31/08/2017
It's been a while since I read anything Ambrose Evans Pritchard has written but having popped over for a look at his
recent effort, one learns that Labour's "sudden embrace" of the EU customs union as a "possible end destination" is a calamitous proposition.
Says AEP, it is a destination to permanent peonage with no way out. The strategic imperative for Britain is to avoid such a trap at all costs. The only good reason to remain in it beyond Brexit, he adds, is to avert a "hard" economic border with Ireland.
But, according to the great man, there are ways to mitigate the damage to intra-island trade with digital tracking technology, mimicking the Sweden's economic border with Norway â or Mexico's border with the US, before Donald Trump started smashing the furniture.
However, in terms of the "invisible border" that the Government is so keen to install in Ireland, Mexico may be a little challenging, to judge from the picture of the El Paso truck crossing (above). In the invisibility stakes, although it is hard to put a finger on it, one has to say that there is something lacking.
The situation between Norway and Sweden is a little more promising, but then the two countries have a long-standing agreement on customs cooperation, in place before the EU came into being, while Norway being in the Single Market, via the EEA, does help to speed the flow of traffic somewhat.
What does not exist between Norway and Sweden, of course, is a customs union. But, as the Kapikule border crossing between Turkey and Bulgaria indicates â countries joined in a customs union â the existence of such an agreement does very little to assist rapid customs clearance.
But if Ambrose is a little confused about the respective roles of the Single Market and a customs union, he is by no means the only one. If he wants minimal delays at the Irish border, though, he needs to forget about customs unions. The EEA, with its provisions for a customs agreement, is about as good as it can get without there being a special deal.
Arguably, the level of customs checks between EEA members would be tolerable, to the extent that the relationship
has been explored as a model for Ireland. Even then, smuggling is still an issue between Norway and Sweden, and there are many who believe that the special conditions which prevail in Ireland would rule out this option.
If the UK Government is sincere about wanting an invisible border, therefore, the only option â as we have
suggested earlier - is to relocate it, either between the Republic and the EU, or between Northern Ireland and the rest of the UK, making the island a single administrative area for the purposes of border control.
Since either of those options is politically fraught, we can understand the UK's reluctance to table them, but the trouble is that the chosen strategy of arguing that the Irish question be folded into general discussions on trade isn't going to work either. If the Irish border is to operate under normal EU-third country trade rules, not only is it not going to be "invisible", it is going to be the hardest of hard borders.
And there lies the heart of the UK's problems in the current round of talks. Unwilling to specify a workable solution, the UK has offered a
complex of ideas which David Davis hopes will allow him to kick the can down the road when he divert talks into more profitable areas â presumably in the hope that "magical thinking" can divine a solution that has so far been hidden from sight.
The same then applies to the financial settlement, where the UK has so far refused to offer a position paper on the issue, leaving the UK stance up in the air. The third of the triumvirate, on the rights of expats, is similarly on hold, while arguments are tossed about over the role of the ECJ.
From the point of view of the EU, there seems little point in deferring discussions on these issues, allowing other matters onto the agenda if these same issues are to re-emerge at the end of the talks, still unresolved and still capable of scuppering the entire settlement. It is best in their view, to bite the bullet early and get these issues out of the way.
That the UK disagrees is neither here nor there. Readers will recall Ivan Rogers advising Theresa May to "go long" on the Article 50 notice, thereby setting the political agenda for the talks. She chose to ignore that advice, proffering vague generalities to accompany the notice, thereby ceding the initiative to the EU, where it has remained ever since. There is not point now in complaining. Mrs May had her chance and she blew it.
One can then understand the frustration, leading to
suggestions that Mrs May is looking to by-pass Michel Barnier and his team, and appeal directly to Macron and Merkel. But, as others are
quick to point out, that isn't going to work either.
It has been pointed out that the European Council's negotiating plan says the negotiations are to be conducted as "as a single package" where "individual items cannot be settled separately". So as not to undercut the position of the Union, "there will be no separate negotiations between individual Member States and the United Kingdom on matters pertaining to the withdrawal of the United Kingdom from the Union", the Council says.
On the last day of this round of talks, that presents the UK team with what the
Irish Times calls a "huge gulf" in the negotiations, and in particular on the "divorce bill" where the UK has chosen the line of arguing over the legal base for any financial obligation, spending three hours telling their counterparts that their claims are "flimsy and confected".
This is actually a win-lose tactic, as even if the UK wins the argument, it loses the political battle where the UK's acknowledgement of a financial liability is as much an article of faith as it is a legal argument. Thus, while the British negotiators are boasting of their 43-page legal response to the Commission's four-page document on the financial settlement, they have failed to impress the EU side.
Meanwhile, Mrs May has travelled to Japan to reassure its government and anxious Japanese investors that the Brexit negotiations are on track, and that relations will be undamaged - something she is
unable to do.
Defending the work done by her MinBrex overlord,
she stated: "We have been publishing a series of papers over the summer, there will be more papers to come, where we are setting out the key issues that both sides need to address, the options that we have, the ideas we have, of how to deal with those".
As an indication of her disconnect, she then claimed that, "It's the United Kingdom that has been coming forward with the ideas and with the clarity about the future".
In a curious episode, she was asked if she still believed no deal is better than a bad deal, whence she answered: "Yes, I think that is right. But if you talk about the point at which we leave the European Union, we want to ensure that at that point we do have a deal and that we have a deal that is the right deal for the UK". The implications of that Delphic comment could be that the UK is prepared to walk away with no deal, but then return to the table in time for a last-minute agreement.
Also at the last minute,
it could seem that Mrs May is expecting the UK to replicate the EU's trade deals after Brexit before recasting its own agreements in the future. The current EU-Japan talks could be basis for future UK-Japan agreement.
This would appear to indicate that the Government has abandoned the idea of going for continuity agreements, carrying over existing EU deals so that they continue to apply to the UK after Brexit. This is a more risky approach, but it has the merits of not requiring EU assent.
Some 40 free trade agreements
are being mentioned but that leaves hanging the 953 bilateral agreements concluded by the EU and the 267 multilateral agreements to which the EU is party, some of which may be affected by Brexit.
Dealing with just the 40 high-profile agreements is hardly going to make a dent in the problem. Labour MP Alison McGovern accuses ministers of focusing on "imaginary trade deals" rather than shoring up existing agreements. The UK could drop out of nine bilateral agreements between Japan and the EU, including
a vital treaty on cooperation and mutual administrative assistance in customs matters.
That, however, is the least of the EU's problems at the moment. As we predicted, the Brussels talks are grinding to a halt, a situation picked up by a number of papers including the
Independent, which has UK officials claiming that the EU mandate is "too rigid".
This sets the scene for the Tory alibi, explaining away the Government's failure to secure an early agreement. The
deadlock will all be the fault of the EU.
