The Political Contentions of the Looming Brexit Deadline

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On June 23, 2016, over concerns of immigration, trade and worries that the UK was losing its sovereignty to the supranational regulatory bodies of the European Union (EU), 51.9 percent of Britons decided to leave the EU in a referendum voted on by less than three quarters (72.2 percent) of the electorate. The decision led the Conservative government piloted by Theresa May (after the resignation of David Cameron) to trigger Article 50 of the Lisbon Treaty on March 29, 2017, formally commencing the process of withdrawal notoriously known as Brexit. Since then May and her government, through the newly formed Department for Exiting the European Union have been locked in negotiations with their continental counterparts over an adequate withdrawal plan to serve as a blueprint for Brexit. After surviving a leadership challenge from her own party on Dec. 12, 2018, her EU approved withdrawal agreement was crushed in the British House of Commons on Jan. 15 2019, losing by 230 votes.

As is common in Westminster style parliamentary politics, May’s government then faced an opposition no-confidence vote which sought to trigger a new election by ousting the government. Surprisingly, May survived with support from her party, including many who voted against her withdrawal plan, and backing from her coalition partners in the Democratic Unionist Party (DUP). Since then May has vowed to return to the bargaining table in order to achieve fresh concessions from the EU, despite the fact that its leaders have reiterated that the defeated withdrawal measure was the “best deal” the British Parliament could expect. With just over a month to ratify and begin implementation of the new deal, the Brexit issue is far from resolved and risks forcing a hard “no-deal” Brexit that could prove disastrous to the economy of the UK and its industries that rely on EU brokered trade arrangements.

Important Issues and Competing Considerations

The predictable defeat of the government’s withdrawal agreement stemmed from two major interrelated issues.The first is the disagreement on how trade relations between the UK and EU are to take shape and how best for Britain to extricate itself from the European Single Market (ESM) and Custom’s Union (CU) while retaining access to continental markets which represent the final destination of nearly 50 percent of the UK’s exports. The most important aspect of this debate is what the UK’s trade relationship with EU member countries will look like once it formally leaves the Union. Since EU members cannot unilaterally engage in trade agreements with outside countries, the UK must reach an agreement with the EU itself in order to continue engaging in lucrative commerce with any of its adherents. Baring an agreement, the UK and EU will be forced to revert to their WTO schedules which constrain them to impose non-discriminatory (i.e., identical) tariffs on the import of goods. As they stand, both the EU and UK levy high WTO tariffs on key industries that make up the bulk of their respective trade. For instance, both entities impose 10 percent tariffs on automobiles and automobile parts. Such tariffs would severely disrupt their trade considering that the EU represents nearly 70 percent of the UK automobile and automobile parts export market and that automobile and automobile parts exported to the UK from the rest of the EU make up large shares of their respective trade to the country, with the industry representing nearly a third of German exports to the UK in 2016. Similar exorbitant tariffs exist in other protected sectors such as agriculture which taken together would lead to severe disruptions in intra-continental commerce.

Another factor is how the lack of a trade framework would damage the UK’s trade relations with other non-EU countries. EU trade accords such as the Everything but Arms agreement has energized commerce with other nations and worked to develop domestic industries that capitalize on their home country’s comparative advantages. The withdrawal of the UK from these key trade agreements could jeopardize its partnerships with countries around the world, especially with developing nations that depend on the UK as a significant export market, such as Cambodia whose textile trade with the UK represents 7.7 percent of the country’s exports. A further issue is the fact that the WTO has little to no regulatory mechanisms dealing with the international trade in services. Since the UK depends on service exports, especially financial service exports, its withdrawal from the EU (where the “four freedoms” of movement of goods, services, people and capital are guaranteed) without a deal would prove detrimental for UK service exports. Early examples of this were seen in 2016 when U.S. financial institutions such as Bank of America were facing the prospects of no longer having foreign operations affiliates in an EU member state.

The second major disagreement directly related to the broader issue of trade agreements is the question of the border between Northern Ireland and the Republic of Ireland. The border issue takes on economic as well as political dimensions since it represents the only land connection (excluding the Channel Tunnel) that the UK maintains with the EU. The economic implications of a hard Brexit mean that once the UK formally separates from the EU the border would have to be guarded and UK customs regulations enforced. This threatens the longstanding and financially significant commercial exchanges that occur between the UK and Ireland. The maintenance of the CU has, therefore, become an important part of the Brexit withdrawal agreement and was addressed in May’s withdrawal plan with the imposition of a “backstop” measure. The backstop would ensure that the UK remains within the EU CU indefinitely should a comprehensive trade agreement not be reached. By doing so, many argue that the UK’s sovereignty would be further compromised by being subjected to commercial regulations it has no hand in effectively opposing (since its membership in any EU regulatory institutions would be revoked by leaving the Union).

The Northern Ireland border and its potential hardening also carry political implications since it would compromise the 1998 Good-Friday Agreement brokered in order to end violence and instability in the region. Key to the agreement that led to the pacification of a region plagued by over thirty years of bloodshed over British rule in Ireland were provisions that ensured cross-border cooperation and the de-militarization of the boundary, thereby allowing the free movement of people and trade as specified by the EU. A significant worry among British officials is that hardening of this border due to customs enforcement could see renewed violence and lead to sectarian instability and the resurgence of identity politics. For this reason, May included the backstop provision as an effort to ensure that the region would remain at peace in the likely event that the EU and UK could not satisfactorily address the trade question by the March 29 deadline.

Political Contentions Between and Within the Major Parties

Whereas parliamentary regimes are traditionally understood to be politically eclectic and facilitate a wide range of party participation, the situation in the British Parliament resembles the partisan gridlock of a two-party system. Similar to what is happening in the United States except with reversed colors, Parliament today is largely split between the Conservative majority and the Labour opposition, each more or less supported by a host of smaller parties that align somewhat with their views on Brexit. Generally, both the Conservative and Labour parties are centrist parties that diverge slightly to the left or right on major policy questions. However, both parties have taken extreme sides on the Brexit debate and have resorted to partisan bickering and gridlock politics. Broadly, Conservatives are pro-Brexit with many advocating for a medium withdrawal plan and maximum concessions from Brussels. They argue that it was under their leadership that the referendum was initiated and it is under their leadership that they will wrestle British sovereignty back from Europe. Most Conservatives are against the regulations imposed by the EU and are opposed to remaining within any commercial regime that hampers the ability of the UK to enter into free trade agreements with third countries without EU approval.

On the other side of aisle Labour seeks to project itself as a counterweight to the Conservatives’ Euro-skepticism and tends to favor a renewed partnership with Europe or, barring that, a soft-Brexit. Looking at countries such as Norway and Switzerland that are not formally part of the EU but are members of the various supranational agreements that constitute it, Labour officials advocate for a Brexit scheme that would see the UK continue its commercial ties with Europe while regaining sovereign decision making in areas such as immigration. While the parties differ on Brexit specificities, they agree on the important points stated above: they oppose the backstop measure and want to avoid a no-deal Brexit scenario. For Conservatives and their parliamentary allies such as the DUP, the backstop is problematic because it would seek to treat Northern Ireland apart from the rest of the country. Such a loss of sovereignty is deemed unacceptable, especially to the unionist DUP based in and around Belfast. Conversely, the Labour party which advocates for a renegotiated membership within the CU sees the indefinite but separate CU with Northern Ireland as yet another barrier in the way of UK reintegration into European commercial agreements.

A further dynamic is that divisions exist within the parties themselves. Among Conservatives, many have expressed support for rejecting deals with Brussels and allowing negotiations to lapse in order to trigger the no-deal hard Brexit. While analysts differ among their predictions of the gravity of such a path, it is sure to have negative repercussions. However, the most ardent Euro-sceptic Conservatives reason that it is the only way to truly sever British ties with the continent and that the economic risks are worth it to regain the UK’s sovereignty. Similarly, Labour is also split on the issue of the shape of Brexit. Many among its ranks have come out in support of scrapping the project altogether. They advocate for another 2016 style referendum that would maintain the UK’s membership in the 28 member bloc. Many others, including the current opposition leader Jeremy Corbyn, currently reject such an approach and hope to use the Brexit deadline to renegotiate Britain’s place in the CU and other EU regulatory agreements.

Potential Outlook for the Looming Brexit Crisis Deadline

While the Brexit debacle could unfold in many ways, the most educated speculation would be as follows. May will now return to the EU in order to renegotiate withdrawal terms. Certainly, the backstop issue will be discussed as well as a possible blueprint for future trade relations, perhaps modeled on the Canadian CETA agreement. In order to accommodate the EU, May may concede and keep the UK in certain environmental and consumer protection regulatory frameworks and may even open up certain aspects of the UK economy, such as the sought after British fisheries, to a quasi-CU in order to appease the opposition. Also on the table will be an agreement to extend the Article 50 negotiation timeframe in the event that her new deal is rejected by Parliament, which will likely be done on her assurance of fresh elections and/or another referendum should the deal be rejected.

May will then present this new withdrawal plan to Parliament likely in mid-March. If it is agreed to the UK will have a largely complete plan to deal with full secession from the EU during the transitory period. However, if it is rejected it is likely that May would either resign or immediately call for new elections before the March 29 deadline so that the EU members could approve the Article 50 extension. Announced in late March and scheduled for mid-June the elections would pit the Conservatives under new leadership against the Labour party which would be led by Corbyn should he renounce his opposition to a new referendum. The Conservatives would likely run on a ticket of revisiting May’s negotiations by advocating for a medium exit by supporting a backstop if it is limited in time and the creation of a free trade agreement which would enable the UK to become more or less integrated in the ESM as a non-EU member. Opposing this would be the Labour party which would promise a new Brexit referendum and advocate for a commitment to either remain in the EU or advocate for a new agreement which would see the UK as part of a loose CU, thereby guaranteeing both stability in Northern Ireland and access to continental markets.

Due to the circumstances, this election will be entirely focused on the Brexit issue and is unlikely to be overshadowed by other traditional concerns such as when the dual terrorist attacks transformed the debate at the end of the 2017 election. As a result, it is likely that the Labour party will win a majority or a plurality and lead the government. Multiple avenues could lead to this, either Labour could win some districts in Scotland where remaining in the EU is largely supported or Labour could win seats away from the Conservatives and form a coalition government with the Scottish National Party (SNP) along the lines of the current Conservative-DUP alliance. In any case, this government led by a pro-referendum Corbyn or by another leader espousing the same would see a new referendum scheduled for the last quarter of 2019. Should the referendum decide to remain within the EU, the UK would retain its membership in the bloc and would likely attempt to reach a compromise along the lines of David Cameron’s early attempts in 2016. However, should the decision be to continue with Brexit, a Labour-SNP coalition government would likely soften the UK’s stance on trade reform and agree to a rework of the CU that would keep the UK in the greater framework of the EU’s trade regime and secure a borderless Northern Ireland. Furthermore, it is likely that once this agreement is finalized the government faces a vote of no confidence since the SNP would have little incentive to work with the Labour party.

Should the Conservatives win, however, and a medium or hard no-deal Brexit occur, the UK could face a host of political crises in which instability would reign in Northern Ireland due to a resurgence of a closed border with the EU and where Scotland could attempt to hold another independence referendum. Indeed, a Scottish referendum seems likely in a Conservative post-Brexit UK considering that the 2014 independence referendum was defeated by less than 6 percent of the vote, largely based on the fact that leaving the UK at the time would jeopardize Scotland’s membership in the EU. With Union membership no longer an issue in the secession debate and with the GBP likely to depreciate in the wake of an actual Brexit (the maintenance of the Pound having been another important consideration in the 2014 referendum), it is likely that the overwhelming Scottish vote to remain in the EU in 2016, where over 62 percent of the region and majorities in every single parliamentary circumscription voted “remain,” would translate to a “Yes” vote for secession as a means of returning the devolved sovereignty to the EU.