“Giving meaning to Brexit”

The best article I’ve read so far on the UK government’s approach to Brexit has been written by Andrew Tyrie MP,  the chairman of the Treasury Select Committee for the think tank Open Europe.

Problems for preserving an open border are clear if the UK leaves the customs union. But without doing so the UK cannot negotiate free trade deals with other countries. On the other hand,  the analysis leaves open the possibility of  an otherwise close relationship with the single market and perhaps special terms for the island of Ireland compatible with the overall deal.  The worst fears of Mairtin O Muiileoir and others will be confirmed if as Tyrie says: “the Government should explain clearly to the public that most of the fiscal dividend available from the EU budget after Brexit will not materialise”.


On the UK’s new relationship with the EU

The Government should set aside the idea of relying solely on the UK’s rights as a WTO member as its preferred outcome. The WTO is not an attractive blueprint. It is an insurance policy if things go wrong. In economic terms, it could amount to shock therapy.

For services, the deficiencies of the WTO option are greater still. Reliance on WTO rules would substantially curtail the UK’s ability to conduct cross-border trade, and the rights of UK firms to establish a physical presence in the rest of the EU, with the level of access varying between Member States

The Government also needs to decide whether the Trade Secretary is supposed to be negotiating trade deals. Given the importance of this to giving substance to Brexit, he probably should be. For that, the UK will need to leave the customs union.

The UK need not replicate the arrangements of other countries  – it will want more market access than Canada, whose trade deal with the EU contains only limited provisions on services, and more control and influence than Norway, which is a passive recipient of single market regulation.

On securing public consent

The Government should explain clearly to the public that most of the fiscal dividend available from the EU budget after Brexit will not materialise.

Parliament should have an opportunity to express a view on the Government’s negotiating position prior to the triggering of Article 50.

On the EU’s negotiating position

A reality check is in order for the EU. The four freedoms of the single market are not inviolable and inextricably interdependent. Far from being ‘completed’, the single market in services remains, in places, an aspiration. Nor is freedom of movement for people as complete as it appears. Purism by EU negotiators on this question would not only be inconsistent with reality; it would also clash with other Member States’ economic interests.

On Article 50

Before triggering Article 50, the Government first needs to decide for which exit door to aim. Furthermore, it should continue to restrain itself from pressing the trigger until it has a good deal of clarity from its negotiating partners that they are in a position to agree reasonable terms.

The Government does not need to trigger Article 50 prematurely to prove its intent. That certainly means waiting until next year. It could mean waiting a good deal longer – even until autumn 2017 after the French and German elections.

A settled relationship with the EU will not be found within the two years specified under Article 50. As such, transitional arrangements may well be required to prevent a sudden reversion to WTO rules.

On immigration and the open border, Tyrie offers no specific formula, saying only:

On the even more vexed question of immigration, the EU’s offer fell short of even the limited ambitions of the former Prime Minister. To both foreign and domestic opinion, the negotiations resembled window dressing. And to the uncommitted voter, the renegotiation closely approximated ‘more of the same’. It was as surprising as it was disappointing that the Prime Minister did not ask his EU counterparts to try harder. The contrast with the negotiations over EEC budget contributions in the early 1980s – during which the Prime Minister returned on several occasions to tell the House of Commons the offer being made by her counterparties was inadequate – is instructive.

Andrew Tyrie is Member of Parliament for Chichester, Chairman of the House of Commons Treasury Select Committee and former Chairman of the Parliamentary Commission on Banking Standards. He writes in a personal capacity and the views expressed do not necessarily reflect those of Open Europe.