What to expect: The United Kingdom, the EU, and Article 50

By triggering Article 50 of the Treaty on European Union on Wednesday, the United Kingdom is one step closer towards turning the outcome of last year’s referendum into reality. The road ahead, however, looks bumpy.

The two-year negotiations can end with the UK’s crashing out of the EU. It is possible that Article 50 negotiations will lead to a dead end. Without an agreement, the United Kingdom would leave the EU at the end of the two-year negotiation period without keeping any formal economic, political, or security-related ties to common EU institutions. That would be disruptive for the UK and the EU, and would not be in America’s interest, either. The UK plays an important role in organizations such as Europol and the European Defence Agency and should continue to do so even after leaving the EU.  Technical barriers to trade would cause economic damage. Unless there are explicit mutual recognition arrangements in place, the UK’s exports to the EU (and vice versa) could become subject to the same inspections, certifications, and other barriers as imports from other parts of the world. This would be in spite of the fact that the day after leaving the EU, the bulk of the EU’s single market rules and standards would still apply in the UK. Avoiding such an outcome should be a priority for everyone involved.

Being legalistic is unhelpful. There is no blueprint for Brexit negotiations, so any course for the negotiations will be, to some extent, arbitrary. Yet, the EU’s chief negotiator, Michel Barnier, suggested that the exit agreement, including a financial settlement, has to be concluded before any negotiations about future trade ties can proceed. The US administration should therefor encourage everyone, including EU-27, to keep an eye on the big picture, instead of drawing red lines.

Making immigration a centerpiece of the negotiations does not help, either. In principle, it is still possible for the UK to leave the EU without leaving the single market. It could become, like Norway or Iceland, a member of the European Economic Area or it can negotiate a series of bilateral agreements with the EU, like Switzerland. Doing so would minimize the possible economic downside of leaving, without foreclosing any future options. The only reason why Theresa May has ruled out this path so adamantly has to do with immigration. The single market entails free movement of people. What is missing from the discussion in the UK is that under existing treaties, single-market countries already have substantial space to restrict access to welfare and public services as well as immigration itself through means such as proof of employment or of sufficient funds to sustain oneself.

This could have been an opportunity to reform the EU. There are growing voices in the EU that are calling for an explicit recognition of the fact that there are multiple approaches towards integration, or a “multi-speed Europe.” Countries like Sweden, Denmark, Poland, Hungary, and the Czech Republic are not rushing into the Eurozone (Denmark enjoys an explicit opt-out). Under better leadership, Brexit negotiations could have been an opportunity to reform governance in the Eurozone, while granting a looser associate status to countries that choose to stay out – possibly including the UK.

This may well be the end of the Union. Of the over three-hundred-year-old one between the England and Scotland, that is. To the ire of Westminster, Scotland’s First Minister Nicola Sturgeon has secured the backing of Scottish parliament to organize a second referendum on Scotland’s independence. If allowed to take place by UK parliament, the referendum promises to be a divisive and messy affair – just like its previous iteration in 2014. Worse yet, it will inevitably compound the chaos that David Cameron unleashed by putting the UK’s EU membership to a plebiscite last year.

Dalibor Rohac is a research fellow at the American Enterprise Institute (AEI), where he studies European political and economic trends. Specifically, he is working on Central and Eastern Europe, the European Union (EU) and the eurozone, US-EU relations, and the post-Communist transitions and backsliding of countries in the former Soviet bloc. He is concurrently a visiting junior fellow at the Max Beloff Centre for the Study of Liberty at the University of Buckingham in the UK and a fellow at the Institute of Economic Affairs in London.