Brexit: the cheating Lyons

Tuesday 17 January 2017  



For those of us who trail in the wake of Dietrich Bonhoeffer (see page 9) and regard stupidity as social phenomenon rather than a congenital defect (like an infectious disease, with transmission characteristics similar to STDs), Dr Gerard Lyons is an excellent subject for study.

This is the man who, in August 2014, while he was still working for the current Foreign Secretary, wrote a treatise called The Europe Report – a win-win situation. Amongst the gems he offered was the claim that: "Article 50 explicitly states that the other remaining members of the EU would decide the terms of the exit, not the country that is leaving", thus confirming Bonhoeffer's thesis.

In considering how we would leave the EU, Lyons also argued that the UK should "be proactive in seeking an amicable separation", to which effect he suggested that "not invoking Article 50 would make more sense". It could be seen as "starting with a clean slate in determining the future relationship with Europe".

Basically, all the mad nostrums that were floating around at the time, Lyons Hoovered up and regurgitated on the pages of his report. This led us to conclude that it was a "disgustingly superficial piece of work, technically illiterate, flying in the face of treaty provisions, written under the hand of a man who is as ignorant of the EU as his master".

The thing about Lyons and his ilk, though, is that they occupy their own, intellectually sealed bubble, where contact with the outside world is rigorously controlled and anything but unconditional adulation is totally ignored. Even more temperate criticism from prestigious sources doesn't make the cut, so that where – as was averred – he makes errors of judgement and fact, these remain uncorrected.

I like the measured tone of the piece that tells us that Lyons "states factually that every IMF Chief has been a European and every World Bank President an American". Writes George Magnus, "Jim Yong Kim might beg to differ. He is a South Korean by birth and current President of the World Bank. This doesn't mean Lyons's case for Brexit is irrelevant, but it betrays an inattention to detail".

That same "inattention to detail" had Lyons claim that "the terms of the Norwegian Option [the EEA Agreement] were negotiated by Norway in anticipation of joining the EU, but its people subsequently decided not to join".

This is so absolutely and demonstrably untrue that one despairs that it is so often trotted out – not least because, as we record here, the EEA Agreement stemmed directly from the Oslo Declaration of March 1989 as Efta's response to the plans of Jacques Delors on the completion of the Single Market. The Agreement was crafted as an alternative to EU membership, not as a preparation for it. The Norwegian political elites subsequently tried to join the EU because the EEA Agreement (in refusing common decision-making) did not satisfy their ambitions.

The persistence of this myth illustrates the refusal of Lyons and the co-denizens of his bubble to engage with the outside world. Their arrogance - in assuming that their flawed and often totally inaccurate versions of events represent the truth - makes them the dross they are. But it also ensures that their work will continue to be riddled with errors, false assumptions and the clinical stupidity with which we are all too familiar.

At the time he produced his 2014 report, I wrote of Lyons that he and his like had done us one small service. They had shown us with absolute clarity that the establishment was not the place to look for a workable EU exit plan.

Yet, such is the continued arrogance of the man that, fortified with his own ignorance, he has teamed up with fellow illiterate, Liam Halligan – the "leading Telegraph economics commentator" - to produce a report on the eve of Mrs May's speech. This one is called "Clean Brexit" – purporting to be the very thing he has shown himself incapable of doing – a workable EU exit plan.

In this, we get the ritual demolition of the Single Market (couched as the "Norway option"), with the same tired arguments. Nothing of the debate of the last two years has percolated the man's excuse for a brain.

But it is a measure of how successful we have been in shaping the agenda that Lyons adds to his diatribe by introducing what he calls the "Liechtenstein model". This is what he has to say about it:
Liechtenstein, despite EEA membership, has negotiated its own tailored EU immigration policy, leading some to suggest it could act as a model for Britain outside the EU but retaining Single Market "membership". Liechtenstein, though, is a rather densely-populated microstate, while the UK is the second-largest EU economy and a major immigrant destination.

It is almost impossible, given growing public disquiet across the EU relating to Schengen, that the EU27 would grant the UK the perceived economic benefits of EEA/SM membership, while waiving "freedom of movement". Were Britain to gain such a concession having voted for Brexit, that would fuel already growing demands for EU referenda across other large members states - something Brussels and incumbent EU leaders are desperate to avoid.
Such as this is a more than adequate demonstration of the arrogance of Dr Lyons - and also his almost complete lack of understanding of this subject. Like so many, while he is forced to acknowledge the issue, he does not identify the main source of argument. Instead, he misrepresents it and, in two short paragraphs, purports adequately to have responded to 20 pages of the closely-reasoned argument here and here.

It is this approach which poisons the debate. Lyons sets himself up on high as the arbiter of a sterile argument which he himself defines, having run away from the real issues and avoided engaging with knowledgeable critics. He speaks only to his adoring claque from whom he gets no dissent.

Those less inclined to adoration, however, might note that in 2014, this much-revered man was promoting a comprehensive free trade agreement as "the most likely UK option". Negotiations would be "improved by the threat of Article 50", in which the UK would push for full market access. And that was a serious proposition.

In the view of the Great Man, it was unlikely that the EU would grant full access, a position which he conceded was "not optimal". Despite that, he thought that the "bespoke negating (sic) relationship" would give the UK "the broadest possible operating environment from which to pursue its post exit future".

What is interesting from today's perspective, though, was – in 108 pages – the minimal reference to the WTO option. With only seven mentions, the most substantive comment was when Lyons took note of an Open Europe observation that: "Britain is unlikely to face what some may call a worst case scenario of having to fall back on World Trade Organisation rules".

As a baseline for the current report, this could not be more extreme. With his "Clean Brexit", the UK would pass its "Great Repeal Bill", when the Article 50 window expires. Outside the Single Market and the customs union a Clean Brexit also means, he says, "we are able to walk away without a deal from the Article 50 negotiations, if any deal which is offered is poor".

The UK Government, Lyons avers, should say we are fully prepared to trade with the EU27 outside the Single Market and Customs Union, under WTO rules, with so-called "Most-Favoured Nation" status - "so the EU cannot legally discriminate against the UK, even if some Commission bureaucrats say that might happen". Thus, in the space of less than three years, we have seen an almost complete volte face.

Nevertheless, it is not for the Great Lyons to set out the consequences of a "walk away" policy. All we learn from him is that, if the EU insists on WTO-tariffs on UK goods and services, the UK will retain those tariffs on them in return. "And because we know we can walk away, that should encourage the UK to keep the Article 50 negotiations as simple as possible, giving us the scope to seek sector-specific deals - and that, indeed, is what we would advocate", he says.

It was three years ago that we were discussing this in Flexcit, pointing out the simple truth that, if the UK walks away from the table without an agreement, it confers on itself "third country" status. As such, the EU is obliged to levy its WTO "bound" tariffs. This happens automatically – the EU has no choice.

Then, if UK chooses to match these tariffs, levying them on imports from the EU, in order to conform with WTO rules against discrimination, it must levy the same tariff rates on other MFN partners – in practice all other counties. The Chancellor would enjoy the hit, but it would not do much for the prices index or the "just about managing".

That Lyons apparently doesn't know these basics is the price he pays for his self-induced intellectual isolation. You can ignore your critics, but that means you are doomed, groundhog day-style, endlessly to repeat the same mistakes. He shares this handicap with Peter Lilley who grandly acquaints us with the schoolboy howler, that under MFN terms, "our exporters would pay only £6.5 billion tariffs to continental governments". Does he really not know that importers, not exporters, pay the tariffs?

As much embedded in cloud cuckoo land, though, is Lyons. Under his "Clean Brexit", with the UK "trading under WTO rules with the EU if a separate agreement has not been reached", he actually believes "our exporters would have access to, but not membership of, the Single Market".

The fatuity of this statement almost beggars belief, even if we know what he is trying to say. The man is attempting to convey that we would still be able to trade with enterprises in EU Member States. What he doesn't state are the terms and conditions, and how hard it would be to get our goods into those markets.

This is actually cheating. Unless you are prepared to identify the difficulties and barriers that a preferred option might encounter, and state in some detail how you could overcome them, you are not being straight with your readers.

Being anything but straight, Lyons avers that his Clean Bexit is "quick and predictable" and "helps make leaving the EU as smooth as possible. This is a travesty of a claim. The WTO option would almost certainly precipitate a crisis. 

Yet, the man says, "by acknowledging we will be outside both the Single Market and Customs Union now, the Government can then also put policies in place for changes we know need to happen by the time Article 50 expires - avoiding the 'cliff edge'". What he doesn't say is how we convince the EU Member States to adopt policies which will allow us free access to their markets.

If we go back to 2014, the policy option that Lyons then preferred was the comprehensive free trade agreement. What we're getting now is that declaring Clean Brexit: "allows ministers and officials to reach out to various sectors for their on-the-ground advice, helping the Government to secure long-term UK-EU trade arrangements that ultimately benefit our people".

As we sift through the verbiage, we then get to the kernel: "the UK intends to leave both the Single Market and the Customs Union, as part of our broader exit from the EU". On top of that, Lyons says: "We should also make clear that while we are very happy to trade with the EU under WTO rules, as a consequence of a Clean Brexit, we would also be willing to strike UK-EU sector-specific deals of mutual benefit".

But, the man says, "to assume that the UK must strike any form of trade deal with the EU, though, during the two-year Article 50 window, would be a major strategic error". He tells us: "There is no need at all for the Government to attempt to shape any form of trade negotiation between now and March 2019, if the EU27 is not so inclined".

We cannot leave it there without stating that these "sector-specific" deals with the EU would almost certainly breach WTO rules, which means that even if the UK tried to pursue them, the EU would probably refuse to play. Thus, what we are basically left with is the UK operating under WTO rules in respect of trade with the EU, with nothing much else. This is supposed to sustain us while we expand trade links with the rest of the world.

The madness of this approach speaks for itself. In the thousands of words we have written on this subject, we have been at great pains to point out the pitfalls. No one has, sensibly and honestly, attempted to argue our points or come up with a credible rebuttal. But Lyons doesn't even try. He does what the rest of the bubble-dwellers do – he simply ignores them. He does not even concede that there might be any problems.

This is not only madness – it is fundamentally dishonest. It speaks of a system that is also dishonest, which survives only because it rigs the debate and excludes critical comment. Halligan, as the co-author, is a journalist, ostensibly committed to free speech. But he is part of that system too, one that seeks to shut down debate rather than entertain it.

As we hear Mrs May's speech later today, we can pause to reflect how much dishonesty and outright stupidity has been poured into attempts to influence her. If it succeeds and we even get close to what Lyons has in mind, we are in serious trouble.



Richard North 17/01/2017 link

Brexit: an epidemic of complacency

Monday 16 January 2017  



One of the oddest things I've been finding in my background research on the potential effects of a "walk away" from the Article 50 negotiations, leaving us relying solely on WTO rules, is how little information or discussion there is on the potential consequences.

There is an endless procession of people saying we should "just leave" and take up the WTO option – the latest being Bill Clarke in the letters column of The Sunday Telegraph, who says there is no need to reach agreement with the 27 EU Member States. But, like the idiot Goodman in Conservative Home, it is perilously clear that Clarke and most of the others advocating a "walk away" can have no idea of what this entails.

These people, it would seem, not only want us to jump off the edge of a cliff, they want us to do it blindfold and in the dark, mentored by people who are unable to tell us whether the ledge gives way to a six-inch or thousand-foot fall. And merely to ask is to be condemned for making things needlessly complicated.

This was very much the case with my research on the haulage industry and Brexit. Google those terms: "haulage industry" and "Brexit" and it is remarkable how little material there is. Then, most of the stuff produced, from trade or legal sources, is extraordinarily generalised, verging on the complacent. Throughout, one sees the assumption that any difficulties that might be encountered will be sorted out in the negotiations.

By coincidence, to add to my work, we now have a BBC article - repeated in the Independent and elsewhere - which warns that "people flying to the UK could face 'severe disruption' after Brexit unless the Border Force employs more people".

The warning comes from the Airport Operators Association (AOA) which is concerned that the creation of a "hard" border for the nationals of EU Member States would require extended processing times arising from more stringent passport checks, and result in longer queues at immigration control.

The AOA, which represents more than 50 UK airports, complains that a growth in air traffic has not been matched by an increase in resources for Border Force. Even without Brexit, this has already led to longer queues at passport desks. In 2015, a record number of 251 million passengers were processed through Britain's airports. Yet Border Force staff numbers fell from 8,332 in 2014-15 to 7,911 in 2015-16.

The coming problem, according to the Independent, is that EU nationals arriving in the UK are currently screened through a "soft" border – an identity verification that generally takes less than 25 minutes. Non-EU passengers are required to go through a "hard" border, which assesses whether they have the right to enter. This can take considerably longer – often up to 45 minutes.

If all overseas passengers have to be intensively screened, it is feared that this could lead to an increase in waiting times. Any such increase would be "highly disruptive" for passengers, airlines and airports. Airports would also have to spend millions of pounds on extra facilities for immigration checks. Tourism volumes - a major export earner - might be affected.

Almost needless to say, the official line is dismissive. A Home Office spokesperson says: "We are about to begin negotiations with the EU and it would be wrong to set out further positions in advance, but we are clear that Border Force has the capacity to meet passenger demand and maintain security".

Now, there are several points that arise from this. Firstly, there is the Home Office assumption that there will be negotiations. However, in the "walk away" context, there will be no [successful] negotiations with the EU – a "hard" border would be an inevitable consequence.

Secondly, although it has been suggested, pre-referendum, that UK citizens would be unaffected in British airports, it optimistic to suggest that they would be spared any disruption. Despite Home Office assurances, the Border Control is not meeting its targets. And with a common resource, the more intensive processing of nationals of EU Member States will require additional staff. Doubtless, they will be drawn from the general pool – with inevitable knock-on effects. At the very least, if more staff is employed, million-pound costs increases must be anticipated.

The third point to bear in mind is that any disruption is unlikely to be confined just to airports. It has already been suggested that the Channel ports could be affected. And as we have recently seen, the disruptive effect that even modest changes to passport controls can bring are substantial. Added to customs clearance hassles, the impact could halt the flow of traffic.  

The fourth point is that, if we decide to impose a more rigorous regime on our Continental neighbours, as night follows day UK citizens will be treated in a similar fashion when they seek entry to EU Member States. And just because more resources will be required to handle extra checks, that does not mean that European authorities will necessarily provide them.

Where there has been a breakdown in negotiations and the UK has decided to walk away, in the acrimonious aftermath one can hardly expect the French State to dole out millions of euros, just to give UK tourists an easy time – especially when French citizens are suffering considerable delays. And with talk of visas and the payment of fees in order to travel to EU Member States, the delays could multiply.

Perversely, nothing of this was foreseen by the Association of British Travel Agents, which published a report in March 2016 (pre-referendum) on the potential effects of Brexit on the travel industry. Its concern was of "a high likelihood of uncertainty during the negotiation period immediately following the referendum". "This", it said, "could last until a replacement set of trading relations and regulations were in place, which could take several years".

Even then, this was styled by the Daily Mail as a "disaster" for tourism. But not for one minute was it thought that the UK could walk away from the table without a deal – or that it might happen accidentally as a result of our negotiators running out of time.

Mind you, one has to wonder at the competence of ABTA officials who, along with Deloitte, wrote the report. They assert that a "leave" vote would trigger "two years of negotiations among the remaining EU Member States to agree the terms to be offered for a continued trading relationship with the UK". It then said: "The UK could not take part in these negotiations".

It was only months ago that this level of stupidity was being taken seriously by the media and politicians – another canard to fall by the wayside, only to be replaced by many more. Small wonder that there is so much uncertainty about outcomes.

More recently, there seems to have been an epidemic of complacency with Terry Williamson, CEO of hotel consolidator and inbound service provider JacTravel saying: "I am still exceptionally positive about this industry, both outbound and inbound".

Thomas Cook's UK boss Chris Mottershead, said: "There are actually more impactful areas that we have to deal with on a daily basis, whether it's a terrorist attack, or a volcano, you name it. There is always something this industry has had to deal with over the years and actually has done remarkably well in dealing with it". With that, he said, "I don't think this is any different in reality I don't see the significance of the impact of Brexit having the same impact as some of the others".

Against this, a trade press editorial recently warned the travel industry that it needed to re-think its place in the world given the multiple challenges facing the world. "The geopolitical realities of our world" – of which Brexit was one - "are worth embracing by the travel industry, instead of ignoring them or, worse still, wishing them away", it said.

It does seem, however, that the ignorance of the "walk away" advocates is being matched by an unwarranted degree of industry complacency – across the board. It appears that very little thought is being given to the impact of a complete breakdown of talks.

It is perhaps this, more than anything else, which is contributing to the air of unreality, whereby the risk of a "hard" Brexit is being understated. Should people start realising what is actually involved, there might be a very different political climate. The AOA report might be the first sign of this happening.



Richard North 16/01/2017 link

Booker: the Ridge line

Sunday 15 January 2017  



Sunday week last feels a long, long time ago, making the debut Sophy Ridge show a thing of the distant past. Oddly enough, according to a puff in the Guardian, her aim was "to show how politics affects those outside the Westminster bubble". In that, at least, she failed.

Instead, the facile woman went for the easy shot, trying to get Mrs May to admit that we would "leave the single market". And when the Prime Minister contradicted her and said wanted us to remain "within" the Single Market, Ridge took this as confirmation of our leaving, triggering a further costly slump in the value of the pound.

But, says Booker, in his latest column, had Ms Ridge been more on the ball, she would have pounced Mrs May's words and asked how, outside the EU, such a thing as remaining "within" the Single Market was possible.

She could have pointed out (as Booker has been doing consistently) that there is only one conceivable way in which, on leaving the EU, we could still do this. That is by rejoining the European Free Trade Area (Efta) to remain, like rich Norway, in the European Economic Area.

Says Booker, there are no ifs or buts here. Despite the efforts of so many to deny it, this is the only solution that ticks all the boxes of what most people say they want from Brexit. While freeing us from three quarters of the EU's laws, we could continue participating in the single market as we do now, thus avoiding a catastrophic disruption to our trade.

We would, he says, no longer be subject to the European Court of Justice. We could regain selective control over immigration from the EU. We could negotiate independent trade deals with the rest of the world. And we would buy ourselves time to discuss all those 30 other major policy areas needing to be resolved in the mere two years allowed for negotiations.

Ms Ridge may have got her headlines. But if only she'd been clever enough to ask the right question, she might just have prodded Mrs May into saying something more meaningful than all those vacuous headlines suggested. Now we must await Mrs May's promised speech this week to see whether we get more substantial clues than anything achieved by that silly interview.

Already, though, the mice are nibbling at the corn, with the Sun on Sunday claiming that Mrs May is expected to announce the UK "is prepared to leave the single market, the customs union and European Court of Justice".

Relying on "senior sources", the paper is able to divine that Mrs May will unveil her "secret masterplan" (should it be mistressplan?) for a "swift and clean" Brexit, and declare: "We're on our way out". Thus are we to get a "triple whammy departure from the EU to be triggered within 75 days": out of the single market, out of the customs union and out of the control of European judges.

The other Murdoch title, the Sunday Times, says much the same but at greater length. It is also declaring that Mrs May will announce that Britain is seeking a "clean and hard" Brexit, pulling out the Single Market and the customs union in order to regain control of immigration and end the jurisdiction of the ECJ.

This is the bog-standard media trope which has not changed in months since promotion to the collective "line to take", now having become "the Ridge line", to coin a phrase. However, in the ST story, David Davis adds to this, telling us that a "transitional deal" is on the cards. According to him, if necessary, the government will "consider time for implementation of new arrangements".

No more than speculation at this stage, this is embellished by the Sunday Telegraph which decides that Theresa May is "to side with Eurosceptics in major Brexit speech revealing what she wants from negotiations". Once again the trope emerges unscathed, with May supposedly seeking to appease the Eurosceptic wing of her party. The same phrasing emerges, as she contemplates a "hard", or "clean" Brexit.

But, in the Telegraph's case, their front-page lead is all based on the most tenuous of threads – not even on sources inside government. We now have to depend on "sources familiar with the prime minister's thinking". Whatever that might mean, it marks a new low in this journal's diminishing claim to be a purveyor of news.

Written before it got its hands on the Telegraph story and copied it out, the Guardian website was recording this "intelligence" as a "growing expectation". So, effectively, we're not being told the news, but simply what the media pack thinks might be the news on the day.

For all the speculation, the only thing substantive the media have to go on is an excerpt of the speech, described as "light on specifics". This has Mrs May calling for an end to the division and the language associated with it – "leaver" and "remainer" and all the accompanying insults. We must all "unite to make a success of Brexit and build a truly Global Britain" - as if.

Meanwhile one former "remainer", Nick Clegg, is calling for Mrs May to go for a "Norway-style trade deal", even if he seems somewhat confused about what is involved. He lauds Efta for allowing its members "the potential to suspend rules on free movement if a case can be made for doing so". In his whole article, the EEA is not mentioned.

This Sunday, therefore, the entire politico-media nexus is living up to its unenvied reputation for ignorance and ill-informed speculation. They make it up as they go along to compensate for the lack of facts, copying off each other in a frenzy of coprophagia, as they all feed off the same inventions.

Building of the torrent of speculation, the Independent builds the next stage of the fabrication. It pitches in inviting reactions from politicians to the event that has not yet happened. Thus it has Tim Farron tell us: "This speech proves that Theresa May is driving the country towards a divisive and destructive exit from the European Union".

"If the UK had voted 52-48 to remain you can bet that Theresa May would never be pushing towards a hard Remain. There would be no embracing of the Euro, no joining the Schengen Zone", he says. "But the Prime Minister seems hell bent on ripping up everything we share with the European Union no matter how damaging that is to the UK".

We also get Anna Soubry saying: "The Government has no mandate for this. To go into the negotiation conceding on the single market and the customs union is extremely serious and very bad news".

Following the example of the Independent, the Mail on Sunday adopts a similar stratagem, using Nicky Morgan to respond to an as-yet-undelivered speech. She believes that leaving the single market "would exact a disproportionate economic toll on UK businesses due to lost trade opportunities".

With all that, there is obviously no need now for the Prime Minister to give her speech. The media and the politicians have already decided what's in it and, in the style of Sophy Ridge, even if she says something completely different, they can ignore it and tell us what she "really" said.

On the other hand, we might just wait until Tuesday to see what she actually says. Even if we are not pleasantly surprised, at least we will be better informed.



Richard North 15/01/2017 link

Brexit: driving to distraction

Saturday 14 January 2017  



The zombies are in full spate – the latest being the foolish Syed Kamall, adding his name to the list of people telling Mrs May that she must "walk away" from the Article 50 negotiations if she doesn't get a deal "we are happy with".

Meanwhile, we've continued wondering about what precisely would happen to UK exports if we walk away without an agreement. And while we've so far been focusing on the treatment of trucks using the Channel ports, we've been most concerned with the effect of the lack of agreed customs arrangements.

However, this is only one element with which truck drivers have to concern themselves. The haulage industry is a highly regulated business, much of which relies of EU law, while the ability of British firms to operate vehicles on the Continent depends to a great extent on mutual recognition provisions, also mandated by EU law.

In the first instance, the truck drivers must themselves be licensed to drive their vehicles, to which effect they must hold the relevant category of driver's licences, issued by the national authority (DVLA). Permission for license-holders to drive on the roads of other EU Member States is conferred, in the first instance, by the Directive 2006/126/EC, which makes provision for all licenses (and their categories) to be mutually recognised.

Potentially, if we leave the EU without agreement on covering arrangements, the mutual recognition could fall, and UK-licensed drivers will no longer be able to drive under that authority once they cross the Channel.

That, though, should not be taken as a given. The EU law comes in the form of a Directive and has been transposed into the legal codes of all 28 EU Member States, with parallel provisions in the three Efta-EEA States, and Switzerland.

This is the case with the UK, where drivers holding what are called "Community licences" are permitted to drive on UK roads without any other documentation. We see a raft of legislation, over term, such as the The Driving Licences (Community Driving Licence) Regulations 1996, which have given effect to the EU law, making the mutual recognition dependent on UK regulations.

What is important in this context is the wording. There are references in the UK legislation to holders of "Community licences", to "Member States" and to "EEA states", which could be taken as making the permission to drive dependent on current membership of the EU/EEA.

How that affects UK drivers in EEA states would depend on the precise wording of the implementing laws in each of the states. If there are specific references to the UK without direct linkage to EEA membership, then UK licenses might remain valid. If, on the other hand, the wording is such that recognition is made dependent on EEA membership, there could be problems.

In short, it is not possible to ascertain exactly what the situation is regarding driving licences without going through the laws of all 30 of the other EEA members. It could well turn out that UK drivers will be able to drive in some countries but not others.

Then there is a situation that will arise when licences expire. Once we are out of the EU, the UK will no longer be able to issue Community licences, while the new UK design will not be recognised by EU Member States unless there are new mutual recognition agreements.

In normal circumstances, continuing such arrangements would not present the slightest problem. But if the UK decides to walk away from the table, there will be no dialogue and no mechanism for renewing agreements. Millions of drivers could find themselves having to apply for International Driving Permits – for private cars and well as trucks and buses.

Private car drivers might find this something of an inconvenience, especially as the permits are only valid for a year. UK citizens resident in EEA states might find themselves having to re-take their driving tests in their adopted countries, in order to continue driving.

For professional drivers of buses and HGVs, though, the problems multiply. They not only need the relevant licenses but, under EU rules, require additional "periodic training". Each must then hold a "certificate of professional competence" (CPC). Currently this requirement is mandated by Directive 2003/59/EC, another law which makes provision for mutual recognition alongside Council Directive 96/26/EC.

These provisions are implemented in the UK by the Vehicle Drivers (Certificates of Professional Competence) Regulations 2007, as amended, which define the CPC by reference to the seventh recital of the 2003 Directive.

These Regulations (and amendments) would, of course, remain in force after Brexit so the UK would continue to recognise the qualifications of drivers from EU Member States. But if their regulations are couched in the same terms as ours, UK CPC documentation may not be accepted in the EEA as we will no longer be a Member State.

Moving on from the drivers, there is a further tranche of regulation applying to transport operations themselves. No one is allowed to go into the haulage business without an operator's license. These are granted in accordance with Regulation 1071/2009/EC which establishes common rules concerning the conditions to be complied with to pursue the occupation of road transport operator.

As EU regulations, these would cease to apply once we leave the EU. Re-enacting them via the Great Repeal Bill would not make any difference to UK truckers seeking to drive in EU territories. While the Bill (once passed) would keep our system in place, without recourse to an international agreement, EU Member States would not be required to recognise our transport operators.

The same applies to Regulation 1072/2009/EC on common rules for access to the international road haulage market. Amongst other thing, this deals with the rules for cabotage, which have significant commercial significance for UK hauliers. Any rights they have will be lost, unless there is a specific agreement that allows us to continue benefiting from them.

With regard to operator licenses, what will really make a big difference is Commission Implementing Regulation 2016/480/EU, establishing common rules concerning the interconnection of national electronic registers on road transport undertakings, setting up the so-called ERRU (European Registers of Road Transport Undertakings).

This provides for a common database by which the different national authorities can verify whether a transport operator is properly authorised. Post-Brexit, the UK will no longer be part of this system, unless we negotiate continued access. This, of course, won't happen if we walk away from the table.

Even now, we're not finished as there us the small matter of the Motor Insurance Directive which has certain provisions which make life simpler for British operators. There are also other areas that need looking at, such as the Working Time Directive in relation to driver's hours. It is acknowledged that there will be no change in the UK in the immediate future, but Regulation 561/2006/EC falls when Brexit cuts in.

Then there is the roadworthiness package which deals with such things as MOT tests and roadside checks. The Directive, 2009/40/EC, is yet another which deals with mutual recognition of test certificates. Whether or not EU Member States will continue to recognise UK-issued certificates, after Brexit, remains to be seen.

Putting all this together, we are not making a "project fear" type of case that trucking in the EU comes crashing to a halt the moment we leave. Road haulage is a stable, mature industry where the regulatory environment is equally stable and well-understood, and where the UK is fully convergent with EU law.

Thus, we would expect in the ordinary course of events that post-Brexit continuity can be quickly and easily negotiated and any rough edges smoothed over before we leave. But therein lies the rub. While the necessary negotiations will most likely be uncontroversial, it has been assumed that alternative arrangements will be made. It is unlikely that a smooth exit can be achieved without fairly detailed technical talks, with firm agreements made to carry us over into the post-Brexit world.

Yet this is exactly where we will be if the "walk-away" zombies have their way, leaving the table with no deals – on anything. The chances then of the haulage industry enjoying a seam-free Brexit look extremely slim. 

Logically, issues have to be addressed before we leave, which makes walking away without a deal a fool's errand. Those advocating this as a possibility are driving us to distraction.



Richard North 14/01/2017 link

Brexit: blood, sweat and tiers

Friday 13 January 2017  



Driven by the hubris of his success in launching the Coal and Steel Community in 1950, Jean Monnet immediately set about planning what was to emerge as a proposal for a European Defence Community (EDC). This provided for a European Army, run by a European minister of defence and a council of ministers, with a common budget and arms procurement.

To create a "common political roof" over the Coal and Steel and the Defence Communities, Monnet's long-time colleague and close associate, Paul-Henri Spaak, suggested setting up a European Political Community (EPC), creating "an indissoluble supranational political community based on the union of peoples".

In September 1952, Spaak's proposal was jointly endorsed by the foreign ministers of the Six, along with the assemblies of the ECSC and the Council of Europe. The ECSC Assembly was asked to study the question of creating a "European Political Authority".

The result, from an ad hoc committee under Spaak, was a "Draft Treaty Embodying the Statute of the European Community". This was nothing less than the first formal attempt to give Europe a constitution, the text and structure of which was remarkable similar to that considered by the Convention on the Future of Europe, fifty years later.

However, when the treaty was brought before a hostile French Assembly on 30 August 1954, it was rejected by 319 votes to 264. The triumphant majority burst into the Marseillaise. The EDC was dead. The idea of a Political Community faded into obscurity: Monnet and his supranationism had suffered a resounding defeat.

Learning the lesson from this defeat, Monnet trimmed his ambitions and focused on what was to became the 1957 Treaty of Rome, creating a "Common Market". Overt supranationalism was replaced by a stealthy, step-by-step integration, using economic means to achieve political integration, a process which became known as engrenage, or "the Monnet method".

It was more than fifty years later, with the coming into force of the Lisbon Treaty that Monnet's ambitions were anything like close to the plans for a European Political Authority, a level of integration achieved through successive treaties which included the Single European Act, Maastricht, Amsterdam and Nice.

Had Monnet back in 1954 insisted on continuing down the path of "full-frontal" political integration, he doubtless would have encountered exactly the same level of resistance that he so ably later overcame. The European Union would never have come into being and we would not now be considering how to leave it.

Next Tuesday, this is something Mrs May needs to be thinking about, when - as promised she sets out her government's plans for negotiating Brexit, in a keenly awaited speech.

Already, the Prime Minister is under intense pressure to offer more details about her approach in advance of triggering Article 50, but she needs to realise that Rome was not built in a day – and neither was the Treaty of Rome. What has taken sixty years to build, on this the sixtieth anniversary of the founding treaty, cannot be undone in a mere couple of years.

If, as we fear, she is planning to go for a "bespoke" settlement, involving a comprehensive free trade agreement (FTA), the most likely outcome is that her negotiating team will run out of time and we will be left with no deal at all.

Any such plans are further complicated by the need for transitional arrangements which will bridge the gap between the end of the negotiations and the time when any FTA is expected to come into force.

Even though the pursuit of the final outcome may be forlorn, her team will still have to expend a great deal of time, effort and negotiating capital in preparing a transitional deal, which will have to be written into a succession treaty which must be approved and ratified by all current 28 members of the EU (including the UK).

This itself is a complex undertaking and, with no precedent to use for guidance, could absorb more diplomatic resources than both sides have to spare. The search for a workable transition could bring down the whole edifice.

Mrs May, therefore, needs to take a lesson from Monnet, and bide her time. She needs to ignore the siren voices, and the psychotic warbling from her own back bench, and decide to go for what is achievable in the time, rather than what is desirable but unattainable.

The point that she also needs make clear is that she is not only seeking to establish trade relations for the post-Brexit period. She is, as Pete points out, negotiating an administrative de-merger and a framework for continued cooperation with the EU on over three hundred areas of regulatory and technical cooperation.

Most likely, the issue that will have to be settled before progress is made elsewhere is the money. And that is going to require a level of compromise which will be completely unacceptable to the zealots. Mrs May is never going to please them, so she might just as well not even bother trying.

And while her backbench (or elements of it) can make trouble for her, if we take the Maastricht rebellion as a guide, the Right will huff and puff but, if the survival of the government is at stake, they will cave in.

Much more problematical is the prospect of an accidental Brexit. A completely unplanned break could have such a serious impact that we could see empty shelves in the supermarket, shortages of staple commodities, mass unemployment and a major run on the pound.

Given the timing of our departure, just one year before the general election, a botched Brexit is perhaps the one thing that could restore Labour's electoral fortunes under Corbyn. All the Opposition leader has to do is stand aside and let Mrs May wreck the economy – and then reap the harvest of votes as the Conservatives' reputation for economic probity is trashed.

Barring the zealots, though, no one is going to object if we are taken out of the EU by the end of March 2019, and then see a carefully managed transition to a defined end game that leaves us better off than we were before leaving.

And that is what Mrs May needs to focus on, on Tuesday. Far too much time and energy has been expending on discussing the process of leaving, while precious little resource has been given to the specifics of our final destination.

In 1940, when the people of the United Kingdom had their back against the wall, Winston Churchill promised them victory but, before getting there, he had nothing to offer but "blood, sweat and tears". As mature peoples, we can understand and respond to such a message and will do so again – even if, this time, it is more likely to be tiers than tears.

If Mrs May can offer us a worthwhile outcome, she need not worry too much about the interim period. If we have confidence that she can deliver, we will accept that this is something to work for and cannot be handed on a plate. And in Mr Monnet took 50 years or so to get us to this state, a decade or so to set the course or history right is not too much to ask.



Richard North 13/01/2017 link

Brexit: the trouble with bubbles

Thursday 12 January 2017  



If anyone needs to know what a "bubble" is, they need only go to Conservative Home, where one can be seen in action – defining its own ignorance by the voluntary exclusion of information. The core example is Paul Goodman's piece, asserting of the Brexit negotiations: "If May wants a good deal, she must be prepared to walk away – and mean it".

This fatuous trope is one which has been floating around the fringe of Westminster politics, much-loved by the Tory right which is convinced that there is no great peril in relying on the WTO option, despite the growing body of information to the contrary.

The immediate definition of the bubble comes with CH's treatment of the debate on Liechtenstein, the EEA and freedom of movement. For the sake of convenience, we can take the opening shot in the debate as this piece published in late June, just after the referendum.

Despite the best attempts at sabotage by the BBC and others, the thesis survives and, in recent days we've been getting indications that it is being taken very seriously by some MPs and in Whitehall.

We did not see it is a coincidence, therefore, when Christopher Howarth popped up on Conservative Home with a spoiler. Howarth is Steve Baker's gofer and the researcher for the European Research Group of right-wing MPs, a group dedicated to pursuing a "hard" Brexit.

There follows my comprehensive demolition of his ill-researched and sloppy work – which fails to refer to my original work and offers a distorted version of it. But this has completely ignored by CH, which treats EUReferendum.com as if it doesn't exist.

Instead, we get CH editor, Paul Goodman, tell us that the non-negotiable baseline of Theresa May's Brexit negotiating position is that we must regain control of our borders. This means, he says, that we will no longer be members of the Single Market, since membership is incompatible with such control, "as Christopher Howarth explained yesterday on this site".

What now comes over is that, as far as Goodman is concerned, the matter is settled. Their favoured analyst has pronounced on it and the debate on Conservative Home is over. And this is how the ignorati manage to remain ignorant. They deliberately exclude themselves from information that might contradict their preconceived views, rig the debate and then seek to close it down.

Staggeringly, we find ourselves in agreement with President Obama who, in his valedictory speech yesterday, declared: "Increasingly, we become so secure in our bubbles that we start accepting only information, whether true or not, that fits our opinions, instead of basing our opinions on the evidence that is out there".

The trouble with "bubbles", though, is that their walls are invisible to those who are inside them – they act rather like two-way mirrors. Thus, people in bubbles (such as Obama) can see those around them but not their own intellectual prisons.

The antidote is open - and honest - debate. It also requires people to be scrupulously accurate in their research and then also to accept that much research is a continuum, where we are progressively learning, correcting our mistakes and adding to our knowledge. That militates against adopting fixed positions for all time, and also requires proponents to reconsider their positions when their factoids no longer support them.

But that is not the way of the self-referential Conservative Home. Another crucial piece of work to which they should have paid attention, but have ignored, is one by Pete, who is worth ten Howarths when it comes to critical analysis.

Days before Goodman's lacklustre article, Pete argued that we should only walk away from the negotiating table where we were negotiating a trade deal, in circumstances where failure did not alter the status quo. In the coming talks, however, failure would radically changes our standing in Europe and the world. The mentality that suggests we can walk away is one that has yet to comprehend Brexit.

Article 50 talks, he says, are not simply a matter of negotiating a trade deal. There is much, much more. The UK government is charged with negotiating an administrative de-merger from an organisation with which we have have a 44-year relationship, amounting to an unprecedented degree of political and economic integration. It must also negotiate a framework for continued cooperation with the EU on over three hundred regulatory and technical areas, covering a huge range of issues. 

As such, there is no WTO baseline. Failure to agree an ongoing framework for the range of issues of mutual concern would mean that we would be looking at multiple a cliff edges. Dealing with them would require a number of emergency measures which could very easily be sabotaged by Member States looking to capitalise on the confusion. We would have no formal means of discourse with the EU and all of our enhanced rights would vanish.

This is the point that is being missed. Long ago when we were first writing what was to become Flexcit, we confronted the range and complexity of the issues to be discussed and concluded that we would be hard pushed to complete talks inside two years. Something had to give. Our answer was to "park" trade, taking the Efta-EEA option off the shelf in order to continue our trading relationships, buying us time to deal with all the other issues that demand attention.

This was never about the Single Market - or even just trade. Eventually we saw the UK leaving the Single Market, but on our terms at a time of our choosing – not under the cosh of time-limited Article 50 negotiations. The key issue was and is not whether we leave the Single Market, but when and how.

As we pursued these ideas more deeply, we eventually concluded that we should take the Single Market with us, and reform it as an intergovernmental institution based in Geneva, exploiting the process of globalisation which is already under way.

Needless to say, none of our concerns about the dangers of the WTO option percolate Conservative Home and its fellow travellers. For Goodman, its "minuses" amount merely to "finicky details" and "potential problems". One of the most obvious, he writes, is whether our customs would have the capacity to cope with the new conditions. Then there is the mass of "finicky details" that have the potential to add up to significant problems.

Displaying world-class ignorance, Goodman goes on to say that one of those most often cited is aviation – flight numbers, landing slots, and so on. Another, he says, is the recognition of the licensing of medicines.

Separately, says Goodman, there is the question of how Britain and Ireland would handle customs, border control and citizenship. The controversy over how important passporting is to the City rolls on. But, he says, it is far from impossible to believe that, although the City won't collapse, some jobs will leak abroad (though less to Paris and Frankfurt than to New York). Some firms might take fright at tariffs, low though most of these will be, and seem to relocate. Potential investors could look elsewhere.

Bizarrely, in Goodman's single reference to customs, we see only doubts expressed as to whether our customs would have the capacity to cope with the new conditions. There is nothing of the newly acquired status of the UK as a "third country" and the treatment of UK goods by the officials of EU Member States.

Part of our concerns relate to the cessation of mutual recognition of UK conformity assessment. In the event of a collapse of negotiations and the UK walking away, as Goodman wants, the existing EU regulations which confer such recognition cease to apply to the UK as it would no longer be an EU Member State.

However, Goodman's complacency is embellished by a commenter who asserts that there has been "a good deal of exaggeration of the risks". Conformity assessment problems, he says, "are overstated especially given the large amount of self-certification allowed and the abundant scope for a deal on mutual recognition". And therein lies exactly the problem. Indeed there is "abundant scope for a deal", but if the UK walks away, there can be no deal.

Similar mistakes are made by Andrew Chapman in a tedious series of posts in his blog, not least relating to the activities of "notified bodies" and the continued recognition of UK bodies after a sudden withdrawal by the UK.

The point I have made is that the validity of certification issued by notified bodies is verified by customs officials by reference to a list in the Official Journal. But, once the UK drops out of the system and becomes a third country, the UK bodies will be removed from the Official Journal. And if they don't exist, certificates issued by them cannot be validated.

There is provision within the Commision Guidance (p.87) for the suspension or withdrawal of a notification. Under normal circumstances, certificates issued by the notified body up to that point, remain in force, until their normal expiry date.

However, this is conditional on the notifying Member State ensure that the files of that body are either processed by another notified body or kept available for the responsible notifying and market surveillance authorities at their request. But since the UK – which would perform this function – would no longer be a Member State, it is hard to see how the conditions could be satisfied.

Despite this, Chapman thinks it is "highly unlikely" that existing certificates will suddenly lose their validity at Brexit. And if, he says, "that rather implausible scenario did come to pass, it would certainly be known about in advance, and UK exporters would then take the necessary steps to obtain valid certificates before they sent their goods to the border".

So here we go again. The point of relying on WTO rules as the "walk-away" option is that there is no advance notice - and no negotiation with the EU over mitigating measures. We face a "sudden death" scenario. In due course, as I point out in Monograph 2, emergency measure could be arranged, but it might be several weeks, if not months, before order could be restored to the resultant chaos.

Crucially, as the EU's own Blue guide points out, imports from third countries are treated very differently from those produced by an EU member state. While the latter are subject to internal checks by national market surveillance authorities, with third country imports, points of entry to the EU's external borders become the relevant places to stop non-compliant and unsafe products coming in.

Thus, customs authorities are told to "carry out initial checks, at the first point of entry, on the safety and compliance of the imported products". In accordance with specific guidelines, which rely on Council Regulation (EEC) No 339/93, those checks must be on "an adequate scale" and must include "documentary, physical or laboratory checks".

Thus, from a zero inspection regime, UK goods would become subject to mandatory checks, their scale based on risk assessment. This will be conditioned by this guidance. UK imports will effectively be treated as "new trade flows", where data are limited after the termination of customs cooperation arrangements. According to Community guidance on risk analysis, the imports will have to be regarded as high risk and subject to the highest intensity of checks. 

These are just some of the "finicky details" that have the potential to add up to "significant problems". They alone are so significant that trade – at least over the short-term – could grind to a halt.

Yet Mr Goodman and so many others seem to be in denial about the effects of the WTO option they so keenly advocate. But it is not good enough for them to skirt over the "potential" damage and leave the "finicky details" to others. All the indications are that this option will cause extreme economic damage. It is not something that should be entered upon willingly. Everything possible should be taken to avoid it happening.

Inside Mr Goodman's bubble, though, the seriousness of the situation has yet to percolate. And as long as his exclusion of relevant information is so rigorous, nothing will change. But in so doing, he and his gang have ruled themselves out of the game. If nothing can penetrate the bubble, nothing coming out of it is of any consequence.



Richard North 12/01/2017 link

Brexit: where time stood still

Wednesday 11 January 2017  



Before I go any further, let me give you all notice that we're planning a public meeting in One Great George Street for 7 MARCH (provisionally 2-5pm), sponsored by Anthony Scholefield and his Futurus think tank. I will blog on this shortly, in more detail (note the corrected date).

As to the substantive subject of this blogpost, we turn initially to the Financial Times and a most extraordinary piece by Andrew Lilico, executive director and principal of Europe Economics, headed: "How Britain can make the most of leaving the single market".

Lilico's thesis is that, outside the Single Market, "the UK will be able to choose rules and regulations for itself", a claim that is so bizarre that one wonders where Mr Lilico has been all these years. Reading his article is like being trapped in the computer game "Where time stood still, derived from the seventies film, The land that time forget".

The plot in each case involves travellers stumbling across a hitherto undiscovered spot where time has stood still and dinosaurs freely stalk the land. Since prehistoric times, nothing has changed.

So it is with Mr Lilico. His mind has frozen around ideas culled from debates decades ago, and not a single new idea has entered since. Once we have left the EU (and the Single Market), he asserts, "the flexibility to try things, make mistakes and try again could allow the UK to become a world leader in the regulation of innovative sectors, attracting businesses and incubating new firms and ideas".

It's a lovely idea, of course – harping back to Queen and Empire, when we made the regulation for half the globe. But trotting out this sort of argument now suggests that globalisation never happened, that there are no global standard-setters and things like the WTO Agreement on Technical Barriers to Trade never existed. In effect, the entire post-war timeline has been re-written.

To allow Mr Lilico to inhabit a time-warp, however, is to be quite gentle with him. Otherwise we might have to suggest that he is the epitome of arrogance. In that event, we might observe that he is a man who has ignored many of the studies and writings in this field, treating them of no value, while elevating his own opinions above those of us mere mortals. The Mighty Lilico has spoken – and we, the plebs, don't count.

Another player seemingly locked in his own private time warp is Christopher Howarth, writing in Conservative Home, seeking to tell us that "EEA membership is incompatible with running our own migration policy".

In passing, Howarth offers us a gem on the "Norway option" so archaic that Noah must have wearied of it. "Membership of the internal market" he tells us, means accepting a legal structure which encompasses a "vast body of EU rules, subject to the European Court".

In addition, he says, Lichtenstein, Iceland and Norway automatically accept all of the EU laws but have no say in how they are made (via the EEA agreement). They are therefore something close to being "non-voting members". This is what David Cameron, to his credit, saw as a disastrous arrangement – "fax democracy" - where EU rules spew out of a machine in Vaduz, Reykjavik and Oslo without any recourse.

However, despite the antediluvian nature of this argument (and the fact that he confuses the "internal market" with the "Single Market"), one is less inclined to accept that Howarth is trapped in a time warp. There is after all a certain malevolence in the way he addresses our arguments on freedom of movement as "yesterday’s game played by yesterday's people". Arguing that there is room for manoeuvre on this issue, it seems, is - according to Howarth - a "rogue belief" which should be ended "once and for all".

This is Mr Howarth's idea of debate, which makes it rather entertaining to find one of his supportive commenters airily declaring of me that I have "no talent for persuading people" and am "increasingly ... intolerant of any alternative view, no matter how gently it is expressed". Whatever these people might have, no one could accuse them of being over-endowed with self-awareness.

Returning to Mr Howarth, another of his little debating tricks is to frame the argument before he gets to the substance. We are being asked to believe, he asserts, "that the UK could take the EEA deal and negotiate an exemption to free movement (reprising the issues raised in the Cameroonian negotiations) or potentially use the small print of the EEA agreement to junk this central EU tenet".

We will deal with the question of negotiating an exemption to free movement, as it relies on the EEA Agreement but, as anyone with eyes to see will find out, there is no question of Article 112 – on which we rely – being "small print". It is exactly the same sized font as the rest of the Agreement.

What Howarth is trying to do is signal that Art 112 is somehow a exceptional get-out rather than being a core element of the Treaty. Denigration is all part of the package.

The supporting arguments from "yesterday's people" are set out in my Monograph 1 - ten pages of closely argued prose, densely referenced to primary sources. But Howarth does not refer his readers to this material. He doesn't even mention it. Instead, it becomes a "theory" which rests on two pieces of "evidence" (embellished with scare quotes) which he alone defines.

Intentionally or not, though, Howarth gets it wrong. One rather suspects that it is intentional, taking us into straw man territory. It has all the hallmarks of setting up a flawed argument in order to make it that much easier to knock it down.

"First", he says, "the EU has granted Lichtenstein a semi-permanent exemption from EU free movement rules. Lichtenstein is a small mountain state, and when it joined the EEA in 1995 it negotiated a protocol which has allowed it to restrict EU migration to 72 permits per year. This is reviewed every five years".

"Second", he adds, "the EEA agreement has a 'safeguard' (art 112) mechanism within it which would allow a state to resile from a treaty provision if 'serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures... '".

In fact, the sequence (and emphasis) is different in important respects. First of all, Liechtenstein invoked in the Final Act setting out the EEA Agreement a reservation on freedom of movement, invoking Article 112. This was accommodated in the Agreement by exemptions written into a transitional Protocol. This expired on 1 January 1998.

With no extension agreed, Liechtenstein thus again invoked Article 112, unilaterally, which allowed it to keep its exemption in force. That action precipitated further discussions which led to an amendment to the EEA Agreement, incorporating "sectoral adaptations" to Annex VIII, approved by the EEA Joint Committee.

Although this is subject to a five-year review (as indeed is the entire EEA Agreement subject to a periodic review), it is a fully-fledged amendment to the Agreement which cannot be changed without the consent of Liechtenstein, effectively making it permanent.

These are the facts of the situation – verifiable and verified by reference to the primary sources. But Mr Howarth does not trade in facts. Taking the first (straw man) argument, he in turn argues that, while the UK "is arguably suffering extreme population pressure", it is "probably not acute enough to persuade the EU that the UK deserves a special protocol of the type that previously eluded David Cameron".

All this, of course, is irrelevant. The UK as an Efta State (a status which we argue it should seek) can, as of right, invoke Article 112 unilaterally, and suspend freedom of movement. It does not need a "special protocol" and it does not need the assent of the EU.

For sure, under Article 114, if the action taken by the UK "creates an imbalance", any other Contracting Party may "take such proportionate rebalancing measures as are strictly necessary". In the circumstances, one might expect one or more of the parties to impose their own "tit-for-tat" restrictions on the free movement of UK citizens, although measures adopted must "least disturb the functioning of the EEA", which rather restricts their scope.

So far, so good, but Mr Howarth falls back on the tired old canard that: "The UK is not Lichtenstein, we are not a micro-state that the EU can afford to make an exception for". Yet size is not a qualifying issue specified in Article 112. Furthermore, safeguard measures stand alone. They are not a matter for the EU, but are, in respect of Efta States, unilateral action.

Still Howarth does not give up. "In any case", he says, "this is not a permanent opt-out, and if mirrored would require the UK to go through a process every five years – a very uncertain basis for a new relationship". Again, however, his argument is irrelevant. The UK, if it followed the path of Liechtenstein, would use Article 112 to broker a permanent amendment to the EEA Agreement. And that would, effectively, make it permanent.

This leaves Howarth then to argue that the use of Article 112 is "superficially attractive" but (in his opinion) "highly implausible". It would, he says, "require the UK to provide evidence and explain why its measures were appropriate in a way that would satisfy an unsympathetic EU". But it would not. Invoking Art 112 for an Efta State is a unilateral right. It would have to make its case, but then go ahead anyway.  

Now confusing himself completely, as well as his readers, Howarth avers that, in Cameron's renegotiation these factors were hard fought over, were time-limited and related to benefits. But, "if the UK announced it was to join the EEA" and then immediately and permanently overrode its rules, using the safeguard mechanism, "it is unlikely that the UK would be allowed to join by the other 30 states who would need to agree".

For this "killer point", though, we have observed that the UK is already a Contracting Party to the EEA. Provided it made an uninterrupted switch from EU to Efta membership, precedent suggest that it could continue as an EEA member. It would not need agreement from the other parties.

All Howarth has left is his final throw, that the Efta Court has adopted much of the EU's case law on free movement. The UK, in his opinion, "would end up in a running dispute with the EU, which would leave it expending all its political capital". There again, the ECJ does not make EEA law, so there is nothing in case law that could interfere with Article 112. It doesn't stop Liechtenstein exempting itself from freedom of movement.   

Nevertheless, Howarth stands by his opinion that Article 112 "is not an option that is designed to give states control over migration policy – and nor would it". But, if he's entitled to an opinion, that's all it is – an opinion. That hardly justifies him calling our research a "rogue belief" - "yesterday’s game played by yesterday's people" - which should be ended "once and for all".

And there, Howarth really is in a time warp. Long gone is the time when he can dominate the debate, seeking to take ownership of it, sneering at people who are his senior in age, experience and qualification.

These snide creatures – Lilico, Howarth and many like them - poison the debate and damage the political system with their arrogance, their assumptions and sloppy, low-grade research. They need to realise that they no longer have the monopoly of opinion, and while their prattle may satisfy their Tory Boy fans and the bubble dwellers, out in the real world it looks exactly what it is – smug, ego-driven platitudes of very little value, in a land where time stood still.



Richard North 11/01/2017 link

Brexit: consequences

Tuesday 10 January 2017  



Within hours of the media reporting of Mrs May's Sunday comments on the Single Market, the BBC was telling us that the value of the pound had fallen to a two-month low against major currencies, dropping about one percent across the board. The only currency against which it gained ground was the Turkish lira.

This was supposedly after the Prime Minister had signalled the UK would pursue a so-called "hard Brexit" from the EU – a meme picked up almost uniformly by the rampant hackery and broadcast to the world.

What we had seen though was "I want the best possible deal for trading with and operating within the Single European Market" being interpreted as meaning that Mrs May would not seek to keep the UK in the EU's Single Market. Unsurprisingly, this was thought, according to the BBC, to have "radical consequences for the country's economy".

The very same Monday morning the pound was nose-diving (if that's what you call a one-percent drop), Mrs May was taking questions after a speech on mental health, being asked by another egregious hack, Channel 4 News's Gary Gibbon, whether she was worried by the fall.

Mrs May's response was that she had said on Sunday what she had been saying for the last few months. This was indeed the case – as we recorded in yesterday's blogpost. Essentially, she was saying nothing different from what she had said at the party conference in October.

Following on from Gary Gibbon, Mrs May then took a question from the Sun's Tom Newton Dunn. Given that she had been saying nothing new, he averred that, either the markets were getting their interpretation of her Brexit stance wrong, or she was getting it wrong. "Which one was it?" 

The Prime Minister replied:
Well, I'm tempted to say the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, [that] it's absolutely inevitable it's a hard Brexit. I don't accept the terms hard or soft Brexit. What we are doing is going to get an ambitious, good, the best possible deal for the United Kingdom in terms of trading with, and operating within, the Single European Market. But it will be a new relationship because we won't be members of the EU any longer. We will be outside the European Union, and therefore we will be negotiating a new relationship across not just trading but other areas with the European Union.
So there we have it yet again: "the best possible deal for the United Kingdom in terms of trading with, and operating within, the Single European Market". How many times is it going to take before the media collective understand that "operating within the Single European Market" might just mean operating within the Single European Market? 

If the media could set aside their enthusiasm for deciding that this meant exactly the opposite of what the Prime Minister is saying, some amongst them might even think of asking how this was intended to come about.

On the face of things, the only possible way that the UK can operate within the Single European Market, from outside the European Union is through the EEA Agreement, via membership of Efta. Yet no one seems to be putting this point to the Prime Minister.

On the other hand, if – as Pete observes - she has something else in mind, we could be in serious trouble. Negotiating an entirely new deal from scratch is precisely what we need to avoid. Given the complexity – which Mrs May herself acknowledges – it is hard to see how an agreement can be reached in time to beat the two-year Article 50 deadline.

One wonders also whether Mrs May's aspirations (whatever they might be) have factored in the needs and wishes of the European Union – insofar as they have been articulated and communicated to her.

The point here is that the EU has consistently opposed the idea of another Swiss-type solution, on the basis that it is resource intensive, complicated and lacking in certainty. Moreover, the EU is concerned about the proliferation of deals relating to its "neighbourhood policy" and is looking to rationalise the agreements and reduce the number of different arrangements.

As a rule, therefore, the very last thing the EU wants is yet another resource-hungry "bespoke" agreement – with the UK or any other nation. This is going in precisely the wrong direction.

Thus, even if it is possible to negotiate a settlement which approximates the EEA Agreement – which itself took eight years to negotiate - the likelihood is that the EU will be reluctant to go down that route. Thus, at the eleventh hour, the UK could find itself adrift, with nothing available other than an enforced WTO option.

Currently, there are people who – for reasons of their own – are seeking to talk down the perils of this option. It is also clear that there is considerable confusion as to what the term means. This is why I wrote Monograph 2, explaining this complex subject. It has since been revised and some small errors removed. I stand by the current document.

Crucially, as I point out, the essence of the WTO option is its unilateral adoption without prior planning. If there are negotiations and an agreed settlement, however basic, this is not – by definition – the WTO option. 

In the event of the option being adopted, trade with the EU has to function on the basis of the UK acquiring the status of a third country. Until new arrangements are made, no systems are recognised, no approvals exist and there are no mutual recognition provisions in place. In legal terms, it will be as if the UK had just been dropped from outer space across the Channel from France. As far as being a trading partner, Brexit would be year zero.

Many pundits, however, do not understand that "risk assessment" is used to determine border inspection frequency. They thus fail to appreciate that a "year zero" third country must be subjected to the highest level of checks. Currently, the UK has almost complete freedom from customs checks. Thus, even a five percent consignment inspection rate on UK goods exported to the EU would be enough to bring gridlock to the Channel ports.

As we reported earlier, in terms of Border Inspection Posts (BIPs), the nearest available port (Dunkirk) has the facilities for inspecting 5,000 consignments a year. By comparison, the Eurotunnel and Dover ferry port handle between them 10,000 trucks per day. That is equivalent to a single lane road train of approximately 100 miles in length, every day of the year.

It takes little imagination to realise that even minor perturbations can have a major effect. We have seen these for ourselves, and live with the knowledge that the Channel port facilities are on a knife-edge, at the limits of their capacities. They function only as long as everything goes smoothly.

Problems are avoidable, but only if the right agreements are reached. To be concerned that there is an "orderly and managed transition" out of the EU is not, therefore, unreasonable. Neither is fear of the adverse consequences if we get it wrong. And, to that extent, we simply cannot afford a "hard" Brexit. Failure, as they say, is not an option.

Pete thus observes that, unless Mrs May realises that the EEA is her only real option before triggering Article 50, she will likely have to confront that reality later down the line. It will create an embarrassing mess for her. Politically she will lose face. 

That, in a sense, won't be what the media insists on calling a "hard" Brexit. It will be a bungled mess that could have avoided from the outset. Our economy will once again be at the mercy of the markets as the media fails to comprehend what is happening.

This "accidental Brexit" is something that has to be avoided at all costs. We can only hope that, in the end, the nation – including the Brexiteer zealots – will be forced to climb down and accept that Britain is presently in no shape to pull out of the Single Market. It may be in the future, but not just yet.

If that lesson is not learned, we will pay dearly.



Richard North 10/01/2017 link

Brexit: Mrs May's cunning plan

Monday 9 January 2017  



People so quickly forget, but the first person recently to put "muddled thinking" into the political lexicon was not Sir Ivan Rogers, but Mrs May. She complained of it during her Conference speech of 2 October last year.

Talking about "our vision" for the "future relationship we will have with the European Union", she believed there was "a lot of muddled thinking and several arguments about the future that need to be laid to rest".

"For example", she said, "there is no such thing as a choice between 'soft Brexit' and 'hard Brexit'". Continuing with this theme, she added: "This line of argument – in which 'soft Brexit' amounts to some form of continued EU membership and 'hard Brexit' is a conscious decision to reject trade with Europe – is simply a false dichotomy".

Just to remind readers, this was on 2 October, when we also recorded the Prime Minister saying that she wanted: "to give British companies the maximum freedom to trade with and operate in the Single Market – and let European businesses do the same here". We wondered at the time as to how that could be done. If this was not EEA membership, it's something very close to it, we observed. 

One now wonders whether the "muddled thinking" to which Sir Ivan Rogers was referring actually related to Mrs May or whether he was simply reflecting the views of his political boss. But he could most certainly extend the description to the media, which has got itself in the most frightful muddle over this issue. We could see this with the fatuous Mz Ridge, in her debut programme for Sky, determined to get her very own "scoop".

Thus we found her telling the Prime Minister that what she had been saying sounded like she was taking us out of the Single Market, so "why don't you just admit it?" To this, Mrs May responded that: she wanted "the best possible deal for trading with and operating within the Single European Market", thereby neatly spiking Mz Ridge's peashooter - not that she noticed.

Earlier, Mrs May had been emphasising that we were leaving the EU: "We are leaving. We are coming out. We are not going to be a member of the EU any longer", she said - and therefore, we should not think in terms of holding on to "bits of membership". Yet one wonders how this could be done. If this is not EEA membership, we might observe, it's something very close to it. In fact, the only possible way we can operate "within the Single European Market" and leave the EU is to remain in the EEA.

And that's where the muddled thinking comes. The legacy media Muppets have absolutely convinced themselves that the Single Market and the EU are indivisible. Thus, to leave the latter is to leave the former.

However, as we well know, the EEA Agreement is a device for separating the Single Market acquis from the more general EU acquis communautaire. The institutions of the EEA convert EU Single Market law into EEA law, which the Efta States then adopt. Thus, to be an Efta State within the EEA is to trade within the Single Market without being a member of the EU. This is something even the Independent recognises – although not, apparently, Michael Gove.

On the other hand, there is no way of separating the customs union acquis from the general body of EU law. It is an integral part of the EU treaties. Thus, to retain membership of the customs union (if it was actually possible) would entail holding on to "bits of membership".

What we are seeing, therefore, as respects the Single Market, is an almost exact re-statement of Mrs May's conference position. If we have achieved clarity in anything, she has effectively confirmed that we are not going to remain in the customs union.

Nevertheless, the hacks are also clutching at the linkage between freedom of movement (as in control of our borders) and the Single Market. Their narrative also has these indivisibly linked, so any re-affirmation of a commitment to control over immigration is taken as a "hint" – or more – that we are leaving the Single Market. The media simply don't do anything other than absolutes.

This is despite Mrs May saying that: "Anybody who looks at this question of free movement and trade as a sort of zero-sum game is approaching it in the wrong way".

This, though, is obviously far too "muddled" for the self-important Susana Mendonca, the BBC's "political correspondent", who takes it upon herself to provide us with analysis, purporting to tell us what to think. "While she [Mrs May] didn't go as far as to say she would ditch single market access in favour of being free to control EU immigration", warbles our Susana, "she certainly appeared to hint at it".

And now we see the media narrative to the fore, as we are told: "Mrs May said the UK would have control of its borders and the best possible trade deal with the EU. She didn't commit to maintaining 'single market access', and she suggested that people who thought the country could keep 'bits of EU membership' were missing the point that it 'would be leaving'".

But actually, Mendonca can't even get that right. Mrs May quite distinctly said that: she wanted "the best possible deal for trading with and operating within the Single European Market". As far as it can possibly go, that is a commitment to keeping us in the Single Market.

Yet, the BBC political correspondent concludes: "This failure to commit to the single market will be music to the ears of Brexiteers. To Remainers it will raise concerns that a 'hard Brexit' could be on the offing". Having thus resorted to inane generalities (thereby rendering us invisible), she then has the nerve to say: "But, as with so much in the Brexit debate, clarity over the UK's position in the negotiations, due to start very soon, remains lacking".

These people really are dross, right down to the BBC's idiot-in-residence, Nick Robinson, who gleefully tweeted: "Bye bye EU single market - 'We're leaving the EU not keeping bits of membership' says PM".

Nothing, however, compares with the intellectual destitution of the Express which proclaims: "Theresa May yesterday gave her clearest signal yet that she plans to pull Britain out of the European Union's Single Market in a decisive break with Brussels". You can't get much lower on the media food chain.

For all that, the crucial uncertainty remains. We got a taste of this in the Observer which was offering the front page story headed: "UK at risk of Brexit 'catastrophe' warns Canadian trade expert", telling us that Sir Ivan Rogers had been "absolutely right to say replacement deal may take a decade to sort out".

As the story runs, Britain risks this "catastrophic" because the government is so dismissive of the concerns of trade experts - according to Jason Langrish, one of the key figures behind the EU-Canada trade deal.

He argues that Rogers' analysis of the time-scale "seems realistic", but says his discussions with UK government officials suggest that there is little chance of minimising serious potential damage from Brexit. The impression he has been left with is that unless the British government shows more flexibility it will probably have to revert to WTO rules – hence the "catastrophe" warning.

This ties in with a Sunday Times story which has Ivan Rogers, before his resignation, secretly dining with David Cameron. Rogers, it appears, has told friends that he fears a "hard" Brexit will lead to "mutually assured destruction" between Britain and the rest of the EU, a view which is said to be shared with Cameron. When Rogers spoke to Cameron, his biggest fear was whether we have an orderly or a disorderly Brexit.

"He thinks we are heading for a car crash, where we don't get a deal and we crash out with nothing", said a friend. "Downing Street's view was that he should stop being such a pessimist. Yet Rogers thinks we need to plan for a disorderly Brexit on our terms rather than theirs, but that No 10 has not given that the priority it deserves".

Some further insight on this comes from Cameron's former aide Sir Craig Oliver, who says that some people thought that Rogers was being overly pessimistic.

That, he told Andrew Marr, "seems to be at the core of this dispute this week. If you read between the lines, Ivan Rogers seems to have been suggesting that he is worried about a disorderly Brexit, the idea that we crash out of the EU without having a proper deal. Others are saying 'you've just been way too pessimistic, you are not being as optimistic as you should be in these circumstances' and that's where the real tension seems to have been".

The thing is, though, if we are to stay within the Single Market – and that requires Efta membership – we should already be talking to the NILS (Norway, Iceland, Liechtenstein and Switzerland) countries. In fact, negotiations should be well advanced, as the fate of our application to rejoin will dictate the nature of our Article 50 submissions.

As Efta is based in Brussels, it can hardly be the case that Ivan Rogers can have been unaware of any approaches to this organisation. And perhaps it is that lack of contact, amongst other issues, that has Sir Ivan so worried.

Here, there is an interesting twist. Relations with Efta States are managed on behalf of the UK by the FCO, but separately from UKREP headed until recently by Sir Ivan. They are handled directly from Whitehall by the FCO's EU Directorate, specifically by the Deputy Director EU-External, known as EU-X. And a previous holder of that post was Tim Barrow KCMG LVO MBE, Sir Ivan's replacement.

Is this wheels within wheels, or just a coincidence? Probably, we will never know. But, at least, we can enjoy the National Review and its "take" on Mrs May's "cunning plan".



Richard North 09/01/2017 link

Brexit: Booker and the "ill-informed" Brexiteers

Sunday 8 January 2017  



There are a lot of people who mark me down as arrogant (or worse), simply because I assert that I know what I'm talking about (even though – or especially because - I very often do).

On the other hand, when a 38-year-old, only recently into the field with no depth of study behind him and no research qualifications, asserts something which is wrong – despite my having placed the correct information in a publicly accessible form, who's being arrogant?

Is it me, for being right or the man nearly half my age, with a fraction of my experience and qualifications, for thinking he knows better than me and ignoring what I write on the nation's premier independent EU-related blog?

We are, of course, talking about Matthew Elliott here, who claimed on BBC's Any Questions on Friday that membership of the EEA via Efta means being subject to the ECJ. It doesn't. The arbitration body for the Efta States is the Efta Court. And while it takes note of ECJ rulings, it is not a supranational court and its judgements are not binding on Efta States.

That Mr Elliott thinks he knows better that me is par for the course. People such as him operate that way. They assert things, without evidence, because it supports their own agenda – even when they know them to be wrong, or could find out whether they are. And then, behind the scenes, they use their considerable networking skills to slander and exclude people such as me, to make sure the truth does not prevail.

From the same intellectual cesspit comes Christopher Howarth, who claims to be an "EU Political researcher" and is a former "senior analyst" at Open Europe. This is a man who seems never knowingly to have read anything I've ever written, yet glibly asserts of me that I "support staying in 95% of EU via EEA" – with the hashtag #euphile, implying, as do many, that I support membership of the EU.

With that and other low-grade sniping from nonentities on the margins, we then get the facile but anonymous "Kenneth" responding on the comments to my piece for Saturday with the question: "Is the author of this blog, the same Dr North that wrote 'The Castle of Lies' and 'The Great Deception'". He adds: "I don't remember him arguing that every EU whim and law should be implemented whatever the cost?"

Interestingly, Booker is getting very similar treatment – including being dropped from any number of Christmas card lists. It seems that, merely to argue for a rational, ordered exit is to place yourself beyond the pale, and incur the wrath of the "leave" establishment – particularly the arrogant Tory right which seems to believe it owns this debate.

However, undeterred by the new status allocated to him, Booker writes again in this week's column, arguing once more for a more rational approach to Brexit. Even that, however, attracts the ire of reader D Butler, who professes to be "rather at a lose (sic) to know exactly where Mr Booker stands on our involvement with the EU".

"Prior to the referendum his articles were very critical of Brussels directives etc", writes Mr Butler. "Now after the British people have democratically expressed their verdict on 40 plus years of rule by unelected bureaucrats, Booker advocates the status quo". In the column itself, Booker writes that the furore over the resignation of Sir Ivan Rogers as our top official in Brussels has only confirmed points long argued in his column.

It may have been understandable that Theresa May should wish to keep quiet about her overall Brexit negotiating strategy. But inevitably this has left a vacuum filled by the "noisemakers": what Sir Ivan called the "muddled and ill-informed thinking" poured out by those "hard Brexiteers" who seem quite oblivious to the astonishing complexity of what a successful negotiation would involve.

At this point, one can interject with a reminder about Charles Moore who, from his lofty position, has decided that: "Only those who don't want to leave see Brexit as mind-blowingly complicated". If you want arrogance, there it is, naked in tooth and claw.

Nevertheless, Booker happily takes on another member of that dysfunctional Tory right, the "breathtaking" Michael Gove, who is still defending as "robust" that ludicrous claim that leaving the EU would save us "£350 million a week".

Says Booker, the very first thing the EU negotiators will want to settle when Mrs May confronts them in Brussels is how we propose to meet all those outstanding financial commitments stretching years into the future. This is the EU spending to which we have already agreed, potentially leaving us with a bill as high as £50 billion.

We are also told we must "take back control of our borders", yet more than half our immigration is nothing to do with the EU. It is mandated by other international commitments, such as the European Convention on Human Rights and, of course, the UN Convention on the treatment of refugees.

Another of the Right's obsessions is the belief that that leaving the EU will free us from huge amounts of regulation. Yet this overlooks the effects of globalisation, as Booker explained in the week of David Cameron's Bloomberg speech in 2013.

In an article headed "Forget Brussels: we are now ruled by the giants of Geneva", he wrote of the colossal revolution whereby up to 90 percent of Single Market regulation now come within the policy domain of global bodies, such as the OECD, the WTO, the ISO and UNECE. Outside the EU, we might have more influence in making those rules, but we will still have to comply with them.

From there, Booker sets out the reason why some of us have long been urging that the only practical way to achieve what Sir Ivan called an "orderly and managed transition" out of the EU.

This is rejoining Efta and thus remaining in the EEA – the so-called "Flexcit strategy", with which we have on good authority Sir Ivan is very familiar. The advantage is not only that it would avoid catastrophic disruption to trade by allowing us, outside the EU, to remain, as Mrs May says she wants "within" the single market, it would also allowing us to negotiate independent trade deals and to exercise some selective control over immigration from within the EU.

Very importantly, would give us time in those two years allowed under Article 50 to discuss all those 30-odd other major policy areas which will need to be resolved, from agriculture an fisheries to security and defence: not to mention how we sort out the question of the EU's 27 regulatory agencies.

We are promised later this month that speech in which the Prime Minister may at last reveal what her central strategy will be. At least, however much the noisemakers may howl, this will provide an entirely new focus to the debate. We may at last begin to take on board the quite mind-boggling complexity of all that needs to be done.

Despite Sir Ivan's anxieties, we must hope that, when it comes to the crunch, Mrs May has not been taken in by all that "ill-informed and muddled thinking" which for too long has been poisoning the air around her, but has been listening to those who genuinely know what they are talking about.

And there we have it again – people who know "what they are talking about". As I have been at pains, to point out, there are no experts in this game. It is about making the best of the information that is available, and avoiding the dogma of those who put their prejudices first, and then look for factoids to support them.

But Booker's piece is headed: "May must ignore the 'ill-informed' Brexiteers", as it is those who, above all else, are proving the most voluble impediment to an ordered Brexit. They trade in misinformation and are impervious to reason, stopping at nothing to pursue their agendas.

Even with, or despite, the departure of Sir Ivan, Mrs May needs to be highly selective in the material to which she pays attention.



Richard North 08/01/2017 link
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