Monday, 17 April 2017
EU and post-Brexit UK – A New Partnership
The UK attitude springs from the unclear “democratic mandate” of the present British Prime Minister who has not won an electoral mandate for herself or her government and is being steered (some say “spooked”) by the need to try and interpret the referendum result while hide under the empty mantra “Brexit is Brexit”.
Initially the EU negotiators’ mandate was not based on a direct electoral mandate either. It was based on an agreement between the EU heads of government, largely under an agenda hammered out by the EU Commission and the German government. It was next endorsed and even upgraded in severity by the European Parliament, but not by the national parliaments of the EU.
Both such hastily concocted mandates could crumble under pressure, the UK one from divisions in the ruling Conservative Party over the conduct of negotiations, the other from divisions between EU member countries and possible upsets in the coming French and German elections, as well as the unresolved euro and refugee crises.
It does not help that neither side has sufficient trust in the good will of the other. The Gibraltar row was but a more extreme example of this distrust. It gives a hint of the tide of nationalism that lurks between the surface ready to emerge whenever either negotiating party decides to rely too much on negative emotions rather than common sense and mutual interest of both the EU and the UK. The requirement by the EU side that Spain would have a veto over any final deal has even caused former leading UK politicians to raise the spectre of the Falklands War. On the British side, constant blunders by the Home Office in its reinterpretation of “automatic right” to permanent residence for EU citizens and their families, as well as flippant comments by foreign secretary Boris Johnson and the provocative jeers of Nigel Farage in the European Parliament, all served initially to anger public opinion in the EU media and provoke the EU to set a tougher stance. Comments in the past from EU Commission President, Jean-Claude Juncker, and his undiplomatic chief of staff Martin Selmayr, have also been unhelpful.
Some EU negotiating initiatives seem almost vindictive, such as the immediate transfer of EU agencies, the European Medicines Agency and the European Banking Agency, from London to other European capitals, as well as the current threat of punitive sanctions against UK companies bidding to participate in the Galileo satellite navigation project. The ultimate negotiating goal for both parties remains worlds apart and in the case of the EU it is primarily expressed in terms of the how much more damaging to the UK the future relationship with the single market must be. It is welcome news that Donald Tusk intends to meet Theresa May regularly in order to retain an atmosphere of trust and reduce tension over the more contentious issues.
The EU negotiators are adamant that the issue of EU citizens and the 60 billion euro exit bill must be settled first and that the future trade deal which the UK wants can only be discussed after the legal and financial repercussions of the separation have been resolved. These tough EU negotiating guidelines are likely to be finalized and approved at an EU summit in Brussels on April 29th. The EU has the stronger leverage because it now controls the timetable for the next 2 years and possibly for longer after that. The only leverage left to the UK is a threat to end all negotiations without any agreement which would be worse for UK than for EU, even though many EU manufacturers and exporters like the German car industry would suffer too. David Davis has admitted that if the UK leaves the customs union with no deal then the UK dairy and meat products could face levies between 30% and 40% while UK car makers like Jaguar will face 10% tariffs on their exports to the EU.
It is worth remembering that 44% of UK exports in goods and services go to other countries in the EU (£240bln out of £550bln in total), while the UK imports £290bln from the other EU countries. In fact the UK is the largest single export market for the EU’s goods and services as a whole (16.9%), just ahead of the USA (16.5%). Commercially, both have much to lose. In the meantime, the UK has been seeking better trading relations with the white Commonwealth countries, the USA, India, China, Japan, Saudi Arabia, Jordan, Turkey and the Philippines, none of which could match the EU in commercial importance and many of which would entail closer cooperation with authoritarian countries that do not share UK and EU democratic values.
The problem for the UK government is that it has no clear electoral mandate for the specific kind of Brexit deal it should be striving for. The UK public still does not have a clear view of the implications of Brexit, except in the broadest terms, and the government has not clarified this to them. There has been no general election since the referendum vote on June 23rd last year and so no opportunity for the government to spell out clearly to the public the costs and losses of leaving the single market. The minor parties, such as the SNP, the Liberal Democrats and the Greens, are clear in their intention to either reverse the Brexit vote or to settle for the closest possible relationship to the single market. Unfortunately, both the membership and the electorate of the two major parties, the Conservative Party and the Labour Party, has no such clear Brexit road-map. This can only be achieved if Parliament chooses to vote out the current parliament by a 2/3 majority and call for a new general election with a coherent platform of a New Partnership between a future post-Brexit UK and the EU. This could be offered to the electorate by either the Conservatives or Labour, or both and it would have the advantage of uniting each party internally and offering a realistic option to the country.
The New Partnership would be based on something that matters to both parties, namely sustaining good trading relations between the UK and EU with open access to each other’s markets. So, it would be vital for both sides to retain tariff free access to the single market provided the UK can satisfy the EU’s current demand that it can still offer free movement in capital, goods, services and labour. In the matter of free movement of labour, the one truly contentious issue, the UK should consider still offering free access for EU citizens, but kept under control with limited or no access to out of work benefits for the first 3 years of their paid employment and no access to in work benefits until the EU citizen has applied successfully for indefinite leave to remain after 5 years. The issue of immigration to most of the UK electorate was a matter of “control” rather than an end to immigration as such. David Cameron’s earlier negotiations before the referendum showed it was possible to gain some leeway in this direction from the EU and that was at a time when no EU leader took Brexit seriously. Now that all parties are clear that Brexit is upon us and with the proviso that an element of trust between EU and UK negotiators is restored, then the EU may well want to show flexibility over benefits with the UK. Even the seemingly intransigent European Parliament is aware of the need to have a public debate in the course of these negotiations on the future of the European Union and has already made clear in its Draft Resolution on Negotiations with the UK that Brexit should “compel the EU-27 and the Union institutions to better address the current challenges and to reflect on their future and on their efforts to make the European project more effective, more democratic, and closer to their citizens”.
The New Partnership should be open to all countries in the EEA, including Switzerland, Norway, Iceland and Lichtenstein, as well as to the UK and the EU countries and could be supervised by a Consultative UK/EEA Council. The non-EU countries within the EEA will be free to decide whether and when this free movement of labour will apply to future countries applying for EU membership.
In this New Partnership, the UK will be allowed to exclude agriculture and fisheries from joint UK/EEA policy, will not be obliged to subscribe to any new EU legislation and be free to amend current EU legislation presently included in the Great Repeal Bill. The main concern for the EU negotiators on this matter would be the need for the UK to retain “a level playing field” in terms of taxes and no dumping of subsidized exports. The UK would also be free to make new international trade deals outside of the EU after the Brexit separation deal is concluded, but these will be the subject of consultation with the UK/EEA Consultative Council.
In order to build early EU confidence in the UK’s proposed New Partnership with the EEA, the UK should be ready to take the first step on the issue on which all 27 EU countries are most sensitive – their own citizens in the UK. The UK could make a unilateral declaration guaranteeing the right to stay and retain acquired rights for all EU citizens in the UK, or who have residences in the UK, valid at least up to and including the date the declaration is made. EU citizens could then be promptly registered and issued with appropriate special status IDs by local authorities and their pathway to eventual Indefinite Leave to Remain, and ultimately to UK British citizenship, can be retained. The EU status of permanent residence would become redundant so all those who had obtained it would automatically receive the UK equivalent status of Indefinite Leave to Remain. The question of the rights of future EU citizens coming to the UK during the negotiation period can still be a subject for further discussions with the EU. The EU negotiating position is based on similar rights being offered to UK citizens abroad to those being offered by the UK government, on the declared grounds of “reciprocity”, “continuity” and “symmetry”, so they would be obliged to make their reciprocal statements about UK citizens after the UK declaration is made. Details of the rights of newly arrived EU and UK citizens in the 2 year negotiating period and the 3 year transition period can be the subject of further separate negotiation while the UK should recognize that for the 2 year period of negotiation any new arrivals would still be able to enjoy full EU status, even if only temporarily.
The UK government should also express its readiness to try for a 3 year transitional period after the 2 year negotiating period is over and a separation deal has been reached and approved so as to give time for the trade negotiations to be completed. Even in those trade talks the main discussion will be around divergence (rather than with the convergence required in other EU treaties, such as with Canada) so the less that needs to be excluded from current trade arrangements, the more likely they will be to reach a quicker agreement. The European Parliament, which ultimately has to ratify any deal with the UK, has already conceded this 3 year transitional period, although it insists on the European Court of Justice remaining the final arbiter in that period, something which the UK government may still want to challenge, even in the New Partnership.
It would also help in mutual confidence building if the UK government should give support to other EU initiatives such as the attempted naval blockade in the southern Mediterranean and future joint declarations with EU on security, peace initiatives and aid programmes world-wide. It should also go for the widest possible cooperation on scientific research. The UK would be free however to opt in or out of common regional fund programmes, the European Space Agency, Erasmus or climate change initiatives, even if only as a third party, and the UK may well negotiate a new looser associate status with Euratom, similar to that of Switzerland.
While the proposed New Partnership may seem naïve and over optimistic in the current negative climate in which the negotiations are being approached, it is still a much better option for both sides. It will require the need for both Conservatives and Labour to face the electorate promptly with courage and honesty, recognizing the reality of Brexit but saving both the UK and the EU from its worst excesses. it will allow the vexed question of displaced EU and UK citizens to be sorted fairly and quickly; it make it easier to resolve the border issues in Ireland, Gibraltar and the British bases in Cyprus; it will conduct the financial and legal separation in good faith, and it will ensure that the final trade settlement and future relationship will still be in the interest of all parties, including all 27 countries of the EU and all 4 nations of the United Kingdom.