Perhaps the European Commission and the EU27 aren’t serious about striking a reasonable deal with the UK in the Brexit talks. And perhaps they are. It is impossible to know at this stage – given the bluff, game-playing and brinkmanship that are an intrinsic part of the negotiations.
Were our Government now to walk out of the talks, it may be that the EU, if it really does want a sensible deal after all, would swiftly back down, and seek to re-open them, conceding trade discussions immediately. So a beneficial deal might happen after all.
Or it could be instead that, having been put in a corner, the EU would feel that it couldn’t back down – even if it wants a reasonable deal. Ministers would presumably feel that they couldn’t back down either. So a beneficial deal which might have happened won’t happen.
Which of these two outcomes would be more likely?
It is worth trying to make the calculation because a group of senior Leave-backing MPs, peers, campaigners and business people have written to the Prime Minister urging her to walk out of the negotiations if progress is not made at the European Council this week – or, in the more diplomatic wording of the letter, “we should formally declare that we are assuming that we will be subject to WTO rules from 30th March 2019”.
Its signatories argue that “this would provide businesses with absolute certainty about the future”. Is that so?
ConservativeHome was early to the debate about taking the WTO route and, as Lee Rotherham pointed out in his opening essay for our series on it, a deal/no deal is not a black-and-white alternative: it is a spectrum.
At one end of it, there would be, as Lee put it, a “trade war” – with the EU refusing to sign up to new legal agreements which would replace the present ones that guarantee the flow of trade, commerce and information.
On the other, there might be, say, tariffs between the UK and the EU (since no fully-fledged trade deal had been reached in these circumstances), but that flow would continue (subject only to the negative effects of tariffs on exporters).
Were the Government to walk out of the talks, would business really have “absolute certainty” about which of these two outcomes would take place? Indeed, would Ministers really still not seek to discuss – to pick a topical example – the exchange of security-related information post-Brexit?
A further question follows: would the UK walking out of talks make such a trade war more or less likely? It will rightly be said that such a conflict would be against WTO rules and against the EU’s interests, too. But nations and institutions don’t always act legally or even rationally. That the EU does not always or even mostly do so is a foundation stone of Eurosceptic belief.
All in all, a point may come in the talks at which it is evident that the EU really isn’t interested in a reasonable deal. It would then follow that the Government, without formally breaking off talks, would have no alternative but to make roughly the declaration proposed in the Leave signatories’ letter. The WTO model in question would presumably be WTO default.
But this site is not persuaded that this point has been reached yet – given the brinkmanship, game-playing and bluff to which we refer. Earlier this week, for example, it was reported that Germany has drafted the outline of “a broad partnership that includes “at a minimum” the fields of foreign and security policy; fighting terrorism; cooperation on criminal justice; agriculture and fisheries; energy; transport, and especially air transport; research and digital issues”. In the words of our fellow-Brexiteering site Guido Fawkes: “sounds sensible”.
The Government should keep talking to the EU; resolve its position on what economic, social and regulatory model it wants Britain to follow in either event, and – crucially – be as Ready on Day One as it can be: Deal or No Deal (of whatever variant). To help achieve this end and reboot economic policy, Michael Gove should be moved to the Treasury.