In a historic rejection, the British House of Commons voted down Prime Minister Theresa May’s plan for leaving the European Union on Tuesday.
In an 432-202 vote, members of Parliament rejected May’s nearly 600-page withdrawal agreement, which outlined how the UK would have withdrawn from the European Union. It would also have guided the political and economic relationship moving forward. The deal was the result of a year and a half of work by May, a time during which she was heavily criticized by both pro- and anti-Brexit politicians.
Pro-Brexit lawmakers want more autonomy from the EU than was promised in May’s deal; anti-Brexiters want a closer relationship with the EU. Ultimately, the deal left several key details unnegotiated, including what a free-trade area with the EU would entail and how the UK would go about forging trade deals with nations outside the EU.
Now, there is a March 29 deadline to come up with an alternative. Whatever the UK decides could have significant ramifications for not only it and Europe, but for the U.S. as well, since the UK has long been the principal American gateway into Europe.
“Having a British voice at the table in Brussels has traditionally been useful to the U.S. in ensuring the EU takes a line that is sympathetic to the U.S.,” said Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations. That applies to a wide variety of U.S. interests, from the EU’s foreign policy toward Russia to regulations on Silicon Valley companies that operate in Europe, he added.
Here are some of the options the UK now faces on Brexit and how it might move forward.
1. Make minor changes to the plan that failed
Under UK law, May has three days to go back to the EU leaders in Brussels and ask for changes to the draft deal that Parliament voted down. If EU leaders agree to the changes, May could bring the amended deal back to Parliament for a second vote.
The wide margin by which May lost the vote makes coming up with a new draft deal much more difficult because she is trying to appease hundreds of lawmakers in both political parties.
“It’s not clear what changes she would need to tip the vote,” Mallaby said.
The biggest sticking point for opponents of May’s deal is the inclusion of the so-called Irish “backstop.”
As the name implies, the backstop would be a kind of insurance policy and ensure no “hard border” between Ireland, an independent nation, and Northern Ireland, which is part of the UK, is put in place.
Right now, because both Ireland and the UK are a part of the EU, goods and people can flow freely across the border with no customs checks. A hard border would require customs checks of both products being transported from Ireland to Northern Ireland, as well as checks on people who travel between the two regions.
Under May’s deal, London and Brussels would have until 2022 to reach a permanent trade deal or the backstop would go into effect. The concept was part of the initial Brexit deal between the UK and EU last December.
The backstop is important because of Northern Ireland’s history. A key provision of the 1998 peace agreement that put an end to decades of violence in Northern Ireland was an open border between the region and Ireland. UK and European leaders are now loathe to put any kind of significant police or security presence on that same border for fear it would disrupt the peace.
Opponents of the backstop agreement dislike it for various reasons. For one, the UK could not get out of the backstop unilaterally. It would need the EU’s approval. Some are concerned the UK will be forced to follow EU rules while having no say in what those rules are. Still others are concerned the complicated arrangement will hurt Britain’s relationship with Northern Ireland.
The EU Commission President Jean-Claude Juncker and EU Council President Donald Tusk sent a letter to May on Monday providing clarification and political assurances regarding the deal — specifically the backstop. But, they said, they were in no position to agree to any changes.
2. No deal
A negotiated exit, like the one May put forward, would allow for a transition period from March 29, 2019 to Dec. 31, 2020, giving businesses, government agencies and citizens time to adjust to the new arrangements.
However, if the UK now does nothing after the failure of May’s plan, it will leave the EU on March 29 with no plan in place. What was once feared as a nightmare scenario now looks like a more realistic possibility.
Under that “no deal” Brexit, all trade agreements the UK had as part of the EU would immediately be severed, and the UK would be forced to operate under the standard World Trade Organization rules.
When it was a part of the EU, goods were allowed to cross between the UK and other EU nations without tariffs. In a “no deal” scenario, the UK would receive no special treatment from the EU. Instead, it would face WTO rules that include relatively high tariffs on certain products, including a 10 percent tax on automobiles and more than 35 percent tariffs on dairy products.
All goods would also need to be checked at the border. Businesses and policymakers fear this could lead not only to higher prices for UK customers, but also create food and medicine shortages if trucks full of goods get stuck at border inspections for hours or days at a time.
The firm Capital Economics estimates if no negotiations continue to take place after the deadline, a drop in trade and business confidence could drop the UK’s GDP by 3 percent over two years. The impacts on the UK’s trading partners, however, would likely still be relatively small.
UK and European banks face the biggest risk, but Capital Economics predicts banks will retain enough capital to withstand the kind of meltdown that triggered the 2008 global financial crisis.
3. Extend the deadline
The UK could attempt to extend the March 29 deadline in one of two ways.
It could unilaterally revoke Article 50, the provision in the EU charter that outlines the steps nations must take to voluntarily leave the bloc. When the UK invoked Article 50 on March 29, 2017, it started the two year countdown to the UK’s withdrawal.
The problem with a unilateral attempt to delay the deadline is that Article 50 was not created to be invoked and revoked at will. Revoking the article would signal that the UK wanted to stay in the EU. If the UK re-invoked it months later, the move could be seen as an act of bad faith, only delaying another attempt at withdrawal. EU leaders might then also be less willing to negotiate a favorable Brexit deal.
Alternatively, the UK could strike an agreement with the EU to extend the deadline for several months, providing more time to negotiate. All 27 EU member states would have to approve that extension.
4. A no confidence vote
May already survived a no confidence vote from within her own party last month. Now, Jeremy Corbyn, the head of the opposition Labour Party, is calling for a no confidence vote in May’s government. Were that vote to succeed, a nationwide election would follow.
If Labour won power, the ramifications are not entirely clear. The Labour Party has been more opposed to Brexit than the conservative Tories, but the Labour leader, Corbyn, has long been an EU critic.
“That puts the opposition in a slightly odd position,” said Amanda Sloat, a senior fellow in the Center on the United States and Europe at the Brookings Institution. “[Corbyn] is not leading the call to abandon Brexit. He just thinks he could negotiate a better deal.”
5. A second referendum
Only a few months ago, a re-do of the referendum vote–the initial nationwide vote on June 23, 2016, that triggered Brexit–seemed a far-fetched idea. Now it appears somewhat more likely. Corbyn does not seem to back a second referendum, but others in his party do.
If Parliament decides to hold a second referendum, it would still need to extend Article 50, which started the countdown clock on the original decision to leave the EU, because putting together a new nationwide vote would take another four to five months.
UK lawmakers would also have to decide the exact language of the new referendum, Sloat said.
For example, would it simply re-ask the question of whether the UK should leave the EU? Or would it also ask follow-up questions about what kind of exit deal the public would support?
May has staunchly opposed the idea of a second referendum.
“I believe we have a duty to deliver on the democratic decision of the British people and to do so in way that brings our country together,” May said Tuesday.