Britain opts to leave the European Union to become America’s 51^st state
“Brexit is Brexit, and Britain will make a success of it” – this circular mantra became the credo of the nascent premiership of Prime Minister Theresa May soon after she moved into 10 Downing Street. After the United Kingdom had voted to leave the European Union in the national referendum on 23 June 2016, the swift ascent of May to the leadership of a deeply divided nation was not marked by decisive and resolute action, but a sense of uncertainty and strategic obfuscation. More than that, the “Brexit is Brexit” line was widely ridiculed for its insipidness and lack of clarity. This is not surprising considering the fact that the Brexiteers quite simply did not have a plan on action once their ambition actually came to fruition.

In the meantime, many options were discussed: Maybe the United Kingdom would not get out of the EU at all? The pending Article 50 case before the UK Supreme Court, the determined opposition of all other 27 EU countries against entering preliminary discussions on Brexit and divisions within the Leave camp on the right post-Brexit arrangement already threatened to throw a spanner into the proverbial works. Consequently, generalities would no longer do it anymore – and Mrs May decided to act.

The Prime Minister delivered a speech on her vision of a “Global Britain” this past Tuesday, 17 January – and what she said provided the hitherto clearest indication of the path the United Kingdom Government now wishes to embark on. Evidently, that path contains a very special interpretation of the transfer of sovereignty: Britain is leaving the European Union under the banner of “taking back control” – only to effectively hand it over to its special ally and partner, the United States, now led by the Administration of President Donald J. Trump who has expressed his disdain for the European Union many a time.

Rewriting History
But first, back to the speech: The Prime Minister began her remarks with a throwaway comment about how the United Kingdom had “voted to leave the European Union and to embrace the world”. Whilst certainly a crowd-pleasing sentiment, especially given the negative sentiments conjured up primarily by the Leave campaign (but, to some extent, parts of the Remain camp as well), this is once more a transparent attempt at misdirection: Whilst being in the EU, Britain continued trading and building closer links with the rest of the world. Besides, this leaves out the basic fact that the residual EU still contains several G8/20 nations, as well as several leading OECD nations. But anyway, I digress.

The Prime Minister attempts to craft a positive case for a “truly global Britain”, thus drawing a marked contrast to both the more extreme proponents of the Leave case (like Nigel Farage, Arron Banks, Jacob Rees-Mogg and Andrea Leadsom). May played the familiar card of portraying the European Union as a constraint on the international economic clout and prestige of the United Kingdom – perhaps ignoring the fact that much of its economic success (especially in the financial services industry and free trade) has been facilitated through a strong trade relationship with the European Union, as well as preferential arrangements that the members of the Single Market share. She also conveniently forgets that countries like Germany, Denmark and the Netherlands have been consistently successful within the European Union as well. This is not to dispute the problems the European Union has in terms of an out-of-control bureaucracy, a tendency to encroach upon competences that are allocated to Member States and a general aloofness from the lives of working people across the Continent – that said, much of Mrs May’s speech appears to be borne more out of wishful thinking than actual facts on the ground. But more about that in a bit.  

In a welcome shift of tone, May distanced herself from the wilfully ignorant voices from both leadership of the Leave side and its sympathizers, including Mr Farage and (lately) US President Donald Trump, which seemed to rejoice at the prospect of the European Union completely collapsing. That said, the atmosphere between London and Brussels has already been poisoned by ill-judged remarks on part of UK cabinet members and leaders of the European institutions, as well as individual MEPs. It can only be hoped that the grand-standing on both sides will now stop and serious negotiations commence in earnest.

Remarkably, she asserted that David Cameron’s attempt at renegotiation was “valiant”. Respectfully, it wasn’t. Instead, the renegotiation was little more than a PR stunt lacking strategy,  the long-term cultivation of alliances within the European Union and the ability to play a constructive role within the EU that could have resulted in much more generous concessions from the other heads of state – and a missed opportunity for Britain to drive a much-needed process of deeper institutional reform which could have convinced swing voters in the industrial heartland that, yes, Britain could remain relevant within the EU.

Our Way or the Highway
“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”, the Prime Minister asserted and then continued by underlining that one of her central priorities was to end the jurisdiction of the European Court of Justice (ECJ) over British legislation – a goal she had already alluded to in her Conservative Party conference speech last autumn. This ties in with two other goals pursued by Mrs May: full control over immigration and clamping down on the freedom of movement of EU citizens.

Consequently, Mrs May announced that not just would she relinquish any claim to Single Market membership, but also to Customs Union membership. Instead, the Prime Minister wishes to negotiate a “bold and ambitious Free Trade Agreement with the European Union”. Thus, previously discussed models for the United Kingdom’s future economic relationship, such as the Switzerland and Norway/Iceland models are off the table now, since these would have required the payment of reduced membership dues, accepting the free movement of workers, the implementation of the entire acquis communautaire and supervision by the European Court of Justice – without any say in Brussels whatsoever.

Nonetheless, this is a remarkable development on a number of levels: first, it appears that the hardliners in Mrs May’s cabinet, led by David Davis and Liam Fox have won the debate over her Chancellor of the Exchequer, Philip Hammond, who had been a fierce proponent of a close relationship with the European Union. Second, it appears that Mrs May has made the decision to prioritize electoral support on issues of immigration control, border security and working-class grievances in northern England over the complexities of disentangling a largely beneficial economic relationship with the remainder of the European Union. In a research paper, the Institute for Fiscal Studies estimated the prospective loss from leaving the Single Market to amount to about 4% of the GDP and up to £75 billion (in terms of an increased budget deficit, short-term losses and reduction in actual trade with the residual EU27).

Even the much-touted potential UK-US Free Trade Agreement with the Trump Administration will not be able to absorb the losses which will hamper the UK’s economy. First, the road to actual negotiations is much longer  (see also here) than the bold statements prior to Mr Trump’s inauguration would make you believe. Further, bear in mind that Mr Trump’s central priority has been expressed in two words: “America First”. American negotiators, aware of the UK’s economic predicament, will drive a very hard bargain – leaving Britain little room for manoeuvre in negotiations with the United States. Finally, the UK Government quite simply lacks the experience needed in trade negotiations – so much so that New Zealand offered its own trade negotiators.  

Sure, it can be sold as a victory – but Britain’s weak negotiating position will expose it to a range of American demands on labour, production and regulatory standards that may very well need to be adjusted to permit for a smooth functioning of such a deal. And that does not even begin to sum up the fears of those Britons who fear effectively becoming a de facto 51^st state of the United States by virtue of the country’s close dependence on the transatlantic relationship in political, economic and military terms – especially now that the country is on its way out of the European Union. Whilst a literal accession of the United Kingdom to the United States may not be on the cards anytime soon, British politicians (especially in the Conservative Party) need to be very careful about getting carried away and engaging in wishful thinking about the effects of individual trade deals or even the inclination of individual European countries to deal with the United Kingdom.

An FTA with the United States, without the clout of a trading bloc (with a larger population and combined economic capacity) like the European Union behind it, could severely disadvantage the United Kingdom and turn it into yet another consumer market for American products.

Taking back control? This is certainly not what Leave supporters bargained for.

 Published on Law Blogs Maastricht