May was caught between the Irish devil and the deep Orange sea

A lot of sound and fury, but ultimately the deal agreed on Friday could have been — and was — largely predicted in April, when the EU adopted its initial negotiating guidelines. The UK has conceded on most of the substantive issues on citizens’ rights and the financial settlement, with the EU27 compromising just enough that this can be presented here as something less than complete capitulation.

What was much less predictable was the complicated four-way dance between London, Dublin, Brussels and Belfast. This ended in an agreement that, if necessary, the UK will “fully align” its rules to the extent necessary to avoid both a hard border between the Republic of Ireland and Northern Ireland, and any border in the Irish Sea between the UK and Northern Ireland.

Essentially, Theresa May was caught between the Irish devil and the deep Orange sea. While “full alignment” does not necessarily mean that the UK will remain in the EU single market or customs union, until it’s clear what it actually does mean it will severely constrain the UK’s ability to make deals with third countries.

Thanks to Arlene Foster, chlorinated chicken is off the menu for the foreseeable future. Good news for chickens – bad news for Liam Fox, whose job looks as if it will be confined to trying to ensure that the UK does not lose the benefit of the EU’s existing trade agreements.

The deal comes as huge relief to No 10, the Treasury and Whitehall — as well as to multinational firms across the EU. The very real fear was that if the process broke down, the trickle of businesses responding to the threat of a chaotic Brexit in March 2019 by announcing job relocations or cancelled investments would become a flood. From London’s point of view, any deal that averts this is better than no deal.

Given this, it makes sense that phase two of the negotiations will relate not to future trade arrangements but rather to securing “transitional arrangements” to bridge the gap between March 2019, when the UK formally leaves the EU, and the implementation of whatever deal is eventually agreed on the future relationship.

And here, once again, the gap between the prime minister’s rhetoric and reality is likely to catch up with her. It is clearer than ever that the “phased implementation” she referred to in her Lancaster House speech less than a year ago, will be nothing of the kind. For one thing, there will be nothing to implement. There is no prospect of a trade deal being signed and sealed by the time the UK leaves the EU.

Second, the prime minister talked of negotiating a “phased implementation”, with both sides making changes to adapt to post-Brexit reality. Yet the EU27 have made it clear that’s not on offer. There will be no adaptation on the EU side. Instead, “all existing Union regulatory, budgetary, supervisory, judiciary and enforcement institutions and structures will apply”.

So, the UK will have to follow all the rules of the single market — including those relating to free movement — in full. ECJ jurisdiction will continue. Indeed, if the EU changes the rules during the transitional period, we’ll have to follow suit. Not only is this not “phased implementation”, it’s not really transition — it’s the status quo. Except we will have no voice and no vote. Agreeing this will be tricky in every sense.

As a recent House of Lords report made clear, it is not entirely clear what kind or length of transition would be supported by Article 50. And even if legal solutions are found, negotiating a comprehensive agreement that clearly specifies the mechanics of replicating the UK’s membership of the EU without formal membership will be hugely complex. This will consume much of the time remaining for negotiations.

Politically, too, there may also, as the song says, be trouble ahead. The organisation, Leave Means Leave, recently laid out its red lines for the negotiations to come. Some of these, such as the desire for trade without tariffs with the EU or the demand for an agreement on the Irish border correspond to positions laid out by the government.

However, others, particularly when it comes to the transition, are more problematic. Thus, the letter demands that the UK be able not only to negotiate, but also implement trade deals from the day that Britain leaves the EU. Equally, it insists that the ECJ will cease to have any jurisdiction from that date, and that no new EU regulations will apply from it.

This is simply not going to be possible. And so, the prime minister will, at some point, have to face down this group of Brexiters if she is going to be able to sign up to the only transition deal on offer.

The other, and even bigger, hostage to fortune that the prime minister has relates to the phrase “Nothing is agreed until everything is agreed”. Deliberately or otherwise, the government has allowed many of its backbench MPs — not to mention some commentators and journalists who really ought to know better — to labour under the misapprehension that if we don’t get a “good deal” on trade, we’ll be able to walk away, including from our financial obligations.

This is fantasy. First, the UK’s negotiating position becomes weaker, not stronger, the nearer we get to March 2019. If the prospect of a chaotic Brexit looks dreadful now, it will be positively unthinkable this time next year.

Second, “nothing is agreed until everything is agreed” applies to the Article 50 Withdrawal Agreement only. This will “take into account the framework for the future relationship”, including the transitional arrangements — but it cannot and will not include a trade deal.

And the UK has now accepted, in writing, precisely the formulation the EU has set out all along — albeit buried in the very last paragraph of the agreed text. So, as we wrote a few months ago on these pages, “We will be writing a cheque before a trade deal is signed. This is likely to be the row of 2018.”

The prime minister has done remarkably well to keep her Cabinet and her party more or less together, if not exactly united, up until now. She’s done this by postponing difficult decisions until the point at which she could plausibly claim that the only alternative was catastrophic. But it’s only going to get harder.

By Professors Anand Menon and Jonathan Portes from The UK in a Changing Europe. This piece originally featured on Times Red Box.

Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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