The Brexit Revolution

Setting Itself Up for Confrontation

With this new power, the British government is gearing up for a confrontation with the EU. To this end, Johnson, unlike Theresa May, has from the beginning relied on de­clared Brexit supporters in his cabinet. All the members of the government are now proven Brexiteers, many of whom cam­paigned for withdrawal from the EU even before the 2016 referendum. In par­ticular, the UK Treasury, which traditionally tends to be pro-single market, is being geared to support a hard Brexit. In contrast to his predecessors, the new Chancellor of the Exchequer, Rishi Sunak, emphasises the advantages of a clear break from the EU. Instead of resistance from the cabinet, the central ministerial posts are now occupied by politicians who reject any deeper insti­tutionalised cooperation with the EU. The Brexit revolutionaries of the “Vote Leave” campaign have thus taken control of the Conservative Party, the government, and Parliament.

Under these conditions, a strategy for post-Brexit relations is already emerging, which is primarily based on confrontation and complete separation from the EU. The prevailing narrative among Brexit support­ers is that, in the first phase of Brexit nego­tiations, the United Kingdom was, in their view, humiliated because the British gov­ern­ment did not want to, or could not, cred­ibly threaten to break off the negotiations. In line with this basic understanding, the British government has already threatened to break off the negotiations if no progress in their favour is apparent by June 2020.

Following the Brexit vote, a wide range of potential models of cooperation were discussed: from the Norway/European Eco­nomic Area (EEA) model with extensive access to the internal market, to a customs union, all the way to a traditional free trade agreement. Theresa May wanted to nego­tiate an interim solution and at least main­tain the frictionless movement of goods – and was prepared to accept EU standards for this. Among others, the then UK Foreign Minister Boris Johnson resigned in protest because, in his view, a Brexit without regu­latory freedom and a trade policy of its own was not a proper Brexit.

In this sense, his government has abandoned the goal of maintaining frictionless trade in goods and emphasises the need for regulatory freedom. It wants a standard trade agreement and rejects any obligation to maintain or align with EU standards. British companies are already being pre­pared for the reintroduction of border con­trols with the EU from 2021 onwards, even if a trade agreement is concluded.

Regional Tensions

Aside from economic constraints, there is one potentially limiting factor on the Brit­ish government’s hard Brexit policy: Brexit fuelled regional tensions within the United Kingdom. In January 2020, the regional parliaments of three of the four nations of the United Kingdom – Wales, Scotland, Northern Ireland, the latter even unanimously – voted against the withdrawal agreement. The British government, how­ever, was legally able – and politically willing – to override them. The regional governments and parliaments also have no veto position in the negotiations on the future relationship.

Nevertheless, the British government will have to weigh up a political trade-off. North­ern Ireland deserves special attention: After three years of deadlock, power-sharing has been restored, and a new Northern Ireland Executive was able to be formed in early 2020. However, the peace process remains fragile, and the surprise election success of Sinn Féin in the Republic of Ireland has put the issue of Irish reunification on the agen­da once again. Crucially, due to the North­ern Ireland Protocol in the Withdrawal Agreement, Northern Ireland will continue to apply EU rules on goods, VAT, and state aid, for example. These measures were agreed to keep the border between North­ern Ireland and the Republic of Ireland open. In consequence, however, the more that the United Kingdom withdraws from the single market of the EU, the more bor­der controls will become necessary between Northern Ireland and the rest of the United Kingdom. In the case of a very hard Brexit, the British government would have to accept that this will boost demands for a “border poll” in Northern Ireland.

At the same time, the conflict between the Scottish Executive and the Johnson administration is one of the UK’s central political battles of 2020. Moving towards a hard Brexit, contrary to the 62 per cent of Scots who voted “Remain”, has significantly strengthened the independence movement. Brexit has now become a key argument for the proponents of Scottish independence. In several polls at the beginning of 2020, a (slim) majority of Scots were in favour of independence. In January 2020, the Scottish Parliament launched legislation for a second independence referendum. Legally, Scot­land can only organise a binding referen­dum with the consent of the British Parlia­ment – something that the Conservatives have already rejected. However, this block­ade attitude will be politically difficult to sustain if the Scottish National Party wins the Scottish elections in 2021. In order to keep the United Kingdom together, the British government should actually take Northern Ireland and Scotland into con­sideration – but so far it has tended to be confrontational, especially with regard to Scotland.

Difficult Trade Negotiations

The first area is economic partnership. At its core, the EU remains an economic com­munity, and 47 years of economic integration have contributed to close economic ties with the United Kingdom. The basic aim is to regulate market access in all sectors that have been covered by EU membership so far – goods, capital, finan­cial and other services, data, public procure­ment rules, mobility of persons, transport, aviation, energy, fisheries, and more.

In principle, both sides are interested in a standard trade agreement to preserve their respective autonomy. However, they have fundamentally different ideas about this: The EU is striving to include provisions on fair competition (level playing field) in a standard free trade agreement. Not only are existing EU standards to be protected, but a procedure for aligning to new EU standards is also to be created in particularly critical areas. This goes beyond the provisions of previous EU trade agreements. The EU-27 justify this with the depth of market access (zero tariffs, zero quotas), the economic weight of the United Kingdom, and its geo­graphical proximity.

The British government, on the other hand, wants a free trade agreement based on the model of the Comprehensive Eco­nomic and Trade Agreement (CETA) be­tween the EU and Canada; it also rejects any obligation to maintain, or even dy­namically align to, EU standards. Nevertheless, it wants (unlike Canada) zero tariffs without exceptions and, with cooperation from regulatory authorities, to keep non-tariff barriers to trade as low as possible.

Other lines of economic conflict lie in fisheries policy and financial services. For the former, the EU mandate aims to main­tain access to British territorial waters and retain fishing quotas. In contrast, Brexit supporters are keen to regain control of their own fisheries policy. The Johnson government therefore wants to negotiate a separate bilateral agreement on fisheries with the EU, allowing for annual flexibility as an “independent coastal state”, similar to Norway, and to determine better conditions for its own fishermen. According to the Political Declaration, which provides for an agreement on fisheries by June 2020, the EU wants to make this a litmus test of Britain’s willingness to compromise.

The situation is to some extent reversed with regard to access to financial market services. The British government has drop­ped the goal of maintaining full access to the EU single market for financial service providers from London. Nevertheless, it wants the EU to create a permanent equiva­lence for financial services in order to se­cure long-term access to the EU market for the City of London. The EU-27, however, insist that equivalence decisions are uni­lateral, and that it must be able to reverse them at any time in order to protect the EU financial market in case of doubt. In the Political Declaration, the Union committed itself with “best endeavour” to complete the equivalence assessment by June 2020.

Internal Security

The second area is cooperation on justice, home affairs, and migration policy. The critical issues here are to develop (more limited) instruments for data exchange, operational cooperation between law en­forcement authorities, judicial cooperation in criminal matters, and cooperation in the fight against organised crime and terrorism. As an EU member, the United Kingdom has occupied a paradoxical position in this policy area. On the one hand, in developing EU justice and home affairs policy, it has negotiated for itself extensive opt-out rights and was not a member of the Schengen Area; on the other hand, it has participated in a large part of the measures of justice and home affairs policy by way of opt-in. In practice, the United Kingdom therefore has often been a driving force when it comes to closer justice and home affairs cooperation within the EU.

According to the Political Declaration, both sides want “close, mutual and recipro­cal” cooperation in this field. The potential for conflict concerns the balance between access to EU databases and the binding effect of standards under European law, for example in data protection. London also wants “pragmatic” cooperation, but only as long as it is ensured that the United King­dom is not bound by EU law and is not subject to the jurisdiction of the European Court of Justice (ECJ). In contrast, the EU-27 want to make the exchange of data depen­dent on the extent to which the United Kingdom undertakes efforts to comply with European data protection standards. The EU also makes cooperation on internal security conditional on the United Kingdom remain­ing a member of the European Convention on Human Rights (ECHR), which the British government, like all legal obligations, re­jects, although the United Kingdom itself is a founding member of the ECHR.

Foreign and Security Policy

A third important area of negotiation is cooperation on foreign policy, security, and defence. Here the need to find a new way of working together is even more pressing: The greatest value of EU foreign and secu­rity policy is in the permanent coordination of EU member states. Although EU law continues to apply in the United Kingdom during the transition, the United Kingdom has already left the EU institutions. It no longer participates in EU coordination, neither in Brussels nor in international organisations such as the United Nations or in third countries. The United Kingdom is therefore no longer sitting at the table – to the detriment of both sides – when coordi­nating in the EU format on how to deal with Russia, Syria, Turkey, China, Libya, Iran, and the Western Balkans.

According to the Political Declaration, Brussels and London aim for “ambitious, close and lasting cooperation”, which in­cludes the establishment of structured con­sultation formats, consultations on sanc­tions, the possibility of British participation in EU operations, the development of de­fence capabilities, and the exchange of intelligence information. However, London has already scaled back its ambitions in this regard and wants to do without institutionalised foreign and security policy cooperation with the EU altogether. Accordingly, the British government will try to switch to bilateral and multilateral cooperation, in particular with Paris, Berlin, and Warsaw, as well as with NATO. This is also a chal­lenge for Germany, which will have to weigh its interest in keeping the United Kingdom aligned with European foreign and security policy, for example on Iran, with its interest in strengthening the EU as a foreign policy actor.

Essential Governance Issues

Fourthly, the EU and the United Kingdom will need to negotiate new governance structures, that is, an institutional framework that brings together the various areas of cooperation. The EU is therefore aiming for an Association Agreement that covers as much of the EU-UK cooperation as possible. According to the Political Declaration, this institutional framework should include a standard dialogue format at all levels, a parliamentary exchange format, and a dis­pute settlement procedure. The latter is par­ticularly important in order to enforce possible agreements on a level playing field. In its own mandate, however, the United Kingdom aims for a series of agreements that are not directly connected by a joint governance framework.

The withdrawal agreement already pro­vides for a dispute settlement procedure. If one of the parties fails to comply with its obligations, an arbitration panel may be convened. In case of disputes relating to EU law, the ECJ must be consulted and its rul­ings are then binding for the arbitration panel. In the event of continued breaches of obligations under the withdrawal agree­ment, the EU – or the United Kingdom, for that matter – may, after no solution is reached over a six-month period, suspend all rights under the withdrawal agreement, or even any other agreement between the two partners. The EU wants to anchor a comparable “guillotine clause” for all areas of the future agreement, including the competence of the ECJ in matters relating to Union law. In addition, the EU mandate provides that the parties to the contract may impose sanctions immediately after a violation and not at the end of a lengthy arbitration procedure. This would enable the EU to sanction British violations of EU standards or agreements on fisheries policy directly, or at least to signal the use of sanctions.

Due to their cross-cutting nature, institutional issues are likely to be the most diffi­cult part of the negotiations. London strictly rejects any jurisdiction of the ECJ over Brit­ish law; rather, it wants to orientate itself on the dispute settlement provisions of CETA. The ECJ has no role to play in this, and the possibilities for sanctions are much more limited. In addition, instead of an overarching association agreement, the Brit­ish government wants a series of individual contracts that are not linked by a common institutional framework. But only the bind­ing nature of the dispute settlement mea­sures will decide how robust the agreements on regulatory standards or data pro­tection are.

The fifth and final aspect that will weigh on the negotiations is the implementation of the protocol on Northern Ireland. As a reminder, the biggest political conflict in the final phase of the Brexit negotiations concerned how to deal with Northern Ire­land. Unlike Theresa May, Boris Johnson has accepted a solution whereby Northern Ireland will continue to be bound by EU single market rules on goods after the tran­sition period, whereas any customs duties will be due on the importation of goods from Great Britain into Northern Ireland if the goods are “at risk” of being traded in the EU. This compromise, worked out under high political and time pressures, must now be implemented by 31 December 2020. How­ever, both sides interpret the obligations very differently: Whereas the EU assumes the necessity of border controls in the Irish Sea, Johnson and his government publicly deny this. Whether the EU and the United Kingdom find a common interpretation – and how well implementation then works – will affect mutual trust in the negotiations on future relations.