John Bruton

Opinions & Ideas

Category: BREXIT (Page 1 of 4)

CAN BREXIT TAKE PLACE WITHOUT EITHER MAJOR TRADE DISRUPTION, OR SERIOUS DILUTION OF THE EU LEGAL ORDER?

Brexit is a British decision.

It means that Britain is seeking to withdraw from a contract it made with the other EU members, on the basis of which those countries opened their markets to British business, in a way it was not opened to other countries. That was the deal.

In business, if one unilaterally withdraws from a contract, one does not normally expect to continue to enjoy all the benefits of the contract, afterwards.  One expects to have to make good some of the losses incurred by the other party.

But that is not how British public opinion sees Brexit. It IS how it is seen by the 27 partners of the UK in the EU.

This difference in perspective is at the root of the difficulties in the present negotiation.

The EU has developed, and maintained, an integrated Single Market for business because it has a single unified system for making, interpreting and enforcing a single set of rules.

The Single Market is deepening all the time and new fields of business are being made the subject of common rules, thereby opening new markets. This will not stop when the UK leaves.

Common rules are what keeps the EU together.

They derive from the EU Treaties, which is like a written constitution. It is difficult to amend. The UK, in contrast, has no written constitution, and there is no similar constraint on the UK Parliament.

So UK often looks at problems purely politically, while the EU has first to look at them legally. This causes misunderstandings. UK Ministers sometimes think that a political understanding with France and Germany will be enough to overcome its problems with the Commission, but that is not the way the EU works. France and Germany, and the Commission, are all subject to a common set of rules. This rule based system protects smaller countries and has been the secret of the EU’s success.

The recent Chequers decision by the UK Cabinet says the UK will keep to the  common EU rules for goods, but goes on to say that the

“UK Parliament would still have a lock on incorporating these rules in the UK legal order by not passing the relevant legislation”.

This is giving with one hand, and taking away with the other.

So, even if the UK and EU standards were the same at the outset, they could diverge substantially, depending on the vagaries of British politics. Ultimately the UK Parliament can do what it likes.

The UK will not be part of the EU legal order. This builds uncertainty into the proposed arrangement, and is bad for business.

This let out clause means that border controls might not be there at the outset, but might have to be reintroduced.

This is a critical issue for Ireland, where the reintroduction of border controls on the 300 mile boundary would be both provocative and impractical.

That is why the EU wants the Northern Ireland issue agreed before the UK leaves the EU.

The UK wants to take back control, but EU needs to have control too.  This point is not always understood in London.

The EU is 27 countries, and all their Parliaments will have accepted any eventual trade deal with the UK. This makes the sort of” flexibility”, the UK says it would like, difficult to obtain. Getting unanimous agreement of all EU Parliaments to a future EU trade deal with the UK will not be easy.

That was illustrated by the difficulties in ratifying recent Agreements with Ukraine and Canada, when extraneous domestic issues were used in Belgium and the Netherlands to delay ratification.

If the Commission wants a deal with the UK that will pass in all 27 Parliaments, it will have to exercise great care.

Patience will be required. Sound bites will not always be a help.

But before we even get down to detail on trade, there will have to be a Withdrawal Agreement.

80% of the text of the Withdrawal Agreement is already agreed, but 20% remains to be settled. Among the issues that are not settled is the

“backstop” to prevent a hard border in Ireland.

Here the EU has put forward the proposal that

“Northern Ireland remains in a common regulatory area for goods and customs with the rest of the EU”.

It has said it is ready to improve the text of this proposal, if the UK has suggestions to make. But such suggestions need to be within the parameters of what the EU has proposed.

This is difficult for the UK for various technical and political reasons, not least because England and Wales, but not Northern Ireland, voted in the Referendum to leave the EU’s common regulatory area.

Opinion on this in the UK is changing, but only very slowly.

The implications of a hard Brexit are only now being contemplated by most of the people who voted Leave in 2016.

In 2016, these people saw Brexit as an emotional assertion of national identity, rather than as a concrete proposal that would change their lives and livelihoods irrevocably.

I believe UK public opinion needs more time to consider if Brexit is really the best way to express their national identity, and more time to fix some of the inequities in British society that prompted people to vote Leave in 2016.

That why I have argued, in an earlier column in this paper, that the period of negotiation under Article 50 should be extended.

This could happen if the UK asked for it, but asking for it would require both immense courage on the part of the UK government, and a constructive response from the UK opposition.

It is hard to see evidence of either yet, but they could emerge if there is a crisis.

 

 

 

Brexit and the island of Ireland: the all-Ireland economy and the border question

THE DAWNING REALITY OF BREXIT

At a conference last week, I heard Owen Patterson, Conservative MP and former Secretary of State for Northern Ireland, say that the UK should renege on the “backstop” agreement on the Irish border, given by Teresa May to EU negotiators.

He admitted that Irish public opinion ”hates Brexit”, yet seemed to expect the Irish government to make Brexit easy for the UK! That is naive.

At the same event, Lord Alderdice, former Leader of the Alliance Party of Northern Ireland, said the Good Friday Agreement came about because the protagonists put the emphasis on developing new relationships between the communities in Northern Ireland, rather than on detailed rules and economic questions.

It seems to me that the absence of this sort of broad thinking, in the UK about the EU,  led to Brexit. UK public opinion saw joining the EU as a business transaction, rather than as a long term relationship building exercise.

When David Cameron decided to have a referendum on leaving the EU, it did not occur to him to call a meeting of the British / Irish Intergovernmental Conference, set up under the Good Friday agreement, to explore how this might affect relations between the UK and Ireland, between North and South and, consequently, within Northern Ireland.

This was myopic. It demonstrated a lack of seriousness, which persists.

 A similar myopia affected the UK relationship with the EU as a whole. UK decision makers saw the EU in purely functional terms, rather than as a means of developing new relationships.

The UK still hopes to negotiate access for itself to the UK Customs Union and Single Market, without joining either of them, and without allowing the freedom of movement of people that all EU members grant to each other, or accepting that the rules will be interpreted by the European Court of Justice(ECJ).

This is unrealistic. Any dilution of freedom of movement would require an amendment of the EU Treaties which would require the unanimous agreement of all 27 EU states. This will not be forthcoming. The ECJ is essential to ensure uniform interpretation of market rules, especially in services.

UK politicians and opinion formers forget that the EU is a rules based organisation, with a common system for making, interpreting and enforcing the agreed rules. In this, the EU is different from other international organisations.

The Treaties founding the EU are the equivalent of a written constitution, which is hard to amend. As the UK has no written constitution of its own, it finds this difficult to accept. These differences in perspective between the EU and UK will continue to cause trouble, unless UK politicians educate their electorate about the nature of the EU.

At this stage in the negotiations, the UK is seeking to interpret Article 49 of the Joint Report, the so called “backstop”, to cover the whole UK, and not just Ireland.

The wording of the Article is as follows;

  1. The United Kingdom remains committed “to protecting North-South cooperation and to its guarantee of avoiding a hard border. Any future arrangements must be compatible with these overarching requirements. The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all island economy and the protection of the 1998 Agreement.”

Reading the paragraph as a whole, it is clear that it is about Ireland, not about the two islands.

In any event, there is no possibility of the other EU countries allowing the whole UK to enjoy the benefits of full access to EU markets simply by aligning its rules, but without allowing free movement of people and accepting the jurisdiction of the European Court.

The UK government is committed to having a frictionless border in Ireland and is considering two possible customs arrangements with the EU to achieve this.

One is called a “Customs Partnership”, which would see the UK collecting the EU tariffs on goods entering the UK, but destined for the EU, and then passing the money on to Brussels. It is hard to see the EU sub contracting its revenue collection to an external power over which it had no control. The Palestinian experience of subcontracting its revenue collection to Israel has not been a happy one.

The other customs option, called “Maximum Facilitation”, entails doing the customs controls, currently done at the border, remotely using technology. This technology is untried and there would be data protection and privacy concerns. It would still entail the preparation of customs declarations for all consignments of goods. This bureaucracy will add between £17 billion and £ 20 billion the business costs, or £32 per declaration, according to the UK Revenue authorities. This will make trade unprofitable in many cases.

The fact that, even at this stage, the UK has not made up its mind between these options, and has not yet made a detailed proposal is disquieting.

The EU will not be bounced into agreeing a half baked proposal, presented just before the Summit,  which attempts to evade the consequences of the UK’s own decision to quit the Single Market and Customs Union.

Those decisions were taken by the Prime Minister, not by Parliament, and should be reversed.

BREXIT…AN ONGOING SOURCE OF FRICTION

“The problems of Brexit will not end, but will intensify, after Brexit day.

It is unclear in what the direction the UK is setting sail, but clearly it will be moving further and further and further away from its closest neighbours. This will have cultural and political, as well as economic, consequences.

The Withdrawal negotiations, and the negotiation of some kind of replacement UK/EU relationship, will divert limited talent and time from constructive purposes, in the civil services and parliaments of  all of Europe for years to come.

That is a tragedy, inflicted on all of Europe by one country, notwithstanding that country having had a voting say in the EU for the last 44 years.

It is not as the EU has not already enough to do, apart from Brexit, on issues like

  • migration
  • rule of law,
  • eurozone governance reform,
  • relations with Russia,
  • defence policy, and
  • the completion of the single market.

Ireland must contribute vigorously to EU action on all these questions.

We cannot just talk and think about Brexit, however tempting that may be.

I fear the negotiation of a new Agreement, which will take years, is liable to generate new sources of friction between, and within, both the EU and the UK. 

EU unity in the negotiations, and the initiative power of the Commission which underlies that unity, should be supported”

 

MRS MAY’S SPEECH

My first reaction, watching Theresa May’s speech, was that The UK is going to put itself, and all the other EU countries, to a lot of trouble, so that it can leave EU, and then simultaneously rejoin it in selected areas.

It wants a partnership with the EU on Customs, on state aid and competition, on transport, on energy, broadcasting, financial services, atomic power, aviation,  on the enforcement of court judgements and a long list of other fields.

As an EU member today, it already has a partnership with the 27 countries of the EU on all these things. This was worked out painstakingly over 45 years of UK membership of the EU. It now wants to tear that up and negotiate a new partnership on all these different questions. And it wants to get the job done within two years.

All this is being done in the name of “taking back control”, but it looks to me that, in many areas, control is being taken back, only to be given away again immediately. A lot of work, for very little product!

Just as Gordon Brown had five “tests” for joining the Euro, which were so loose that he could interpret them any way he liked, Theresa May has five tests for an acceptable Brexit outcome, which will mean different things to different people. In fact, they sounded more like the introduction to an election manifesto, than a prism through which to measure the success of a negotiation on some of the most technical and specialist of legal topics.

Originally the UK was promising a frictionless border in Ireland. Yesterday, Mrs May seemed to retreat from that, speaking of a border that would be

“as frictionless, as possible”.

Her idea of a Customs Partnership, to avoid a hard border in Ireland, seemed like a smuggler’s charter.

She envisages the UK having different rates of tariffs on goods entering the UK, to the tariffs charged on goods entering the EU.  That is the whole point of leaving the Customs Union. She then suggests that the UK would charge the UK tariff on goods “intended” for the UK, and the EU tariff on goods passing through the UK but “intended” for an EU country (most likely Ireland).

In this way, she hopes no customs checks would be needed at the Irish border, or in Irish ports. The scope for abuse, and exchanging of goods, seems to be unlimited here.  Consignments could be substituted for one another, and there would be no check on them when they crossed the Irish border. Such an arrangement would very difficult to police, and is unlikely to satisfy the EU Customs Code.

If the EU and the UK are to have different rates of tariff,  her idea of exempting what small businesses along the Irish border from any control at all seems like an invitation to smuggle.

Presumably, Mrs May will want the EU Customs Code amended to take on her ideas. But if that is done, similar concessions will be demanded along all the other borders to which the Customs code applies, such as the EU borders in Eastern Europe. Mrs May should not forget that whatever she negotiates will have to be approved by all 27 EU countries

The most valuable test that Mrs May wishes to apply to a Brexit agreement is that it should be one that would endure, and not require constant renegotiation.

But she said things elsewhere in her speech that will make it very difficult to pass that test.

She stressed that any Trade Agreement with the EU could be changed afterwards by the UK Parliament. That is a recipe for instability. At the moment the UK Parliament cannot over rule an EU rule to which the UK had previously agreed. After Brexit, that would longer be so, and, as result, business would know that everything about any future UK/EU trade agreement would be subject to the vagaries of British politics. British politics has already forced the UK to renege on 45 years of Treaty based agreements with the EU. So a mere Trade Agreement in future will not be a solid base for investment.

Every time the UK Parliament tries to go back on something in the Agreement, there will have to be a new negotiation.

Furthermore, Mrs May ruled out the UK Courts accepting the decisions of the European Court of Justice (ECJ) on many disputed matters. The best she could say is that the UK Courts would “look at” ECJ rulings, before making their own British decisions.  That means that UK interpretations will gradually diverge from standard EU/ECJ interpretations. When that happens, renegotiation will be inevitable.  

She advocated, instead of accepting ECJ jurisdiction, the idea of an “arbitration mechanism” that would be independent of the EU and the UK. That might work for a country which trades a limited number of products with the EU.  But Mrs May herself said that she wants an agreement with the EU that would cover more subjects that any trade agreement anywhere else in the world.

An arbitration mechanism, covering the vast range of EU’s dealings with the UK, if it is to be truly independent, would soon become a rival to the ECJ. It could develop a different interpretative philosophy to the ECJ.  That would undermine the common legal order of the EU, and is unlikely to be accepted.

One of the tests that Mrs May set for an acceptable Brexit, was that it would be one that would strengthen the Union between the four “nations” that make up the UK.

But the process of Brexit itself is having the opposite effect.  In the way the referendum was set up, a majority of English and Welsh “leave” voters were allowed to overrule “remain” majorities in the two other “nations”, Scotland and Northern Ireland.

The Brexit Referendum was a crude exercise for English power, to satisfy a purely English political agenda.

There is growing dissatisfaction in the devolved Assemblies, including even in Wales, about the way Westminster is making decisions on EU related matters, that are the prerogative of the Assemblies in Edinburgh, Cardiff and Belfast.

It is good that Mrs May’s speech, at last, got into some detail in her speech. This will have had some educational value for her Party. But the text of the Withdrawal Treaty is not yet agreed, and that must be done before the substantive negotiation can begin.

But the fact that the UK has not come up with a legal text of its own, to reflect the agreement Mrs May made in December  on the Withdrawal Treaty with Michel Barnier, but is still criticising the EU version virulently,  shows that we have long way to go on this unproductive and time wasting road to Brexit

 

CAN THE FORCED MARCH TOWARDS BREXIT BE STOPPED?

Can the forced march, towards a hard and deeply disruptive Brexit, be stopped?

Part of the difficulty with the Brexit crisis is that the two sides are approaching the negotiation with radically different assumptions.

For the UK government, it is a purely political exercise. This explains why the UK government is setting out its negotiating position, to the extent that it has one, in political speeches and briefings. It is as if the whole thing was a PR exercise. Thus UK leaders are attracted to ambiguous political buzz words like “bespoke solutions”, “frictionless borders” and “imaginative thinking”

For the EU side, things are very different.  For the EU, the issue is a legal one, where understandings reached with the UK must be converted into legal texts, which will be watertight, and able to stand scrutiny in the European Parliament, and in Ministries of all 27  EU states. The EU will insist that precedents not be created for the UK, that would lead to similar demands either from existing or from prospective new, EU member states

The EU sees the European Treaties, which the UK signed 40 years ago, as a contract between nations. The EU sees them as similar to a contract between private parties. Withdrawing unilaterally from a private contract is not something you can do for free, especially if the other parties to the contract undertook costs expecting you would keep your side of the contract. In private business, the party unilaterally pulling out of contract would be the one offering compensation.

The UK does not see it this way at all. It sees the EU as a sort of club, where one can just decide not to renew one’s subscription and leave. The UK sees things like this because the nature of the EU, and of the political obligations the UK undertook when it joined it, have never been explained to the British public by British politicians.

Any country wishing to join the EU, and there are numerous candidates, is told, at the outset of the negotiation, that it must bring all its relevant legislation, including its customs rules, into full compliance with the EU “acquis”. So a precedent, that granted exceptions from this, to a country that was voluntarily leaving the EU, would undermine the EU position in future enlargement negotiations.

The UK approach to the issue of the border in Ireland illustrates the UK’s superficial understanding of the EU Customs Code, even though the UK had a hand in drafting it. For example, some in the UK think one can comply with the code, simply by checking electronically the number plates of goods vehicles crossing the border.

As I understand it, the Code requires that a sample (2/3%) of goods, crossing into the EU Customs Union, must be physically examined.  Whether this happens at the exact geographic border, or some miles away at a depot, the effect will be highly disruptive.

Many cargoes will contain a mixture of components, from different countries to which different rates of EU tariff may apply, so these cargoes of mixed goods will have to be checked.

Food imports to the EU will have to be examined with particular care, to see that they comply fully with EU rules in regard to pesticide residues, additives, GMOs and hygiene. Food safety is a highly sensitive issue politically.  Even if the UK, once it has left the EU, has the same, or similar, rules on food safety, it will no longer be subject to EU enforcement of these rules within the UK.

So the EU will have to check UK originating goods rigorously for itself, on its own territory. “Good faith” will not be enough, because the EU writ will no longer run in the UK.

The tragedy of what is happening on Brexit is that it is an abandonment of a fundamental UK constitutional principle, which is the ultimate sovereignty of Parliament.

Under this principle of parliamentary sovereignty, no Parliament can bind its successor.  There is thus an inbuilt capacity for Parliaments to change their minds over time, in the same way as voters can change their minds. This flexibility, inherent in Parliamentary sovereignty, used to be an expression of historic British pragmatism.

Now that is gone.

A referendum decision, taken without a full understanding of what a “Leave” vote meant, is being deemed by both major Party leaders in Westminster, as holding Parliament in a vice like grip.

MPs are no longer free. They will be presented with a fait accompli, and told by the two leaders, on pain of deselection, that they may not reopen the referendum decision.

The only place in which this fateful march towards disaster can be stopped is in Westminster itself. It cannot be stopped in Dublin or in Brussels.

Here the politicians of Northern Ireland bear a heavy responsibility, on which they will be judged by history.

Brexit changes the constitutional status of Northern Ireland, without the consent of its people. But the politicians that Northern Ireland voters elected to Westminster, either refuse to take their seats, or back Brexit uncritically, in defiance of the balance of opinion in Northern Ireland.

There is no voice or vote in Westminster for the majority of Northern voters who voted to remain.

If Sinn Fein took their seats in Westminster they could change the dynamic of Brexit  and of the future these islands for generation to come. This is what Irish Nationalist MPs were able to do in 1910.

Just as today’s historians still debate who did what, between 1910 and 1922, similar questions will be asked for years to come about who rose to their responsibilities on Brexit in 2018 and 2019.

Do Sinn Fein MPs really want to be asked, in twenty year’s time,

“Where were you in 2018, when Westminster broke its word, and voted to reimpose a border in Ireland, because it insisted on leaving the EU Customs Union?”

and to have to answer,

“I was sitting at home, because my principles would not allow me to use the vote that I had”.?

The welfare of the people of this whole island, at this critical moment in history, is at stake.

 That should prompt rexamination of republican abstentionist doctrine. Of course this is not easy. But  the policy has  been changed before, for arguably far less immediately important reasons.

 

Bruton calls for Brexit negotiating extension

John Bruton, Speaking to RTÉ’s Morning Ireland today.

Former taoiseach John Bruton has called for the two-year Brexit negotiating period to be extended.

Mr Bruton, who is also a former EU Ambassador to the United States, said the time limit is too short and any agreement reached will have to be ratified by the UK and EU parliaments, which also takes a lot of time.

Speaking to RTÉ’s Morning Ireland, Mr Bruton said that pressure for negotiations is too great and that mistakes are inevitably made, when insufficient time is given to negotiations.

Mr Bruton added that the time pressure is adding to a “fevered atmosphere” in British politics, with just over a year left before the negotiating period ends in March 2019.

He warned that Ireland would suffer as much as the UK, if the right deal was not reached.

Mr Bruton said there is a provision for the extension of the two-year negotiating period in Article 50.

He said that there are some downsides to the idea of extending the period and it would have to be reached unanimously.

However, he said the possibility of extending the period would allow for more rational discussion and a better outcome.

 

 

TWO YEAR PERIOD FOR NEGOTIATING BREXIT CAN, AND SHOULD, BE EXTENDED

I am delighted to be invited to speak at this important launch.  I congratulate Skoda on the recent rapid growth in sales in the Irish market.

I would like to talk this morning about Brexit.

I believe that Brexit will do disproportionate damage to the motor industry, which is one of Europe’s premier industries. It depends for its efficiency on complex supply chains, and these will be disrupted if the UK Government persists with its intention to leave the EU Customs Union and Single Market.

The risk of the UK simply crashing out of the EU remains high. The fact that Mrs May has had to postpone her planned speech on Brexit, points in that direction.  So does her slap down of Philip Hammond for saying that the changes in the EU/UK trade relationship would be “modest”. That slap down is hardly consistent with her promises in regard to the Irish border, which still have to be converted into Treaty language.

The gap between popular expectations and practical possibilities remains dangerously wide.

The two year time limit to conclude the negotiation of the terms for UK withdrawal from the EU is, as we are slowly learning, far too short.

The implications of UK withdrawal have not, even yet, been fully discovered by the negotiators on either side. New complications and hypotheses are emerging every day. These arise because we are only now digging down into 40 years worth of trade deals, memberships, and understandings, which the UK can only be part of, so long as it is in the EU.

It would be in the interest of Ireland if the UK were to decides either not to leave the EU at all, or, failing that, decides to rejoin the EU, on terms acceptable to Ireland.

How might this happen? This is the question I am attempting to answer in a paper to be published today by the Institute of International and European Affairs.

The UK hopes to leave the EU on 29 March 2019 but to continue to have access to the EU market for a two year Transition Period, ending on 29 March 2021.This date was presumably chosen because it is before the scheduled date of the UK General Election.

I believe this Transition Period approach is a mistake. I believe it would be simpler and wiser for the UK and the EU to agree to extend the period for negotiation under Article 50 by two or more additional years. This can be done by unanimous agreement.

DISADVANTAGES OF THE PRESENT” TRANSITION PERIOD” APPROACH

At the moment, the UK is seeking a two year transition period, after March 2019, during which, having left the EU as a member,  it would still enjoy the benefits of membership of the EU Single Market, and Customs Union. Some in the European Parliament have said the longest Transition the UK might be granted is 3 years.

If this is conceded, the U K, for the duration of the Transition, would not then have any say in the making, and in the interpretation of the rules of the Single Market and Customs Union, with which it would have to comply. It would still be subject to ECJ jurisdiction, and would still be contributing to the EU budget, on the same basis as if it was a member.

The UK Prime Minister calls this proposed transition period an” implementation” period.

Businesses in the UK and in the EU, and particularly Irish businesses trading with the UK, would presumably be expected to be implementing changes in their business practice to accommodate themselves to the sort of arrangements that would apply, in March 2021, when the UK had actually left both the Single Market and Customs Union, as Mrs May desires.

The difficulty will be that no one would know for sure what to prepare for.

The Transition would be more of a Postponement than a Transition!

This is because the  EU and the UK could only start substantive negotiations of the terms of a future UK/EU trade deal at the beginning of transition period, because the UK must first become a non member of the EU, before it can negotiate a trade deal with the EU.

On the other hand, as a non member and during the Transition Period, the UK would also have to negotiate replacements for the hundreds of  Trade and other Agreements it has with third countries as an EU member, which would cease once the UK had left the EU, on 29 March 2019.

Negotiating the terms of a Transition Period may prove to be very difficult, almost as difficult as negotiating a final agreement. Perhaps more, because there is no precedent to follow.

Of course, the political outlines of a  possible trade arrangement with the UK might have with the EU would be referred to in the “Framework for a future relationship” that, under Article 50, should accompany the Withdrawal Treaty.

The Withdrawal Treaty itself, and presumably the Framework, can be agreed by a qualified majority in the European Council.

But a future trade deal with the UK would face more difficulty. Depending on its content, and whenever it is eventually finalised, it  will  almost certainly require the  unanimous agreement.

If it covered services, many of which are regulated at national as well as EU level and which the UK wants included, it would have to get ratification from all the national parliaments.

So any outline of the trade deal, promised in the Framework accompanying the Withdrawal Treaty, might not survive the substantive negotiation that would take place after the UK had already left the EU

The Framework to be full of good intentions, but not full of the sort of bankable legal commitments that businesses will need to make investment decisions.

So two years may be too short a Transition period for business.

It will also be too short for trade negotiators, who say that a deal as complex, as the one the UK is seeking, would probably take 6 years to finalise, not just 2.

But, politically, a two year Transition, may be as long as the UK can live with, because its government is in such a political rush to leave.

By the time of the next election, the Conservative Party will not be comfortable ,if the UK is still in “transition”, implementing EU laws, contributing to the EU budget, and under the jurisdiction of the ECJ.  So it may be willing to pay a high price to finalise a Framework deal and end the Transition within the two years.

On the other hand, the likelihood is that, in those negotiating circumstances, the deal will be a “bad one” for the UK. But rejecting that “bad” deal will  not be attractive either because without a deal, the UK will be out of the EU, and will only be able to trade with the EU on “WTO terms”, which would be really bad for the UK, and appalling for Ireland.

All of this will be happening on the eve of the UK’s 2022 General Election.

In these circumstance the UK government might be tempted to look for an extension of the two years  Transiion and leave it to a post General election government to take the blame for an unsatisfactory Trade Agreement.

I believe one such time limited prolongation of the Transition Period, if requested by the UK, would be granted by the EU 27. But that would be it.

An indefinite prolongation, or a series of prolongations, would not be offered.

There is so much uncertainty surrounding the content and timeline of a UK/EU Trade deal that the Transition Period will not provide a reliable basis for planning by business.

All the same, the longer is the Transition, the better it will be for Irish business.

But a long Transition will be exceptionally difficult to sell in the UK.

It would offend against the principle of democratic representation. The UK would have to implement and abide by EU regulations, in the making of which it would have had no part. It would have no representation in the European Parliament,  Council or Commission. Any financial contribution it might make during the Transition would be represented by some as “taxation without representation”.

So, I conclude that, as the UK explores the difficulties of its proposed Transition or Implementation Period, it may find itself forced to look at other options.

The only other option on offer is an extension of time under Article 50 (3)

EXTENDING THE TWO YEARS AS PROVIDED FOR IN ARTICLE 50

Article 50 (3) of the Treaties, under which UK withdrawal is being negotiated, says a country that has applied to withdraw from the EU and given notice of intention to do so under Article 50 (2) shall cease automatically to be a  member

“ two years after the notification referred to in paragraph (2), unless the European Council, in agreement with the member states concerned, unanimously decides to extend that period”.

Extending the two year period is a matter for the member states. There is no provision requiring the consent of the European Parliament to such an extension of the two years.

At the moment, there is no official sign that either the UK, or the EU 27, would contemplate using such an extension, or even talking about it.

It is too early. To do so would signal weakness, and would be a poor negotiating tactic.

But the provision for an extension of the two years was put there for a practical reason.

Even with the best will in the world, trade negotiations can take longer that all sides want.

There can be unexpected technical and legal difficulties.

General Elections and government formation delay can prevent decisions from being taken. Look at the example of Germany at the moment.

Rigid time limits can also be exploited by forces that have another agenda, and simply want to maximise chaos.

Politicians can even change their minds, but need more time, than is provided with in the two year limit, to adjust the expectations of their supporters.

Time limits create a fevered atmosphere in which rational calculation becomes more difficult.

Time will have to allowed, at the end of the  two year period, for ratification of the Withdrawal Agreement, and of the Framework for Future Relations by both the British and European Parliaments, and both may look for time for debate and deliberation on the merits of rejecting, or accepting, the proposed Treaty

. Neither Parliament may wish to be confronted with a proposition, which says “take it or leave it, and do so now”.

Allowing time for Parliamentary ratification , on its own, might necessitate an extension of the two years.

An extension of the two year period, under Article 50 (3) would be different, in its effect ,from an extension of the Transition period.

Under Article 50 (3), the UK would continue, for the duration of the extension, to be a full voting member of the EU, except on issues to do with Brexit.

It would still be a member of the ECJ and a British Judge would continue to sit there.

The UK member of the Commission would continue his important work in that capacity.

The UK MEPs would continue to sit in the European Parliament, although from 2019 there would be different MEPs from some of the constituencies.

The UK would continue to be bound by EU law, but that will also be case during a Transition. But in the Article 50(3) scenario, the UK would enjoy democratic representation.

In these senses, an extension under Article 50 (3) would be a better deal for the UK than a Transition Period.

But the Referendum decision to leave the EU would not yet have been implemented. It would still be under negotiation.

An extension of time under Article 50(3) offers a greater degree of certainty to business. The UK would definitely retain all the obligations and advantages of membership for the duration of the extension.

Article 50 (3) offers no guidance on, and does not limit, the period of an extension that could be granted. Nor does it place a limit on the number of extensions that might be granted.

Given that every EU state, and the UK itself, would have to agree, the likelihood is that the initial period of any extension could be quite short.

But if, during that extension, negotiations were going forward in a good and constructive spirit, further extensions could become possible

Under the Article 50 (3) approach, the UK would still be a member of the EU.

Thus, while it could agree a framework for its future relationship with the EU and this could cover trade matters, the UK could not negotiate and finalise a trade deal with the EU or anybody else.

That would be a big negative from the point of view of those in Britain who believe there are attractive trade deals waiting to be concluded.

But, on the other hand, the UK would continue to benefit from existing EU trade agreements, and the extra time would allow it to put much greater flesh  and detail into the Framework for Future Relations with the EU, than will be possible in the time between now and March 2019.

I believe the two year time limits has created a fevered atmosphere in the negotiations. It  has politicised them in a way that makes rational calculation of mutual interest more difficult.

An early agreement to a substantial extension under Article 50 (3) would remove this problem, and would give the negotiators more time and space.

I have the sense that some in the UK are open to this possibility, but there is little appetite for it in Brussels.

If the EU side were unilaterally to offer an extension of the time period, under Article 50 (3), that went beyond the time of the UK General Election, it would thereby place a heavier responsibility for a bad negotiating outcome on the current UK government.

The UK government might want to reject such an offer, but it might not be able to persuade the UK Parliament to agree.

This would not be easily done.

There is a feeling in some continental EU countries that the UK has already taken up too much of the EU’s time. For example, the David Cameron’s decision to prevent the Compact for the Fiscal governance of the Eurozone being incorporated in the EU Treaties, even though they had nothing to do with the UK, has left a very sour taste.

There is a fear that any extension of UK membership under Article 50 (3) could be exploited by the UK to block other EU reforms, and/or to improve the UK’s position in the competition between the EU and the UK post Brexit.

Granting the UK, which had decided to leave and chose the timing of its Article 50 letter freely, an extension of the time limit, would be seen by many as encouraging other sceptical EU states to use the threat of withdrawal as a bargaining tactic, or a means of getting votes in Elections.

In this context, taking a tough line with the UK is not seen as “punishment” of the UK, as much as being “self preservation” by the EU.

An extension of time under Article 50 (3) would mean that UK MEP’s would still be eligible to sit in the next European Parliament, at least until the extension period had expired and the UK was out.

A European Parliament Election in 2019 in the UK would allow the British people to debate the issue of UK withdrawal from the EU in a much more informed manner than was possible in the Referendum of 2016. The campaign, and the result, of the European Parliament in the UK in 2019 would give valuable guidance to negotiators.

It might confirm the decision to leave, or it might signal a willingness to change course.

Either way, under the Article 50(3) time extension scenario, this would happen before the UK had actually left the EU. So the outcome of a European Parliament Election, in the UK in 2019, would be politically meaningful.

If the result was decisive vote in favour of Remain candidates, the UK might have the option of withdrawing its Article 50 letter and staying on in the EU, under existing terms.

An extension of time under Article 50 (3) would facilitate a second Referendum, if that is what the British people want.

The choice would be much clearer than it was in 2016, because Britain would still be in the EU at the time of the Referendum. So staying in the EU in existing terms would be the clear alternative to accepting the Withdrawal Treaty and accompanying Framework document that would be presented in the Referendum.

Reapplying to join under Article 49, which would be the only option if the change of heart took place after the UK had already left the EU would be much more difficult. It would mean a whole new negotiation and different, and less favourable terms of membership, for the UK.

On the negative side, UK MEPs continuing in the European Parliament after the 2019 Election could play the role of spoilers. They could ally themselves with nationalistic and anti system MEPs from other countries, who simply do not want the EU to succeed.

A disadvantage of a time extension under Article 50 (3) is that it would interfere with the plans of a number of European leaders, including the Taoiseach and President Macron, to allocate some of the seats to be vacated by UK MEPs, to MEPs who would be elected from a constituency of the entire European Union. In the European Parliament itself, work is already being done on the allocation of the vacated UK seats, and some existing member states could get more seats. Beneficiaries might be inclined to resist an extension of time under Article 50 (3), but the European Parliament’s consent is not required. But keeping the UK in the EU is more important.

CONCLUSION

If an individual wants to withdraw from a contract, he can do so, but he would normally expect to have to compensate other parties to the contract for the damage his decision might cause. No consideration at all was given, during the referendum in 2016, to the impact, UK withdrawal would have on other contracting parties, notably on Ireland.

For all these reasons, I believe the UK, and the EU 27, need to take time out to think about where we are going with Brexit. Two years is not enough.

The confrontational atmosphere, engendered by the artificial time limits in Article 50, prevents a quiet discernment of mutual interests. It imposes a dangerous straight jacket.

As I have shown there are advantages but also profound difficulties, with all the options I have considered.

But, on balance, I believe the best way to reach a sensible outcome in the negotiation, that will do least damage to the political and economic relations between the UK and the rest of Europe, would be to forget about the Transition option, and agree a time extension under Article 50 (3).

That may not seem politically feasible at this stage, but I believe it will be seen in a different light by next October.

As I said earlier, if the EU side were to offer such an extension, at a moment when the full difficulty of the Transition option was becoming clear, it would change the dynamic in British politics.

If it rejected the time extension option in favour of the Transition option, the UK government itself would have to take the full responsibility

  • for entering what some Brexiteers have described as “Vassal status”,
  • for implementing rules they had  no say in making, and
  • for entering a period in which the UK would paying into EU funds, with no say in how the money was spent.

The rush for an early Brexit, that motivated Mrs May to write her Article 50 letter before her government had done its homework, was driven by a deep fear among the architects of Brexit that, if they did not leave quickly, they, or their voters, might change their mind about leaving at all.

This is, quite literally, an irrational basis for deciding the future of Britain.

It is a deeply dangerous basis on which Britain would impose the costs of its mistakes on Ireland.

It will leave deep and lasting scars.

I believe that an extension of time under Article 50 (3) of the Treaty is the best way to minimise, and possibly to eliminate, the damage.

====================================================

Speech by John Bruton, former Taoiseach and former EU Ambassador to the United States, speaking at the Skoda  Fleet Business event at 8 am on Monday 29th January in Bellinter House Hotel, Navan Co Meath;

 

The EU vote ignored Ireland, but the UK can still change its mind

Let me first try to explain why the handling of Brexit by the UK led to a crisis in Anglo-Irish relations. Treaties between nations are like contracts between individuals. They influence how each party behaves, towards one another and towards the rest of the world. While a contract or a treaty can be withdrawn from, there is a legitimate expectation that this will only be done with careful advance consideration of how this will affect the other parties to the treaty or contract. This is not just a legal expectation, but an expectation of the sort of civility that should apply in relations between people and nations.

One also takes for granted that, if the withdrawing party to a contract wants a new or different contract with the same parties, it will say in advance what it wants that new relationship to be. Even now, Ireland has no clear idea what sort of relationship, compatible with the EU rules the UK helped make, the UK wants with the EU, and hence with Ireland. As the country most affected by Brexit, there is thus deep disappointment in Ireland that our neighbour the UK has not been able, in respect of Brexit, to live up to the normal expectations I have just outlined.

Forty-four years ago, Ireland and the UK signed the same contract with one another, and with the seven other countries that then made up the European Common Market. We each renewed that contract several times, in the UK’s case with the sovereign approval of its parliament. We each expected that the others would continue to honour the contract and we shaped our institutions and our economies on that basis. In particular, when Ireland and the United Kingdom negotiated the Belfast and St Andrews Agreements, to resolve the ongoing conflicts in and around Northern Ireland, we each did so on the unquestioned assumption that the UK would continue to be an EU member.

We each assumed that the freedoms created by membership of the EU could continue to be used to strengthen relations between the two communities in Northern Ireland, between North and South, and between Ireland and Britain.

The renegotiation and referendum process that was initiated by David Cameron, which has led to Brexit, seemed to us in Ireland to have been designed in a way that took no account of the obligations and expectations the UK had created in Belfast and at St Andrews.

During the renegotiation phase, the Irish taoiseach, Enda Kenny, supported Cameron’s attempt to improve the special status the UK already had in the EU, even though some of the concessions the UK were given weren’t in Ireland’s interest.

Irish people saw other problems with the process that led to Brexit. The complex UK/EU relationship was reduced to a simple “Leave” or “Remain” choice. While it was clear what “Remain” meant, no effort at all was made by the government sponsoring the referendum to say what sort of “Leave” it would choose. So “Leave” became a vehicle for fantasies and wishful thinking of the most egregious kind. Explanations of the choices between different forms of Brexit – such as on whether to stay in the customs union and the single market – were left over until the people had already voted.

There was no deliberative process to inform public opinion, something one would have expected of the UK parliament, one of the oldest democratic deliberative bodies in the world. The referendum was not preceded by detailed green and white papers. In the absence of authoritative information, there was no informed debate about the impact of Brexit on the Irish border, and on hundreds of issues.

It is only in the past week that the UK government has started to consider the sort of post-Brexit relationship it will ask for. In doing so, it will have to take account of the fact that the EU works because it is a single legal order, with a single system that makes, implements and adjudicates on the meaning of shared EU rules. The UK has a sovereign right to decide what it would like, but it cannot expect the EU to change its very nature, just to accommodate a country that is leaving.

In preparing its proposal, the UK will need to take into account the Interlaken principles that govern EU relations with third countries, and the EU community customs code, both of which UK ministers helped to draft. When it has done this, the UK government can then compare the special position it already enjoys as a voting EU member, with what the EU will be in a position to offer it as a non-member. Then it can make an informed decision. We are each allowed to change our minds in our private lives if the issue is important enough. Nations might sometimes allow themselves the same privilege.

Opinion @ The Guardian by John Bruton

MAY SHOULD HAVE DUG INTO DETAIL OF EU RULES, BEFORE WRITING HER ARTICLE 50 LETTER

At his meeting with Simon Coveney last week, the British Foreign Secretary, Boris Johnson, expressed enthusiasm about “digging into the detail” of the future EU/ UK relationship.

It is a pity he did not dig into the detail, before his Prime Minister wrote her Article 50 letter, which set the clock ticking.

Given that Brexit is a unilateral British decision, the first responsibility for spelling out how the British government’s decisions might affect the border in Ireland, and movement between Ireland and Britain, rested, and still rests, with the British government itself. The failure of the UK to do this has placed both the Irish Government, and the Democratic Unionist Party, in an invidious position.

The nature of the border will be determined by the long term permanent relationship the UK will have with the EU.

So far, apart from saying that it wants a “tailor made” deal between the UK and the EU, the UK has not set out any detail of what this relationship might look like. This is a fatal omission on the part of the UK and explains why the UK is in difficulty.

One would have thought that, once it had decided to reject the customs union and the single market, which it did over a year ago, the UK government would have immediately worked out a detailed blueprint for the proposed new relationship it wanted with the EU, taking into account what it knows well are the fundamental parameters of all EU relationships with third countries.

AFTER ALL BRITAIN HELPED WRITE THOSE RULES

The UK knows what these parameters are because it had a hand in drawing them up.

They were approved of by the EU Council of Ministers as far back as July 1978, with full UK participation and have been adhered to ever since. They are well understood by the British Foreign Office.

They are known as the Interlaken principles. They were set out for the EU at a meeting in Interlaken between the EU and the countries of the European Free Trade Association. They were accepted by all as the basis for negotiating any relationship, short of EU membership, for the countries of EFTA, or for any other country.

The Interlaken principles say that any arrangement with a third country (which the UK now aspires to become) would have to meet the following requirements

+ priority for the EU’s own internal integration

+ the safeguarding of full decision-making autonomy for the EU, and

+  a balance of benefits and obligations between the EU and the third country in question.

These principles have been respected in all EU arrangements made since, with countries like Norway, Ukraine, Georgia, Switzerland, Canada, and Turkey.

There is no way an exception from these principles can be made for the UK.

After all, the UK is leaving the EU of its own free will. Any breach of the principles would be a precedent that would undermine the EU’s relationships with all other non member countries. It would set a precedent. It would reward a country for leaving the EU, and thus it would discourage any new applications.

If the UK government had devoted serious time to thinking itself into the EU mind, before writing its fateful Article 50 letter , it would have seen all this.

If the UK Government had worked up a blueprint of its own for UK/EU relations, that met, or at least attempted to meet,  these Interlaken criteria, it  would have flagged all the  negotiating problems the UK negotiators are now facing.

If it had done this, it would have seen, for example, that refusing the jurisdiction of the ECJ, and attempting some parallel bilateral judicial arrangement to arbitrate EU/UK disputes, would have broken the second Interlaken principle (autonomy of EU decision making).

It would have seen that any attempt by the UK to opt into the bits of the single market that it liked, but not others, would offend against the third one (balance).

BRITAIN HELPED DESIGN THE SINGLE MARKET LEGAL ORDER, AND NOW WANTS TO BLAME THE EU FOR DEFENDING IT

Some people in UK politics knew this all along.

I heard a prominent pro Brexit Minister admit a couple of weeks ago that the EU single market is a “legal order”, and that a country cannot be” half in and half out of it”.   That is the way the Single Market was designed by the UK and other EU countries when it was set up. The UK knows the rules, because it helped write them.

But it will still try to blame  other EU countries and the Commission for applying the rules the UK itself helped to write, when it was an EU member.

The nature of the Single market was concisely explained, in a UK newspaper last week, by the former Director General of the EU Council Legal Service, Jean Claude Piris, as follows.

The Single Market, he said

“aims to abolish all regulatory obstacles to exchange and binds participating countries to strict conditions. These include the norms and standards for goods, the primacy of EU law over national laws, and the exclusive final power of interpretation by the EU Court.”

Other countries, that have never been EU members, and are trying to negotiate access to the EU market, might be excused for not understanding these basic principles of EU policy, but the UK cannot plead this excuse, because the UK was at the table when these rules were laid down.

Once the UK “takes back control”, it’s norms and standards for goods and services will inevitably diverge from EU standards. That will mean customs controls and inspections. It does not much matter whether these controls are on the border itself or not, they will involve delays, bureaucracy, and extra costs. The friction may or may not be at the border itself, but there will be plenty of friction!

UK DECISION TO QUIT SINGLE MARKET AND CUSTOMS UNION WILL CREATE OPPORTUNITIES FOR ORGANISED CRIME AND THE FINANCING OF TERROR

Controls, of the kind that will have to be introduced, will create glorious new opportunities for organised crime, which is an entirely foreseeable consequence of the UK government choices. Meanwhile the UK is taking itself out of the European Arrest Warrant!

For cultural and historical reasons, the UK has never allowed itself to understand the EU. It is not now ready for Brexit. It needs time to think out properly about what it wants, and what it is giving up.

That is why I have suggested that a six year time frame for the Withdrawal negotiation replace the two years allowed in Article 50. That could be agreed by unanimous consent of the 28 EU states. It would give everyone the breathing space necessary to see where they are going, and  make sure it really is where they want to go.

 

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