Daniel Hannan is an MEP for South-East England, and a journalist, author and broadcaster. His most recent book is What Next: How to Get the Best from Brexit.
Here are some aspects of Brexit that, as far as I can tell, have the agreement of everyone in Cabinet.
- After we leave, European law will no longer have supremacy in Britain;
- We will withdraw from the EU’s Common External Tariff and strike our own trade deals;
- We will seek the closest relationship with the EU compatible with our sovereignty;
- There will be bridging arrangements, providing certainty and stability during the transition;
- We won’t join the European Economic Area;
- Britain has an interest in the integrity of the EU’s Single Market, with which it will continue to have a close association;
- Freedom of movement as a right will no longer apply, though EU nationals will still probably be able to take up offers to work and study here;
- The UK will not erect any border infrastructure in Ireland;
- EU nationals already in the UK will have their current rights to live, work and claim benefits and healthcare guaranteed;
- While we must have a bottom line, a deal is far preferable to walking away without agreement;
- We want the EU to succeed, and our negotiating position, including on the financial settlement, will reflect this objective;
- Britain might remain in certain EU programmes, on education, research and policing, for example, as an associate member, paying its share of the costs.
There is, in truth, considerable consensus over the EU negotiations. Pundits are creatures of habit and, when they find themselves typing the words “Tory” and “Europe” in the same sentence, their muscle memory kicks in and their fingers automatically add the word “splits”. But look past all the clichés about rows and rifts and nuclear wars, and you’ll see a party which, in the space of a year, has moved from the referendum divisions to a remarkable degree of accord over how to proceed.
Hardly anyone, certainly no-one in Cabinet, still argues that we should stay in the Customs Union. Equally, hardly anyone still argues that we should sever all our links with the EU: even after the interim period, we will have a closer relationship to our neighbours than simply a trading one in the manner of, say, Mexico.
The two alternative views of how to proceed are characterised as “Norway-plus” and “Canada-minus”. The difference between the two is important but, by the standards of recent divisions over the EU, narrow. Both involve free trade and other flanking agreements; neither involves the Customs Union or the direct effect of EU law.
In her Florence speech, Theresa May indicated that her preferred outcome was somewhere in between these two already fairly proximate positions: closer than Canada, she suggested, but not so near as Norway. Long-standing readers of ConservativeHome will know that this has long been my preferred option. Although both Norway and Canada have a better deal with the EU than we currently have as members – more than 75 per cent of Norwegians oppose accession – our circumstances are different, and lend themselves to something intermediate.
There are aspects of the Single Market which we should keep – notably the ban on discriminating against products on grounds of nationality, which is its true basis – while removing the direct jurisdiction of the European Commission and Court. We should mimic Single Market regulations where there are economies of scale, but be free, in certain sectors, to exclude ourselves from both the market and the rules. This is roughly speaking the Swiss deal, and I can’t help noticing that the Swiss are doing pretty well. They also oppose membership by more than 75 per cent.
It’s worth stressing that, on the day we leave the EU, all of our technical standards will be not just equivalent to those of the 27, but identical. What will follow is a gradual and partial divergence. In some fields, the EU and the UK will continue to pursue similar regulatory policies. Indeed, in many areas, ranging from food standards to banking, the rules are increasingly set at a world level, and Britain will recover its seat at the global table. In other sectors, though, our conditions and needs will diverge, and our laws should follow.
My guess is that there won’t be a great clamour to scrap existing EU rules. However unpopular these regulations are before they are imposed, companies tend to lose interest in repeal once they have had to assimilate the compliance costs. There will be exceptions: the rules regulating the art market, for example, are so disadvantageous to London that it would be preposterous to keep them. But I have been struck by the way in which rules that everyone hates at the time – the REACH Directive on chemical imports, for example, or the AIFMD, which regulates fund management – have a way of bedding down afterwards. It’s not just that businesses have gone through the hassle of adopting them; it’s that they then don’t see why the next start-up should be able to do without them, and so gain a competitive advantage. Thus does regulation create a constituency for itself.
The vital thing, in the talks, is to have the freedom to diverge from future regulations. If, for example, the EU 27 come back to their plan for a Financial Transactions Tax, Britain must have the option of saying: “Thanks, but we’d rather not have the preferential access and not have the costs”.
Existing businesses, almost by definition, are relatively comfortable with the status quo. The challenge, during the disengagement process, is to ensure that we also bear in mind the businesses that don’t yet exist, and so can’t lobby.
Brexit will – and should – be a process rather than event, a gradual reorientation towards global markets and a more competitive regulatory regime. Such an outcome is in everyone’s interest: just as we want a prosperous EU next door, so a successful UK will make a good customer for European firms. Keep remembering that as you read the alarmist headlines. In a successful negotiation, there are no losers.