The danger of a ‘blind Brexit’
Approach would leave the UK without any assurance over future trade relationship
This first week back at Westminster has been a pretty calamitous one for Theresa May and her Brexit strategy.
At home, her Chequers plan has been roundly condemned by hardline Conservative Brexiters who demand a “Canada-style” clean break with the EU.
In Brussels, Michel Barnier has issued a clear rejection of the PM’s proposal for the UK to stay in the single market for goods but not services, telling British MPs the idea is dead.
Meanwhile, on the other outstanding question in the Brexit talks — the future status of Northern Ireland — Mrs May is getting no joy either.
The EU insists on maintaining a Northern Ireland-only backstop in the Article 50 withdrawal agreement. In other words, if a future UK-EU trade deal fails to provide a frictionless border across Ireland, then Northern Ireland will have to stay in the single market and abide by the EU’s customs code.
The British hate this, of course, because it drives a border down the Irish Sea; but the EU shows no sign of budging.
Given this deadlock, it is hard to see how progress can now be made in the Brexit talks. But the past 24 hours have brought some new indications of how the EU side now sees the way to a deal.
The EU’s thinking can be gauged in a note published by Mujtaba Rahman of Eurasia Group, based on a briefing from European officials. Some of the thinking was confirmed in a subsequent piece by Bloomberg, which moved sterling.
Mr Rahman says the EU is still giving no ground on Chequers or the Irish backstop. Instead, the EU is now focused on the political declaration that accompanies the Withdrawal Agreement.
The EU wants the political declaration to specify that the UK and EU are working towards agreeing a “free-trade agreement with customs co-operation” by the end of the transition period in December 2020.
Mr Rahman says that, for EU officials, the crucial point about such a formula is that it does not preclude more ambition about the trade relationship in the future. Essentially, the “FTA with customs co-operation” will articulate the “floor” of the UK and EU’s ambition. In other words, this is the minimum the two sides will seek to achieve — but it could be more.
There are attractions to this approach. First, it solves the problem in the Tory party. For Jacob Rees-Mogg and his hardliners, the aspirational language about “FTA plus a customs arrangement” would be close to the Canada- style deal they seek.
At the same time, this is not a disaster for Mrs May either. True, she gets nowhere with Chequers. But she can always argue that the UK can aspire to reach a Chequers arrangement in a future treaty.
Squaring Northern Ireland’s Democratic Unionist party will be much harder. They will need a lot of convincing that the Northern Ireland backstop is something that will never happen. But they may have no choice but to accept it or bring down Mrs May.
Would such an approach work? Some UK officials say this may be the only way to secure an orderly Brexit in March 2019. There is just one problem: far from being an agreement on a trade framework, this is a leap in the dark — a blind Brexit — in which Britain leaves the EU without the slightest assurance over what its future trade relationship will be.
Can Britain accept a blind Brexit? Many are bound to see it as an unacceptable outcome to the Article 50 process.
Britain would be paying €39bn to leave the bloc. But without any commitment on its future trade arrangements, it will have thrown away all its negotiating leverage.
The UK will have an orderly Brexit in March. But the clock will immediately start ticking down to the end of the transition period in December 2020, with every possibility that this will end up being the cliff edge.
The problem is that when MPs come to vote later this year, they may have no choice but to accept this outcome. Many MPs might well see the alternatives — no deal, a general election and a second referendum — as too hazardous to contemplate.
But MPs should be in no doubt either about what a blind Brexit implies. For Britain, it would be a humiliation, not a solution