To punish or not to punish? That is the question on everyone’s lips. I’ve spent most of this week in London and Brussels and it seems to be the question preoccupying every commentator as more and more polls suggest that a departure of the United Kingdom from the EU is likely.
The French want to punish the Brits, the Nordics and Ireland want to be helpful and the Germans are somewhere in between. But I am not so sure that the process of handling Brexit and negotiating the subsequent bilateral relationship, is something that can or will be managed in a precise and controlled manner. The existing legal framework, as well as the basic practical realities of managing the internal market and the internal political dynamic post a potential Brexit, will dictate the aftermath of next Thursday’s vote. In a sense existential factors will dictate the nature of any future relationship with the UK, rather than motives of revenge or conciliation.
The process of handling the British exit from the EU will be legally anchored in Article 50 of the Lisbon Treaty of the EU. This is essentially the process of getting out of the Union. It takes into account the “framework for its future relationship with the Union” but a Free Trade negotiation it is not.
I cannot envisage any circumstance in which the totality of the UK’s future engagement with the EU, particularly in terms of its relationship with the single market, can or will be negotiated in two years or anything like that timeframe. So the ‘Leave’ element may well be concluded, but the ‘What Next’ element will not.
It is assumed by advocates of the Leave campaign that future membership of the single market is a no-brainer. It is not. All existing models which allow full access to the single market, such as the Norwegian model, require the non-EU state to accept free movement of people, sign up to all single market rules, regulation and red-tape without having any influence over them, and to make a significant contribution to the EU budget.
All three of these requirements are precisely the reasons the Brexiteers argue the UK should leave. Therefore, there can be no assumption of a smooth and controversy-free transition to a new relationship which allows the UK easy access to the Single Market on the basis of these accepted conditions.
These requirements to entry will be politically unsaleable in Britain. The British public will ask why exactly they went to the trouble of holding the referendum in the first place. So the issue is not French hostility or a desire to punish the UK. The problem is one of unrealistic and quite unachievable political and public expectation in the UK. The British public have been promised they can have their cake and eat it. This is the fundamentally dishonest picture of Post-Brexit Utopia which has been painted by certain British politicians. It ignores the fact that what they promise simply cannot and will not be delivered.
Assuming that a Norwegian type arrangement providing access to the Single market is not feasible in post-Brexit Britain, what are the alternatives? Well Boris Johnson has helpfully pointed to the EU – Canada Free Trade Agreement as a model which could be pursued. The first truth which Boris and his colleagues should impart to the British public, is that a FTA does not give full access to the single market. They should also recognise that negotiations of the EU – Canada FTA began in 2005. The negotiations were concluded 11 years later, but the deal has yet to be ratified. These negotiations take a huge amount of skilled negotiation and no small degree of man hours to conclude.
As an alternative to a Norwegian type of arrangement, and instead of a Canadian FTA style agreement, (or at the very least for the intervening years while it is being negotiated), the existing WTO rules will apply to trade between the EU and the UK. These rules only cover goods and not services, so are of little help, for example, to the financial services sector which makes up the heartbeat of the UK economy. They also allow for tariffs and customs controls in the trade of goods. For example, traditional tariff barriers would apply in sectors such as agri-food, which are a core part of the UK’s business with the rest of the EU (and Ireland’s with the UK!). It is clear that such a system would inflict significant damage on both the UK and EU economies, even if only temporarily applied.
So the narrative around the punishment of the UK by vengeful EU member states is irrelevant. The biggest problem facing the UK will be the fantastical and totally misleading tales that have been spun by Leave campaigners and just how incompatible British citizens’ expectations are with the political and legal realities. At the end of the day, the sort of access to the Single Market that the UK wants and needs, is just not possible without accepting the governing rules and regulations which apply to all of the other beneficiaries of this market access. The notion that one State would be allowed to participate in the market, enjoying all of the benefits, without adhering to all of the rules that everyone else must abide by is nonsensical. But it is the nonsense that is being sold to the British public. Let’s hope they see it for what it is before June 23rd. For all our sakes.