It’s March 29, 2019 – Brexit day – when Britain was scheduled to leave the European Union (EU). Instead, today the British Parliament for the third time rejected the EU Withdrawal Agreement negotiated by Theresa May’s government. This means that there is still no plan in place to manage Britain’s post-Brexit relationship with the EU. As fears rise that Britain will simply crash out of the EU, citizens have even taken steps to buy a “Brexit Box” containing days of freeze-dried food.
Are precautions like the Brexit Box needed? It is unclear. What is clear is that the supply chain into Britain will be strained if the United Kingdom (UK) leaves the EU without a deal, as is appearing increasingly likely.
It is also clear that the Brexit vote to leave the EU requires the UK to make some stark choices. It is the reluctance to recognize and squarely face this reality that accounts for the current dilemma.
What did the “leave vote” really mean?
The vote by a narrow majority of UK citizens to leave the EU did not address what kind of post-Brexit trade ties Britain wanted to have with the EU. These details were left to Theresa May’s government to negotiate. However, the commitment to keep an open Irish border meant that the only realistic “leave” option was for the UK to remain within the EU customs union while exiting the other components of the European Single Market. This option, offered by the EU, was soundly rejected as a non-starter.
The “leave” negotiations instead focused on the dream of using technology to replace the border checks and controls that will be required with departure from the customs union. This option is some years away, at a minimum, and without any guarantees that it will work. Consequently, the negotiated Withdrawal Agreement leaves the UK within the EU customs union for an undefined period and without any voice or opportunity to influence the rules by which it will have to live. This reality is a key factor in the UK Parliament’s solid rejection of the negotiated agreement.
A motion to negotiate a “permanent and comprehensive UK-wide customs union with the EU” was put on the table today during parliamentary discussions and narrowly defeated, by only eight votes. This close vote (the closest of the various Brexit options voted on) may nevertheless signal to the EU that the UK may finally be ready to discuss this option.
What next?
The EU has granted Britain a short extension until April 12, 2019 to either: (1) gain approval for the negotiated Withdrawal Agreement; or (2) come up with an alternative plan. The first option failed today. If unable to develop a viable alternative, the UK seems destined to leave the EU without a deal or a plan. This is where the Brexit Box comes in. In this scenario, it could take years to negotiate a new agreement that comes even close to capturing the complexity of EU-UK trade. More immediately, no deal means the re-establishment of borders, complicating trade and business relationships that have been taken for granted for the last 45 years.
