Theresa May’s Brexit Speech of 17 January 2017 – Decoding its clarity and ambiguity

Wednesday, 25 January 2017
CEPS Policy Insights
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The speech by Prime Minister Theresa May on 17 January 2017, marked an important step on the way to Brexit, followed by the Supreme Court’s decision on 24 January to require that Parliament authorise the triggering of Article 50, which will lead rapidly now to a short enabling Act. The Prime Minister announced in her speech of 17 January the objective to negotiate a Comprehensive Free Trade Agreement (CFTA), combined with a Strategic Partnership to cover non-trade aspects of the future relationship. This closes the debate about whether the UK would stay as full member of the EU’s single market as in the European Economic Area and the EU’s customs union; the answer being no. A next step in defining the UK’s objective follows immediately, since the aim is still to have maximum ‘access’ to the single market, while the UK also intends on Day 1 of withdrawal to ‘nationalise’ all EU market law into UK law, which would indeed seem to make for a high degree of market access. The issue that arises here is how the UK will want to use its legal freedom to change this nationalised EU law, alongside the predictable requirement from the EU side that the CFTA should be a legally water-tight treaty. This leads into two alternative models for a CFTA: either a Canadian-style (CETA) agreement which makes no reference to EU law, or a Ukrainian-style (DCFTA) agreement which does rely heavily on EU law for defining market rules. There is no indication yet whether the UK will want to tend towards the one or other model, but this will be a major and inescapable choice to make when negotiations begin. An important omission from the Prime Minister’s speech was any indication how the UK may want to control immigration from the EU. In addition the speech says there will no longer be huge payments into the EU budget. Whether these several ingredients can also add up into an acceptable deal for the EU of course remains to be tested. In the event that only a ‘bad deal’ is on offer from the EU, the UK threatens to take aggressive tax and other regulatory measures to strengthen its competitive position, with uncertainties here both as regards the credibility of the threat and the EU’s possible response.

Michael Emerson is Associate Senior Research Fellow at CEPS.