Severing ties

Britain’s “Brexit” Secretary David Davis resigned on July 8 because he was not willing to be “a reluctant conscript” to Prime Minister Theresa May’s plans to leave the European Union. The late-night resignation was praised by “Brexit” campaigners in May’s Conservative party, who felt her plan to press for the closest possible trading ties with the European Union had betrayed their desire for a clean break with the bloc.

Last Friday, the UK government agreed a proposal that would see the United Kingdom and the EU establish a free trade area for goods. This would require the UK and EU to maintain a “common rulebook” for all goods. It would also introduce a “facilitated customs arrangement”, whereby the UK would collect tariffs on behalf of the EU, removing the need for border checks with the rest of the bloc.

“In my view the inevitable consequence of the proposed policies will be to make the supposed control by Parliament illusory rather than real,” Davis said in a letter to May. “I am also unpersuaded that our negotiating approach will not just lead to further demands for concessions.” In a letter to Davis, May said she disagreed with his characterisation of the cabinet’s decision. Davis has now been replaced by Dominic Raab as “Brexit” Minister.

May’s “Brexit” plan faces a battle on three fronts. The resignation of Davis will embolden hardliners in her party who say the Prime Minister’s proposal to quit the European Union is too soft. But opposition parties still think it’s too hard, and Brussels is bound to want more concessions. With less than nine months to go until Britain leaves the bloc, it’s getting harder to envisage a compromise.

May’s cabinet is split between those who are determined to sever ties with the EU, and those who want to limit the economic damage of “Brexit”. The plan agreed at her country retreat on Friday is therefore a tangle of contradictions. Britain will leave Europe’s customs union and single market, but sign up to EU rules for trade in goods and agriculture. It will have the right to set its own tariffs, but also collect duties on behalf of the bloc. British courts will make their own judgments, but take account of decisions by their European counterparts.

Supporters of “Brexit” – Davis included – think this is unacceptable. The plan will tie Britain to the EU, but strip it of the influence that full membership brings. Opponents of “Brexit” dislike the plan for the same reasons: they think it would be better to stay in. Moreover, the proposal is merely a starting point for negotiations with the European Commission, which is likely to reject parts of it as unworkable and demand more compromises. That will further ratchet up the tension in May’s party.

The Prime Minister could face more resignations, and a challenge to her leadership. But supporters of a harder “Brexit” do not have a plan which can command a majority in Britain’s parliament. The opposition Labour party will take any opportunity it can to weaken May’s minority government, and probably oppose any deal she presents.

As the clock ticks towards March 2019, the risks of a chaotic “Brexit”, where Britain crashes out of the bloc without a deal, are rising. So, however, are the chances that its departure is delayed, if parliament cannot agree and the government is forced to beg the EU for more time. Businesses eager for greater certainty face an agonising wait.

Alan McQuaid (9/7/18)
Economist