Brexit Britain will have to get used to life as a ‘third country’

Once upon a time there was a creature called Brussels that ate national sovereignty. This monster had a special hunger for Britishness, feasting on the independence of that nation, while its neighbours were mysteriously undiminished. France never became less French, despite dwelling closer to the beast’s lair. Prime ministers were forced to pay tribute to Brussels. They defended themselves with magical red lines, but the monster was too powerful. It had to be slain.

That is the founding fable of Brexit, propagated by Eurosceptic journalists and politicians for years. At its core is the fallacy of “Europe” as something distinct from the UK; an extrinsic force over there, doing wicked things over here. In truth, Europe was part-British, as it was part-French and part-German. UK prime ministers wielded their share of the power that newspapers back home called “Brussels”. As a political entity and as a bureaucracy, Brussels was never just them. It was also us. A tragic irony of Brexit is that it risks turning our relationship with the EU into the unbalanced thing it was falsely said to be.

On 29 March next year, Britain becomes what EU treaties define as a “third country”. Such countries can be very close to the EU, like Norway and Switzerland. They can have “deep and special partnerships”, which is what Theresa May says she wants. A big third country might have influence in Brussels. But it can never be Brussels. That power is reserved for member states, whose ministers attend summits, whose leaders nominate commissioners, whose voters elect MEPs.

If Brexit is the prize its advocates claim, losing those things needn’t be mourned. Busting out of EU institutions was the point. Yet now that the shackles are loose, the cell door unlocked, life on the outside is losing its allure, even for once eager escapees.

David Davis, for one, does not fancy life in a third country. We know this because he was stupid enough to write it down. In a memo leaked last week, the Brexit secretary complained that “some EU agencies have published guidance to business outlining that the UK will become a third country when we stop being a member state”. This, he said, was spooking investors. But being a third country and not being a member state are the same thing. Davis is unhappy that Brexit means Brexit.

Even with a smooth transition, the third country problem doesn’t vanish. The UK abides by the rules but loses its seat at tables where the rules are written.

EU citizens

• EU citizens in the UK and UK citizens in the rest of the EU have the right to stay. Rights of their children and those of partners in existing “durable relationships” are also guaranteed.
  

• UK courts will preside over enforcing rights over EU citizens in Britain but can refer unclear cases to the European court of justice for eight years after withdrawal.

Irish border

• The agreement promises to ensure there will be no hard border and to uphold the Belfast agreement.

• It makes clear the whole of the UK, including Northern Ireland, will be leaving the customs union.
  

• It leaves unclear how an open border will be achieved but says in the absence of a later agreement, the UK will ensure “full alignment” with the rules of the customs union and single market that uphold the Good Friday agreement.
  

• However, the concession secured by the DUP is that no new regulatory barriers will be allowed between Northern Ireland and the rest of the UK without the permission of Stormont in the interest of upholding the Good Friday agreement.

Money

• There is no figure on how much the UK is expected to pay but the document sets out how the bill will be calculated – expected to be between £35bn and £39bn.
  

• The UK agrees to continue to pay into the EU budget as normal in 2019 and 2020.

• It also agrees to pay its liabilities such as pension contributions.

Other issues

• The two sides agreed there would be need for cooperation on nuclear regulation and police and security issues.

• There was an agreement to ensure continued availability of products on the market before withdrawal and to minimise disruption for businesses and consumers.

May has conceded that a spell as a “rule-taker” is necessary to avoid a cliff-edge Brexit. Curiously, Tory hardliners who once sounded impatient to drive off that cliff have stopped revving their engines. Some flinch at the sight of the drop. Most are just wary of destabilising their leader, going along with May’s dodgy Brexit for fear that the alternative might be no Brexit at all. So the old Eurosceptic gang that once told tales of Britain taking dictation from Brussels go along with a plan to turn their paranoid vision into reality.

The leavers’ comfort is that transition is temporary. It is the desert to be crossed before reaching the promised land – marked on Downing Street maps as a “bespoke deal”. This means unimpeded access to EU markets, with freedom to diverge from EU rules in certain sectors. May’s team argues that this shouldn’t be hard because Britain starts the process from a position of maximum alignment. So Brexit just requires carving out exceptions.

This fails to grasp what it means to become a third country. EU members will be obliged to treat UK goods and services as alien, unless a treaty explicitly states otherwise. As a recent report by the Institute for Government puts it: “There is a difference between having the same rules and having those rules legally recognised as being the same as the EU’s.” On Brexit day, the UK loses the right to have its laws presumed equivalent to those of its biggest trading partner. Even with goodwill, restoring that equivalence takes time.

This problem goes away if the UK stays in the single market, as SNP leader Nicola Sturgeon on Monday argued it should. But the single market comes as a package with free movement of labour and perpetual regulatory alignment, policed by European courts. May rules that out with a thick red line, and there is no middle way.

Repeating the word “bespoke” does not explain how the UK can be in the single market for some things, but not others. Philip Hammond, last week moaned to a German newspaper that Brussels was being uncooperative to punish Britain for leaving the club. But what the chancellor sees as intransigence, the EU sees as technical exposition of the law. The choice to become a third country is self-punishing.

Still, it is jarring for EU leaders to hear Britain ask for special deals when its membership package was the most bespoke of the lot: outside the euro; outside the Schengen border-free zone; treaty opt-outs on social protection and criminal justice; a budget rebate. Those concessions were won from a seat in the room. Once on the outside, the question is not what new favours are available, but how much it costs to restore old privileges.

With deft diplomacy, Britain can avoid being ripped off. May is not wrong about the depth of mutual economic and strategic interest in play. A partnership that meets the prime minister’s ambitions of depth and specialness is feasible. But, from the EU point of view, the most that Brexit can do is raise the UK up to be first among third countries. May might claim that as a triumph, another fairytale red-line defence against the Brussels beast. Or she could tell the truth: there was once a better deal, before Britain voted to leave.

• Rafael Behr is a Guardian columnist