one degree or another with the vision - insofar as you can call it that - outlined by the prime minister at Mansion House. ‘Remainer’ Nicky Morgan, Tory chair of the treasury select committee, said it was a “recognition at last of the complexity involved in Brexit” and the need for compromise. Anna Soubry too, who at one stage suggested that hard Brexiteers should be kicked out of the party, welcomed the conciliatory and sensible tone of the speech - though she did wonder what was in it for ‘leave’ voters, given that “the Brexit we are heading towards is very, very different to the one we were promised”. She might have a point.
On the other side of the fence, Iain Duncan-Smith praised the speech as “upbeat and clear”, and called on the European Commission to “stop playing games” and treat Britain as an “equal partner”. Boris Johnson, the absurd foreign secretary, tweeted that Britain will remain “extremely close” to the EU, but the Brexit mapped out by the prime minister is one where the country is “able to innovate, to set our own agenda, to make our own laws and to do ambitious free trade deals around the world”. More importantly for Theresa May and her hopes of an outbreak of peace and love in the Tory Party, was the reaction of Jacob Rees-Mogg - who described it as a “good speech” that was “pragmatic and generous”. He wrote in the Daily Telegraph that “now is not the time to nit-pick” (March 2) - though the implication was that such a time will eventually come.
Of course, a staunchly pro-European grandee like Sir Michael Heseltine was not pleased by the speech one bit - it consisted of nothing but “phrases, generalisations and platitudes”, which had done nothing to make a deal more likely. For him, the only way forward was to put the issue back to parliament and then to an election or another referendum. But, at the end of the day, Theresa May’s speech was not designed for Michael Heseltine, John Major or Kenneth Clarke - let alone Tony Blair or The Guardian - so such grumblings are neither here nor there.
However, like Heseltine, the response from the EU has been very frosty - there is no sign that its leaders will go with Theresa May’s various special or “bespoke” deals for the City, British car industry, free movement of people, etc. Guy Verhofstadt, the European parliament’s Brexit coordinator, cuttingly remarked that “we can only hope that serious proposals have been put in the post” - whilst Michel Barnier, the EU’s chief Brexit negotiator, damned the speech with faint speech by saying it provided “clarity” about the UK’s intention to leave the single market and customs union, ominously adding that the “recognition of trade-offs” would “inform” the EU’s future approach to Brexit and the British government.
Even less impressed, it seems, was Stefaan de Rynck - the main advisor to Barnier - who stressed that the rules of the single market require far more than the mutual recognition of standards. He pointed out that in the wake of the financial crisis the EU has moved to a “centralised approach with a single EU rulebook, common enforcement structures and single supervisory structures” (The Guardian March 6). Furthermore, EU rules were clear that the ECJ could intervene “at any point” to declare that mutual recognition of standards was “undermining” the single market’s integrity.
He also claimed that EU businesses, faced with a choice, “are more concerned with maintaining the integrity of the EU single market than any loss of access to British markets” and warned Britain that there was “no appetite” to extend the talks on UK’s exit beyond the current timetable of March 2019. Therefore, if the UK wanted to rescind its proposals to withdraw from the EU, set out in its article 50 letter, this would not just be a matter for the UK unilaterally, but would require a “collective response” by the EU member-states. Another hard fact, so to speak, was that the length and terms of the transition period could only be agreed once the withdrawal agreement was settled.
Just as illuminating were the contents of a leaked EU report, released on the eve of the European Council’s planned publication of guidelines for a post-Brexit trade deal. Pointing out the obvious, the study commented that, just like with her other speeches on the issue, May was mainly addressing her domestic audience - “trying to bridge the gaps between the two poles of the debate on Brexit in the UK”. Her latest intervention may have featured a “change in tone”, the report says, “but not in substance” - it was totally “short on workable solutions that would respect the EU27 principles”. The document accused Theresa May of “double cherry-picking” by “taking in selective elements of EU membership and of third-country trade agreements” and making “zero progress” when it came to ideas for customs cooperation. As for Northern Ireland, the British prime minister has “no solution” - the aims of no single market or customs union, no hard border in Ireland and no border down the Irish Sea were “mutually contradictory UK objectives”. Something has to give.
Theresa May herself blindly proved this point with her Commons statement on March 5. She declared that there are “many examples of different arrangements for customs around the rest of the world” - such as, “for example, the border between the United States and Canada”, which “we are looking at”. This seems a curious model indeed for a “frictionless” or “invisible” border, given that it features a whole series of custom posts, barriers, fences, vehicle blockades, hidden sensors and cameras, armed officials and snarling dogs - residents of both states who own property adjacent to the border are forbidden to build within six metres of the border without permission from the International Boundary Commission.4 Unsurprisingly, the Irish prime minister, Leo Varadkar, said that a US-Canada type border is “definitely not a solution that we could possibly entertain”.
Back to the drawing board, Theresa l