Insight
How would negotiations after a no-deal Brexit play out? by John Springford 3 September 2019
After no deal, the EU would demand that the UK sign up to the provisions of the withdrawal agreement, but in exchange for an emergency deal that is far worse than the standstill transition. We know that a no-deal Brexit would be disruptive to the British economy. The UK would trade with the EU largely on World Trade Organisation terms, which would mean that tariffs would have to be paid on British goods entering the EU, and checks would be carried out on British products, especially agricultural goods. British banks would no longer be able to sell many financial services directly to EU clients. Checks at the Dover-Calais crossing would lead to lengthy queues, and may lead to shortages of some goods, especially the types of food that Britain largely imports from the EU. But an important question has largely gone unanswered in the British debate: how would negotiations between the UK and the EU after no deal play out? The EU has already put in place some measures to mitigate the worst effects of no deal for the 27 remaining member-states. Aeroplanes will continue to fly between UK and EU airports (although British airlines will not be able to take passengers between EU airports, unless they have set up a subsidiary in the EU). Some forms of financial activity between the City of London and the continent will continue to be legal, but only temporarily, with regulatory equivalence granted until March 2020. But, to achieve further relief from the effects of no deal, the EU will demand that the UK signs up to at least some of the provisions of the withdrawal agreement, including the money the UK owes to the EU budget, the securing of EU citizens’ rights to continue living and working in the UK, and the Irish backstop. But the benefits that the UK would receive from paying the money, agreeing to the backstop and securing citizens’ rights after no deal are far smaller than they are now. It would not be legally possible for the UK to simply pass the withdrawal agreement and move seamlessly into the standstill transitional period that Theresa May negotiated. The EU’s lawyers insist that the transition is only legal under Article 50, which sets out procedures for withdrawal; that’s the justification the EU has used to only offer a time-limited transition in the withdrawal agreement. If the UK crashes out, it will no longer be a member-state, and trade negotiations with the EU must be conducted under Article 218 of the
CER INSIGHT: How would negotiations after a no-deal Brexit play out? 3 Septeber 2019
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