The UK’s negotiating position on Brexit is a fantasy
A fortnight after Britain filed for divorce from the EU, the outcome of the two-year process is delicately balanced. Brexit is bad news, but in a happy scenario, the UK and the EU 27 will come away with an agreement that they believe serves their respective interests reasonably well. The alternative is worse: Britain leaves in poor grace and remains in the EU’s bad books for a long time.
The UK’s negotiating position seeks a “deep and special partnership” with the EU after Brexit. It hopes the partnership will include protected rights of EU citizens living in Britain and UK citizens living in EU member states, a soft border in Northern Ireland, free trade in goods with minimal customs barriers, the most ambitious international services trade agreement outside the EU, and security and policing co-operation. Although it wants control over its border, immigration, the jurisdiction of the European Court of Justice and money, both sides have a mutual interest in forging such a partnership, Britain insists, since the “no deal” alternative would be worse for all.
The EU 27 position, outlined in the the bloc’s negotiating guidance, also seeks guarantees for citizens, and imaginative solutions for the Northern Ireland question, but thereafter takes the status quo as its starting point. Since it is happy with Britain as an EU member state, it seeks compensation from the UK for changes that damage other member states’ existing rights. Where Britain wants exemption from common rules such as free movement of people, there will be a price for the privilege, the EU insists.
The two opening negotiating positions are incompatible. Britain starts from a fantasy in which the UK is happily already outside the EU and seeking a better relationship, while the EU 27’s position is grounded in reality. Britain will have to budge.
In any case, while there was no truth in Theresa May’s boast in January that “no deal is better than a bad deal”, the sentiment is closer to reality for the EU 27 than it is for the UK. So, to get an agreement, which Britain needs, it must make concessions.
Simple logic dictates that a pact will be easier to negotiate if both sides can find British concessions that the EU 27 perceive to be large while having little salience at home. Failure awaits if Britain cannot concede on issues that are objectively minor, but are perceived domestically and in Brussels as of great importance.
In the first two weeks of skirmishes, there are some initial signs that Mrs May understands this logic well. She has highlighted the loss of influence Britain will suffer over the EU. Brexiters could not care less, but it matters in Brussels.
It is not her only concession. The prime minister has accepted that a trade agreement will be negotiated only after Brexit. There was never any doubt about this, but the acknowledgment is valuable in bringing the two sides closer together.
She has also come close to agreeing Britain will remain in the customs union and bound by single market rules, including free movement of people, for a transition period after Britain leaves the EU (so long as people call it an “implementation period”). The UK has little choice in the matter as it could not set up functioning customs and work permit systems within two years, so it was wise to make a virtue out of necessity.
Neither side should get cocky, however. The EU demand for a financial divorce settlement is reasonable in principle and objectively small, but has already met stiff resistance in government with Boris Johnson egging on the prime minister to emulate her predecessor Margaret Thatcher and dig her heels in.
The foreign secretary has also been far from helpful by escalating tensions with Spain over Gibraltar when, as a British overseas territory not currently in the EU customs union, it could never automatically get the same post-Brexit trading relationship with the EU 27 that the UK negotiates for itself.
At some stage soon, Britain will have to face these facts. It will also have to agree not to turn itself into a tax haven or seek to be a European business hub based on lax social and environmental regulation — this would be a bad basis for a favourable modern trade deal with any other country.
It is not yet clear whether the British government fully understands the logic of Brexit negotiations. Behind the rhetoric of mutual advantage, it needs to make many concessions if it wants to maintain preferential access to European markets outside the EU. If Mrs May can face down the inevitable domestic howls, she will put herself in a position to make the best of a bad job.
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