The Brexit deal is ‘doomed’

Manal Lotfy , Wednesday 28 Nov 2018

The knives are out for May’s Brexit deal, with a plan-B urgently needed, writes Manal Lotfy in London

Protest against Brexit
Demonstrators protest against Brexit outside the Houses of Parliament in London, Britain, November 28, 2018 (Photo: Reuters)

In 38 minutes and after 524 days of negotiations, the EU’s 27 heads of state and government ratified the British exit agreement from the European Union after 45 years of membership.

It was a defining moment for the UK and the EU.

No wonder the general mood was one of sadness and anticipation.

This is only the beginning of long, complex and potentially very toxic negotiations.

Let’s face it, the withdrawal agreement — a 585-page document that will form the basis of a legally binding treaty — and the very vague political declaration, on page 26, on the future relationship (and not legally binding) was always going to pass the European Council.

The withdrawal deal guarantees the UK will pay a divorce bill of £39 billion to the EU.

Early in the talks, David Davis, former Brexit secretary, told European Commission President Jean-Claude Juncker that there was nothing in the EU’s treaties to suggest that the British government owed any money. Juncker responded that Britain would have to come good on the spending commitments it made as a member state.

That is a victory for the EU.

Besides the divorce bill, the deal also includes the much-abhorred concept among Theresa May’s critics that is the backstop as a solution to the Irish border if the UK and the EU did not reach a final deal on future relationships and the UK were to leave without a deal.

According to the EU, the backstop is an insurance policy that could be used if, and only if, future trade talks fail to avoid a hard border on the island of Ireland.

The backstop means the whole of the UK will remain in the EU customs union, while Northern Ireland will have to follow single market rules.

Brexit supporters despise the backstop, fearing it will leave the UK “handcuffed” to EU rules.

Also, suspicious EU countries fear the plan could benefit the UK, so insisted in the deal that the UK should respect EU social and environmental rules to avoid undercutting their companies. May signed to that obligation.

The deal also safeguards the rights for more than three million EU citizens in the UK, and over one million UK nationals in EU countries to stay and continue their current activities in the place in which they have made their homes.

May had sought to limit the scope of the deal to those who arrived in the UK before 29 March 2019, but failed to convince EU leaders.

So, all those arriving to live in the UK at any point up until the end of the transition period, which could last until the end of 2022 should it be extended, will enjoy the rights that EU nationals have today to make Britain their home, to live, work and study.

Walking Into A Trip?

In reality, the withdrawal deal is too good for the EU to refuse. It is not only very good for the EU in dealing with exiting issues, but it is also very good in influencing difficult talks about future relationships.

It gives EU countries all the cards needed to shape future relationships according to their interests.

And the backstop is the most important card of all. If any EU country, such as France or Spain, is not happy with the final deal, they could veto the deal and Britain would be forced to stay in a limbo transitional phase for decades.

This is a nightmarish scenario for Brexiteers and Remainers alike.

French President Emmanuel Macron did not take long to remind May of her predicament.

Hours after the ratification of the exit deal, he said that the UK will be trapped in a customs union after Brexit unless Downing Street offers European fishermen full access to British waters during coming trade negotiations.

“We as 27 have a clear position on fair competition, on fish, on the subject of the EU’s regulatory autonomy, and that forms part of our lines for future relationship talks,” Macron said.

“It is a lever, because it is in our mutual interest to have this future relationship. I can’t imagine that the desire of Theresa May or her supporters is to remain for the long term in a customs union, but to define a proper future relationship which resolves this problem.”

He added: “We will concentrate our efforts in order to obtain access to the British waters before the end of the transition period. And, of course, all of our fishermen will be protected.”

His statement was a very clear message: agree to what we want, or we will veto the final deal and the UK will be forced to stay indefinitely in the backstop customs union envisioned in the withdrawal agreement.

Downing Street hit back at the threat of the French president to trigger the customs “backstop” if the UK does not swiftly agree to allow European Union boats to fish in British waters.

The prime minister’s official spokesman said such a threat, if carried out, would amount to a “breach of good faith” under the withdrawal agreement and the UK would immediately refer the situation to independent arbitration.

“If the EU were not willing to engage in a genuine negotiation to replace the backstop with the future relationship or alternative arrangements, for example, if it had closed its mind from the outset to the UK position on fisheries, that would put it in breach of its duty of good faith under the agreement, and we can refer this to independent arbitration,” the spokesman said at a briefing for journalists.

However, May has been accused by her critics of falling for a European Union “trap” to keep Britain locked in a customs union with the bloc, warning that France and Spain could use fishing rights and Gibraltar to force the UK into submission to their demands or facing being ruled by the EU from outside.

In her statement in front of the House of Commons, May was criticised harshly for the backstop submission.

Even an old ally like ex-Defence Secretary Sir Michael Fallon turned against her.

He said he cannot support the exit deal as it stands, calling it “worst of all worlds”, emphasising that the deal is “doomed” and must be renegotiated.

Asked whether May should stay on as Tory leader if the deal was rejected by MPs on 11 December, he said it was “up to my colleagues”.

His remarks come after research published by the London School of Economics, King’s College and the Institute for Fiscal Studies suggests May’s Brexit deal could leave the economy as much as 5.5 per cent smaller in a decade’s time than it would be if the UK stayed in the EU.

The study warns that the cost to public finances could be as much as 1.8 per cent of GDP. It blamed the imposition of new trade barriers and a fall in immigration.

Another study by the National Institute of Economic and Social Research, commissioned by the People’s Vote, which supports a second referendum, said GDP would be 3.9 per cent lower by 2030 and the government’s Brexit deal will leave the UK £100 billion worse off per year than if it had remained in the EU.

“This is the equivalent of losing the economic output of Wales or the City of London,” it said.

May was facing enough challenges internally and from the EU when the US president interfered and made the situation worst. Donald Trump has suggested May’s Brexit agreement could threaten a US-UK trade deal.

He told reporters the withdrawal agreement “sounds like a great deal for the EU” and meant the UK might not be able to trade with the US.

Speaking outside the White House, Trump said: “Right now, if you look at the deal, [the UK] may not be able to trade with us. And that wouldn’t be a good thing. I don’t think they meant that.”

Cabinet Office Minister David Lidington said Trump’s comments “were not unexpected” and negotiations on a trade deal with the US were always going to be “challenging”.

“The United States is a tough negotiator,” he told BBC Radio 4. “President Trump’s always said very plainly ‘I put America first’. Well, I’d expect the British prime minister to put British interests first.”

May’s warning to her government and to the Commons — back my deal or risk more division — does not seem to be working.

Labour, the Lib Dems, the SNP, the DUP and many Tory MPs have said they will vote against her Brexit deal.

So, winning the Commons’ vote on 11 December looks like an impossible task for Mrs May.

What Are The Alternatives?

Stop Brexit. That is the worst nightmare for the Brexiteers and the ultimate goal for the Remainers.

If the deal fails in the Commons, some will try to stop Article 50, and stop Brexit. However, constitutionally and politically this is very complex and unprecedented.

It is very difficult to see a majority in parliament move to stop Brexit based on the collapse of the deal. Also, it is not clear if the ability to call off Article 50 rests solely in the United Kingdom’s hands.

Early elections. If the withdrawal agreement were to be defeated in the Commons on 11 December, the Labour Party will put down a motion of no confidence in the hope of triggering an early election.

However, that would require Conservative MPs to be willing to vote for an early election and that is unlikely as there is good chance the public will punish the ruling party for its divisions and shambolic Brexit deal.

So, prospects for an early election are slim.

A Second referendum. This is another problematic option. However, it is not off the table. If you look at parliament, it is almost impossible for it to agree on anything — May’s Brexit deal, Canada-style deal or Norway deal.

The only thing MPs will never vote for is “No deal”, as it could be catastrophic for the UK economy.

In this equation, a second referendum cannot be ruled out. If politicians cannot agree, it is fair to bring the issue back to the people.

Exiting without a deal. Some Brexiteers argue for that, emphasising the UK can trade with the EU on the basis of World Trade Organisation rules, and that would be fine. Few would agree with them, especially in business and finance. So, this is a very unlikely scenario to materialise.

Finally, any of these scenarios will be bad news for May. If her deal collapses in the Commons, her legitimacy will collapse with it.

*A version of this article appears in print in the 29 November, 2018 edition of Al-Ahram Weekly under the headline: The Brexit deal is ‘doomed’

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