Brace! Brace! Britain is Exiting the Single Market

The year began with the outgoing UK Ambassador to the UK complaining that we didn’t yet know the UK Government’s negotiating objectives for Brexit. In her speech at Lancaster House in London on 17th January, the British Prime Minister Theresa May has given some stronger indications of her government’s direction of travel for the UK’s future relationship with the European Union. The headline political message is that the UK will be outside the Single Market.

In more formal legal terms, what this means is that the UK will not seek any type of association agreement with the EU. This will disappoint those, like Andrew Duff, for whom such an arrangement offered the softest of Brexit landings. Association agreements can be concluded between the EU and a non-Member State or an international organisation. The EU has a large number of these agreements including with countries in the EU’s Mediterranean near-neighbourhood like Israel, Morocco and Tunisia. In June 2014, the EU agreed an association agreement with Ukraine, including an extensive free trade agreement together with structures for policy and political cooperation beyond trade.

The difficulty with association agreements is that they require the unanimous consent of all EU Member States’ governments for signature, and can only formally enter into force once ratified in all Member States according to their own constitutional requirements. In the Netherlands, a citizen-initiated referendum – a result of the Dutch Advisory Referendum Act 2015 – put to voters the question of whether they were for, or against, the adoption of the Approval Act that would ratify the Ukraine agreement. On 6 April 2016, the electorate rejected the deal (albeit on a low turnout). This was only the second referendum to be held in the Netherlands on EU issues and, like the first – the referendum on the Constitutional Treaty held in June 2005 – it saw the rejection of what was on offer. So from a legal point of view, embarking on an association agreement would entail certain risks of delay or even failure and so create the kind of uncertainty that the Prime Minister made clear – as one of her twelve objectives for Brexit – had to be avoided.

The other obvious association agreement model is that which the European Free Trade Association has with the EU in the form of the European Economic Area agreement (Switzerland does not participate but has its own series of bilateral agreements with the EU). It became clear following the referendum that the EEA model – sometimes known rather reductively as the ‘Norway’ model was a potentially attractive option, whether as the end result or even as a transitional step to allow the UK to weather the ‘Brexit Storm’.

The EEA agreement entails the four freedoms that underpin the Single Market, but does not include a Customs Union – so EFTA states are free to pursue other trade agreements (EFTA currently has 27 free trade agreements). Participating EFTA states also have access to the EU’s research programmes like Horizon 2020 that allows for pan-European research collaboration and researcher mobility. But this level of engagement requires contributions to be paid with Norway making annual contributions of over €800 million.  The combination of free movement of workers and contributions to the EU effectively ruled this option out for the UK government. After all – and a point repeated by Donald Tusk in a tweet response to the PM’s speech – the Single Market was regarded by EU leaders as ‘indivisible’ such that the UK could not cherry-pick which bits it did or did not want.

Instead what is on the cards is a comprehensive free trade agreement. And despite the much-repeated phrase of a ‘Bespoke Brexit’ it is much more likely to be a Canada Copy. The Canada-EU agreement (CETA) is a very extensive free trade agreement. So extensive it was treated as a ‘mixed’ agreement because it was considered to stray beyond matters within the exclusive competence of the EU under the Common Commercial Policy (CCP). The precise scope of the CCP has been a matter of legal debate. But rightly or wrongly as a matter of political practice it was conceded by the European Commission that CETA was a mixed agreement and so required not just signature by Member State governments but also domestic ratification (much like association agreements). It will be recalled that there was a hiatus when the Belgian Walloon Parliament initially withheld its consent, raising concerns about the protection of labour and environmental standards as well as the novel dispute-resolution mechanism contained in the agreement. Legal challenges were also brought before the German Constitutional Court in a failed bit to halt German approval of the provisional application of the CETA agreement.

In an Opinion given in late December 2016, Advocate General Sharpston offered the European Court of Justice her view of the scope of the EU’s exclusive competence under the Common Commercial Policy. If accepted, it will give a relatively wide scope to that exclusive competence – trade in goods, trade and investment in renewable energy, trade in services and government procurement (excluding certain transport services), foreign direct investment, commercial aspects of intellectual property rights, competition law, trade in road and rail transport services to name some of the key areas. This would give Theresa May’s government a useful template as to how ambitious a free trade agreement could be and still fall within the scope of the EU’s exclusive commercial policy competence and so avoid some of the pitfalls and risks of domestic ratification.

None of which, of course, resolves the fundamental issue of whether the free trade agreement can be negotiated in parallel with the withdrawal agreement or whether it necessarily has to follow Brexit, when the UK will become a non-Member State. There will not, in my view, be a single Brexit agreement but rather a bundle of agreements and the next stage of clarification that is required is around the structure and sequencing of that bundle of agreements.

But if the approach which the British Prime Minister has set out is guided by certain legal considerations, it is at heart an attempt to translate the reasons behind the referendum result into a political programme for Brexit.

The referendum was not a general election. It did not elect a political party into power to deliver Brexit based on an election manifesto. UKIP wasn’t even directly linked to the lead campaign for Leave but was instead linked to other organisations including Leave.EU. The lead campaign was run by an organisation, Vote Leave. While some of the politicians associated with that campaign are now in government, Vote Leave has absolutely no responsibility for what will now happen. Indeed, one of the more dubious responses to the referendum result has been the Vote Leave Watch campaign which attempts to hold Vote Leave to account for promises made during the campaign. It is the government that needs to be held to account. The normal way in which a government is held to account is through the election process and through parliamentary oversight.

Although parties are not bound by their election manifestos in any legal sense, they are judged on them politically. David Cameron won the 2015 general election with a Conservative Manifesto that promised to ‘safeguard British interests in the Single Market’ and to ‘extend the Single Market to new areas like digital’, concluding that ‘we say: Yes to the Single Market’. A Conservative government under a new leader – and without a general election – is now saying ‘No’ to the Single Market.

The UK government’s direction of travel will also put the UK and Scottish Governments on a collision course. On 20 December 2016, the Scottish Government published its plans for ‘Scotland’s Place in Europe’. Its priorities are continuing UK participation in the Single Market – through the EEA – and the Customs Union. If that objective could not be obtained for the UK, then it proposed that a deal should be sought that would allow Scotland to participate in the EEA (it being accepted that the whole of the UK had to be either in or out of the Customs Union).

Not only did Theresa May make clear that the UK was leaving the Single Market and the Customs Union, she also wants to ‘Strengthen the Union’ with a plea ‘to face the future together’ and, more pointedly, the demand that ‘no new barriers to living and doing business within our own Union are created’. The Scottish Government’s plan is being discussed at the Joint Ministerial Committee (EU Negotiations) – the forum being used by the UK Government for formal talks with the devolved administrations – on 19th January but it is difficult to imagine circumstances in which Theresa May’s government will seek to carve out a special deal for Scotland. The Prime Minister’s speech is a way of backing the Scottish First Minister Nicola Sturgeon into a corner to either back down on her bid for a differentiated Brexit or to come out fighting for an independent Scotland.

As for parliamentary oversight, the key point in the Prime Minister’s speech is that the final agreement with the EU will be put to a vote in both House of Parliament. This is consistent with the view – and one put forward by the House of Lords EU Committee in its report on parliamentary scrutiny of Brexit – that the provisions of the Constitutional Reform and Governance Act 2010 would be triggered by a withdrawal agreement. But aside from the legalities, there are good reasons for the Government to engage with Parliament.

In the judgment to be delivered by the Supreme Court on 24th January, we will learn whether Parliament needs to give statutory authorization for Article 50 to be triggered. While much attention will be paid to the Supreme Court’s reasoning, in the end, the outcome is binary: either a statute is needed or it is not. If it is required, then Parliament will need to legislate to begin the withdrawal process. The political parties appear to accept that they do not have a mandate to block the legislation. The Liberal Democrats, however, may attempt to tag on a requirement for a second referendum before withdrawal takes place and any new agreement replaces the UK’s existing membership of the EU. To do so would be a mistake. It would suggest that Theresa May’s Brexit Government can only act on a direct mandate from the people through a referendum rather than being – like any government – primarily accountable to Parliament. If it is necessary to go back to the people it should be through a general election. If the Supreme Court decides that Parliament is not required to give statutory authorization, the arguments for parliamentary oversight of the Brexit negotiationsremain unchanged.

Of course – and as the Prime Minister herself made clear – the UK may end up with no deal at all if something acceptable to both sides cannot be agreed. That won’t be a hard landing. It will be a crash landing. Brace, brace.







Our (Not So) Permanent Representative

The resignation of Sir Ivan Rogers as the UK’s Ambassador, or ‘Permanent Representative’, to the EU has seen the New Year begin with more fireworks than the Sydney harbour bridge. His incendiary letter of resignation highlighted not just that the government’s objectives for the negotiations that will follow the triggering of Article 50 TEU are not yet known, but equally worrying that ‘serious multilateral negotiating experience is in short supply in Whitehall’. Sir Ivan had a wealth of such experience. Aside from his knowledge of the EU as David Cameron’s Europe adviser and then Permanent Representative, Rogers had significant experience of the workings of the European Commission having been chef de cabinet to Leon Brittan as EU trade commissioner. He had also acted as Cameron’s G8 ‘sherpa’.

Together with Tom Scholar – David Cameron’s Europe adviser (a position Scholar filled when Rogers vacated the position to become the UK Permanent Representative) – and Ed Llewellyn – David Cameron’s Chief of Staff and now Lord Llewellyn, UK Ambassador to France – Sir Ivan had piloted the UK’s pre-referendum negotiation of a ‘new settlement’ with the EU. The post-referendum and post-resignation chatter depicts Rogers as a gloomy ‘pessimist’, raining on the parade of those who had wanted David Cameron to demand a cap on the number of EU nationals coming to the UK, and those who now view Brexit as world of opportunity if only we’re optimistic and have self-belief.

As regards the renegotiation, a cap on numbers would have required treaty change which ‘old’ Member States would not stomach as it violated a founding principle of free movement and which ‘new’ Member States would view as discriminating against their nationals (who had already been the subject of transitional post-accession labour market restrictions). Not only would a cap or even an ‘emergency brake’ on the number of EU migrants coming to the UK be a political tall order, the need for treaty change would have pushed the timescale for the referendum back. What Sir Ivan and other negotiators sought, therefore, was to achieve a ‘new settlement’ within the framework of existing treaties and feasible legislative change.

In terms of the post-referendum period, the publication of Sir Ivan’s private advice to ministers that a UK-EU trade deal could take up to ten years to implement has irked those who see such statements as evidence of foot-dragging, stalling and civil service attempts to derail Brexit. Yet the advice reflects the uncertainty over how negotiations will be phased – will the divorce and future relationship be sequential or negotiated in parallel? – and the risks of veto and delay that may follow if a comprehensive agreement requires domestic ratification. The outcome of Brexit depends not on optimism or mere force of personality but certain cold, hard political and legal realities.

But for Brexiteers, it seems you are either with them or against them. So much so, that it was suggested that Prime Minister Theresa May should have replaced Sir Ivan with someone who believes in Brexit.  Whether or not Sir Tim Barrow – swiftly appointed by Theresa May to be the new EU Permanent Representative – is feeling Brexity is not clear. However, Nigel Farage is disappointed, having used the pretext of Sir Ivan’s resignation to demand a purge of the Foreign Office. Sir Tim is a career Foreign Office diplomat with service as Ambassador to Russia and to the Ukraine.

In his letter, Sir Ivan is clear that he was due to leave office once the withdrawal negotiations were underway. While it may have made sense for a new Ambassador to be in post before Article 50 is triggered, it equally makes little sense for the incumbent to leave his post abruptly just weeks before negotiations begin unless he felt under political pressure to quit. The finger of suspicion has been pointed at the Prime Minister’s joint chiefs of staff and closest political advisers Fiona Hill and Nick Timothy. It may be, however, that it was the Prime Minister herself who lost confidence in her EU Ambassador.

But the political fallout from Sir Ivan’s departure raises important questions about the politicisation of the civil service and the position of the UK Permanent Representative in the context of Brexit.

Conflict between ministerial advisers and civil servants is not new. The Constitutional Reform and Governance Act 2010 put the Civil Service on a statutory footing and in so doing it also recognised in law the role not just of civil servants but also special advisers. Each is governed by a Code of Conduct with a statutory basis. While civil servants have a duty of impartiality, special advisers do not, recognising that they provide more overtly political guidance to the ministers who employ them. However, according to the Code for Special Advisers, special advisers ‘should act in a way which upholds the political impartiality of other civil servants’. It is clear, then, that those advising key ministers engaged in the Brexit process must act within the boundaries of the Code and allow the civil servants who are equally engaged in the Brexit process to provide advice with complete impartiality.

Brexit is a process not a credo. It is a process that requires different strands of government to work together bound by common objectives rather than a shared belief-system. Creation of the new Department for Exiting the EU – to which the UK Permanent Representation (UKREP) in Brussels reports back – was not about grouping together like-minded Brexiteers even if it is led by a pro-Brexit minister. To work well, it needs to coordinate departments across Whitehall as well as working closely with UKREP, all under the guidance of the Prime Minister.

But returning to the specific issue of the politicisation of the appointment of a new Permanent Representative, it is worth highlighting that Sir Ivan is not the only Ambassador to the EU leaving his post. The US Ambassador to the EU, Anthony Gardner will be packing his bags as the Obama administration leaves office and President Trump moves into the Oval Office. In the US, the appointment of ambassadors is an overtly political matter, and nominees are scrutinised in Senate hearings prior to their appointment.

Pre-appointment hearings have become a feature of the British political system with parliamentary select committees scrutinising the appointment of nominees for significant public appointments. According to Cabinet Office Guidance, hearings take place after the selection of a candidate is made but before the appointment is confirmed. It it for ministers to decide whether to act on the recommendations of the select committee. When Sir Ivan’s predecessor, Sir Jon Cunliffe was being lined up as Permanent Representative, the then Conservative MP Douglas Carswell (later jumping ship to UKIP), demanded a pre-appointment hearing of Sir Jon in front of Parliament’s Foreign Affairs Committee. Carswell asked: ‘At what point do those who profess to represent our national interests answer to the nation for the deals that they strike in our name?’

The Foreign Affairs Committee has intimated its intention to hold pre-appointment hearings for appointment of individuals from outside of the diplomatic service to senior diplomatic roles. This would clearly not apply to someone with the diplomatic background of Sir Tim Barrow. But coincidentally, on 10 January 2017, the Committee takes evidence from Lord Llewellyn on his appointment as UK Ambassador to France. Although ex post rather than ex ante his appointment, it is consistent with the idea that parliament should have oversight over the appointment of individuals who have not been public servants in the traditional sense.

In the absence of a pre-appointment hearing it would seem likely that select committees will want an early opportunity to take evidence from Sir Tim Barrow. After all, committees have taken evidence from Permanent Representatives in the past and this is a proper part of parliamentary oversight of ‘those representing our national interest’. Moreover, parliamentary scrutiny would seem particularly important at a time when anyone from High Court judges to ambassadors are apparently fair game to be labelled as ‘enemies of the people’ unless they toe a particular Brexit line. Parliamentary scrutiny might help build broader public confidence and trust in those who have the difficult task of interpreting the Government’s Brexit objectives, as and when they are formulated.

But before the new Permanent Representative gets his chance to appear before Parliament, we may have the opportunity to hear more from his predecessor. The Chair of the European Scrutiny Committee, Sir Bill Cash sent a letter to Sir Ivan Rogers on 15 December 2016 inviting him to appear before the Committee to explain the work of UKREP. More interestingly, on 4th January 2017, and following Sir Ivan’s resignation, Sir William wrote again to Sir Ivan to say that ‘the invitation still stands’. If the invitation is accepted, the New Year fireworks may not yet have ended.

In Brexit Time, nothing, and no one, is permanent.




Brexit Time: Looking to the Future

This blog was launched at the end of 2016 as a companion to my book Brexit Time and in order to provide a ‘running commentary’ on the issues surrounding the UK’s decision to withdraw from the European Union. It is time for the blog to take a new direction and to begin to think about life after Brexit. For the next three years I will be working on issues of regulatory alignment and divergence after Brexit as part of a Leverhulme Trust Major Research Fellowship. it makes sense to develop the blog to showcase that research as it emerges and to provide a forum for discussion about the impact of Brexit on the future direction of UK regulatory policy in key sectors. I hope you will continue to find the blog to be of interest and to continue to engage with the views and opinions expressed here.