Commentary / World

Let reason rule the day

by Hugh Cortazzi

On Wednesday, British Prime Minister Theresa May sent a letter to the president of the European Council in Brussels stating that under Article 50 of the Lisbon Treaty, Britain was leaving the European Union. This signals the start of negotiations for a British divorce from the union and for the development of a new relationship between Britain and the EU. These negotiations have to be completed within two years unless both sides agree to an extension.

The negotiations will be difficult and complex. Both the British and EU negotiators will be under significant pressures from all the various interested parties and from popular opinion as expressed in parliaments in the United Kingdom and in EU countries as well as in the media. There will be a lot of hot air and inevitably some emotional outbursts. Reasoned discussion and a realistic understanding of the facts are needed. The negotiators on both sides need to exercise restraint and be willing to search for mutually acceptable compromises.

The first requirement is to agree on a process for negotiation. The EU wishes to settle the financial and legal terms of the divorce before negotiations about trade and future relations. The British want these negotiations to be conducted in parallel.

Assuming that some compromise can be found on the process agreement has to be reached about the cost to Britain of its financial commitments to the EU budget, e.g., for pensions to EU staff and commitments to EU programs. Britain for its part will demand its share of EU assets. There will be much bargaining, which could become bad tempered on both sides.

Negotiations on future relations will have to cover three main areas: security, the rights of EU citizens in the U.K. and British citizens in Europe, and economic relations — which is likely to be the most complex. A fundamental issue is likely to be legal. May has made it clear that one of her red lines is freedom from the jurisdiction of the European Courts. But what mechanism will there be to settle the inevitable legal complexities which will arise over the details of any agreements that may be reached?

Not least in view of the threat from Islamist terrorism, it is imperative to both sides to agree on cooperation over security, including intelligence and police collaboration. Britain may have much to offer but it would be unwise for the British to attempt to use this as a bargaining counter in negotiations on other matters. British security could suffer if, for example, cooperation with France over refugees seeking asylum in the U.K. was halted.

It is also in the interests of both sides to reach early agreement on the status of EU nationals in Britain and of British nationals in the EU, but there are complex practical issues. British ministers speak glibly about an open and outward looking Britain but their rhetoric is at odds with their demand for stringent control of immigration.

One basic problem is that, in the absence of identity cards in the U.K. and reliable statistics about migrants entering the U.K. from EU countries, there is no proper U.K. record of EU citizens in Britain. Difficult issues will arise over pensions and security benefits for current EU residents and how to deal with future EU migrants whom Britain will need to employ, for example, in the National Health Service and in horticulture.

There are fewer British residents in EU countries but their needs must be taken into account.

The most difficult area will be economic, not least because British ministers often seem to have hazy ideas about the different facets of economic relations with which they will have to deal.

They speak glibly about free trade and removal of tariffs, but trade in goods in the modern globalized industrial world is more about standards and regulations than about tariffs.

Britain — not least because of the manufacturing investments of Nissan, Toyota and Honda — seeks free access to EU markets in automobiles. This means acceptance of EU rules on standards and rules of origin and the smooth import of parts from the EU. As May has signaled that Britain will leave the EU customs union, it will not be easy to agree on the detailed arrangements that will be needed for the auto industry and to fulfill the (confidential) pledges made to Nissan to secure its further investment in the U.K.

There will be similar but just as complex problems for other products that British industry imports and exports to the EU, such as pharmaceuticals and food products.

The British economy has become increasingly dominated by service industry, not least banking and finance. It is increasingly integrated into the European economy over energy supplies and generation. The EU has made limited progress in establishing a singe market in the various service sectors, but each sector will need careful scrutiny and complex negotiations.

One issue, which has received scant attention so far, has been aviation. When Britain leaves the EU it will need separate civil aviation agreement around the world, Anyone with experience of negotiating such agreements knows that they will lead to acrimonious bargaining over landing slots and air traffic rights.

The Brexiteers in the Conservative Party have become increasingly arrogant in their demand for a hard Brexit. They are unrealistic in asserting that Britain can compensate for trade with nearby Europe by reaching agreements with the United States, which under President Donald Trump has become protectionist and anti-free trade, and with Commonwealth countries such as Australia and New Zealand. May should remember that when she raised the question of a trade agreement with Indian Prime Minister Narendra Modi, his immediate riposte was to demand a more liberal attitude toward Indians wanting to enter and work in Britain.

British irritations with the Brussels bureaucracy and inadequate understanding of European history have unfortunately resulted in a lack of understanding of the value and benefits of European integration. Popular fears about immigration have militated against a full and rational debate about immigration.

May has said that she would rather have no deal than a bad deal, but Britain would certainly suffer economically and politically if Britain “fell over the cliff edge” of no deal. Brexit could also lead to the breakup of the U.K.

Hugh Cortazzi served as Britain’s ambassador to Japan from 1980-1984.