Sunday, 5 February 2017

The longer, harder road to Brexit

I've been trying my best to envisage the form Article 50 talks will take. We know that there must first be an agreement on the divorce and then we talk about future relations and trade. The government has not been clear on what it wants to opt into for the duration of the transitional period and I rather suspect that's because they themselves do not know.

The complexities of the REACH system means we will require an opt in of some kind and we assume the government wishes to keep our arrangements for the aviation industry, along with a number of other concerns which are presently interwoven with the EU.

For those transitional arrangements to be upheld there can be no deviation without consultation with the EU. If we are to have a comprehensive trade agreement then that will comprise of mutual recognition measures and the EU will want to be notified of our intentions in order to confirm among member states whether what we have in mind will be recognised.

In that respect it seems to me that the trade framework must be agreed before any transitional arrangement, which must then be meticulously planned. Corporate scale de-mergers do not happen overnight, nor do regulatory regimes.

The government intends to use the repeal act to ensure there is no cliff edge, and though that seems plausible in theory, reality is sure to throw a spanner in the works. It's no copy and paste job. Any undertaking to transpose such law must first know which components we intend to maintain for the duration of the transition. If the EU is to agree to the final trade deal it will necessarily need to define parameters of what it will accept in terms of the finished Act. Then once we have a comprehensive trade deal, we are not at liberty to diverge outside the parameters of the deal. So not only does the EU get to set the terms of the transition, it also has a long term hold over what we do next.

Then, as much as we are obliged by WTO commitments to uphold global standards, which can be anything from food safety to labour laws, the Brexiteer deregulation fantasy starts to fall apart. What then develops is an asymmetrical relationship where the UK must update its own regulatory codes to keep pace with developments in the EU internal market if it wishes to maintain access.

To a certain extent, the EU must take soundings from any nations it has comprehensive agreements with but ultimately, it controls its own agenda and unless we change along with the EU then we can expect to be gradually excluded. The EU has a gravitational pull of its own and it is likely the UK will not put up any serious fight unless there is an obvious national interest in doing so. Those times, I suspect, will be few.

In this it would actually help if the government had a clear post-Brexit vision and an idea of what it wants to achieve. That would at least give us a clear indication of what we are seeking to negotiate and why, but in terms of strategy the government has nothing - except for a declaration that we will have "some sort of deal" with the US and some vague nonsense about trading with the rest of the world. Without a more informed position, the likelihood is they will agree to many EU terms simply because they don't see why such terms would be an obstacle in the future.

As ever, we remain in the dark because the government simply has no handle on what they are doing or why. All we really can do is restate that which we do not know, and that is quite a long list at present. If we take things at face value, and by now that seems like a wise approach, the EU is not minded to grant our many impractical wishes nor will it allow selective participation in the single market without exacting a price.

In that, Member States want assurances for the future and some would prefer that their citizens retained the ability to live and work in the UK. That's what the EU will be gunning for. So, regardless of the EEA debate, we are still back to a question of how much market participation do we want and what are we willing to give up to get it. Participation does not come without obligations.

That then brings us to a chicken and egg scenario. How do we settle the administrative issues of divorce, not least payments, when we do not know which systems we will retain and roughly what the final trade deal looks like? Each stage impacts on the other in such diverse ways that Inception starts to make sense. Even if trade is separate to the administrative process of Article 50, it's not easy to see where the lines of delineation are. This is a question for the constitutional experts - of which there are few.

As it happens I expect nobody knows for a fact which way this is supposed to work and politics will shape it as much as the letter of the law. That is when things get ever more unpredictable and we won't know what the bridge looks like until we're crossing it. Much of our fate rests on whether the PM is serious about walking away and whether the EU is minded to let the chips fall where they May.

The only thing I can say for certain is that this "clean break" Brexit will be anything other than clean and I rather suspect we will be remaining under EU legal supremacy far longer than anyone anticipated. When this much becomes apparent Brexiteers will come to appreciate the folly of snubbing the EEA option. It ain't perfect - but at least we'd be out.

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