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UK Learns Brexit is Easier Said Than Done

[This post was first published on the website of the Whitney and Betty MacMillan Center for International and Area Studies at Yale. It is republished here with permission of the author.]

David R. Cameron, Professor of Political Science, Director of the Program on European Union Studies, Yale University

When Prime Minister Theresa May took over as the leader of the British Conservative Party and prime minister of the United Kingdom in July, she famously said, “Brexit means Brexit.” Her words were meant to assure the Conservative members of parliament and voters who had supported the Leave option in the June 23rd referendum that, although she had supported the Remain option, she would respect the decision of the voters to leave the European Union.

But six months have passed since the referendum, the UK still has not notified the European Council under the terms of Article 50 of the Treaty on European Union of its intention to withdraw, a variety of political and legal obstacles have arisen, and PM May’s catchy sound bite now strikes one as not only tautological but vacuous; it has become increasingly clear that the UK government still does not know precisely what Brexit means. And as it continues to search for the elusive meaning, it is discovering that Brexit, whatever it means, will be easier said than done.

The UK government’s delay in notifying the EU of its intention to withdraw is not because it is having second thoughts about exiting but, rather, because, once it notifies the EU, the clock on the time allowed to reach a withdrawal agreement will start ticking. Article 50 stipulates that the EU treaties will cease to apply to the withdrawing state as of the date of entry into force of the withdrawal agreement or, failing that, two years after the notification unless the European Council unanimously agrees to extend the two-year period. As a result, the UK could find itself, two years after notification, no longer in the EU and with no withdrawal agreement, no arrangements for its exit and no framework for its future relationship with the EU.

The two-year ticking clock obviously gives the EU a great advantage in the negotiation; if the UK’s preferences fall outside the EU’s set of acceptable outcomes, the EU can simply sit on its hands and let the clock run down – and watch the pressure on the UK government mount as financial service firms, auto manufacturers, and others make plans to relocate elsewhere in the EU. Indeed, that pressure is already mounting; Lloyd’s of London has already drawn up plans to relocate some of its operations and several Japanese financial institutions have told the government they will start preparations to relocate in the next several months if they don’t receive assurances they will retain full access to the EU market.

While a two-year window might seem to be sufficient for negotiating a withdrawal agreement, in fact it provides considerably less than two years for reaching an agreement. Article 50 requires that, once a state notifies the European Council of its intention to withdraw, that council must establish negotiating guidelines for the Union. As the EU 27 – the European Council minus PM May – made clear at its informal meeting last week, it will not adopt those guidelines until it receives the UK’s notification of its intent to withdraw. According to the procedure adopted last week, the General Affairs Council will then adopt a decision authorizing the opening of negotiations providing negotiating directives after receiving a recommendation from the European Commission. All of that will take some time; if, after six months, the UK is still not ready to negotiate, it is highly unlikely the EU will be ready to do so until sometime in the autumn of 2017.

The two-year window for negotiating will be shortened as well by the procedures required by Article 50 for conclusion of the withdrawal agreement once it has been negotiated. The article stipulates that, once the agreement has been negotiated, its conclusion requires approval by the Council, acting by a “qualified majority” – i.e., a super-majority of roughly 70 per cent of the weighted votes of the 27 member states – after the European Parliament has given its consent to the agreement. Both of those steps will take some time as well.

Given the short window for negotiating the withdrawal agreement, it’s obviously not in the UK’s interest to notify the EU of its intention to withdraw until it knows exactly what it wants and has a good sense of what it will get. And that is the problem: Even after six months, it is not clear what the UK government wants and, more importantly, what it is willing to accept in order to get what it wants. To take but one issue, the financial services firms in the City of London want to retain the “passporting” rights they now enjoy that allow them to operate throughout the EU.  The EU has made it clear that any access to its Single Market, including via “passporting” for financial services, will require full adherence to its foundational commitments, including the free movement of EU citizens. Will the UK accept that trade-off?  It may not.  But if it doesn’t, the financial services firms won’t get “passporting.”

Article 50 states that the withdrawal agreement will, in addition to setting out the arrangements for the state’s withdrawal, take account of “the framework for its future relationship with the Union.” There has been growing recognition both in the UK and the EU, as the complexity of the forthcoming negotiation has become increasingly apparent, that, unless the UK opts for retaining full access to the Single Market, even at the price of accepting free movement, the two-year window for negotiating the withdrawal may not provide sufficient time to negotiate the post-exit relationship between the UK and the EU. Indeed, both Philip Hammond, the chancellor of the exchequer, and David Davis, the secretary of state for exiting the EU, have suggested recently that the UK may need to negotiate a transitional deal that fills in the details of that “framework.” Based on their experience with other trade deals, sources in the EU suggest that could take several years.

Article 50 does not preclude the negotiation of a transitional deal. It simply states that the treaties will cease to apply from the date of entry into force of the withdrawal agreement or, failing that, two years after notification unless the European Council agrees unanimously to extent the negotiation. One way to extend the negotiation to cover the transition to the UK’s exit would be through a unanimous vote of the Council; another would be by setting the date of entry into force of the agreement at some future date sufficient to allow negotiation of the post-exit relationship.

If it was already clear that Brexit is easier said than done, that reality was underscored on Tuesday when the Scottish government released its long position paper entitled “Scotland’s Place in Europe.” In her foreword to the document, First Minister Nicola Sturgeon stated that, although she would prefer Scotland to remain in Europe as an independent state, for the sake of finding common ground with the UK government, Scotland believes that the UK as a whole should remain in the Single Market, through the European Economic Area, and within the Customs Union.  In the event the rest of the UK decides to leave, Scotland believes it should remain in the Single Market and retain key benefits of EU membership. Whatever the outcome of the Brexit negotiation, Scotland will insist that additional powers be devolved to the Scottish Parliament. And lest anyone forget her party’s commitment to independence, she reminded readers and those listening of the Scottish National Party’s commitment to another independence referendum if that became the preferred option of a majority of the people of Scotland or there was a significant change in the situation, such as Scotland being taken out of the EU against its will. And she noted that “we have published a Draft Referendum Bill for consultation so that the option of a referendum on independence will be available if we conclude that Scotland’s interests cannot be protected by other means.”

Brexit was never going to be easy. It just got a lot tougher.

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Published on December 23, 2016
Author:          Filed under: Analysis
 

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