Theresa May held an “away day” at the Prime Minister’s country residence at Chequers in July 2018 to agree with the Cabinet a favoured UK position for Brexit talks, resulting in the Chequers Plan.
This included proposals for the UK to mirror EU rules on goods and for the UK and EU to be treated as a “combined customs territory”, meaning that the UK would apply domestic tariffs and trade policies for goods intended for the UK, but would charge and account across for EU tariffs and their equivalents for goods which will end up heading into the EU. The idea is that this would then avoid the need for a visible border with the Republic of Ireland.
The Plan suggests that the UK would also be free to strike its own trade deals with non-EU countries and says it will end free movement of people, "giving the UK back control over how many people enter the country". But a "mobility framework" will be set up to allow UK and EU citizens to travel to each other's territories, and to apply for study and work.
A "joint institutional framework" will be established to interpret UK-EU agreements. This would be done in the UK by UK courts, and in the EU by EU courts. But decisions by UK courts would involve "due regard being paid to EU case law in areas where the UK continued to apply a common rulebook".
Cases will still be referred to the European Court of Justice (ECJ) as the interpreter of EU rules, but it "cannot resolve disputes between the two".
Importantly - services, which constitute over 80% of Britain’s economy, were largely skirted over. The Cabinet simply agreed to retain “regulatory flexibility” and to accept less EU market access as a result.
The UK stance arouses suspicion in Brussels, with EU negotiators arguing it is hard to detach services from goods trade. They also note that in areas such as financial services Britain still seems to want to replicate Single Market access from outside.
There may indeed be an assumption in the UK (credible/realistic or otherwise) that access to the UK financial services market is simply too great an asset to the EU for it to be able to afford to try to overly restrict its availability to and within the Single Market.
In her foreword to the Chequers Plan, Theresa May insists that the UK will leave the Single Market, Customs Union, Common Agricultural Policy and the Common Fisheries Policy, “take back control of our money, laws, and borders, and begin a new exciting chapter in our nation’s history”. The European Court of Justice will no longer have jurisdiction in Britain, she says.
However, she acknowledges that the withdrawal “requires pragmatism and compromise from both sides”.
The reaction from hard-line Brexiteers to the Chequers Plan was negative; within two days, Foreign Secretary, Boris Johnson, resigned as did Brexit Secretary, David Davis (swiftly replaced by Jeremy Hunt and Dominic Raab, respectively) who see the Plan as not providing a clean break with the EU.
The Chequers Plan has not gained much support from the UK Parliament generally since then, and the EU has also said that the trade parts of the proposals are unacceptable (including EU Council President Donald Tusk rejecting the Plan at the EU’s September 2018 gathering).
Theresa May is, however, currently sticking to her guns claiming that the Plan is workable and takes on board both the EU’s and UK’s red lines and claiming that it avoids the need for a hard border in Ireland.
There has however been mounting speculation that the UK could well leave the EU without a deal if opposing positions do not soften, and Mrs May’s repeated phrase has been “no deal is better than a bad deal”.
The main alternatives proposed by hard Brexiteers in the UK are either “Canada Plus” or no trade deal at all.