EU Referendum

EU Referendum: a slow lose


In March 2014, in our completed submission for the shambolic IEA Brexit prize, we wrote in detail about "timing complications" in relation to Article 50 negotiations. If, following the referendum, we wrote, there is a strong demand for the earliest possible exit from the EU, we anticipate that the two years initially set by the Treaty for Article 50 negotiations, will be treated as a maximum.

Although the period can be extended by unanimous agreement, there will be little tolerance for prolonged talks and certainly not for a process that drags on for many years. 

We then pointed out that advocates for bilateral options rarely discuss the time needed to conclude negotiations, adding that even the relatively straightforward Greenland exit took two years to conclude. We also noted that the current round of EU-Swiss talks started in 1994 and took 16 years to complete.

Two years later, picking up on exactly the same theme is Philip Aldrick, economics editor of The Times. In a piece headed: "Fed up with the EU now? You'll be maddened by it if Britain leaves", he adds a year to the Greenland agreement (by including the time taken to bring it into force), telling us that: "Greenland took three years to sort out its trade agreement with the EU - and it only has one industry".

The point is thus made that a deal with the EU might be expected to take considerably more than two years to conclude – unless the UK "could do a Norway and join the European Economic Area for a quick fix that protects growth".

However, being a mere economics editor, Aldrick does not follow though on this. Instead, he writes: "that idea has already been mocked by David Cameron". Brains and thinking capacity are obvious in short supply in The Times, so he takes this no further, and sticks with the idea that concluding a deal with Brussels could take decades. "The simplest problem can tie Brussels up for years", he tells us.

And if Adlrick can see that point – and only two years after we had discussed it at length - it really cannot be that difficult to understand. Thus, you might surmise that the eurosceptic "aristocracy" might also be aware of this problem, and have offer a way of dealing with it.

Sadly, though, such an intellectual feat seems totally beyond them. The Bannermans, Ruth Leas and the Hananns all bleat endlessly about their fantasy trade agreements, and assure us that the EU will want to reach a deal. But not one of the motley crew ever commits to a timescale.

What we do get is optimism by the bucket-load. The EU, we are told, will want to do business with us as we have a huge trading deficit with them. They will find a way of doing a deal, we are assured.

That optimism might be justified in any one of them could point to a single instance of the EU reaching a quick deal with any party. But, for the EU, prolonged negotiations are the norm. One example is the Mexico-EU FTA: preliminary talks started in 1995 and finished on 24 November 1999, the agreement coming into force on 1 July 2000, taking nearly five years to complete.

The Colombia-Peru deal was launched in June 2007 and provisionally applied in the first trimester of 2013, also taking nearly five years. Its 2,605-page length, with 337 articles and dozens of schedules, give clues as to the complexity of the task confronting negotiators, but the UK deal will be more complex still. The Single Market acquis alone is more than 5,000 laws, running to several times the length of this deal.

A deal which was recently cited as a model by David Davis is the EU-Canadian Comprehensive Economic and Trade Agreement (CETA). Yet work on this started in June 2007 and it took until October 2013 for its key elements to be agreed, a period of just over five years. Yet this excludes agricultural and food products – of vital interest to the UK.

Another potential model is the EU-South Korea FTA. Negotiations on this started in 2006 and the final agreement entered into force on 1 July 2011. However, this was only the last stage of a process which had started in 1993. Delivery of the current 1,336-page trading agreement, alongside a broader-ranging 64-page framework agreement on political co-operation, had taken almost 18 years.

Not all negotiations are successful. The EU-India free trade negotiations were launched in 2007 and have still to come to a conclusion nine years later. It was hoped that an agreement might have been reached in 2015 or even later, but the Indian general election changed the political order and introduced new uncertainties. We are still no closer to a conclusion.

The putative EU-Mercosur agreement has an even more chequered history. Negotiations were launched in September 1999 but, despite a re-launch in May 2010 and nine further negotiation rounds, no agreement has been reached after more than ten years.

Talks floundered over European agricultural subsidies and the opening of Mercosur industries to competition from Europe. So substantial are the differences that, in June 2014, EU External Action Service Director Christian Leffler declared: "There is no sense in holding discussions if both sides are not ready".

Then there is the trade agreement with the East African Partnership, being negotiated under the aegis of the Africa Caribbean Pacific (ACP) European Union Economic Partnership Agreement (EPA) negotiations. The talks were launched in 2002 under the Cotonou Partnership Agreement (CPA) where parties agreed to conclude WTO-compatible trading arrangements, removing progressively barriers to trade between them and enhancing cooperation in all areas relevant to the CPA.

Early agreement proved elusive, leading to the signing of an interim agreement in 2007, running to 487 pages.That brought duty-free, quota-free access for some products exported to the EU but, after 12 years of negotiations, the remaining contentious issues were unresolved. The latest round of talks was concluded at the 39th session of the ACP-EU Council of Ministers in Nairobi, Kenya on 19 June 2014, without an agreement being reached.

Even more limited pacts can take many years. Negotiations for the Turkish readmission agreement – allowing for the return of illegal immigrants entering EU member state territories via Turkey – started in November 2002, but the agreement was not signed until 16 December 2013 – an interval of 11 years.

And if all that is history, right up-to-date we have an EU which has spent the last ten months since Mr Cameron's general election victory giving him the run-around over a mere four "baskets" – all in the context of a "renegotiation" where, ostensibly, the "colleagues" don't want the UK to leave the EU.

When it comes to the Article 50 negotiations, we will be up against these same 27-nation states. There will be no common position and we'll be dealing with 24 working languages. The sheer mechanics of reaching an agreement will take time. Even with the best will in the world, there are no short-cuts.

What then makes this so important, and unlike any other negotiations, is the deadline - the two-year time limit. If the UK takes the optimistic line on the assumption that everything will come out in the wash, there is the problem of what happens if an agreement is not reached by the deadline, and the "colleagues" refuse to extend the time.

With unanimity a requirement, this is no small risk. It takes but a single country to say "no" and we are cast adrift without an agreement. The result is certain disaster. And that is the risk the "aristocracy" would have us take. This is the risk which they would put in front of the electorate, with absolutely no answers, and they expect us to win the referendum? 

That, of course, is where Flexcit comes in. When it came to working out what we needed to do, we did not make arbitrary decisions. Rather, we worked out what was the least-risky route, based on the need to avoid what could be a catastrophe. And that's what the current "big leave" campaigns are prepared to sacrifice for reasons which make no sense at all.

There is no logic to this stance - and no justification whatsoever from putting the entire referendum in jeopardy, simply to support the vague nostrums of our self-appointed "aristocracy". Unless there are some serious, sensible compromises made, and the fantasy ideas on free trade agreements are abandoned, we are setting ourselves up to lose this referendum. 

If Cameron then goes early, it will be a race to the bottom, as to who puts the most effort into losing. As it stand, the "leave" campaign is putting itself ahead in the losing stakes.