You could be forgiven for thinking today would be a banner day for Philip Hammond. Had Parliament been in session, doubtless he would have been heralded into the Chamber – the champion of Brexit who has given British business the certainty it’s been seeking.
The announcement that the Government intends to seek a transitional customs union arrangement of up to three years is significant for three reasons. Firstly, because it gives some semblance of an idea as to what British negotiators will be talking about with their European counterparts. Let’s not forget the picture of the initial meetings last month between David Davis and Michel Barnier. Barnier’s side of the table was strewn with papers and important looking briefings. Davis’s side was so clean you could practically see your reflection. Unless we’re to believe the Brexit Secretary and his chief aides are possessed of eidetic memories, it was difficult to dismiss the sense the British team were doing things at least somewhat on the fly.
The second reason the position paper is important is closely linked to the first. It provides a degree of information and certainty that business has been demanding. And, if the UK is able to successfully agree a transitional arrangement, it buys corporates valuable time to adjust to new trading relationships with the EU rather than being dropped in the proverbial deep end come 2019.
Thirdly and finally, the position paper represents a victory for Chancellor Philip Hammond who in the past month has been championing a transitional arrangement akin to a ‘softer’ Brexit. In getting his way, the Chancellor has – at face value at least – met his commitments to protecting and providing certainty for British business, and faced down the tougher demands of influential Cabinet colleagues such as Liam Fox and Boris Johnson. It surely bolsters the Chancellor’s position after months of speculation over his future, which kicked off around the Budget and has barely abated since.
That said, is it as much a victory for the Chancellor as one might think based on the reaction of political commentators?
What we’ve got is no more than the aspiration of the British government. Granted it gives some room for negotiation, but it’s far, far from certain that the EU negotiators will be minded to commit to transitional arrangements. There are benefits for EU member states exporting to the UK to be sure, but we shouldn’t for a second consider a transitional model a done deal.
The British position would also allow the negotiation of trade deals during the transition period. That’s likely to be a sticking point for our European partners. And, virtually everybody on the EU side – from Jean Claude Juncker down – have repeatedly made it clear that the UK can’t withdraw from the club and expect the perks of membership. A transitional arrangement may seem like such a situation to heavyweights on both sides. And from an EU perspective there’s at least some need to make clear that the UK can’t expect a better deal with Europe if it’s outside the bloc. Otherwise, in the populist political times we live in, what’s to stop another member state from looking to tear up their membership card?
So is it as much of a victory for the Chancellor as it seems at first glance? If a transitional period can be arranged, then sure. But if not – and there are some significant reasons why a deal won’t be agreed – then the Chancellor’s position is seriously, perhaps fatally, undermined. But that’s the consequence of public discussion amongst Cabinet rather than closed door talks and collective responsibility.
