11 Brexit questions for Theresa May: background briefing

11 Brexit questions for Theresa May:

1. Will the United Kingdom be outside the jurisdiction of the European Court of Justice, have ended free movement of people, and no longer be making payments to the EU budget by March 2019?

  • In Theresa May’s Lancaster House speech she stated that the UK would no longer be sending vast contributions to the EU budget, would be taking control of immigration and would be ending the jurisdiction of the European Court of Justice.[1]
  • However, Whitehall officials have conceded that the UK will have to continue making payments into the EU budget even post-March 2019 in order to arrive at a good future relationship with the EU.[2]
  • Theresa May has said herself that free movement could continue post 2019 in a transitionary deal between the UK and the EU.[3]
  • The European Council draft Brexit guidelines make it clear that any transition which covers EU laws, “would require existing Union regulatory, budgetary, supervisory and enforcement instruments and structures to apply.”[4]

 

2. If there is a transition period between exit in March 2019 and full ratification of the new UK-EU FTA, will the UK remain within the Single Market and the Customs Union for the duration of this period, or will our terms of trade with the EU be weaker from this point onwards?

  • The Prime Minister has indicated that there will be what she has termed an “implementation phase”. Specifically, she noted in early April that, “If you think about it, once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and governments are adjusting systems and so forth, depending on the nature of the deal, a period of time during which that deal will be implemented.”[5] She has also said that ratification of the FTA will take place after exit from the bloc.
  • The EU have been clear that as soon as the UK leaves the EU to become a non-Member, we will trade on weaker terms. Angela Merkel has said, “Countries with a third country status – and that’s what Great Britain will be – cannot and will not have the same or even more rights as a member of the European Union. All 27 member states and the European institutions agree on this.”[6]
  • The European Council draft Brexit guidelines also cover this point, stating that “A non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member.”[7]
  • The European Parliament’s resolution says explicitly that, “a state withdrawing from the Union cannot enjoy similar benefits to those enjoyed by a Union Member State, and therefore announces that it will not consent to any agreement that would contradict this.”[8]

 

3. Do you stand by David Davis’ commitment that the UK’s Brexit deal will deliver the “exact same benefits” as we have now in the Single Market?

 

  • David Davis, the Brexit Secretary has stated that “What we have come up with…is the idea of a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have.”[9]
  • As noted above, the European Council, the European Parliament and Angela Merkel have made clear this is not possible.

 

4. Do you accept that Angela Merkel is right when she says that if the UK leaves the Single Market the only option is an FTA where Britain is treated as a “third country”, and that it is an “illusion” that this will deliver the same trade benefits?

 

  • Angela Merkel has said, “Countries with a third country status – and that’s what Great Britain will be – cannot and will not have the same or even more rights as a member of the European Union. All 27 member states and the European institutions agree on this…I have to put this so clearly because I get the impression that some in Great Britain still have illusions about this, and that is a waste of time.”[10]
  • This runs directly counter to the Government’s argument that the “exact same benefits” are available to the UK as a non-Member.

 

5. Does the Government intend for Parliament to be able to recommend that negotiations be extended if there is no majority for the draft Brexit deal in 2018/19, or is the plan to present Parliament with a choice between accepting the deal or leaving with no deal and a WTO cliff edge?

 

  • The Government has stated that when the EU-UK Brexit agreement is finalised, the UK Parliament will be allowed a “meaningful vote”. [11] However, the Government’s interpretation of this position so far has been that if the UK parliament were to vote against this final agreement then the UK would leave the EU without any agreement.
  • The Prime Minister has repeatedly been clear that “no deal for Britain is better than a bad deal for Britain.”[12] This is stance which has been backed up by Boris Johnson, who has stated that the UK walking away from the negotiations would be “perfectly ok”. [13]
  • However, the cost of this position has been made clear. The UK’s car manufacturing industry has said that WTO tariffs would make UK car manufacturing uncompetitive and could add £1,500 to the cost of every car sold in the UK.[14] A “no deal” scenario in the EU negotiations has also been criticised by the Head of the CBI as “opening up a Pandora’s box of Economic consequences”, noting that “the UK would face tariffs on 90 per cent of its EU exports by value and a raft of new regulatory hurdles.”[15]
  • Under a no deal scenario and with the UK and EU trading on WTO terms, forecasting by the LSE predicts that by 2020 UK GDP would have fallen by 2.6% and by 2030, GDP would have fallen by 9.5%.[16] The National Institute for Social & Economic Research have produced a report highlighting that a WTO cliff-edge scenario could lead to a reduction in trade by up 29% and a reduction in foreign direct investment by 29%.[17]

 

6. The Government has said it wants to enhance security co-operation with the EU. Does the Government accept that opting in to Justice and Home Affairs measures as a non-Member State, for example the European Arrest Warrant, means accepting the jurisdiction of the European Court of Justice?

 

  • On security, the Government has said it will seek a close deal with the EU, as spelled out in Theresa May’s article 50 letter.[18] More specifically, Home Secretary Amber Rudd has stated that it would be a Government “priority” to keep the European Arrest Warrant[19], and Theresa May has said that Europol was “one of the important matters”.[20]
  • The UK Government’s aim of no longer being subject to the European Court of Justice incompatible with being part of Europol and the European Arrest Warrant, both of which are covered by the Court of Justice and have been since the entering into force of the Lisbon Treaty.[21][22][23]
  • If the Government were to decide to fully leave the jurisdiction of the European Court of Justice, the Head of Europol, UK national and former Mi5 officer, Rob Wainright, has urged the UK Government to stay part of the European Arrest Warrant, given how important it has been for the UK in catching criminals.[24]

 

7. Does the Government accept that its stance means the UK will move from rule-maker to rule-taker, as a comprehensive FTA will mean accepting EU legislation in the fields of environment, social affairs, financial services and competition on an ongoing basis, without input into decision-making?

 

  • In her Lancaster House speech, Theresa May talked about taking back control, stating that “we will not have truly left the European Union if we are not in control of our own laws.”[25]
  • In her Article 50 letter to Donald Tusk on 29 March 2017, the Prime Minister contradicted this by saying that, “We also understand that there will be consequences for the UK of leaving the EU: we know that we will lose influence over the rules that affect the European economy.”[26]
  • Both the European Parliament’s Brexit resolution as well as the European Council’s draft negotiating guidelines put strict wording in place on this. The Council guidelines state that, “Any free trade agreement….must ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping.”[27] The European Parliament’s Brexit resolution contains similar language.

 

8. How long after Brexit will the Government sign its first trade deal with another country, and can it be demonstrated that the gains from new trade deals will outweigh any costs of leaving the Single Market and Customs Union?

 

  • The Brexit Secretary David Davis stated in January of new trade deals with non-EU countries, “We can't actually sign until the day we leave. But I've got a very strong suspicion there will be a lot of things to sign that very next day.”[28]
  • The National Institute for Economic & Social Research (NIESR) have found that leaving the single market will be associated with a long term reduction in total UK trade of between 22% and 30%, depending on whether the UK concludes an FTA with the EU or not. The estimated increases in trade from concluding FTAs with all of the BRIICS, are much smaller at just over 2%, while concluding FTAs with all the Anglo-American countries (USA, Canada, Australia and New Zealand) is associated with a long-term increase in total UK trade of less than 3%.[29]
  • Both campaigners and politicians have cautioned against lowering of standards with trade deals once the UK has left the EU, in particular with the United States, arguing that this could lead to a lowering of standards, particularly on environmental issues and food safety, and would also impact on the NHS. [30]

 

9. Can the Government guarantee that, while ending the free movement of people and leaving the Customs Union, there will be no changes to the border between Northern Ireland and the Republic of Ireland?

 

  • The Secretary of State for Northern Ireland has pledged to maintain a “frictionless” border between Northern Ireland and the Republic of Ireland.[31] In Theresa May’s Article 50 Letter to Donald Tusk, the Prime Minister stated “We want to avoid a return to a hard border between [the UK and the Republic of Ireland]”[32]
  • With the UK outside Customs Union, some form of customs checks is almost inevitable.[33] The often-cited example of the Swedish-Norwegian border as a solution is not applicable in this case due to the fact that both countries are members of the Single Market and so there is a high degree of product conformity already, minimising the need for border checks on customs’ duties[34]
  • The Government’s decision to leave the Single market and therefore end free movement impacts on the free movement of people, services and capital across the border, which will have serious implications for the Northern Irish economy.[35] It will also raise questions about the viability of free movement between the UK and the Republic of Ireland within the Common Travel Area (CTA), where CTA rules might have to be revised to take into consideration the fact that the UK will no longer be in the EU and Northern Ireland-Ireland border will constitute an external EU border. Current CTA rules allow EEA nationals to cross freely between the two countries without having to show a passport. If this were to continue, EEA nationals would be able to enter the United Kingdom even though the UK had left the EU.[36]

 

10. Do you agree that open trade and migration are inextricably linked – as shown by the Indian Government’s demand for visa liberalisation to be part of any trade deal. If so, how will you be both a champion of open trade and meet your ‘tens of thousands’ migration target?

 

  • The Prime Minister has repeatedly reaffirmed her commitment to the target of reducing migration to the “tens of thousands”.[37]
  • This position could damage the depth of the Free Trade Agreement negotiated with the EU, which the UK Government will want to cover service sectors, so important to the UK economy. The freedom to provide services is interlinked with the freedom of movement, where EU law allows for mutual recognition of certain provisions, allowing for EU-wide provisions of services.[38] For example, architects and medical practitioners who need to be able to move freely for their work, if they intend to work on an EU wide basis require freedom of movement rule sin order to undertake their professions. Should this movement be curtailed, the freedom to provide services will also suffer.
  • Furthermore, new trade deals with non-EU countries will also include visa provisions. Countries with whom the UK is looking to negotiate free trade deals have specifically noted that free movement/visa-liberalisation would be part of any such deals. For example, the Indian High Commissioner has been clear that the “issue of visas Is not going to go away”.[39] The Australian High Commissioner has stated that “We would want to see greater access for Australian businesspeople working in the UK and that’s often been a part of free trade negotiations – it hasn’t always been by the way, but it’s often been part of our free trade negotiations.”[40]

 

11. If Brexit were conclusively and categorically shown to be harmful to the economy, would you consider giving the British people a say on whether they still want to go through with it?

 

  • The Prime Minister has repeatedly said that Brexit is irreversible, saying “there can be no turning back”.[41]
  • With GDP growth slowing, consumption slowing, businesses beginning to move workers overseas, prices rising and ‘shrinkflation’ due to devaluation, the Government loosening their fiscal rules, considering tax rises and breaking the triple local, the Brexit squeeze has already started. If it is unquestionably clear that there is an economic cost to Brexit and the basis on which both the EU referendum vote and Article 50 vote have been proven false, it would be illogical to not have an open mind about whether the path taken was in the national interest.

 

[1] https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech

[2] http://www.telegraph.co.uk/news/2017/04/25/britain-must-contribute-eu-budget-2020-secure-favourable-brexit/

[3] https://www.ft.com/content/32fe20c6-daf2-39de-9a75-ae0c06e86547

[4] Draft guidelines following the United Kingdom's notification under Article 50 TEU, point 5

[5] https://www.ft.com/content/853e78ae-1945-11e7-a53d-df09f373be87

[6] https://www.theguardian.com/politics/2017/apr/27/angela-merkel-attacks-british-illusion-of-keeping-benefits-of-eu

[7] Draft guidelines following the United Kingdom's notification under Article 50 TEU, point 1

[8] http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+TA+P8-TA-2017-0102+0+DOC+PDF+V0//EN

[9] https://hansard.parliament.uk/commons/2017-01-24/debates/D423AEE6-BE36-4935-AD6A-5CA316582A9C/Article50#169

[10] https://www.theguardian.com/politics/2017/apr/27/angela-merkel-attacks-british-illusion-of-keeping-benefits-of-eu

[11] https://www.theguardian.com/politics/2017/feb/07/theresa-may-agrees-to-let-mps-vote-on-brexit-deal-head-off-tory-revolt

[12] https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech

[13] http://www.telegraph.co.uk/news/2017/03/12/leaving-eu-without-deal-brexit-will-not-apocalyptic-boris-johnson/

[14] https://www.theguardian.com/business/2017/jan/26/uk-car-industry-tariffs-red-line-issue-jobs-brexit-smmt

[15] http://www.independent.co.uk/news/business/news/hard-brexit-pandoras-box-uk-businesses-cbi-boss-paul-dreschlser-a7607581.html

[16] http://ukandeu.ac.uk/wp-content/uploads/2016/06/Comparing-Brexit-forecasts-table.pdf

[17] http://www.niesr.ac.uk/sites/default/files/publications/National%20Institute%20Economic%20Review-2016-Ebell-121-38.pdf

[18] https://www.gov.uk/government/publications/prime-ministers-letter-to-donald-tusk-triggering-article-50

[19] https://www.politicshome.com/news/uk/home-affairs/policing/news/83959/european-arrest-warrant-membership-priority-brexit-talks

[20] https://blogs.spectator.co.uk/2017/03/transcript-andrew-neils-brexit-interview-theresa-may/#

[21] http://www.europarl.europa.eu/atyourservice/en/displayFtu.html?ftuId=FTU_5.12.7.html

[22] http://www.cer.org.uk/insights/european-arrest-warrant-british-affair 

[23] https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/111615.pdf

[24] http://www.telegraph.co.uk/news/2017/03/07/europol-boss-britain-will-carry-sharing-intelligence-brexit/

[25] https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech

[26] Theresa May letter to Donald Tusk, p.4 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/604079/Prime_Ministers_letter_to_European_Council_President_Donald_Tusk.pdf

[27] European Council draft Brexit guidelines

[28] http://www.express.co.uk/news/politics/755343/Brexit-news-David-Davis-House-of-Commons-statement-free-trade-deals-April-2019

[29] http://www.niesr.ac.uk/blog/will-new-trade-deals-soften-blow-hard-brexit#.WQITIhPyuUk

[30] http://www.independent.co.uk/news/uk/politics/brexit-latest-news-trade-deal-us-uk-donald-trump-theresa-may-threat-nhs-environment-food-safety-a7529836.html

[31] http://www.irishtimes.com/news/politics/brexit-brokenshire-rules-out-special-status-for-northern-ireland-1.2959317

[32] Theresa May letter to Donald Tusk 29 March 2017 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/604079/Prime_Ministers_letter_to_European_Council_President_Donald_Tusk.pdf

[33] Further information on impact of Brexit on Northern Ireland see the House of Lords report from December 2016: https://www.publications.parliament.uk/pa/ld201617/ldselect/ldeucom/76/76.pdf

[34]The Government’s Brexit contract with the British people 28 March 2017 https://d3n8a8pro7vhmx.cloudfront.net/in/pages/11621/attachments/original/1490680551/govtcontract_final.pdf?1490680551

[35] http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/583116/IPOL_BRI(2017)583116_EN.pdf

[36] https://www.freemovement.org.uk/brexit-briefing-impact-on-common-travel-area-and-the-irish/

[37] http://www.telegraph.co.uk/news/2017/04/20/theresa-may-commits-tories-cutting-net-migration-uk-tens-thousands/

[38] https://ec.europa.eu/growth/single-market/services/free-movement-professionals/qualifications-recognition_en

[39] http://www.independent.co.uk/news/uk/politics/brexit-uk-britain-india-trade-deal-freedom-of-movement-delhi-boris-johnson-a7534026.html

[40] https://www.theguardian.com/politics/2017/jan/21/australia-to-seek-uk-migration-deal-in-brexit-trade-talks

[41] http://www.express.co.uk/news/politics/785327/Theresa-May-Article-50-statement-Brexit-House-of-Commons-EU-referendum