Saturday, 24 September 2016

The Big Brexit To Do List

Before Brexit can happen, we need to know what needs to be done beforehand.

I'm getting as fed up with the endless hot air surrounding Brexit as much as you probably are. This will be my final post on Brexit for the foreseeable future. I'm also considering ignoring any future statements/questions on this in the Senedd as nothing's actually happened yet and nobody seems to be in a rush to make anything happen either

Credit where it's due, for the most part (with the exception of Andrew RT Davies) both sides have calmed down a bit and the debate is moving from emotion, triumphalism and sour grapes to practicalities. Though, as said, at the moment there's little substance to many of these discussions which have become bogged down in semantics and, to be frank, nobody seems to have a f**king clue what's going on or where to start.

I'm not one of these people calling for a second referendum and I'm not secretly hoping the process will be delayed to such an extent that the UK remains in the EU by default either. The result stands; Brexit has to happen and it has to work.

Though even as a Remainer there's no reason I can't be constructive in setting out how the UK might withdraw from the EU and how Wales can use it to our advantage.

The first step is listing what the UK Government, Welsh Government and both governments together need to prioritise before beginning exit negotiations (....and there could be some that I've missed too).

UK Government

(Pic : UK Government)
Deciding what sort of Brexit there'll be - Despite all the crap in the Senedd and elsewhere, this has to happen before anything else can happen. There are at least five ways forward, outlined by the First Minister to the Senedd's External Affairs Committee recently:

  • Membership of the European Economic Area (EEA) – This has all the trade benefits of EU membership without being an EU member. The UK would have near enough full access to the single market (as we do now). This is known as the "Norwegian option".
  • Membership of the European Free Trade Association (EFTA) – Again it would allow participation in the single market with a few extra restrictions. The UK would probably have to negotiate a number of bilateral agreements with the EU on specific areas (as Switzerland has done) but that shouldn't be a problem.
  • A UK-EU customs union – This would allow tarrif-free movement of most goods between the UK and EU, but a similar Turkish agreement doesn't extend this to services (which would hit the London financial sector).
  • A bespoke UK-EU free trade deal – This would specifically negotiate the terms by which the UK accesses the single market (so the UK might be able to retain control over things like free movement and remove many tariffs), but it requires specialist negotiators and could take the best part of a decade to finalise; it's likely the EU would have the upper hand, at least initially.
  • World Trade Organisation (WTO) rules – This is the default option if no other deal is agreed before "Brexit Day". Trade between the EU and UK would be subject to fixed tariffs set by the WTO, but the UK wouldn't have to apply any EU rules. There's also the option of the UK unilaterally removing all tariffs on trade; whether the EU would do that is another question.

EEA and EFTA would be "Brexit-lite" because most EU rules and laws would still apply and the UK would retain full access to the single market. The latter three would be increasingly "hard Brexit" with WTO rules being "Brexit-max". A tricky area to negotiate - regardless of which Brexit option is taken - is whether EU trade deals with third party nations will continue to apply to the UK. If not, the UK will have to negotiate its own.

Activating Article 50 of the Lisbon Treaty
– Their second job will be to actually get the Brexit ball rolling. The withdrawal process can't start until the UK Government notifies the EU Commission of its intent to leave ("triggering Article 50"). It's rumoured this might happen in the first half of 2017, with the process from triggering to full withdrawal set in the Lisbon Treaty at two years.

Replacing or maintaining the current round of EU structural funding until 2020 – I know this suggestion is laughable, but promises were made by Leave campaigners and the UK Government. Until Brexit happens the money will come from the EU anyway (because the UK remains an EU member), so unless Brexit happens before 2020 (which at the moment is looking unlikely) nothing's really going to change. It's whether current programmes will be maintained after Brexit that matters and I don't think anyone should get their hopes up - but if there's a "Brexit bonus", who knows?

Status of EU migrants already resident in the UK – The UK Government have already said that nothing changes for EU nationals living here. Any EU citzen who's lived in the UK has a right to permanent residence without registration, while anyone who's lived here for 6 years can apply for British citizenship.

Status of UK migrants already resident in the EU
– The ball is in the EU and its member states' court, but it's highly unlikely free movement for UK citizens can be guaranteed without a reciprocal arrangement for EU citizens. In a "hard Brexit" scenario The UK might be able to negotiate visa-free travel to the EU, which would cause minimal disruption.

Post-Brexit immigration rules –  The Leave vote was carried mainly on the promise of reduced immigration. Under free movement rules any EU citizen can live in the UK without restriction (except Croatians) while Irish citizens have separate rights under the Common Travel Area. A points based system for EU immigration has already been ruled out, despite being something anti-immigration voices have been demanding for ages - so it's hard to tell what measures will come. I'm going to guess that free movement for EU migrants who have a job in the UK (and their immediate relations) will be put on the table, but if the UK wants complete access to the single market, it'll have to accept current free movement laws.

The Irish Border & Northern Ireland Peace Process – The UK will still have a land border with the EU in Northern Ireland. The Common Travel Area covers this so it might not be a problem. However, if right-wing MPs get jittery about Dundalk becoming the next Calais then you could easily see the introduction of customs controls at the very least, if not full border controls. With regard the peace process, there's no immediate threat but the EU has played a direct role via the PEACE programme, which has seen around €1.5billion spent on community cohesion measures. This will probably have to be replaced and Northern Ireland has a pretty strong case for the Treasury to stump up given they voted to remain.

Stabilising and protecting the UK economy and financial system
– The Bank of England have already taken measures here such as an extra injection of cash and cutting interest rates. It appears to have worked with the post-referendum slump recovering quickly (though we won't know for certain until November/December). The longer-term impact Brexit will have on confidence in the business sector and the performance of exporters will need to be closely monitored, but for now there's reason to be cautiously optimistic. A quick deal that doesn't diverge too dramatically from the status quo will certainly help.

Reviewing (or guaranteeing) EU employment law, workers' rights and miscellaneous benefits – Another big one. The Leave vote has handed a Conservative government the biggest opportunity to gut employment law and workers' rights since the days of Margaret Thatcher. Maybe I'm being optimistic but I don't believe they'll take the opportunity despite the temptation. I expect them to chop around the edges rather than throw things out whole scale, simply because it'll take up too much of the UK Parliament's time otherwise. The only thing I can see significantly changing is the Working Time Directive; I think most health and safety and environmental protection regulations will be kept. This even includes things as otherwise unimportant as "pet passports" (subject to negotiation).

Welsh Government

Agriculture will almost certainly be the single biggest devolved policy are
deeply affected by Brexit, but there are other areas too - some of which may be surprising.
(Pic : Wales Online)

Future of agricultural and rural development payments
– This is probably going to be the single biggest issue falling under devolved powers. The Common Agricultural Policy (CAP) and CAP payments will have to be replaced or reformed, and at current prices CAP payments are worth around £220million a year to farmers. An Assembly committee are currently undertaking an inquiry into the way forward here so it's far too soon to be able to comment on precisely what will replace CAP; but there's definitely an opportunity here to create a system fit for Wales instead of "one size fits all" in the EU.

Reviewing Welsh fisheries policy – A small, but still significant, area of policy. Some of the key questions include: What sort of quotas will Welsh fishermen be set? Will there be any quotas? How will the Welsh Government protect the Welsh fishing zone going forward? What might the impact be on marine conservation and water quality?

Replacing/Reviewing EU finance to universities – Another big one as universities were one of the main beneficiaries of EU structural funds over the last 15 years or so. This money will have to be replaced, whether in part or in whole. There'll also be a financial impact relating to the free movement EU students that will need to be addressed (i.e. will they need a study visa?), as well as retaining EU academics.

Replacing/Reviewing EU finance to the Third Sector (see also : A Guide to the Welsh Third Sector) – The same thing as the above. Although direct EU funding for the Third Sector was in the tens rather than hundreds of millions of pounds, everything listed above will be competing alongside them for the same pot of cash post-Brexit. That could cause problems if the Third Sector loses out, particularly for those organisations that are over-reliant on government grants.

Ensuring Wales remains "open for business" - Foreign investors and domestic businesses need to be confident Brexit isn't going to cause major disruption. In Wales' case that means guaranteeing: business support programmes will continue, investment in the likes of the South Wales Metro and funding major regeneration projects. This also means some projects that are part-funded from EU structural funds - like A465 dualling – might have to be brought forward before the door closes on that EU cash. This could provide a short-term economic boost.

One of the big advantages of a "hard Brexit" is that EU state aid rules would no longer apply (though the WTO has its own power to adjudicate here - see the recent Airbus subsidy argument), meaning the government would have greater ability to intervene in business. However, EU state aid rules will continue to apply if the UK wants full access to the single market (EEA/EFTA).

Both Governments

One key thing that will need to be sorted out is Brexit's impact
on the future of the UK itself.
(Pic : Telegraph)

A new funding settlement for Wales – This would've happened regardless. Brexit has simply added a new layer of complication. There've been protracted negotiations on reform of the Barnett formula to take into account relative need, or the establishment of a "funding floor" below which the Welsh block grant can't be cut. It's been said recently a deal could be reached early in 2017.

Disentangling EU directives and regulations from Welsh and UK law – Both governments and their legal advisers will have to go through all EU laws currently applying in the UK and decide – depending on what sort of Brexit there'll be – which ones will be repealed, which ones can remain and which ones will be rewritten. This won't put the brakes on Brexit, but as a constitutional process it could take the best part of a decade, if not longer.

Reaching a consensus on which type of Brexit there should be – As listed earlier. The First Minister clearly wants the Senedd to have a say in "ratifying" any Brexit deal, but before that there needs to be consensus between the respective UK governments on the format Brexit should take. Scotland and Northern Ireland are likely to want to push for EEA/Brexit-lite (I suspect Wales will too) and have a mandate to press for that; right-wing English and Welsh MPs, including UK cabinet members, will want something "harder".

If there's going to be any major constitutional crisis it'll start over this. It's part of the reason why there's been such a big fuss in the Senedd over whether Wales wants "access to" or "membership of" of the EU single market: "membership" means Brexit-lite/EEA/EFTA (as listed earlier); "access" can be negotiated in a stand-alone deal and leaves the door open to a "hard Brexit". Both options are compatible with the Brexit vote because both still mean leaving the EU.

The constitutional future of the UK
– The EU has played a big role in keeping the UK together because as the UK is an English hegemony/unequal union, we all had EU citizenship to fall back on and held in common. As implied earlier, it's clear that if there's a Brexit deal that the Scottish Government in particular don't find palatable it'll trigger a second Scottish independence referendum. In all likelihood Scotland would vote to secede, though it's perhaps not as certain an outcome as it seemed on June 24th. Things have calmed down a bit and the SNP, while not completely backtracking, are being more cautious than they're given credit for. Nevertheless, if Theresa May is determined to hold the UK together she'll have to revisit the UK constitution and slaughter some sacred cows along the way, like Westminster's sovereignty.


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