Honour on both sides of the Channel may have been satisfied, for now. The EU has a promise from London that it will pay around €40 billion to cover its financial obligations and sufficient guarantees on the rights of EU citizens and the Irish border. And Prime Minister Theresa May has a commitment from Brussels to begin talks on a successor EU-UK trade deal in the New Year.
The fact that the Article 50 talks, despite lengthy delays, have progressed sufficiently to move from the divorce deal to future trade talks suggests that a deal will probably be struck. A vanishing number of UK ministers and businesses support a no-deal Brexit.
But a transition period only succeeds in moving the ‘cliff-edge’ to March 2021. That could mean two years of grandstanding and then another panic in summer 2020.
“Politics has the disturbing habit of throwing up outcomes that nobody wants,” said Professor Anand Menon, the director of UK in a Changing Europe think tank at London’s King’s College.
May’s defeat in the House of Commons on Wednesday (13 December) over the passage of her government’s EU withdrawal bill, and the attempts by her Brexit Secretary David Davis to soothe the fears of Tory Brexiteers and the Democratic Unionist Party, has underscored how the Brexit process remains fraught with political danger from all sides.
In fact, sorting out the divorce bill was always likely to be the easy bit.
“One of the beauties of Brexit is that we find out about (EU) membership as we do it,” said Menon.
The Joint Report agreed by Michel Barnier and May is silent on any enforcement mechanism apart from on citizens’ rights. But the question of how UK-EU relations will be arbitrated on in the transition period that is likely to follow March 2019 will be one of the first, and trickiest, issues to resolve.
“The notion that we’re going to have mutual recognition but they’re not going to check (what we do) is nonsensical,” says Menon. “The Conservatives since Thatcher have not understood that markets need strong institutions to enforce them.”
Catherine Barnard, a Changing Europe UK fellow, highlighted an obvious inconsistency among the Brexiteers, saying she “always found it odd that the Brexiteers like to fall back on the WTO which has a supra-national court”.
The Court choice
With the European Court of Justice (ECJ) ruled out, the European Free Trade Area (EFTA) court – like the ECJ also based in Luxembourg – has been mooted by some politicians and legal experts as a possible half-way house option.
Carl Baudenacher, the court’s president, touted his organisation in September at meetings with UK officials and ministers. However, just like the ECJ, it suffers from the obvious problem in presentational terms – of having ‘European’ in its title – clearly not something Brexiteers want.
Yet if the May government has little room for manoeuvre on the legal status and location of an arbitrator, its counterparts in Brussels could be similarly constrained.
The controversy over Investor-State Dispute Settlement (ISDS), the procedure that allows companies to sue host governments if they are discriminated against, sank EU-US trade talks and nearly derailed the EU-Canada trade pact last autumn. That makes an ISDS-style arrangement highly unlikely, argues Menon.
“I just don’t see that being ratified in Germany (one of the most vocal opponents to ISDS courts in TTIP),” he said.
For the moment, however, departments in Whitehall are more concerned with working out what regulatory agencies will replace the EU bodies in 2019.
In a letter to the Environmental Audit committee released on 11 December, Environment Secretary Michael Gove outlined plans for a “new independent statutory body” to police environmental standards post-Brexit.
“Mutual recognition is a brilliant idea that doesn’t really exist in reality,” warned Barnard. “Pass-porting is hemmed in by a lot of EU standards. Directives are already re-badged as national law.”