Maximum flexibility – the Government’s starting assumption in post-Brexit negotiations

As we reach that point in January when it definitely is too late to say “Happy New Year” any more, and the one-month mark since the election has rolled by, it seems a natural moment to explore where the new Government goes from here on its most pressing issue. What’s next on the Brexit front?

First, there’s the question of fulfilling that iconic pledge: Get Brexit Done. The Withdrawal Agreement Bill is with the Lords, having stormed through the newly-elected Commons – not surprisingly, given the extraordinary mandate it won at the ballot box.

While it is yet to pass, the progress of the Bill in itself shouldn’t be downplayed. As recently as a few weeks ago, it was possible that this country would never leave the EU at all.

If getting Brexit done is the first priority, the second should be ensuring that it is widely communicated that it has actually happened, at long last. There’s already an effort underway to try to claim that it is somehow impossible to ‘do’ Brexit – that even the act of leaving the institutions of the EU won’t really count, because political debate and change arising from leaving will continue.

This is bogus – obviously, exiting the EU means fulfilling the promise to do so; if it did not, those opposed to leaving wouldn’t be so bothered about it happening – but the spin effort has a reason behind it. The hope in hardcore Remainer/Rejoiner circles is that they can disillusion those who voted Leave and/or for Boris Johnson through bitter experience. Get Brexit Done proved a compelling message, and so they fervently hope to discredit it by arguing it is a broken promise.

I doubt that the Government would actively choose to have the media discussion largely framed, weirdly, through the lens of whether Big Ben should Bong as Brexit happens or not, but their main hope will be that everyone knows that Brexit is happening at that time, on that day, as promised.

So Brexit can indeed be done. And it’s simply inaccurate to talk of the entire future thereafter – negotiating a new relationship with the EU, hammering out trade deals around the world, re-establishing and re-learning ways to govern ourselves in a host of repatriated areas of sovereignty – as amounting to it somehow not happening.

Rather, those are the key elements of post-Brexit life; the fact that democratic self-government needs work and takes time is not a case for having stayed in the EU, it is part of what the goal of ‘Taking Back Control’ always meant.

Much of the Government’s policy for life after EU membership is as yet unpublished and unknown. Some is still being developed, some will be influenced by changes at the top (including the reshuffle and potential Whitehall re-organisation), and some is sensibly kept under wraps ahead of sensitive negotiations.

It is nonetheless possible to glean a few things from what the Government has and hasn’t done so far.

Overall, the signs point to a continuation of the strategy which distinguishes this administration from its predecessor: the belief in practice, not just rhetoric, that successful negotiation rests on the availability of and willingness to pursue a tough alternative.

That position is sometimes misunderstood, and more often misrepresented. Remember all the bombastic claims that Boris Johnson couldn’t possibly get a new deal, that he wasn’t even interested in trying to do so, and even that he actively desired No Deal? And yet his approach worked to avoid exactly that outcome.

Extending that logic from the autumn to today means the Government retains the willingness to march out of transition without a deal, and intends to hold to the deadline of the end of 2020. The size of the majority, and the new popular electoral mandate, bolster that position. They also weaken the routes by which it is possible to breach deadlines while avoiding the blame – it’s hard when one has a majority of 80 to argue that a Hung Parliament forced you into delay, for example.

It might at a push be possible, if both sides have signed a workable future relationship deal before the December deadline, to see some sort of new timetable established – a mutually agreed fudging under a new brand (an implementation period, perhaps?) – but it’s hard to see that being acceptable unless it were brief, strictly time limited, delineated from ‘transition’, and explicitly for the sole purpose of putting the technicalities of an already-agreed future relationship in place.

At the same time, as Stephen Booth recently suggested on this site, there may be an agreement to bundle together the various other deadlines currently scattered through the year – for tricky talks on fishing, financial services equivalence, and data – and reschedule them for the end of 2020, too. ‘Nothing is agreed until everything is agreed’, as somebody once said. After the failure to properly assess the risks of different schedules in the previous round of negotiations, expect Westminster to be far more robust in fighting for its preferred timetable this time.

So what sort of relationship will the UK seek? That is bound up with the time available. The EU’s preference, naturally, would be to argue that a short 11-month negotiation window ought to encourage something akin to continued membership – ongoing compliance with existing EU law and continued ‘dynamic alignment’ with new measures.

The UK’s interests, and the bitter lessons of political experience under Theresa May, argue for the opposite – not starting with the monolith of EU membership and shaving bits off apologetically here and there, but starting from the assumption of maximum flexibility and agreeing to compromise on that where absolutely necessary.

That would be the route by which the back-up alternative – a UK economy designed to out-compete the EU through swift divergence – is easiest to achieve. And therefore it is the most productive way to encourage an agreement instead. It would also, of course, allow the newly-elected Government to frame the negotiations in less apologetic terms than May: self-government is an opportunity, not a risk to be limited, and compromises which the EU might seek are concessions to be won from the UK.

There are signs of the groundwork being laid for such an approach. The Government’s rejection of amendments to the Withdrawal Agreement Bill which would require it to deliver one particular outcome or another from negotiations is a sensible start. If the proponents of those amendments haven’t yet got it, ministers have no intention of starting talks with their hands bound or their position compromised.

We see similar provisions being made for maximum flexibility elsewhere, too. The new Agriculture Bill does not include a legislative ban on new trade deals varying the standards applied to food imports, for example, which had been demanded by the NFU, among others.

Likewise, Clause 26 of the Withdrawal Agreement Bill itself proposes to give ministers the power to issue regulations telling courts (below the Supreme Court, which already has this power) to disregard ECJ and EU case law on a range of potential issues.

That has an obvious implication – the transition period provides for stability and continuity in the authority of EU law over the UK, but if we really need to then we can start to loosen some of those constraints early. The Government hopes, and works on the assumption that, the talks will be productive and constructive – but it retains the right to make provision for the UK to best serve its interests if they do not work out, and rightly so.

It will be worth watching carefully to see how forthcoming legislation like the Immigration Bill might reflect this approach; or, for that matter, if the Budget will contain any measures which could be seen as preparing the UK to compete more energetically with its EU neighbours.

While Brussels sometimes talks as if the UK ought to gratefully sign up to compliance and alignment – some would say obeisance – on all fronts, the fact is that now, more than ever, it is aware of the risk and challenge of a divergent competitor on its doorstep.

The EU knew that Philip Hammond was unlikely to seriously prepare for such an outcome, and that the Parliamentary numbers were not there even if he wanted to do so. Now he is gone and there is a Commons majority, backing a Government which is willing to act if needed.

That was evident as a factor in Angela Merkel’s remarks to the Financial Times this week about Brexit as a ‘wake-up call’ to the EU to become more competitive. Even Mark Carney recently argued that the UK must make the most of its advantage in financial services by retaining flexibility and regulatory self-government.

The implication of all this – the timescale, the preparation of an alternative, the retention of the right to diverge – is that the priority is getting an agreement in good time, without excessive sacrifice of control.

That points to a simpler, looser relationship, which would itself raise two huge questions: first, how would the UK then make the most of its newfound flexibility in terms of domestic regulation and taxation, and negotiation of new trade deals? And second, how would it mitigate the impact on sectors which could lose out as a result – particularly those with complex international supply-chains stretching into the EU, which are fearful of delays and costs from customs complexity?

It is perhaps no coincidence that the other benefit of prioritising a swift agreement is that the Government gains more time to address both of those questions through its actions well before the next election.

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