The authoritative source for independent research on UK-EU relations

13 Mar 2019

Relationship with the EU

As the law stands, the UK leaves the EU on 29 March, deal or no deal. If parliament wants to prevent a no deal Brexit MPs must vote for this. Should the prime minister lose another meaningful vote, as is looking increasingly likely, MPs will be given the opportunity to take ‘no deal’ off the table this coming Wednesday.

But why do so many MPs oppose no deal when there are many things to commend about it, not least that it avoids a delay to Brexit and delivers on the result of the referendum? A no deal Brexit would also be a ‘clean Brexit’, no need to fulfil those obligations the EU will impose on the UK which are within the withdrawal agreement.

no deal Brexit means no Irish backstop. Both sides have said they don’t want a hard border anyway, so that’s taken care of without the need for an agreement. No deal means no transition period during which the UK becomes a ‘rule taker’ and abides by EU rules but has no representation in the EU institutions.

Without a deal, new trade agreements that symbolise ‘Global Britain’ become a reality sooner. Missing tariff-free access to our market, German car manufacturers will put pressure on the Commission to quickly agree a UK-EU free trade deal to help fend off the impending economic downturn facing the Eurozone.

Looked at this way, no deal sounds appealing and delivers exactly what has been promised, a Brexit on time that gives the UK everything and without the continuing regulatory shackles of a withdrawal agreement.

However, before those who support no deal get carried away, they should pause and reflect on what a no deal Brexit entails. Above all, it means the UK entering a legal and regulatory vacuum, with no Transition period and existing rules immediately cease to apply without Parliament having replaced them with UK laws.

To address this scenario the government has introduced bills covering trade, agriculture, fisheries, immigration and financial services, but these bills face major parliamentary hurdles and will not be on the statute book by 29 March, making a Transition all the more important.

Even in the event of a no deal and without this legislation it would be wrong to assume that MPs would suddenly be won over to cooperating with the government and deliver a ‘managed no deal’. The UK would cease to function as a state.

Without a parliamentary majority and no agreement amongst MPs on the way forward there will be paralysis in Parliament. Legislation which controls our borders or access to fishing rights, which would be required immediately, is unlikely to be passed by MPs, undermining the argument that a no deal Brexit is the easiest way to take back control.

Perhaps the most important piece of legislation, in the event of a no deal Brexit, is the Trade Bill which would provide the legal basis for the UK’s future trade agreements. For UK trade, a no deal Brexit means a cliff edge Brexit.

There is no transition and the UK immediately abandons 45 years of rules-based cooperation which governs our trading relationship with the EU and encompasses 36 free trade deals, spanning more than 60 countries. As things stand, the UK has rolled over less than £20bn out of £117bn total value of these trade deals.

The frequent response of those who advocate a no deal Brexit is that the absence of UK trade laws or failing to roll over existing trade deals will not present a problem as the UK can simply fall back on WTO rules. But even this logic fails to grasp the point that the WTO, like the EU, is a rules-based trading organisation. As the Telegraph reported on the 6 March, the cabinet is split on how to respond to a no deal Brexit after which the UK would be trading on WTO rules.

Liam Fox has been accused of keeping “secret” a government plan which would cut up to 90% of tariffs from all WTO countries in the event of a no-deal Brexit. A sensible policy, in the short term, no deal supporters may say, and they may be right.

This would keep goods moving and consumer prices would remain stable. It also demonstrates the UK’s free trade credentials. However, a cautionary note should be sounded because such unilateral liberalisation of tariffs would be likely to have significant impact upon sectors of the UK economy, such as farming, which would struggle to compete against cheaper imports.

However, when it comes to negotiating future trade deals, unilateral liberalisation, as a knee-jerk response to a no-deal Brexit, will become a real obstacle. Those short-term benefits of tariff liberalisation would come at the longer-term cost of undermining the UK’s negotiating position in any future trade talks. Having already removed tariffs on a large range of goods, there will be little left for the UK to use as a bargaining chip.

Replacing EU laws with UK legislation within the Article 50 period was always going to prove challenging. Once the PM lost her parliamentary majority the task became monumental and with less than three weeks to Brexit day, the UK is missing key legislation, not just in trade, but in immigration, fisheries and agriculture.

UK legislation in these policy areas, for the first time since 1973, has come to symbolise the mantra of parliament ‘taking back control’, but taking back control was never meant to be this problematic, was it?

In the coming days, MPs are faced with difficult choices. If MPs believe no deal remains a viable option then they must explain how, without a Withdrawal Agreement and the necessary UK laws in place, the UK will meet its international obligations over the Irish border or how the UK will conduct trade relations on WTO terms.

But, MPs who want to take no deal off the table should also pause. Yes, extend Article 50, but be clear to the voters for what purpose?

The withdrawal agreement has many faults, but as the EU repeatedly states, it is the only show in town. Above all, it avoids a regulatory cliff edge and provides for a transition essential to an orderly Brexit and getting through Parliament the legislation still required.

The advice to MPs should be ‘vote for the agreement and leave the EU in an orderly manner’. Then, MPs across the Brexit divide can regroup for the next stage of negotiations on the future UK-EU relationship, because this is when things will really get tough.

By Professor Adam Cygan, Professor of EU Law at the University of Leicester and Research Leader at The UK in Changing Europe. This article originally appeared in the Telegraph.


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