48 The EconomistFebruary 3rd 2018
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NYONE familiar with the European Un-
ion could have predicted that the ne-
gotiations to leave it would be long and
painful. But few could have expected The-
resa May’s government to prove so incom-
petent at the job. The boost she got after
reaching agreement in Brussels in Decem-
ber on the Brexit divorce terms under Arti-
cle 50 has faded fast. All around the EUshe
is criticised for failing to spell out what she
wants the future trade relationship to be.
And in London many of her own MPsare
plotting to dump her because they think
she is not up to the job.
It is telling that the latest Brexit row
should be about the transition period after
March 2019. This ought to have been one of
the few uncontroversial issues. In her Flor-
ence speech last September, Mrs May was
clear that what she calls an “implementa-
tion” period would prolong the status quo,
only with Britain losing its voting rights. As
she argued, such an arrangement was
needed to give business certainty and to
avoid requiring it to adjust twice. She pro-
posed that the period should be time-limit-
ed, lasting “around two years”.
On January 29th EUforeign ministers
approved their negotiating guidelines for
such a transition. They leave Britain few
choices. During transition, it must stay in
the single marketand the customsunion. It
will be subject to the full force ofEUlegisla-
tion, including new laws, without any sayBritain should know all about.
Jacob Rees-Mogg, the new head of the
European Research Group of Eurosceptic
ToryMPs (see Bagehot), dislikesvassal
statehood so much that he thinks it would
be more honest to extend Article 50’s two-
year deadline, though that would need
unanimous agreement from the EU’s
members. It would also resolve legal wor-
ries and concerns about third-country
deals. But politics gets in the way. Mrs May
might be fuzzy about her ultimate goals for
Brexit, but she is clear that she must be able
to say that Britain has left the EUon March
29th 2019. That is consistent with entering a
transition period, but not with prolonging
membership by extending Article 50.
Why are hardline Brexiteers only now
making a fuss about the transition? After
all, as Jonathan Lis of British Influence, a
think-tank, points out, its terms have been
“patently obvious since Florence”. The an-
swer is that hardliners are becoming ever
more fretful about the direction the Brexit
negotiations are taking. Many fear that Mrs
May is heading towards a softer Brexit than
the one she set outin her LancasterHouse
speech just over a yearago. Mr Rees-Mogg
has accused the government of being
cowed by the EU.
Brexiteers worry about the conse-
quence of Britain’s promise in December
that there will be no border checks in
Northern Ireland. One Eurocrat calls this
“unimplementable” if Mrs May sticks to
her red lines of leaving the single market
and the customsunion. Brexiteers also
know the EUis unimpressed by talk of se-
lective regulatory divergence, which it sees
as cherry-picking, and wants to enforce a
level playing-field for competitiveness.
They know big businesses want to stick
with EUregulations and stay in a customs
union. Though they dismissed this week’sin them. All four freedoms, including of
movement of people, will continue,
though Mrs May wants to limit new arriv-
als’ right to stay. Britain will remain under
the European Court of Justice. As for the
time limit, the guidelines propose a shorter
period than Mrs May did, with transition
ending on December 31st 2020.
There are pitfallsin transition. One is
what happens to the EU’s hundreds of
agreements with third countries, including
its trade deals. David Davis, the Brexit sec-
retary, wants to remain in these, and he ex-
pects the EUto agree. But some third coun-
tries may seek concessions in return. A
bigger problem is that the transition period
is too short to negotiate and ratify a deep
trade deal with the EU. The guidelines may
leave open the possibility of an extension,
but some lawyers say this may not be pos-
sible under Article 50, which is about with-
drawal, not staying in.
Yet the biggestpolitical issue on transi-
tion is the assertion by Brexiteers that Brit-
ain will become a “vassal state”. Mr Davis’s
suggestion thathe should be allowed to
object to newEUlaws will get short shrift,
although British observers may be able to
attend some working groups. Britain will
be in a more abject position than full EU
members and than countries in the Euro-
pean Economic Area, which mostly follow
EUrules. One diplomat in Brussels likens
transition to being a colony, somethingBritain and the European UnionA sea of troubles
Theresa May is under fire from all sides—including from many Tory EuroscepticsBritain
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