Article 50: where we are now

Janice Morphet, author of Beyond Brexit, looks at what the future holds for the U.K. after the triggering of Article 50 and the formal beginning of the Brexit process. 

Janice Morphet

As the UK government faces its two-year roller coaster ride of negotiation, following the Prime Minister’s triggering of Article 50, many pressure points have already been revealed while some remain as haunting unknowns.

The first challenge that has emerged is how ill prepared the UK government finds itself. While the letter triggering Article 50 and the subsequent White Paper on the Great Reform Bill are full of words addressing internal political party agendas, any pretence of maintaining a united view across the UK has been abandoned.

No legal basis for devolution

Although stating in the White Paper that everything would remain the same until dismantled and changed through Parliamentary procedure, this is completely undermined in the chapter on devolution which confirmed the re-centralisation of returned powers on agriculture, environment and some transport issues.

Subsidiarity is based on principles laid down in the Treaty on European Union and there are no guarantees that it will survive Brexit as a principle of the UK state. Following Brexit all devolution within the UK, including to cities in England, will transfer to the whim of each five-year Westminster Parliament and cannot be agreed in perpetuity.

Northern Ireland

However, the Prime Minister has also learned that the issue of devolution can be weaponised through negotiation. In the EU’s draft guidelines for the coming discussions, issued in response to the Prime Minister’s letter, there is a strong statement on the long-term effects of Brexit on Northern Ireland.

Here the EU has prioritised its commitment to and protection of the peace process through its signature of the Good Friday Agreement and for the EU this remains of paramount importance.

The draft guidelines state that the EU negotiations will require ‘flexible and imaginative solutions’ and an approach that includes the aim of avoiding a hard border within the island of Ireland while respecting the legal order of the EU.

The only way to achieve this may be political arrangements between the north and south of Ireland and proposals for ways to achieve these are being drawn up currently by the leader of the opposition in Ireland.

The close vote in recent elections in Northern Ireland, following the breakdown of the power sharing agreement, may yet lead to new elections. If Sinn Fein manage to overcome the 1168 first preference votes for the unionists, then there may be some shift on this. Given that there were nearly 9,500 spoiled ballot papers in this election, this might easily be achieved.

“The price of Brexit may be the loss of Northern Ireland.”

There has already been a request for an independence referendum in Northern Ireland and this could be progressed under the Good Friday Agreement. The European Commission has already stated, and David Davis, the Secretary of State for Exiting the EU, has confirmed by letter that Northern Ireland can re-join the EU immediately if there is an all island agreement.

The price of Brexit may be the loss of Northern Ireland in addition to the resolution for another referendum in Scotland. These pressures serve to weaken the strength of the Prime Minister’s negotiating position and leaves her open to the EU’s hand of friendship being extended to those nations wishing to retain their relationship.

Gibraltar

Other issues also threaten the territorial integrity and policy of the UK. Gibraltar’s future has arisen in the EU’s negotiation position.

While discussions between the EU and UK about the legal validity of the Treaty of Utrecht can continue about Gibraltar above its head, it too may decide that a different status will be appropriate. The crown dependencies of Jersey and Guernsey might also like to take this opportunity to split off. If the UK remains with pass-porting rights for financial services, it must act on these states and their approach to banking secrecy – an issue that currently remains outstanding for the UK government.

Trade negotiations

The EU’s published terms of discussion suggest a more mature and rounded approach to the coming negotiation.

As it states, it is unlawful to discuss further trade agreements with the UK under WTO rules until it leaves the EU. This has always been the case and should be recognised.

There will be further EU institutional issues that emerge. The European Parliament, that must approve the final settlement prior to the European Council, has its own red lines in the negotiation. These may be extended beyond those that have been agreed with the other two negotiating bodies – the Council, and the Commission.

“The UK will not be given even similar benefits to being in the Single Market and Customs Union…”

In an early sight of a proposed motion on these red lines to be put to the European Parliament in the coming weeks, the UK will not be given even similar benefits to being in the Single Market and Customs Union, let alone the exact same benefits, as had been suggested by the Prime Minister. Further, a future trade deal would need to include equivalence in key areas including competition, trade and social policy, which means a bonfire of regulations is incompatible with a new UK-EU Free Trade Agreement.

There will be no sectoral deals that replicate the exact same benefits as being in the single market and customs union which is a clear statement against the Prime Minister’s hitherto hopeful approaches to finance and the car industry among other sectors. Finally, while there could be a transitional deal, this will be for a maximum of three years, during which period the European Court of Justice would have legal authority.

All this suggests that businesses could make locational decisions sooner rather than later. There is no mention of science or research and development.

This will encourage relocations inside the EU and it is also likely that universities, companies and banks will not be able to claim EU membership benefits through a token presence. There should be a significant transfer of operations to qualify. However, before these issues are discussed, the rights of EU citizens in the UK, and UK citizens living elsewhere in the EU will need to be resolved. And of course, after that there is the bill for the divorce…

Lessons in diplomacy

The UK has spent nine months being reassured that all these issues are not important or can be amicably resolved. The Prime Minister’s focus on security as the main outcome emerged again in her Article 50 letter and it appears that this remains her greatest concern.

The coming months offer a very bumpy ride and possible lessons in diplomacy. In the UK’s first past the post electoral system, negotiation between politicians is required within but generally not between parties. The UK government is about to find out what many years’ experience of political deal-making in proportional representation systems can serve up to an inexperienced player.

The road ahead

How long will the backers of the Conservative party watch this disaster in slow-motion about to be unveiled? Leaving companies, the lowering pound and high domestic borrowing with the lowest levels of savings since the 1960s in UK households, are all in evidence.

While the last major financial crisis hit housing, there is an expectation that car financing schemes could be going in the same direction this time if there is a financial crash. As inflation increases, payments will be more difficult for households with high debt levels and no savings.

This undermines the UK’s negotiating position not only in the EU but worldwide. So perhaps the arch brexiteer and former agriculture minister Owen Paterson’s suggestion that the elderly should be picking crops in the fields when EU nationals return home is not so far from what might be on offer…

 

Beyond Brexit? by Janice Morphet can be ordered here for £7.99.

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