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Analysis
UK-EU deal merely prolongs uncertainty

UK-EU deal merely prolongs uncertainty

European elections in 2019 may stymie Brexit progress

by Joergen Oerstroem Moeller in Singapore

Thu 22 Mar 2018

The agreement between Britain and the European Union announced on 19 March on the proposed 21-month Brexit transition is mislabelled. It is not about transition if for no other reason that nothing is said or known about Britain's future relationship with the EU. What the UK is transitioning to remains uncertain. Markets are not any wiser as to what free trade agreement Britain may put forward or which model the EU is mostly likely to accept.

The agreement is in some ways an extension of the two-year deadline for Brexit negotiations. Britain will not leave the union on 29 March 2019, as the Article 50 deadline would have it, but at the end of 2020. This is a positive development, as the two-year window for negotiations was known from the start to be too tight. Both Britain and the EU now have almost double that time to settle terms on future economic and political relations. But the accord raises several questions.

For political reasons, the EU and the UK did not seek a deal in accordance with Article 50 to extend the deadline. The 19 March agreement differs in important ways from a simple extension.

The agreement says Britain for those 21 months will stay in the single market and the customs union and follow EU rules. But the UK will not have a presence in the EU institutions to put forward its views, negotiate, and defend its interests. It is not difficult to imagine the tension that such a status may cause.

Britain will be able to negotiate, sign and ratify trade agreements with non-EU countries even if such agreements cannot enter into force until it has legally left the EU at the end of 2020. Until then, Britain will remain a member of EU trade agreements.

There is no new proposition for the problem of the Northern Ireland/Republic of Ireland border. The parties agree that border controls should not be reintroduced, but do not know how to achieve that objective.

An extension of negotiations is not without problems for the British government. Prime Minister Theresa May must continue to try to placate rival groups in her Conservative party. It is an open question as to whether she can maintain unity and sustain her slender majority in parliament as negotiations move to the next stage. At the same time, Scotland, Wales and Northern Ireland are vigilantly defending their interests against any steps that might jeopardise devolution. Scotland's fishing industry is already protesting vigorously about Brexit terms. It will not be the only group to speak out over the coming months.

Two timing problems are likely to materialise. The European Commission is negotiating Brexit on a mandate granted to it by EU member states. In October next year the term of Commission President Jean-Claude Juncker's cabinet ends. If the usual timetable is followed a new president will be nominated in early summer by the European Council, and the new commission will come into power in autumn 2019. The European Parliament, which must consent to the final agreement laying down Britain's future relations with the EU, will hold elections at the end of May 2019. The complication is that the incoming Commission president must be approved by the parliament.

The implication is the risk of near-stalemate in 2019. It does not take much imagination to see Brexit being used as a tool in these two elections, complicating matters and, in a worst-case scenario, increasing the probability that a deal will not be concluded.

Joergen Oerstroem Moeller is Senior Research Fellow, ISEAS Yusof Ishak Institute, and a former State Secretary at the Danish foreign ministry.

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