May's Third Way

08 Jul 2018

Theresa May has concluded her Brexit meeting with general agreement from her cabinet, and a commitment to a formal reinstatement of Collective Cabinet Responsibility over Brexit(or not), which is a big deal if that can hold up. The detailing is still made up of the finest Brexit Fudge, and while it makes for a good first draft of what the Brexit negotiations should have opened with, we are going to need a substantial jump in progress to see deadlines even come close to being met. That said, it is worth considering what this deal actually is, to see how negotiations could fare.

A basic summation of this proposal is that the UK takes part in the Single Market in goods(inc. agrifood), with the UK keeping rules from the EU on that matter, with a form of veto on new rules. The proposal sees the UK leaving the Single Market for Services, and replaces Freedom of Movement with some kind of similar arrangement(likely including special rights for EU citizens). The ECJ ends direct jurisdiction, with some joint process for arbitration, seemingly observing ECJ case law. The proposal also entails a customs partnership with ‘technology’, in which the UK collects tariffs on behalf of the EU. [More at: BBC News and The Guardian]

Ignoring the latter elements of the arrangement, this deal strongly resembles the Ukraine-EU Association Agreement which exists for the whole purpose of serving as part of a pathway to EU membership, and not as necessarily as an element of a long-term arrangement. The Goods-Only element only exists because of a wish to execute the deal with due haste, as opposed to being a template agreement, so Michel Barnier’s team may yet express concerns about the splitting up of Single Market components.

There will be some concern from business that the Service sector, which makes up a lot of UK business, will now potentially face new obstacles when exporting to the EU and EFTA, a huge market that the UK already actively benefits from. The crux of the issue is surmised well by’s Ian Dunt:

“The EU got up the morning after the vote and had a position pretty much like the one it has now. If you want Option A - lots of trade - you have to sign up to lots of alignment. If you want Option B - lots of independence - you have to accept loss of trade.”

This is something that seems to be something that is avoided by leading Brexiteers either through pure lack of understanding, or intentional avoidance of the facts. Some Brexiteers fear that they’ll be further concessions, and some reckon they may have given up too much, given that the side happiest with this isn’t theirs.

With all this in mind, it seems that this model doesn’t feel like the blueprint of a deal, so much as a stepping stone to a different one. The commitment to preserving the present border in Northern Ireland compels single market access, ideally including services, making for full Single Market membership to become a likely future pathway. The state of international relations at present might compel the EU to be more generous in its Free Trade offerings, but the UK government doesn’t yet seem to have considered engaging in some form of Customs Union. At present membership of the EU or EFTA Customs Union would be a far more logical thing, but this continues to be avoided by a the Government, held hostage by Brexiteers. EFTA membership could be sold relatively easily, with more control over faster negotiated deals around the world, its own court and a trade over politics focus. [See also: EFTA list of trade deals]