Thursday, June 20, 2019

What are the chances of a Brexit deal in case Boris Johnson becomes the new British PM?

Published on The Daily Telegraph

It seems almost inevitable that Boris Johnson will become the next Prime Minister of the UK, tasked with delivering Brexit. Boris may not be universally loved in Brussels, given his role in swinging the referendum vote towards Leave, but it would be wrong to assume that concluding a Brexit deal has become less likely as a result.

In many negotiations, it takes a hardliner to close the deal. Theresa May, a Remainer, would always have had a much harder time selling concessions to the British public than a Brexiteer would. For Boris, there are two options: either he goes full-on Trump or he chooses a more diplomatic path. It is not obvious what will work best with the EU. Jacob Rees-Mogg, a key ally of Boris, summed up the basic idea of a “Trumpian” strategy well, when tweeting: ‘To misquote Vegetius "If you seek a deal prepare for no deal."’

Contrary to the popular narrative, the EU does seem willing to compromise - at least a bit. Boris is keen on delivering the “Brady amendment”, the only thing UK MPs could agree upon, apart from rejecting no-deal. This entails renegotiating the Withdrawal Agreement relating to the Northern Ireland backstop, an arrangement whereby the UK would remain under the EU’s customs regime until further notice, and replace it with ‘alternative arrangements’.

From talking to diplomatic sources, the Telegraph’s Europe Editor Peter Foster, has gathered that a time limit to the backstop, is “not beyond realms of possibility if we're talking five to seven years [and if there is a] clear baked in Parliamentary majority as price of a deal.” Foster however thinks that the Trumpian approach would fail, as “a demand to ‘bin the backstop’ will be rejected outright and very quickly scupper any chance of a reset”.

In a way, the question isn’t even which approach will appeal to the EU. The real question is what will appeal to Ireland. A senior French official recently stated that "only Ireland can say the backstop is no longer necessary, but that’s not the case.” So when push comes to shove, the EU will ask the Irish what they think.

Following the increased discussion of a no-deal Brexit during the Conservative leadership contest, Irish Taoiseach Leo Varadkar said, “to me, no backstop is effectively the same as no deal”. Will Varadkar and the Irish political class respond positively to a Trumpian approach or will they dig in deeper instead?

Well, we can’t know for sure, and even if Ireland were to concede to a time-limited backstop, discussions would only resume in a few years time. This is why it’s so important to have a plan B, to prevent a traumatic no-deal Brexit.

While it’s true that the effects of “no deal” can and will be mitigated, given how both sides have a clear interest in doing so, it would spark a terrible blame game. French President Emmanuel Macron would no doubt blame the UK when confronted by French fishermen angry over the loss of access to British waters. The UK, meanwhile, would blame Ireland and Ireland would blame the UK. Everyone would be right to blame each other, but as a result of this, there would be less political capital to agree the deals necessary to mitigate no-deal.
A plan B could therefore consist of proposing to negotiate “alternative arrangements” to the backstop immediately. Both sides agree that the backstop should be replaced by something else at some point, so why not try to agree it now, so the UK can leave the EU, knowing for sure that it won’t have to enter the backstop?

So far, the Irish government has been very sceptical about the possibility of alternative arrangements preventing a hard border with Northern Ireland. Then Christian Bock, the head of the customs department of Switzerland, which is outside of the EU’s single market and customs union, has told British MPs at a hearing that he thinks an “invisible border” on the island of Ireland is “possible”.

The EU will of course come up with shaky legal arguments that it wouldn’t be able to talk trade before the exit date, even if Jean-Claude Juncker himself suggested just that in December. Then if the EU accepted to talk about future trade, Boris could claim that an extension of UK membership is warranted.

The actual “alternative arrangements” are likely to entail a lot of concessions from all sides. The UK may need to concede to some regulatory alignment, perhaps by Northern Ireland alone, which would cause some extra regulatory checks in the Irish Sea. Ireland may need to accept that Northern Ireland will simply also leave the EU’s customs union and the other EU member states would need to tolerate that Ireland and the UK will not bother to impose burdensome border checks. If goods entering the Irish Republic from Northern Ireland were compliant with single market standards, there isn’t much for the EU to fear, beyond the loss of a tiny bit of tariff income, which Ireland and the UK could compensate for.

Fundamentally, if we want to protect the extensive trade between the world’s fifth biggest economy and the world’s largest trade bloc, there is no alternative to perpetual negotiations and flexibility. Even when the EU-UK divorce and future relationship have been sorted, negotiations will remain necessary. If market access were granted on the basis of regulatory alignment, any regulatory changes would once again trigger negotiations. That is certainly the case in the stormy relationship between Switzerland and the EU. The EU’s relationship with post-Brexit Britain will be no different.

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