There is an Alternative
to Brexit in Name Only
Lee Jones, Peter Ramsay, Anshu Srivastava, Mary Davis
22 July 2018
Government and opposition disarray over Brexit reflects a lack of vision for a future outside of the EU. But securing a decent Brexit deal is still just possible. Here we set out how Britain can regain popular sovereignty and make a clean break from EU structures.
The government’s “Chequers” plan is preparing Britain for a “Brexit in Name Only”, retaining some of the worst aspects of EU membership despite formally leaving the organisation. This reflects a deep fear of any disruption to the status quo, a commitment to Margaret Thatcher’s dictum that “there is no alternative”. It is still far from clear that the EU will accept this halfway-house fudge. As a result, the prospect now looms of Britain and the EU failing to agree any deal before Britain formally leaves the EU on 29 March 2019.
Many Remainers have spent the summer claiming that this only demonstrates what a “fantasy” leaving the EU always was – as if quitting is an act akin to defying gravity. The Labour Party, for all the alleged radicalism of the Corbynistas, remains terrified of breaking from the neoliberal EU. According to Jeremy Corbyn himself, a customs union that will leave the EU in charge of Britain’s trade relations with other countries is essential. And he insists that Labour will fight any attempt to leave the EU without a deal, inviting the EU not to negotiate seriously. Meanwhile shadow Brexit secretary Keir Starmer is so convinced that “there is no alternative” to the EU that he is willing to undermine democracy through a second referendum (see Proposal #5 - Do Not Hold A Second Referendum).
Contrary to such claims, there is an alternative. Below we set out how the UK can really leave the EU, and take back control of its future. However, this proposal must first be set into the difficult situation that Britain now finds itself in.
From the beginning, the British government’s approach to the negotiations has been hopeless. At the heart of this problem is half a century of membership of European institutions that has transformed Britain into a “member state” at every level of government and across mainstream political life. What this means is that the political class and civil service have entered into tight networks with their European counterparts, looking to them for legitimacy and policy direction, rather than to the British electorate (see Analysis #1 – The EU’s Democratic Deficit and Analysis #9 – Why is Brexit Proving So Hard to Implement?).
A referendum result was not enough to change this. With the bulk of the state’s political, bureaucratic and academic cadres committed to the status quo, and Tory Eurosceptics having no real understanding of the problem they faced, the political process of leaving the EU was always likely to be, at best, a tortuous undertaking and, at worst, an embarrassing farce. At no point has the British government presented the EU with a serious negotiating stance.
As some of us pointed out soon after the result, invoking Article 50 before there was a clear and agreed political strategy for Brexit – even within the ruling party, let alone parliament or the country as a whole – was always going to be a disaster. Article 50 was designed to make it difficult for a member state to leave, and it is working. Eighteen months through a two-year process, both the government and the main opposition party are divided; parliament remains wholly unrepresentative of the electorate on the issue; and the EU has shown very little willingness to give any ground.
Nevertheless, it is still possible to identify a way to implement the referendum result, and we outline it below. Our proposal is based around a very straightforward principle: that Brexit should restore popular sovereignty. Britain should be freed from the supranational rules and institutions associated with the European Union, and the British people – through parliament – must be fully empowered to determine their own political and economic future. Overarching laws and institutions that bind Britain into a constantly evolving system of transnational governance with its inherent, structural democratic deficit are not compatible with popular sovereignty. A sovereign country may, however, agree to make specific, finite commitments through international treaties.
1. The departure agreement
The three key sticking points in negotiating Britain’s exit from the EU were: the fate of EU nationals in Britain (and UK nationals in the EU); the financial settlement; and the Irish border. Preliminary agreements on each of these were made in December 2017. The first two of the three elements of this agreement exemplify the British government’s inability to stop acting like a member state and start acting like a sovereign democracy.
The Irish border
The current impasse in negotiations with the EU arises directly from the agreement over the Irish Border. Both sides agreed that, in the absence of any other agreement over the border, the “backstop” would be that Northern Ireland would remain in full alignment with EU single market regulations and the customs union. To comply with the “backstop” requires one of two arrangements. The first is to separate Northern Ireland from the rest of the UK for the purposes of customs and economic regulation, effectively creating an internal border in the Irish Sea. This would be a massive step towards Irish reunification, but without the border poll promised in the Good Friday Agreement. It would be reunification achieved by the back door in the service of the EU rather than the Irish people. No British government is likely to agree to it, and it is certainly impossible for Theresa May’s minority government to agree to it, given that its survival in parliament depends on votes from the Democratic Unionist Party. The second option is to keep the whole UK inside the single market, i.e. Brexit in Name Only.
Although this was only meant to be a “backstop” in the event that no alternative solution could be reached, because the preliminary agreement suits the EU so well, it has virtually no incentive to negotiate any further. The EU’s top priority, set out in the European Council’s public instructions to Michel Barnier, is to defend the integrity of the single market and its “four freedoms”. It does not wish to allow the UK to “cherry pick” among these arrangements, as it fears other member states will seek a similar escape route. At Ireland’s behest, the EU is also concerned to avoid a so-called “hard” border with Northern Ireland. The “backstop” serves EU interests perfectly well. The UK has spent many months devising infinitely complex customs arrangements to try to move things forward, only to be rebuffed.
The Chequers plan is an attempt to break the deadlock, and meet the “backstop requirements” with a watered down version of the second option, keeping Britain within the single market for goods and establishing a customs partnership with the EUs. However, it pleases neither the EU not British Leavers since it asks the EU to fragment the single market while keeping Britain subject to EU rules and European Court of Justice jurisdiction for the foreseeable future. The longer this dance continues, the greater the risk that Britain leaves the EU with no deal on the future relationship. This prospect is in turn being used by Remainers to ratchet up Project Fear and bolster demands for a second referendum to overturn the first.
The only solution consistent with the referendum result is to drop the backstop and accept that there should be a normal international border between Northern Ireland and the Republic with some customs controls. This border will very likely be inconvenient and involve some economic costs in border areas. The UK government will have to devote resources to alleviating these problems. Existing technology, such as that used on Swiss borders, can be deployed to minimise disruption to cross border trade and movement, and the longstanding Common Travel Area between the UK and the Republic of Ireland can be maintained.
In December 2017, the UK government agreed complicated arrangements with the EU giving the European Court of Justice oversight of EU nationals' legal rights for many years after the UK leaves the EU. This is inconsistent with popular sovereignty. Therefore, rather than separating EU nationals into a new and separate class of residents governed by EU laws, Britain should unilaterally award full British citizenship to all EU nationals resident in the UK before 23 June 2016 who wish to receive it (see Proposal #1 - Give EU Nationals Resident in Britain Full British Citizenship). Those who decline on the grounds that their home state does not permit dual citizenship should be granted permanent residency status. Others who decline should be offered work visas, like any other foreign worker. Whether new citizens, permanent residents, or guest workers, EU nationals would then be subject exclusively to UK law. This commitment should be made now, and independently of any other agreements.
The so-called “divorce bill” of £37bn, agreed by the government last December should continue to be offered as an incentive to the EU to come to agreements on Britain's withdrawal and future trade. The settlement largely covers pre-existing budgetary commitments made before the referendum, which will continue, in some cases, to finance EU activities in which the UK may continue to participate.
2. The future relationship: seek a straightforward Free Trade Agreement
Remaining in the customs union or single market, even partially, does not liberate the UK from EU rules. Contrary to the Chequers proposal and White Paper, Britain should not be bound by a “common rule book” determined by the EU, whether in goods or services. Authorising parliament to reject specific rules is merely fake sovereignty: since it would immediately disrupt our relations with Europe, this “power” will never actually be used. Nor can Britain accept EU rules on competition and state aid: throwing off these constraints is essential to realise transformational change in the way we run our economy (see Proposal #2 - Quit the Single Market: How the EU Throttles State Aid and Industrial Policy and Proposal #8 - Extend Public Ownership).
Britain should therefore seek to conclude an FTA with the EU. Other states have made FTAs with the EU as independent, sovereign states. Although both they and the EU have made some specific, finite concessions to get agreement, these states are not bound by EU laws, which continually expand, nor by the European Court of Justice. This is not the case, for example, with the “Norway model”, i.e. remaining in the European Economic Area, which involves continued payments to the EU, deference to EU laws, subordination to the ECJ, and probably continued free movement of labour. Concluding an FTA is often complex, and would need to cover “mutual recognition agreements” in various sectors. However, the starting point of close alignment, plus the UK’s £96bn trade deficit in goods with the EU27, should make it easier to achieve agreement.
As with all FTAs, there will need to be clauses on what happens in the case of future regulatory divergence. In order not to limit parliament’s genuine ability to do this, these clauses should be minimally restrictive, and not used to lock in the single market acquis through the back door. Other FTAs with the EU are not to be taken as models for the UK’s. The agreement between Canada and the EU, for example, has been criticised for offering too much in the way of investor rights protection, in ways that would limit the room for manoeuvre of British economic policy, and too little in the way of labour rights protection . The precise elements of a UK-EU FTA would need to be negotiated very robustly with the interests of British workers at the forefront of British negotiators minds.
The FTA will need to address sectors such as aviation and automotive industries that are particularly sensitive to Brexit. In these areas alone, the UK may need to commit to respecting certain EU laws. If an FTA cannot be concluded in time, it will be essential to safeguard these sectors through standalone agreements. It would therefore be sensible to structure the FTA using “chapters” that could be extracted and signed as separate treaties.
3. The negotiation process
Negotiation time limit
An unambiguous time limit for negotiations to be completed should be set. If no outline agreement on the Irish border, resident EU nationals and future trade relations has been concluded by the end of November 2018, Britain should formally declare that it will leave the EU on WTO rules and that negotiations will now focus only on making the necessary arrangements to govern the future relationship with the EU on this basis. The bulk of the government’s attentions should then turn primarily to domestic adaptations.
This outcome should be regretted but not feared: most countries in the world (111 out of 195) trade with the EU on WTO rules, including China, India, Russia, the United States, and Singapore. There would be a short-term adjustment “shock” to the economy, but there is no reason why the UK cannot adapt successfully in the medium term. The much-vaunted costs to economic growth arising from a so-called “No Deal” are based on Britain’s existing economic model. This low-wage, low-productivity growth model has already failed millions of people in Britain, and Brexit creates an opportunity to change it (see Proposal #9 – Fix the Broken British Growth Model). The boost to economic growth from improving Britain’s productivity performance would dwarf the worst predictions of losses arising from Brexit. The critical gain from Brexit is the opportunity to democratise Britain’s political economy, making it more responsive to the needs of all of its people. Taking this opportunity would be far more significant than the losses or gains in international trade that obsess short-sighted Remainers.
Moreover getting a withdrawal agreement and an FTA that serve the interests of the British people is more likely if the British government shows itself to be serious about walking away without a deal. This is a basic truth of any negotiation. The experience of the Greek people with the EU in 2015 should have made that truth abundantly clear to anyone who may have doubted it. The British government’s obvious reluctance to embrace this prospect has given the EU no incentive to negotiate seriously.
Article 50 extension
Implementing the above will be extraordinarily challenging in the time frame available, given the UK’s current disarray, arising from its member-statehood. It would be prudent to request that the EU grant the UK a one-year extension to the Article 50 process to make the necessary arrangements. However, this should be requested only after an agreement has been reached on the future relationship or after Britain has declared its intention to leave on WTO terms. Any extension without prior agreement or such a declaration will only reduce the probability of Brexit being implemented. The EU has not yet rejected the Chequers proposal outright in part because fears of a disorderly, “no deal” Brexit are beginning to concentrate minds on the Continent. Extending the negotiations deadline now will reduce this pressure and make agreement less likely. Furthermore, the longer the talks drag on, the more damage is done through prolonged economic uncertainty and the greater the demoralisation of the citizenry. Any extension would require unanimous agreement from the EU27, and some in the EU will no doubt be reluctant to grant one except as a tactic to keep Britain in the EU. However, it would be a sensible approach, given the economic costs for both sides in the event of a disorderly Brexit.
 See Richard Tuck "Chequers: a Trap for the Left", Briefings For Brexit, July 2018
 See Chris Bickerton, Lee Jones and Peter Ramsay, “Article 50 is a trap… democracy needs open political negotiations”, The Current Moment, 21 July 2016; Lee Jones, “Invoke Article 50 Now? Be Careful What You Wish For”, The Current Moment, 30 July 2016; Peter Ramsay, Philip Cunliffe, Nicholas Frayn and Lee Jones, “Invoke Article 50 Now: Depoliticising Brexit”, The Current Moment, 1 September 2016.
 See Philip B Whyman, The Left Case for Brexit: Active Government for an Independent UK (Civitas, 2018)
 See Phil Mullan, “No Deal is Nothing to Fear”, spiked, 22 August 2018.