Brexit Briefing No.45 - Chequers Countdown

Whilst most of the country has been absorbed in the World Cup and enjoying the decidedly continental heat wave, Westminster’s eyes have been focused on a quiet corner of the Buckinghamshire countryside, whilst Europe's gaze was set on the southern German region of Bavaria and the issue of migration.

It was migration rather than Brexit which dominated the European Council Summit after Horst Seehofer, the German Home Secretary and leader of the Bavarian CSU party, threatened to resign, pull the CSU out of the coalition government and close Bavaria’s borders to migrants if a solution to the migration crisis was not found at that summit. 

Apart from potentially causing traffic gridlock at alpine borders over the summer holiday period, such a move would have severely threatened the Schengen open borders zone, as the Austrian government quickly reacted by saying it would close its borders as well to avoid migrants being stuck in Austria. This domino effect would have been disastrous for Europe even if the peak of the migrant crisis was nearly two years ago and current migrant numbers are nowhere near as high as they were. 

It was also an existential challenge for Angela Merkel’s leadership as the CSU is the sister party of the CDU. The two parties do not stand candidates against each other in elections. The issue therefore took over the whole EU summit. An agreement was eventually found (at around 4am) to house migrants in EU centres within Europe before either repatriating them or resettling the migrants around Europe. 

The deal was a hollow one and is voluntary for EU countries but it seemed to be enough to draw the CSU back from the brink. The German Chancellor and the Schengen zone appears to have survived to see another day, however it shows the political shadow that the migrant crisis is still casting over Central and Eastern Europe. 

german border sign

Back in the UK the Cabinet Summit at the Prime Minister’s official country residence of Chequers is intended to settle the government line on the future customs relationship with the EU and approve an array of other Brexit policy areas ahead of the publication of the government’s Brexit White Paper on the 9th July. 

This could be a tumultuous period for the government as all previous options have been immediately rejected by Brussels and so carving out a policy which can keep the majority of the government on board, whilst also being acceptable to Brussels will be very difficult. 

It appears that the latest approach will be a cross between a New Customs Partnership, where the UK will collect tariffs on behalf of the EU, and maximum facilitation, (Maxfac) which uses electronic means to minimise but not totally remove customs checks. 

The main test of this approach will be whether the EU believes that this is enough to avoid customs checks between Ireland and Northern Ireland whilst allowing the UK to do separate free trade deals with third countries. 

The reality is that the Brexit talks remain in a state of little progress, as they have done for some months. The June Council meeting once expected to be dominated by Brexit saw only limited discussion of the state of negotiations, with the PM emphasising the need to agree a swift and comprehensive security partnership.

Whether the EU will even engage in discussion of any of the options put on the table by the government after Chequers remains unclear, with many negative utterings from the EU Chief Negotiator Michel Barnier on anything other than full customs union and single market membership or a Northern Ireland-only opt in to those areas with a wider UK free trade agreement. Brussels does seem to understand how unattractive full customs union and single market membership would be for an economy the size of the UK’s, given the fact that the UK would have to take all EU laws with no input to their creation. However, there remains limited comprehension in the EU’s headquarters of the sensitivities of creating barriers in trade, however small, in the Irish Sea, and the dangers of appearing to take sides in the internal political disputes in Northern Ireland. At the moment those are the only two options being put on the table in Brussels, but the government clearly remains hopeful that the EU27 leaders may take a more flexible approach when the crunch time comes.

fishing nets

However in the UK, progress is being made on wider Brexit policy decisions in the UK, with most of the White Paper ready to go and the publication this week of the government’s paper on ‘Sustainable Fisheries for Future Generations’ which sets the stall for a fisheries bill to be introduced into parliament later this session. This will give the UK full control of its territorial waters, up to 200 miles from the shore and will allow the UK to set its own quotas for UK-based vessels. At the moment EU-based fishing fleets take a substantial amount of the total catch in UK waters under the common fisheries policy (CFP) and the government is clear this level of access will be under review, with a “fairer share” for UK fishermen.

This has been a huge political issue in many coastal communities and was a big part of the emotional argument to leave the EU. Many coastal communities have seen a big decline in their local fishing industries, particularly in Scotland. This is partly due to EU rules and partly due to technology, which have allowed far fewer fishing boats to catch many more fish. However fishing still employs an estimated 11,000 people in the UK, many of them concentrated in a number of key marginal coastal constituencies.

It is an issue which poses many problems for the Brexit negotiations, partly because the UK does not have the fleet to fish or even patrol all of its huge territorial waters and because decisions that the UK takes, even decisions not to fish certain areas, have knock on effects for EU fisheries as fish migrate between EU and UK waters. So some level of coordination between the two will be required whatever the outcome of the negotiations. 

In addition, most of the French and Dutch fishing fleets rely on UK waters for the majority of their fish, and most of the fish caught by British fisherman are exported tariff free to Europe. Loss of market access for UK fisherman or loss of fishing access to UK waters for French fisherman are likely to cause significant problems in the negotiations. There is also concern that in the UK that any agreement reached must be properly policed by both sides given the inability of authorities to patrol all waters. That is particularly important for ensuring sustainable fishing of waters, something the UK government has committed to focus on in future, issuing annual statements on fishing stocks. The reaction to the government paper has been broadly positive from the UK fishing industry so far, but as with everything Brexit related the final agreement with the EU will be critical in determining the future shape of UK fishing.

So the next couple of weeks are going to be very interesting in seeing how the EU reacts to what the government proposes on customs and Northern Ireland, and there may be a lot of political activity in Brussels and London before politicians go on their summer holidays at the end of the month.