December 5, 2019
Brexit: Several Possible Outcomes, One Direction Forward
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If there’s one thing we know about Brexit, it’s that the dates for when the United Kingdom will leave the European Union (EU) are in constant flux—if it happens at all. Recently, the Brexit deadline was extended for a third time, to January 31, when British Parliament was unable to agree on Boris Johnson’s latest proposed deal. Yet that said, if Parliament agrees on a deal prior to that, the UK could leave the EU before the deadline. And adding to the intrigue: Calls for early elections by Johnson were approved by parliament and voters will go to the polls on December 12.
Although British citizens will be thinking about matters beyond Brexit (the economy, migration, or other topical matters), it will nevertheless be playing a significant role in how they vote. Additionally, the outcome of this election will determine the next steps in reinventing the UK’s relationship with the EU.
Different Parties, Different Views
The Conservative party is most definitely pro-Brexit. Johnson is running on a platform promoting Brexit with the current deal he struck with the EU. While much of what he architected is similar to Theresa May’s deal, the key difference lies with the border between Northern Ireland and the Republic of Ireland. In Johnson’s deal, Northern Ireland leaves the EU’s customs union, but remains in the UK’s customs territory while following EU procedures for imports. Under this setup, customs checks would occur at ports. In addition, taxes would need to be paid only for goods being transported into Northern Ireland or the EU, and for goods deemed “at risk” of being transported from Northern Ireland into the Republic of Ireland (if these products are then not transported into EU customs area, the UK is responsible for refunds). These “at risk” products have yet to be determined by the UK and EU. The deal still includes a transition period, which is set to run for at least one year, during which no changes will occur in order to give both the UK and EU additional time to prepare for the UK’s exit.
As for the Labour party, Jeremy Corbyn, Boris Johnson’s main opponent, is addressing Brexit by calling for a new referendum in his campaign. In that setup, the choice would be between a renegotiated deal with the EU, or voting to remain inside the EU. The Labour Party has not yet made clear if it would support Leave or Remain. Corbyn’s strategy brings many unknowns. If the referendum comes about and the outcome is Remain, Brexit could be cancelled. This would mean the UK revoking Article 50 of the Lisbon Treaty (which Teresa May triggered in March 2017, officially starting the procedures for the UK leaving the EU). A ruling in favor of that by the European Court of Justice (ECJ) is possible, however also irreversible (because the UK can’t revoke Article 50 in order to buy more time and then resubmit it again later - it is not, however, barred from re-submitting article 50 in the future, it is only barred from revoking and then re-submitting in order to buy time). The alternative option in the referendum, a new renegotiated deal, will be challenging to realize. Given the December 12 election date, and the new exit date of January 31, Corbyn would have approximately six weeks to negotiate a new deal with the EU; pass it through British parliament; and hold a referendum on it. This is unless Labour’s plan to ask the EU for an additional 6 month extension is successful, which would delay Brexit to summer 2020. Theresa May and Boris Johnson have been unable to make it through the first two steps in the past three-plus years, so even with a six month extension it will be challenging for Corbyn to realise this plan. Additionally, there is a significant chance the EU will be unwilling to reopen negotiations yet again, as they were reluctant to do so the previous two times for both May and Johnson.
Additional campaigns are also in the works. The Liberal Democrats have been campaigning to scrap Brexit under Jo Swinson’s leadership. Yet, they have said they would support a new referendum if they cannot realize this plan. Meanwhile, Nigel Farage’s Brexit Party is campaigning for Brexit to happen sooner rather than later, regardless of whether or not a deal has been agreed on. Although these parties are unlikely to win a majority of the votes, they both appear to be targeting Labour voters, which in turn may sway the vote in favor of the Conservatives.
Lastly, a final outcome to consider, is that the General Elections will not result in any real majority. This could lead to a hung parliament and continued stalemate with Brexit.
Elections are hard to predict, and this one particularly so. With continued uncertainty surrounding Brexit and its implications, the best course of action, as mentioned in a previous blog post, may be to appoint a customs broker who “speaks Brexit.” Another useful option is to partner with a freight forwarder with an integrated customs brokerage and record of helping customers navigate major global events.
Taking the right steps now, including partnering with an experienced freight forwarder, can help ensure an agile supply chain that is responsive and ready to adapt to Brexit.