What happens if the British parliament rejects the Brexit deal?

Theresa MayBy Richard Snow

This article is divided into two parts: a short summary of some features of the withdrawal agreement between Britain and the UK, and second, what happens if the British parliament rejects the agreement on December 10.

i)- The withdrawal agreement

Here are a few things about the Brexit agreement negotiated between the EU and Britain. The actual agreement is 585 pages long, so obviously this summary only touches on some of the aspects that have been publicly reported.

There is a transit period up to December 2020, extendable out to December 2022 if both sides agree. During the transit period, Britain must still EU rules on most things, but will have no say in their formulation. During the transition period, there is a temporary customs union between Britain and the EU. This avoids the hard border between Ireland and Northern Ireland. Britain cannot leave this unilaterally: it cannot do so until the EU is satisfied that it will not result in a hard border between Northern Ireland and the Republic of Ireland.  I suspect this was probably put in at the insistence of Ireland.

During the transition period, some of the ‘single market” rules apply to Britain, these include the free movement of money, people, goods and services.

Britain still has access to law enforcement and security databases, at least for the transition period.

Brits living in EU countries (about 1 million people) and EU citizens living in Britain (about 3m people) can continue to live where they are, and are guaranteed social security benefits when they retire.  It is not clear if a British person living in (say), Germany, can relocate to (say) France or Holland.

The recognition of occupational qualifications from other countries is not yet resolved.

Fishing rights have not yet been resolved.

Britain will withdraw from EURATOM (the EU atomic energy agency).

The single electricity market on the island of Ireland will be preserved.

Britain remains subject to decisions of the Court of Justice of the European Union (CJEU) during the transition period.

Goods already in a supply chain on the day the transition period ends can continue to be sold to their end users.

Britain can negotiate free trade deals with other parties (e.g. the US, Australia, the TPP-11 countries) to take effect after the transition period. (This is rather important, since Britain may need to join some other free trade block for the sake of its economy.)

ii)- What happens if the parliament rejects the deal?

The Democratic Unionist Party (the DUP) whose 10 MPs Theresa May needs for her majority parliament, is opposed to the deal as some rules of the EU will only apply to Northern Ireland during the transition period. The DUP is vigorously opposed to this as they see Northern Ireland as being an essential part of Britain and want it treated the same as other parts of Britain. This could spell trouble for May, and trouble for the deal. The deal is due to be voted on in the British parliament, possibly on December 10th. The Scottish Nationalists and Labour have said they will vote against the deal, as will some conservatives. Parliament could reject the deal.

If the deal is voted down, Britain may leave the EU with no deal at all, which may create chaos on 30 March 2019. There does not appear time to create another deal the size of this one by the end of March. If Britain had to leave the EU with no deal, it would to re-institute customs inspections on goods going between it and the EU. Britain just doesn’t have  the staff, or the buildings in which to do this at its ports and airports, because for 40 years it hasn’t had to inspect goods coming in from the EU. It would have 3 months to recruit and train staff. That’s a big thing to ask. (Two articles below explains this scenario.) British and EU airlines might be able to fly direct to and from Britain and a European country, but not operate legs within Britain or the EU. (E.g a British airline might not be able to fly Paris to Rome. An EU airline may not be able to fly London to Manchester.) British abattoirs without EU certified vets acting as hygiene inspectors may not be able to export meat products to the EU. British motorists holidaying in Europe may need to get an international drivers licence, since their British ones may not be accepted. There are hundreds of things like this. You get the picture.

Part of the reason countries join a free trade zone is because it gives you higher trade volumes at lower transaction costs. (You don’t need to employ so many customs inspectors because you don’t need to inspect everything that comes in from another country in the free trade zone, there is less paperwork in getting occupational qualifications recognized, you all use the same product standards etc, and all these things reduce transaction costs.) if a country leaves a free trade zone, especially if it crashes out t with no deal in place, it is delusional to think that you can have the same trade volumes and the same lower transaction costs. people in Britain who think that they can exit under a no deal scenario and Britain will have a stronger economy are believing in magic puddings.

Some MPs think that if the deal is rejected, there is time to hold a second referendum, on whether Britain should leave with the current deal, or reverse position and try to cancel Brexit completely. There is a lot of uncertainty about whether the notice of intention to leave that Britain gave the EU under Article 50 of the Lisbon treaty can be reversed. The British lawyer who drafted it says he thinks you can reverse the notice, however, he failed to include any wording to this effect in the actual clause. The question has been taken to the court by a group of Scottish members of parliament who want the European Court of Justice (the ECJ) to advise on the question. Since no one has ever left the EU before, there has never been a ruling. It’s all uncharted territory.

It’s possible the court might decide that the British parliament can reverse the decision on its own, or that a referendum must be held,or it might decide that the other EU countries have to agree to the reversal,  or that the European parliament must vote. No one knows what the court will decide, because this has never happened before.

It seems unlikely that the follow events could all be done by March 30: (i) the Scottish MPs obtain a court decision saying Britain can reverse its decision (and perhaps the court places conditions on the reversal – who knows), (ii) parliament votes to reject the current deal, (ii) parliament passes a law to hold a new referendum, (iii) the referendum is held, and the people vote ‘stay,’  (iv) Britain tries to reverse the notice under section 50, and (vi) the EU agrees to let them stay. That’s a lot of action to take place in four months. A decision by the court is expected on Tuesday December 4.

Here are some useful links:

‘Brexit treaty, what the EU and UK have agreed,’ in the Financial Times is here.

‘Reality Check: Brexit withdrawal agreement’ in the BBC is here.

The EU’s summary of the agreement is here.

An article from the Guardian, ‘European court to rule on whether article 50 can be reversed’  is here.

Arguments for and against whether article 50 can be reversed by two law professors are here.

The full text of Article 50 is here.

Two articles on possible transport chaos and customs inspection are here and here.

Richard Snow is a former economist now studying International Relations at La Trobe University, Australia.

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