Finally, Some Give-and-Take on Brexit
(Bloomberg Opinion) -- The back-to-school air brought a reality check to the Brexit negotiations. The good news is that the ticking clock has forced all sides to take a hard look at the dangers of an abrupt split between the U.K. and the European Union. Most have concluded that separating on unsettled terms would create chaos for businesses and consumers and leave everybody in too much jeopardy.
The bad news is that there is no time left to resolve the major technical and political issues. Forget the original October deadline for the U.K. and EU to sign a Withdrawal Agreement, which would state the terms of the divorce and set out a transition period in which the U.K. would remain part of the EU's single market and customs union but no longer have any voting rights. Even a deal reached in November or December would barely leave time for scrutiny by the U.K. and European Parliaments before March 29, 2019, the date when the split becomes official.
The squeezed time frame is the main reason the Brexit mood music has gone from funereal this summer, when one U.K. government minister put the chance of splitting without a deal at 60 percent, to something a little more upbeat. Last week, Bloomberg News reported that Germany and the U.K. are willing to leave some aspects of the future trading relationship vague; the pound initially surged on the news as it suggested that the bitter wrangling over the future might be kicked to, well, the future.
EU negotiator Michel Barnier, who is firmly in the driver's seat and had been grumpily dismissive of U.K. proposals, has also suddenly seemed more conciliatory. He has suggested that the EU could improve on its proposal for keeping open the EU-U.K. border between Ireland and Northern Ireland and has warmed a little to the proposal for the future trading relationship proffered in July by May, calling parts of it "useful." He also now seems open to somehow linking the 39 billion pound ($50.4 billion) divorce bill to a future trade agreement, a change that would help May sell any deal to parliament.
That is still a long way from bridging the substantive differences between the two sides, but it suggests that there is more wiggle room than the EU has let on. The Irish border question is the main outstanding issue preventing a withdrawal agreement, so any give from Barnier would be significant.
In her Chequers plan May proposed keeping Britain aligned with EU rules for goods and agri-food, and proposed a customs agreement that allows Britain to collect duties for the EU on third-country goods that pass through the U.K. But Barnier has rejected both as unworkable. He views May's "common rulebook" for goods as cherry-picking from its four single market freedoms and went so far as to say that giving the U.K. its way could lead to "the end of the single market and the European project."
The EU could have left the Irish border issue to be decided as part of the final trade agreement, to be negotiated after Britain exits, but EU-member Ireland correctly surmised that it had maximum leverage at the earlier stage and the EU was leaving nothing to chance. It has insisted that the withdrawal agreement include a "backstop" plan to keep the Irish border open even if trade negotiations don’t yield a solution.
The U.K. can't accept a solution that leaves Northern Ireland cut off, by a different regulatory or customs regime, from the rest of the country and so proposed to include all of the U.K. in the backstop for a period until a future, probably technology-based customs arrangement can be introduced. The EU rejected this. And yet now the red lines seem to be softening, with Barnier telling a British lawmakers that the EU was open to technological solutions to check goods crossing the U.K.-Irish border.
May won't get any encouragement from the sidelines in Britain, however. Hardline Brexiters have launched a full-scale attack on the government plan that they say is a betrayal of Brexit. They are due — yes, at this late hour — to release their own proposals for a new relationship with Europe that is likely to be more of an enhanced free trade agreement. That's progress of a sort: Earlier in the summer they were mostly selling a no-deal Brexit as an acceptable option.
Barnier's tough negotiating stance at least has some logic to it: The EU faces populist euroskeptics in Italy, Hungary and elsewhere and must show that the cost of exiting is dear. But Conservative Brexiters have won their main battle and face a weak opposition in Jeremy Corbyn's Labour Party. Instead of doing a lap, they risk snatching defeat from the jaws of victory.
Parliament member Daniel Hannan, an arch-Brexiter himself, warned fellow Brexiters not to get carried away with tribalistic virtue-signaling:
We won, for Heaven’s sake. Whatever happens next, EU laws will no longer have precedence over our own. We shall again get to decide our agriculture, fisheries, immigration, taxation, regional policy and the rest. Yet people continue to rage about treachery and defeat and national humiliation as though nothing had changed. For decades, we euroskeptics, in Galadriel’s haunting phrase, "fought the long defeat"; it has apparently made some of us unable to accept victory.
There are not many paths that lead to a happy ending. Trade negotiators say a complex deal like this might be done in five or 10 years, given all the technical details and the fraught politics. Britain has a little over 200 days to Brexit, and around two months to get a withdrawal deal done. It's the difference between cramming for an exam and getting an education.
The only way to achieve an orderly Brexit is to agree on the easier issues and leave time to resolve the harder ones. Time has already had one major impact on opinion: Polls now show attitudes toward immigration have moderated. Some of today's Brexit red lines may look trifling down the road.
Whether Britain has a hard or soft Brexit, to use the terms coined to designate varying degrees of cooperation with the EU, is irrelevant now. Better to have a slow but sure Brexit; a withdrawal deal that creates political space to resolve the bigger questions.
To contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Therese Raphael writes editorials on European politics and economics for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.
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