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The origins of No-Deal
03 Jul, 2019

It arose from a misunderstanding of negotiating technique

Leavers want No-Deal. It has come to be seen as the only true Brexit that honours the 2016 referendum, even though none of Leave’s proponents specifically referred to a ‘No Deal’ Brexit during the referendum campaign. It is a retreat to Brexit fantasy-land. But we can use it to obtain support for a referendum by making No-Deal an option. However, we do have to defeat it. That means focusing on long term relationship harm. London4Europe Committee member and former HM Treasury senior civil servant Michael Romberg writes.

 

What does No-Deal mean anyway

There are two separate components:

  • A rejection of the withdrawal agreement (pay our bills, UK/EU citizens’ rights, Irish border, transition period)
  • A desire for a UK/EU free trade agreement with little acceptance of EU regulations, no difference between GB and NI, and an indifference to the consequences for the Irish border. (Note that a GB/EU FTA would be possible under Theresa May’s deal, but would require a customs and regulatory border in the Irish Sea reflecting the divergence from EU regulations.)

 

2016: all about the deal

At the time of the referendum and its immediate aftermath it was all going to be “the easiest trade negotiation in history” because “we held all the cards”. We would be able to “have our cake and eat it”.  A People's Vote campaign video brings the claims together.

Leavers talked about how they liked Europe just not the EU; how they wanted friendly co-operation, just not through EU institutions.

Leavers dismissed HM Treasury’s economic analysis which looked at three different models for UK/EU relations after Brexit: EEA, a specific deal like Turkey or Canada, and WTO terms.

The EU Flag Mafia has graphed references to No-Deal: it does not start until 2017 and does not take off until 2018 H2. A Twitter thread by “Steve Analyst” responds to Piers Morgan’s claim that “No Deal is actually Brexit” by a thread showing videos of Leave advocates talking about deals.

Initially Soft Brexit meant in the Single market; Hard Brexit a FTA outside itLeavers did not expect to be outside the single market after Brexit.

 

Theresa May’s negotiating stance

Theresa May started in her January 2017 Lancaster House speech to say “No deal is better than a bad deal”. That was meant to shore up her position with the hard leavers in her party; and to strengthen her position in negotiations with the EU.

 

Sensible, but not in these circumstances

An international negotiation between two entities with established ties and agreements is not the same as a commercial negotiation. For example, I propose to sell you my car for £8,000. You offer £5,000. I think that is a bad deal. So I walk away from the transaction. Of course, I still have the car.

The equivalent in the Brexit negotiations would be to Remain, not to leave without a deal (and don’t get your hopes up – when asked the question in surveys those who want “no-deal” are clear that it means Brexit).

As a negotiating approach it was inept to use threats when we would have to have a close relationship. Moreover, the EU knew how harmful no-deal Brexit would be to us. So it was an empty threat – at any rate for as long as they were dealing with a rational responsible actor.

  

Retreat from reality

It would be possible to think of a deal so bad that leaving without a deal would be better. But no-one has done so.

No-Deal is not quite a unicorn. We could actually leave without a Withdrawal Agreement.

But the ERG’s proposal for No-Deal fundamentally misrepresents what would happen next. "A clean managed Brexit" assumes the EU would negotiate an FTA and a series of non-economic bilateral agreements based on trust and friendship with the UK without settling the substance of the withdrawal agreement first. The EU has consistently ruled that out.

The ERG paper has been criticised by Professor Steve Peers, Dave Henig of the UK Trade Forum, Peter Foster (Europe Editor of the Daily Telegraph) and Ivan Rogers

Of course, No-Deal is a lousy option. Richard Corbett MEP has taken it apart. No-Deal is described by FT correspondent Martin Wolf as “lunacy wrapped up in stupidity”. The UK Trade Policy Observatory sets out what it would actually mean.

 

Brexit the dream

Brexit has been espoused by both the bulk of the Conservative party and by Jeremy Corbyn

After the brush with reality that was the government’s deal – virtually identical to Jeremy Corbyn’s proposed deal (both deals miss Labour’s six tests by a mile) – the Leave world has retreated to the comforts of dreamland. Guardian feature writer Rafael Behr sums it up well in 100 seconds in this video.

 

We can utilise that to call for a referendum

Most MPs are too responsible to allow No-Deal – though it is not clear whether they have the power to stop it. There is also a majority against a referendum, at least at the moment. Impasse. So, one way to obtain the majority for a referendum is to say that No-Deal should be an option.

Many Remainers and responsible MPs will not wish to see it on the ballot paper. But they need to explain how a referendum could be seen as legitimate if Leavers’ preferred option is not a choice. A multiple choice referendum could be designed fairly in two stages.

 

We need to improve our arguments against No-Deal

We have tended to focus on the initial disruption that No-deal would cause. Leavers see that as Project Fear.

We need instead to focus on the longer term. We need a good relationship with the EU: they are our neighbours, much bigger, and an essential partner not just for trade but for security, environmental regulation and so much more besides. We will not be able to have a good relationship until we have settled the substance of the withdrawal agreement. That the EU would keep the aeroplanes flying and some other minimal agreements gets us nowhere near the level of co-operation we need. 

Nor would it be a good look to go to countries outside the EU asking for a new relationship when our main selling point is that we have just thrown a brick at our neighbours and key partners. The only countries that would be interested in talking with us are those that can smell weakness.

  

Conclusion

So we need to win the argument against no deal, but in the meantime can use it to gather support for a referendum.

 

 

 

The London4Europe blogs page is edited by Nick Hopkinson, Vice-Chair. Articles on this page reflect the views of the author and not necessarily of London4Europe.