Brexit talks


San Fulgencio
November 28, 2016

Dear Editor
The Daily Mail called Lord Thomas, Sir Terence Etherton and Lord Justice Sales ‘enemies of the people’ for their ruling in the High Court that the executive requires the permission of Parliament before triggering Article 50 of the Lisbon Treaty.
Instead of calumny, the three judges should receive plaudits for their decision and be regarded as defenders of the British Constitution and the sovereignty of Parliament.
Using the anachronistic Royal Prerogative to start the process of leaving the EU would set the precedent of a referendum being determinative rather than consultative. This would be the first step on the road to government by plebiscite; at best, a ridiculously expensive process, at worst a recipe for chaos. It would dramatically change the delicate balance that is the British Constitution and undermine the sovereignty of Parliament, a principle underpinning many of the votes for exit.
The immediate task of the British government is simple: to determine its objectives in the forthcoming ‘negotiations’ and formulate a strategy, before then presenting Parliament with an Enabling Bill to trigger Article 50. (Calls for the government to outline its ‘plan’ or to involve the electorate in determining the shape of the plan are ludicrous. It is absurd to reveal your strategy to the other side prior to the start of negotiations.)
If it be true that the present composition of Parliament has a majority in favour of remaining in the EU, then this enabling legislation could be voted down. Edmund Burke, the philosophical founder of modern conservatism, told the electors of Bristol in 1774: ‘Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.’
Should Members of Parliament lack the courage of their convictions (and I suspect they will), the difficulties start when Article 50 is invoked. Arguably, the UK does not need a ‘plan for Brexit’ and formal ‘negotiations’ between Britain and the EU are irrelevant.
Clause 4 of Article 50 reads:
For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.
This means that the EU has the final say on the terms of the withdrawal ‘agreement’ and can determine the shape of that agreement without reference to British opinions, should it so desire.
Of course, in practice, there are too many vested interests at stake for the EU as a whole, or individual countries within the Union, to ignore British opinion. In 2014, seven out of the UK’s top ten trade partners were from the EU; all of them, except the Republic of Ireland, had a trade surplus with Britain, a situation that has prevailed since at least 1994.
This fact was presented by the Leave Campaign as a reason why the EU cannot afford to be too draconian with Britain.
The argument has some force, but is far too simplistic. In 2014, Britain had a $28 billion trade deficit with Germany, exporting $43 billion worth of goods and importing $71 billion (Office for National Statistics). Our top two exports to Germany were cars and petroleum products.
Guess what the top two imports from Germany were? That’s right… cars and petroleum products. The modern global economy is unbelievably complex and we don’t know the half of it!
Of course, trade between Britain and the EU will be affected by Brexit, whatever the final deal. It seems reasonable to expect a decline in imports and exports between the two, especially as the British export sector (which, according to the Observatory of Economic Complexity, is ‘extremely efficient’) will then be free to seek alternative markets.
However, it will not be the case that Britain and Germany, for example, will suddenly decide to stop trading with each other as a consequence of Brexit. It is simply a question of scale and the availability of alternative sources for goods. Certainly, Germany has ‘more to lose’, but it is perfectly feasible that British exports to Germany could suffer a greater decline than German exports to Britain.
The truth is that nobody knows!
The final agreement has to be passed by the EU with a ‘qualified majority’ as defined by Article 238(3b) of the Treaty on the Functioning of the European Union. This entails 55% of member states voting in favour, with those states representing 65% of the total population of the EU.
Clause 4 eliminates the UK from the equation which, in practice, means 15/27 states with a combined population approaching 300 million need to vote in favour of the agreement. If only four member states representing more than 35% (about 157 million people) vote against, the motion falls (the blocking minority).
The situation is further complicated if the final agreement cuts across policy areas within the preserve of the member states, such as certain elements of services, transport and investment protection. This is classed as a ‘mixed agreement’ and requires additional ratification by every national parliament in the EU.
EU Treaties would also need to be amended in the European Parliament to reflect the UK’s departure. So, in effect, a negotiated UK exit from the EU might require ratification via a ‘qualified majority’ vote, a majority in the European Parliament and, in the event of a ‘mixed agreement’, a unanimous vote across the 27 national parliaments in the EU.
The EU is not a homogenous institution, and this can be used to Britain’s advantage. Arguably, bilateral talks between the UK and individual EU states will be far more important for success than formal negotiations with the Council.
For example, there are 2.9 million EU nationals living and working in the UK (as opposed to 1.2 million UK citizens living in the rest of Europe). The top five European states with nationals living in Britain (all with more than 150,000 people, Poland having by far the most with 800,000) have a total population of 133.6 million people (Wikipedia).
Assuming they would look favourably on Britain for the sake of their citizens, this would already give the UK the makings of a blocking minority in the event of a negative deal being proposed by the EU Council.
Elections are due in 2017 in the Netherlands (March), France (June) and Germany (October). There are strong anti-EU sentiments in all of these countries. A Le Pen victory in France could even see the end of the European experiment and, even if Fillon wins, he cannot afford to ignore the estimated 60% of French voters opposed to the present structure of the EU. (The Independent)
Harold Wilson said that a week is a long time in politics. Before the referendum, President Obama indicated that US trade with Europe would be a higher priority than trade with the UK. January 20 will see the inauguration as President of a professed Anglophile, Donald Trump. In 2014, the USA was our top trade partner, representing 17% of all our exports ($88bn) and 9% of imports ($52bn). With a Trump White House, the odds on improving those figures and striking a trade deal after Brexit are likely to have shortened.
The odds must also have shortened on a successful outcome for the UK, though I do not envy the British team of negotiators their task. The next two-and-a-half years should, indeed, be interesting times.

Yours sincerely
Joe Pilkington

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