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Theresa May wins agreement for new UK Brexit offer

LONDON — Theresa May has a deal. How long it lasts is another question.

In a statement released at 6:52 p.m. Friday, the U.K. prime minister announced the Cabinet had formally endorsed her plan for a new “U.K.-EU free trade area” and closely intertwined customs relationship with Brussels which, taken together, will form the backbone of Britains future relationship with the EU after Brexit.

If agreed with Brussels, the government claims the new plan would solve the Irish border issue, making it easier for the U.K. to agree to the EUs so-called backstop clause because it would never come into effect.

However, the Cabinet also agreed to step up preparations for a “no-deal” scenario given the possibility the EU could reject the latest proposal, a statement released by the government said.

The announcement came after almost 10 hours of intense discussion at Chequers, the prime ministers official country residence, throughout the day Friday.

Mays declaration — released alongside a lengthy communiqué setting out the main tenets of the agreement — appeared to blindside senior government officials in London, who said it had been put out while Cabinet ministers mobile phones were still locked away for security reasons.

“She steamrolled this through,” said one senior government official who predicted there would be uproar among Tory MPs when the details became clear over the weekend. The official said the communiqué had not changed much from the prime ministers initial proposal, which was circulated among Cabinet ministers on Thursday.

Rift with Davis

By forcing through the agreement, May risks a serious split with leading Brexiteers in her Cabinet, including Brexit Secretary David Davis, who has found himself increasingly isolated amid the growing influence of the prime ministers chief EU adviser Olly Robbins.

According to one official, Davis is deeply unhappy with the deal agreed Friday and made his position clear.

Davis warned the Cabinet the proposals are “not compatible” with the prime ministers pledge to take back control of laws that apply in the U.K. or the ability to strike independent trade deals after Brexit.

Davis attacked the proposal to agree “harmonization” with EU law on goods and agriculture, which he said is “fundamentally different” to the previous policy of “equivalence outcomes,” which would allow the U.K. to set its own regulation.

Davis also warned the proposal leaves the government in a “trap” that if it ever rejects future EU laws on goods, the whole EU-U.K. agreement could collapse.

“Its the Swiss trap Olly has walked the prime minister into,” one senior official said, referring to the series of bilateral agreements Switzerland has agreed with the EU, which collapse if the government in Bern breaks any single element of the deal. “A lot of Brexiteers are going to be very, very cross about this. Shes going to have a big problem.”

In the prime ministers statement, however, May said the new “collective position” protects all the governments red lines.

“Our proposal will create a U.K.-EU free trade area which establishes a common rule book for industrial goods and agricultural products. This maintains high standards in these areas, but we will also ensure that no new changes in the future take place without the approval of our parliament,” Mays statement said.

“As a result, we avoid friction in terms of trade, which protects jobs and livelihoods, as well as meeting our commitments in Northern Ireland. We have also agreed a new business-friendly customs model with freedom to strike new trade deals around the world.”

The prime minister said it is now imperative to “move at pace to negotiate our proposal with the EU.”

The EUs chief negotiator Michel Barnier gave a guarded welcome to the new U.K. position on Twitter. “I look forward to White Paper,” he wrote referring to the U.K. governments detailed Brexit position expected next week. “We will assess proposals to see if they are workable & realistic.”

Earlier in the day though, in a speech in Brussels, he had emphasized the importance of the EU single market as “the heart of the European project” and said that its rules are indivisible — something that on the face of it, Mays plan would require.

“There will be no damage to it,” said the EU negotiator. “There will be no unraveling of what weve achieved.”

New plan

Much of the U.K. governments proposal had been leaked during the week.

A separate statement released by the government admitted the U.K.s opening offer last year of a “deep and special relationship” needed to “evolve in order to provide a precise, responsible and credible basis for progressing negotiations.”

“We therefore agreed to a more developed and comprehensive proposal for the economic partnership,” the statement read. “At the core of this proposal is the establishment by the U.K. and the EU of a free trade area for goods.”

Details of the new plan will be set out in an official paper next week.

For services, restrictions would be imposed, limiting access to each others markets. But that, warned Julian David, CEO of techUK, would have “very real consequences.”

He said the U.K. tech sector does not see clear benefits of divergence with EU standards on services. “A goods only approach would risk U.K.-based tech firms selling into Europe having to comply with two competing regulatory regimes and being unable to guarantee that services can be provided on the same terms to customers in different locations,” he said.

“Such a deal also ignores the increasing number of goods that rely on a services contract to operate where divergence would make it harder for UK digital-services businesses to be part of European supply chains.”

The Institute of Directors lobby group welcomed the “united front” from the Cabinet. “The more clarity we have on the future trading relationship, the easier it will be for business to plan ahead. We hope today will turn quickly into progress in negotiations, and clarity for business on the path ahead,” said Director General Stephen Martin.

The U.K. has also conceded a “joint institutional framework” to interpret the EU-U.K. agreement. “This would be done in the U.K. by U.K. courts, and in the EU by EU courts — with due regard paid to EU case law,” the government statement states.

In a further concession, the U.K. will pledge not to let regulatory standards for the environment, climate change, social and employment, and consumer protection fall below their current levels.

In a nod to Cabinet Brexiteers, the government statement insists the U.K. will leave the Common Agricultural Policy and Common Fisheries Policy, deliver an independent trade policy — ”including seeking accession to the Trans-Pacific Partnership” — end free movement and end “vast” annual payments to the EU budget.

However, the paper includes a reference to a new “mobility framework” so “U.K. and EU citizens can continue to travel to each others territories, and apply for study and work.”

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