Countdown to Brexit: 58 days – As the Prime Minister is sent back to Brussels in an attempt to re-open negotiations with the EU – a ‘Malthouse Compromise’ has emerged

It was drama in Westminster last night, ending in a mission for Theresa May to go back to the EU to try to renegotiate an aspect of her Brexit deal.  MPs voted to attempt a replacement for the controversial Northern Ireland backstop.  Little was made during the debate of the other contentious points in the Withdrawal Agreement and Political Declaration that together led to the defeat for the deal by the biggest margin in modern times.

Within 10 minutes of the vote - President of the European Council, Donald Tusk, strongly reiterated the position of the Heads of all 27 remaining EU states, the European Council, the European Commission and the European Parliament.  The Withdrawal Agreement – freely and openly negotiated between EU and UK and accepted last November - "is not open for renegotiation".

Tusk said the Irish backstop "is an integral part of the Withdrawal Agreement".  It takes up over 100 pages of the draft Treaty – and was inserted at Theresa May’s insistence.  He cannot see any way that the Prime Minister can now return with a mandate to seek "alternative arrangements".   For him it’s the ‘deal’ or ‘no-deal’.

If the EU is to be believed – and it only takes one of their bodies to object – it is Mission Impossible.  The question is whether a second look at the unchanged Theresa May deal in two weeks lead to a different outcome in Parliament?  Or will the UK be back to the binary choice of no-deal or no-Brexit?  

As the amendments were systematically voted down, one possible compromise was left standing – a proposal for a different kind of Brexit settlement christened the ’Malthouse’ Compromise – or as we are in mission impossible mode - ‘Plan C’.

It comes from an unlikely alliance of Conservative ‘Remainers’ - such as Nicky Morgan MP - and ‘Brexiteers’ - like Jacob Rees-Mogg MP and Steve Baker MP - as well as the DUP.  Full details of the plan are unclear, as it has not been formally published - but has been christened ‘Plan C’, or the ‘Malthouse Compromise’.

‘Plan C’ has two key components

Component 1: to “replace the backstop with an acceptable indefinite solution,” - as set out earlier proposal supported by the DUP and the European Research Group.

In summary - a time-limit on a ‘backstop’ of 10 years - as opposed to the indefinite backstop in the Withdrawal Agreement.  This aims to avoid a hard border through the conclusion of a free trade agreement (rather than a single customs territory) - and the operation of mutual recognition of standards, customs facilitation processes, and promises to not put in place border infrastructure.

Could the EU accept this?  ‘A Better Deal’ was not well received by border experts.  It proposes to avoid a “hard border” is by ensuring the UK recognises the EU’s rules and the EU recognises the UK’s rules, and to use technology instead of physical checks – were not new in December 2018.  ‘Max Fac’ - as it was known when the UK government was pitching to Brussels - was dismissed by the EU.

Yesterday, the European Commission said: “We looked at every border on this earth, every border EU has with a 3rd country - there’s simply no way you can do away with checks and controls.  The negotiators have not been able to explain them to us and that’s not their fault, it’s because they don’t exist.”

Component 2:  a ‘managed no-deal’.  The UK would approach the EU and ask it to honour the Withdrawal Agreement without the backstop.  The UK would pay relevant financial contributions for this transition period.  It aims to buy more time to negotiate either a future relationship or to prepare for a full ‘no-deal’ exit in 2021.

Could the EU accept this?  The EU has been adamant that the Protocol and the Withdrawal Agreement are a package deal.   Chief negotiator, Michel Barnier, said in November: “Without an operational backstop, there will not be an accord and there will not be a transition period.”

The majority of trade experts believe that WTO law does not actually allow this.  Thus, even if the EU supports this component -  it is likely there will be problems with it under WTO law.

Could the EU accept ‘Malthouse Compromise’ with its two components? Frankly, it is unlikely to be well-received by the EU.  If it were to be brought to the Commons and then receive an overwhelming parliamentary majority, it may result in negotiations being reopened - however firm the EU is on this not happening.  Nicky Morgan MP argues that it’s at least worth asking.  However, it is not certain that it will make it through Parliament - it would need the entire Conservative Party to back the MC, or if there are rebels, a few cross-bench Labour votes.


John ShuttleworthComment