Negotiations Over Dinner Leave A Bad Taste

“Events over the last few days have shown some in Brussels don’t want these talks to succeed, don’t want Britain to prosper”. That was Theresa May’s understated response to the merde tipped on her by Jean-Claude Juncker.

The President of the European Commission attended a private Downing Street dinner and acted courteously all evening. His henchman then told a German newspaper the UK Prime Minister is “deluded” for suggesting any “exit payment” should be linked to a mutually beneficial UK-EU free-trade agreement. That’s annoying. The Commission then demanded the UK pays €100bn to leave the EU, up from the earlier €60bn estimate, while accusing May of “living in another galaxy”. That’s annoying too.

What’s really shocking, though, is how quickly much of the UK commentariat, after Juncker’s poisonous briefing, simply accepted his twisted view as gospel, the unvarnished truth. It’s never the job of the British press to blindly champion the government. This column has, for years, fiercely criticized ministers of all political shades. But newspapers should question and provide context. Juncker wants to pressure Britain – this is a negotiation. He is derided by German Chancellor Angela Merkel who, lest we forget, opposed his initial appointment.

The massed ranks of eurocrats that Juncker leads are petrified Brexit could upend the “European project” that underpins, in perpetuity, their cushy per diems and pensions. On top of that, as the second-biggest EU contributor heads for the exit, the Commission desperately needs British money. Amid breathless accounts of the Downing Street dinner last week, little or none of this background was included. Juncker’s spin was presented as the only possible version of events, proof the government’s Brexit plan is “unrealistic” and “deeply flawed”.

Of course these EU negotiations will be tough. Of course millions of UK voters didn’t back Leave – and there is still a (shrinking) market for doom-laden Brexit coverage. Yet Juncker not only has motive, he has form. This is the man who said of negotiation: “When things get serious, you have to lie”. The same German paper that ran the Downing Street dinner leak, at the height of the 2011 eurocrisis, accused him of “taking the lead on deception”.

Juncker, anyway, represents the Commission – not the EU. It’s the big EU nations, chiefly Germany, with whom the UK will ultimately negotiate. Two days after Juncker’s leak, Stephan Mayer, Merkel’s Home Affairs spokesman, weighed in: “It is not good when negotiation details become public,” he said. “This situation is complicated enough”. I suspect that, when these Article 50 negotiations get really serious, Juncker won’t be involved.

Parliament rose last week, ahead of the June 8th general election. With her own mandate and potentially a three-figure majority, May will be in a much stronger position to negotiate Brexit. That is Juncker’s fear – yet his cack-handed intervention will likely strengthen her domestic support.

The Tories are this week finalizing their election manifesto. It will contain references to leaving the single market and the customs union, as highlighted in February’s Brexit White paper. Once the government has been re-elected on that, Parliamentary convention means the determined ultra-Remain brigade in the House of Lords will be able to delay Brexit-related bills, but not stop them. That’s a major reason May called an election.

As she goes into this campaign with a big lead, May should feel emboldened – not least as the UK economy is looking strong. The PMI industrial index hit a 3-year high of 57.3 in April – where 50 indicates growth. Employment is rising, amidst an export boom.

Even if the Brexit talks go well, though, the UK government feels “an implementation period” will be required after March 2019, when the Article 50 window closes and we formally leave. This, too, is in the white paper and will be in the manifesto. To that end, I had an interesting conversation with the Former Foreign Secretary Lord Owen last week – an influential Brexiteer who remains one of the shrewdest political analysts around.

Some pushing for “soft Brexit” want Britain, having left the EU, to remain inside the European Economic Area. This “Norwegian option” means on-going single market membership. But it also means accepting continued multi-billion pound annual payments and the EU’s freedom of movement rules. As such, EEA membership isn’t Brexit. Lord Owen agrees with me that EEA, as a final destination, would be a betrayal of our referendum result. He thinks, though, the EEA membership could be useful during the “implementation period”.

Should the Article 50 negotiations get really nasty, with the EU irrationally refusing cooperation on customs clearance and the “mutual recognition agreements” that facilitate trade, UK exporters could face disruption in March 2019. Staying in the EEA for a period, and by extension the single market, would avoid that. And once we’re in the EEA but outside the EU, Lord Owen says, the EEA treaty contains a vital clause that allows us to leave at a time of our own choosing, as long as we give a year’s notice.

Using the EEA, then, frees the UK of the hard Article 50 deadline, which we don’t control, allowing us to leave the EEA at will. This avoids any “cliff edge” business nervousness that, Lord Owen fears, could become significant if diplomatic relations sour. It may also allow more time to negotiate a full free-trade agreement with the EU.

Some Brexiteers will view even the transitory use of the EEA option with suspicion. Lord Owen’s scheme may also fall down on legal grounds, as some say retaining EEA membership come March 2019 is impossible. This idea may be worth exploring, though, on a strictly time-limited basis, to give Britain what Lord Owen calls “a flexible full exit timetable, under UK control”.

http://www.telegraph.co.uk/business/2017/05/06/negotiation-dinner-leaves-bad-taste/

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