In March 2017, UK Prime Minister Theresa May triggered Article 50, a provision under the EU’s Lisbon Treaty, that formally put into effect, the procedure of withdrawal from the European Union. The United Kingdom has until March 2019 to negotiate a deal with the EU. The topic of this essay aims to assess the negotiating capacities of both states and provide an answer to the question, of whether one of the negotiating parties have a power advantage over the other in the Brexit negotiations. To answer the question, we must consider; the issues surrounding Brexit, the leverage that the European Union has over the UK and vice versa, and most importantly conclude on which of the two sides has more to lose and as such which of the two stands at a position of power. Article 50 is important in Brexit negotiations, because it gives the UK, two years to negotiate a withdrawal agreement with the EU and dictate their relationship with the EU moving forward. Any agreement that is decided upon needs to be accepted by a qualified majority of the EU member states, which means that 72 percent of the member states must vote in favour of the deal.1 If an agreement is reached by March 2019, any existing treaties between the UK and the EU will expire and all treaties will automatically expire after the two-year period if no agreement is decided on.2 There does exist an option of extending negotiations, however, it will require the consent of all 27 member states, which may prove to be quite challenging, and if the agreement reached is a mixed agreement then it will have to be formally accepted by the parliaments of individual member states, essentially giving each member state considerable power in negotiations and further delaying them.3 At a first glance, things do not seem to be in favour for the UK, however the issue of leverage and power dynamics can only be raised once primary issues and key areas of focus surrounding Brexit are assessed.
One of the most significant characteristics of the European Union is the importance it places on the free movement of goods, services, capital, and people.4 The United Kingdom wants the access to the single market but does not want the free movement of people, the reasons for which stem from the high number of immigrants that come into the UK from the EU.5 Immigration was a key concern for many of the leave voters and it reflects in the UK’s stance on immigration, much of which stems from the fear of terrorism and refugees coming into the UK, and in the eyes of the UK, the free movement of people only threatens its national security. A case can be made for the UK’s ability to negotiate with the EU and to somewhat achieve this goal. David Davis, Secretary of State for Exiting the European Union, believes that both the goals are achievable with negotiations and has stated that the UK’s strong stance on immigration will only prompt a favourable deal from the EU in their own interest, when they realise that the UK is unwilling to compromise on free movement of people.6 However, it may be a stretch to assume that the EU would accept any such unwillingness, especially given its strong stance on free movement. Donald Tusk, President of the European Council, has clearly stated that the access to the EU single market hinges on the acceptance of all four of the EU freedoms; which includes the freedom of movement of people.7 With the other EU member states supporting the motion, it leaves the UK with little room to negotiate, as far as the movement of individuals is concerned. Campaigners for the ‘Leave” campaign have argued that the UK pays more money to the EU budget than it gets back and that this money could be saved and utilized elsewhere. Throughout the campaign the proponents of the ‘Leave’ campaign; most notably Nigel Farage, leader of the UKIP, talked about divesting the money sent to the EU into the NHS, a statement that was very much changed after the day of the Brexit referendum.8 The reality is, that if the UK wishes to have access to the European single market it will have to pay, and in many ways that in itself defeats one of the key arguments for leaving the EU, the precedent for which is evident when we look at Norway. Norway, which is not a member state of the EU contributes to the EU budget and adheres to the regulations set out by the EU in order to have access to the single market.9
The ‘Leave’ campaign and its supporters contested and raised issues regarding the regulations imposed by the EU, which include; environmental regulations, product safety regulations, and regulation on working standards to name a few.10 Many of these regulations are the international norm or standard and will continue to be in effect regardless. If the UK leaves the EU, regulations will still be an active feature of the UK even if the EU is not the one imposing them; and even if the UK gains access to the single market it will still have to adhere to and abide by certain regulations set out by the EU as part of that access, the example for which can be seen in the example of Norway’s access to the single market.11 Much of the rhetoric around the UK leaving the EU was centred around immigration, and the aim of the ‘Leave’ campaign was to put into effect an immigration barrier from Europe. However, in reality, any barriers to free movement will be detrimental to both the EU and the UK. There are millions of EU nationals residing and working in the UK and vice-versa; and constituents of both sides would want to retain their right to freely move, and any deal to secure the free movement between the EU and the UK for UK citizens will have to be reciprocated for the EU and the citizens of its member states.12 At a glance, it seems that the EU has much more room to bargain and holds a position of power, which does not bode well for the UK’s negotiating powers. It is then worth considering what leverage the EU actually holds over the UK.
The ‘Leave’ campaign has suggested that the EU exports more to the UK (£290 billion) than the UK exports to the EU (£220 billion), and as such claim that they will be negotiating from a position of power.13 In the event that no agreement is reached, the EU would lose financially and would lose a major trading partner. However, if we look beyond the sheer sum of money in question, the UK’s exports to the EU amount to 44 percent of its total exports, and the EU’s exports to the UK amount to about 10 percent of the EU’s total exports, giving the EU an advantage over trade negotiations.14 So, in an event where no agreement is reached, the EU will stand to lose a substantial amount of money yet only a minor percentage of its exports. The UK however, stand to lose a substantial sum and a major exporter and trade partner. The financial loss hurts the UK more than it does to the EU, however it can prove to be significant when things do add up. A bad deal with the UK threatens to disrupt the UK’s cooperation with the EU on matters of security. The UK has global clout and boasts of a defence expenditure that surpasses that of any other EU member state.15 A loss of such a strong militaristic nation is sure to hurt the EU. The Brexit referendum has gone to highlight the isolationist sentiment of the UK voters and any deal that seems unfavourable to the masses in the UK will only strengthen the anti-EU sentiment. The UK’s clout internationally and with individual EU member states (Germany in particular), many of which rely on trade with the UK, plays a key role in negotiations as well.16 These relationships will play a considerable role in ongoing negotiations, however, relationships alone would not be sufficient leverage. Any final decision between the UK and the EU will require, as mentioned earlier, the qualified majority to agree and vote in favour of the agreement, and in the event of a mixed agreement, a unanimous vote is required. This limits the UK’s room to negotiate and definitively grants the EU a position of power from which it can steer negotiations. The EU is faced with the challenge of setting a precedent to deter any other member states from leaving the European Union in the future. This does not bode well for the UK. Any deal that seems favourable to the UK will be frowned upon by the other member states and will jeopardize the unity of the EU. In an ideal scenario where there was no risk of future defections, the EU and the UK could come to an agreement that would have been beneficial for both, however the EU is now more likely to walk away from deals that may be favourable to itself as well, in order to de-incentivize other member states from leaving. As such the EU will look to make an example of the UK, not out of malicious intent but to avoid future defections.
There are many factors working against the UK, foremost the fact that the EU will look to make an example out of the UK leaving the EU. It’s agreements with non-EU members like Switzerland, Norway, and even Canada hinge on the acceptance of regulations, certain EU norms and paying for the access to the EU single market, and any hopes of being exempted from such demands would be a gross misjudgement on the part of the UK and its leaders. The campaigners for leaving the EU may have promised more than they could realistically hope to deliver. As mentioned earlier, the contributions to the EU was one of the key campaign agendas, yet leaving the EU might prove to be more economically detrimental to the UK, as any access to its single market will require contributions to the EU budget. The crisis of immigration and national security may have been exaggerated and is much more a reflection of the right wing, anti-immigration, and nationalist sentiments of the last few years than the actual problem. The UK aims to achieve a deal where it has access to the single market with minimal regulations, contributions and concessions, and also have strict barriers to entering the UK, a deal which is utopian in its vision and implausible in consideration. It is perhaps a scenario where the UK will have to concede defeat and admit that maybe the reality of leaving the UK is not as ideal as they thought it would be or would like it to be. The possible outcomes for the UK are far and away from what the ‘Leave’ campaign promised, and at this point, any scenario will only serve as a disappointment for those that voted to leave the EU. In the event of a no deal, the trade rules could potentially default back to those laid out by the WTO, however, it would mean that barriers, tariffs and trade regulations would be imposed on the UK regardless and would hurt the UK especially.17 There is an option to follow a model, similar to that followed by Norway, where Norway has access to the EU single market in exchange for its agreement to the EU’s regulations, freedom of movement, and its financial contribution to the EU.18 If the UK decides on going with this model, it would essentially be contributing to the EU in a similar capacity, possibly worse due to EU’s need to set a precedent, essentially defeating the entire purpose of leaving the EU in the first place.
The answer to which of the two sides have a leverage in negotiations is more complicated than it initially seems. If we take into account the interests of both parties, there is no one deal that would be ideal for both parties. The best choice would have been to remain in the EU, however, we have to look at the scenario for what it is and not how we wish it was. However, based on the facts examined in this essay, the greater losses that the UK stands to suffer, the collective bargaining power of the EU and the sheer inability of the UK to realize the promises that the ‘Leave’ campaign made in the run-up to the Brexit referendum, it is clear that the EU has a greater advantage and wields more power over negotiations.