May Ends Marathon Brexit Session as EU Preempts Decision

Updated on
  • Divided cabinet went to country retreat to discuss divorce
  • Cars, digital trade and agriculture were on the agenda

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Prime Minister Theresa May gathered her top ministers for an eight-hour session to get them to back her Brexit strategy, as the European Commission preempted the outcome by saying that what it’s heard of her plan won’t work.

May took her most senior colleagues to her country retreat to extract their backing for the negotiating position she will take to Brussels for trade talks. But the plan is divisive because it foresees keeping European Union rules in many areas -- such as carmaking and data sharing -- while breaking away partially or fully in others. The approach is known as the “three baskets,” as each sector gets one of the three treatments.

Talks aren’t due to begin until next month, but look increasingly likely to start with a stalemate. May’s opening negotiating position is a product of the dynamics within her Conservative Party: she needs to find a compromise that satisfies the various factions at war over Brexit. The FT and the BBC reported afterward that both cabinet ministers who favor staying close to the EU and those who favor distance were happy.

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This is likely to reflect the fact that it’s easy to decide to ask for things. The hard part is getting the other side to agree. And before May’s meeting even got going, the European Commission weighed in with a slideshow presentation that rejected the U.K.’s emerging strategy.

“U.K. views on regulatory issues in the future relationship including ‘three basket approach’ are not compatible with the principles in the European Council guidelines,” one of the slides reads. If the U.K. “aspires to cherry pick,” there’s a “risk for the integrity” of the single market, it says.

The Commission, which is leading the negotiations, outlined the difficulties of reaching trade terms with the U.K. in areas including chemicals, agriculture and carmaking. Despite U.K. proposals for a system of “mutual recognition” of British and European regulations, the document suggests this would represent exactly the kind of “cherry picking” approach it has always ruled out.

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The danger for May comes not with agreeing to set out ambitious demands, but if it becomes clear that there will have to be compromises. For those in her government who doubt the EU will agree to give the U.K. everything it wants, the important thing is to keep options of a less dramatic Brexit on the table.

So while, according to the FT, the focus of those in the meeting who back Brexit was on agreeing to ask the EU to continue accepting British goods even as regulations diverge, the focus of those who are doubtful, such as Chancellor of the Exchequer Philip Hammond, was on agreeing the that U.K. will initially stay closely aligned to EU rules.

Cars and Fresh Raspberries

Ministers discussed the automotive industry -- where the U.K. wants to stay so close to EU rules that regulators on either side could delegate to each other -- and agriculture and food -- where the plan is to ditch EU rules. The car sector is key because of its sensitivity to regulation and cross-border trade. And because it’s a big employer, the government made secret pledges in 2016 to Nissan Motor Co Ltd to persuade it to keep investing in the U.K.

Liam Fox

Photographer: Luke MacGregor/Bloomberg

Ministers also talked about the overall future partnership in a discussion led by May, and pro-Brexit Trade Secretary Liam Fox led a session on digital trade, according to May’s office. They dined on sweetcorn soup, slow braised Dexter beef rib and lemon tart with fresh raspberries.

The meeting comes at a critical time in the Brexit process, with May’s authority under pressure and time for negotiations running short. May will make a speech on what she wants the future relationship to look like next week. Pipping her to it, will be opposition leader Jeremy Corbyn, who will set out his vision Monday in an intervention that has the potential to shift the whole Brexit debate.

(Updates with BBC and FT reports on meeting from third paragraph.)
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