The Brexit white paper still allows for a deal with the EU – but will the Conservative Party agree to it?

Editorial
Theresa May's proposals have been widely condemned in her own cabinet and have led to a raft of resignations: AFP/Getty Images

When Boris Johnson met David Cameron for a chat before the Chequers summit, the two Old Etonians – who have done so much to shape (ie damage) modern Britain – agreed that Theresa May’s Brexit proposal was the worst of both worlds.

Since partly denied, it certainly seems to be a verdict that is gathering currency, with everyone from Nigel Farage and Donald Trump to Peter Mandelson expressing frustration with it.

As Theresa May faces the daunting prospect of selling her ideas to a sceptical EU and an actively hostile Conservative Party, she may soon understand the old adage about a good compromise being one that annoys everybody.

There has always been a case to be made that the only viable options were to stay in the EU or to leave entirely, and take a substantial hit on the economy in the hope that new trade deals and a freewheeling Singapore-style open market economy could outcompete the EU.

Anything in between would always mean that the full benefits of either possible future could not be fully harvested. Hence the worst of all worlds.

It was never going to be logically or politically possible for the UK to be simultaneously both in the customs union or single market as well as free of their rules and constraints. As is often said, we cannot have our cake and eat it.

The word sometimes used by government ministers to describe the white paper is “clever” because it does attempt to square circles using ingenious mechanisms, such as separating the goods and services sectors of the economy.

Realistically, it recognises the reality that the UK needs workers and skills from the EU, and vice versa. It is the nearest solution to “cakeism” yet devised. They have not yet dubbed it “smart Brexit”. Perhaps they should.

Smart as it is, will the EU buy it, even in part? The noises coming from Brussels have not been encouraging, as The Independent has reported, and it would be astonishing if the white paper was casually accepted in its entirety.

Scepticism rests on practical and ideological issues. Practically, the UK proposal most closely resembles the current relationship between Switzerland and the EU. This, again where some sectors of the economy are subject to EU rules and others are not, requires constant bureaucratic attention as new laws are passed on either side.

The two sides find themselves in permanent negotiation, which the EU finds irksome. Switzerland, for its part, finds the single market obligations of free movement – it is even a member of the passport-free Schengen zone – increasingly unpalatable, with right-wing parties making trouble over the migrant crisis.

In other respects, the white paper resembles the Norway option: in the single market but outside the customs union, with parallel drawbacks for border controls. These would cause predictable problems for the Irish border question.

The UK suggests variations on a theme of a customs area and high-tech solutions to replace old style controls. The EU rightly says that the technology has not yet been invented. What do we do until it arrives?

So it would take a considerable degree of goodwill for the EU to indulge this special treatment for the UK. It effectively reinstated the national veto that was swept away in the single market reforms of 1992, and potentially applies it to pettifogging administrate measures rather than vital national interests.

It would enormously complicate the single market. It might encourage other dissident EU states to lobby for relation of rules and obligations such as free movement of labour.

What, for example, would happen if a Labour government came to power in the UK and wanted to offer state aid to failing industries – something the white paper rules out and Brussels frowns upon? Would there then be yet another mini renegotiation?

Or would the European Commission turn a blind eye? And if it all ended in legal action, would the European Court arbitrate?

The EU might be persuaded to accept the British proposal and the violation of one of the central pillars of the EU, free movement of labour, if it received compensatory concessions: access to fishing; enhanced subscriptions to EU development funds, especially for eastern Europe, or very easygoing rules on migration. Or all three – and more.

Britain still has little bargaining power with an economic bloc 10 times its size. But the UK is a substantial market, and a profitable one: for some sectors of western European industry, the City provides a deep pool of liquidity for EU-based corporates, and the UK is increasingly valued as a security and defence partner in an era of Russian revanchism and American disengagement from Nato.

That all still count for something – if less than the Brexiteers dream. So the chances are that there is a deal to be done with the EU.

Whether it is one that the Conservatives or parliament can agree to seems unlikely. What then?