Photo: Bloomberg
Photo: Bloomberg

UK’s Brexit proposal is pragmatic enough

UK's proposal offers the European Union an opportunity to demonstrate flexibility and start a process of internal reform

Two years after the Brexit referendum and related political vacillation, Britain’s official negotiating position has finally begun to emerge. After corralling cabinet ministers for a marathon meeting at Chequers, the prime minister’s country residence in Buckinghamshire, the contours of a British compromise were released. This milestone marked an important pivot in Britain’s stance. As expected, this has generated dissent within the right wing of the Tory party. The heatwave in Britain may reach a political boiling point. With free trade under siege from a rising tide of global protectionism, there is a broader undercurrent to this saga. It remains to be seen how Europe responds to British pragmatism. The stakes are high, and matter beyond Europe’s shores.

As a starting point, the British government outlined its aim for the UK and the European Union (EU) to maintain a “common rulebook for all goods", including agri-food, with the UK making an upfront choice to commit by treaty to ongoing harmonization with EU rules. The clarion calls of alarm from the industry given potential disruption to supply chains—witness recent warnings from Airbus, Jaguar Land Rover and BMW—appear to have been heeded in theory. 

Allied to this would be a new “facilitated customs arrangement" that would remove the need for customs checks and controls between the UK and the EU, as if it is a combined customs territory. The intention would be for the UK to apply the UK’s tariffs and trade policy for goods intended for the UK, and the EU’s tariffs and trade policy for goods intended for the EU. Quite how this would work out from a technology and operational perspective remains to be seen. 

The UK government also recognized that even after the UK leaves the jurisdiction of the European Court of Justice (ECJ), EU law and ECJ decisions will continue to affect the UK in relation to the common rulebook interpretation—UK courts would have to pay “due regard" to ECJ case law. Given the strident advocacy from pro-Brexiteers on unshackling the UK from ECJ jurisprudence, this was a notable shift from an ideological mooring.

Rather curiously, the UK has chosen to remain ambiguous in relation to potential convergence on financial services. It would seek to “strike different arrangements for services" in order to have regulatory flexibility, but would also look to “preserve the mutual benefits of integrated markets". Squaring this circle will be crucial. Given that the UK is a net exporter of services to the EU, this will need to be fleshed out urgently to silence alarm bells. 

What about the bogeyman of immigration though? Anxiety over immigration had played a pivotal role in the success of the Leave campaign. That gave way to the red line that free movement of labour—a key tenet of the single market—must end. But reconciling this with the strains of an ageing population and the demands from businesses has been far from easy. Hence, the recognition that an appropriate “mobility framework" will need to be developed to facilitate work and travel arrangements.

From a British perspective, the advantage of the proposed approach would be to keep trade in goods with Europe as frictionless as possible, avoid a hard border in Northern Ireland and also retain the freedom to strike deals with non-European partners. Gone is the erstwhile swagger that “no deal would be better than a bad deal". 

Frankly, it is clear that the rhetoric of a hard Brexit has softened considerably. Granted that UK parliamentary sovereignty has been preserved in that the UK could deviate substantially from the EU if it chose to. But this seems to be a theoretical construct. This fudge will leave many disappointed. Leavers will be cross. They will lament that the UK may become a “vassal state". Conversely, Remainers may yet clamour for more. They may feel entitled to wonder whether the complexities of a soft Brexit should consequently lead to a push for more integration. Internecine turbulence within the Tories cannot be excluded. The resignations of foreign secretary Boris Johnson and Brexit secretary David Davis in protest of Prime Minister Theresa May’s approach bear this out. The symbolism of Johnson’s departure as the architect of the Leavers cannot be underestimated. May will need every inch of resolve to thwart a rebellion. 

From a European perspective, a certain degree of schadenfreude would be understandable. Yet, it would be folly to remain obdurate by sticking to an entrenched position. The truth is that the European pipe dream of an “ever closer union" continues to ignore a range of anxieties within member states on immigration, welfare spending and excessive centralization. Witness the rise of right-wing populism in Austria, Hungary and Germany as an example. The classic European response to such anxieties has been to pretend they do not exist. However, Brexit offers an opportunity to demonstrate flexibility and start a process of internal reform within Europe.

At least May has started a dialogue based on reaching a middle ground. At a time when protectionism is on the rise, it remains ever more important to make and preserve the case for free trade. Feuding Tories should not forget this. The onus is also on EU politicians to debunk ideological dogma and demonstrate a willingness to listen. Otherwise, the risks of a Brexit no-deal scenario will be far worse for everyone. 

Rishabh Bhandari is a London-based lawyer and political commentator.

Comments are welcome at theirview@livemint.com

Close