© 2018 SCER
With little fanfare, the supposed deadline for a Brexit deal – the October 2018 EU summit – has passed. The emergency summit pencilled in for November has been removed but could re-emerge; more likely, for now, the mid-December summit will become a genuine make or break moment for a Brexit deal.
Theresa May’s cabinet and party look ever more deeply divided, unstable and unruly; uncertainty rules. May appears to have stepped back last weekend from a deal on the withdrawal agreement drawn up between UK and EU negotiators at official level as she couldn’t keep her cabinet on board if it went ahead. For many of her cabinet, and Brexiter backbenchers, the idea of an Irish backstop that isn’t temporary and that could allow a differentiated deal for Northern Ireland (with a possible Irish Sea border) is too much.
The one half-new idea that did emerge around this week’s summit was of a further extension to the current 21 month transition period. The idea that the possibility of an extension to transition might be slipped into any deal at the last minute has been around for quite a while (not least as few thought a future trade deal could be negotiated so fast). But now the idea is being mooted that such an extension could make the Irish backstop (in whatever form) more palatable.
How Long Could a Backstop Last?
Much confusion reigns around the different possible backstops and their relationship to any future UK-EU trade deal. The idea of having 2 backstops – or a backstop to the backstop – has also been around for a while. This would mean that there would be a Northern Ireland specific backstop, keeping Northern Ireland in the EU’s customs union and in (much of) the single market’s regulatory set-up. And there would be a preferred backstop whereby the whole UK would stay in a customs union with the EU, thus avoiding customs and rules of origin checks.
Since the EU has insisted up to now that a full customs union, with appropriate safeguards on a level-playing field (to avoid regulatory undercutting), could only be negotiated legally and practically after the UK left the EU, the Northern Ireland specific backstop was seen as still necessary (even if called the backstop to the backstop). Some media sources are now suggesting the EU might shift on this with a firm commitment to an all-UK customs backstop. Whether that proves to be the case or not (it would be a significant shift), this does not solve many of the challenges facing Theresa May in getting such a deal through her cabinet and through Westminster.
To be an effective backstop, any backstop must be indefinite not temporary. UK and EU negotiators then need to find a form of words to allow for the fact that a future UK-EU trade deal could supersede the backstop, making it redundant. But there is no guarantee that a future trade deal will be agreed, ratified and create frictionless borders between the UK and EU in future, so that the Irish border will not become a hard border with regulatory and customs checks in the context of that future trade deal. So an indefinite backstop is needed.
A customs union would, of course, only be half the story. Even if an all-UK customs union backstop is agreed, that doesn’t cover ensuring Northern Ireland stays in line with EU regulations for goods, animal health and so forth to keep the Irish border open and without checks. So if the rest of the UK (rUK) is diverging from single market rules, there will be regulatory barriers and borders between rUK and Northern Ireland. So even May’s preferred backstop will result in a differentiated deal for Northern Ireland, and will need to be indefinite.
And a customs union doesn’t resolve the separate problem that the UK will need to renegotiate the EU’s trade deals covering around 60 countries globally (it will have to apply the tariffs the EU negotiated but then negotiate its own access to those countries’ markets).
Meanwhile, any future trade deal – if it sticks to Theresa May’s red lines and takes the UK out of the EU’s single market and customs union – will struggle to avoid regulatory checks and rules of origin checks (even if the deal abolishes all tariffs). So it is hard to see how a future deal will allow the backstop to be superseded. Angela Merkel has repeatedly emphasised that a third country partner of the EU cannot have the same access or deal as EU and EEA member states have. That’s not a recipe for frictionless borders.
UK Politics of the Brexit Endgame
So Brexiters who fear remaining in a customs union for ever would, quite probably, have their fears confirmed. Yet, at the same time, May is unlikely to agree any form of words on the political declaration on the future relationship – together with the withdrawal agreement – that suggests the UK won’t eventually move to the bright, sunlit uplands of a deep and special trade deal that allows the UK to run its own global trade policy. While that may not be enough to appease the Tory Brexiters, there should be little risk that Corbyn’s Labour MPs will do anything other than vote against the deal (bar some pro-Brexit rebels (some of whom will blame their fear of a no deal Brexit)), as it won’t state that the UK is aiming at a permanent customs union. Likewise, the SNP’s MPs would certainly be expected to vote against too – and with her support for another EU referendum, Nicola Sturgeon has recently hardened her position on this.
How does a longer transition fit in here? In principle, it allows time to negotiate a customs union backstop and a future trade deal (though that’s a lot to get through) so that any Northern Ireland-specific backstop won’t be needed, and ideally (from May’s point of view) so that the customs union backstop won’t be needed. On its own, this looks unlikely to reassure Tory backbenchers and the DUP more than it may enrage them. It will also raise questions of a budget contribution for the extended period. But it would also have the advantage of pushing the December 2020 cliff-edge further back.
So the Brexit end-game continues. A deal remains much more likely than no deal, but whether that deal will pass at Westminster, or allow May to retain the support of (most of) her cabinet – given the decaying and imploding politics of the Tory party – is open to serious doubt. If the deal isn’t done til December, and it only comes to Westminster in January, there will be huge pressure to allow it through (including, to some degree, from the EU27).
If there’s a deal and it passes at Westminster, the UK will leave the EU next March. That won’t solve the UK’s chronic political crisis – and Brexit’s impact on a divided England, and in pro-remain Scotland and Northern Ireland, will play out as the reality sinks in (economically and politically), and as the talks on the future relationship begin.
But if the deal fails to clear Westminster (or there is no deal), the route will be open – via a serious political crisis – to a general election, or a people’s vote. Some suggest there could be a government of national unity at such a point. But in July there wasn’t a majority in the Commons to back a customs union, so would there be a majority for such a national unity government and to do what – to run a people’s vote, to negotiate a rule-taker ‘soft’ Brexit?
A general election might or not deliver a change of government (surely a change of Tory leader). And both a people’s vote and an election would require an extension to Article 50. The EU27 might agree to this – but it needs unanimity and it’s not guaranteed.
Even in the scenario of a ‘remain’ vote in a second EU referendum, the divisions within the Tory party and within the UK and within England will not disappear over night (or at all). There is no simple path back to 2015.