Florence. In Which Theresa Tries To Slay The Unicorn

Today Theresa May spoke about the UK Government's vision for Brexit. A little later the EU's chief negotiator Michel Barnier issued a statement in response.  Has she slayed the 'unicorn' of the UK wishing for he impossible, having its cake and eating it? Let's look at each statement in turn.

THERESA'S SPEECH

I listened to Theresa May talking, live.  Her tone of voice as much as the actual words. First what was good:

1. The overall tone was to work with the EU's negotiators for common benefit.  Gone were the strident, aggressive tones of Government representatives that have hindered the talks so far.
2. Negotiations work best when the other side's position is understood. She specifically acknowledged that freedom of movement of people (FOM) is a fundamental requirement of the single market, and that the same trading benefits cannot be expected without the same obligations.  The new relationship outside the EU requires a new balance.
3. She displayed a new pragmatism, especially the need for a transition period to give businesses and governments both sides of the channel time to implement the agreed post-Brexit arrangements.  Around two years was suggested.  

Two years is tight if major border and trading changes are required, and assumes sufficient detail of the new relationship is known by March 2019. Technically under article 50(2) of the Lisbon Treaty, only the withdrawal agreement and future framework would need to be finalised by then, with further detail on the future relationship potentially taking years to negotiate.  The devil's in the detail in such matters.

She also made a few specific points, especially on the three key negotiation issues that have stalled:

(1) There should be no hard border in Ireland, and nothing else to undermine the Good Friday agreement.

(2) EU27 nationals currently in UK are welcome and valued under current terms.  "Italian Continental Stores" happens to be in the heart of her constituency.

(3) Money will be available to plug any hole in EU finances, presumably during the transition period but no longer.

So far so good.  The unicorn wounded, but not slain.  

But she also said that UK must be able to control its borders.  That's what she believes was meant by the Leave vote.  For some voters it was, but for others it was more about striking further distance from the EU's intent on becoming the United States of Europe.   Fact is though, as Home Secretary she could not properly control immigration.  Being able to do so is a key factor behind her conversion from Remain campaigner to leading Brexit.

So to achieve no FOM she asks for a "creative" trading arrangement.  One that recognises the depth of the existing trading relationship, and so not like Norway nor Canada. Something new.

But she made no proposal for how that trading arrangement might look, or at least not one she is prepared to outline in public.  A vision with no clear means of achievement after all these months.  

Sadly the unicorn stands proud!

BARNIER's RESPONSE

Firstly he acknowledged Theresa's "constructive spirit which is also the spirit of the EU". He will entertain the idea of a transition period, but on EU's' terms.

Unsurprisingly he wants some "concrete" proposals on the various items.  After all it is the UK requesting to leave whilst somehow retaining a partnership.

The key issue is his brief from the EU27 to not discuss the future relationship before the existing issues such as the Irish border have been resolved.  But this is fundamentally wrong for two reasons

(1) Article 50(2) of Lisbon Treaty specifically says "...setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union..."

(2) Because the framework for the future relationship can provide the key to major withdrawal issues, such as the Irish border and monies

IN CONCLUSION

The unicorn still stands proud. The UK is still after on ongoing relationship that doesn't look achievable.

There are two key issues, one on each side, that make negotiations difficult:

(1) EU's insistence on deferring talk of ongoing arrangements when these could help resolve the withdrawal issues

(2) UK's insistence on controlling borders, without any proposal for a workable trading relationship. Probably because there isn't one that doesn't cross the EU's red lines that Theresa acknowledged today.

The EU must agree to talking about the ongoing relationship soon.   Logically the ongoing relationship should be in place before the withdrawal agreement, as article 50(2) implies.   Indeed the steps should be:

1. Framework for future relationship (with detail to follow)
2. Any transition arrangement
3. Any remaining withdrawal issues

The EU is putting the cart before the horse, and that must change. 

But that still leaves the UK's FOM issue of border control.

It's like border control is the tail wagging the UK dog.  The conundrum is that Leave won because of that topic, but with it there is no clear solution to future trading and the Irish border.

Nevertheless, border control does not justify holding the negotiations to ransom:

1. 

   Net immigration has been consistently below non-EU migration which is fully controlled.  Employers that need workers will get dispensation anyway. Border control of EU27 nationals is therefore somewhat of a red herring.
   2. Reciprocation will mean Brits will no longer have the freedoms to live, work, travel and retire to EU countries, nor to move between them.  That is a big loss.

I can see no settlement without border control being dropped.  If explained properly in the terms above, the majority of Brits should support it.  But that would make a mockery of the need for Brexit, and leave many people still disappointed.

How about simply walking away with no deal?  Whilst the UK government still says they would do it, everyone knows they can't.  The economic consequences would be too bad, with a massive hit to public finances.  Governments don't do that.  That's why Theresa effectively pleaded with the EU27 to work together to avoid that possibility.

That then leaves only two pragmatic options:

1. Proceed with a "soft Brexit" in which trading continues similarly to currently, with all four FOMs.
2. Brexit is cancelled, and UK continues with MEPs

Personally I'd support either, but would be interested in a soft Brexit if well constructed. Some ideas here.

In the meantime the UK is still chasing that unicorn of an ongoing trading arranegement similar to today's but with border control.