Friday, September 27, 2019

The EU risks squandering its last chance to do a deal with Britain

Published on The Telegraph
When it comes to EU negotiations, it is becoming ever clearer that the political consequences of the Supreme Court's ruling on Boris Johnson’s prorogation of Parliament are not particularly significant. Yes, it means that MPs have only lost two weeks, instead of five, to try to influence Brexit. But, more importantly, Parliament can’t really agree on much.
There is no support, at least not yet, for any of the alternatives: a Brexit deal, allowing “no deal”, revoking article 50, an early election or a second referendum. Boris Johnson may have lost his majority, but there isn’t an alternative one ready to replace his government. There is only a majority for extending UK membership, something that doesn't settle anything.
The EU must really consider carefully whether it wants to waste the upcoming month in the hope that Boris is deposed, opening the way for either a “softer Brexit” or the reversal of Brexit altogether. The latter is something many in the EU now realise is unsustainable, given how difficult the UK would be as a partner, not least due to the 17.4 million voters that would feel betrayed.
Given that Boris Johnson may also adopt a much more radical position on Brexit in the event of an election, in order to gain votes from the Brexit party, the EU would do well to realise a deal with him now is likely to be much easier rather than one later.
Boris has been moderating his position, most notably by suggesting an all-Ireland agri-food zone, which would increase the number of checks on UK territory, in the Irish Sea. He has however refused to align Northern Ireland to the EU’s customs territory, as this would mean intra-UK customs checks. Instead he has proposed things like trusted trader schemes and technology as a means to soften the border. The EU considers this to be a big obstacle.  
Boris Johnson still wants to preserve the Good Friday Agreement, but by minimising border checks instead of avoiding them altogether. This has lead to EU accusations that he was no longer committed to the "frictionless" trade Theresa May signed up to but only to trade that was "as frictionless as possible".
As a European diplomat put it: “His proposals presuppose the management of a border . . . not the avoidance of a hard border, as was the clear commitment between the EU and the previous UK government.”
The UK and the EU also seem to define what constitutes a “border” in a different way. Whereas the UK only sees it as a geographical frontier, the EU takes a wider view encompassing the all-island economy, thereby also defining checks away from the frontier as a border. 
The backstop is intended to protect the “Good Friday Agreement” and because of this, many equate it with this important peace accord, but as a new Open Europe briefing highlights, this is fundamentally mistaken. The backstop does not meet the same tests for cross-community consent as the Good Friday Agreement. Nationalists support it but most unionists oppose it.
The backstop may on the contrary undermine the already weak institutions established under the agreement, as there are major doubts that it respects the important “Principle of Consent” in the Good Friday Agreement that any fundamental changes to Northern Ireland’s governance must enjoy support among both communities.
The key difference between Boris Johnson and Theresa May is that the former is much keener for the UK to have an independent trade policy. Theresa May’s team seemed much more relaxed about this not materialising, by signing up to the backstop arrangement, which puts Brussels in charge of UK trade policy.
Given that Boris is set on an independent trade policy and therefore tariff differences, which will necessitate some checks, this means that for a deal, “European leaders will have to make a difficult shift in the negotiating red line of having no regulatory friction on the border at all. That is a big ask” an EU source tells The Times.
That is the case, to be fair, but surely asking for the UK to sacrifice an independent trade policy until further notice isn’t exactly a modest demand either.
There is, however, cause for optimism, as the EU has been moving too, even though one needs a microscope to see it. For a start, there was the EU’s willingness to grant Ireland some slack on border checks in case of "no deal”, at least for a while. That’s good news, as it is sometimes forgotten that it’s Germany, France, the Netherlands and Belgium that are going to ask Ireland to protect the EU’s external border after Brexit, while Boris Johnson has pledged that “under no circumstances (…) will the (…) United Kingdom be putting checks on the Northern Irish frontier.”
Secondly, given how leaky the EU’s external border is, it would be weird if Ireland were to come under intense pressure to deliver a perfectly protected border from those countries that fail in exactly that.
We are talking here about Greek customs facing more than €200 million in fines for failing to act against a major Chinese fraud network dumping ultra-cheap clothing and footwear in Europe. And about the ports of Antwerp and Rotterdam, those major gateways to the EU’s internal market, which are “leaking like a sieve”, according to Antwerp’s mayor.
On this, we can spot some movement, as there were some rumours about tolerating the same lacklustre VAT collection in Northern Ireland as elsewhere in the EU.
But apart from this glimmer of hope, nothing is moving on the EU side. EU negotiators have dismissed most UK demands for flexibility, which ultimately come down to tolerating a few extra holes in the external border, for the sake of peace. One such demand was to exempt small traders from being checked at the border.
Even if Ireland would move on the backstop, flexibility from Ireland’s EU partners in tolerating a border that is at least as leaky as the EU’s external border elsewhere will be absolutely crucial in order to come to a deal.
If Juncker is not just being diplomatic when stating that he thinks Boris is intent on a deal, he should realise the EU will need to move. In one month, “dealmaker” Boris may be replaced with “no deal Boris”. To quote EU negotiator Michel Barnier: “The clock is ticking”.  

Monday, September 09, 2019

This may well be the EU’s last chance to avoid a no-deal Brexit. But will they take it?

Published in The Daily Telegraph
Boris Johnson's future as PM may hinge on whether he can avoid having to request a three-month extension, as required by legislation passed by a majority in Parliament. As this newspaper has reported, the Tory leader has drawn up plans to “sabotage” any Brexit extension by “send[ing] an accompanying letter alongside the request to extend Article 50 setting out that the Government does not want any delay after October 31”.
The EU will require the UK to “indicate a way forward” as a condition to granting an extension. Therefore, the UK hopes Brussels will automatically reject London's “request”, if it deliberately fails to present a concrete reason for the extension.
Legal challenges in the UK may hamper this strategy - a judge may, for example, rule that such conduct would violate the Benn legislation that forces Boris Johnson to request an extension. EU leaders might also still grant the extension, claiming that they believe a general election to be imminent, given the fact that Boris Johnson no longer has a majority. The latter would certainly be unprecedented, but these are unprecedented times.
Moreover, Brussels may now be strategising on the basis that, if they grant an extension, a Labour government, intent on stopping a no deal Brexit, could well come to power - and such a situation may work to Brussels' advantage.
One scenario they might envisage is Labour gaining power in December, perhaps propped up by other opposition parties. This would then be followed by yet another extension of UK membership, followed by a referendum where the British people would be able to vote between remaining in the EU and agreeing to a Labour-style Brexit deal, with likely more alignment than the deal Theresa May negotiated.
Crucially, Brussels is also very anxious to avoid no deal. It is true that France is threatening not to grant an extension, but - as was the case with the extension granted in Spring - this is more a game of trying to extract concessions such as the length of the extension period. Unlike last spring, President Macron no longer fears that the UK’s membership would affect the outcome of the European Parliament elections. 
Most importantly, France and other EU member states will be wary about any action that brings about a no deal against the wishes of Ireland. The latter's Minister for Finance Paschal Donohue stated today that Ireland “would be in favour of an extension that would create the space to hopefully conclude where we are”. It’s well-known that the country isn’t ready to deal with a hard border, even if the EU has now made clear it will tolerate holes in that border at least for a while.
Other European countries will be just as eager to avoid no deal. Insiders in the Port of Rotterdam admit that they’re not ready for a WTO Brexit,  as customs officers, inspection posts and lorry spaces are lacking. The Federation of German Industries (BDI) has warned a no deal Brexit would cause Germany's already weak growth to tumble to zero this year.  Never mind that this is the same BDI which trumpeted right after Boris Johnson entered office that “The Withdrawal Agreement must not be renegotiated.” In other words, the stars are aligned for an extension.
The EU should not, however, waste the time between now and 18 October by simply waiting for the extension. These may be the last weeks for them to avert a "no deal" Brexit. Extending Article 50 does not automatically stop no deal. With Boris Johnson, the EU have “the Devil they know”.  What if an extension is followed by a general election, in which Boris Johnson is obliged to back no deal in order to forge an alliance with the Brexit Party? What if the Conservatives win an absolute majority based on those pledges, and also because Boris Johnson has stepped down just before the extension, "sacrificing" his job for Brexit? These are now very real possibilities.
Therefore, the EU might want to look more seriously into what Mr Johnson is offering now. It’s hard to accuse Mr Johnson of not wanting a deal. Although the PM has moved on food checks in the Irish Sea, the EU and the Irish government have not softened their positions; they are still simply repeating that they are open to the idea of going back to the original Northern Ireland-only backstop. Some UK commentators have pointed out that due to the loss of a majority, the DUP are now “irrelevant” to Boris, so an Irish Sea border of some sort may therefore be easier. 
This may well be the EU’s last chance for a deal-based Brexit. But will they take it?

Sunday, September 08, 2019

Mijn interview over #Brexit in De Zevende Dag:

De EU wil enkel een brexitakkoord als het VK een keuze maakt tussen het uitbesteden van zijn eigen handelsbeleid tot nader order, of anders douanecontroles organiseert op eigen grondgebied (tussen NI en GB):

Thursday, September 05, 2019

Wat Brussel niet heeft begrepen van de brexit

Published in Belgian daily De Morgen and in the magazine of Dutch think tank Clingendael

Het wordt alsmaar moeilijker om tot een brexitakoord te komen. Een van de redenen is dat velen in Europa de Britse standpunten eenvoudigweg niet goed begrijpen. Hier zijn vier belangrijke misvattingen die vaak onuitgesproken blijven, maar het denken over brexit op het vasteland wel domineren en daarmee een akkoord bemoeilijken.

1. DE BRITTEN NEMEN EEN RIGIDE STANDPUNT IN

Men kan veel zeggen van de Britse premier Boris Johnson, maar zijn regering wenst nog te onderhandelen om zo een voor beide zijden pijnlijke no deal te vermijden. De EU weigerde sinds november, toen Johnsons voorganger Theresa May een uittredingsakkoord sloot met de EU, om het bindende deel van dat akkoord te onderhandelen, ook al waarschuwde May de Europese leiders toen uitdrukkelijk dat ze er misschien niet in zou slagen om haar parlement te overtuigen. Pas verleden week maakten Macron en Merkel een eerste bocht: de letter van dat bindende deel kan wel worden gewijzigd, zolang er maar onmiddellijk werkbare alternatieven zijn om een harde grens in Noord-Ierland te vermijden.

2. HET BRITSE VERZET TEGEN HET UITTREDINGSAKKOORD IS IRRATIONEEL

Zoals ondertussen bekend is, weigerde het Britse parlement tot driemaal toe om het brexitakkoord goed te keuren omwille van de zogenaamde backstop die erin is voorzien. Die voorziening houdt in dat het VK de handelstarieven van de EU overneemt, tot op het punt dat de EU en in het bijzonder Ierland zich akkoord verklaren met controles op handelstarieven aan de Ierse grens die een harde grens vermijden. Theresa May stemde hiermee in omdat de EU in feite stelde dat een brexitakkoord enkel mogelijk is onder een voorwaarde: dat het VK, de vijfde grootste economie ter wereld, een keuze maakt tussen dit uitbesteden van zijn eigen handelsbeleid tot nader order, of als alternatief douanecontroles organiseert op zijn eigen grondgebied, in de Ierse Zee, tussen Noord-Ierland en Groot-Brittanniƫ. Het akkoord met de EU schendt trouwens het Goedevrijdagakkoord dat vrede bracht in Noord-Ierland, aldus Nobelprijs-winnaar David Trimble, een van de leiders van de partijen die dit akkoord sloten.

3. HET VK ZIT NIET ZO IN MET EU-BURGERS

Velen, inclusief Theresa May, interpreteerden brexit als een uiting van antimigratiesentiment, maar peilingen wijzen uit dat dit niet zo is en dat men in de eerste plaats migratie beter wil kunnen controleren. Dat werd duidelijk toen de nieuwe minister van Binnenlandse Zaken onlangs liet weten dat er in geval van no deal onmiddellijk een einde zou komen aan het vrije personenverkeer. Ze werd meteen teruggefloten. De Britse regering wil dit alles geleidelijk veranderen, ook omdat Boris Johnson zelf nogal positief staat ten opzichte van migratie.

Ook stelde de Britse regering al voor aan de EU om de rechten van de meer dan drie miljoen Europese burgers in het VK en die van de Britse burgers in de EU te regelen in een aparte overeenkomst, in het geval er geen uittredingsakkoord zou zijn. Maar de EU weigerde dit.

4. HET VK GEEFT NIET OM EEN HARDE GRENS IN NOORD-IERLAND

Noord-Ierland maakt tot nader order nog altijd deel uit van het VK en nieuwe spanningen daar zouden het VK dus nog meer treffen dan Ierland. De Noord-Ierse DUP stelde trouwens als minimumeis tijdens de onderhandelingen met May om haar regering te ondersteunen dat er geen harde grens in Ierland mocht komen. Het is wel zo dat die partij nog meer belang hecht aan het vermijden van controles in de Ierse Zee, tussen Noord-Ierland en het Britse vasteland.

Johnson suggereerde net deze week om Noord-Ierland de EU-voedselstandaarden te laten volgen, wat dus controles in de Ierse Zee noodzakelijk maakt. Hij is dus bereid om compromissen te sluiten om een harde Ierse grens te vermijden, ook al zien de unionisten dit met lede ogen aan. Ondertussen weigert de Ierse regering elke flexibiliteit, ook al zou een no deal naast grote economische schade voor Ierland en zijn EU-partners (zoals ons land) ook tot spanningen kunnen leiden met die andere EU-lidstaten. BelgiĆ«, Nederland, Frankrijk en Duitsland willen dat Ierland grenscontroles gaat uitvoeren na de brexit. Dit om de Europese douanegrens te beschermen, ook al zijn onze eigen havens, althans die van Antwerpen en Rotterdam, “zo lek als een vergiet”, aldus de Antwerpse burgemeester.

Boris Johnson daarentegen stelt dat hij helemaal geen grenscontroles wil in Noord-Ierland. Misschien is er dus toch dringend een andere kijk op het brexitvraagstuk nodig.

Tuesday, August 20, 2019

If Boris can survive September, the EU may rethink its stubborn stance


Published in The Daily Telegraph

It was always predictable how the first few weeks of Boris Johnson’s premiership would play out. It would have been astonishing to see him abandoning his demands to “scrap the backstop” right after entering office. The same can be said about the EU side, which has repeated ad nauseam that the binding part of the Brexit deal agreed by Theresa May is non-negotiable. 
Now, ahead of the Biarritz G7 Summit, and as the Prime Minister prepares to meet his counterparts in Paris and Berlin, things are getting more interesting. Johnson has come out with a document detailing – to an extent – how his Government wants to renegotiate the binding part of the deal. This was swiftly followed by the EU side – including Ireland – ruling out any renegotiation of the Withdrawal Agreement, with the EU Commission arguing that the Government’s “letter doesn’t provide a legal operational solution to prevent the return of a hard border”.
In other words: the European side is telling Boris Johnson to explain how he would solve the border conundrum. It’s the EU’s view that this may well take up to 15 years. At least that’s what Austria’s leading diplomat charged with Brexit estimates. The UK Government does admit that “alternative arrangements” may not be ready by the end of the transition stage, on 1 January 2023, but Boris Johnson vows in his letter to "look (...) at what commitments might help" so to reassure the EU that he is interested in a solution.
It used to be the case that many in the EU were hoping Brexit would simply not happen. By now, the chances of Brexit being stopped have flattened, partly due to the Brexit Party's success in the European elections. The EU side is nevertheless still hoping that Parliament will somehow depose Johnson and his Government, with a successor requesting another extension of the UK’s membership which would then be followed by the UK agreeing to the terms of the Withdrawal Agreement negotiated by Theresa May. Few have considered how Parliament would pass this – after an election which may terminate the careers of many Remain-supporting MPs.
The first week of September, therefore, will be crucial. It should give an indication of the chances that Boris Johnson will still be Prime Minister by the end of October. The EU knows this; so do not expect any major concessions from them until the situation in Parliament becomes clear.
After that, rationally, there should be movement. One would expect the EU to at least have some kind of “plan B” in case it did need to make some concessions, and it's not difficult to imagine what this would look like; likely an offer to make the backstop time-limited, for, say, 20 years. This offer would then of course need to be communicated by the Irish government, so it doesn’t appear as if the other EU members had pressured one of the smaller member-states. 20 years would of course be unacceptable to the UK, but we should not forget that when the EU wants a finger, it asks for an arm. Even those more wary about making concessions to Boris Johnson in the EU could support such a plan B - it would at least shift the blame away from the EU for any ensuing “no deal” disruption.
The Prime Minister, meanwhile, now thinks “an agreement is possible” on “a” Withdrawal Agreement, which should build confidence among EU countries that Boris is not aiming for “no deal” and that any concessions made by the EU won’t be futile. If the UK government now becomes more specific about what it wants to replace the backstop with, this would deal with EU concerns that Boris has only promised to “look at” a possible solution in case alternative arrangements wouldn’t be ready by the end of the transition period. The work of Prosperity UK is inspirational here
However, if the EU refuses to discuss reopening the binding part of the deal even if it is clear that the alternative is, in fact, Britain leaving without one, Brussels will truly be responsible for no deal. Denmark won concessions in 1992 and there are several precedents of the EU reconsidering deals agreed with governments after referendums and parliamentary votes contesting them. Importantly, Theresa May did tell EU leaders in November that she could very well fail to push the deal through Parliament, so the UK cannot be accused of having acted in bad faith here.
It is fair to demand that Boris comes up with more detail, but how responsible is it to continue to refuse any changes whatsoever to a draft agreement which both sides knew had a slim chance of being accepted by Parliament? The Irish Times reports that “there is as yet no real detail” provided by the Irish government “about how the border will be managed in the event of no-deal”. So a disruptive “no deal” troubling the peace process is not all that far-fetched, sadly, unless the Irish government decides to throw all of its obligations to guard the EU’s external border out of the window.
In his letter, Boris Johnson writes that the EU "presents the whole of the UK with the choice of remaining in a customs union and aligned with those rules, or of seeing Northern Ireland gradually detached from the UK". When the UK is attempting to formulate compromises, the time has come for the EU to make a move towards abandoning their excessive demand.


Wednesday, August 07, 2019

Can we expect the EU to behave "rationally" in the face of "no deal"?

Published in The Daily Telegraph:

Brexit negotiations have descended in a game of chicken, with the EU repeating that it is unwilling to reopen talks on the binding part of the deal Theresa May struck. This rules out pretty much any concession to the UK..

It was predictable that the EU wouldn't simply change its tune the day after Boris Johnson became PM, but what will happen in the next few weeks? Will EU capitals look at the withdrawal agreement again, and perhaps change the terms of the Brexit negotiation mandate  they have given to the European Commission in order to offer concessions?

Rationally, that's what they should do. Avoiding a "no deal"  Brexit would deliver much more of what Ireland is trying to achieve than letting a no-deal Brexit happen. After all, a o deal may hit Ireland's economy harder  even than the British, and because the Irish government would need to put up a border of some kind, both the peace process and Irish relations with its EU partners may come under strain.

As for the other EU member states, a deal is rationally preferable to no deal too. Any damage to the UK economy would do little  to soothe the pain inflicted upon the Belgian, French, Dutch and German economies. Amid predictions of a German recession and the escalating trade tensions between the US and China – to which the EU is particularly vulnerable given its weaker industrial base – one can hardly think of a worse time for Europe for a "no deal" Brexit to occur.

So will the EU be rational? Nobody can predict the future, but there are a number of reasons to suppose there is at least a chance.

First of all, the EU side has  shown some flexibility already during the Brexit process. In November, it conceded that as part of the "backstop", the whole of the UK – and not just Northern Ireland – could enjoy tariff-free access to the EU. Another example is how, in the spring, after weeks of grand statements that the EU was "prepared" to go for no deal, it was ultimately only an isolated French President still pretending this that this was true. It wasn't very credible then, given how Calais had been plagued by customs strikes for weeks, with question marks hanging over bureaucratic preparedness for all to witness. Various reports, including one from the CBI, have highlighted how  today, too, the EU isn't exactly as well-prepared as it claims.

More fundamentally, claims that the EU would be unable to violate certain sacred – and often arbitrarily defined – "principles" are simply factually incorrect. During the eurozone crisis, emergency bailout funds worth billions and billions of euros were agreed over a weekend, in open violation of the letter and the spirit of EU rules, given how Germany had only sacrificed its D-Mark in return for a Treaty ban on bailouts. During the chaos of the migration crisis, member states simply stopped applying the letter of the Schengen agreement, which scraps passport checks, once again dubiously bending the law.

Over the years, the EU has reconsidered deals it had struck with governments, after referendums and parliamentary votes contesting them. In the 1990s, the Danish received an opt-out from having to join the euro and other grand EU schemes, after the Maastricht Treaty was rejected in a referendum. Lesser concessions were granted to the Irish after they rejected a new European Treaty twice in the 2000s, to the Dutch after they rejected the EU-Ukraine Treaty in 2016 in a referendum, and to Wallonia's Parliament when it refused to agree the EU-Canada trade deal in the same year.

Some have argued that these were all concessions to member states, which are not likely to be offered   to  the UK since it is  leaving. But, given how economically integrated the EU27 are, that overlooks the fact that this is really a negotiation to prevent damage due to a part of the pan-European economy breaking off. This is an intra-European divorce and the UK leaving is no minor  matter, as its economy is equal in size to the economies of the EU's 19 smallest member states.

The EU has, moreover, been flexible to non-EU countries in the past – for example to Switzerland and Ukraine, entering into trade frameworks with both in which the sacred "four freedoms" were split. The EU-Ukraine Treaty, for example, does not include freedom of movement of persons, something which EU propaganda has in other circumstances described as intrinsically linked to openness to goods and services trade.

There are nevertheless also good reasons to think the EU won't be rational and will continue to refuse concessions. If Boris Johnson doesn't reassure them that any concessions will actually result in a deal, it gets tricky. And  the EU side may be complacent when it comes to no deal. They may think that predicted massive job losses can reasonably be avoided through mitigation measures, while forgetting that they may also  find themselves in a context of mutual blame sharing, which would make such measures harder to agree. How big would French President Macron's room to be flexible be, for example, if French fishermen lose access to UK waters, which is an automatic consequence of no deal? And how much room for manoeuvre would Irish politicians have, if they attempt to blame the UK to deflect domestic criticism that they had not properly prepared for no deal? It's not clear that the EU side have thought this through, so don't bank on them being the adults in the room.



Thursday, June 27, 2019

As Brexit negotiations have stalled, tensions between the EU and Switzerland are ramping up

Published in The Daily Telegraph

Since 2014, Switzerland and the EU have been trying to amalgamate their existing 120 bilateral treaties into a single agreement. Yet the Swiss refused to concede to EU terms without clarification on certain issues; in response the EU now looks likely to cut off Swiss stock exchanges from the Single Market within days in retaliation for their failure to ratify the treaty quickly enough. 

As a leak last week revealed, their reasons for doing so are, quite transparently, to make an example of Switzerland “in what is probably the decisive phase regarding Brexit”, according to the commissioner in charge of the talks. In other words, Switzerland, a member of EFTA and Schengen, a country that has paid billions into the Brussels coffers over decades, and enjoyed a largely amicable trading relationship, has become mere collateral in the EU’s desire to cow Britain into submission. 

But the Swiss are refusing to back down, threatening to retaliate by banning EU stock exchanges from trading Swiss shares. About 30 per cent of trading in Swiss blue-chips takes place in London. Opposition is not only coming from the right-wing populist Swiss People's Party, but also from trade unions. The Swiss Parliament has instructed the government to return to the negotiating table. 

For the EU, these problems date back to the 1980s, and an initiative by then-Commission President Jacques Delors, who inspired the legendary Sun headline “Up Yours Delors!” following one of his clashes with Margaret Thatcher. Delors, keen to design a uniform system to deal with neighbouring “third countries”, proposed to grant them full access to the single market, but only in return for adopting all the EU’s rules and standards. Lack of a veto over these rules inspired Jens Stoltenberg, the PM of Norway, which did adopt this arrangement, to brand his country a “fax democracy”. It didn’t take sovereignty-loving Swiss voters long to figure this out, and they rejected a similar arrangement in a referendum in 1992.

Back then, the EU respected this outcome and went on to negotiate a package of bilaterals, granting the Swiss selective market access in return for selective rule-taking. Today, however, the EU dismisses this arrangement, which closely resembles the government’s “Chequers plan” for the future EU-UK relationship, as “cherry picking”.

There are many parallels between Brexit and the EU-Swiss relationship, and in fact the British government should be ramping up coordination with Switzerland, to counter the EU’s attempts to increase its regulatory power on the back of disrupting business.

The proposed framework agreement between the EU and Switzerland contains two issues that would be troubling not just for Swiss politicians, but could be rejected in the Swiss public referendum which will follow if their government concedes to the EU terms. First of all, the agreement introduces an arbitration mechanism, with a role for the European Court of Justice, into the Swiss-EU relationship. Until today, that wasn’t the case - all previous disputes were resolved by politicians. The arbitration mechanism anticipated in the framework agreement is effectively the same as that agreed by Theresa May with the EU in November. The Swiss government seems to have conceded on this issue, but whether it will survive its own direct democracy is another question.

Secondly, the EU favours “dynamic alignment”, which means that the Swiss would be forced to accept updates of the EU rules they have aligned with in return for market access. It is a long-standing EU frustration that this wasn’t negotiated in the 1990s. The reason was of course the deep Swiss attachment to democracy and suspicion of agreeing to accede to EU rules that aren’t properly understood.

All in all, the Swiss-EU relationship has been so smooth that the EU’s ultimatums and threats to restrict trade look disproportionate and uncharitable in the extreme. Switzerland has contributed billions to EU projects, and granted free movement, so that today almost one in four inhabitants of Switzerland does not have Swiss nationality, 80 per cent of which are Europeans. How can the EU treat a friendly neighbour in this way? 

In 2018, eleven EU countries, including Germany and the UK, opposed the EU Commission when it suggested cutting off access for Swiss stock exchanges. Now the Commission is getting its way, ignoring warnings from Business Europe, the confederation of European industry, not to escalate. 

One EU diplomat told the FT that because “we’re not going to treat the Brits any worse than Switzerland”, hinting that failure to punish Switzerland with loss of market access for refusing to bow would be seen as a dangerous precedent. Though Switzerland will likely manage to mitigate the damage through its protective measures, it would signal that the EU is willing to restrict market access when it fails to increase its regulatory control over a trading partner.

Given the deep seated love of self-government in both Switzerland and the United Kingdom, two of the oldest democracies in the world, self-destructive attempts to hurt trade in a bid to gain more regulatory control will only fail. When faced with a European country that does not seek to belong to the customs union or single market, yet nevertheless enjoys a smooth trading relationship with the bloc, the EU should not seek to restrict the flexibility that has driven prosperity on both sides, over decades. Instead, it should channel some of its past pragmatism in approaching its future relationship with the United Kingdom.