My Three-Point Plan To Kickstart The EU Talks

“After nine months on the launch pad,” wrote Boris Johnson in the Telegraph earlier this week, “Britain has finally engaged the most famous ignition sequence in diplomatic history”.

The Foreign Secretary was referring, of course, to Theresa May’s triggering last Wednesday of Article 50. The UK now has two years to agree the terms under which it will leave the EU, while trying to determine the nature of our future relationship with the remaining 27 member states.

The Prime Minister’s letter to the European Council insisted the UK wants to maintain “a deep and special partnership” with our continental neighbours. We are “leaving the EU, not Europe,” as she has repeatedly stressed.

There was a hint of steel, a warning the EU’s “fragile” security would be “weakened” if cooperation ended, given our intelligence services and military. But, overall, this was an emollient statement. It was certainly far friendlier than the EU’s on-going insistence we accept a jaw-dropping £50bn exit bill before the talks even start.

I’d like to offer the government three pieces of economic advice – the first regarding this so-called “divorce payment”. We may indeed end up paying a final bill – contributing to the pensions of EU bureaucrats and any on-going membership of various EU schemes. The actual amount, though, is integral to what will obviously be a multi-faceted negotiation.

Far from opening the talks, agreeing the size of any payment should be the very last piece of the UK’s Article 50 jigsaw. The EU’s up-front insistence on a ridiculous cash sum is designed to discredit our Brexit vote by causing maximum public outrage. It should be flat-out rejected.

Secondly, on a more conciliatory note, the Prime Minister should keep stressing that Britain fully respects the EU’s insistence on “no cherry-picking”. So, we’ll remain outside the single market and customs union. Negotiating “special” membership of these two constructs, in return for concessions on “freedom of movement”, risks pulling the EU apart, as other members would demand the same. The entire edifice, the single currency and all, could come crashing down, shaking the global economy to its core. A “clean Brexit”, then, is safer for everyone – and far more likely to foster good long-term UK-EU relations.

It also makes sense economically. America’s EU exports exceeded $250bn dollars last year, from “outside” the single market. Chinese and Japanese firms similarly enjoy “access” by meeting EU regulatory standards and, where necessary, paying low tariffs.

Ours can do the same. Britain’s EU trade can continue, then without the massive loss of sovereignty associated with single market “membership”, even if we don’t finalize a free trade agreement with the EU during the two-year Article 50 window.

Being outside the customs unions, too, means we can negotiate our own trade agreements with the 85pc of the world economy beyond the EU. The bloc has failed to achieve this with the US, China, India and other huge economies, despite years of trying, because the 28 members themselves have hopelessly conflicting demands. Outside the customs union, UK imports would also be cheaper, given that we’d be free of Brussels’ common external tariff.

While a free-trade agreement would be preferable, we can trade happily with the EU on the same basis as do other leading economies. Listening to the doom-mongers – those who insist “crashing out” with no trade deal is “disastrous” – would be a major strategic mistake. Ministers should expose such nonsense for what it is, not least so their EU counterparts understand we’ll only accept a trade deal that brings the UK clear economic benefits.

My third piece of advice is more contentious. It will cause discontent within Downing Street, but I’ll write it anyway. The UK should now, unilaterally, without waiting for the EU to reciprocate, guarantee the residency rights of the vast majority of the 3m or so EU nationals currently living and working here. This makes sense – economically, strategically and morally.

Granting such rights – after 9 months of cruel limbo – would be welcomed not only by UK-based EU nationals but also their employers. Such people do important work – from health care to catering, from finance to agriculture. They’d benefit from certainty, as would the businesses they serve.

Such rights will eventually be confirmed anyway, as will those of the 1.2m British citizens living elsewhere in the EU. Many such Brits are skilled professionals or relatively wealthy pensioners (with UK-derived pension and health care entitlements). Spain, where many live, has confirmed it wants them to stay.

Acting unilaterally would show the world, at a time when some want to insinuate otherwise, that Britain remains an open, tolerant country. It would kick-start our Article 50 talks with a bold gesture, wrong-footing Brussels – which would be forced, by public outcry, to reciprocate. The government, having tried to agree this issue on a mutual basis for months, has been met with EU intransigence – a cynical intransigence designed, once again, to undermine public confidence in Brexit.

Much of the UK’s political and media establishment still hopes to reverse our EU referendum by scaring the public into changing its mind. Granting the rights of EU citizens unilaterally, breaking this deadlock, would reassure many Remain voters the Brexit happening in their name is a process they can now back. The government will need that support in the tough negotiations ahead.

Sometimes it is right for a leader to listen politely to her advisors, then do the opposite. Sometimes, in a complex negotiation, an audacious opening move is needed that positively impacts the entire process. Rather than acting like the cautious Home Secretary she was, May now needs to act like the bold Prime Minister we need.

http://www.telegraph.co.uk/business/2017/04/01/three-point-plan-kickstart-eu-talks/

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