The “New Soft” Brexit, 17/07/2018

After the recent developments, and especially the UK Government’s “Chequers Statement”, a new reality has dawned regarding the outcome of Brexit: there will either be a ‘cliff-edge’ scenario – UK crashing out in 2019 without any deal – or a “3rd country-regime-with-some-but-not-even-remotely-the-same-as-before-advantages”, which we might call ‘soft(er) Brexit’. Thus understood, ‘soft(er)’ Brexit has taken the place held by ‘hard Brexit’ at the beginning of negotiations, namely a limited free-trade deal like the one the EU negotiates with third countries; the old ‘soft Brexit’ – a special, inclusive and mutually satisfying commercial relationship – has died in acrimony, loss of time and respect, arcane (or even obvious, as in the case of the Ireland border) legal/political complexities. ‘Soft(er)’ is a hybrid between real ‘hard’ and ‘soft’ but it is the only alternative to a cliff-edge result.

Soft Drivers

This gradual shift to a soft(er) Brexit has been driven by several factors:
1. Softening by reality. It has become obvious that it would be suicidal for both the UK and the EU to completely severe their economic ties. Everybody also realised that there can be no border on the island of Ireland and in the Irish Sea. For both reasons, the only workable solution is for the UK to remain in some way and to some extent part of the single market and customs union;

2. Softening by Parliament. The UK Parliament could force policy adjustments by adopting amendments to various Brexit bills. A majority of the UK parliament seems to be in favour of a soft(er) Brexit and retaining some benefits of the single market. There are still many important votes/amendments to come in the forthcoming parliamentary rounds;

3. Softening of the UK’s red lines. The UK government has softened its initial red lines without causing an upheaval. The Chequers stance has moved the ball to the soft(er) camp with a semblance of cabinet support:

4. Softening by time. Brexit voters are split, and will become even more split, on whether they want a cliff-edge as the cliff comes into view. Time pressure might be a friend of compromise – if the EU at some point decides to view it as such. Now that the June EU summit has been ‘lost’, all the pressure is on the October summit to agree on the main withdrawal issues, including the Irish border. Beyond that, with the European institutions hibernating in preparation for the forthcoming European elections, chances of any agreement will become very slim.

Deadlock Prevails

Reality may be dawning and time might be pressing, but the obstacles are still formidable.
The UK Cabinet is divided and weak: it is ploughing on rather than deciding. The last election result still rattles; the Prime Minister has shown resilience rather than leadership; there is a divide between public opinion (decisively rejecting Mrs. May) and the Tory party (implicitly favouring her non-replacement for reasons of necessity more than choice). On the ideological-political front, the internal friction between the two plans on the UK-EU future customs relationship is almost insurmountable: on the one hand, a ‘Customs partnership’ favoured by the Prime Minister, in which the UK would be part of a ‘quasi-union’; and on the other, so-called “maximum facilitation” favoured by anti-EU Conservatives, which relies on (future) technology to preserve the mirage of both complete autonomy and no border checks. It is far from certain that the departure, after Chequers, of prominent supporters of the latter track within the government will make the friction go away.

What is certain is that UK proposals have been unacceptable to the EU so far. The concepts of cherry-picking and of handing a third country (the UK) powers preserved for members run contrary to EU law and spirit. The ‘technology track’ put forward to resolve the Irish conundrum is too vague and seems a pretext more than a solution: the technology hasn’t been invented yet and would require an (indeterminate?) extension of the transition period – both non-starters from an EU standpoint.

The UK Parliament remains powerfully powerless. The Supreme Court (‘Miller’) decision of January 2017 has restored its constitutional competences and made it an “ultimate arbiter”, although no one yet seems to know – and the PM reserves the right to be the sole interpreter of – what “a significant (final) vote” means. However, from an individual parliamentarian’s point-of-view, not disrespecting the popular vote may well outweigh any judicial, or moral, incentive. Also, Parliamentary arithmetic cuts both ways: The government has a working majority of 13 in the House of Commons, including support from the DUP. There is also the possibility of some pro-Brexit Labour MPs (calculated as not more than 7) voting with the government.

Nevertheless, the soft(er) Brexit camp seems to be able to gather a (theoretical) majority: Labour – 262, SNP – 35, Lib Dems – 12, Pro-EU Conservatives – 25, Total 334/650. However, for Conservative MPs, voting against one’s own government (and against the tabloids) takes some particular courage; for many Labour MPs, supporting the government, especially on that issue, is unthinkable; and, more generally, there is still no sign of this accumulation of votes being a realistic political outcome. What we have seen so far is that none of the more “radical” Lords amendments has passed in the House, that the Government has managed to keep a tight leash on the Tory rebels, and that Labour is procrastinating, focusing more on tactics than substance.

The population is divided, lost in translation. There has been no major opinion shift even after all the government ‘evolutions’ and the revelation of the Brexit campaign lies (NHS, immigration, “taking back control”). The very British – and, in some cases, very admirable – “get on with it”, “a vote is a vote” sentiment seems to be prevailing. Many (but maybe not a majority anymore) Brexit voters would find a second vote or a ‘soft(er) Brexit’ unacceptable.
So, the May Government had to move.

The Chequers “New Deal”

It is a still rather vague proposal centred on two premises: a) a UK-EU free-trade agreement for goods, and b) a very particular customs arrangement. Britain would have to keep its regulatory system for goods aligned with Europe’s and would give the European Court of Justice at least some role (though the “jurisdiction issue” is completely muddied) in interpreting and enforcing the rules. Services wouldn’t be covered, though, and the UK would not agree to the principle of free movement of people between Britain and the EU. The UK would be collecting tariffs on the EU’s behalf for goods entering Britain bound for Europe in order to avoid the need for a customs border between Northern Ireland and Ireland, or between Northern Ireland and the rest of the UK. And such a complicated, if not unworkable, ‘union’ would also allow the U.K. to negotiate, albeit the affair would be openly extra-marital, new trade deals with third parties.

This stance is a last-ditch effort to placate Conservative Brexiteers while making them accept a definitive move towards a soft(er) Brexit. The proposal may be presented as respecting important “Brexit red-lines”, since there will be no free movement of people, limited ECJ jurisdiction and a “bespoke” commercial arrangement. On the other hand, multiple other red-lines are being crossed: acceptance of EU rules, regulatory alignment, negotiated judiciary solutions, heavy cooperation thrust. The proposal may be perceived as moving towards soft(er) Brexit in the sense of the UK remaining “not completely out” of the EU but it takes two to tango. The EU hasn’t shown any signs of being particularly attracted to that tango partner and the proposal makes the prospect even dimmer: legally and politically it will be very difficult for the EU to agree with such cherry-picking (free trade only on goods, not services) and to accept legal arrangements not provided for in the EU Treaties. Most importantly, the Irish ‘solution’ may in fact not be one, if the customs deal proves unworkable, if it is not agreed soon and if the ‘backstop’ transitory solution drains all the energy from a real solution.

Interesting Times

A path towards a soft(er) Brexit seems to have been found: it might even be argued that a soft(er) Brexit appears more likely (in the vicinity of 60-40%) than the UK crashing out without a deal; but both a new vote and a “mutually satisfactory” solution have become extremely improbable. Everyone involved has to give up something: the UK Government its pretence of serving both “hard” and soft(er) Brexit visions; the UK population its mirage of gaining something positive out of the June 2016 decision; the EU Commission (and Parliament) its temptation to ‘punish’ and ‘give a lesson’; hardliners of all hues to have the upper hand on reality. One thing alone is certain: even the best, i.e soft(er), possible outcome, would mean a vastly inferior relationship between the UK and the EU, years of regret and uncertainty and an immense blow dealt to the most progressive political project of the 20th century.

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