Negotiations not about economically optimal outcomes

Negotiations not about economically optimal outcomes

The Wonk.eu has posted a must read report from the Director of the Centre for European Reform.  It gives a comprehensive up-to-date analysis of Brexit issues but also the dynamics at the heart of upcoming negotiations. It makes the realistic but very worrying conclusion that both Britain and the 27 EU countries are not aiming to achieve economically optimal outcomes. Britain’s top priorities: restricting free movement and excluding the ECJ.  While the 27 are driven more by politics as expressed in cohesion, unity and strength.  “Neither side seems particularly bothered that even the best possible deal that is feasible will harm the economic well-being of all concerned.” concludes Charles Grant.

He considers three possible outcomes to the negotiations:  “a separation agreement plus an accord on future relations including an FTA; a separation agreement but no deal on future relations, so that Britain has to rely on WTO rules; and neither a separation agreement nor a deal on future relations, so that Britain faces legal chaos and has to rely on WTO rules”

It goes onto examine issues around how to get a good deal but adds even in the most optimistic of scenarios the Brexit deal with be  “fairly hard.”

Reflecting on the potential obligation to restore customs post on the Irish border he adds: “There is a strong desire in Dublin, Belfast and London to find some clever system which would obviate the need for customs controls on the border. The good news is that Michel Barnier, the Commission’s chief Brexit negotiator, is very keen to help. The less good news is that nobody has yet found the clever system that will solve the problem.”

As we say an absolute must read.  You will need to register with The Wonk.eu to read but its a small price for a lot of information.