With “sufficient progress” now (barring last minute hitches) agreed, the Brexit focus has turned to the issues of the future trade and security partnership and the arrangements for the transition period.
Trade talks won’t start until February or March, so the government has a little time to decide what it should do. In the meantime there are many calls for a “transition” arrangement to begin straight away.
We can think of there as being four forms a “transition” could take. In the first, “transition” is a state rather than a process — to be “in transition” is to be in a state intermediate between EU membership and non-membership. Furthermore, in this firm form, “transition” is open-ended. The European Economic Area is sometimes described as a “transitional arrangement” where the members never quite moved on to EU membership.
During the EU referendum campaign, I suggested that, post-Brexit, financial services rules might establish a “transitional arrangement”, keeping things much as they are now, which was periodically revisited and extended for another review period unchanged. Perhaps one could yet imagine an arrangement of that sort for financial services. But for the UK economy and broader society affected by EU membership as a whole, such an “open-ended transition-to-nowhere” cannot be an option.
In the second form of “transition”, what it really means is the UK staying as a non-voting de facto EU member for some additional period post-March 2019. During the EU referendum campaign, I suggested the UK would probably in practice de facto leave the EU at the end of 2020 (because of the financial issue). Other leave campaigners suggested Article 50 triggering might be delayed or we might leave via some process other than Article 50. Overall, many speculated that departure need not necessarily be as simple as two years after the EU referendum vote (i.e. June 2018) or even two years after Article 50 triggering.
In principle that remains an option, and indeed many commentators suggest that that is almost precisely how “transition” will work in practice, with de facto departure delayed “about two years” from March 2019 — i.e. to the end of 2020 or the very start of 2021. This is, in effect, what is known as the “stand still transition” concept.
With sufficient mutual trust between the UK and the EU, a firm enough approach by the UK to its dealings with the rest of the world, post-Brexit (eg immediately negotiating post-Brexit trade deals with non-EU countries) and if the UK political class were fully reconciled to actually and meaningfully leaving the EU (as opposed to, say, seeking an excuse for a second referendum or seeking an open-ended transition-to-nowhere), I still think this would probably be the best plan. Unfortunately attempts to reverse or frustrate the referendum have been so widespread and sustained, dealings with the non-EU world so weak, dealings with the EU so fraught, and notions of the purpose of transition so misguided that I fear this option may no longer be viable.
Talk of our “needing” a transition period to “reduce business uncertainty” is well wide of the mark. A transition without an agreed post-transition end-state makes the period of uncertainty longer, increasing uncertainty, not reducing it. Talk of our “needing” a transition period to “avoid a cliff edge” is just as bad. If the transition period involves changing nothing, the “cliff edge” simply awaits, unreduced, at the end of the transition period. The “cliff edge” effect is in no way reduced by a stand-still transition.
Many Brexiteers would fear that if a stand-still transition were agreed that had no pre-agreed end-state, the forces of Continuity Remain would conspire to find some way to make it open-ended, or to argue for a “transition” at the end of the stand-still transition, in a Micawberesque hope that something will turn up and Brexit never truly happen.
A third form of “transition” would be an “implementation” or “bridging” period between EU membership and whatever our new longer-term arrangements with the EU will become. That would be a period over which processes and rules would gradually shift, bit by bit, from what they are now to what they will be in the end state. This is the UK government’s stated objective.
The idea here would be that before we have left the EU we will agree at least the broad shape of our longer-term partnership, with a trade and security deal being “struck” (to use David Davis’ term) in a “gentleman’s agreement”, even if a detailed free trade agreement is not formally signed (though we should note that some argue that if there is no formal free trade agreement, it could prove problematic, under WTO rules, for there to be any “implementation period” — implementation is supposed to be implementation of something specific and formal, not just a gentleman’s agreement). Then in the implementation period, the measures agreed in the trade and security deal would be gradually implemented and the final details of the partnership honed.
The fourth option is a variant of the third. Instead of an implementation period, as such, in this fourth option there is a “phased withdrawal” from some EU programmes, whilst others are left unchanged. So, for example, perhaps we might stay in the Single Markets for goods and services and in the single capital market until the end of 2020, but might withdraw from the Common Agricultural Policy, Common Fisheries Policy, Common Commercial Policy, Customs Union, European Arrest Warrant, and European environmental accords in March 2019.
Sometimes, when Theresa May talks of her aims for what she usually calls the “implementation period”, she sounds as if she really means a phased withdrawal, with discussions of withdrawing from some programmes before others.
My guess is that the real choice here is between stand-still transition and phased withdrawal (the second and fourth options above). And I think that if she is to give Brexiteer Conservatives comfort that stand-still transition will not become open-ended, she had better favour phased withdrawal in at least some dimensions.
Probably the most obvious phased withdrawal candidates are the Common Commercial Policy (that is to say, the EU being in charge of negotiating our trade deals for us), the Common Agricultural Policy and the Common Fisheries Policy. But as matters stand, the government is entirely vague.
We need to be told what the government wants. Assuming it is phased withdrawal to at least some degree, does it want us to be in the CAP, CFP, CCP, Customs Union, EAW, environmental rules, tobacco control regulations, what? At the moment we have no idea as to its thinking and the UK political process has engaged in no debate as to the pros and cons of different options. We should at least have a go at debating that internally before we try to talk to the EU about what we want.
So tell, us, Prime Minister — what EU programmes do you intend for the UK to withdraw from during any transition period?