1 August 2018

The EU has remained remarkably united and steadfast in Brexit negotiations. Considering that most of the negotiations so far were on the withdrawal agreement – ensuring, for example, that the UK settles its financial obligations, and safeguarding the rights of EU citizens abroad – this is perhaps not particularly surprising. But it was also aided by the fact that it took the UK quite a while to actually come up with any clear and substantive proposals of its own. Now that Theresa May has presented her Chequers proposal, will this change the dynamics?

The reactions from European leaders, both at the national level and in the EU institutions, have been rather limited – and where they occurred, they were largely lukewarm. In the broader political debate, however, the proposal has evoked substantive feedback. While some continue to lament British cherry-picking, other business groups and politicians welcome the proposal as a constructive step forward in negotiations and call on the EU27 to reciprocate with increased flexibility.

What are trade, business and industry bodies saying?

In Ireland…

  • The British-Irish Chamber of Commerce has welcomed the whitepaper as “a serious step forward in the process and a credible document on which negotiators from both sides can engage in a serious discussion on how the future UK-EU relationship will look,” adding that, “The proposed free trade area for goods including adoption of a common rule book will be good news for our members in the manufacturing and agri-food sectors.”
    • It also welcomes future UK participation in European standard-setting agencies, arguing, “The UK holds considerable expertise in these fields and the loss of future cooperation between agencies would not only hurt the UK’s standing in these fields but also the EU’s, meaning continued cooperation will be mutually beneficial to both parties.”
    • The Chamber is sceptical however of British plans for a “Facilitated Customs Arrangement”, claiming, “It is difficult to see the EU ever accepting such a proposal.” It also judges it “highly unlikely” that the EU will accept the UK’s proposal on institutional arrangements, suggesting, “it might be worth both parties looking towards the EEA and EFTA court system as a possible compromise.”

In Germany…

  • The influential Federation of German Industries (BDI) is worried that May’s white paper “leaves many questions unanswered,” and warns that its “customs [partnership] proposals put additional bureaucratic burdens on businesses.” Its CEO Joachim Lange is also critical of splitting market access for goods and services, saying, “For our companies [that we represent], services and goods are often indivisible parts in their business model. We are critical of the unequal treatment of the four freedoms of the Single market.”


  • Also the German Chambers of Commerce and Industry (DIHK) laments that “two years after the Brexit referendum, [the Chequers proposal] prompts new questions instead of giving clear answers.” Its CEO Martin Wansleben sees “unchartered territory” in May’s plans, and fears that “the British model of a customs partnership poses a challenge to the integrity of the EU’s Single Market […] the EU has, time and again, rightly pointed out that the integrity of the Single Market takes top priority,” stressing, “This is also of paramount importance from the point of view of German business.”


  • The Mechanical Engineering Industry Association (VDMA), the largest industry association in Europe, welcomes May’s decision to “finally present concrete ideas on the future UK-EU relationship on trade.” It acknowledges “the British commitment to adopt EU regulations for industrial goods [as] an important step to avoid trade friction in the engineering sector in the future,” adding, “We also appreciate that goods will remain customs-free for bilateral trade.”


In Belgium…

  • The Belgian employer federation VBO-FEB has demanded of “both parties” in Brexit talks, “also Europe […] to show flexibility, as it did in the past while negotiating privileged relations with neighboring countries that didn’t want to become a member of the EU”, a reference to the Swiss deal with the EU in the 1990s.


In the Netherlands…

  • In the Netherlands, business federations VNO-NCW and MKB-Nederland don’t even mention “splitting up the four freedoms” in their reaction to the White Paper. They saythey are “positive for now” about it, however stressing that companies should still prepare for the worst as the transition will only be agreed if everything is agreed. They call it “a step in the good direction that the UK goes for a softer Brexit”, but also have questioned whether the UK’s proposal to collect EU tariffs won’t be too complex.


What are academics, (former) officials and politicians saying?

  • Last week, five international academics and politicians – among them Norbert Röttgen, German CDU MP and Chair of the Bundestag’s Foreign Affairs Committee, as well as Jean Pisani-Ferry , former programme director for Emmanuel Macron’s presidential campaign – have argued that “the White Paper puts the ball in the EU court,” adding, “Until now, the EU has not produced anything similar.” They urge the EU to “neither stick to rigid positions nor hide behind red lines,” stressing, “They should not pretend that only off-the-shelves solutions are available for building a relationship with Britain.”


  • Also former Belgian ECJ judge Franklin Dehousse has arguedthat “quick concessions from both sides” are needed, noting “The present backstop proposal remains valid, but it can be conditionally extended to the whole UK territory,” suggesting “participation to [the] single market in goods” only as an option. He also recommends Britain joining a common customs union, permanently, something Open Europe doesn’t see as sustainable, but such a recommendation from a top EU legal authority to “split up the four freedoms” is important.


  • In the Financial Times, former IMF official Isabelle Mateos y Lago writes: “Some argue that the white paper violates the indivisibility of the EU’s ‘four freedoms’ of goods, capital, services and people. But this is a matter of interpretation — the four freedoms are not absolute. And, critically, the British government’s proposal, in its broad outline, meets a fundamental goal of EU leaders: it does not create a bad precedent. Indeed, it potentially creates a good one.”


  • Rene Cuperus, a Senior Research Fellow at the think tank of the Dutch Labour Party (PvdA), writes in Dutch daily De Volkskrant that “the UK should not become a stranger to Europe. The EU must therefore urgently abandon the purely technocratic – legalistic approach to Brexit. In the world of Xi, Trump and Putin Brexit isn’t a hobby of EU Treaty lawyers but a big political priority. Chefsache. It’s high time for European government leaders to get to a geostrategical deal with the UK”.


  • Also Karl-Heinz Paqué, member of the executive board of Germany’s Free Democrats (FDP), warns that a failure of May’s Chequers proposal would lead to “a sort of divorce in strife, with a long-lasting bitter aftertaste of humiliation and frustration,” leading the UK to “inevitably reorient itself” away from the “European camp.” Paqué stresses that now, “It is about making the best of the situation. And for this we need imagination, pragmatism and reason, also in Brussels – and not rigid dogmatism.”


What are editorials saying?

  • On the frontpage of the Frankfurter Allgemeine Zeitung – the voice of Germany’s centre-right establishment – an editorial calls on the EU to consider to offer something else to UK than only “full” single market membership, writing “One can only hope that Barnier opens up to a compromise. Insisting that the UK can only have full membership of the single market would pull the rug out from under May’s feet.” In another piece, the FAZ’s London correspondent Marcus Theurer writes that the Chequers proposal is “the opposite of ‘cherry-picking’. The EU should be responsive. Otherwise an even bigger problem is looming.”


  • For German public broadcaster Deutschlandfunk, journalist Joachim Dorfs comments, „Despite many question marks remaining […] London now has, after months of dissonance and dogmatism, for the first time presented a somewhat realistic plan [for Brexit]. The EU now needs to acknowledge this.” Dorfs continues, “Without a strong woman in Downing Street, without a stable government in London, the EU will not be able to achieve a proper agreement with London. And Brussels cannot be interested in a weak or unstable Britain. EU-chief negotiator Michel Barnier, who so far always has calmly rejected London’s confused ideas, now needs to move.”


  • In the Netherlands, the magazine Elsevier has welcomedas “a good thing for the Netherlands” that “the UK wants to remain in the single market for goods”.


Will Chequers set the ball rolling for a bespoke deal?

It is hard to find effusive endorsements of the Chequers plan across the Continent. To many politicians, business representatives and journalists, Theresa May’s proposal symbolises little more than another attempt of British cherry-picking that fails to respect EU red lines. Particularly, the British suggestion of a Facilitated Customs Arrangement fails to find much favour across the EU27.

Still, despite its flaws, there is a growing sentiment across Europe that the UK’s Chequers plan is a substantial proposal that needs to be taken seriously. Partly, because observers keep a wary eye on the domestic situation in Britain and understand that May’s scope to offer further concessions at this point is severely limited. And this at a time when the danger of a no-deal Brexit, whose economic and political fallout would not be pretty for either side, is looming ever larger.

But partly also because they see the direction of the proposal as broadly sensible – while the UK reduces its obligations (e.g. by restricting freedom of movement), it also accepts the loss of certain membership benefits (e.g. less access for services exports; rule-taker rather than rule-maker on goods). Chequers itself may not be the balance of rights and obligations the EU27 are looking for, but there is likely to be increasing pressure from within the EU27 for EU negotiators to engage seriously over what kind of bespoke agreement actually would.