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The Brexit process continues to be complex

  • Published at 07:46 pm April 15th, 2018
  • Last updated at 01:51 am April 16th, 2018
The Brexit process continues to be complex

Since June 2016, the British establishment has been trying to find a compromise within the anticipated Brexit process paradigm.

However, both British and European leaders have been facing legal, political, and intellectual challenges. Analysts have also started asking whether a country can be both half-in and half-out of the European Union. Questions are being raised as to whether there is potential under international law for creating a new category of associate or second class membership within the EU.

Analysts in this context have also been drawing attention to three other states -- Norway, Iceland, and Switzerland -- who got stuck during the accession process, disagreed with the ramifications of full EU membership, and then changed their mind about joining.

Subsequently, the first two have forged (with tiny Liechtenstein) a European Economic Area agreement with the EU through which they enjoy most of the privileges of full membership, without any of the rights of full membership.

Switzerland moved on its own path and now finds itself in a controversial matrix of bilateral agreements with the EU and its member states. None of these four European countries are members of the EU customs union. That privilege belongs for a third country -- Turkey.

They have been given certain rights except in the area of agriculture. In this regard, they have to accept the common external tariff of the EU.

It needs to be noted, however, that these countries enjoy certain facilities, but their goods require customs checks and are subject to the levy of complex VAT and excise duties, to certification of rules of origin and to application of the EU’s health and safety norms.

No easy task

Interestingly, Jeremy Corbyn, the British Labour Party leader, who, as an MP, has shown disdain in the past about remaining in the EU, now appears to have changed his tone. In a speech delivered on February 26, he announced his conversion to continued UK membership of the customs union.

However, it was underlined that if he became the British Prime Minister he would demand full access to the single market subject to the UK’s ability to “negotiate protections, clarifications, or exemptions” where it wants them, for example, on labour mobility, state aids, and competition policy.

Two former British prime ministers, John Major and Tony Blair, have expressed disagreement with Jeremy Corbyn. They want to stop Brexit and hope that the British House of Commons will vote against the Article 50 withdrawal agreement in October.

Their stand is based on two presumptions: First, that the EU would be happy to have the British back as full members without imposing tough political conditions; and second, that the British electorate would change its mind about Brexit if offered the chance to do so in a second referendum.

The Brexit process is more complex than ever before

Blair has, however, also pointed out that there is need for reform with regard to fiscal policy (for the Eurozone), energy supply, and immigration policy. These will not be easy to accomplish by the EU without a formal shift of competence up from the member states to the EU level. Any doubt in this regard, or how resistant the EU is to political reform, was made clear recently through Mark Rutte’s speech in Berlin on March 2.

EU analysts have remarked that these two British leaders should be listened to with care. At the same time, they are also holding them responsible for creating the dynamics that led Britain to move away from the European mainstream, and to former British Prime Minister Cameron’s eventual decision to hold a referendum.

Enter the Emerald Isle

There has also been controversy with another critical matter in the European Commission’s draft text, which includes a protocol on the Irish border. Both Prime Minister Theresa May and labour leader Jeremy Corbyn have indicated this to be unacceptable.

It may be recalled that the Joint Report of December 2017 outlined three options for Ireland: A comprehensive free-trade agreement between the EU and UK that would avoid a hard border and protect north-south cooperation as well as commerce between the whole island of Ireland and Great Britain; the second being a package of smart customs and border control arrangements to be proposed by the UK government; and the third being a joint commitment by the UK government and the EU to establish full regulatory alignment between Northern Ireland and Ireland, should the first two options not materialize.

The strong reaction in London to the appearance of the draft protocol suggests that the UK establishment as well as North Ireland will have a tough time ahead, unless they can find least common denominators in the shortest possible time.

Reuters has, in the meantime, underlined another important factor. There is likelihood that companies in Britain and the EU will face an extra 58 billion pounds in annual costs if there is a no-deal Brexit. In this context, firms across EU’s 27 countries other than Britain will have to pay 31 billion pounds a year in tariff and non-tariff barriers if Britain leaves the bloc without a deal. Similarly, British exporters to the EU will have to pay 27 billion pounds a year. This will definitely compound the problem.

Undesirable choices

Theresa May gave her third set-piece speech on March 2. Unlike the first two, this time she tried to face up to truths she had previously sought to avoid. She noted that she accepted the basis of the EU’s case, set out in its original guidelines of April 2017.

She was clear that divergence from the European acquis would have adverse trade consequences for the UK. She also took the opportunity to disagree with the argument that Britain faces an undesirable dual choice between Norway on the one hand and Canada on the other. In this context, she reiterated that her overall intention was that UK and EU standards “would remain substantially similar.”

She also underlined her hope that Britain would be able to complete negotiations which would end in a comprehensive rules-based system of mutual recognition.

The prime minister’s views will certainly receive careful attention during the forthcoming meetings of the European Council. They will also have to draft new guidelines for the European Commission. Without this measure, the responsible authorities will be unable to finalize the draft of the political declaration or the juridical principles that will need to be attached to the Article 50 treaty, that will define the framework for Britain’s future relationship with the EU.

One thing is clear. The Brexit process is more complex than ever before.

Muhammad Zamir, a former Ambassador is an analyst specialized in foreign affairs, right to information and good governance, can be reached at [email protected]