Forget Punishment: The Brexit Deal Needs To Carve Out Sectors Of Exceptional Common Interest

If we can avoid massive disruption of a no-deal exit, the transition period will set the tone of the UK and EU’s relationship over the coming years
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So: at Salzburg the unstoppable force of Brexit finally met the immovable object of EU concerns about the integrity of its single market, and its insistence that the UK must be “either in or out”. Teresa May is emphatic: she has made a proposal; the EU must respond not with rejection but with suggestions.

As it considers options, the EU’s core dilemma is that what it may see as legitimate defence of the EU’s interests risks being perceived and spun in sections of the UK as an attempt to punish. And one great lesson of history speaks to the EU’s conundrum: punishing countries, however tempting, is a road to disaster. The 1919 Treaty of Paris that imposed devastating reparations payment on Germany after the First World War - which led to enduring European and international crises culminating in the Second World War – is the classic, if extreme, example. In an increasingly fragile world, the UK and the EU need each other.

Refusal to compromise in certain areas would entrench divisions, both within the UK and across the channel. The EU’s chief negotiator Michel Barnier earlier hinted at some flexibility to consider an unprecedented relationship covering trade and security. A plausible hope is that if we can move to a reasoned transition, the rhetoric will decline and cooperation will again grow.

Beyond security, where and why might both sides look for mutually acceptable areas of close co-operation? If the core of the Chequers plan – proposing full access to EU trade in goods - is viewed as too generous to the UK (relative to the strain it might impose on the EU’s basic principles), attention needs to move to specific areas in which the common interest is obvious and undeniable and in which progress can build on established examples.

There are two economic sectors, above all, which depend on ongoing mutual co-operation between the EU and UK: energy and transport. These sectors are linked by fuels, technology and by universal environmental concerns. EU energy policy already preserves substantial elements of national sovereignty whilst simultaneously nesting with wider pan-European frameworks, including the Energy Community (integrating the Balkans) and the Energy Charter Treaty (regional investment regimes).

The government committee of technical experts that I chair was unanimous in our recent report that our physical energy interconnections by wires and pipelines with the continent do not only facilitate markets and pull down UK energy costs, they support energy security in both directions. Imports through those connections kept the lights on during March’s “Beast from the East” freeze, while our exports to France and Belgium helped them weather the large-scale closure of French nuclear stations two years before.

The connections are still expanding. Moreover the North Sea is proving to be a vast resource not only of oil and gas, but also of renewable energy. Close regional cooperation with unified governance can develop that far more cost-effectively, for all.

The Chequers plan singles out energy as an area where the UK is open to considering continued full participation in the rules of the EU internal energy market. The mutual benefits are huge, not least because trade is physically linked and meeting essential needs. For the UK, there is no ‘Canada+’ option: electricity interconnectors and gas pipelines outside Europe are physical and economic nonsense, so the gains of trade can only come from European connections and the mutual governance thereof.

Ironically, the energy sector also gives lie the to the political absolutism around the Irish border. We have a single integrated Irish electricity system, spanning North and South; and a single integrated GB (not UK) system for the mainland. The rules and governance differ by geography. Whatever the rhetoric, some fundamental planks of UK energy policy including the carbon floor price apply to GB but not in Northern Ireland.

All of which underlines the imperative to move the negotiations away from grandstand rhetoric to sectoral realities, with energy as the ideal place to start.

Another sector where close relationships offer huge mutual gains is vehicles, where common standards are not only fundamental to their complex pan-European supply chains, but wield huge influence on global vehicle trends. All the major European countries share manufacturing and market interests in this sector - which also will become increasingly integrated with energy (including electrification), and is fundamental to achieved shared environmental goals. And transport integration has already become one of touchstone areas of debate.

All of which also points to the common concern on environment and climate change, as cemented in the “other” Paris Agreement, in 2015 on Climate Change. It reached a deal by shaping ways in which huge diversity in national circumstances need not thwart common interests. This year’s weather and extreme events globally again underlined the growing threat. But the only conceivable route to implementing its ambition now is through an axis of Europe with China. This hinges centrally on continued progress in Europe (above all in energy and transport), and Europe’s political unity on the global stage. In all these, the UK role in Europe is crucial.

If we can avoid massive disruption of a no-deal exit, the transition period will set the tone of the UK and EU’s relationship over the coming years. Given time and opportunity, this relationship can flourish and proceed through common sense and common interest. If history is to teach us anything, it would be folly to punish Britain for Brexit and the future must follow the example of Paris 2015 not Paris 1919. Energy, climate and transport are the logical sectors from which to start the writing of a new relationship.

Michael Grubb is Professor of Energy and Climate Change at UCL, and Chair of the UK government Panel of Technical Experts on Electricity Market Reform. He writes in his academic capacity

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