U.K.'s Tortuous EU Exit Is a Lesson to Bloc's Members: Don't Try This at Home

Date : 12/15/2019 @ 2:29PM
Source : Dow Jones News

U.K.'s Tortuous EU Exit Is a Lesson to Bloc's Members: Don't Try This at Home

By Marcus Walker 

As Britain's vote launches the country's exit from the European Union into a new and difficult phase, the bloc is cementing a top goal: Halting more EU defections.

The bruising 3 1/2 -year Brexit process has been so negatively viewed by European voters that even EU-skeptic parties on the Continent have mostly dropped talk of leaving the bloc or the euro. Instead, nationalist politicians such as Italy's Matteo Salvini and France's Marine Le Pen now speak of changing the EU from within while reassuring voters that their countries will remain in it.

That could change if the U.K. secures a trade deal with the EU that gives it greater national sovereignty without hurting its economy and Brexit comes to be seen as a success for Britain. But the likelihood is that Prime Minister Boris Johnson's new government will confront painful trade-offs after its EU membership ends on Jan. 31.

"Perhaps the cloud is lifting a bit, but the U.K. will still have a steep hill to climb to work out a new economic and political relationship with its most important trading partner," said Mujtaba Rahman, head of Europe at political-risk consulting firm Eurasia Group. "Concluding and ratifying a trade agreement will be very difficult, and the U.K. will ultimately have to make big concessions while getting less access than it has now. That will continue to color people's perceptions in Europe that exit is a painful process."

Mr. Johnson's strong Conservative election victory means he can now ratify his divorce agreement. Under the deal, the U.K. will continue to apply EU laws and regulations until at least the end of 2020, after which a new trade treaty is supposed to be ready. Without one, economic chaos could follow.

In trade talks, the EU will again use the same bargaining power over the smaller U.K. it used ruthlessly to limit the U.K.'s options for its divorce deal. The U.K. could face a tricky choice between losing vital access to European markets and accepting EU rules over which it will no longer have a say.

Some Britons who want continued close relations with the EU complain that the bloc has been driving too hard a bargain in the negotiations, risking a bitter and lasting alienation of the U.K., which remains one of Europe's most important economies and military powers.

But ever since Britons voted to leave in a June 2016 referendum, the EU's other 27 countries put another goal above good relations with London: the bloc's survival.

In 2016, many European political elites feared a great unraveling of European integration if a wave of populist movements overthrew the broadly centrist establishment in Western Europe. After the surprise British referendum result, and President Trump's election, Ms. Le Pen looked like a strong contender to win the French presidency. At the time, she spoke of dismantling the euro and the treaties underpinning the EU.

Germany's political elite feared that losing France, its longtime partner at the heart of European integration, would doom the experiment.

Smaller EU countries warned German Chancellor Angela Merkel against being too accommodating toward Britain to avoid encouraging anti-EU forces back home. Led by Ms. Merkel, EU leaders soon united around the priority of defending the bloc and preventing Brexit from setting a risky precedent.

"From the point of view of the worst fears in 2016, the EU's negotiating strategy has been a success," said Sara Hobolt, professor of European politics at the London School of Economics. "They have managed to stay united, and there has been no domino effect."

The most important part of the EU's tough stance concerns the long-term economic relationship. The bloc will warn the U.K. that the more it diverges from EU economic regulations and standards, the less access it will gain to Europe's large markets for goods and services. That puts the U.K., which is more dependent on Europe than vice versa, at a disadvantage.

Failure to reach a trade deal risks battering the U.K. economy. But agreeing to one will likely require Mr. Johnson to accept a "level playing field" of economic regulations. That could reassure business but anger lawmakers and voters who want a radical break with the EU.

The form that Brexit takes could also test the U.K.'s territorial integrity over time. Mr. Johnson's divorce deal leaves the U.K. province of Northern Ireland inside the EU's customs union -- but facing customs controls vis-à-vis mainland Britain. Thursday's U.K. elections were also a victory for Scottish nationalists, who want to leave the U.K. and stay in the EU.

What's more, the U.K. must also renegotiate many economic relationships with the rest of the world that were previously handled via Brussels. "The idea of a global Britain will be postponed, because first you have to reorganize the Britain that's already global," said Sergio Fabbrini, director of the LUISS School of Government in Rome. "The U.K. will be taken up for years and years by this."

Write to Marcus Walker at marcus.walker@wsj.com

 

(END) Dow Jones Newswires

December 15, 2019 09:14 ET (14:14 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.


NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.