Thursday, 21 July 2016

How to prevent Brexit from damaging the EU

The UK has a new government under the leadership of Theresa May. The mandate of the new government, as the new prime minister stated, is to "make a success of Brexit". Although the detail of what success here means is unclear, there can be no doubt about what it means in general. It should be interpreted as keeping access to the EU single market while gaining concessions from the EU about the rights of the United Kingdom to control immigration. In other words: trying to square the circle. Something the Brexit campaigners have led millions of British citizens to believe can be done easily.
What negotiation strategy should the European Union take? Here is the choice that must be presented to the UK. Either the UK government takes over the Norwegian model or it stands alone and negotiates new trade agreements with the EU and about fifty other countries (or group of countries) in the framework of the rules of the World Trade Organization (WTO). The EU must make it clear that there is nothing between these two choices. There can be no "special deal" with the United Kingdom.
If the UK accepts the Norwegian model, it retains full access to the single market. In that case there are no obstacles for British goods and services in the EU and for EU goods and services in the UK. But the price the UK pays in this model is the free movement of EU citizens in and out of the UK. Without the free movement of people there can be no free movement of services. This is the core of the single market. Moreover, the Brits will have to accept two other things in the Norwegian model.  First, they will have to abide by the rules on standards, health and safety that are decided in Brussels without being involved in the decision making process. Secondly, they will have to contribute to the European budget.
It is very unlikely that the UK government will accept this model. The Brexit camp considers free migration and Brussels legislation as diabolic and will revolt if the UK government accepts these conditions. True there is an important faction in the new government that is attached to maintaining full access to the single market and sees few problems in accepting free movement of people and Brussels regulation. But this faction is probably too weak to counter the demands of  Brexit supporters.
I assume, therefore, that the British government will reject the Norwegian model and will try to obtain concessions from the EU that reduce migration flows, while ensuring access to the single market. Here, the EU must make it clear that a special deal with the UK is excluded. The EU must insist that the only other option for the UK is to stand on its own feet, and to start negotiating new trade deals with the EU and other countries after Brexit is completed. In other words, the UK must be treated like the US, China, Brazil, etc., i.e. as sovereign nations that insist on maintaining full sovereignty over their trade agreements. The trade negotiations between the UK and the rest will take years, if not decades. Their outcome is uncertain. It is not clear, for example whether the UK will be able to maintain free movement of services with the EU as this freedom is intimately linked to the free movement of people. But that is a problem for the Brits who have chosen to embrace full sovereignty.
Here are the reasons why the EU should not accept to be dragged down in negotiating a special deal with the UK. Some EU-countries are tempted today to also organize referenda. I have no problem in principle against such referenda. If citizens of a country dislike being member of a club, they should be able to leave. This will be better for all. There is no point in living together with people who intensely dislike each other. However, it is in the interest of both parties that the terms of the divorce should be made clear in advance.
That is why the EU should make it clear what potential exiters should expect. It will be either the Norwegian model or a “standalone-model” in which the newly sovereign nations will face the difficult task of establishing new trade agreements on their own. Clarity is essential for those who consider leaving the EU. This clarity can only be achieved by excluding a privileged trade agreement with the United Kingdom.

When the UK joined the EU in 1973 its main strategy was to prevent the union from becoming too strong. The UK political elite decided that this could best be achieved from inside the union. Now that the UK is departing the century old British strategy remains the same, i.e. to weaken the forces that can make Europe stronger. The UK can achieve this by insisting on a special deal between the UK and the EU whereby the UK maintains the benefits of the union while not sharing in the costs. Such a deal, if it comes about, will signal to other member countries that by exiting they can continue to enjoy the benefits of the union without the costs. Such a prospect would fatally weaken the European Union.

8 comments:

  1. Thanks for this enlightened comments, professor. Let's hope our European leaders read this also.

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  2. My fear is that to have any chance to gain concessions Britain will have to either, divide the EU, the nations leaders opinions or threaten with its economic weight.
    It can be very damaging. It is difficult to see why would the EU give any treatment of favour.
    Regarding EU nationals in the UK being used as bargaining chips (as have already been suggested), I can't see the UK risk having to take back retirees (i.e. a large part of the 800.000 britons living in Spain) and let go younger people contributing to their economy and Inland Revenue.

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  3. third option: the EU breaks up before UK even has to invoke article 50, and everybody wins but a few thousands of Eurocrats. Let's hope this is the case.

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    1. G Cris, do read:
      http://www.lrb.co.uk/v38/n15/john-lanchester/brexit-blues
      and
      https://www.opencanada.org/features/brexit-post-mortem-17-takeaways-fallen-david-cameron/
      and also
      https://next.ft.com/content/3cef5b22-4ec0-11e6-88c5-db83e98a590a

      The later exemplifies your stand: you give yourself the right to decide what is good for every European citizen and and you show you don't want to leave the EU you want to destroy it. Which prompts the question: why? You voted out, Britain will leave and, what business is of yours deciding for those Europeans you so desperately want to distant from? Is the fall of the EU is what most people who voted Brexit want? Most probably not. Also consider the possible consequences you seem to be ignoring: the Union, the British one could be falling apart sooner than the EU. Scotland has already made clear its position, N Ireland and Gibraltar, bastions of unionism are shaken and Wales is demanding the rebates and investments from the EU to be guaranteed by London. England was already asking for a separate parliament to Scotland and Wales...

      Those who suffer from envy don't want what you have, in their bitterness they want you not to have it. In this case a prosper union of European countries.
      There is a very good chance the EU comes out of this strengthen and reformed. We may very well end up with an impoverished Britain and a stronger EU.

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  4. I fully agree. The EU should not be forced to sell its soul to keep the UK on board. The free movement of people has been one of the most tangible benefits of European integration for ordinary citizens - including British people. A union that lets capital flow freely but restricts people from working in other countries would be cynically lopsided.

    For all my respect and admiration for the UK (only somewhat dented by recent events) I think the EU has to be very clear on this. If the Brits want to build walls, they should get used to living in the shadow.

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    Replies
    1. Surely there is room for negotiation. It is not because the British have been misled by some populistic figures and are lured into something they did not really think through that they should be punished. Let's negotiate a new model that complies with the wishes of the British people and that is also to the benefit of the EU. What might emerge of these negotiations might be a new model that is more suited for nations with concerns about the free movement of people within Europe. Perhaps this model is a sort of revamped EEC that serves as an outer shell around the EU. And if this new model would lead to other nations being tempted to follow the UK, so be it. The EU should be a union of people who really like mingling among each other, not a sort of prison where there is no escape possible.

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  5. Very nice,thank you for your post

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