May faces down hard Brexiteers, and now the real work begins

When Theresa May meets Conservative backbenchers at Westminster on Monday, she will face tough questions about Friday's Chequers statement, which hardliners see as a blueprint for Brexit in name only. A legal analysis for the backbench Brexiteer European Research Group (ERG), led by Jacob Rees-Mogg, described the plan as the worst possible Brexit.

“These proposals … lead directly to a worst-of-all-worlds, ‘black hole’ Brexit where the UK is stuck permanently as a vassal state in the EU’s legal and regulatory tarpit, still has to obey EU laws and ECJ [European Court of Justice] rulings across vast areas, cannot develop an effective international trade policy or adapt our economy to take advantage of the freedom of Brexit, and has lost its vote and treaty veto rights as an EU member state,” it said.

Brexiteer backbenchers may howl in anguish but there is little they can do to change the prime minister’s approach to Brexit unless they trigger a leadership contest. And even if they have enough votes to trigger a contest, which requires the support of 48 Conservative MPs, they are unlikely to defeat her.

May has faced down the Brexiteers in her cabinet and bound them to support her soft Brexit strategy with a declaration that collective responsibility has been fully restored. But her proposal as it stands will not be acceptable to the European Union, and her next compromises could strain the unity she imposed at Chequers.

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It's hard to find anyone in London or Brussels who believes this customs plan is workable

The Chequers plan proposes that Britain should create a free trade area with the EU for all goods, including agri-food, making a treaty commitment to ongoing harmonisation with EU rules. For Brussels, this amounts to membership of the single market for goods, a kind of cherry-picking that could offer Britain a commercial advantage.

Services

EU negotiators point out that services, which would not be covered by the deal, account for up to 40 per cent of the value of many manufactured goods, in the form of data, maintenance and financial services such as loans and insurance. Besides, as Michel Barnier repeated last week, maintaining the integrity of the single market is a priority for EU negotiators.

The Chequers plan promises to ensure “a fair trading environment” by adopting EU rules on state aid, maintaining similar competition rules and promising that standards on the environment, climate change, social and employment, and consumer protection will not fall below their current levels. This is an important commitment for the EU, which fears that without a commitment to a “level playing field”, Britain could undercut EU member states with lower standards and social dumping.

The plan proposes that a “joint institutional framework” should provide for the consistent interpretation and application of the agreement, done in the UK by UK courts, and in the EU by EU courts, “with due regard paid to EU case law in areas where the UK continued to apply a common rulebook”. This implies indirect ECJ jurisdiction in Britain, perhaps in breach of May’s original red lines, but it may not be robust enough to satisfy the EU’s demand that its court should be the final arbiter.

Staging post

A “facilitated customs arrangement” would, according to the Chequers statement, remove the need for customs checks and controls between the UK and the EU “as if a combined customs territory”. The UK would apply the UK’s tariffs and trade policy for goods intended for the UK, and the EU’s tariffs and trade policy for goods intended for the EU. It’s hard to find anyone in London or Brussels who believes this customs plan is workable so it may be a staging post on the way to a formal customs union between Britain and the EU.

Until now, it has been tempting for Britain to delay agreement on the issue of Ireland in the hope of using it as a bargaining chip

The Chequers plan doesn’t directly address the issue of the Irish Border but suggests that the proposals would address the issues surrounding it and ensure that any backstop agreement would never have to come into effect.

“In this context, we also noted that this proposal should allow both parties to resolve the remaining Withdrawal Agreement issues, including the ‘backstop’,” it says.

Michel Barnier last week sought to reassure unionists that the EU's backstop proposal is not a threat to the UK's constitutional order and will not create a border between Northern Ireland and Great Britain. Any checks at Northern Irish ports and airports would be strictly "technical and operational" and would amount to little more than an enhancement of checks that are already carried out on livestock and some agricultural products.

Until now, it has been tempting for Britain to delay agreement on the issue of Ireland in the hope of using it as a bargaining chip at the end of the negotiations. With business clamouring for certainty on a transition deal, which can only happen if the backstop is agreed, an early resolution of the issue is now in Britain’s interest.