Analyzing the 2016 Brexit: The UK Exit Plan is Revealed, Promising a “Hybridized” End-result.

January 20, 2017

PREFACE:

The British Prime Minister, the Right Honourable Theresa May, presented her government’s plan for Brexit negotiations in a speech to the nation on Tuesday, January 17, 2017.[1]  Consisting of 12 distinct points,[2] the plan makes it quite clear that the U.K. does indeed want a clean break from the European Union and the freedoms and rights to control its own immigration and make its own laws,[3] but, at the same time, the U.K. wants to enjoy a good deal of continued access to the E.U. common market.[4]  This is quite some progress since: (i) the High Court ruling of Thursday, November 3, 2016 that the prime minister could not unilaterally trigger the Brexit process[5] – which is still pending on appeal to the U.K. Supreme Court[6] that many knowledgeable Members of Parliament fear the government might ultimately lose;[7] and (ii) the overwhelming 448:75 vote in the U.K. House of Commons on Wednesday, December 7, 2016 to endorse and follow the prime minister’s plan to trigger the Brexit process by or before the end of March, 2017 – providing, of course, that both houses of the U.K. Parliament see and consider the final deal reached.[8]  That parliamentary accord was effectuated and made public in point 1 of the Prime Minister’s Brexit plan.[9]

 

 

ANALYSIS:

In my original Brexit post,[10] made shortly after the June 23, 2016 vote, I had posited 7 actual, and 1 potential and as then undefined, model of what the UK’s future relationship with Europe might be.[11]  Now, looking to the full transcript of prime minister May’s speech,[12] we can clearly see that several of these models – with all of them working well for their adherent nations, were rejected outright.

 

Model I: Full membership[13]

This model, the prior status quo, is rejected by the seeking of a full exit from the European Union and self-determination within the U.K. under both point 1 and point 2, as stated by the prime minister.[14]

 

Model II: Norway[15]

This model, used by Norway, is rejected in the fact that the U.K. will no longer make significant and blanket contributions to the E.U. budget and programs, but retains the right to make limited contributions on select E.U. initiatives on which it has a vote and in which it acknowledges a continuing stake: “There may be some specific European programmes in which we might want to participate.  If so, and this will be for us to decide, it is reasonable that we should make an appropriate contribution.  But the principle is clear: the days of Britain making vast contributions to the European Union every year will end.”[16]

 

Model III: Switzerland[17]

This model, used by Switzerland, involves free movement but it is rejected in point 5 and the U.K. prime minister’s stated desire to “[…] get control of the number of people coming to Britain from the EU.[18]

 

Model IV: Turkey[19]

This model, used by Turkey, also involves acceptance of cash contributions from the E.U. with mandatory enforcement of certain E.U. trade laws in Turkey, and the right of Turkish nationals to access E.U. welfare structures.  As implied by the rejection of all the above models and as specified by the prime minister, this option is also off the table as it would not accomplish the full split from the E.U. that Britons want: ““European leaders have said many times that membership means accepting the “four freedoms” of goods, capital, services and people.  And being out of the EU but a member of the Single Market would mean complying with the EU’s rules and regulations that implement those freedoms, without having a vote on what those rules and regulations are.  It would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country.””[20]

 

Model V: Canada (signed on Sunday October 30, 2016)[21]

This model, used by Canada, eliminates duties on most exports for each counterparty and gives Canada access to the E.U. market at a time when access to the U.S. market to Canada’s immediate south, is under strong query by the incoming Trump administration.[22]  Signed by Canada and the E.U. on October 30, 2016, it does still require approval by each and every one of the parliaments of the “current” E.U. member states, including the U.K.[23]  That requirement could therefore still pose some problems regarding the deal’s entering into full force and effect.  The prime minister also rejected this model in the preamble of her speech: “Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out.  We do not seek to adopt a model already enjoyed by other countries.  We do not seek to hold on to bits of membership as we leave.[24]

 

Model VI: Hong Kong and Singapore[25]

The unilateral free trade policies adopted by Hong Kong and Singapore are not an option for the U.K., as the domestic economy would not be able to withstand the onslaught of cheap goods from all corners of the globe.  On the contrary, the prime minister stressed the renewed U.K. desire to be and remain global and pursue as many free trade deals with as many free trading partner nations and groups of nations, as possible, in point 9: “We want to get out into the wider world, to trade and do business all around the globe.  Countries including China, Brazil, and the Gulf States have already expressed their interest in striking trade deals with us.  We have started discussions on future trade ties with countries like Australia, New Zealand and India.  And President Elect Trump has said Britain is not “at the back of the queue” for a trade deal with the United States, the world’s biggest economy, but front of the line.[26]

 

Model VII: WTO Default Rules[27]

WTO default rules are generally used by trading nations where there is no existing trade agreement between them.  Considering the prime minister’s intent in point 9 to set U.K. tariff lines at the WTO, and her call for a “phased approach” to implementation in point 12, it is quite likely that some form of WTO regime will be applied during the transition process: “But the purpose is clear: we will work to avoid a disruptive cliff-edge, and we will do everything we can to phase in the new arrangements we require as Britain and the EU move towards our new partnership.[28]  On the other hand, if the U.K. Parliament votes against the final deal as tabled, seeking amendments or issuing a total rejection of same, then advisable best practices of having WTO Rules ready to fill the void while that was all sorted out, and the stated and mutual intention for a phased implementation of the Brexit and its successor conventions would prevent one or a few hiccups from ending or permanently handicapping the process altogether.

 

Model IIX: the “unknown unknown”[29]

As is now abundantly clear, the overall intention of Mrs. May’s government is to craft a relationship with the E.U. that does not fit squarely within the parameters of any of the foregoing options, but includes: significant customs and regulatory cooperation (but not full integration) with the E.U. through a broad free trade agreement; strong cooperation and integration with the E.U. in matters of science and technology; deep security cooperation with the E.U.; a plethora of free trade agreements with other nations; maintaining the free movement of Britons within the U.K. as well as a somewhat semi-porous E.U. border through the Irish Republic; greater worker rights and protections within the U.K.; and solidification of the ties binding the UK’s constituent parts together by means of greater power devolution of powers from England to local lawmakers in Wales, Scotland, and Northern Ireland.[30]

 

In any case, the eventual model must achieve Mrs. May’s overarching vision for the future Britain:

 

“I want this United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before.  I want us to be a secure, prosperous, tolerant country – a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead.  I want us to be a truly Global Britain – the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too.  A country that gets out into the world to build relationships with old friends and new allies alike.”[31]

 

To underline that fact and to let both the European nations and the British voters at home know that she and her staffers would be very serious, deliberate, and focused in their approach to and conduct of those Brexit negotiations, the prime minister also made it abundantly clear that she would walk away from a bad deal for Britain if that were the last or sole option that the Europeans put on the table: “I am equally clear that no deal for Britain is better than a bad deal for Britain.”[32]

 

 

PROGNOSIS:

While the path ahead for prime minister May and her party is fraught with dangers, today’s inauguration of Donald J. Trump as the 45th president of the United States of America,[33] has left many nations queasy, uneasy, and seeking free trade deals of their own – Canada with 70% of pre-Trump exports going to the United States,[34] will now likely consider deeper ties with China, Japan and India,[35] and China is already considering and sealing deals with everyone.[36]  As a result of this deal frenzy, the Britons will therefore find very many parties willing to talk trade with them.  Indeed, China’s President, Xi Jinping, best summed-up the current global thinking on trade[37] amidst the tweet-fuelled apprehension caused by Mr. Trump and his protectionist leanings,[38] when the former said:

 

““Pursuing protectionism is like locking oneself in a dark room, [w]ind and rain may be kept outside, but so is light and air.””[39]

 

Once again, then, the “great game”[40] for geopolitical and economic leverage is on.  This time, however, the landscape is global, and Britain and Russia – the protagonists of yore trying to shoulder their way back-in, have given significant ground to the new prime movers of China, the E.U., and at least until now, the United States of America.

 

Let us therefore wait and see what the British Supreme Court has to say on Brexit, which nations end-up locking themselves into those dark, and which nations throw open their doors and windows to get the best access to the shared light and air of trade that gives jobs, mutually assured security, and life itself.[41]

 

**********************************************************************

 

Author:

Ekundayo George is a lawyer and sociologist.  He has also taken courses in organizational and micro-organizational behavior, and gained significant experience in regulatory compliance, litigation, and business law and counseling.  He is licensed to practise law in Ontario and Alberta, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America.  See, for example: http://www.ogalaws.com.  A writer, blogger, and avid reader, Mr. George has sector experience in Technology (Telecommunications, eCommerce, Outsourcing, Cloud), Financial Services, Healthcare, Entertainment, Real Estate and Zoning, International/cross-border trade, other services, and Environmental Law and Policy; working with equal ease and effectiveness in his transitions to and from the public and private sectors.  He is a published author on the National Security aspects of Environmental Law, has represented clients in courts and before regulatory bodies in both Canada and the United States, and he enjoys complex systems analysis in legal, technological, and societal milieux. Trained in Legal Project Management (and having organized and managed several complex projects before practising law), Mr. George is also an experienced negotiator, facilitator, team leader, and strategic consultant – sourcing, managing, and delivering on complex engagements with multiple stakeholders and multidisciplinary teams.  Team consulting competencies include program investigation, sub-contracted procurement of personnel and materials, and such diverse project deliverables as business process re-engineering, devising and delivering tailored training, and other targeted engagements through tapping a highly-credentialed resource pool of contract professionals with several hundred years of combined expertise, in: healthcare; education and training; law and regulation; policy and plans; statistics, economics, and evaluations including feasibility studies; infrastructure; and information technology/information systems (IT/IS) – also sometimes termed information communications technologies (ICT).  See, for example: http://www.simprime-ca.com.

 

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”) including employees, agents, directors, officers, successors & assigns, in whole or in part for their content, accuracy, or availability.

 

This article creates no lawyer-client relationship, and is not intended or deemed legal advice, business advice, the rendering of any professional service, or attorney advertising where restricted or barred.  The author and affiliated entities specifically disclaim and reject any and all loss claimed, no matter howsoever resulting as alleged, due to any action or inaction done in reliance on the contents herein.  Past results are no guarantee of future success, and specific legal advice should be sought for particular matters through counsel of your choosing, based on such factors as you deem appropriate.

 

[1] Dan Bloom.  Theresa May’s 12-point plan for Brexit in full: PM finally reveals basis for EU exit negotiation.  Posted January 17, 2017 on mirror.co.uk.  Web: <http://www.mirror.co.uk/news/uk-news/theresa-mays-12-point-plan-9637039>

[2] Id.

[3] Id at point 2: “Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast.  And those laws will be interpreted by judges not in Luxembourg but in courts across this country.

[4] Id at points 8 and 9: “Instead we seek the greatest possible access to it through a new, comprehensive, bold and ambitious Free Trade Agreement“.  “Whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position”.  “I have an open mind on how we do it.  It is not the means that matter, but the ends“.

[5] Sky News.  Brexit court case: Government loses, May cannot trigger Article 50.  Posted November 3, 2016 on sky.com.  Web: <http://news.sky.com/story/may-cannot-trigger-brexit-government-loses-high-court-case-10642756>

[6] Anushka Asthana and Heather Stewart.  Government will lose Brexit supreme court case, ministers believe.  Posted January 11, 2017 on theguardian.com.  Web: <https://www.theguardian.com/politics/2017/jan/11/government-brexit-supreme-court-theresa-may-article-50>

[7] Id. “Losing”, in this context, means that a majority of the 11 Supreme Court judges will rule that the government “must” seek parliamentary approval to trigger a Brexit.  “Losing badly” means said majority of judges will either (a) specify what the government must seek or achieve from Brexit negotiations; or (b) that the government must secure “specific” approvals from Scotland and Ireland (which voted to remain) – and which would require advance concessions to secure that approval; or (c) that a patchwork of other conditions or preconditions must be met, and which would both severely constrain the government in its negotiations, and publicize its strategy to its detriment.

[8] Tim Ross and Alex Morales.  U.K. Lawmakers Back Theresa May’s March 2017 Brexit Schedule.  Posted December 7, 2016 on bloomberg.com.  Web: <https://www.bloomberg.com/news/articles/2016-12-07/u-k-weighs-swiss-norwegian-style-eu-customs-deals-davis-says>

[9] Time Staff.  Posted January 17, 2017 on time.com.  Read Theresa May’s Speech Laying Out the U.K’s Plan for Brexit.  Web: <http://time.com/4636141/theresa-may-brexit-speech-transcript/> at Point 1: “I can confirm today that the government will put the final deal that is agreed between the UK and the E.U. to a vote in both Houses of Parliament, before it comes into force.”

[10] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/>

[11] Id.

[12] Time Staff.  Posted January 17, 2017 on time.com.  Read Theresa May’s Speech Laying Out the U.K’s Plan for Brexit.  Web: <http://time.com/4636141/theresa-may-brexit-speech-transcript/>

[13] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Online: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 89 (full E.U. membership).

[14] See Supra note 12 at points 1 and 2.

[15] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 90 (Norway model).

[16] See Supra note 12 at point 8.

[17] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 91 (Switzerland model).

[18] Time Staff.  Posted January 17, 2017 on time.com.  Read Theresa May’s Speech Laying Out the U.K’s Plan for Brexit.  Web: <http://time.com/4636141/theresa-may-brexit-speech-transcript/> at point 5.

[19] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 92 (Turkey model).

[20] See Supra note 18 at point 8.

[21] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 93 (Canada model).

[22] Jared Bernstein.  Trump promises to tear up trade deals. Here’s what he should do.  Posted November 14, 2016 on washingtonpost.com.  Web: <https://www.washingtonpost.com/posteverything/wp/2016/11/14/trump-promises-to-tear-up-trade-deals-heres-what-he-should-do/?utm_term=.7ba295aa5e94>

[23] Robert-Jan Bartunek and Philip Blenkinsop.  EU, Canada sign free trade deal but battle not over.  Posted October 30, 2016 on reuters.com.  Web: <http://www.reuters.com/article/us-eu-canada-trade-idUSKBN12U0HU>

[24] Time Staff.  Posted January 17, 2017 on time.com.  Read Theresa May’s Speech Laying Out the U.K’s Plan for Brexit.  Web: <http://time.com/4636141/theresa-may-brexit-speech-transcript/> at A message from Britain to the rest of Europe.

[25] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 94 (Hong Kong and Singapore model).

[26] See Supra note 24 at point 9.

[27] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 95 (World Trade Organization default rules).

[28] See Supra note 24 at point 12.

[29] Ekundayo George.  Analyzing the 2016 Brexit: A Classically Complex Conundrum.  Posted June 30, 2016 on ogalaws.wordpress.com.  Web: <https://ogalaws.wordpress.com/2016/06/30/analyzing-the-2016-brexit-a-classically-complex-conundrum/> at note 96 (the hitherto unknown model, yet to be developed).

[30] See generally Time Staff.  Posted January 17, 2017 on time.com.  Read Theresa May’s Speech Laying Out the U.K’s Plan for Brexit.  Web: <http://time.com/4636141/theresa-may-brexit-speech-transcript/>

[31] Time Staff.  Posted January 17, 2017 on time.com.  Read Theresa May’s Speech Laying Out the U.K’s Plan for Brexit.  Web: <http://time.com/4636141/theresa-may-brexit-speech-transcript/> at the preamble.

[32] Id. at A new partnership between Britain and Europe.  See also Peter Dominiczak, Political Editor and Michael Wilkinson, Political Correspondent.  The 12-point Brexit plan explained: Theresa May warns EU she will walk away from a ‘bad deal’ for Britain.  Posted January 17, 2017 on telegraph.co.uk  Web: <http://www.telegraph.co.uk/news/2017/01/17/theresa-may-warns-eu-will-walk-away-bad-deal-britain/>

[33] USA.Gov.  Presidential Inauguration 2017.  Posted on usa.gov.  Visited January 18, 2017.  Web:

<https://www.usa.gov/inauguration-2017>

[34] David Israelson, Special to The Globe and Mail.  Canada’s trade alternatives post-Trump and Brexit.  Posted December 6, 2016 on theglobeandmail.com.  Web: <http://www.theglobeandmail.com/report-on-business/international-business/canadas-trade-alternatives-post-trump-and-brexit/article33208634/>

[35] Id.

[36] Zhong Nan.  China eyes more FTA deals in 2017.  Posted December 28, 2016 on chinadailyasia.com.  Web: <http://www.chinadailyasia.com/business/2016-12/28/content_15548398.html>

[37] Larry Elliott and Graeme Wearden in Davos.  Xi Jinping signals China will champion free trade if Trump builds barriers.  Posted January 18, 2017 on theguardian.com.  Web: <https://www.theguardian.com/business/2017/jan/17/china-xi-jinping-china-free-trade-trump-globalisation-wef-davos>

[38] Jurek Martin.  Apprehension ahead of President Trump’s first words.  Posted January 18, 2017 on ft.com.  Web: <https://www.ft.com/content/b4cba008-dcda-11e6-86ac-f253db7791c6>

[39] Supra note 37.

[40] See Wikipedia.  The Great Game.  Visited January 18, 2017.  Web: <https://en.wikipedia.org/wiki/The_Great_Game>

[41] *Reserved*

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