Friday, 14 October 2016

Soft Brexit or Hard Brexit? It's a false choice

Today's vote in Wallonia against an EU-Canada free trade deal makes it painfully clear - Europeans will not approve any arrangement that lets Britain have its cake and eat it too.

Over the past weeks, people in the UK have been engaged in a tortured debate - should we have a "hard Brexit" or a "soft Brexit"?

A hard Brexit, viewed by most people (even the Brexiteers) as the worst outcome, would mean that the UK cuts economic ties with Europe, and continues to trade with the EU only on WTO terms. In other words, the UK is left with the same relationship with the EU enjoyed by Morocco.

A 'soft Brexit' would mean the UK retains market access while formally leaving the EU. This would occur either by the UK joining the EEA (à la Norway and Iceland) or negotiating bilateral treaties (à la Switzerland). Either of the latter two options would involve compromise. Crucially, the EU has made clear that the UK can't have either of these "soft Brexit" scenarios without maintaining freedom of movement (the ability for EU citizens to live and work in any EU country).

So when UK Prime Minister Theresa May affirmed, at the Conservative Party conference last week, that whatever Brexit deal is agreed will end free movement, it sparked a panic among remainers and from industry (contributing the the collapse of the pound this week). The markets fear that May's vision means there is no way to avoid a hard Brexit.

'Nonsense', replied the Tory Brexiteers. 'We can have a soft Brexit in which we end freedom of movement'.

But two developments this week make one thing clear: no reasonable person can conclude that a soft Brexit which ends freedom of movement is possible.

The cock versus the Canadians

In a shock development today, the state government of Wallonia, the French-speaking region of Southern Belgium, voted to reject an already-signed free trade deal between the European Union and Canada. 

Although they are negotiated by the European Commission, EU free trade deals must be ratified by all 28 EU member states before they can take effect. Because of a quirk in Belgian law, the federal government cannot take such a decision without the permission of its six parliaments (two of which do not even represent geographic entities. Belgium is ridiculous). 

So Belgium will have to veto the signature, owing to national political grievances more than a real objection to the treaty's actual contents. Even after all other 27 member states approved signature. 

Obviously, the fact that one tiny state of 3.5 million people can overrule the rest of the EU's 507 million people is rather absurd, and shows the degree to which EU action is still hampered by too much national control. The free trade agreement isn't dead yet - this thing took years to negotiate and some kind of solution will probably be found - particularly since the reasons for the rejection are largely parochial.

Beyond the implications for the purpose and future of the EU, which were brutally spelled out by Canada's prime minister this week, this should also serve as a warning to people in Britain.

Why give special rights to Brits?

The Walloon parliament's reasons for voting down this trade agreement are complex - a combination of strong agricultural interests making a fuss and local politicians sensing that they can hold the EU to ransom. But what should alarm the Brexiteers is that they have a vote at all.

Any Brexit deal that is worked out with the UK will also need to be agreed by the EU's 27 other national governments (and Belgium's 6 assemblies). Even if EU leaders are convinced to abandon their principles and offer the UK market access without freedom of movement, that will still need approval by the peoples' representatives in 33 parliaments across Europe. 

Why on Earth should those MPs, MEPs and Senators approve a deal which seems to be giving Brits special treatment, at the expense of other Europeans?

Brexiteers like to cast this as a 'threat' by the EU, as if they are somehow owed access to the EU single market and petty Eurocrats will take it away in revenge for Brexit. But the fact is, if the UK is allowed access to the market while being exempt from freedom of movement obligations - one of the EU's four 'pillars' - they would be getting a special deal that has never been given to another country before.

Norway and Iceland have access to the EU single market through the EEA. In exchange, they must allow all EU citizens to live and work in their country. Switzerland enjoys market access through a series of bilateral treaties (because the Swiss voted in a referendum to reject membership in the EEA, Bern had to recreate EEA membership through bilateral treaties that did not need approval by the public). In exchange, Switzerland must allow all EU citizens to work in their country.

If the Brits are given an arrangement different to this, they are being given special privileged access to the market that has never been given to any other European. The British are already immensely unpopular in continental Europe. Do you really think people are in the mood to give them this special treatment?

Even those Brexiteers who saw they are "comfortable" with a hard Brexit have made the argument that the UK can negotiate a free trade deal with the EU that mirrors the arrangement Canada was about to start (something that does not even come close to the single market access the UK currently has, but is much better than WTO terms). 

But the EU-Canada deal took seven years to negotiate. Given that the UK will have to leave the EU by March 2019 (if May follows through on her promise to invoke Article 50 in March 2017), that leaves a gap of five years of no trading relationship with Europe outside the WTO.

Even if the UK can sweat it out those five years, such a free trade agreement would likely be rejected by at least one of the 33 European parliaments. Who knows, maybe it will even be Wallonia that will deliver the death blow to the United Kingdom (or whatever is left of the UK by that point - England and Wales?).

It's hard Brexit or no Brexit

Of course, any discussion of parliaments ratification is moot, because EU leaders are extremely unlikely to ever let a 'soft Brexit' land on the MPs' desks in the first place.

Speaking in Brussels yesterday, European Council President Donald Tusk spelled this out in the bluntest terms possible. He heads the most powerful institution of the EU - the Council of the 28 national governments. And he spoke for the other 27 EU national leaders when he said:
"The only real alternative to a hard Brexit is no Brexit, even if today hardly anyone believes in such a possibility. The brutal truth is that Brexit will be a loss for all of us. There will be no cakes on the table for anyone. There will only be salt and vinegar."
In case that wasn't clear enough, he tweeted it too:

Tusk was referring to a comment by Brexit leader (and now UK foreign secretary) Boris Johnson earlier in the week. Johnson, seemingly unaware of the meaning of the idiom, insisted that the UK could "have its cake and eat it too". Tusk slapped this notion down.

The Brexiteers have dismissed Tusk's words as the opening salvo of a negotiation - tough talk before the Brexit negotiations begin. But they seem to not be looking at the bigger picture. The UK is in the weakest position here. 

Even if Tusk and the other EU leaders could be strongarmed by some hypothetical brilliant British negotiators (that's a big hypothetical there) into accepting an arrangement where the Brits get privileged market access, there is no way that that arrangement is going to be approved by the people of Europe.

Just ask the Walloons.  

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