Friday, November 29, 2019

How might the EU react to the possible outcomes of the general election?

Published on BrexitCentral and German opinion site

The upcoming general election may well turn out as a de facto second referendum on Brexit. Here is an overview of the different scenarios that are possible and how the EU is likely to position itself in each case:

The first scenario, which is taken by most as the base case, is for the Conservatives gain an absolute majority of seats. If this happens, it is very likely they’ll simply pass the “Boris deal”, so then Brexit happens.

However, Boris has now promised not to extend the transition stage, in order to convince Brexit Party voters. This increases the chance of a “no deal” in a year or so, given how ambitious it is to negotiate the future relationship in such a short period. Sabine Weyand, who heads the trade department of the European Commission, has just warned that the UK will only get a “bare bones” deal – meaning only limited market access - if Boris sticks to his short timetable.

In 1992, in a referendum, the Swiss narrowly voted against an arrangement whereby they would automatically take over EU rules in return for full market access to the EU, as is the case for Norway today. The negotiations to work out a “Chequers”-style deal took five years, from 1994 to 1999. Thereby, the Swiss agreed to voluntarily take over EU regulations in return for market access. Given how it took five years for the EU and Switzerland, the EU may get its way here, at least if both sides are willing to protect integrated supply chains of heavily regulated companies, such as car manufacturers or producers of chemicals.

The promise made by Boris is ultimately a result of the EU not merely offering a short extension, which would have prevented an election before Brexit. Perhaps another fudge may now be for the EU and the UK to negotiate another “standstill” period during the transition, with the UK already recovering some sovereignty, so technically this would not be an “extension”. After all, Brexit is a process, not an event, and it will mean perpetual negotiation with the EU.

The withdrawal agreement only allows a one-off extension in any case, and to deal with this, the European Commission is already thinking to let the grand EU-UK trade deal enter into force provisionally, to enable a “mixed agreement” to be negotiated. Such an agreement can deliver more market access but it would also need approval by member states parliaments and not just the European Council and European Parliament.

While the UK will likely need to concede on the timetable, the EU will likely be forced to move on its opposition to “cherry picking”. Continuously, it has ruled out that a Swiss-style deal would be up for negotiation, claiming that this would somehow “split the four freedoms”, even if this arrangement functions smoothly with Switzerland for almost twenty years now. One can only wonder what major manufacturers would say in case the EU would risk a “no deal” cliff-edge when the UK would offer to continue to take over EU rules for manufacturing and chemicals – at least for a while - but would refuse for the City of London to be governed from Brussels without a say for the UK.

Due to fears of harming supply chains, the stars are aligned for a Chequers-style arrangement. Every time the EU will come up with an update of those rules the UK takes over, however, voices in the UK will be raised to reconsider whether market access to the EU is still worth it. It will be “pick and choose” like never before.  

In a second scenario, the Tories narrowly fail to achieve a majority, but the 8 to 10 expected DUP MPs are needed. A scenario with Brexit Party MPs holding the balance is extremely unlikely, given how unlikely it is that the party will manage to obtain even a single seat.

If the DUP comes back into the game, the EU won’t be keen to throw Ireland under the “no deal” – bus, so it can be expected that negotiations will re-open.

To make the Brexit deal more palatable to the unionists in Northern Ireland is in any case a good idea in the first place. Even if Nobel Peace Prize winner Lord Trimble supports the “Boris deal”, there’s quite a bit of anger about it in Northern Ireland, with reports of Brexit contributing to the risk of paramilitary violence.

The “Boris deal” foresees that Northern Ireland will remain in the UK’s customs area, not only legally but also practically, given that the Northern Irish will be able to enjoy any lower tariffs negotiated by the UK. Then some kind of checks will be needed in the Irish Sea, something that also already triggered protests from lorry drivers.

There would be customs declarations for goods coming from Great Britain to Northern Ireland, even if Boris Johnson seems to have denied this, by stating on the campaign trail that "there will not be tariffs or checks on goods coming from GB to Northern Ireland that are not going on to Ireland.” Perhaps he was confused, as there will not be tariffs on such goods, but unfortunately, some extra bureaucracy and therefore checks will apply to those, under the deal.

Another concern is that “exit summary declarations” for goods traded from Northern Ireland to Great Britain would be required, even if article 6 of the Northern Ireland protocol may enable the UK to waive these for quite a few goods. Also, EU Commission sources suggest that the Irish Sea checks will be less dramatic than they appear at first sight. The crux will likely be checks for goods entering Northern Ireland from Great Britain, as this is what the EU is primarily concerned about.

A lot of the detail is still unclear, but in case of such a renegotiation, the DUP is likely to only concede more to the extent the EU is flexible on intra-UK checks. This time, it wouldn’t be DUP versus Ireland but it would be DUP versus the likes of the Netherlands, Belgium, France and Germany: countries fearing a hole in the EU’s external border, even if their own part of that border is quite leaky.

Precisely for that reason, the EU is likely to move on DUP demands to water down that Irish Sea border, but the question is whether their concessions would satisfy DUP, which are known to be tough negotiators. “No deal” would firmly be back on everyone’s minds.

third scenario is if the “everyone but the Conservatives and DUP” – coalition secures a majority of seats, followed by Jeremy Corbyn somehow managing to convince this shaky rainbow coalition to prop him up as Prime Minister. One condition for that will certainly be a second Brexit referendum, something which the Lib Dems will push hard, and perhaps even a second Scottish referendum, on request of the SNP.

Corbyn would then submit a choice of “remain” versus “soft Brexit”, which is likely going to entail so little sovereignty for the UK that many Brexiteers and perhaps even the Conservative Party may boycott the vote, triggering accusations that the choice is between “EU membership” and “EU membership without voting rights”.

Despite some grumbling, the EU is likely to go with Corbyn’s renegotiation. After all, the UK aligning or harmonizing its regulations and trade policy is more attractive than facing a “competitor”, as German Chancellor Angela Merkel has put it.

If the UK electorate would then support the “remain” option, that would clearly not be seen as the end of the world either for the EU, even if many now genuinely understand the dangers of having the UK in the club after all, with more than 17 million Brexit voters feeling rightfully angry that they were told to vote again and give a proper answer.

As said, it’s unlikely for the Conservative Party to simply go along with this. Given that it has now become the “party of Brexit”. It’s likely to state it will deliver the Boris-deal after all, simply waiting for Corbyn’s shaky minority government to collapse. The EU will feel helpless, knowing that Brexit will be on its way despite the second referendum.

And even if the Tories would not go down this route, sooner rather than later the UK will emerge as a much more difficult partner than it ever was before 2016. Therefore, this election does not only matter for the UK’s future, but also for the EU’s future. Brexit was supposed to turn the UK from a bad tenant into a good neighbor. A UK which continues to obstruct would be seen by EU leaders as an even worse tenant.

In the first place, it’s of course unfair to consider a member state which is the second biggest financial contributor and which is widely considered as sticking to EU rules more firmly than many others as a “bad tenant”. Then it’s an accurate description of how some EU leaders see the UK.

A few weeks ago, outgoing EU Commission President Jean-Claude Juncker accused Tony Blair – of all people – of having contributed to Brexit, arguing that "when it came to the political union, to moving closer together, they wanted nothing to do with the EU. That was even the case with my friend Tony Blair. (…) If you stick to that narrative for over 40 years, it should not come as a surprise when people remember it during the referendum."

This not only reveals an odd belief that politicians shape the convictions of the population, it’s downright bizarre to suggest that the UK public may not have voted for Brexit if only the UK’s leadership had ignored popular discontent about the course of the EU. In Brussels, there’s very little introspection as to why the UK voted to leave in 2016.

The UK somehow remaining in the EU after all would be very much “back to the future”, with the agenda to reform the EU, which Open Europe has always pushed, returning to the fore. This agenda, which truly revolves around turning the EU into a more modest vehicle, focused on scrapping barriers to trade, may now well be a lot more appealing to mainland Europe than it was before 2016, when the so-called Eurosceptic populists were much weaker. It would in any case be tried as a way to deal with the concerns of Brexiteers in the UK, perhaps in vain.

In any case, UK voters now hold the keys. Apart from the slight chance of the DUP holding the balance, it’s quite black and white: an absolute Tory majority means Brexit. Otherwise, “remain” for at least another year is a very real prospect. The EU will simply play along in both scenarios, even if it now realizes “remain” may not be sustainable for long.  

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