12 April 2018

What should we make of Michel Barnier’s comments that the UK could change its negotiating stance during the transition period, including to stay in the Customs Union and Single Market? They have important implications for the “meaningful” parliamentary vote on Brexit, but also potentially on the stakes for the Government on amendments to the Trade and Customs Bill which would force the UK to seek to form a new Customs Union with the EU.

In an interview with Sueddeutsche Zeitung and other European newspapers, the European Commission’s Brexit-lead Michel Barnier said that “if the UK decided to shift its red lines [on the terms of its post-Brexit relationship with the EU], then we will shift ours as well.” Asked by Le Soir how much time the UK has to change its mind, Barnier said, “They are leaving the EU on 30 March next year. But they are not leaving the Single Market or the Customs Union until 31 December 2020…,” adding later, “As long as they have not left, during the transition period, anything is still possible.” This therefore leaves the door open to a shift in UK policy even after the Article 50 period has ended.

These comments are interesting in several ways.

At one level they point to something we’ve already seen. The Commission has long been determined to push the UK towards staying within the Customs Union. That’s no surprise as it would allow the Commission to retain control over UK trade policy after Brexit, and to sell access (without our control) to our markets in their future trade deals. Barnier and other EU figures often disingenuously suggest that leaving the Customs Union is a UK decision, rather than an automatic consequence of Brexit. After all, even those countries closest to the EU – such as Norway or Switzerland – are outside of the Customs Union.

In his new comments, Barnier repeats his suggestion that the UK could ultimately opt to stay within the Single Market – how could that be squared with commitments by both the Government and the Opposition to end Free Movement? Or is he expecting this ‘red line’ to fall away? That seems very unlikely without significant movement on the EU side towards redefining what free movement entails, something that doesn’t appear to be on the agenda.

The idea that the EU is open to a fundamental re-opening of the framework of the future partnership during the transition is a new development. (The previously published Council guidelines included an evolution clause that clarified that the EU would respond to a UK re-think, but didn’t suggest this would extend after the end of the Article 50 period, by which point the UK would be a third country). We already knew that the transition period would be a de facto extension of the negotiation period. Contra David Davis’s insistence, most commentators don’t expect the UK and EU to get too far beyond a political declaration – heads of terms – on the future partnership during Article 50 (and there’s some obvious political advantages for the Government in keeping things somewhat vague to appease potential parliamentary critics ahead of the ‘meaningful’ Brexit vote).

But there’s a difference between spending the transition colouring in details around a political declaration on heads of terms and fundamentally re-thinking the nature of the partnership. Barnier’s comments will arguably make the “meaningful vote” on the Brexit deal – which is expected this autumn – less significant. If the EU side is saying they could shift their overall position (in response to a British shift) during the transition period, surely it’s harder to justify voting against a deal on the Withdrawal Agreement, especially if doing so could secure a ‘no deal’ exit. Arguments for extending the Article 50 period are also potentially weakened by this development – if the transition starts to look more and more like a longer Article 50, albeit from outside the EU, why insist on extending Article 50?

The comments show the propensity of the EU to play British politics. The Government has long been clear that it intends to leave the Single Market. During the referendum debates, the leaders of both the Remain and Leave sides repeatedly argued that Brexit would entail leaving the Single Market. Why re-open this question for the transition? Perhaps because there’s a growing acceptance amongst political commentators and EU watchers that Brexit is happening, but that the ‘fight’ is moving away from whether the UK leaves the EU towards how the UK leaves and where it ends up. By explicitly signalling that the Commission is open to a shift in the UK position – even after Article 50 ends – the Commission is jumping right into this political debate.

While perhaps making a rejection at the “meaningful vote” stage less likely, these comments also raise the stakes for the Government in terms of the risks around amendments, such as to the Trade and Customs Bill, which would oblige the UK to seek to negotiate a new customs union with the EU. Previously the Government could have tried to delay the Trade and Customs Bill’s return to the Commons, and sought to argue – especially if the “meaningful vote” came after October – that there was insufficient time to re-open fundamental aspects of the future partnership. The Commission has just made that line of argument rather weaker.