Having your fudge and eating it

Two months after its first “final deadline”, nine months after Theresa May triggered Article 50 before she was ready, 18 months after the referendum, and following a week of serious embarrassment and frantic night-time meetings, the long awaited ‘sufficient progress’ in phase one of the Brexit negotiations seems to have been achieved after a number of U-turns by the government.

And this was, in the words of Donald Tusk, the “easier part of the task”, before moving onto the far more important second phase.

Yet even this deal fudges many key issues, and raises new ones. It has given rise to conflicting interpretations within hours of it being published.

Some see it as a victory for the hardline Brexiteers. As one prominent Remainer Tory put it to me:

Extreme Brexiteers are willing to pay any price to leave the EU.
· £50billion — no problem.
· Splitting up the United Kingdom — no problem.
· Making an assessment of the cost of leaving the EU — no need, any price is worth paying
· Trying to test the impact of leaving the EU on different scenarios — no need, any price worth paying
· Analysing the effects on important sectors of the UK economy if we leave — no worries, let’s just see
· Working out the cost of ‘No Deal’ — let’s not bother.”

But many hardline Brexiteers see it as caving in. The Leave.EU campaign has called May a ‘traitor’ who has ‘betrayed leave voters’. Nigel Farage has tweeted ‘The British PM flying through the night to meet 3 unelected men and agree to every single one of their demands is humiliating for our country.’

So, it is no surprise that the document is riddled with language that can give rise to contradictory interpretations, or that leaves key points unsettled.

Unsettled, that is, in the battle between the factions of the Conservative party rather than with the EU…

Let’s look at some of key issues. Where has May made a U-turn and where has she fudged?

1. European Court jurisdiction

May’s ‘red line’ that the European Court of Justice (CJEU) would have no jurisdiction in the UK after the withdrawal date, or even at the end of the transition period has clearly been been crossed — at least until 2027. Paragraph 38 of the agreement establishes:

rights for citizens following on from those established in Union law during the UK’s membership of the European Union; the CJEU is the ultimate arbiter of the interpretation of Union law. In the context of the application or interpretation of those rights, UK courts shall therefore have due regard to relevant decisions of the CJEU after the specified date.

It is also agreed that pending cases against Britain at the CJEU will continue, if registered before Brexit day.

Verdict: U-turn

2. The rights of UK citizens in the EU and EU citizens in the UK

The Telegraph front page asserted that EU citizens already in Britain would be “allowed” to stay as a “price” of Brexit.

And Brexiteers in the government have certainly made a U-turn in conceding that the cut-off date for being entitled to stay in Britain will be the date of Brexit, not the date of the referendum or of the Article 50 notification, as they initially insisted. They have also conceded that a wide range of family members (and partners in a durable relationship) will be able to join resident citizens (even after the Brexit date), that they must be treated in the same way as UK nationals, that several pieces of relevant EU legislation will continue to apply, and that, as we saw above, the EUCJ will have a continued role in enforcing those rights.

Nonetheless, other issues remain unclear or unsettled. The organisation The 3 Million, which lobbies on behalf of citizens from other EU countries living in the UK, says the agreement is a “flawed compromise”, pointing out that many guarantees are time-limited and many people who have made the UK their home are still “in the dark” about whether they will qualify for settled status.

Brits living in other EU countries have expressed similar misgivings. The reciprocal agreements apply to them too. And their rights to further movement are left open for a later negotiation.
One particular quirk is that any UK citizen who wants to retain their EU citizenship can do so, provided they were born in Northern Ireland. Too bad if you were born in Bradford, not Belfast.

Crucially, expats in both directions will continue to be in limbo. Unlike the provisions regarding Ireland, where the deal states that the commitments made “must be upheld in all circumstances, irrespective of any future agreement”, that is not the case for the section on citizens’ rights. They are all dependant on the final agreement.

Verdict: combination of U-turns and fudge

3. Irish border

The document acknowledges that “the UK’s departure from the EU gives rise to substantial challenges to the maintenance and development of North-South cooperation”. The understatement of the year!

The document commits both sides to an open border. It also says the UK is leaving the EU’s single market and customs union. These two positions appear to be in contradiction.

As Martin Sandbu pointed pointed out in the Financial Times:

When goods cross an international border, three things have to be enforced. First, the collection of any import duties or compliance with import quotas. Second, compliance with rules of origin, which involve preventing third-country goods from being camouflaged as the trading partners’ own production (when the latter are treated more leniently). Third, the enforcement of standards, such as food regulations, which must be met for the products to be legal in the territory they enter.

An FTA takes care of the first by removing tariffs between the trading partners. A customs union takes care of the second by agreeing on the same tariffs against third-party countries (so that no rules of origin need to be checked once the goods are inside the customs union). A regulatory union [single market] takes care of the third: when the rules are the same in both countries, compliance checks when goods cross a border are unnecessary.”

Of those three, the first has yet to be negotiated, and the other two have been specifically ruled out by the UK government. Not surprisingly, this has set alarm bells ringing. Sinn Fein leader Gerry Adams said:

The insistence by the British that Britain and the North must leave the customs union and the single market presents a real and live danger which cannot be understated.”

He is not the only one to worry about this.

To try to allay such fears, the document (paragraph 49) offers “alignment” — a fudge word if ever there was one — whereby:

In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.

And in the very next paragraph, to placate the DUP, it says there will be “no new regulatory barriers” between Northern Ireland and the rest of the UK and that Northern Ireland’s businesses will continue to have “unfettered access” to the UK internal market.

So, there can be no customs or regulatory border between the North and the rest of Ireland, nor between the North and the rest of the UK. But the UK will nonetheless have such a border with the EU. Go figure!

Verdict: fudge

4. The future trade relationship

Does the Northern Ireland part of the deal give us any clues about the future trade relationship, on which negotiations are about to start?

If it indeed leads to an alignment of the UK as a whole with EU single market rules in such a wide field (presumably agriculture, sanitary standards, consumer protection, transport, fair competition, environmental standards and more), then does that not amount to most single market rules? In which case, why not maintain all of them to keep full UK participation in the single market?

The wording equally implies, depending on how “alignment” is interpreted, the UK following the customs arrangements it presently adheres to as a member of the EU customs union.

Such a “soft Brexit” is what many economists recommend anyway, to avoid a significant hit to UK economy.

But closely following the EU’s single market and customs union rules, despite not being a formal member, is not what every Brexiteer had in mind (they were divided on this, even during the referendum). Some cabinet members are certainly resisting this interpretation. Michael Gove has said the UK would be able to pass laws with “full freedom to diverge from EU law on the single market and customs union”.

And a situation in which the UK will be required to follow the rules of the single market without having a say in what they are — rule-takers rather than rule-makers — will inevitably lead to the argument that Britain would be better off staying as a full member and having a say on the rules.

Verdict: both U-turns and fudge, so chaos and confusion!

5. The financial settlement

The document confirms what informed observers (but not ministers who said the EU could “go whistle”) have said all along: this is not an exit fee, but a calculation of UK commitments entered into during its period of membership and for which it should still pay its share.

Thus, the UK will participate in the current multi-annual budget that it signed up to until 2020, both on the payments and receipts side (including delayed payments), but any amendments to it after withdrawal which impact UK will not apply to UK. Britain will remain liable for its share of EU contingent liabilities, but will gain from the return of its share of paid-in guarantees.

Beyond that settlement, any EU programmes (research, space, Erasmus student exchange scheme, etc.) that the UK might wish to participate in post-2020 as a non-member state (still to be requested, let alone agreed) will require a UK contribution.

Verdict: U-turn

6. Some other things to note

  • Para 30 of the agreement sets out that future changes to EU regulations on the coordination of social security systems will be decided jointly through a mechanism to be established in the withdrawal agreement. In other words, there would be some UK participation in future EU decision taking on legislation that will still apply to the UK.

Verdict: U-turn

  • Para 40 provides for an authority to be set up in the UK to fulfil an equivalent role to that of the European Commission for the purpose of monitoring the implementation and application of the citizens’ rights part of the agreement. In other words, this would not be under direct government control.

Verdict: U-turn

  • It is confirmed that the government intends Britain to leave the European Investment Bank, despite this being Britain’s main source of finance for infrastructure projects.

Verdict: Sadly, no U-turn, even though it would not have been controversial in Britain

  • It is confirmed that the government intends Britain to leave Euratom despite doing so being legally and politically complicated and costly and despite it being a separate legal entity from the EU with its own treaty. Leaving means British hospitals could have initial difficulties in accessing radioactive isotopes for cancer treatment. It also means Britain having to set up separate procedures and inspections under the UN nuclear non-proliferation treaty, at significant expense and duplication.

Verdict: Sadly, no U-turn, even though it would not have been controversial in Britain

  • It is confirmed that the government intends Britain to leave the European Development Fund (EDF), through which EU countries pool resources and avoid duplication in their overseas development aid to third world countries, despite it being a separate international agreement from the EU. We will henceforth act separately, without that coordination and sharing of costs.

Verdict: Sadly, no U-turn, even though it would not have been controversial in Britain.

Finally, the joint-report clear states that, ‘nothing is agreed until everything is agreed’. There is still much to be done, and very little time to do it.


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