EU Referendum: FUD-proofing required

Thursday 2 July 2015  


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In an obscure journal, we get another example of the steady drip-drip-drip of FUD coming from the pro-EU scare industry. This time it is Peter Gowers, CEO of the Travelodge hotel chain, who warns that the "hospitality industry must wake up to the potential dangers posed by Britain voting to leave the European Union".

Gowers is, of course, worried about freedom of movement within the EU, which might be seriously circumscribed if we withdraw. It would massively affect the £126bn tourism industry, adversely affecting nine percent of the UK economy.

If we adopted Felxcit, or a variation thereof, there would be absolutely no problem. The visa-free movement of people from the EEA area would continue, with tourism unaffected by our withdrawal. 

On the other hand, if we were to allow the WTO option to go ahead, or any settlement which excluded free movement provisions, we would be looking at very substantial damage to an industry which, as the UK's third largest employer, give jobs to 3.1 million people (2013), accounting for 9.6 percent of total employment.

As it stands, anyone who works directly in the tourist industry, or is closely related to someone who does, might have good cause to fear a "no" vote in the referendum, potentially driving six million or more (including relatives and dependents) into the "yes" camp. Those are votes we can ill-afford to lose.

A coherent "no" campaign, therefore, needs to have a serious, and well-thought-out response to claims that the tourism industry would be put at risk. After all, a case could be made that the UK stands to lose far more through job losses and other economic damage that it stands to save through stopping EU subscriptions.

But, the moment we seek to assure voters that freedom of movement will be maintained, up pops the vexed question of immigration. Somehow, we need a system which can distinguish between genuine visitors, and unwanted immigrants. That, in turn, requires a serious and sophisticated policy response, to achieve something which no current government has so far been able to achieve - real reductions in immigration. 

Here, even walking away from the EU's rules on free movement is not necessarily an answer. While it can be argued that it is a necessary condition for us regaining control of immigration policy (as respects the EU), no one but the wildest of optimists would argue that it was, in itself, was sufficient.

On the other hand, there is a credible alternative argument to be made. Firstly, we could accept the specific freedom of movement provisions of the EEA agreement, shorn of the horizontal agreements which have been added later, that give rights to dependants. Then, we could instigate administrative reforms to the Borders Agency, and implement a raft of measures to reduce "push" and "pull" factors.

By this means, we could achieve an effect comparable to that which could be gained by removing freedom of movement agreement, thereby retaining preferential access to the Single Market.

This, however, is not a certain outcome, but if we are to address the FUD – not unreasonable in the case of tourism – then we have to have some answers. That means a properly argued exit plan, with the authoritative backing of any official "no" campaign.

Those who would argue otherwise need to tell us how they would protect us form the FUD. How is the "no" campaign to counter accusations that hundreds of thousands of jobs are at risk, and millions of pounds, if we pull out of the EU? 

Among the things we need to know is how, if freedom of movement is removed, we would deal with the epidemic of "overstayers" who traditionally comprise a significant component of illegal immigration.It is all very well "closing the borders" to immigrants from the EU, but if there is then visa-free entry from the continent – and a substantial "black" economy - the only result will be a massive surge in illegal immigration from the 32 million who visit our country each year.

In any credible "no" campaign, such issues can't be ignored, and answers can't be delivered "on the hoof". And nor have they been satisfactorily addressed by other sources. If we revert to "free movement of workers", which the original EEA agreement encompassed, then there will be no provision for free movement of people and we will have to revert to reciprocal visa arrangements.

That will, of course, will create no end of stresses, as the EU has made it crystal clear that it is in no mood to make any concessions on the fundamentals. We are not going to get cosy little deals, as between New Zealand and Australia. If we want reciprocity, we are going to have to buy into the whole freedom of movement package. We cannot assume there will be any compromises or half measures. To do so provides the illusion of a solution which is simply not there to be had.

The issues we have to confront, therefore, necessarily make for a complex, difficult and uncertain future. But seeking simple mantras and easy answers isn't the way forward. Complex issues are complex, by definition. We can only go so far in offering simple solutions before we lose touch with reality.

Therein lies the rub. The purpose of a political campaign is to communicate a message. But to complain that the message is complex and difficult, and thus to call for a change of message, is to defeat the object of the exercise. That is like a PR firm being engaged to sell soap and deciding instead to sell bananas because it is easier.

So yes, we have a problem. In the coming campaign, single market access and freedom of movement will be inextricably linked. Any solution will be extremely difficult to present in a clear, decisive way that will satisfy all comers. But there are solutions to be had, and with some inventiveness, we can find a way of selling them.

On the other hand, ignoring the problem, or selling bananas instead of soap, is not going to solve anything. We know what the problem is. We need to deal with it.



Richard North 02/07/2015 link

EU Referendum: Flexcit for dummies

Wednesday 1 July 2015  


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It has been put to me that Flexcit, with its six-stage structure, is too complex for the tender flowers of Westminster. These darlings can only handle one idea at a time, and can only read a maximum of two pages, as long as the text is double-spaced and in bullet-point format.

Seriously, these are the people who would have us believe are capable of running the country, and of building policies that are supposed to keep the machinery of government functioning.

Interestingly, though, this seems to be a one-way problem. A well-structured document of 419 pages is far too difficult to read, but us plebs are supposed to suck up 1000 pages of error-strewn, inchoate garbage and, presumably, come back for more.

However, for those tender flowers for whom even an 800-word, two-page summary is just too difficult, here is Flexcit in a nutshell, written with homage to the style of Joyce Grenfell.

We start with a thing called the European Union, but we can't use horrid words like "supranational treaty organisation". We will call it "Europe". It isn't Europe, of course - that's a continent. So when we talk about Europe, we don't actually mean "Europe", but the European Union.

Now, in order to leave "Europe", we have this thing called a Treaty. Yes, a "treaty", dear, not a treat. It's not your birthday. That's a name for a thing that grown-ups who run countries make. It means they promise to be nice to each other, or nasty in a nice way.

And in this Treaty thing we have another thing called an "Article". Actually, there's lots of these article thingies, but there is one very special article called Article 50 which we want the people in charge of the country to play with.

Yes, dear, I know this "Article" isn't actually an article. No, you can't pick it up, suck it ... or throw it out of a pram. I don't know why it's called an article – it just is. It means a lot of words strung out in a particular order, which lets you do special things.

Look, I'm telling you, the words have to be in that order. If they were in a different order, they wouldn't be Article 50. They might not even be an Article. They could be an order for ice creams. But as they stand, they make up Article 50, and that's our "get out of jail free" card.

Yes dear, I know we said it was an Article. So no, it can't be a card as well. That's just a figure of speech. And no, we're not in jail, as such – although a lot of people think we are. Believe me, we're not in jail. I've been in jail, and "Europe" is not a bit like it. You can get ice cream in Europe. Well, yes, you can get ice-cream in jail as well, but not as many flavours. So it really is different.

Anyhow, with this Article 50 thingy, we can get out of Europe. We give the nice men (yes, and there are some mummies as well), our Article 50 "card" and then talk about leaving for two years, and then we get out.

No, we can't just leave. Don't be silly. And no, we don't talk all the time for two years – this isn't like Mummy and Daddy having a row. We still get to go to bed, and we have to have our dinners, and we even get holidays. And yes, if you insist, we do have plenty of time to use the potty. Yes, number twos as well.

So, what do we talk about? Not that's really quite difficult. You know I said we have this Treaty thing? Well, that is what keeps us in Europe and in order not to be in Europe we have to have another, different Treaty thingy. We just call an agreement, although it is a treaty really - that's what treaty thingies really are.

Now, when we are in Europe, we can sell them lots of ice creams, and they can sell us lots of motor cars – yes, just like daddy's, except his comes from Japan. No, Japan isn't in Europe, dear. Yes, mummy's iron comes from Europe as well. If we just left Europe and didn't have a new treaty thingy, mummy couldn't do any more ironing. Your clothes would be all wrinkly and scrunchy, and that wouldn't he very nice.

So, for mummy to keep on ironing, we absolutely must have this brand new treaty. Only then can we keep selling ice-creams to Europe. Yes, we could sell them cars as well, only they like their cars better.

Right. Now there's a tiny problem here. The nice people in Europe won't give us this nice new treaty unless we promise to let lots and lots of the nice people from Europe come to England (yes, and Scotland, dear, except I don't think any of them want to go there), so they can take our jobs and fill the doctor's, and so all their nice little boys and girls can go to your nice school.

Look, let's not get into an argument here. If we want to sell them ice-creams, we have to let them come here, so you'll just have to put up with having classes in the playground and waiting for your dinner.

But, we do need to make sure that too many people don't come. If we don't,  all the schools and hospitals will be too full and you'll have to wait until supper time to get your dinner. What's more, that nice Mr Farage won't be able to drive to Wales on a Friday evening.

Well, that's why we need stage two of Flexcit. In stage one, we work out how we're going to leave Europe and still sell them ice-creams – yes and irons, as well. In stage two, we work out how many people we will let into England and how we stop too many coming in. And no, dear, I don't think they'd let us just send them to Scotland.

So, we have two stages now. But we need another one. Why? Because there are some horrid people in Europe called bureaucrats – no, bureaucrats, darling, not burrow-cats. No, they're not cats, darling. There's an "r" in there, crats, as in bureau-crats.

Alright, don't cry. We'll call them burrow-cats. And yes, I'm quite sure they look like the meerkats on television. Ok, we'll call them meerkats, then. These meerkats make rules for ice-creams and things. When we were in Europe, we had our own meerkats, and they helped make the rules, but if we leave Europe, our meerkats go home and only their meerkats make the rules.

Yes, it does, matter. If they make all the rules, we could end up with nothing but raspberry ice-cream and no strawberry ice-cream. And daddy's car might have to have pink tyres instead of black ones. No, he wouldn't like that very much … although mummy might.

And that's what stage three of Flexcit is all about. We have to get all our meerkats together, so we can all make the rules together, their meerkats and our meerkats, just like we used to do before we left Europe, only in a different way.

Just different, dear. These are the things grown-up do, they make rules – you know: when you go to bed and how much pocket money you get. And they make rules about ice-cream as well. And in stage three of Flexcit, we ask UNECE to do it. No, not Eunice, dear, UNECE, U-N-E-C-E.

Well, I'm sure Eunice would make a jolly good job of it, but she's gone to her granny, so we'll have to ask UNECE to do it. No, she isn't a "she", she's an "it". Yes, you're quite right, it's an "it".

Where were we? Right. Now we come to stage four. In this stage, we look at all those things that we messed up while we were in Europe – you know, things like fishing and farming, and energy and all the rest of those things.

Well, we mess them up with policies, dear. So in Europe we have policies for little fishes in the water, and we have policies for all the little baa-lambs you saw in the field yesterday. And yes, we have policies for daddy's car.

No, they're not like wing mirrors. No, you don't stick them on. Think how silly baa-lambs would look if you stuck policies on their ears. Those are ear-tags, dear, not policies. Stop being silly. We put them on because of European policies.

Please, can we now move on? We get rid of all those silly European policies, and make our own. I'm quite sure they won't be silly, because our own meerkats will make them. Then our MPs will insist they are really clever policies, not like the silly ones we get from Europe.

What are MPs? Well, they're the people who … oh, never mind. And yes, I'm afraid the baa-lambs will still have to wear ear-tags. But they'll be British ear-tags, not European ear-tags.

So, we've now got four stages of our lovely Flexcit, but we now have to have another one. You see, while in Europe, those horrid European meerkats make all the rules for us when we want to buy and sell things to countries outside Europe. Yes dear, we sell ice-creams all over the world.

So now, under stage five, our nice meerkats will make all the rules for selling ice-creams to other countries in the world, so we can sell lots more ice-creams to lots more people. Don't worry dear, they'll still be plenty left for you.

And that brings us to stage six. That's all about those naughty MPs who took us into Europe in the first place, and let all those nasty foreign meerkats make all our rules for us. So we want some new rules to stop our MPs ever taking us into Europe again. Then our meerkats can keep making rules to keep our ice-creams nice and cold, and none of those nasty European meerkats will ever get a look in.

So, that's what Flexcit is all about. Six-stages: one to leave and trade; two to stop too many people coming; three, common rule-making; four, new policies; five, global trade; and six, to stop the buggers doing it again.

Yes, dear, we know we shouldn't say "buggers", but they really are buggers, and that's why we need Flexcit. Simples, really.



Richard North 01/07/2015 link

EU Referendum: meetings galore

Wednesday 1 July 2015  


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Two meetings in the stifling heat of a crowded London yesterday, both devoted to the coming "no" campaign – although the issues are very far from settled. Meanwhile, Normal Tebbit thinks it's starting to look unlikely that there will be a single organisation campaigning for a "no" vote. At present, he says, there is too wide a spectrum of opinion to make that possible. 

He could be right, although our Referendum Planning Group (RPG) is trying to make things happen, while the Exploratory Committee (ExCom) is banging heads together in the hope that agreement can be reached. But then there is Arron Banks and his "going global" group and, of course, Ukip to contend with. No one knows which way they will jump.

The only optimistic note I can muster is the thought that the "yes" campaign is probably as divided and certainly as incompetent as some of our groups. And while Mr Cameron has some good advisers, he has some very bad ones, and himself is not master of his EU brief. 

Oddly, the driving force behind this entire campaign is ignorance. In fact, it's a race to find who has the stupider arguments. One is constantly taken aback not by how much people know, but by how little. Even the basics of Article 50 are a closed book to some, yet they feel qualified to pronounce on strategy. That's without knowing the legal and technical constraints of the negotiations that must follow a successful referendum.

In that madhouse of the Westminster bubble, though, there is still that naïve belief that they are at the centre of the game. There is still no real appreciation of the democratising power of the internet, or the fact that there is a huge and increasing constituency out in those tacky little provinces, who are better informed than the centre.

We've already seen this with the media, where it is quite evident that even senior journalists do not have a grasp of the basics, while think-tank gurus make fundamental mistakes, betraying their limited grasp of the way things work. And the more they produce - the longer their tomes - the more of their ignorance they reveal.

Nor, it seems to me, is there a proper understanding of the nature of a major referendum such as this.  The contest is not a general election, but I don't think that point has really sunk in. This is not a case where political parties take centre stage. Neither is the government master of events, much less the media and their handmaidens, the pollsters. 

The essence of a referendum of this importance is that the politicians have been forced to release their already tenuous grip on the reins of power. They have handed the decision to the people. Whether they appreciate it or not, this is where the people have been given the opportunity to tell their masters what they really think. Many are beyond the reach of political manipulation, and will no longer take their guidance from the centre.

The point here is that the old aphorism of "information is power" is actually true. People used to come to the centre because that's where the information was. You had to gather together, in the coffee houses and meeting rooms, to know what is going on. But, as the flow of information has become decentralised, the centre not longer has the monopoly, and can no longer control the flow.

It is now my rooted belief that, once ordinary people realise how little their masters understand of the way we are governed, and how little control they actually have over the processes, things will change even more than they have. Power relies on illusion - it always has done. 

For the moment, the centre is still playing its games in the belief that it is in control. But they parade on a stage to which the rest of the nation is largely indifferent, where the writ of the illusion no longer runs. The centre is no longer in charge - because it is no longer master of its brief, because it can no longer control the flow of information. The only thing is, it doesn't yet realise it. 

And on this, I shall ruminate further.



Richard North 01/07/2015 link

EU Referendum: no default option

Tuesday 30 June 2015  


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Having already dealt with the persistence of Ruth Lea in insisting that WTO rules are the default option in the event of us leaving the EU, it is easy to forget that such myths can have long half-lives, making them extremely dangerous to the cause.

We thus recall CBI President Mike Rake asserting in May that: "No-one has yet set out a credible alternative future to EU membership. The current alternatives are not realistic options … ", whence Lea elected to address his claim by way of an "open letter" (extract illustrated above). Unwisely, she declared that, if the UK left the EU, "the UK-EU default relationship would be under the WTO rules, by which many countries, including China, very successfully conduct much of their trade".

Despite the obvious fatuity of this message, and the attempts at rebuttal, we still see repeats on Twitter, in Eurofacts, in the Better off Out magazine and in multiple other outlets. This blog, it seems, is the only site attempting to bring sense to the debate and, against the constant repetitions of Lea's myth, we are struggling to make ourselves heard.

But what is perhaps more disturbing is that lack of debate – from both sides of the divide - over what is quite plainly a suicide option that would bring trade with the EU screeching to a halt. In fact, right across the board, one sees an almost complete lack of appreciation of the adverse effects of the "WTO option".

Even the prestigious Bertelsmann Stifung, which reported on the implications of this option back in April of this year, came up with an incredibly anodyne analysis of what it called the "deep cut" scenario, where the "United Kingdom exits the EU and there is no trade agreement between the EU and UK".

This, said Bertelsmann, means that "non-tariff barriers to trade would be introduced/ increased by dismantling exemptions from existing trade agreements and tariffs would potentially be introduced between the EU and UK". However, it then goes on to say:
While prevailing WTO law requires a country to levy MFN tariffs against its trade partners if they do not have a free trade agreement, there really is no reason why – if a Brexit does happen – the United Kingdom would have to return to the non-tariff barriers from before it joined the EU. After all, the acquis communautaire has been implemented into UK law. But uncoupling from the EU's regulatory coordination and harmonization process – a key demand of the UKIP and other Euro critics – would gradually lead to a build-up of new non-tariff barriers to trade.
This apparently plausible argument, however, is seriously flawed, so much so that it tends to demonstrate that German think-tanks are no more knowledgeable than their UK equivalents, and just as prone to error.

In this case, what we are seeing is the same error as exhibited elsewhere - the failure to understand that entry for third country goods to the EU's Single Market requires surmounting two basic hurdles. The hurdles would have to be surmounted by importers of UK goods, once the UK had left the EU.

On the one hand, there is the requirement for regulatory conformity (achieved either by harmonisation or mutual recognition of standards). On the other, there is the separate requirement for products to undergo conformity assessment and for there to be a formal means of providing evidence of conformity. And it is this latter requirement which is being neglected.

The point here is that all the UK assessment systems and bodies, which are currently recognised under EU law by virtue of our EU membership, ceased to be recognised. The documentation and certification that they produce will not be valid, and will not be accepted by the authorities in EU (or EEA) Member States.

Furthermore, in law, the UK on leaving the EU without concluding a trade agreement will formally assume the status of a third country. An indication of what is required when there are formal agreements in place comes from the US. What our list will look like, when there no agreements in place, is very difficult to say, but it is self-evidently the case that our exporters are not geared up to producing the level of paperwork required.

However, if you want a quick guide to the requirements for demonstrating conformity assessment, it is here, which deals with the general principles and concepts behind the EU's "New Approach" laws and directives – essential reading for any putative third country (i.e., British) exporter - and the importers of British goods.

There is, in this, an interesting twist to the procedures related to the "New Approach", in that many of the goods can be released by Customs, for circulation in the internal market, on the basis of self-certification. But, if there are no Mutual Recognition Agreements (MRAs) in place, self-certification is not recognised. The responsibility falls on the importer, which must have a representative resident in the EU. This would add costs and delays to imports from the UK, making them less attractive than goods sourced from within the EEA, or from countries which have trade agreements with the EU.

Even when British goods were able to gain access to the Single Market, therefore, they would most often carry a cost penalty that would make them less competitive than other products.

Now, in what is a complex field, nothing of this has to be taken on trust. The EU is nothing if not generous with its information, setting out copious details on the Europa website. What most readers will particularly enjoy are the eponymous SAD guidelines, which spawn thousands of additional pages of guidance. And, as this guideline indicates, without mutual recognition, any exporter is going to have a hard time getting products into the Single Market.

The "bible" however, goes by the name of the Blue Guide. It sets out the broad requirements, making reference to the need for conformity assessment, and outlining how the status of different countries affects their ability to export. Then, the whole system is given legal "teeth" by Council Regulation (EEC) No 2913/92 of 12 October 1992, as amended, otherwise known as the Community Customs Code.

Of this 88-page document, Article 79 in particular applies, setting out the terms for "release for free circulation" of goods from third countries - the technical term for customs clearance. This, the Article tells us, "shall entail application of commercial policy measures, completion of the other formalities laid down in respect of the importation of goods and the charging of any duties legally due".

The important thing to understand from this is that it is a negative procedure. Customs officials may not admit goods unless they conform with the requirements. With intra-community trading, there is a presumption of conformity. With third country goods, valid documentary evidence of conformity must be provided. If it is not furnished, the goods cannot be admitted. It is as simple as that.

From there, it gets doubly interesting. You might have thought that the procedures for dealing with goods, in the event of the documentation proving inadequate, might be well-established. But that is not the case. The procedure I sketched out in my earlier blogpost is based on my personal experience as a port health inspector, and my work as a one-time consultant, when I was involved on behalf of clients on legal issues relating to rejected imports.

However, as this press release makes clear, after all these years of a Customs Union, there is no standard procedure applying throughout the EU. Remarkably, each of the 28 countries have their own way of doing things. To resolve this, the Commission has proposed a new directive which, as it stands currently, is still going through the legislative procedure.

Make no mistake, though, if the UK drops out of the Single Market and the attendant treaty system, and does not replace it with a new and comprehensive agreement, trade with Member States will be severely disrupted. Then, given how fragile the physical system is, it would take very little to bring the whole structure crashing down.

Therefore, people who are currently promoting the "WTO option", by whatever name it is called, must be brought to recognise that there is no "default option". We can either negotiate a settlement under Article 50 or trade goes down the pan. Helpfully, on page 6 of this document, the Commission sets out the criteria it expects to be fulfilled, before there can be a trade agreement which gives near neighbours access to the Single Market. 

With that, I hope we can begin to focus some minds on the real world, and bring some sense into the putative "no" campaign. If we do not, we stand a very real risk of losing the referendum, and we will deserve to do so.



Richard North 30/06/2015 link

EU Referendum: les grandes lignes

Monday 29 June 2015  


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Sometimes jobs that should be quick and easy take a surprisingly long time. For instance, an attempt to find the latest figure for Greek GDP yields a variety of sources and a wide range of figures. We get the European Commission tell us it's €182 billion (2013), while the figure from Wikipedia (after conversion gives us €216 billion (2014).

Eventually, I found the Greek government statistical site (80 percent funded by the EU), and managed to track down the GDP figures – not that easy as the downloads are, irritatingly, in … er … Greek. Anyway, €182 billion for 2013 checks out. And the figure for 2014 drops to €179 billion. I'll go with that.

The point of my search was to draw information to make a series of comparisons. First, I wanted the EU and the eurozone as a whole. Those, according to Eurostat (another site I hate), are respectively €13.9 and €10 trillion. Then I wanted Germany, which is €2.9 trillion (all 2014), and then – out of left field - the turnover of the Volkswagen group. That's €202 billion for the same period.

Now we're in a position to make those comparisons. The Greek economy is 1.3 percent of the EU economy. It's 1.8 percent of the eurozone economy. It's only one sixteenth of Germany's economy and slightly less than that of the Volkswagen group (less than half the size of Walmart). Even the Irish economy is bigger (€185 billion).

This illustrates, with brutal clarity, quite how insignificant Greece really is – from an economic stance, at any rate. Mrs Merkel could, if she so desired, buy Greece from petty cash and still have change – not that she, or anyone in their right mind, would want to.

Sooner or later, their own insignificance will dawn on the people of Greece and their government. And, when push comes to shove, the people don't want to leave the euro and certainly don't want to leave the EU. Before it became a member of the EU and then the single currency, Greece was already a failed state. Without EU intervention, the state would have collapsed.

Thus, in February 2012 - when the circus was in full cry - I was warning people to keep their eye on the ball. Basically, they needed to ignore the "noise", the distractions, and focus on les grandes lignes - the main events.

Currently, I think the main function of the continuing Greek soap opera is to serve as a distraction, keeping people from watching events elsewhere too closely. Whatever the short-term outcome (and I've totally lost interest in what it might be), the situation will eventually come right, but only when the "colleagues" get their new treaty in force, scheduled for 2025 at the latest.

The fact that treaty change is back on the EU agenda proper is impossible to conceal, even if the legacy media are doing their best to ignore it, having almost totally succumbed to the hype over the Greek superdrama.

Despite this, Mr Cameron's current game plan is certainly coming clear as the Sunday Times reports on a "leaked note of a conversation" between him and another leader. This revealed that the prime minister has a "firm aim" to "keep the UK in the EU". He has "deliberately not produced a lengthy shopping list" of requests.

It seems like only yesterday when Cameron was pledging to achieve "fundamental" reform, which was to be finalised "in a new treaty". But last week he conceded defeat: no new treaty before the referendum. The game is changing before our very eyes.

One of the few politicians on the ball is Owen Paterson, who states for the record that Cameron's approach of relying on "valueless" promises of future treaty change is "not good enough". He accuses the Prime Minister of missing "an historic opportunity" to change Britain's relationship with Brussels.

Taking Cameron at his own valuation, Paterson notes that the "historic opportunity" to change the nature of the EU would have required "full-on treaty change". This, though, is beyond the scope of Mr Cameron. He is having to content himself with promises from the other 27 members of changes in the treaty to come.

Putting himself out on a limb, in comparison with the rest of the Party, Paterson dismisses this as "not good enough". He says that: "The prime minister is asking for very little of substance to change. He said we would get fundamental change. We're hearing now that he didn't even ask for it".

What readers of this blog have known for a long time is now being admitted at a high level in political circles, where there is the dead weight of inertia to overcome. "He is not trying to regain the power for Britain to make our own trade deals", confirms Paterson. "He is not trying to end the supremacy of EU law. He is asking other European countries what they will give him, which is no way to conduct a negotiation".

No one in the least expects the Prime Minister to change tack. The die is cast. This allows Dominic Lawson to observe that it is dawning on even the most loyal of Conservative Eurosceptics that Cameron’s promise to them of "a fundamental renegotiation" of Britain's relationship with the EU is a chimera.

Given this, Paterson adds that "some in the cabinet and many in the Conservative party" would be likely to vote "no". There is still the statutory caveat of "unless the prime minister changed tack", but the battle lines are firming up.

Once the dust has cleared from the Greek distraction, even the legacy media might begin to see the shape of Mr Cameron's new strategy. Fortunately, this has been well-signalled, and he has extremely limited room for manoeuvre. Thus, by focusing on les grandes lignes, we already have a fairly good idea of what is coming and how to deal with it.

What we most need now, though, is for our own side to scale down its attempts to lose the referendum. Then we might have some chance of winning, as Mr Cameron runs out of room.



Richard North 29/06/2015 link

EU Referendum: spot the deliberate mistake

Sunday 28 June 2015  


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Here we go again … the confusion between Single Market participation and EU membership. Under Flexcit the whisky trade would be completely unaffected by withdrawal from the EU.

It has to be said, though, that if certain regimes were followed, the whisky trade with the EU would not just be disrupted, but almost destroyed – along with most of the rest of our trade with the EU. The only thing that is stopping the putative "yes" campaign having a field day on this is that their campaign groups seem almost as inept as some of ours.

However, one cannot rely on this continuing to be the case, and I wouldn't like to be the group forced to "do a Salmond" at a late stage in the campaign, having to deny that its recommendation would probably cost the British economy not three million but closer to ten million jobs. 

In this game, you can get away with a lot, for an incredibly long time. But the thing about dormant time bombs is that you never know when they are going to go off.



Richard North 28/06/2015 link

EU Referendum: the end of the Norway option?

Saturday 27 June 2015  


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Barely, if at all, mentioned by the legacy media this week was a report issued on Tuesday - the so-called Five Presidents' Report on completing Europe's economic and monetary union.

This, we think, must be taken with other indicators, and details emerging from the European Council, together with the Council conclusions, Mr Cameron's own comments on the referendum timing and the Bertelsmann Stiftung Fundamental Law.

Putting all these sources together, together with the views of the Commission President, and the idea of the Prime Minister brokering associated membership status with the EU now looks even more plausible. The "colleagues" plan to launch the treaty process that will allow this in late 2017, the moment the UK's referendum is over. Completion is scheduled by 2025 at the very latest.

As the Bertelsmann "Fundamental Law" points out, though, associate membership could also cater for the needs of Norway, Iceland and Switzerland, "seeking to improve on their present unsatisfactory arrangements". Presumably, this will also include Liechtenstein, pulling all four EFTA countries into the Greater European Union, to total 32 countries.

The attraction for the "NILS" countries is that they add MEP and Council representation to their current EEA/bilateral arrangements, removing the oft-repeated complaint of lack of voting power or "influence" over Single Market laws.

The "inner circle" will comprise members of the eurozone, which will sole access to the "inner Council", with European Parliament sessions set up to deal exclusively with eurozone business.

Of immediate concern to the UK referendum campaign is that Mr Cameron will, at the eleventh hour, offer association as a form of "rebranded" EU membership, pointing out that the offer will also be available for the NILS countries.

In this scenario, both the Swiss and Norway options will disappear, leaving the "no" campaign seriously bereft of viable exit plan options. Potentially, this could be very damaging, especially as the "WTO option" is guaranteed to bring the UK economy to a halt.

However, in anticipation of this problem, and to address perceived weaknesses in the Norway option, we have been doing some rebranding of our own. Specifically, we've been looking at the "shadow EEA" option, our fallback in the event that the UK's application to rejoin EFTA fails or if the UK is blocked from staying in the EEA.

As the Flexcit plan stands, if this happens, we have the UK seeking to negotiate a bilateral agreement to adopt the entire Single Market acquis. The UK would adopt the same mechanisms for the incorporation of new laws, so that there would be no divergence once the agreement was in place.

However, there is a further option, not dissimilar to the line taken by the Australian government in 1997. Then, it signed a joint declaration on EU-Australian relations, followed two years later by a Mutual Recognition Agreement. The scope exists for the UK to do likewise, or to make a unilateral declaration, up to and including a commitment to full regulatory harmonisation (which already exists).

A full harmonising commitment would be akin to the shadow EEA agreement, only made unilaterally. As such, it would not need assent from EU member states. Given that commitment, the UK would then be in a very strong position to insist on access to Single Market, invoking WTO non-discrimination rules.

Add the MRA agreement, and an agreement on tariffs, and then a bilateral agreement on programme participation and there is an almost exact equivalence with EEA Agreement.

Carried out under the aegis of Article 50, the negotiations would be given a formal framework. As long as the UK did not seek preferential access to the Market, on better terms than were available to a full member, there would seem to be no serious obstacles to an agreement.

Inevitably, though, this requires some agreement from EU Member States. Yet, it is posited by WTO advocates that the "no" campaign cannot promote an option which relies on bilateral agreements.

This is based on the experience of the Scottish referendum, when Alex Salmond was confronted with the question of which currency an independent Scotland might use. He was unable to offer a solution in the event that the UK authorities refused to permit continued participation in sterling. It is thus held that the "no" campaign cannot afford a similar refusal.

However, any comparison with the situation pertaining to the UK's exit negotiations is flawed. Not least, the negotiations are taking place within a treaty framework.

Within this framework, not only does Article 50 require Member States to negotiate with the departing state, Article 3 of the Consolidated Treaties requires the Union to, "contribute to … free and fair trade". Article 21 requires that the Union, "work for a high degree of cooperation in all fields of international relations, in order to … encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade".

Furthermore, the EU Treaties themselves exist within the framework of the Vienna Convention on the Law of Treaties which requires the parties to act in "good faith". Then "good faith" in itself is "almost certainly" a principle of customary international law, and indeed is a principle of WTO law.

Any idea that the EU, within the framework of Article 50, as reinforced by the separate Articles within the Treaties, and further reinforced by international law, would refuse to negotiate on basic issues of trade, and not strive in good faith to reach an agreement, simply does not lie within the realm of practical politics. And, should there clear breach of EU treaty obligations, those breaches might well be a remedy through proceedings in the ECJ. 

The whole rationale for discarding Flexcit, and instead going for the WTO option, is fundamentally flawed. This is especially so as the WTO option also requires bilateral agreements to make it work, essentially making it a theoretical construct, with no basis in reality.    

Thus, we aver that stage one of Flexcit offers as reasonable an assurance of an amicable exit settlement as could be anticipated, and one which will secure the UK's continued participation in the Single Market, with or without the EEA.

But since we now offer not one but three mechanisms for securing exit, we feel it would no longer be appropriate to call stage one the Norway option. Nor would we even to claim that this is a preferred option. In terms of our rebranding, what we now suggest calling it the "Market Solution", reflecting the outcome that we seek and would almost certainly be able to secure.

Whether or not, Mr Cameron therefore comes up with the idea of associated membership, we will still have something better.



Richard North 27/06/2015 link

EU Referendum: we're being played

Friday 26 June 2015  


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I'm almost too bored to write about the BBC hyperventilation about the EU treaty change (not).

We are told that David Cameron has accepted there may be no change to the EU's treaties to accommodate Britain's demands ahead of a referendum. The Prime Minister has instead argued for an "irreversible lock" and "legally binding" guarantees that EU law will be changed at some point in the future, says the BBC's.

This is picked up by the Guardian and most of the other children in the media, who think they're adults talking to children when, mainly, it's the other way around. But they, and the rest of us, are being played, the only difference being that the media haven't realised it yet.

If I can be bothered, I'll do some grown-up analysis later this morning, but the finding will be the same: we're being played.



Richard North 26/06/2015 link

EU Referendum: an open letter to Dominic Cummings

Thursday 25 June 2015  


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Dear Dominic

You have been prominent in the media recently, slated as a key figure in the development of an effective "no" campaign, and your role in the newly-formed "Exploratory Committee" has been well advertised.

As such, you are in a position to have a significant impact on the shape of the "no" campaign, to which effect it is extremely helpful and generous of you to air your initial views on your own blog on aspects of the campaign. In particular, you pose two questions – firstly as to whether there might be not one but two referendums, and then you ask whether it is necessary for the "no" campaign to produce an exit plan.

Since you have aired these issues in public, in the interests of openness and fair debate, I will answer your points on this blogpost. Because of the complexity (and importance) of the issues, it may take me a couple of days to complete this one post, especially as I intend to take into account any relevant comments of my readership – which is also entitled to express a view.

When the piece is complete, I will also send you an e-mail with a link, and if you wish, I can also send you a copy in any other format, should you want to circulate it further. It would help then to have a considered response, published out in the open, but I will not hold you to that. You are undoubtedly very busy.

However, I will state that, in my view, there are no more important a questions in relation to the forthcoming "no" campaign than, firstly, whether we should have an exit plan, and then, secondly, the nature of that plan (and, indeed whether there should be one or several plans).

Upon the outcome of this issue will depend my attitude to the campaign lead, and my degree of involvement in the campaign. I am sure many of my 10,000-plus readers will also be taking a keen interest in the outcome, and none of us will want to expend much energy on a campaign if it is doomed to failure from the outset.

With that in mind, I will address first the issue of whether the "no" campaign should have and exit plan, to which effect, if I understand you correctly, you are veering towards the view that we should not have one. To quote you on the matter, you wrote:
There is much to be gained by swerving the whole issue. No10 is dusting off its lines from the Scottish referendum. Perhaps they can be neutralised.

Different people have different ideas about the best way to leave. For example, some people suggest we should leave the EU but simply remain in the Single Market while we negotiate a new deal. Others have different ideas. Global rules set by the World Trade Organisation provide some guarantees against European countries discriminating against British trade. But none of this is the real point. We are not a Government. We can't negotiate anything. A NO vote as a simple matter of law does not mean that we leave the EU tomorrow. A NO vote really means that a new government team must negotiate a new deal with the EU and they will have to give us a vote on it. If you want the EU to keep all the power it has and keep taking more power as it has for decades, and you're happy paying billions to the EU every year instead of putting it into the NHS – then vote YES. If you want to say "stop", vote NO and you will get another chance to vote on the new deal. If the country votes YES, we've lost our chance to change anything. We may not get another vote for decades, after we've had to bail out euro countries and had another few decades of the EU's useless and inhumane immigration policy. If the country votes NO, we can force politicians to get us a better deal.
The key points which I take from this (which I assume is the expression of your opinion) is that we – i.e., the "no" campaign - is not a government and can't negotiate anything. Therefore we can't dictate terms, which are basically up to government. Instead, therefore, you propose an alternative, essentially arguing for a fear-based (i.e., negative) strategy, of scaring people into voting "no", essentially because, if they do not, they'll not get another chance in decades.

I trust that I have properly and accurately conveyed the thrust of your argument – if I have not, please do get back to me and I'll make the necessary adjustments. But, on the assumption that I am correctly conveying the flavour of your stance, if at this point I say: "with the greatest of respect ... ", you will know exactly what that means.

Some long time ago – in March 2011, to be precise - I wrote a piece about what I called the Stokes precept. It was named after the Conservative MP Richard Stokes, who contributed to a debate in the Commons on 15 October 1940 (at the height of the London Blitz) on war aims. These at the time (and were to continue to be) an extremely contentious issue, whence Mr Stokes argued that that you cannot campaign solely on a negative. You have to give people something positive to aim for. 

Arguably, it was the failure of Churchill to offer a positive vision for his war aims (resolutely refusing to discuss them, or permit a formal statement) that lost him the 1945 general election. And here you are suggesting that we fight on a negative basis, a strategy that, in my view, will ensure we lose.

What in fact I am arguing for is three things, what I've been calling a three-legged stool. I put this up on the blog and any effort spent in reading it would be well rewarded. It goes through the argument in detail, for an exit plan and other components of what should form the "intellectual case" needed to underpin our campaign.

Specifically, I argue, we must have our negative case (as you have set out - although it needs much more). We then need a "positive" vision - a picture of what a post-exit Britain might look like - effectively conforming with the Stokes precept.  But then, as I have written God knows how often - and in detail in Flexcit, which you really need to read - no plan will be successful if drafted without reference to the capabilities and intentions of the enemy.

In this context, again and again we see - in practice and in terms of declared intent - that the pro-EU side intends to rely mainly on fear. More specifically, it is using FUD - fear, uncertainty and doubt - powerful tools which act in favour of the status quo.

Therefore, in addition to our negative pitch, and our positive vision, we need a FUD neutraliser. When the enemy argues that leaving the EU is a terribly dangerous venture, we have to counter by illustrating that leaving the EU is a perfectly practicable proposition, entirely reasonable and safe. That is the purpose of an exit plan. It is not to second-guess the government. It's primary purpose is to demonstrate to the wavering voter that leaving the EU is possible and safe.

Elsewhere, I have painted a picture of people on the bank of a river, looking at an island in the middle, in which is situated a utopian village. To motivate them to go there, I argue, you must make the case that to stay where they are is not optimal (or even very bad) and that the island is a perfect destination. But you are not going to convince people to make the crossing if the waters are crocodile-infested and those who attempt to swim across face certain death. You must provide a sturdy boat, and a seasoned crew.

Thus do we complete our three-legged stool. We have our case for saying "no" – why we need to get out. We paint a rosy vision of what it would like to be out, and then we reassure people that it is safe to cross over into the promised land.

Putting this another way, this is basic motivational theory. I won't give you a specific link because there are hundreds which say much the same things. In essence, in order to get people to change (in this case, vote "no" in a referendum when they are inclined to vote the other way), you first have to establish the need. People need to be convinced of the need to change.

Secondly, you must identify the reward – the reason why the risk is worth it. Then, thirdly, you must remove the barriers to realisation. In this coming referendum, the most important barrier is fear (or FUD, if you like). That's what makes an exit plan essential. And I really do mean essential – not an optional extra, but a core part of the "no" campaign's intellectual trinity. Without it, I would argue, a campaign is unlikely to succeed. 

Before leaving the matter there, however, I must return again to your idea that the detail of an exit plan is best left to government, because we, the "no" campaign, are not in a position to execute such a plan. What, in effect, you are saying is that the development of an exit plan should be left to those in the position to execute it.

You might care to pause to consider this argument for, if it was valid, it would negate much of the rationale for the think-tank industry that inhabits (some might say infests) London. Part of the necessary process of advocacy - often adopted by think-tanks - is not only to propose a course of action, but suggest to government the means by which it should be achieved. 

It is by no means unusual for government then to borrow ideas from those think-tanks (or other bodies), in order to execute their policies. One might even observe that the whole idea of the European Union came from outside agencies, as indeed did the methodology for making it happen.

An important part of making an idea happen, therefore, is to suggest (sometimes in some detail) how it might happen. This is another good reason why a exit plan should be produced independently by the "no" campaign, with the added advantage that in the event of success and the Government is forced to negotiate our exit, the plan can be used as the yardstick against which its performance can be measured. If it delivers a less advantageous deal than we suggest is possible, we have reason to ask why.

Finally, to conclude this part of my letter on this issue of whether we need an exit plan, I must refer once more to the activities and intentions of our enemies. In this context, one sees Sir Mike Rake, in his persona as President of the CBI openly taunt the "no" campaign on its failure to coalesce around a credible exit plan. Thus, he said at the May speech to the CBI annual dinner:
No-one has yet set out a credible alternative future to EU membership. The current alternatives are not realistic options – little or no influence and the obligation to comply with EU principles whilst still paying most of the costs.
Sir Mike is not the first or only person to make this point. In November last year, we saw Juergen Maier, chief executive of Siemens UK, note that, "It is perturbing that those who claim that Britain would be better off out have not put forward a detailed alternative for what 'out' means".

In the wake of Sir Mike's speech, we saw this theme picked up by a leader in the Observer and, by reference to the Business for New Europe (BNE) site, we can see this developing into a major attack point for the "yes" campaign, which will increasingly be used against us.

On this basis, and much more, its is overwhelmingly evident that the "no" campaign cannot go into this fight without a comprehensive, clearly thought-out exit plan. There is no gentle way of putting this: to argue against having such a plan is simply not a credible position.

Before moving on to address the question of whether there should be a unified exit plan, I now turn to your comments on a second referendum. In the first instance, you pose the question of whether the Government will suggest a second referendum, in the event that we succeed with a "no" vote. That raises some intriguing possibilities.

You suggest that offering a second vote would give the government the opportunity to reverse a loss in the first, so that "yes" would mean victory yet "no" would not necessarily mean defeat. European governments, you remind us, have held second votes repeatedly over the past quarter century.

On this basis, you posit a scenario where the government says: "If the public votes 'no', we will have to negotiate an exit deal with the EU and we believe that it is only right that the public has a vote on the final deal". If it did offer this option, you assert that it would be likely that Labour would do the same. You even argue that Labour might suggest this, and that the Government would feel obliged to agree.

Secondly, you ask whether the "no" side should demand a second referendum in the hope of forcing the parties to commit to one. At this juncture, I might myself suggest that, when you get round to reading Flexcit, you will note that we entertain the possibility of a referendum on the outcome of Article 50 negotiations. There is a reference to one on page 3, in the summary we so helpfully provide for people who haven't the time to read the whole document. There is another on page 123, and another on 393.

For sure, we don't make a big thing of it, not least because I have mixed feelings about the utility of a "yes-no" referendum. A "yes" vote would at least give democratic legitimacy to the agreement, but a "no" vote would present us with some problems. There does not appear to be a facility within Article 50 for the departing state to reach a provisional agreement and come back for more talks if it can't get it ratified. The outcome would mean dropping out of the treaties without a replacement agreement. This, as we will see shortly, would be disastrous. 

On the other hand – as we have observed earlier in this letter – a referendum on the Article 50 agreement would serve to keep the Government honest. If, for instance, it sought to broker a dishonest deal which meant rejoining the EU disguised as something else – which is quite possible – then a new "no" campaign could pull the plug, and warn the nation to reject the deal. 

As to whether the "no" campaign might argue for a second vote, which is a scenario you discuss, I tend towards the view that we should do so. And if for no other reason, it sets the tone for a new, independent nation. If the Government took us into the EEC (and then the EU) without a vote, it can at least commit to a fully democratic process when taking us out of the EU.

You yourself argue that, "as a matter of democratic accountability, given the enormous importance of so many issues that would be decided in an Article 50 renegotiation – a far, far bigger deal than a normal election – it seems right to give people a vote on it". I tend to agree.

However, you also argue that it makes a "no" vote seem much less risky. "If you vote 'yes', you won't get another vote for another 40 years – if ever. You should vote 'no' to Cameron's rubbish deal", you suggest. "If you vote 'no', you will force a new Government to negotiate a new deal and give you a new vote. A 'no' vote is much safer than a 'yes' vote".

With this last argument, I am not sure I agree. It seems rather too convoluted and confusing – and thus easily demolished. The question is whether the initial "no" vote is safe on its own merits. And that depends largely on whether there "no" campaign can deliver a credible exit plan. We have gone full circle.

I now turn to another of the crucial matters that you raise, the question of whether we need a unified exit plan, as opposed to the argument over whether we should have one at all. "Creating an exit plan that makes sense and which all reasonable people could unite around", you observe, "seems an almost insuperable task". You add, quite rightly, that: "Eurosceptic groups have been divided for years about many of the basic policy and political questions".

To address the key point, though, and to answer the question of whether we need a unified exit plan, the response has to be, most emphatically in the negative. Unlike the advocates for European political integration, we do not need to be tied to a single, monolithic plan. We can embrace and rejoice in plurality and diversity.

Whether we need a "unified plan", therefore, it the wrong question. To get to the right question, we need to go back to Sir Mike Rake, who asserted that "no-one has yet set out a credible alternative future to EU membership" – or (unspoken) a means by which we could safely arrive at that future destination.

The operative word, therefore, is not "unified", but "credible". If the "no" campaign is to offer or endorse one or any number of exit plans, they must meet one test, that of credibility.

What we cannot afford is official recognition of any plans which do not meet the credibility test. Even if the "no" campaign also endorses a plan which is credible, the enemy will attack the weakest link. It will adopt divide and conquer tactics, and afford most prominence to the weakest plan.

In your blogpost, you kindly refer to our plan, Flexcit, although you tell us that you need to study it more. You also state that, "Global rules set by the World Trade Organisation provide some guarantees against European countries discriminating against British trade", which is a tangential reference to a plan given a number of titles and descriptions, but which is generically known as the "WTO option" - or sometimes the MFN-based approach.

There are other options, and most (including the WTO option) are described and analysed in depth in Flexcit, and you would find their study rewarding. The sections convey essential knowledge, without which you will struggle to understand the arguments being put forward.

Although we assert that Flexcit should be adopted officially by the "no" campaign as a stand-alone plan, we are also quite relaxed about other plans being adopted. Our only proviso, on which our support for the official campaign is conditional, is that they should be credible. 

However, what is happening at the moment is that a bid is being made to have the "WTO option" adopted as the official credo of the "no" campaign. We also learn that Flexcit, for reasons which have not yet been openly declared, should be discarded. Furthermore, it is my understanding that you are involved in the process of selection, albeit that an official "no" campaign has yet to be selected (and can only be by the Electoral Commission).

But, if there is to be a contest of ideas, it is healthy that it should be out in the open, not least so that justice is seen to be done. There has been far too much hole-in-the-corner stuff, some of which has been a disgrace to the good name of Euroscepticism. Your facilitation of an open debate is thus doubly to be welcomed.

Now, against that background, I will aver that, in whatever name or guise it might appear, the "WTO option", as a plan, entirely lacks credibility. We (for I am not alone in this) would go so far as to suggest that the ideas being advocated by a number of prominent groups are dangerously flawed, to the extent that, if adopted by an official "no" campaign, they could be instrumental in losing us the referendum. Their destructive potential cannot be overstated.

To be absolutely clear on what is being discussed, though, we will reiterate our understanding that the "WTO option" is one where the UK leaves the EU without having negotiated any trade agreements with the EU, either within the framework of Article 50 negotiations, or on the margins. Instead, it relies entirely on the multilateral WTO agreements covering trade-related matters.

As to this option, I've already trashed it on this blog, I've taken it apart in Flexcit and I've held seminars and workshops explaining why it's a non-starter. But like the resignation of a Ukip leader, just when you think it's gone, up it comes again.

As you review the living dead on your blog, I note that you assert that: "Global rules set by the World Trade Organisation provide some guarantees against European countries discriminating against British trade", and we also note from another source the claim that: "Were the UK to leave [the EU], it would continue to have access to the EU's markets, as World Trade Organization rules prevent the EU from imposing unfair, punitive tariffs on UK exports".

Looking briefly at your comment, where you assert that the WTO provide some guarantees against European countries discriminating against British trade, one has to take note of the "some" qualifier as regards protection against discrimination. The point here, that you need to take firmly on board, is that the WTO rules only afford very limited protection against discrimination, and then only in respect of tariffs.

But, as the WTO site itself says, "by their very nature RTAs (Regional Trade Agreements – as is the EU) are discriminatory", and, under WTO rules, an amount of discrimination against third countries (and that would include the UK) is permitted. The WTO observes:
Modern RTAs, and not exclusively those linking the most developed economies, tend to go far beyond tariff-cutting exercises. They provide for increasingly complex regulations governing intra-trade (e.g. with respect to standards, safeguard provisions, customs administration, etc.) and they often also provide for a preferential regulatory framework for mutual services trade. The most sophisticated RTAs go beyond traditional trade policy mechanisms, to include regional rules on investment, competition, environment and labour.
The crunch issue here is the "preferential regulatory framework". Unless goods seeking entrance to the EU Single Market (i.e., British exports) conform to the regulations which comprise the framework, they are not permitted entry. Thus, the assertion that, if the UK left the EU, "it would continue to have access to the EU’s markets …", is simply not true. And - to spell it out - if it is not true, it is false.

With or without tariff issues being resolved – which are actually irrelevant to the access issue - the claim is false. Tariffs do not prevent access to a market. They simply impose a tax on entry. The actual barrier is regulatory conformity – what is known generally as a non-tariff barrier (NTB) or, sometimes, as technical barrier to trade (TBT).

Nevertheless, it is generally recognised that, in order to access the Single Market, goods must comply with EU rules. Conformity is the way of overcoming the NTB. But what advocates of the WTO option have not realised is that there is more to it than that – much more. Potential exporters not only have to ensure their goods conform, they must provide evidence of their so doing. This requires putting the goods through a recognised system of what is known as "conformity assessment".

We are at this point entering serious "nerd" territory. If your eyes are beginning to glaze over, all I can say is welcome to my world. It has taken me years of mind-numbing, tedious study to understand this amount of detail, and either your know it, or you don't. If you don't, you are going to make serious mistakes. And that is just what the "WTO option" advocates have done. Bear with me and you'll see why their mistakes are not so much serious as catastrophic.

And, for all that, the fundamentals are quite simple. The point about the Single Market is that border checks have been eliminated. The common rules are monitored by relevant national authorities and there is mutual recognition of standards. Thus, if you so desire, you can load a truck with grommets in Glasgow and ship them all the way to Alexandroupoli on the Turkish border, with just the occasional document check.

But the moment we leave the EU, this stops. Your grommet manufacturer may still comply with exactly the same standards, but the testing houses and the regulatory agencies are no longer recognised. The consignment has no valid paperwork. And, without it, it must be subject to border checks, visual inspection and physical testing.

What that means in practice is that the customs inspector detains your shipment and takes samples to send to an approved testing house (one for the inspector, one for the office pool, one for the stevedores and one for the lab is often the case). Your container inspection is typically about £700 and detention costs about £80 a day for the ten days or so it will take to get your results back. Add the testing fee and you're paying an extra £2,000 to deliver a container into the EU.

Apart from the costs, the delays are highly damaging. Many European industries are highly integrated, relying on components shipped from multiple countries right across Europe, working to a "just in time" regime. If even a small number of consignments are delayed, the whole system starts to snarl up.

Then, as European ports start having to deal with the unexpected burden of thousands of inspections, and a backlog of testing as a huge range of products sit at the ports awaiting results, the system will grind to a halt. It won't just slow down. It will stop. Trucks waiting to cross the Channel at Dover will be backed up the motorway all the way to London.

For animal products exported to the EU, the situation is even worse – if that is possible. Products from third countries (which is now the UK) are permitted entry only through designated border inspection posts (BIPs). Only at these can they be inspected and, if necessary, detained for testing. But, for trade between the UK and EU member states, there are no designated BIPs. Until one (or more) has been nominated and equipped trade in these products stops dead - say goodbye to a £12 billion export trade.

If the way out of the country becomes blocked, very quickly the return route gets blocked and incoming trade from the EU starts suffering. In the UK, goods from the EU are no longer delivered. Trade slows. Manufacturers which depend on imported components start struggling and then have to close. And while the naysayers talk about losing three million jobs if we leave the EU, we are looking at twice that and more – seven or eight million jobs are at stake.

At this point, you might say, how can this happen? The "WTO option" advocates will tell you that countries such as China, the United States and Australia all trade with the EU without formal trade agreements, and therefore operate under WTO rules. They don't have these problem – so why would the UK? The answer, however, is tragically simple. These countries don't rely solely on WTO rules.

What our "WTO option" advocates have done is make a very basic but fatal mistake. They're obsessed with tariffs and haven't begun to focus on non-tariff barriers. Thus, by and large, they are only looking at trade agreements dealing with tariffs - a sub-set of international agreements which are registered with the WTO. But there are many different types of agreement and many which involve trade, either directly or indirectly, which are not registered with the WTO. These, for our "WTO option" advocates, remain under the radar. To them, they are invisible.

Yet one of the most important types of trade agreement is the Mutual Recognition Agreement (MRA) on conformity assessment. This gets round the problem of border checks, as the EU will then recognise the paperwork on product testing and conformity certification. Throw in agreement on Customs cooperation – to ensure that official paperwork and systems mesh – and you are on your way to trouble-free border crossings.

China has a Mutual Recognition Agreement, signed in May 2014, the United States has one on conformity assessment which runs to 81 pages, agreed in 1999. Even Australia has one. All of these are outside the remit of the WTO but they are nonetheless trade agreements, and vital ones at that. But look then what the think-tank Global Britain - another "WTO option" advocate - is doing. "As an example", it writes, "Australia has no trade agreement with the EU ... ". It then goes on to cite an EU web page, which actually tells us:
The EU and Australia conduct their trade and economic relations under the EU-Australia Partnership Framework of October 2008. This aims, apart from cooperation on the multilateral trade system and trade in services and investment issues, to facilitate trade in industrial products between the EU and Australia by reducing technical barriers, including conformity assessment procedures.
What is the EU-Australia Partnership Framework, if not (inter alia) a trade agreement? The details are set out here, and we also see that it sets the framework for the all-important MRA on conformity assessment. One MRA is here, running to 110 pages, with an amendment here running to a further 20 pages.

There are, in fact, 82 agreements between the EU and Australia, of which 18 are bilateral. There are 65 between the EU and China, of which 13 are bilateral. Between the EU and the United States, there are 135, of which 55 are bilateral. As regards trading agreements, not only is Global Britain incorrect in its assertions, its authors apparently don't even read their own reports.

Such is the importance of agreements such as the MRAs that the UK would have no option but to seek deal with the EU, for which there is a facility within Article 50. But, the moment it sought such deals, it would no longer be relying on exclusively on WTO rules. It would be seeking bilateral agreements along the lines of the so-called "Swiss option".

One can say, unequivocally, that the UK could not survive as a trading nation by relying on the "WTO option". It would be an unmitigated disaster, and no responsible government would allow it. If, on the other hand, the official "no" campaign adopts it, the "yes" side will be counting its blessings.

Initially, we will be looking at a slow burn. In what is an arcane field, pro-EU analysts are almost as ignorant as our own. And there is always a possibility that mutual ignorance would cancel out pro- and anti-EU campaigns. But, with this ticking time bomb at the heart of the "no" campaign, it would be unwise to assume that real trade experts will not brief the opposition on the implications of the "WTO option". If that happens, we can expect the FUD to be lethal. The chances of the "no" side winning would quickly recede to nil, especially if the demolition took place in the last weeks of the campaign.

But now, a further question arises, as to why a number of prominent bodies (and one in particular) got it so wrong, and are so keen to reject Flexcit, even though it apparently delivers the answers – or so we would aver.

To reach an answer on why, almost simultaneously, most of London-based think-tankers have suddenly taken the "WTO option" to their hearts, one has to recall the shambolic IEA Brexit competition last year when €100,000 was wasted on a trivial piece of work, when all six finalists just happened to support the so-called "Swiss option", or variations thereof. 

But, with the case for the Swiss option in tatters and with the criticisms mounting, out it all goes as the think-tankers turn on a sixpence and go chasing after their latest hystérie du jour. That's €100,000 for a master plan that has had a shelf life of 14 months before being unceremoniously dumped.

The point that has to be made, therefore, is that the London claque is in the grip of a disease, identified back in 1896 by Gustave Le Bon in his book The Crowd. The disease is one of prestige, of which he writes:
The special characteristic of prestige is to prevent us seeing things as they are and to entirely paralyse our judgement. Crowds always, and individuals as a rule, stand in need of ready-made opinions on all subjects. The popularity of these opinions is independent of the measure of truth or error they contain, and is solely regulated by their prestige.
When you come to consider the arguments above, you need to be sure that you are making an objective assessment, and are not clouded by this disease which leads so many people astray. I touched on this in a recent post and conclude with the observation that there is far too much at stake to allow this to have its usual effect.

There is much more to write, and some of the points you raise on your blogpost I have not addressed. But this is neither the time or place: there are some other pressing matters I must attend to. Thus, I trust what I have written so far is helpful and I look forward to a continued dialogue. Before I finally do leave this, my own blogpost, though, I will quote your own words back at you:
To those who say these discussions should happen only in private, I strongly disagree. Much about a campaign has to remain secret but these big questions are necessarily part of public debate. A decade has been largely wasted. These big things must be confronted now in parallel to establishing a professional campaigning organisation and public discussion raises the probability of the NO campaign getting things right.
I could not agree more with those sentiments, and commend you wholeheartedly for expressing them. And I will add one sentiment of my own. I voted in the 1975 referendum and, having gone out and bought a copy of the Treaty of Rome – then to read the words "ever closer union" – voted "no". This time round, I will be fighting as well as voting, and with a determination to win. For those who do not share my commitment, I have a few words of advice.

Don't get in my way.

Yours truly,

Richard



Richard North 25/06/2015 link

EU Referendum: the information snobs

Tuesday 23 June 2015  


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In legal terms, the ultimate responsibility for the accuracy of published content rests with the publisher. Thus, where a newspaper might commission named authors to write a piece, the ultimate responsibility doesn't change.

Given the flood of rubbish that we are seeing in the media on EU issues, therefore, most often it is the newspapers rather than the author(s) that we challenge. And, over the years, we have been active in pointing out their manifest failings.

But so devastatingly poor has their output now become that, for a long time I have been arguing that the legacy media (which includes newspapers) are incapable of reporting EU issues properly. I've even gone so far as to assert that they lack the institutional architecture which would enable them to do so.

Generally, such is their dereliction that they do not even realise when they are making errors, or allowing their authors to do so. When they are told, mostly they lack the honesty to admit they are wrong. As a result, they close down the means by which they could learn from their mistakes, and thus perpetuate their own ignorance.

As a result, pointing out media errors has provided a rich source of material for this blog, and in many ways we gain a perverse satisfaction from seeing the media repeat their errors. Thus do they confirm our thesis, again and again and again.

Very recent events have done nothing at all to shake our thesis and, as time passes, we see so many examples of the institutional media incompetence that we have occasionally wondered whether it is possible to have a free and fair referendum.

Fortunately, the grip of the legacy media is slackening, and although the self-referential politico-media loop survives – with constant reinforcement from the increasingly lacklustre London think-tank circuit – the number of passive onlookers diminishes by the day. People may visit media websites but fewer and fewer people rely on them. We go elsewhere for our information.

By way of an example, the media might assail us with discussions on tariffs in respect of the EU's Single Market. But knowledgeable people (which means those who do not rely in the media for their information), know that that main barriers to trade have long ceased to be tariffs, and have become non-tariff barriers. Unlike the media, we know that they are increasing to the extent that they are far more troublesome and expensive as trade barriers than the tariffs ever were.

Among the people who know this is the growing band of Flexcit readers - responsible now for over 21,000 downloads. Yet such intelligence escapes the media writers (whether staff of guests) because Flexcit lacks the magical quality of "prestige". And only if material is imbued with this property will it gain the attention of this snobbish, dying industry.

However, this "information snobbery" goes much further than merely excluding sources because their authors come from the wrong side of the track. The "not invented here" syndrome extends to any source outside the London claque, even when the originator has unimpeachable credentials and huge global stature.

Thus we see the authors of a recent think-tank paper prefer a source of some antiquity from within their comfort zone. Even though it expresses bizarre and long-discredited ideas (except, that is, to the London claque), it takes precedence over a more recent paper from Pascal Lamy, one time European Commission Trade Commissioner and former Director General of the WTO.

Published in English by the European Centre for International Political Economy (ECIPE) in Brussels, this paper might just as well be written in Swahili as far as the London claque is concerned. As to the concepts discussed – entirely familiar to the readers of this blog and those who have worked through Flexcit - they might just as well come from another universe.

In the wider world (such as inhabited by Pascal Lamy), information is most often assessed on merit – but that doesn't apply to the London circuit. Recruiting what Nigel Farage calls "posh boys" (and girls) for your editorial board will gain you far more brownie points than mere factual information. There is no premium at all for accuracy or depth - "prestige" is everything in a grouping where ignorance is worn as a badge of honour.

Furthermore, in their closed, self-referential little world, the "posh boys" (and girls) think they own the agenda. Certainly, with ready access to an incompetent legacy media – which is also largely London-based – they have high visibility and gain in "prestige" from being published in "prestigious" journals. But it is merely an exercise in mutual coprophagia. It impresses only the denizens of the bubble.

These were the people who, almost to a man (and woman), failed to predict the outcome of the general election, when we were quietly confident that the Conservatives were going to win. Many of the self-proclaimed financial gurus in the claque missed the signs of the 2009 financial crisis coming, and still don't understand why it happened.

Nevertheless, to help them remedy their profound ignorance, it has been put to us that we should expend time and effort "educating" these people - leading them to the path of righteousness. Despite having been ignored, sneered at, and generally treated with disdain, we should now extend to them the benefit of our hard-won learning, even though most of the material is contained within Flexcit, which they can't be bothered to read.

But not for nothing did I invent the phrase "constructive ignorance". It describes a state affecting certain people, where they deliberately deprive themselves of information. Most often, they revel in their own ignorance as they limit themselves to "prestige" sources, mostly from within their own circles.

Unfortunately, rather like alcoholics who can't be treated until they admit they have a problem, these "information snobs" can't be tutored or informed until they are prepared to admit what they are. They then need to recognise that they are neither the centre of the universe, nor the fount of all knowledge and wisdom. They also have to acknowledge that other people, some of them despicable, lowly creatures, might actually know more than they do – a lot more.

Such presumption in lowly creatures, however, is most often regarded as "arrogance" (better translated as having ideas above one's station). The effect of this property is further to legitimise the exclusion of their information. If the claque can dismiss a source as "arrogant", or confer a base motivation, it absolves them from taking any notice of it at all.

By this means, we see created the Catch-22 nightmare where advocacy of a message from an "inferior" source is matched by an equal or greater determination that it should not be heard. Only if one is deferential and discrete is a work regarded favourably, except that it then remains unknown and is ignored anyway.

Confronting the nature of this problem, one is reminded of that wonderful joke, which asks how many social workers it takes to change a light bulb. The answer, contrary to expectation, is one – but the light bulb really has to want to change.

Despite the put-downs, the sneering and the studied indifference, we are still keen to spread the messages that can help win the referendum - as opposed to bolstering their progenitors' egos. The readers of this blog (and this writer) collectively represent a powerful resource, with unparalleled skills and knowledge. We are here to be used and are remarkably liberal with our information and who has access to it.

But if the "information snobs" are determined not to listen - are determined not to read anything we produce - we cannot help them. If they remain attached to their belief that they are the superior beings who have nothing to learn from us "plebs", they will continue to fester in their own ignorance. Much as we might regret it, there is nothing anyone can do. And we cannot afford to waste our time on them. Our focus has to be on those who appreciate our work, and can make best use of it.

And that, despite the presumption of the gilded circle, is actually the majority. The monopoly of information provision (and analysis) went long ago and the amateur efforts we so often see handed down from the centre merely invite derision (and occasionally despair). The "information snobs" are the losers - they're just too ignorant to know it.



Richard North 23/06/2015 link
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