Brexit Lessons from the Commercial World
Why it’s a fantasy to think anyone can renegotiate the Withdrawal Agreement now
I spent years negotiating large commercial transactions for a living. A whole range of contracts from large hotel and corporate purchases to executive incentive plans. Negotiations between governments both do and do not follow the rules that apply in business.
The Article 50 negotiation has mainly been a case where comparisons to the commercial world do not hold. That is because in the commercial world, when two willing parties sit down at the table, they generally do so without a grenade ticking under the table that will blow up at a set time, agreement reached or not. The first rule of negotiation is never negotiate against a ticking clock.
The second rule is always be prepared to call No Deal and mean it. In the commercial world, that means walking away from the table and accepting that both sides revert to their position that existed before negotiations started. Impossible with Article 50 — that grenade is set to blow. So, No Deal in Article 50 terms has never meant what it means in the commercial world. Under Article 50, what it means for the UK, by the government’s own reckoning, is planes that don’t fly, ports where nothing moves, medicines that cannot be guaranteed: people who die. Political suicide.
But now we have entered a phase I do recognise. That point where you have sat up through the night as often as is necessary to get the papers into nearly final form. That point where the commercial framework and the detail have been fully negotiated and fought over. The stage where there are maybe a few details to fill in but no opportunity if you actually want to close the deal for either side to re-open the mechanisms and principles that hold the deal together and make it work.
In a corporate purchase you will probably have secured warranties from the seller that you can call on if promises made don’t turn out to be what they were held out to be. A backstop if you like.
At this final point of the deal, just before signature, you might give one large push back against the quantum of the warranties: “I know I said I’d be on the hook for my promises to the tune of £10 million but sorry I’m limiting that to £5 million before I sign”.
Not at all unheard of is a last minute price cut from a confident buyer who knows that the seller will probably go for the certainty of a deal today rather than start again tomorrow with a different buyer in an uncertain market. A finely-judged (if not entirely ethical) “take-it-or-leave it” moment.
If the divorce payment (actually a complete misnomer for the settling of old and unavoidable debts) were truly a lump sum, the UK could still try one quick slice at that before doing the deal. Of course it isn’t; it’s an agreed mechanism (relatively opaque out of political necessity to make it impossible to calculate an accurate figure now) and the EU will have no tinkering with that.
Likewise the Irish backstop is a finely-tuned, hard-negotiated mechanism designed to protect the interests of the EU, Ireland and the UK (i.e. the UK’s vital interests as a party to the Good Friday Agreements). The form of the backstop is the one requested by the UK government that allows it to say that Northern Ireland remains at all times within the customs territory of the UK. Renegotiating that now, particularly to insert an unilateral rip cord the UK could pull to depart, would be like taking the warranties out of an agreed final form commercial agreement at the last minute. It would simply lead to deal-break.
Those cabinet ministers who think they can plot over the next week and force a wholesale renegotiation betray their lack of understanding of how negotiation works in the endgame.
Yes, the deal’s a stinker. But that’s because Brexit is a stinker and would be so whoever had negotiated it, because the UK’s flawed assumption was that the EU would be willing to damage itself in order to accommodate us as we walk through the exit door. It took an age for the various negotiating ministers — Brexiters to the last man and woman — to get where they got. Renegotiation is not an option now.
Back in the political world, where these ministers presumably do have expertise, the deal looks likely to go down in flames in the Commons. Then we take our chances that common sense prevails.
Just as the shareholders of a public company can reject a value-destroying major transaction proposed by the directors, the public needs to be allowed to scrutinise these terms, vote no to the deal and stay as we are: remain.