Brexit could look very different by the end of this month. In the coming days, the government is expected to present a new version of the ‘backstop’, which is meant to address the Irish border problem. This would see the whole of the UK stay in a customs union with the EU and copy EU rules on goods and agriculture until, and unless, a comprehensive trade deal is done. So much for taking back control.
There is another great danger in this approach — it would result in a permanent Brexit limbo. Britain would be a rule-taker unable to pursue a meaningfully different economic model. Once the ‘backstop’ is in place, it’s hard to see what incentive the EU would have to negotiate and approve a big free-trade deal. After all, what would be left to discuss is services — where the UK has a £92 billion surplus with the EU27 in contrast to our £135 billion goods deficit.
Anyway, it is by no means certain that the EU will agree to a UK-wide backstop. They may well try to insist that the backstop can only apply to Northern Ireland. Why would they do this? Because the Commission doesn’t like the idea of the UK essentially being able to stay in the single market for goods but without free movement. Yet every-one knows that a backstop that includes free movement would be politically unacceptable to the UK. The majority of Tory MPs are not, actually, that bothered by the details of the Brexit agreement. But they know that a deal that failed to end free movement would risk the emergence of a new Ukip-style party.
Meanwhile, the House of Commons will vote on Tuesday on the Lords amendments to the EU Withdrawal Bill. Ministers are particularly concerned about losing the ‘meaningful vote’ amendment. This would, in essence, allow the Commons to tell the government how to conduct the talks. It would weaken the executive’s negotiating hand still further by ensuring that the Prime Minister couldn’t walk away without the support of the Commons — something which the European Union knows is not going to be forthcoming. In these circumstances, Michel Barnier would have every incentive to keep on squeezing Britain because he would know that he wasn’t going to collapse the talks.
An amendment with even more chance of success is one that seeks to make this country stay in a customs union with the EU. Senior Tory backbenchers complain that three months ago, the government would have won this vote. But the absence of a cabinet–endorsed customs policy has created a vacuum which proponents of a customs union have filled. If Theresa May does avoid defeat on this measure, it will only be thanks to Labour abstentions.
It’s impossible to find a Leaver who thinks the whole process is going well. No surprise there. But the Brexiteers are divided about what to do now. They can, as one of their number explained to me, be roughly split into two camps: hedgers and ditchers.
Hedgers believe the single most important thing to do is to get to 31 March, 2019, when Britain will have legally left the EU. They argue that once that has happened, the Tory party will move to replace Theresa May, giving the Brexiteers a chance to get one of their own into No. 10 and to take control of the most important Brexit department of all, the Treasury.
The hedgers argue that this new administration could then set about negotiating a trade deal with the EU. They point out that the withdrawal agreement is unlikely to go into any real detail on the future trading relationship between Britain and the EU, so a new prime minister would not have his or her hands bound too tightly. On top of this, they add that with Britain out of the EU, the Remainer resistance in the Tory ranks should ease; making it easier to win key parliamentary votes.
The ditchers argue that what’s needed now is a last-ditch effort. They vigorously dispute the hedger analysis. They plan to stiffen Theresa May’s spine and get her to commit to ‘max fac’, the Brexiteers’ preferred customs arrangement, and the ability to diverge from EU rules. They say, with some justification, that once Britain has agreed to pay the divorce bill, which it will have done by March 2019, then a large part of our leverage will have gone — and with it the chance of a good deal. They say that to rely on the Tories changing leader is a big gamble, because May has no intention of going anywhere. Those around her are convinced she can redeem herself in time for another general election campaign. The ditchers add that even if May goes, it isn’t certain that a Brexiteer would replace her. With multiple Leave candidates, the winner could again be a unity candidate, elected because they don’t have any particularly strong views on this most divisive of subjects.
Both hedgers and ditchers are right in their own ways. The hedgers are correct that the government’s scandalous failure to prepare rigorously for no deal (which must be the major focus of the inevitable Chilcot-style inquiry into Brexit) leaves Britain with few options. The government could only contemplate walking away now if it was prepared to invoke the Civil Contingencies Act; a step which it is impossible to imagine any government taking for fear of the message it would send out at home and abroad.
Without a credible threat to walk away, the government will find it hard to get the EU to engage constructively. But the ditchers are correct to say that if the government agrees to pay the EU £39 billion in exchange for little more than warm words on trade, then that money — much of which is a goodwill payment — will have been wasted. Also, the backstop would leave EU states with almost no incentive to discuss the front-stop: a comprehensive UK-EU free trade deal
At the very least, Theresa May should be setting out a blueprint for what she wants the future trading relationship to be. But the white paper detailing all this is not due to be published until after the June meeting of the EU Council. This is a mistake. It means that the UK will again fail to take the initiative in these talks. Mrs May needs to turn up to this month’s Council with a clear and realistic plan for how she wants the future UK / EU relationship to work. She needs to lead.
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