The EU is hardly showering itself in glory among its citizens, tired of a lack of accountability and a deeply controversial migration policy. Brussels would be minded to not serve a blow to European businesses, too, just to frustrate Brexit in order to cause the UK economy to suffer. The ball’s in your court, Brussels. And if you don’t want to play? We’ll say, ‘Walk Away, May.’
By Alexandra Phillips l March 12, 2018
LONDON-The much awaited third big speech on Brexit by the British Prime Minister has been met with, as should be expected, varying responses from across the political classes and commentariat.
Rather like the Rorschach Test, where the interpretation of an ink blot is used to determine psychological disposition, the myriad views on what was otherwise a pretty clear statement of intent reveal how deep rooted Brexit panic has become amongst those who oppose it, and how optimism now fuels a desire for reconciliation from those who wish to see the job done, properly.
The Labour Party curiously proposed keeping the UK in the EU’s Customs Union (a position so curious from the self-righteous left given it supports a capitalist big business-big banking cartel rather than forging new trade policies to protect small businesses, lower the cost of living and open the door to truly fair commerce with the developing world), a model that is frankly untenable and undesirable, if not a member of the EU, as it would force British industrial strategy to be determined by Brussels and render sovereignty down to that of a vassal state. They have retorted to Theresa May’s outline by painting an apocalyptic image of division, a country wholly unable to do what the majority of other sovereign nations in the world already can; govern itself. But then nobody would ever accuse an opposition party of cynical politicking, would they?
It is quite clear Jeremy Corbyn’s strategy is to force, and win, a vote on the issue to drive a steamroller through the middle of negotiations to try to instigate May’s overthrow. That a man can be so motivated by power to turn his back on his own political ideology is telling about the current nature of the opposition in Britain, and I don’t think his pretty transparent tactics will be lapped up by the ever-discerning British public.
Of course, the microphone was offered by a headline hungry media to former Tory Deputy Prime Minister, Baron Heseltine, Patron Saint of Remoaning, to tear apart the speech, who told the left-wing Sunday paper the Observer: “The speech just moves us further down the cherry-picking road. It set out the cherries that Britain wants to pick but that approach completely ignores the fact that the EU has said, ‘sorry there is no cherry picking’.”
Well, Theresa May has a very different view, and thank goodness. As she so pertinently stated in her speech, all trade deals are, of course, cherry picking. The very nature of a deal is selective bartering, and even a quick scan of EU trade deals would demonstrate that they are bespoke, following bilateral negotiations.
The Prime Minister has stolen a march, laid down her agenda for all to see, and has now called Brussels’ bluff.
However, the EU are yet to walk into the trap that May had laid in forcing them to play the role of the villain by outright refuting her checklist publicly; a strategy increasingly weakened by political hasbeens who have their own sense of self-importance at heart above what is best for the country. Heseltine was already sacked as a Government advisor last year following a particularly piquant anti-Brexit outburst and has faced mounting clamour to have the whip withdrawn.
In response, former leader of the Conservatives Iain Duncan Smith caused parliament to erupt with laughter as he told the house, “When she gets into negotiations with her European counterparts about trade arrangements, could she remind them that cake exists to be eaten and cherries exist to be picked”.
And, according to the PM herself, what she outlined was “a vision that was ambitious” but “practically based and therefore credible”. I certainly agree.
Credible in the sense that it is an achievable and desirable outcome for both sides. The only problem is, the EU does not want the UK to be successful post-Brexit.
But it is my opinion that, whether or not a government believes it can achieve an agenda, it is right to lay down explicitly its intent. My main criticism of the current government is the U-Turn on reintroducing academically selective education at state level. Despite being a hugely popular policy among voters, the powers that be have done the maths and calculated they cannot win a vote in Parliament and thus dropped the matter. Better, I believe, to have tried, and been voted down, but able to demonstrate to the public that the will was there, is far better than to allow opposition powers to claim victory by default.
British Demands and Conditions
Following repeated demands from across the Channel that Theresa May must lay out what it is precisely that Britain wants, that is exactly what she did do, by making plain a whole array of conditions for a Brexit deal, while repeating the assertion that no deal is better than a shoddy one. Perhaps she should have had them etched onto an EdStone…
Among them, she said Britain would demand:
- A time limited implementation period –
- [ I fear this could be exploited by the EU to force punitive regulation on The City of London during a timeframe in which Britain would be subject to the EU’s rule changes without being a stakeholder in the talks.
- A bespoke trade model that does not hinder established supply chains –
- This is a pragmatic proclamation of support to transcontinental business that I expect will be roundly supported by multinationals, particularly the automotive and aeronautical industries, and thus a device the EU could not sidestep but potentially use as leverage to push through some of their own demands.
- No state aid and adherence to EU competition regulation –
- Most of which is prerequisite for any trade deal under international standards.
- An independent arbitration mechanism –
- To serve as a go-between so that neither the EU nor the UK as interested parties could be called as judges in trade disputes.
- For regulators to work together and Britain to be open to participating in various EU agencies –
- I have made clear before that the membership of EU agencies, as opposed to the institutions, is open to associate third country non-EU states, and that it would be highly unlikely that British cooperation, financial contribution, and expertise would be cynically rejected by those agencies within which the UK wishes to remain, despite the Remain camp scaremongering to the contrary.
- Similar regulatory standards –
- This again is a prerequisite of almost any trade deal between any nations and, given the starting position after Brexit is from a position of homogeneity between the UK and the EU, becomes a major argument for why a swift trade deal is more than possible.
- Customs alignments for goods that are ultimately destined for the EU and a mechanism to allow the UK to set its own tariffs and strike its own deals –
- This firmly reassures me the Government will not renege on the commitment to leaving the dreaded Customs Union.
- IT solutions to prevent a hard border with Northern Ireland –
- Right-minded people should surely realise that this is an eminently plausible solution to prevent a hard border or imposing physical infrastructure as such technology exists in clear sight across the UK and Europe for other levy collections.
- Broad energy cooperation and to stay in EURATOM as well as a science and innovation cooperation pact –
- As Theresa May pointed out, the UK has some of the world’s leading universities and capabilities in the field of innovation.
But then we came to financial services.
This is the area that has been the major sticking point for the EU and is likely to be the primary bone of contention. The City of London is at the heart of the British economy and a thing coveted by not only our continental neighbours but much of the rest of the world. It is Britain’s whip hand over international commerce and accounts for almost a quarter of the country’s GVA contributing over £350bn annually to the UK economy.
The EU in previously stating that services could not be part of any free trade arrangement is of itself cherry-picking, as the vast majority of trade deals cover both goods and services, and should be regarded as a barely veiled threat that Brussels intends to take Brexit as an opportunity to weaken the UK’s grip on the financial services industry.
Currently passporting rules allow EU finance companies to sell their services across the 28-member bloc with a local license, rather than getting a license to operate in each member country where it does business. While the fluidity of a financial single market may seem attractive to certain companies, quite rightly, Theresa May has rejected staying in the current situation as:
“If we were to accept ‘passporting’ we’d just be a rule taker, we’d have to abide by the rules that were being set elsewhere”.
There are many in The City who find the current regulation coming from Brussels already too heavy handed. However, May naturally wants financial services to be included in a free trade deal, something I expect to be echoed when the Chancellor lays out his position on the same next week.
Knowing how important the financial services sector is to the UK economy, we saw for the first time the Prime Minister exhibit a publicly hinted threat of her own as she coolly pointed out that UK located banks are currently underwriting around half of the debt and equity issued by EU companies and providing more than £1.1 trillion of cross-border lending to the rest of the EU, in 2015 alone. I would imagine that some of the other threats that could be made behind closed doors eclipse this one, particularly regarding the Bank Of England’s responsibility over major chunks of the European Investment Bank’s activities.
So, the EU demanded to know what Britain wants. That’s what this speech did. For me, there were no surprises. The majority of what she laid out was predictable, if not inevitable. There is no Brexit without leaving the EU’s institutions and jurisdiction, but this does not preclude future cooperation through its agencies, and a free trade deal, particularly starting from a position of regulatory pre-harmonisation. That is what the British people voted for and anybody believing Brexit could be anything other than what is now on offer is disingenuous and anti-democratic.
With rising Euroscepticism in Italy following the recent election results that saw 70% of voters back Eurosceptic parties, the EU is hardly showering itself in glory among its citizens, tired of a lack of accountability and a deeply controversial migration policy. Brussels would be minded to not serve a blow to European businesses, too, just to frustrate Brexit in order to cause the UK economy to suffer. With such intertwined fortunes, cutting off their nose to spite their face could provoke an angry outpouring against the EU from manufacturing and agricultural countries with a keen memory of the recent historical Eurozone crisis.
The ball’s in your court, Brussels. And if you don’t want to play? We’ll say, ‘Walk Away, May.’
Alexandra Phillips is former Head of Media for the United Kingdom Independence Party (UKIP), the political party in Britain that successfully campaigned to leave the EU and was aide to its charismatic leader Nigel Farage. She left UKIP after the referendum victory and joined the Conservative Party in order to ensure other big political ambitions are met in the U.K. She is a political advisor and communications consultant in London. Ms. Phillips is also a contributor to SFPPR News & Analysis, of the conservative-online-journalism center at the Washington-based Selous Foundation for Public Policy Research.