Britain Opts for "Brexit in Name Only"

December 11, 2017 2:00 PM
Photo Credit: 
REUTERS/Yves Herman

The agreement reached on December 8 between the United Kingdom and the Europeans on phase 1 of the British exit from the European Union (EU) reveals a familiar chorus just in time for the holidays. While Prime Minister Theresa May invokes the voters’ mandate to make a clean break, hard economic realities have now dictated that it will be a “Brexit in Name Only” (BINO).

If the music is familiar, you might ask Swiss or Norwegian officials, whose countries contribute to the EU budget and institutional upkeep, implement all relevant EU legislation, but have no say in how these rules are written. The refrain consists of them saying, “We have to protect our economies and also comply with our publics’ desire to appear sovereign.”

A detailed look at the agreement confirms the de facto capitulation of the British government on all major negotiating points for the divorce. The United Kingdom (UK) will pay the tens of billions of euros demanded by the EU to settle its accounts. EU citizens in the UK will maintain their expansive rights under EU law during their lifetimes in the UK. Meanwhile, UK courts can refer cases concerning EU nationals to the European Court of Justice (ECJ) for eight years and must take ECJ case law into consideration in perpetuity when adjudicating disputes.

Most important, the accord sets up a phase 2 negotiation, with the UK committed to a default option in the absence of a trade deal. That means there will be both “full alignment with rules of the [EU-27] Internal Market and Customs Union” and “no regulatory barriers between Northern Ireland and the rest of the UK.” Unless the UK government miraculously invents new border control technology, the status quo will prevail and the UK will remain inside the EU’s Internal Market and Customs Union. BINO!

Because of this agreement on the Northern Irish border issue, the 27 EU countries with which Britain is negotiating have no incentive to strike a new trade deal with the UK. The fallback option is now their preferred outcome. The EU-27 may offer a Canada-style free trade agreement (FTA), but UK businesses are likely to continue to push for BINO. The Labour Party, with its emphasis on a “Jobs First Brexit,” will likely feel the same way. As a result, a large cross-party majority for BINO is likely to emerge in parliament, where Prime Minister May heads a minority government.

The lopsided concessions by May’s government makes one wonder if she secretly wanted to pursue a BINO all along and conveniently chose to ram it down the throats of the Conservative Party Brexiteers and large parts of the British public over the principled issue of Northern Irish peace.

The agreement between the EU-27 and the UK could be interpreted to mean that the British government’s concessions relate only to those areas covered by the Good Friday Agreement, the 1999 accord involving Britain, Ireland, and Northern Ireland leaders. But such a narrow interpretation would violate World Trade Organization (WTO) rules. An FTA under Article XXIV of the General Agreement on Tariffs and Trade (GATT) is the only acceptable exception to the most-favored-nation principle if the agreement covers substantially all trade between the participating countries. In other words, the UK government is de facto committed to maintaining full regulatory alignment on substantially all trade.

The deal also means that the threat from hardline Brexiteers to blow up the negotiations and pursue a “no deal Brexit” is a hollow one. It is very difficult to see a majority in parliament favoring reestablishment of a hard border in Northern Ireland.

It is fitting but ironic that the Good Friday Agreement, which ended the civil war in Northern Ireland, has become the tool for maintaining the UK’s ties to Europe. The EU was a project of peace, and Brexit’s threat to Northern Irish peace saved its mission.

It further seems clear that a perceived threat from a Labour government under Jeremy Corbyn is the most powerful political reason why Prime Minister May can cling to power, even as she delivers BINO. There is simply nothing her party will not suffer to avoid a new election. May’s longevity is testament to the political strength coming from political weakness and a feared alternative.

The role of the Democratic Unionist Party (DUP) in these negotiations is telling. It seems pretty clear that the Conservative Party would have settled the Northern Ireland border issue via a new border through the Irish Sea, separating Ulster regulations from the rest of the UK in the process. The role of the DUP in propping up May’s minority government made this impossible, however. The DUP’s openness to a “no deal Brexit” rather than caving on this issue made it necessary to pursue full regulatory alignment for all of the UK with the EU-27.

BINO will not settle the perpetual Conservative civil war over Europe. Many Brexiteers will claim betrayal and vow to continue to pursue a “real Brexit.” Only a shift to proportional representation elections in the UK will banish the “hard Brexit tribe” to the political periphery in British politics, where they belong.