Soft Brexit, Soft Transition: Myths and Reality

COMMENT

Soft Brexit, Soft Transition: Myths and Reality

Kirsty Hughes | 1 November 2017

Brexit March, Megan Trace, CC-BY-NC-2.0

Public opinion in the UK on Brexit is edging slightly towards a ‘Remain’ majority but only just – a range of 51%-53% in recent polls. But that Remain opinion has barely any political expression in the main political parties.

Theresa May has repeatedly said the UK will not stay either in the EU’s single market or its customs union, so the Tories are clearly leading the UK to a hard Brexit (whether of a cliff-edge or free trade deal variety).

For Labour, Jeremy Corbyn talks of a ‘jobs-first’ Brexit but this looks like a hard, free trade deal Brexit too. Labour has not endorsed a ‘soft’ Brexit approach – either of being in the EU’s single market, or its customs union or both. Shadow Brexit minister Keir Starmer has talked of possibly staying in the customs union and of somehow retaining full single market access, but without necessarily being in the single market, but Corbyn has not endorsed this approach.

Both Labour and the Conservative government talk about a transition period – two years for the Tories to four years for Labour – where the UK would probably stay in both single market and customs union, so there is little gap between them on this either.

There are, of course, politicians pushing for a ‘soft’ Brexit of either staying in the EU’s single market or staying in both the single market and customs union. Nicola Sturgeon has argued for the latter (while retaining the SNP’s policy of an independent Scotland in the EU as the final goal). The Lib Dems want a second EU referendum on the deal, potentially allowing a halt to Brexit – or otherwise at least a ‘soft’ Brexit.

And there is plenty of cross-party collaboration in Westminster between the few Tory MPs who want the UK to stay in the single market – SNP MPs, Lib Dems and Green MPs and a substantial number of Labour MPs who, defying the party line, want a single market and customs union deal. Frequently, these MPs are referred to in the media as ‘pro-EU’ but supporting a ‘soft’ Brexit not a hard one is not arguing to halt Brexit. The closest to a ‘halt Brexit’ argument there is comes from the Lib Dems – but they still want to wait for a deal and a vote on that in autumn 2018.

So the Remain half of the UK population for now have very little political voice and representation. Some in the EU27, who would be encouraging if the UK changed its mind and decided to reverse Brexit, warn that another year of deteriorating relations could make it increasingly hard to get political acceptance in the EU for a change of course. And the next year in the UK looks likely to be economically and politically turbulent, with no clear glide-path to an autumn 2018 deal.

But focusing more specifically onto the ‘soft’ Brexit option, there are five serious problems with the whole concept of ‘soft’ Brexit, whether as an endpoint or as a transition.

(1) Would ‘soft’ Brexit be sustainable or democratic for the UK?

If the UK chose to be a big Norway – in the European Economic Area or its own equivalent version of that – it would get no vote and have little influence on EU regulatory decisions and laws that it would nonetheless have to apply in the UK. Some argue that Norway is not a ‘fax democracy’ because it can veto EU laws. But in practice Norway does implement relevant EU laws – and if Norway didn’t pass a directive that affected a particular sector it would then potentially lose access to the single market in that sector.

If the UK also agreed to be in a customs union with the EU, then it would have to apply tariffs that the EU had agreed in its current and future trade deals, again without the UK having any say. No country has, so far, been in both the EEA and a customs union with the EU, so there is no guarantee anyway that the EU would offer this. Nor is there any guarantee that the EEA (the EU27 and Norway, Switzerland, Iceland and Liechtenstein) would agree to UK membership of the EEA.

But even if these hurdles were cleared, it is hard to imagine that such a deal would be sustainable in terms of UK politics and democracy. For the UK to have no say in future single market regulations and no say in EU trade deals would soon impact on some sectors or issues in ways that were controversial and/or damaging to the UK (since the UK would not have been able to ensure its interests were represented). This would soon be controversial on a range of issues not just for Eurosceptics but for the wider public, for business, for a whole range of other sectors and interest groups.

In such a ‘soft’ Brexit, the UK would still have to respect the four freedoms of the EU’s single market, including free movement of people – despite the ‘Leave’ side anti-migration rhetoric. And there is no guarantee that the UK would have the degree of freedom that Norway has in its agricultural and fisheries policies (which are anyway constrained internationally). The EU27 are very concerned about access to UK waters for their fishing fleets – and, if there was not a satisfactory deal on that, the EU27 would quite likely not agree to an EEA ‘soft’ Brexit. This is also relevant to, but not usually considered in, the Scottish independence debate, where some on the pro-independence side assume Scotland could easily get exactly the same deal as Norway currently has if it went the EEA route.

(2) Could the EU Withdrawal Bill underpin a ‘soft’ Brexit?

The EU Withdrawal Bill is set for a rough ride through the House of Commons and Lords with numerous amendments having been put forward. The Welsh and Scottish governments are also arguing strongly against the ‘power grab’ of devolved powers that the bill in its current form entails. For now, it is possible that neither the Scottish parliament nor the Welsh assembly will give legislative consent to the bill, sparking a deeper constitutional crisis, although there continue to be talks between the UK, Scottish and Welsh governments on this.

But there is a separate issue with the EU Withdrawal Bill that has received much less attention. Is the withdrawal bill neutral on the type of Brexit the UK goes for? Or is it, rather, formulated on the basis that the UK leaves the EU’s single market and customs union (an issue also pertinent to future trade, customs and agriculture bills amongst others)?

Alan Page, professor of public law at the University of Dundee, doubts whether the bill is neutral in this way. In response to a question for this comment piece, he said:

‘The EU (Withdrawal) Bill is written on the assumption that we will have left the EU. Joining or staying in the EEA, on the other hand, implies that EU law, or rather a lot of it, will be “retained”. But “retained” in an EEA – “soft Brexit” – outcome is not the same as the way “retained” is used in the Withdrawal Bill, i.e. as a body of law whose retention, amendment and repeal are matters ultimately for the UK parliament. At the very least, I think it would require substantial changes to the bill, which would then present its own political problems. The extent of the problems would depend, in part, I suppose on what can be squeezed out of Clause 9 of the bill, but it underlines the difficulty of legislating for different and not necessarily consistent outcomes.’

This raises some challenging political issues. The Scottish government might agree a deal with the UK government on the Withdrawal Bill, which would presumably mean they would not refuse legislative consent. But if the Withdrawal Bill is designed for a hard Brexit, then the Lib Dems and SNP should surely vote against, given they want either a ‘soft’ or no Brexit. This could also put Labour on the spot over their vagueness over the type of Brexit they want. If Labour were considering voting for or not opposing the Withdrawal Bill (depending on what happens to the various amendments that are key for them), these questions would surely come to the fore.

(3) A ‘Soft’ transition: Time-limited?

Some soft Brexiteers hope that a ‘soft’ transition could end up being extended indefinitely or even make it easy for the UK to rejoin the EU at some future point.

There are a number of problems with this. The EU27 and the European Parliament have so far made it clear they want a time-limited transition, with the European Parliament’s resolution saying it should be no more than three years. While the EU27 might be open to the UK choosing the ‘big Norway’/EEA option, it would want to agree this as a final destination.

But what the EU27 will not want is for talks with the UK on a trade deal to drag on for several years with the UK in a ‘soft’ Brexit limbo. This would take pressure off the UK side to agree a trade deal, and it would lead to unhelpful uncertainty on both sides – as well as potentially making the adjustment to a post-Brexit trade deal look smoother than some in the EU would want. A long transition might also become difficult in the UK for the reasons outlined above – loss of voice and vote.

It is also, so far, unclear exactly how a transition deal that involves extending the EU’s ‘acquis’ for the UK for a short period of 2-3 years will be done. Some argue that the UK should then just stay in the EU for two more years – which could be done if the Article 50 time limit were extended by unanimity. This is unlikely from both sides. The EU27 will not want the UK to prolong its exit and keep its voting rights, allowing the uncertainty of Brexit to continue. And the current UK government supposedly wants to ensure that the UK has visibly left the EU in March 2019.

Equally, while there might perhaps be some way to envisage a temporary UK membership of the EEA which would keep it in the single market for a couple of years, there is no equally obvious way to keep the UK within the EU’s customs union on a temporary basis. So, while the EU27 are open to a transition, exactly how it is done and for how long will become key questions in the coming months. And if it is done, it is likely to be without the UK retaining voting (and so in effect membership) rights.

Any exit package, including a transition deal, under Article 50 is to be agreed on the EU side by a qualified majority vote (and by a majority in the European Parliament). If a time-limited transition is agreed, it is not obvious how it could be extended in future. And since the UK would in future be a third country not an EU member state, it is quite likely any new, extended transition period would need unanimity – and ratification across member state parliaments (which could be very hard to get).

(4) ‘Soft’ Brexit as democratic?

Some ‘soft’ Brexiteers argue that a single market (and customs union or not) Brexit would respect the vote to leave the EU while also doing least damage to the UK.

This is problematic on various levels. Firstly, if the UK – or the English and Welsh – public change their mind on Brexit in the coming months, it is not undemocratic to argue for a second EU referendum. And, secondly, since there was no specific Brexit model put forward in 2016, then once the type of Brexit is clearer – whether through ‘no deal’ or through an outline trade framework being part of the exit deal – it is also democratically fair to argue that should be put to a vote.

But there is also a certain degree of political obfuscation going on here. Some soft ‘Brexiteers’ would in theory like to still argue for EU membership but are concerned at how that would play with voters in their constituencies. Rather than give political leadership, in terms of the economic damage that even a ‘soft’ Brexit/EEA would do, and so argue for the UK to think again, some soft ‘Brexiteers’ are either in damage limitation mode, or in ‘wait and see’ mode. For this group, if public opinion changes and moves against Brexit strongly and clearly, they might come out and then support this. But they won’t lead. It’s a politics of weakness, and procrastination, not strength.

Another group of ‘soft’ Brexiteers still cling to the idea, rejected repeatedly by the EU27 – and European Parliament, that there is a ‘Norway minus’ version of ‘soft’ Brexit, where the UK would not have to apply free movement of people rules as they do today while otherwise being a full part of the EU single market. But there is currently nothing to suggest that the EU27 will not stick to their clear public position on this. This is a politics of denial by these particular ‘soft’ Brexiteers.

Some also hope that eventually, after some years of a ‘soft’ Brexit, whether in a transition phase or in the EEA, the UK will decide to rejoin the EU. This looks like a difficult, if not impossible, path. The EU will have moved on – current Franco-German discussions include a common EU asylum policy, corporate tax harmonisation and greater defence integration, not policies that would be attractive in the current UK political context. And the UK, if it rejoined the EU, would certainly not be able to get back its current budget rebate – indeed some in the EU27 argue today that if the UK changes its mind before March 2019, it shouldn’t retain the rebate even then (though whether the EU27 could demand that is an open question, tied to the issue of whether UK can unilaterally withdraw Article 50). And while French president Emmanuel Macron has suggested a future multi-tier EU could even facilitate the UK’s return, a multi-tier structure has long been discussed by the EU without ever really moving forward on it.

(5) ‘Soft’ Brexit may not solve border problems

A ‘soft’ Brexit by the UK staying in the EEA would not solve all border problems. The Norway/Sweden border has a range of controls including cameras and the power to pull over traffic for inspection. Outside the EU’s customs union, ‘rules of origin’ have to be respected and reported in customs forms.

So for the UK, this would ease but not solve problems of customs congestion and challenges for cross-border supply chains and just-in-time production. For the same reasons, this would not solve the challenge of keeping the Ireland/Northern Ireland border open and frictionless.

Equally, a customs union-only Brexit, while the UK was outside the EU single market, would mean UK exporters would need to prove regulatory conformity – and would also mean substantial barriers to services trade (so does not really deserve the label ‘soft’). A super-soft Brexit of being in both the single market and customs union could in theory solve border problems. But Turkey’s customs union with the EU has not removed all border regulation, tailbacks of lorries (and only covers industrial goods). So any new UK-EU27 customs union deal would have to be much more comprehensive and include agriculture if it was to resolve the Northern Ireland/Ireland border question.

Not a simple solution

‘Soft’ Brexit is not the simple solution its proponents suggest. And currently the UK is not on a ‘soft’ Brexit path. The Tory government has rejected a ‘soft’ Brexit Norway-style. And underneath Labour’s deliberate confusion on its Brexit aims, there is so far no ‘soft’ Brexit either.

But if the politics changed and a ‘soft’ Brexit was on the cards after all, it would hit its own problems of loss of influence and lack of democracy, lack of sustainability and border challenges. And the current EU Withdrawal Bill might not work at all for a ‘soft’ Brexit. Nor is it likely that a ‘soft’ transition would carry on indefinitely. It is perhaps time for its proponents to abandon the cautious politics of fear, denial and procrastination, and call for a halt to Brexit.

Kirsty HughesKirsty Hughes | Twitter

Scottish Centre on European Relations

Dr Kirsty Hughes is Director of the Scottish Centre on European Relations. She is a researcher, writer and commentator on European politics and policy, and she previously worked for a number of leading European think tanks.