If some UK red lines shift, it would be hard for the EU to remain obdurateby Charles Grant / September 12, 2018 / Leave a comment
Theresa May’s Chequers plan for the future UK-EU relationship appears moribund. The European Union has been critical and the UK parliament seems unlikely to vote in favour: both the Labour Party and hard-Brexit Conservatives are hostile. Yet important parts of the Chequers plan may yet re-emerge, because the alternatives are so unpalatable.
One argument for Chequers is that it is the least bad option for the UK (and EU) economy that could conceivably work politically. By aligning Britain with EU rules on manufactured goods and farm goods, and providing for a sort of customs union, it would protect manufacturing supply chains and ensure frictionless trade.
To be sure, the EU’s Brexit strategy is no more driven by the desire to maximise trade than is Britain’s. EU leaders care more about politics and principles. But the other argument for Chequers is political: it would remove the need for border controls between the two parts of Ireland in a way that works for Unionists, that is to say without checks on trade between Northern Ireland and Great Britain.
The part of Chequers that is truly dead is the “facilitated customs arrangement”: goods entering the UK would pay either UK or EU tariffs, depending on their ultimate destination, leaving the British free to strike their own trade deals. The EU thinks this could not work and would encourage fraud. But it might accept a fudge whereby both sides committed to a clever high-tech scheme that would in the long run provide for both frictionless trade and an independent UK trade policy; the British would promise to stay in a customs union until such a scheme was viable.
The EU also dislikes the Chequers idea of the UK being in the single market for goods but not services. It fears other countries will demand some but not all of the “four freedoms,” which could undermine the Union’s institutional strength. Furthermore, the French and the Germans worry that Chequers could allow the UK economy to do quite well, encouraging eurosceptics to argue in next May’s European elections that others should follow the British out.
The Commission claims that since services provide much of the value of goods, if the British were free to undercut EU standards on services, they would distort the playing field for…