The U.K. Sketches the Outlines of Its Brexit Strategy
OCTOBER 7, 2016 | 02:17 GMT
The
British government has started to outline the positions it will take in
negotiations over its departure from the European Union. Recent
statements by Prime Minister Theresa May and several members of her
Cabinet have sought to clarify London's views on a number of issues
surrounding the Brexit. Any haggling over the country's future outside the bloc must
wait until the United Kingdom formally triggers the Brexit process, and
May's ministers remain divided on multiple counts. But more than three
months after the British referendum passed, London feels that it is time
to send a message to voters, local and foreign companies, and EU
governments.
The campaign began over the weekend with May's speech at the Conservative Party convention, where she announced that London will formally notify the European Union of its intention to leave the bloc by March.
This will start the official negotiation process between the United
Kingdom and its EU peers on the terms of the Brexit and, perhaps, the
shape of their future relationship. Afterward, critics in the media
accused May of reducing the United Kingdom's leverage by prematurely
setting a date for the formal notification. But the prime minister
likely deemed that prolonged uncertainty about the Brexit's timetable
would unnecessarily hurt the British economy.
On
Wednesday, a member of the team in charge of the Brexit talks said the
British government has four "red lines," or demands on which it will not
compromise: the United Kingdom wants to stop making contributions to
the EU budget, regain full legislative sovereignty for its Parliament,
break free from the jurisdiction of the European Court of Justice and
have an independent immigration policy.
It's
too soon to know whether these goals are truly inflexible or simply an
attempt to set a starting position before concessions are made. But with
the announcement, London is signaling that its continued membership in
the internal EU market may not be a priority. During her speech, May
said her government would not try to emulate Norway, which while not a
member of the European Union, accepts EU workers, contributes to the
bloc's budget and follows some EU norms in exchange for its
participation in the common market.
This
strategy, which addresses most of the issues that resonated with voters
who favored a Brexit, makes political sense. It is also in line with
May's attempt to appeal to the country's working class, which she said
would be the focus of her government rather than corporate or
financial-sector interests. The Brexit vote had visible anti-system and anti-establishment elements,
and the new British government is interested in winning support from
those voters. As the prime minister said, "in June people voted for
change. And a change is going to come."
But
May's strategy also faces significant challenges. Should London decide
not to remain in the common market, it would probably seek to enter a
free trade agreement with the European Union. But that path has its own
obstacles. In general, free trade agreements are easier to negotiate for
goods than they are for services. The United Kingdom's is primarily a
services economy, and the British government will be interested in
negotiating as much access for services as possible.
Another
crucial issue in the Brexit talks will be the status of the United
Kingdom's passporting rights, a system that allows financial companies
operating in the United Kingdom to sell their services to EU members
without having to apply for permission in each country. Despite her
appeal to the working class, May cannot afford to completely ignore the
needs of a sector that represents a sizable portion of the country's
gross domestic product. The interests of some big EU economies will also
play a role in this process: Germany or France, for instance, could
deny Britain's passporting rights to force companies currently in London
to relocate to Frankfurt or Paris.
May's speech reignited fears in Scotland and Northern Ireland,
where a majority of the population voted to remain in the European
Union. Legal experts in both countries have said the Scottish and
Northern Irish governments may have the power to veto the United
Kingdom's exit from the European Union, a claim rejected by the British
government and other legal experts. Some Northern Irish politicians are
also worried that a Brexit could jeopardize the 1998 peace agreement
with Northern Ireland. Because Ireland and the United Kingdom are
currently members of the European Union, people, goods and services can
move freely between them. Should the United Kingdom lose access to the
EU common market, however, Northern Ireland might be forced to
reintroduce border controls. The government in Dublin recently called
for Northern Ireland to be given special status to keep the border open.
This will be one of the many topics up for discussion when the Brexit
negotiations formally begin.
With
this week's announcements, the British government offered glimpses of
clarity after months of uncertainty. But the preview of London's
negotiation strategy confirms that May's team will have to make tough
political and economic choices. What might make sense from an economic
point of view could prove unacceptable politically. Moreover, the red
lines drawn before the start of negotiations might have to be altered as
the conversation progresses. What is most clear, though, is that
domestic political calculations will be as important as economic
strategies in shaping the future of the United Kingdom's relationship
with the European Union.