Walking the Brexit trail

Despite many warnings UK decided 23 June 2016 to start walking the Brexit trail. Apart from some financial turbulence at the very start, it has so far not appeared any serious problems. But it is a long trail, they are supposed to be walking for years.

Unlike most other trails it is not known exactly where it ends. PM May has said

Brexit means Brexit and we're going to make a success of it ... There will be no attempts to remain inside the EU, there will be no attempts to rejoin it by the back door, no second referendum ... I will make sure that we leave the European Union

And concerning access to the EU´s single market and immigration:

We need to get the best deal in trade and goods and services ... I'm very clear that the Brexit vote was also a message that we need to get control on free movement. Free movement cannot continue as it has done until now

May has also stressed the importance of keeping the UK together.

Even if it seems to respect the referendum result, the PM´s description of Brexit is far from exact. The vagueness opens for a discussion about quite different perspectives. Some Brexit-hardliners emphasizes the importance of repealing the European Communities Act from 1972, which would, in practice, mean that EU legislation would become unenforceable in the United Kingdom and Gibraltar, and the powers delegated by the Act to the EU institutions would return to the Parliament of the UK. They will not join the Single Market, but instead negotiate trade agreements with the EU. Others are highlighting the need to achieve a balance between between access to the tariff-free market and the Single Market four freedoms. Voices are also advocating that by using the EEA Agreement and EFTA the UK can take part in the single market while limiting immigration. 
Statements from leaders of EU-institutions and -memberstates, eg Tusk, Juncker, Merkel, Hollande and Sapin, show both an acceptance that UK need some time for Brexit-preparations and a willingness to negotiate compromises.

While the UK is working to find out where the Brexit-trail ends, it is difficult to imagine that the country would be satisfied with a traditional trade-agreement. Because EU´s internal market and the EURO cooperation is dynamic, PM Cameron asked for and got "EURO safeguards" for UK as a non-EURO member of the EU. Cameron´s EU-deal is now history, and therefore the UK will probably need a Brexit with something more than a static trade-agreement.

Lack of Brexit plan may open for win-win solutions

When a majority voted for Brexit on 23 June, there was no plan for how it should be implemented. The lack of it has been criticized, and at an evening dinner in Berlin yesterday – May’s first foreign trip since becoming prime minister seven days ago – May stressed that she needed until the end of the year to come up with a UK position – even if that upset some EU member states.

A period with uncertainty of what the UK wants and what the EU is willing to offer is unfortunate. There are good reasons to do it as short as possible. But this situation of uncertainty also holds opportunities for solutions that can provide gains for both the UK and the EU. Even if the EU has said clearly that there will be no negotiations before UK has invoked Article 50, it seems that the process of creating a platform for Brexit will include inputs both from countries within the United Kingdom and from the EU and its member countries.

This position-building period may prove to be very important. The UK´s Brexit strategy must include both the relations between countries within the UK, between the UK and the EU and between the UK and the rest of the world. However, also the EU and the Union's member states need to identify Brexit solutions that might be useful and provide benefits for themselves. This will be difficult. However, by using the time until January 2017 to identify opportunities and establish a framwork, the basis for the Article 50 proceedings could be far better than it is at present. 

PM May seems to choose such a way of working. Yesterday, after talks with Chancellor Merkel, she said 

All of us will need time to prepare for these negotiations and the United Kingdom will not invoke Article 50 until our objectives are clear. That is why I have said already that this will not happen before the end of this year.

I understand this timescale will not please everyone but I think it is important to provide clarity on that now. We should strive for a solution which respects the decision of British voters, but also respects the interests of our European partners.

  
Shortly after May became PM she visited Scotland and had talks with SNP leader Nicola Sturgeon, and this week she visits her colleagues in Germany and France. Perhaps this can be seen as a sort of "common" Brexit preparation which will last until Article 50 is invoked.

Does UK need a dynamic agreement with the EU ?

The leave campaigns did not offer any common receipt for a Brexit before the referendum. And neither did the government. So when PM May says

I won’t be triggering Article 50 until I think that we have a UK approach and objectives for negotiations, I think it is important that we establish that before we trigger Article 50

it seems very reasonable. Invoking Article 50 without a strategy would be risky, as the negotiations will have a two-year limit unless the European Council and the Member States - unanimously - decide to extend the period.

Both the government and the parliament now explore the possibilities. Lots of ideas and preferences are presented. According to Daily Mail Ministers say they are going to secure ground-braking free trade deals with 12 countries, having a total area ten times the size of the EU, "before Britain leaves in 2019".

UK is barred from striking individual trade deals until it officially leaves the EU, but Liam Fox, the new International Trade Secretary, hopes to have agreed the terms of the new trade deals beforehand so they could take effect immidiately after Britain is no longer an EU member state.

The Ministers seem to have different views over when to trigger Article 50. David Davies, the Brexit Secretary, wants Britain to start the formal process of leaving the EU this year, but last week the PM insisted she would not trigger it until she had agreed a UK-wide approach to the process for leaving the EU.

In this process of establishing a new platform for trade the question of what kind of future relationship UK will have with the EU remains to be solved. Will trade agreements be enough, and what will the EU accept ? This is important also because the Single Market is not static, it develops every day.

The EEA-agreement takes care of this aspect. A central feature of the agreement is its dynamic aspect; the common rules of the EEA-agreement are updated continuously with new EU legislation. Economically this dynamic arrangement has served the EEA-EFTA countries (Lichtenstein, Iceland and Norway) well, but there is a democratic problem connected to it: the EEA-EFTA countries do not take part in the EUs formal decisions about the Single Market. To call it a "fax-democracy" is a good picture, but not entirely correct because the EEA-EFTA countries have possibilties to influence new EU rules. 

Switzerland rejected in a referendum to join the EEA-agreement. They do not have a fax-democracy problem. Instead - to catch up with new EU legislation - they have to negotiate new agreements every time it is needed. This is a laborious procedure for both for Switzerland and the EU.

There is not a quite obvious answer to how the UK should handle the dynamic aspect of the EU, but it is hard to imagine that they will wish for a Swiss solution. But if they go for a dynamic agreement, then it will be more or less a fax-democracy or some kind of arrangement where UK can have a say in the relevant EU decisions, i. e.  a relation which could look like a membership light. But perhaps that might be acceptable ?

An EEA kind of Brexit ?

The expert group PM Cameron established some days ago to look at possible Brexit alternatives will of course not be able to present a thick report as a welcome gift to the new PM tomorrow. But to show some ideas and possibilities with pros and cons can also be helpful as a starting point for further exploration. An acceptable solution should include three elements: EU-exit (i e invoking Article 50, access to internal market an national immigration control. To achieve this might be overly optimistic, or perhaps not.

Richard North at EU referendum has discovered that the safeguard measures in EEA-Article 112 (the "emergency brake") has been used several times for opt outs to the four freedoms, among them Lichtenstein (movement of people opt out) and Iceland (movement of capital opt out). Switzerland used Article 112 (measures to limit immigration), but its agreement was rejected in a referendum. The European Commission has also invoked Article 112 on its own account, making trade in salmon of Norwegian origin conditional upon observance of a floor price. While the Article 112 allows EFTA-countries unilaterally to take appropriate actions, EU member states have to rely on the Commission to take action.

North argues that if UK can be accepted as a member of EFTA, it can slide from EU to EFTA and still be a member of the EEA. As an EFTA member the UK is then entitled to unilaterally invoke Article 112.

But what about UK´s possibilities to influence the rules of the internal market without taking part in the EU´s decisionmaking process ("fax"-democracy) ? A policy paper from Fondation Robert Schuman argues that the UK "could explore the opportunity to revise the EEA rules so that the non-EU members ...have a right to vote .. in policies in which they participate, notably those involving the single market. In this scenario the UK would continue to participate in the internal market and apply the corresponding rules". It would also have to contribute to the EU-budget.

There are of course huge uncertainties about an EEA kind of Brexit, but a closer look might open new options - also for the EU and other countries within and outside the EEA-agreement.

Article 50 must be invoked

Contradicting most expectations and predictions a majority of the British electorate voted for Brexit. The result was a severe blow to remainers in the UK and also to the European Union. Project Fear failed, the voters used the opportunity to tell they are fed up with Brussels and want their sovereignity back.

The referendum question was: "Should the United Kingdom remain a member of the European Union or leave the European Union ? " 52 %  said the UK should leave and 48 % wanted to remain. Now the result must be implemented. But how ? Many politicians have said that the referendum result must be respected. But "respected" is a vague concept. A negotiated "leave light" agreement might be presented as the only possible solution because the consequences would otherwise be to negative. There is only one way a real exit can be legally done, namely by invoking Article 50 of the Treaty of the European Union.

Invoking Article 50 is also of great importance in the struggle for a more democratic EU and a rebalancing of power between the supranational and national level. A real British exit can stimulate "populistic" eurosceptic protests and parties across the Union and perhaps generate enough politic pressure to stop the march towards an ever closer union. It has not been successful, the Euro-crisis  and large-scale migration are now threaths to the EUs existence. The Union´s course must be changed from "more Europe" to "a Europe with added value for everyone".

Nigel Farage said Brexit would not lead to EU reforms. It is impossible to stop the Europhiles, the march towards an ever closer Union will therefore continue until the EU is destroyed. May be Mr. Farage is right. But what seems certain is that without a real British exit the pressure on the Europhiles will be watered down, and it will be harder to enforce necessary reforms.