Beyond the negotiations with the EU, what do you think are going to be some of the biggest Brexit-related issues the British government will have to tackle over the next two years? What challenges might they face in Parliament?
The Brexit negotiation is going to unlock a series of internal political debates in the UK that the United Kingdom has not had to focus on since it has been an EU member. This will be part of ‘taking back control’, but taking back control also means reengaging in a domestic debate about potentially contentious issues.
A key element is passing the Great Repeal Bill, to be submitted on 30 March, where thousands of pieces of legislation which currently reside under the European Communities Act 1972 are brought over into domestic law.
This step will smooth over the post-Brexit transition for companies that need to trade products and services between the UK and the EU under the same regulatory standards (although UK-based exports to the EU will still need to be certified as being compliant with EU regulations). But it will not absolve the government from the need to undertake complex domestic legislative work to embed some of the key frameworks of policy that have been under EU auspices into British law.
These are likely to include a legislative framework for agricultural subsidies, for the benefits available to EU migrants, UK commitments to global climate change targets, sanctions on Russia, and re-codifying the customs duties and tax arrangements under which the UK undertakes foreign trade.
So, while everyone is talking about how the UK negotiates its Brexit bill, the future rights of EU and UK citizens, or the framework for a future UK–EU trade deal, the British government will have to engage in a heavy parallel domestic legislative agenda over and above the normal business of government. And it will have to do so with a small majority in Parliament.
For at least the next two years, the prime minister may find herself negotiating on two fronts simultaneously, with potential insurgencies behind the Brexit front lines that are as intense as the negotiation she has to undertake with the rest of the EU.
Do you think that the UK government needs to consider more seriously the post-Brexit effects on the politics of Scotland and Northern Ireland?
Nicola Sturgeon has claimed Theresa May’s decision to pursue a ‘hard Brexit’ – giving up membership of the single market and the customs union – is the ‘material change’ in circumstances that creates the need for a second Scottish referendum. This means that Theresa May is going to need to think carefully about the type of deal she brings back at the end of the negotiations.
But I don’t think she will adjust her approach to the EU negotiation to one that includes the devolved administrations in a more active way than they are already, especially given the fact that she will already be managing a complex domestic negotiation alongside the external negotiation.
However, a key question she will have to consider throughout, for the survival of the Union, will be: what happens to trade across the Northern Ireland border on Day 1 of Brexit? Other elements – for instance, how much agricultural spending might be decided by Stormont, what fisheries responsibilities might Scotland have – can be figured out later on, once they have been negotiated on behalf of the United Kingdom as a whole.
The government has talked up the prospects of a ‘Global Britain’ outside the EU. What do you think is necessary for the country to fulfil that ambition?
It is going to be difficult to turn the idea of a more Global Britain into reality during the process of the Brexit negotiation. The Brexit negotiation is probably going to put serious discussion of future bilateral trade agreements on hold rather than mark their kick-off. Those who have said they are interested, like the Americans and Australians, will wait to see what kind of a detailed deal the UK strikes with the EU before they go beyond the preliminary conversations that have already been announced in this ‘phoney war’ period.
Where Global Britain can best be manifested in parallel to the Brexit negotiation, if the government has the bandwidth and the energy, is by focusing on the UK’s strengths as a security actor: by demonstrating the value of its role in the defence of eastern Europe, by trying to engage Turkey despite the country’s internal contradictions, by helping manage unregulated migration towards Europe, by remaining actively involved in counterterrorism operations and strengthening bilateral defence cooperation with its EU partners… The first responsibility of a Global Britain will be meeting its responsibilities as a European power.
At the same time, the UK will need to sustain a strong international voice, whether in the UN Security Council or in helping the world meet the Sustainable Development Goals, and demonstrate that it is not completely obsessed by resolving its relationship with the EU.
This will include being a trusted interlocutor and constructive rather than subservient partner to the Trump administration on the world stage.
Do you think there is any scenario ahead under which Britain does not actually leave the EU?
There are only two scenarios under which I would see Britain not leaving the EU in the next 2-3 years.
One is if there were to be some unexpectedly bad downturn in the British economy during the course of the negotiations as a result of some combination of domestic and international factors. It would probably originate from some external shock that then flows into the British economy. For instance, a crisis in China’s economy, Germany all of a sudden looking vulnerable economically, the negotiation with the UK then suddenly being pushed to the bottom of the agenda, and this making global markets concerned that the EU can’t deliver the type of pragmatic deal with the UK that markets are hoping for.
And, of course, the UK outside the EU will be more vulnerable to global markets if they were to test the strength of the pound. If it took a further drop, inflation could go up, interest rates might go up – a key vulnerability for the UK given its high level of home ownership. If that were to happen, the government might be forced to call a snap election – at which point the negotiations might be put on hold.
The only other scenario I could see stopping Brexit would be a really devastating series of terrorist events in Europe, or a major crisis with Russia that made it impossible for EU governments to sustain a parallel negotiation – something really serious at a geopolitical level. It would take something that big, in my opinion, for the negotiations under the Article 50 process to be suspended.
How could Brexit change the direction of European integration for the remaining member states?
Brexit, the rise of populist parties across Europe and Trump’s election have galvanized the debate over the future of the EU. We’ve seen the president of the European Commission and Chancellor Angela Merkel talk about the need for a ‘multi-speed’ Europe. Although there is very little public support for deeper integration at the moment, Brexit plus Trump, plus a threatening Russia and ever-more powerful China are making continental European governments circle the wagons against these external threats. Just as external threats have driven Europeans together in the past, so they are doing the same now. But EU governments know they have to be thoughtful about pushing for further integration, even if they are determined not to let European integration go backwards.
That being said, we’re in a slightly artificial period, with the French and German elections due over the next six months. If the EU gets through those two elections with a centrist like Macron winning in France and a CDU- or SPD-led coalition emerging in Germany, then EU governments could try to complete some of the practical initiatives that would demonstrate that the EU can deliver results and thereby regain the trust of European citizens. These initiatives might include completing the digital union or the energy union and perhaps undertaking some initiatives that the Brits might have blocked, such as a joint unemployment scheme, or that the Germans have resisted hitherto, such as greater financial backstops in the eurozone. The idea of restructuring Greek debt to make it sustainable might even be on the table after the German election.
My big worry is that, without Britain in the EU, a united Germany will be seen to be more dominant. At the moment, a united Germany is balanced structurally by both France and Britain – given the fact that Italy, because of its economic and political troubles, has dealt itself out of the equation for the moment. Without Britain, you could end up with an insecure France sitting next to an overly powerful Germany.
How do other countries react to that? Do they team up with Germany? Do they try to balance against it? Central and eastern European countries that are against further political integration might feel that they need to resist German leadership. France may feel it has to surround itself with allies to prevent being dominated by a German EU. Britain can’t help manage these concerns anymore.
Another concern is that, without the UK at the table, the EU continues to avoid opening up fully its capital and services markets. Those two reforms will be critical for long-term growth and employment in Europe, but have been viewed suspiciously by both France and Germany. Without a British spur, they may languish.
What do you think is the most likely status for the relationship between the UK and EU on 29 March 2019?
I am in the small camp that believes it is possible to do a fairly complete deal by 29 March 2019. I think that the more threatening external environment I described earlier – the new leadership in the US, Russia, mass migration, the terrorist threat – will serve as a disciplining force both on the EU27 and the UK, compelling them to agree to a deal that avoids Britain falling off 'the cliff edge'. And further delay is not really an option – the EU27 want to embark on elections to the European Parliament without the UK, and Theresa May knows that politically she must be able to stand before the British people on 29 March 2019 and say, ‘We have left the EU.’
So I think in two years we will have a completed divorce agreement and a legally binding commitment to create a comprehensive free trade area, even if the trade agreement requires several more years to complete.
The divorce settlement will include an agreement on how much the UK will pay the EU. Agreement might be secured by finessing the length of time over which the sum is paid and by the UK remaining engaged in some of the things it pays into, like joint R&D programmes and the EU energy market. It will be underpinned by an agreement on the rights of citizens in each others’ countries and by the UK organizing a preferential movement of labour system for EU citizens. The UK will be able to say that it has control over immigration and then use that control to give preferential access to EU workers.
The likely framework for the free trade agreement will include zero tariffs on the trade in goods, but with important protections for the EU on rules of origin for its imports from Britain. Agreeing on the arrangements for the trade in services will be more complex, even if the UK abides by all current EU regulations. I think there will be restrictions or frictions on the way that professional and financial services are traded between the two sides. Ultimately, the UK will have to abide by many EU regulatory regimes long after it has left the EU. But the government will be able to argue that it has regained sovereignty over non-tradeable aspects of its economy and its social policies.
I do not underestimate the complexity of securing a meaningful agreement in 18 months – thereby leaving time for ratification by both sides. But the one thing we know is that, if politicians want to arrive at a deal, national and EU officials and their ranks of legal advisers will be told what that deal should be and to find a way to make it work.
Dr Robin Niblett CMG Director, Chatham House. He became the director of Chatham House in January 2007.