Almost a fortnight after the General Election returned a hung Parliament, the repercussions continue to be felt. The Prime Minister’s personal position remains tenuous, and the Government is increasingly under pressure to abandon its policy of a ‘hard Brexit’ (ie leaving the Single Market and Customs Union, without transitional arrangements, on 29 March 2019).
Monday saw the formal start of the Brexit negotiations. David Davis (the SSExEU) led the UK delegation; Michel Barnier was the EU’s chief negotiator. They exchanged gifts: Barnier received a book on mountaineering, Davis a walking stick. Clearly, both men anticipate a difficult road ahead. (Or does the EU now see the UK as the sick man of Europe?)
The main aim of this first session was to agree the negotiation’s Terms of Reference (now published). These identify the three key issues for negotiation as:
Significantly, there is no reference to parallel talks on the UK’s future relationship with the EU. Remember that, in her letter triggering article 50, the Prime Minister said she believed it was:
The EU disagreed, and closed ranks. Barnier simply said:
Davis claimed it didn’t matter what was discussed first, because it would all be agreed (or not) at the end – but it has been widely reported as a defeat.
A separate (slower) dialogue on Northern Ireland’s border has also been launched. ‘This is a technically difficult issue,’ explained Davis (showing admirable use of understatement).
That the UK Government is, as yet, undecided as to its ‘customs and free trade priorities’ will do little to reassure the DUP (who still have not reached agreement with the Prime Minister on a confident and supply arrangement, and who are opposed to any ‘special status’ for Northern Ireland) and those in industry, who are increasingly calling for the Government to abandon its ‘hard Brexit’ position.
On Tuesday, the Society for Motor Manufacturers and Traders (SMMT), which represents UK’s car makers, lobbied the Government to secure interim arrangements to safeguard the future of UK motor industry. Its view was that a final agreement on a new trade relationship with the EU would not be achieved by March 2019, and so the UK should maintain single market and customs union membership until a final agreement on a new relationship with the EU has been agreed and implemented, in order to avoid a ‘cliff edge’ Brexit. SMMT believes this is necessary because almost 60% of the cars made in the UK are sold in Europe (four times as many as in the UK’s next biggest market), and many components travel back and forth across the Channel to various plants during the manufacturing process. SMMT wants that trade to be tariff-free, as frictionless as possible to support the ‘just in time’ manufacturing process, and with consistent regulation.
The desirability of a period of transition following Brexit was also stressed by the Chancellor, in his Mansion House speech on Tuesday morning. He wanted ‘early agreement on transitional arrangements so that trade can carry on flowing smoothly, and businesses up and down the country can move on with investment decisions that they want to make, but that have been on hold since the referendum.’ He outlined a three-pronged approach, which involved:
He said that achieving this while sticking to the Government’s long-term objectives would be challenging:
The EU’s chief negotiator, Michel Barnier, has stated that the UK will have to stay under the jurisdiction of the European Court of Justice during any transitional period:
CJEU supervision may well be a step too far for those in favour of a hard Brexit.
Also on Tuesday, more than 50 Labour politicians, including frontbenchers, signed a statement opposing a ‘hard right’ Brexit, which they claimed would damage workers’ rights and prosperity, and calling on Labour to fight ‘unambiguously for membership of the single market’. Labour’s official position is (ambiguously) to retain the ‘benefits’ of the Single Market, but not necessarily membership. There has been a suggestion that the Opposition will table an amendment on remaining in the Single Market.
Today (Wednesday) brings the Queen’s Speech, which sets out the Government’s legislative programme for the new Parliamentary session. It will include the Great Repeal Bill (and perhaps as many as seven other Brexit bills). The Government has also announced that it is to drop the 2018 Queen’s Speech, allowing for a double parliamentary session needed to pass the large volume of extra Brexit legislation. We will report further on the Queen’s Speech in our next post.