Monday, December 10, 2018

Now Theresa May has postponed the vote, how will the EU react?

Published on The Spectator's Coffee House blog

Even before today’s announcement that the Brexit vote would be pulled, a number of media leaks indicated the EU’s plan in case of a parliamentary defeat. According to Reuters, the EU had been planning to concede a number of cosmetic changes. However, those changes would not be made to the withdrawal agreement, but onlyto the non-binding political declaration.
As one EU diplomat said: ‘we could look at doing something cosmetic, relatively quickly. First, we would have to hear from May, see what they want’. Another EU diplomat, however, warned that ‘if she falls short of a hundred votes, it’s probably not doable.’ It now makes sense for the EU to go ahead with this plan, now that Theresa May has essentially suffered a virtual defeat in Parliament. An ‘EU source’ confirmed this after learning about the delay of the votesaying ‘She’ll get ‘optics’ but little of substance’.
These anonymous statements go against endless public denials from the EU that changes would be possible. But as the former president of the European Commission Romano Prodi explained to those taking the words of EU politicians a little too seriously: ‘Look, when the British parliament has still to vote you are obliged to be in this position. But then of course the day after you start dealing. This is politics.’
The EU is much more unwilling to consider a renegotiation of the withdrawal agreement itself, stressing this both in public and in private meetings. One reason for this, is that the 27 EU member states would want to reopen the debate about compromises they had made as well. It’s no secret they aren’t too happy with some of the elements of it, such as UK businesses enjoying tariff-free access to the EU without having to follow EU regulations, even if that’s – to a certain degree – the case for Turkey as well.
If Theresa May secures cosmetic changes that still fail to secure parliamentary support in the UK, what the EU may try next – again according to rumours – is to extend UK membership, if the UK asks for it. Reuters notes that apart from that, ‘even helping Britain halt the Brexit process altogether, as many EU leaders have regularly said would be their ultimate preferred option’ is something that is being considered.
This wishful thinking is often expressed in Brussels, but it ignores the many hurdles to reversing Brexit, despite today’s ECJ ruling which enables member states to unilaterally revoke Article 50. First of all, the Labour party would need to back the idea of a second in/out referendum, an early election would need to be called and Labour would need to win it. Then the electorate would still have to vote to actually remain in the EU. Meanwhile, UK membership of the EU would need to have been extended, at the request of a Conservative Prime Minister, as Labour is unlikely to enter power before the end of March. If there was no extension of UK membership before the end of March, a second referendum could only offer EU membership without all the opt-outs and special arrangements the UK currently enjoys. And even if the UK did stay in the EU eventually, it would be a much more difficult partner to deal with than before 2016. People really haven’t thought this through.
Apparently, also in mainland Europe and not just in the UK, governments are somehow hoping that a ‘market reaction’ may help to convince British MPs to support the deal. But hoping for a very uncertain result, which would only be achieved with a degree of chaos, isn’t much different from gambling.
At the moment, it’s not clear whether any changes – cosmetic or more fundamental – to either the political declaration or the withdrawal agreement would lead to more or less British sovereignty. Supposedly, the proponents in the UK of Norway plus – which would in effect mean that the UK remains a rule-taker indefinitely, may succeed in winning over some ‘Remainers’, including pro-EU Labour MPs. But the latter do not seem to be playing ball, rightly pointing out that the UK would have more sovereignty if it remained a member.
Dominic Raab, meanwhile, had been pushing hard for a unilateral right for the UK to leave the ‘backstop’ status, which currently isn’t in the withdrawal agreement, as a joint EU-UK decision is needed for it. But here the EU really only possesses a theoretical veto over the UK regaining trade powers. That’s because the UK can always end the withdrawal agreement, as it can end any international treaty, if relations go sour and no trade arrangement is agreed. Sure, the UK would risk causing a costly ‘cliff-edge’ event, but it would be costly for the EU side as well, so both the UK and the EU would have an interest in staying at the table.
Perhaps changing the withdrawal agreement may not even be necessary, as a right of withdrawal may be implied from the nature of the treaty, due to the ‘best endeavours’ obligation to agree a trade deal. This is, however, subject to a very specific interpretation of international law, so both sides could issue an interpretative declaration stating that if one side did not negotiate in good faith, it would be considered a material breach of the treaty, allowing the other side to suspend the operation of the backstop.
The are other big stumbling blocks for eurosceptics: the differencesin customs regimes between Northern Ireland and mainland Britain, and the role of the ECJ, may be harder to deal with without reopening the withdrawal agreement. To scale back the role of the ECJ – which can decide over disputes related to EU law – is something the EU is very unlikely to concede, if only because the ECJ may strike down parts of the withdrawal agreement that reduce its role.
Then, scrapping arbitration altogether from the withdrawal agreement could be a way out. An arbiter is also not foreseen in EU-Swiss relations, which functions just fine, regardless of EU grumbling. Actually, the Swiss government has just refused an update to the EU-Swiss arrangement that would introduce the exact same arbitration model with a role for the ECJ as agreed by Theresa May. In response, the EU has already threatened to restrict the access of Swiss stock exchanges to EU investors, something Switzerland apparently will manage to circumvent. It all indicates that everything really is up for negotiation.
The EU shouldn’t despair that it will need to go to the negotiating table once again, because this is still only the beginning. Brexit truly means eternal negotiation between the EU and the UK, over market access, the extent to which each of the partners aligns it regulations, what happens when one side changes its rules and all kinds of cooperative schemes.

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