BREXIT th June 2018 Garvan Walshe

Transcription

1 BREXIT th June 2018 Garvan Walshe

2 BREXIT POLITICAL UPDATE

3 TRD POLICY Brexit-22 GAME OF CHICKEN The EU has maintained its unity while the UK has divided into increasing number of factions. 1. Withdrawal Agreement 2. EU Negotiating Objectives 3. EU Politics 4. UK Factions 1. Parliamentary Votes 2. Backstop 5. Scenarios 1. Transition to a snowy country 2. No Deal

4 TRD POLICY 1. Withdrawal Agreement WITHDRAWAL AGREEMENT 1. Under Article 50, Legally Binding 2. For EU, Conditional on 1. UK agreeing to pay budget contributions it has signed up to as a member 2. Agreement on Citizens Rights 3. Avoiding hard Irish Border (Hence Backstop) There were supposed to be two stages of this, but agreeing Irish border has taken so long there s only space for a short Political Declaration 4. Not legally binding. 5. Doesn t determine future trading relationship (Norway, Canada etc.). NO WA = NO TRANSITION

5 TRD POLICY 2. EU Objectives EU WANTS A DEAL THAT OBTAINS 1. Integrity of the Single Market They think having half-membership would unravel EU. 2. No hard border in Northern Ireland All small states oppose overriding a small state on a matter of vital national interest to please a non-member. 3. Gets Brexit over with They have lots of other things to do: Eurozone, Refugees, Hungary & Poland, Defence, etc. NO DEAL > A DEAL THAT FAILS TO MEET 1&2

6 TRD POLICY 3. EU Politics 1. Has maintained unity British hopes to divide them failed. 2. Is satisfied by outsourcing to Barnier 3. Unforced UK Errors Citizens of Nowhere Go whistle for our money EU = Soviet Union

7 TRD POLICY 4. UK Factions UK DIVIDED INTO FACTIONS A SIMPLIFIED LIST 2. ERG 3. DUP 4. THERESA MAY 5. NORWAY FOR NOW 6. THE WORSE THE BETTER REMAINERS 7. LABOUR LEAVE 8. PEOPLE S VOTE

8 5 ERG ~40 European Research Group of Hard Brexit MPs Claim rebellion, but don t follow through. Would accept a Canada type arrangement, but happy to have No Deal.

9 5 DUP 1bn Extra public spending given to the DUP for supporting the Government. They don t want a Brexit that treats northern Ireland differently from the rest of the UK

10 5 STANDUP4BREXIT 50 MPs Opposition to to May s Checquers deal camouflages opposition to May herself and support for a successor. Overlap with ERG. Thoughtt to be stalking horse for Boris Johnson or David Davis

11 5 NORWAY FOR NOW EEA Join the EEA and have a Customs Union with the EU. Some want EEA to lead to Canada-style relationship. Others as stepping stone to rejoining. Gove (Leave) + Morgan (Remain) Unclear if legally possible

12 5 MAY + HER LOYALISTS Mar 29 Without that election they would have been assured of majority. Support her Chequers proposals (rejected by EU) Want to delay vote as close to exit day to force choice

13 5 THE WORSE, THE BETTER 8 Tory Remainers who want to vote against a deal Because No Deal gives them a chance of calling the whole thing off.

14 5 LABOUR LEAVE <7 Labour Leavers, whose votes with the Government have allowed it to see of Tory Remainer rebels. But Corbyn himself is anti-european

15 5 PEOPLE S VOTE 670,000 The successor to Open Britain and Stronger In. Wants another referendum, and to stop Brexit altogether. Needs a government that would actually propose one

16 TRD POLICY 4.1 PARLIAMENT BRITISH PARLIAMENTARY VOTE IF A DEAL IS AGREED BY NEGOTIATORS 1. NO MAJORITY FOR ANY PROPOSAL 2. VOTE OF CONFIDENCE? 3. ELECTION? 4. TORY LEADERSHIP RACE? 5. HANDED OVER TO PARLIAMENT? 6. REFERENDUM? 1. DEAL vs NO DEAL 2. DEAL vs REMAIN (People s Vote) AND THEN THE EUROPEAN PARLIAMENT HAS TO VOTE

17 5 BACKSTOP Permanent Needed to avoid a Hard Border in Ireland Alignment of NI goods trade Customs + Single Market in goods Can t be unilaterally withdrawn by UK

18 SCENARIOS

19 TRD POLICY 5. SCENARIOS IF A DEAL IS AGREED BY NEGOTIATORS 1. TRANSITION TO 1. EEA + Customs Union = No Backstop Needed 2. Canada + Backstop 2. NO DEAL 1. No Transition. 2. March 29 cliff. 4. Delay 5. Revocation after Election or Referendum

20 5 PROBABILITIES 60% [ 80% 50% Deal agreed by negotiators Negotiators deal passes Parliament The chance of No Deal Charles Grant, Centre of European Reform.

21 TRD POLICY 3 No Deal PRINCIPAL CONSEQUENCES No agreement between UK and EU. No transition. No rules to govern aviation Single European Payments Area disrupted Possible disruption of electricity supplies to NI UK and EU required by international trade law to impose tariffs at ports and inspect cargo. UK NAO: UK Not ready for this. Queues at ports. Lorries out of place. Warehouse space exhausted. Civil Contingencies Act (Emergency powers) activated. Of 12 computer systems needed to manage the UK s foreign trade and movement of people in a no-deal brexit, only 1 is likely to be ready (NAO) GBP hit heavily. EUR hit somewhat.

22 TRD POLICY 3 Transition to somewhere snowy PRINCIPAL CONSEQUENCES No immediate disruption to trade. Agreement likely on counter-terrorism and security. Risk transferred to end of transition period. Prolonged and fractious FTA negotiations with EU. Ratified under A218 of European Treaties Corbyn s Labour party: hostile to much FTA content. Even a long transition of 3 years would make a UK- EU FTA one of the fastest ever negotiated EU would seek provisions to limit UK s use of state aid or deregulation to gain competitive advantage. Not possible with current parliament: requires backstop.

23 TRD POLICY 3 Delay PRINCIPAL CONSEQUENCES The EU might grant A small extension to the negotiating period for ratification A large extension if there were a genuine change of heart by the UK (as evidenced for instance by a change of government) A short delay for UK to ratify would probably be granted. A long delay faces insoluble problem of European elections It would not grant more time because UK didn t get its act together

24 TRD POLICY 3 Revocation PRINCIPAL CONSEQUENCES Unclear if A50 is unilaterally revocable. Remainers in UK claim it is. Text itself is ambiguous. John Kerr (who claims to have written the article) claims it is revocable. View in Brussels is that this is political, and revocation could be agreed if UK was willing to return in good faith and act as a sincerely cooperating member of the EU. Consensus in Brussels is that revocation would only be possible if the UK had a genuine change of heart Rebate and possibly opt-outs would be up for discussion.