It has been clear that every move by the Tory government on Brexit is designed to contain the splits in the Tory Party, hold together a deeply divided cabinet, and maintain a working majority in Parliament through a deal with the reactionary, pro-Brexit Democratic Unionist Party (DUP). The government is having to do this while, at the same time, gradually moving away from a ‘hard’ Brexit deal that would seriously damage the British economy, dominated as it is by financial services and the global activities of the City of London. That is why Prime Minister Theresa May’s major speeches on Brexit, since the Conservative annual conference in October 2016, have necessarily moved from a ‘hard’ to a ‘softer’ Brexit standpoint. The latter is, at present, embodied in the so-called Chequers agreement made at the special cabinet meeting of 6 July 2018. The inevitable limitations of this process have been dramatically exposed with the resignation of two leading Brexiters from the cabinet, Brexit Secretary David Davis and Foreign Secretary Boris Johnson, shortly after the Chequers agreement was announced. David Yaffe reports.

May, possibly to placate the Eurosceptic wing of her party, replaced Davis at the Department for Exiting the EU (DExEU) with fellow Brexiter, Dominic Raab, and his deputy Steve Baker, who resigned alongside him, by another Brexiter, Chris Heaton-Harris. Boris Johnson, who was replaced by Jeremy Hunt as Foreign Secretary, clearly had to go after the resignations of his colleagues, having said at the Chequers meeting, in his typically bullying manner, that colleagues would be ‘polishing a turd’ if they tried to defend the agreement to the party and the public. In his resignation speech he warned of a ‘miserable permanent limbo’ under the new agreement. Other less well-known MPs were also to resign from their positions in the Tory party and government. At this stage leading Eurosceptic Jacob Rees-Mogg, chair of the more than 60-strong pro-Brexit European Research Group (ERG), said that he does not believe a change of leader of the Tory Party is necessary at present, but that he and his supporters would not back the Chequers agreement in Parliament.

The Chequers agreement

With the Chequers agreement May believes she has made a significant move towards a future relationship with Europe. It is a cabinet agreement on the UK's preferred way forward in negotiations with the European Union on their future relationship. It is now published in a 98-page White Paper. The points below are taken from a government summary of the agreement.

The government agreed to a more developed and comprehensive proposal for the economic partnership. At the core of this proposal is the establishment by the UK and the EU of a free trade area for goods. This would avoid friction at the border, protect jobs and livelihoods, and ensure both sides meet their commitments to the north of Ireland and the Irish Republic through the overall future relationship.

1. After Brexit, the UK and the EU ‘would maintain a common rule book for all goods including agri-food products’, with the UK committing by treaty to ongoing harmonisation with EU rules on goods, ‘covering those necessary to provide for frictionless trade at the border’. There would be a different arrangement with services, where it is in the UK’s interest to have ‘regulatory flexibility’, recognising that the UK and the EU will not have current levels of access to each other’s markets.
2. The UK and EU would ensure a fair trading environment by incorporating strong reciprocal commitments related to open and fair trade into legal agreements that define the future relationship. This would include commitments on state aid, competition, the environment, climate change, employment and consumer protection etc, which ensure standards will not fall below their current levels.
3. The UK and the EU would establish a joint institutional framework to provide for the consistent interpretation and application of UK-EU agreement by both parties. This would be done in the UK by UK courts, and in the EU by EU courts – with due regard paid to EU case law in areas where the UK continued to apply a common rulebook.
4. The UK and the EU would work together on the phased introduction of a new Facilitated Customs Arrangement that would remove the need for customs checks and controls between the UK and EU as if a combined customs territory. The UK would apply the UK tariffs and trade policy for goods intended for the UK, and EU tariffs and trade policy for goods intended for the EU.

The statement makes it clear there would be an end of free movement, giving the UK back formal control over how many people enter the country, with a ‘mobility framework’ to be set up to allow UK and EU citizens to travel to each other's territories, and apply for study and work.

May, on summarising the agreement, said, while ‘it remains our firm view that it is in the best interests of both sides to reach agreement on a good and sustainable future relationship’, it is also ‘responsible to continue preparations for a range of potential outcomes, including the possibility of “no deal’”. Having studied the White Paper, the EU’s chief negotiator, Michel Barnier, is not impressed. He said the Prime Minister had failed to offer Brussels a firm basis for negotiations, with the UK’s demands falling foul of the EU’s red lines and founding principles. He raised concerns over fraud, red-tape and competitive disadvantage to European companies.

To meet this challenge before October’s EU summit, as MPs left for the Parliamentary recess on 24 July, the Prime Minister took over control of the Brexit talks, putting herself at the head of negotiations, in an attempt to end the rivalries that have undermined her exit strategy. Around 50 Brexit staff will be transferred into the Cabinet Office, concentrating power into her own hands and that of her chief Europe advisor Olly Robbins. This unit will have overall responsibility for the preparation and conduct of the negotiations. The DExEU led by Dominic Raab will be downgraded, with a new focus on domestic preparations for Brexit (Financial Times 25 July 2018).

From a ‘hard’ to a ‘softer’ standpoint

At the end of May there were two important matters that needed to be finalised. The first is the published withdrawal (transitional) deal, 75% of which is agreed, which will allow the UK to leave the EU on Brexit day, 29 March 2019, but retain the benefits of the single market and customs union for a further 21 months. This transitional period itself, however, depends on a full withdrawal deal being agreed and ratified before Brexit day by the UK and EU parliaments, sometime in autumn. The most important issue still to be resolved is the dispute between the UK and the EU on the Irish border. The UK had agreed in December 2017 a default ‘backstop’ solution to avoid a hard border between the north of Ireland and the Irish Republic, under which the north of Ireland would maintain full alignment with the EU single market and customs union. This is, however, seen as threatening the constitutional integrity of the UK and is totally unacceptable to the DUP. It was accepted by the government with the proviso that that both sides work towards technological and legal alternatives that will avoid this necessity. Two possible alternatives were offered: May’s preferred ‘customs partnership’ and the so-called ‘Maximum facilitation’ model preferred by Eurosceptic ministers. May warned that unless they accepted her position, Parliament could inflict an even less palatable option on them – a full customs union with the EU.¹ A compromise proposal was eventually reached which became a crucial component of the later Chequers agreement discussed above.

On 12 and 13 June the government had to deal with 15 House of Lords amendments to the European Withdrawal Bill, which transfers EU law on to the UK statute book in preparation for Brexit. Three of the amendments carried a significant threat not only to the government’s Brexit strategy but also to its attempt to hold together the warring factions within the party. The first concerned an amendment asking the government to outline the steps it had taken to negotiate the UK’s participation in a customs union with the EU. The second was an amendment to stay in the European Economic Area (EEA), effectively a vote to stay in the single market. The third was to give Parliament a ‘genuinely meaningful’ vote at the end of the Brexit negotiations, designed to stop the UK leaving the EU without an exit deal.

A defeat on the customs union amendment was averted after the government said it would support an alternative amendment remainer Nicky Morgan and arch-Brexiter Jacob Rees-Mogg had tabled, committing the UK to negotiate a ‘customs arrangement as part of the framework for the future relationship’ with the EU. The clash over this issue was, in effect, deferred, until two trade bills, which contain amendments that would keep the UK in the existing customs union, returned to the Commons in July.

The second amendment was defeated because the Labour Party instructed its MPs to abstain. The Labour Party leadership, while it wants a close relationship with the single market, maintaining its benefits, rejects full membership, which is conditional upon accepting EU state-aid rules and continual free movement of labour. Defying party whips, 75 Labour backbenchers voted for the amendment and a further 15 voted against. Significant divisions over Brexit exist in the Labour Party.

The government narrowly avoided a humiliating defeat on a ‘genuinely meaningful’ vote on Brexit after some 15 pro-European Tory rebels accepted what they thought were significant last-minute government concessions. They claimed that May had promised that the Commons would have an ultimate say over a ‘no deal’ Brexit. The government agreed to table an amendment to the Bill when it returned to the Lords and ‘open discussions’ on the amendment tabled by Dominic Grieve, which could lead to a block on a ‘no deal’ Brexit. As a result the amendment was defeated by 324 votes to 298. When it returned to the Commons a week later, after a great deal of horse-trading that ended up with Grieve voting against his own amendment, it was defeated. Grieve said that a statement from Brexit Secretary David Davis gave him reassurance that MPs would be able to have a voice, if not a meaningful vote, on the final deal (The Guardian 21 June 2018). The EU Withdrawal Bill had survived almost intact.

A planned ‘political coup’

In early July Theresa May was still struggling to bring her warring Tory party behind a compromise proposal for a customs system between the UK and EU after Brexit – a ‘Facilitated Customs Arrangement’ – that would not require invoking the default ‘backstop’ solution to avoid a hard border in Ireland. A full cabinet away day at Chequers was called for 6 July to discuss the new proposals. May had asked everyone with the right to attend cabinet to be present, 29 people, a majority expected to be loyal to her. Business interests played a key role in changing the dynamic of the meeting. Over the previous month corporations such as Airbus, Siemens, Unipart, BMW UK, Jaguar Land Rover, Nissan, the Unipart Group and the freight industry warned of the uncertainty and dangers of a ‘hard’ Brexit. This business onslaught had been encouraged privately by Business Secretary Greg Clark. The full documents for the meeting were only released late on the day before, giving critics little time to coordinate.

Ministers were locked in Chequers without their phones and advisors. May took on the Eurosceptic ministers in her party and wore them down. Pro-Brexit Environment Secretary Michael Gove was said to be instrumental in getting leave-supporting cabinet members to support the proposals. A press statement from the government on the final agreement was sent out and journalists had copies before the ministers’ special advisors had seen it. Boris Johnson and other Eurosceptic ministers had been told by senior government officials that they would not be able to use their official cars to make the 40-mile journey back from Chequers if they quit. Within an hour of the meeting ending a letter was sent to Conservative MPs, warning that the days of debate over the government’s Brexit position were over. ‘Collective responsibility’ warned May was fully restored (from The Guardian, Financial Times 7-9 July 2018). However, in reality, the battles had hardly begun.

May struggles to defend her Brexit strategy

Mid-July saw the return of two important bills to the Commons, the Customs Bill and the Trade Bill, as May struggled to defend her Chequers agreement against the warring factions in the Tory party. It hadn’t helped her overall strategy that a few days earlier, before meeting the Prime Minister, the US President Donald Trump had trashed her Brexit policy in an interview in The Sun newspaper. He questioned whether her plan upheld the referendum result and suggested that her ‘soft’ Brexit approach would scupper any plans for a free trade agreement with the US. He even went so far as to suggest that the former Foreign Secretary Boris Johnson would make a great Prime Minister. His later attempt to repair the diplomatic damage inflicted on May, by calling The Sun’s report ‘fake news’, only added to the insult.

The return to the Commons of the Customs Bill on 16 July saw the government narrowly defeat a Commons rebellion by Tory pro-remain rebels, after the Prime Minister had accepted what appeared to be four wrecking amendments to her Brexit strategy from the hard-line pro-Brexit ERG. The government’s majority was reduced to only three votes on two of the amendments that were contested. The ERG’s amendment to prevent the UK collecting tariffs on behalf of the EU unless the EU agrees to collect them for the UK passed by 305 votes to 302. Another, to prevent the UK from joining the EU’s VAT regime, was passed by 303 votes to 300. 14 Tory remainers voted against the government, which avoided defeat due to the support of Labour Eurosceptic MPs Frank Field, Kate Hoey and Graham Stringer – along with Kelvin Hopkins (currently suspended from Labour). Notable absentees from the vote were Lib Dem leader Vince Cable and his predecessor, Tim Farron. None of the amendments put by the Labour Party were passed. The Bill secured its Third Reading by a majority of 33, and will proceed to the House of Lords after the summer recess.

It is said that the Prime Minister accepted the ERG amendments in order to reach the relative safety of the summer Parliamentary recess without further confrontation with the Eurosceptic rebels in her party. She had earlier considered bringing the date of the recess forward. Downing Street claimed that the amendments were consistent with the negotiating strategy set out in the Chequers agreement. Pro-remainer MPs said they were not.

A day later Tory remainers Nicky Morgan and Stephen Hammond tabled an amendment to the Trade Bill under which Britain would be forced to join a customs union with the EU if no agreement were reached on frictionless trade by 21 January 2019. If won the government strategy would have been critically undermined and May would have had to consider her position. The government narrowly survived by six votes, 307–301. More Tory MPs would have rebelled if the Tory whips had not threatened to table a no-confidence vote if the vote was lost, raising the possibility of a General Election. May’s government was, once again, saved by five Brexit-supporting Labour MPs. The battles, however, will continually return.

Whither the UK?

As has been argued over many years, the parasitic character of British capitalism leaves it increasingly incapable of withstanding the economic and political challenge of US or European imperialism as an independent global imperialist power. In this context the Brexit conflict is essentially a dispute between sections of the ruling class over two necessarily, totally reactionary outcomes for British capitalism – staying as part of a European imperialist bloc or leaving and becoming an offshore centre for usury capital under the umbrella of US imperialism.² May has attempted to make a choice for Britain, but the irreconcilable divisions in her party, and the 23 June 2016 referendum result to leave the EU, severely limit her room for manoeuvre. Her choice, though, seems to be that Britain’s national interests cannot be separated from close and strong relations with Europe. The Chequers agreement and the White Paper seem to show that Britain wants an ‘association agreement’ with the EU of unprecedented breadth and depth, but with access tailored to UK interests. In economic terms, it permits so much continuity that, as one EU diplomat teased, it looked more ‘like a membership application’ than an exit (Financial Times 13 July 2018).

For the moment the EU negotiators have rejected the Chequers agreement and the White Paper. Michel Barnier has clearly emphasised: ‘Maintaining control of our money, law and borders also applies to the EU’s customs policy. The EU cannot and will not delegate the application of its custom policy and rules, VAT and duty collection to a non-member who would not be subject to the EU’s government structures. Any customs arrangements… must respect this principle.’ On a similar basis Brussels has thrown out the government’s little-discussed Brexit plan for City access to the single market, arguing that it would rob the EU of its ‘decision-making autonomy’.

The outlook for British capitalism is bleak. A ‘no deal’ Brexit, says the Financial Times, expressing the dominant standpoint of corporate and financial capital, guarantees chaos on all fronts. No competent government, suggests the Editorial, could contemplate such an option. Yet the Conservative Party could be on the way to breaking up. The next few months will be decisive.        

Fight Racism! Fight Imperialism! 265 August/September 2018

1 See David Yaffe ‘Brexit the end game approaches as imperialist rivalries intensify’ FRFI 264 June/July 2018 on our website at https://tinyurl.com/y98hlj36 for a more detailed discussion.

2 ‘EU referendum: the position of communists’ in FRFI 251 June/July 2016,  on our website at http://tinyurl.com/z7cpcz7