Seven reasons Brexiteers are wrong to think EU exit negotiations would be easy

Opinion piece (City A.M)
Agata Gostyńska-Jakubowska
29 April 2016

Some eurosceptics think that Brexit negotiations would be a piece of cake. But if Britain decides to leave the EU, it will have no choice but to invoke Article 50 of the Treaty on European Union. That will set in motion a complicated procedure that puts the departing member state at a disadvantage. The Leave side dismisses this as scare-mongering. They are wrong on several counts.

First, Article 50 cannot be ignored, as some Brexiteers advise. It was included in the Lisbon Treaty to establish a legal pathway to leave the EU. Yes, Britain could in theory simply repeal the European Communities Act (1972), which establishes the supremacy of EU law over British legislation. But at what cost?

To give just one example, if the European Market Infrastructure Regulation (EMIR) were no longer in effect in the UK, financiers trading derivatives in London for banks headquartered elsewhere in the EU would be doing so illegally. London is the largest financial centre for derivatives trading in the EU, so repealing the 1972 act and thereby annulling EU regulations would create enormous risks for Britain’s financial system, as well as that of the EU as a whole.

Second, a post-referendum Prime Minister could in theory delay pulling the Article 50 trigger, hoping to squeeze more concessions from other member states. But this would come at the cost of antagonising the rest of the EU. European partners would be unlikely to agree to yet another list of British demands. They think that they have already conceded a lot to Britain in February’s deal, and have warned that the deal would no longer be on offer if Britain voted to leave the EU. With eurosceptic parties on the rise on the continent, EU leaders would want to send a strong message to their home-grown populists that an EU à la carte was not on offer, and that threatening to leave the EU would backfire.

Third, once the Article 50 process starts, the tight timetable reduces the UK’s negotiating leverage. The UK would have only two years to agree with partners on what would end, what would change, and what could remain broadly the same. Any decision to extend the two-year deadline must be taken unanimously; any member state can block it. In the absence of agreement on exit terms or an extension to the negotiating deadline, Brexit would be automatic. The UK would then have no choice but to trade with the rest of Europe under the World Trade Organisation rules. This could seriously damage the British economy.

Fourth, Article 50 puts a departing member state at a disadvantage in the negotiations with the rest of the EU. That is not to say that the UK would have absolutely no influence over the withdrawal terms. But according to Article 50.4, Britain would not be in the room when member states agreed on the EU’s negotiating position; once the 27 had agreed, the Commission would then negotiate with the UK on the basis of that position, with any compromises included in the final text subject to member states’ agreement by qualified majority (Britain would not participate in this voting). The agreement would need the consent of the European Parliament. British MEPs would probably participate in the Parliament’s voting but there are only 73 of them; if more federalist MEPs decided that the Commission had conceded too much ground in the negotiations, they could block the conclusion of the treaty with the UK.

Fifth, to reduce legal and economic uncertainty, Britain and the EU may decide to negotiate a comprehensive agreement which would regulate both the withdrawal terms and a future relationship between the UK and Europe. But such an agreement would probably be a “mixed” one, in EU jargon: it would cover policy areas where both the EU and the member states have competence. It would therefore require ratification in all member states. Because of the importance of the issue, some EU countries might decide or be forced to hold a referendum on the agreement, with the risk that this might be blocked in one of the EU capitals.

Sixth, Britain would not be able to filibuster or veto EU policy if it did not get what it wanted in withdrawal negotiations (as Michael Gove has suggested). Article 50 does not prevent a member state that is in the process of negotiating its exit from participating in deliberations on, say, the energy union before it formally leaves the EU. But most EU policies are decided by qualified majority, not unanimity, so the UK would struggle to block them. And other member states would have little reason to take account of the interests of a member state that has one foot outside the door.

Finally, it would be fanciful to suggest that the UK could always reverse course and rejoin the EU on the same terms that it now has, if leaving turned out to be a mistake. Yes, Britain would be free to apply for membership again, but it would have to follow a painful accession process similar to Montenegro or Serbia and would struggle to negotiate the opt-outs it enjoys today. Most of its political capital in Europe would already have been spent by then.