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Money Observer: Why nobody wants to trigger Article 50

article-fifty-of-the-lisbon-treaty-on-paperIf the UK does formally leave the EU it will have to renegotiate hundreds of trade agreements. But the UK parliament ‘does not currently have the capacity to cope with a full Brexit’, says a House of Commons commentator.

The majority of members in the Houses of Parliament were on the ‘remain’ side, says the commentator, and a full Brexit would bring immense legislative difficulties in its wake. However, a full Brexit may not actually happen.

On 23 June, the announcement of the EU referendum result threw the economy into turmoil. But the EU referendum is not legally binding and the formal procedure of leaving the EU can only be done through Article 50 of the Lisbon Treaty.

It may be the case the Article is suspended forever, says the House of Commons commentator: ‘The withdrawal notice could be sitting somewhere in a cupboard in Brussels for decades to come.’

If the UK actually does decide to tell the EU it is withdrawing under Article 50, the UK’s exit then has to be negotiated with the remaining 27 members of the EU and ultimately each member state would have to approve it.

The UK will not be part of the ensuing discussion; as Article 50 states: ‘The member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.’

When David Cameron announced that he would step down, he refused to trigger Article 50, leaving it to his successor. At the same time the EU has declared that it won’t negotiate informally with the UK until Article 50 is officially triggered.

In recent times the EU has been the UK’s most important trading partner. In 2014 it accounted for 45 per cent of UK goods and services exports (£230 billion) and 53 per cent of imports to the UK (£289 billion).

The UK government contributed an estimated £8.5 billion to the EU in 2015, which is around 1 per cent of total public expenditure and equivalent to 0.5 per cent of GDP.

Hundreds of trade deals as well as huge amounts of other legislation would have to be renegotiated if the UK does leave the EU.

The number of civil servants and resources would have to be doubled, says the House of Commons commentator. In order to properly scrutinise the legislation involved in new trade agreements, many more researchers and advisers would have to be employed.

When asked to comment, a House of Commons spokesperson said: ‘Once the terms of departure from the European Union are known, the House of Commons will assess the potential impact of the new arrangements and adjust resourcing as needed.’

In addition to that, every EU member state would have to ratify new trade deals. And parliament would have to pass these new deals through a legislative process in the UK, which would be a huge legislative burden.

To put that into perspective, Switzerland has spent the past 45 years negotiating agreements on everything from trade to immigration. Many of these deals, particularly those on trade, have mandated that Switzerland adopts EU regulations in return.

As a result 40 per cent of Swiss legislation derives from EU rules – more than twice that of the UK’s current legislation. Switzerland has adjusted its domestic policies to fit with EU legislation, in areas including welfare provisions and the free movement of labour.

This article was originally published on 1 July 2016 in Money Observer: http://www.moneyobserver.com/news/01-07-2016/brexit-why-nobody-wants-to-trigger-article-50

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This entry was posted on July 2, 2016 by in Finance.

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In a crowded London shop
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While on the shop and street I gazed

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