Henry Newman is Director of Open Europe.
In her Mansion House speech on Friday, Theresa May outlined her vision of “Our Future Partnership” – the economic relationship which she is proposing between a post-Brexit United Kingdom and the European Union. The Prime Minister delivered some hard truths and was more explicit than before about the complexity of Brexit, admitting that it would mean some reduction in mutual market access. Overall, Friday’s speech, her third dedicated to Brexit, was the most successful so far. Importantly, she began to criticise the logic of the EU’s arguments and to expose some of its muddled thinking. This is something that she should have been doing for the past few months.
Every time the UK proposes a way forward in the negotiations, it seems that the proposals – whether sensible or not – are met with cries of “cherry-picking” from Brussels and certain European capitals, or otherwise with accusations that this is about having cake and eating it, as if a mutually beneficial agreement was a bad thing. At the same time, the EU side often argues that Brexit is a British decision for which Britain has to come up with the answers or solutions. Of course this is true to a point, but it’s also true that leaving the Union is a right specifically afforded to all members in the EU’s own treaties. Article 50 requires the EU not just to negotiate with the exiting party, but to conclude an agreement with it.
We spend a huge amount of time focusing on the red lines from the UK side. Rightly these are called into question and scrutinised. We spend far less time thinking about the EU’s own red lines and their validity, as Oxford’s Professor Kalypso Nicolaïdis argued at an event organised by the French embassy last week. For some time, Michel Barnier sought to argue that the UK could only adopt an existing model – either Norway or Canada. Yet the European Commission’s own internal documents refer to a “tailored approach” taking “into account the UK’s unique ‘proximity/market size’ mix”. Neither Norway nor Canada would solve the issue of avoiding a hard border with Ireland, which the EU has repeatedly said is one of its key aims.
Back in January, President Macron told Andrew Marr that given the UK did not want to be in the Single Market, the relationship would be “something perhaps between this full access and a trade agreement” – precisely what the Prime Minister is seeking. Paolo Gentiloni, the Italian Prime Minister (for now), has also called for a “tailor-made” agreement with the UK. Even Leo Varadkar, Prime Minister of Ireland, backed a “specific agreement”, saying “it’s difficult to compare it to Norway, which is a relatively small country…or a country like Canada, which is on a different continent”.
But, while ruling out any single existing model, May’s speech did sensibly point to the precedents which the European Union has already established in the many agreements into which it has entered. Each of these agreements contains different elements – there is after all no single template for an EU agreement with a third country. The Prime Minister drew out this point, saying “every Free Trade Agreement has varying market access depending on the respective interests of the countries involved. If this is cherry-picking, then every trade arrangement is cherry-picking”. To put it another way – every trade agreement is bespoke.
In her speech, she explicitly referred to the EU’s agreements with the Ukraine, Switzerland, Norway, South Korea, Canada and the (for now defunct) TTIP with the United States. Each is distinct, offering a different balance of control and access. The Prime Minister drew out some relatively minor but nonetheless illustrative differences between the agreements. Open Europe will be looking at these existing EU agreements, and elements that the UK and EU can build on, in a forthcoming paper. In particular, Switzerland has something close to participation in the Single Market for goods, with somewhat limited preferential treatment for services. The EU may be loath to recreate that arrangement, but it can’t deny that it has allowed a country partial participation in the Single Market.
The Prime Minister could also have referred to other EU agreements, for example, the association agreements the then European Community signed with (as it then was) Czechoslovakia, Hungary and Poland in the early 1990s. Despite the supposed indivisibility of the Single Market, these agreements – details of which can be found on the Commission’s own website – moved towards “free movement of goods”, without establishing free movement of people until after accession a decade later. These were of course stages in an accession process but had “an indefinite period of validity”.
The Prime Minister has so far accepted the EU’s argument that the four freedoms are indivisible and absolute. But others have called this into question. Back in October 2016, Vince Cable wrote in the New Statesman outlining how Germany does not accept a “pillar of the single market. It blocks free trade in services to maintain German professional standards and to prevent dilution of its privacy laws in a digital single market”. Cable argued that “France resists another pillar, free movement of capital, if this results in French firms being taken over”. Helpfully an example of this was provided by Macron when France nationalised the Chantiers de l’Atlantique shipyards rather than allow control to be taken over by Italy.
In its treatment of Britain, the EU claims to be only enforcing its existing rules. Yet it has of course chosen before to bend and flex those rules when it suited its political imperatives. Plenty of things were manipulated to allow countries into the Eurozone which patently didn’t meet the criteria, and then other rules were broken to keep the currency afloat. In other areas, treaty and political obligations have been similarly massaged.
Equally the Union itself is hardly a one-size-fits-all club at present. It has adopted a somewhat à la carte approach to membership (admittedly often due to British pressure) with certain states outside of the Single Currency, the UK and Ireland outside of the Schengen Area, and opt outs from Justice and Home Affairs, and Defence, for the UK, Denmark and Ireland. Of course, the EU may be more relaxed about offering flexibility or opt outs to members, than non-members, but the flexibility is there nonetheless.
Among the elites of Europe these arguments so far seem to have relatively little purchase. Brexit seems to have precipitated an almost religious reverence for the supposed perfect indivisibility of the Single Market’s freedoms and a strong belief that doubling down on an inflexibly dogmatic approach is the best antidote to anti-establishment political eruptions across the Continent. The challenge to this orthodoxy which I most often hear around the dinner tables of EU ambassadors is an argument that the UK should have been more slack in enforcing the Single Market’s rules. Will the penny drop? It’s hard to say, but it’s important that the UK keeps making these arguments and Friday’s speech from the Prime Minister was a move in the right direction.