How to turn the Withdrawal Agreement into Brexit

How to turn the Withdrawal Agreement into Brexit

There is no doubt that Theresa May’s Withdrawal Agreement is a terrible deal. It gives the EU pretty much all they could have ever hoped for, and achieves absolutely nothing for the UK. That was cruelly illustrated by the Prime Minister’s doomed attempt to sell the deal directly to the electorate in December. Claiming that she had “negotiated” all sorts of things that we would have got simply by doing nothing for two years was sadly typical of our bumbling Prime Minister.

So yes, the Withdrawal Agreement is truly awful. But it looks increasingly as if it is all Brexiteers will get. So is it worse than Remaining, as some claim? No, it is not. There is hope, and we should carefully consider whether we accept the tiny sliver of Brexit being offered. That is not to say that if May’s deal passes, achieving a proper Brexit will be easy. The backstop looms over any negotiation, and there are many other obstacles. But it is still possible, and the backstop might just be the reason why.

Let’s start with the (very) limited good news. If May’s deal passes, we will legally have left the EU. That seems a small thing, but it is not. Leaving will kill off both the second referendum and revoke Article 50 campaigns. From 30th June, if we have left by then, the attitude amongst the general public will range from apathetic to ‘couldn’t care less’. The UK will breathe a huge sigh of relief and hope they never have to think about the EU again.

Those Remainers who want to fight on will have to rename themselves and become Rejoiners. And rejoining is a much harder task than remaining. The status quo is always powerful and the status quo will be out. Describing how wonderful it will be to hand over £9 billion (or more) each year to have more expensive food and to pay for a pointless parliament will not be easy. Nor will making the case for freedom of movement. And Rejoiners will have to set out where the EU will go. That means facing up to the claims about a federal Europe, the euro, an EU army and all of the other things that are deeply unpopular amongst the electorate.

As important, the EU is likely to be mired in its own problems for the next few years. The Eurozone economy is looking very fragile, populist parties are on the rise across the continent and the hole caused by the loss of the UK’s net contribution will need to be filled. The EU is unlikely to look a very attractive place to be part of, however hard Rejoiners try.

There will be therefore a breathing space for Leave MPs and supporters to regroup and recharge. Leavers have spent so much time and energy fighting on all fronts against all sorts of lies, disinformation, politically-motivated legal challenges and all the rest that there has been no time for the real arguments. Accepting May’s deal offers a chance to go back to the whole point of Brexit, rather than – at best – another year of the same old chaos.

Once the dust settles, it should then become apparent that the deal with the EU is largely something everyone in the UK can agree on: sensible rights for EU and UK citizens, ease of travel and flights, but the UK determining its own immigration policy, co-operation on security, crime, defence and terrorism. Most of us will want the UK to retain control over our fish and we will not want to pay over billions each year without some clear, defined benefit. Whether all of that can be achieved obviously depends on the EU, but also on how we negotiate.

That leaves the one area that will be contentious: the trade relationship. For most Leavers, (and many soft Remainers) the obvious stating point is to make an offer to the EU of a full and comprehensive free trade deal – Canada++ say, or something similar. That will put both the EU and those MPs who still demand a customs union in a difficult position. To say that it is not enough will be unconvincing: the differences between a proper FTA and a customs union are relatively small, and, crucially, smaller than between WTO terms and a customs union. More importantly, MPs and others will be able to approach the debate more sensibly. This will no longer be about Remain versus Leave, but about the benefits and costs of the different ways of trading with Europe.

Claims of economic disaster from going the FTA route will simply not be credible and the dense fog of Common Market 2.0, EFTA, Norway Plus and all the other options floated will have lifted. A clear choice can be presented: a deep and comprehensive FTA with no rule taking and our own trade policy or a customs union with rule-taking and no independent trade policy.

To back up that argument, the UK could show progress in negotiating FTAs with other countries. Conservative MPs, even those who today are fervent believers in a customs union, will struggle to turn down a coherent and liberal free trade policy and continue to claim that the customs union is vital to our prosperity.

Of course, this all presumes that the backstop does not drive the negotiations straight to a customs union. But that depends crucially on how the UK chooses to negotiate. We need to ditch our usual tactic of clichéd and pointless red lines. All that happens is that these get negotiated to within a whisker of being breached. Instead we must set a small number of clear goals that must be achieved. That makes the negotiation offensive rather than defensive.

Setting the two fundamental goals is crucial to the negotiating strategy: first, a comprehensive free trade agreement and second a non-trade based solution to the hard border issue. Crucially, these two objectives must be kept completely separate.

There is no doubt that will be very difficult. The EU – rightly – fears the UK becoming highly competitive outside its control. It will try and negotiate the two as a single issue to keep the UK in a customs union. But how could it refuse to negotiate an FTA with the world’s fifth biggest economy? Only by saying it doesn’t solve the border issue. That is why the border and the trade relationship must be considered separately from the outset. Have two teams, have two reporting lines, keep saying that trade and the border are different issues and, most importantly, that the two can conclude independently, at different times. In other words, the UK will sign an FTA even if it means going into the backstop for a while and putting the FTA on the shelf. Once we are out of the backstop, the FTA comes into force. Again, how could the EU refuse that approach?

This approach has numerous other benefits. It allows the trade deal to have a typical exit clause. It allows the UK to negotiate FTAs with other countries, knowing that we will have no restrictions once we solve the border problem. At the same time we can set out our tariff schedule and how we will help developing nations to trade with us. We can start to think about deregulation and tax and investment incentives, ready to implement what we want as soon as we can.

Pushing the EU on both fronts separately makes sure it uses “reasonable endeavours” on both issues. It also ensures that the EU has to properly consider every option for the border rather than relying on the customs union as the solution. So how would the EU react? If it cannot refuse to negotiate an FTA with us, would it simply dump us in the backstop and forget about us? That will be hard to do.

The EU says the backstop is not meant to be used and can be avoided. The EU may say that because it views it as a nuclear weapon, the ultimate deterrent. But if it does, it has miscalculated, because nuclear weapons are not deterrents in anything but massive, global conflicts. The backstop is simply too dreadful to be used except in absolutely exceptional circumstances. Mervyn King pointed this out, predicting that the terms are so bad the UK would eventually be forced to abrogate the treaty.

Nobody in the UK will demand that we enter – let alone stay in – the backstop, provided we can show that we have a reasonable answer to the hard border issue. Whereas now saying we have no solution to the hard border can be used by Remainers as a stick to try and keep us in the EU, once we have left it would be a stick to force us into or keep us in the backstop. Who is going to make that argument, even if they see it as part of a long-term plan to get us to rejoin the EU?

There has already been movement on the Irish border problem as the EU worries about No Deal. Over the next two years, there will inevitably be further progress because the technology that could be used there is beneficial everywhere. The EU could not implement or allow technological solutions at other borders and deny they could be used in Ireland. Hopefully Ireland will come to its senses once we have left, and drop its inflammatory rhetoric. It can then make a rational choice between forcing the UK into an unnecessary and hated backstop or accepting an FTA and technological solutions. It is difficult to see Ireland’s advantage in pursuing the former course once we have left.

Crucially, saying we will sign an FTA without agreement on the border dares the EU to drop the bomb. And that will give it pause because the nuclear option is the EU’s only weapon. Would the other EU members see it as appropriate and proportionate when there is an FTA waiting to be used? I suspect not, because it sets a terrible precedent for them too.

And this is the other aspect of the deterrent Leavers and the EU have not properly considered. We can call the bluff because otherwise the UK might as well not bother turning up to the negotiations at all. We might as well just wait for the EU to send us the deal and sign it. Leavers are right to point this out but we are being too defeatist to say we can do nothing to stop it. We can. All we need to believe is that there will be solutions to the hard border issue, and that if we hold our nerve, the EU will have to admit that. Is the Withdrawal Agreement something the UK should agree? No, absolutely not. Is there a chance to make it into something acceptable? Yes, if we are smart.