Getting Brexit deal over finish line would only begin a tortuous new race

Britain could face the prospect of paying the European Union billions of euros a year to buy time to complete its split from the bloc. Photo / AP

Britain would have no more than a few months to negotiate a new trade agreement with Brussels, a process that typically takes years.

Should Prime Minister Boris Johnson persuade Parliament to pass his Brexit deal — to "get Brexit done," as he promised — it would seem to bring a successful end to the most difficult chapter of his career.

But it would signal only the beginning of another tortuous process to fully extract Britain from the EU, one that could collapse next year in the same sort of failed divorce from the bloc that members of Parliament have tried so hard lately to avoid.

Lawmakers are now trying to amend Johnson's plan to hedge against that result, an effort that could help insulate Britain's already-stagnant economy but could also shatter the tenuous coalition behind the prime minister's Brexit deal.

The problem is that Johnson's deal with Brussels, while setting the terms of Britain's departure from the EU, resolves none of the fraught questions about the country's long-term relationship with the bloc, its biggest trading partner. The government would have no more than a few months to settle those questions in a new trade agreement with Brussels, a process that typically takes years.

That means Britain could once again be staring down a catastrophic, cliff-edge split from the EU in December 2020, when the Brexit transition period is to end. To avoid such a result, Britain could pay the bloc billions of euros a year to hold onto its access to the European market while it completes a long-term, negotiated divorce.

"There is honestly no way to do everything we need to do in 14 months, even with the best of intentions," said Anna Jerzewska, a trade specialist who has advised the British Chambers of Commerce.

That reality has dawned on Parliament, where lawmakers have already drawn up an amendment to Johnson's plan that could protect against an abrupt 2020 exit without a trade agreement by forcing a two-year extension of the transition period.

But such a change could also undercut the support of hard-line Brexiteers and end any hopes of passing a deal now.

"It's such a fragile coalition of support," said David Henig, the director of the UK Trade Policy Project at the European Center for International Political Economy. "For the extreme Brexiteers, they want to be able to leave with no deal in December of next year, whereas other people absolutely don't. It's a continuation of the intra-Conservative Party squabbles."

The threat of a no-deal departure next year has already generated enough anxiety among moderate Conservative lawmakers that they refused to go along with Johnson's expedited timetable for passing his current plan, delivering the prime minister a defeat Tuesday night that has put his entire Brexit deal in limbo.

Philip Hammond, the Conservative former chancellor, called Johnson's Brexit legislation a "sham," saying "it is a camouflage to a no-deal Brexit at the end of 2020."

Prime Minister Boris Johnson says Britain will work out a new trade agreement with the bloc in short order. Photo / AP

Johnson's predecessor, Theresa May, crafted a withdrawal deal that protected against an abrupt split from the EU at the end of the transition period. With her so-called backstop, the entire United Kingdom would have remained in a reasonably close trading relationship with the bloc past the end of next year.

That provision was anathema to Brexiteers, and Johnson overhauled it, pointing Britain toward a harder split from the EU. Under his plan, only Northern Ireland would keep close trading ties with the bloc, as a way of avoiding customs checks from taking place on the historically contentious Irish border.

But apart from stitching together a new trade agreement with the EU at breakneck speed, or asking for an extension, Johnson's plan offers no way to cushion Britain from crashing out of the bloc at the end of the transition period. Britain has until July to ask the bloc to prolong the transition period.

"Under this deal, relative to May's, the worst case scenario is worse," said Sam Lowe, a senior research fellow at the Center for European Reform, a research organisation.

Johnson has argued in recent days that there is no risk of an abrupt departure next year because Britain will work out a new trade agreement on time that includes, for example, new tariff arrangements. But experts said that was an extremely tall order.

It could take months for the EU to get a mandate from member states about its position in the talks, analysts said, and then months more to prepare for negotiations with legal studies and impact assessments.

Such negotiations are expected to be highly contentious. Lowe said European negotiators would most likely demand that Britain commit to a "level playing field" with the bloc in areas like state aid, tax and social and environmental protection, effectively guaranteeing that Britain does not undercut European businesses by engaging in competitive deregulation.

The price for Britain temporarily maintaining its trading ties with the bloc beyond 2020 in order to avert a no-deal Brexit could be even higher than the 10 billion euros ($17.4 billion) a year that it now pays into the European Union's budget. Member states all make annual contributions, and the bloc could ask Britain to pay more than its member's share once it formally becomes independent.

Brexiteer lawmakers already are fuming about Britain being on the hook for a 39 billion pound divorce settlement that covers the country's obligations until the end of next year.

Hard-line Brexiteers have let slip that, in order to keep them on board with Johnson's deal, senior ministers have promised that Britain would leave the bloc next year even without a trade agreement. More moderate lawmakers have gotten a contradictory promise.

"The government cannot tell me that this deal leads to a deep and special trade partnership, while simultaneously telling other colleagues that it is a direct route to no-deal at the end of 2020," Hammond, the former chancellor, wrote in The Evening Standard on Tuesday.

That points to the difficulty Johnson faces in Parliament.

The price for extending the transition to avert a no-deal Brexit could enrage Brexiteer lawmakers. Photo / AP

His deal could be held up by amendments, perhaps none more significant than a proposal from Nick Boles, an independent lawmaker, that would force the government to seek a two-year extension of the transition period unless it strikes a new trade agreement or Parliament decides otherwise.

Such changes are so threatening to Johnson's hopes of passage that he is considering mounting a fresh bid for an early election before he tries to push his deal through Parliament.

The fight over what happens next year is only a preview of the looming disagreements in Britain over its post-Brexit relationship with the EU, said Meredith Crowley, an expert in international economics at the University of Cambridge. While a Labour government would most likely point a post-Brexit Britain toward a permanent customs union, the Conservatives have promised a more complete split.

Sarah Hall, a professor of economic geography at the University of Nottingham and a senior fellow at UK in a Changing Europe, a research institute, said it was evidence that "Brexit is much more of a process than a one-stop, clean break."

Some analysts expect that Johnson will swallow the huge payouts to the EU and request a longer transition to avoid an exit next year without a trade agreement. But as long as a no-deal departure remains a possibility, analysts said, investment in Britain would continue to lag.

"The threat of no-deal continues," Henig said. "There's been talk for a while that there'd be an investment bounce once there's a deal. But this uncertainty is going to stop any major bounce of investment. You've merely kicked the can down the road another 14 months."

Written by: Benjamin Mueller

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