What kind of a Brexit compromise is possible now?

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June 14, 2017 by Paul Goldsmith

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There were two ways we might have got a soft-Brexit. The first was a massive majority for the Tories, which would have stopped Theresa May having to constantly worry about appeasing the hard-Eurosceptics in her party to get anywhere in Parliament and to make some of the painful compromises that would have been the reality in the upcoming negotiations.

The second was the result we have just got. There is simply no parliamentary majority for a hard Brexit. All it will take is a few pro-EU Tories to vote against the deal she gets, or the Brexit-related laws she will need to pass for May to have to either return to the drawing board or leave the EU with no deal. The reality now is that May cannot stay in office unless she works with the opposition in order to achieve a softer Brexit which will be backed by a cross-party consensus whilst still delivering the result of the referendum, which was to leave the EU.

So let’s look at the options: Whatever happens, the EU will insist on the free movement of labour. It is absolutely central to what the EU is about. Without free movement of labour Europe is not a union. But many Conservative and Labour MPs are convinced it is time to reconsider it. Free movement of labour might be good for the country as a whole, but the country is not the same as its people, and free movement of labour was a massive issue in the EU referendum.

It is possible though to achieve a Brexit that has modest curbs on free movement whilst also staying in EU regulatory agencies and still involving the European Court of Justice. Despite people thinking these two areas infringe our sovereignty and have to go, they are the quid pro quo for maintaining close economic ties.

Something else that might be maintained is the customs union. If the UK stays in the customs union there would be no need to controls on the movement of goods and services, no need for queues on the EU-UK border, or for customs posts between the north and south of Ireland.

In return for staying in the customs union, the price would be that the UK would have to maintain EU tariffs and would not have the freedom to negotiate its own free trade agreements with countries outside the EU.

Britain can’t do anything else if it stays in the customs union because that would result in something called trade deflection, where other countries outside the EU would get their products into the UK without tariffs and those goods could get into the EU from Britain without tariffs. That was what Britain tried to negotiate in the 1960s when Charles de Gaulle vetoed our first application whilst we insisted on maintaining our free trade links to the Commonwealth. It couldn’t happen then and it couldn’t happen now.

Staying in the customs union would madden the Tory right, but it would please businesses, and by connection please their employees.

EU leaders would be happy if the UK sought a softer Brexit. They want a deal, but they are, despite what Brexiters say, in a far stronger position than the UK, because no deal damages the UK far more than the continent (they lose one customer, we lose 27). They will not let us cherry pick parts of the single market, as it has to include free movement and the complete jurisdiction of the European Court of Justice. The ECJ is necessary as free trade needs rules to settle disputes.

Giving the UK any kind of ‘cherry pick’ on the single market will not happen because it undermines the EU’s institutional and legal coherence – basically life outside the EU cannot be more agreeable than membership, which involves compromise and the pooling of sovereignty. If the UK wants economic integration, it must give up sovereignty, and that is that.

What the EU want to see is a UK negotiating team that is prepared, has expertise and makes realistic demands. The UK, and Theresa May in particular (or whoever might be PM soon) would benefit from building relationships with other European leaders. If the EU see that, they may scale back some of their demands, for instance on money.

 

 

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