Three deals

Hardline Brexiteers risk no trade deal – a disaster for Britain, writes Roger Liddle

The Brexit negotiations have three distinct but overlapping components.

The first deal is the withdrawal agreement under the Lisbon treaty’s now infamous article 50. This is about the divorce: what money is owed; the rights of European Union citizens living in the United Kingdom and British citizens living abroad; and the framework for the future relationship. To come into force, this treaty has to clear the relatively low hurdle of a qualified majority of the European council and the approval of the European parliament.

The second deal is how Britain moves from being a ‘member state’ to a ‘third country’. Theresa May insists in calling this an ‘implementation’ period: virtually everyone else calls it a ‘transition’. This difference of wording hides a potentially big difference of substance.

The third deal is to agree the specifics of the future relationship after March 2019, covering most importantly the economic relationship, but also continuing cooperation in areas as diverse as security, overseas development and education and research. This trade treaty will certainly require full ratification in member state parliaments and possibly referendums.

Most EU experts and insiders think the trade agreement will take years – at least three, possibly up to seven – to negotiate and ratify: that is why a transition deal is needed, almost certainly on the basis of continued membership of the single market and customs union. May, on the other hand, wants as detailed an agreement as she can get by October 2018.

The Brexiteers hate the very idea of a so-called ‘divorce bill’. They argue that no one pays anything to ‘leave’ a club, but this ignores the reality of the political commitments Britain has solemnly entered into as an EU member for which the bill has not yet been paid. But threatening to walk away is not like walking away from buying an overpriced house or car. That costs you nothing: the status quo prevails. If we walk away from the Brexit talks without a deal on the divorce terms, the result is chaos – at the ports, as a full regime of customs controls is hurriedly put in place; and in terms of disruption of cross-border supply chains and the imposition of high tariffs on our imports of food. The Brexiteers say this will never happen because our partners would suffer as well: but Britain would suffer far more, as nearly half our exports go to the EU, while only eight per cent of their exports come to us: it is stark staring obvious who would lose out most!

However, their biggest sticking point will be the basis on which we enter into free trade talks with the EU. The cabinet is split down the middle on this question. May claims she wants a deal that keeps Britain closely aligned to EU regulatory standards. But for the Brexiteers the whole point of Brexit is to break away from EU standards and rules.

So my best guess is the Brexiteers will through gritted teeth tolerate a divorce settlement and shift the blame for it onto May. Their ‘implementation’ period will only be to give time to put in place the customs arrangements and border controls to trade with the EU on World Trade Organisation terms. But they will fight hard to prevent Britain getting enmeshed in what they see as the morass of a deep and comprehensive trade deal with the EU. This is not ‘no deal’ in terms of walking away from article 50, but ‘no trade deal’ is nonetheless a disaster for Britain which Labour must totally reject. 

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Roger Liddle is a Labour peer and co-chair of Policy Network

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