To Deal or Not to Deal?
Conversation with a Brexiteer
The United Kingdom’s (UK) farewell to the European Union (EU) is scheduled for 29 March 2019, yet these perhaps will be the longest and riddled final days of British permanence within the Union. The next weeks will be critical for EU-UK relations and, in an increasingly interconnected world, this relationship will be of relevance for the parties’ international partners, including in the Arab Gulf.
In terms of Euro-Gulf relations, the UK has always been on the front-line in shaping the relations with the Arab Gulf states. For almost 150 years, until its withdrawal in 1971, the UK was the dominant power in the Gulf region. Britain’s initial interests were driven by the development of trade and the protection of commercial routes. After Britain’s withdrawal, London strengthened and expanded its bilateral contacts with the governments of the Gulf, while acquiring a leading role in influencing European countries’ foreign policies in the region. Brexit, and the consequent changing dynamics in relations between London and European capitals, will certainly affect political and economic relations well beyond the borders of Europe.
Amid an increasingly unclear route to Brexit, the Euro-Gulf Information Centre (EGIC) hosted, on 7 March, MEP David Campbell Bannerman of the European Conservatives and Reformists group (ECR). MEP Campbell Bannerman is Chair of the European Parliament’s Delegation for Relations with Iraq (D-IQ), and a member of the European Parliament’s International Trade Committee.
Time is Running Out
After the UK voted to exit the EU in June 2016, its government set in motion Article 50, the EU’s legal provision for members wishing to leave the Union, and its parliament ratified the decision, setting a two-year countdown for the official departure of the UK to March 2019. Prime Minister Theresa May’s government began to negotiate with the EU to draft a deal regulating the post-Brexit relations between the parties in all aspects of social, economic and political life. A provisional text, referred to as “Withdrawal Agreement” (a legally binding 585-page document) was negotiated to function as a transitionary arrangement, designed to make the separation process smoother. However, since the beginning of 2019, May has faced a rejection of the agreement by Parliament, which has also introduced motions to delay Brexit in order to prevent a No-Deal scenario.
According to Campbell Bannerman, the No-Deal scenario does not pose really daunting challenges and the scenario could entail only minor arrangements, that will take time to implement, but is still preferable to delaying Brexit. MEP Campbell Bannerman described delays as counterproductive for all sides.
David Campbell Bannerman, in discussing trade, stated that there is a mechanism to ‘manage’ a No-Deal scenario; one that works within existing World Trade Organisation (WTO) rules. He advocated for the implementation of Art. 24 of the former General Agreement on Tariffs and Trade (GATT) as the legal framework to manage trade between the UK and the EU, in case an emergency solution would be needed. His proposal would be to leave on the scheduled date, having reached a provisional agreement with the EU, and pursue negotiations towards a comprehensive free trade deal after. Accordingly, both the UK and the EU would be permitted, under WTO rules, to maintain the current zero tariff and zero quota trading arrangements. MEP Campbell Bannerman argued that, backed by this explicit provision of the WTO regime, it would thus be possible to continue with the pre-29 March regime in trading settlements without any interruption. This provisional agreement would therefore be a significant component of a ‘Managed No-Deal’ outcome from the end of March.
MEP Campbell Bannerman’s main concerns were also reflected in the Northern Ireland “backstop” (the 310-mile Irish border – which separates Northern Ireland from the Republic of Ireland). The backstop agreed between the two parties would keep Northern Ireland aligned to some EU rules on issues like agricultural products and standards, and to prevent the need for checks on goods at the Irish border. Neither side wants to see a return of physical checkpoints, towers or custom posts among border as it was before the Good Friday Agreement of 1998. To prevent the reignition of the Irish conflict, the UK and EU agreed to put in place a backstop a sort of safety net to ensure there is no hard border within Ireland whatever the outcome of future trade settlement between the two parties is. On the other hand, many argue that the backstop creates a technical border between Northern Ireland and the UK, i.e. effectively an internal border within the UK, something widely regarded as unacceptable.
Despite the seemingly endless uncertainty, Campbell Bannerman struck on an upbeat tone and reminded the audience that several experts are sounding alarm bells for a No-Deal Brexit, and this fear is comparable to the Millennium Bug’s anxiety -–the computers’ incapability in formatting and storing data for dates beginning in the year 2000 that, according to some, could have had apocalyptic consequences. However, after generating fears and uncertainties, the Bug turned out to be harmless and opened the doors to the 21st century’s main technological advancements.
Commercial and political cooperation between European countries and those in the Middle East will inevitably be affected by the decisions that will be taken before 29 March. Looking at the UK, a renewed interest in former commercial partners seems to be rapidly growing and Euro-Gulf are front and centre. EGIC, will continue to monitor events related to the UK, EU and the Middle East.
18 March 2019