Brexit: churning

23/05/2018  


In November 2016, I was writing about the lack of vision in the Brexit plans, observing that this would not go away.

The referendum, I wrote, was only a means to an end and the exit campaign, which started in the 1970s, will not be over until we are fully out of the EU. We want more than a fudged exit, leaving us enmeshed in the Union with no clear direction for the future.

Eighteen months later, we are treated to a report from Tony Blair's Institute of Global Change, under the title "Customs and Exiting the European Union".

This is an evaluation carried out by Blair's team on the various options which supposedly present us in leaving the European Union. The report, we are told, makes clear that the options available to the UK for its future trading relationship with the EU all come with compromises.

On the one hand, it says, remaining in the single market and customs union would minimise friction, minimise the impact to the UK economy and avoid a hard border in Ireland. On the other hand, it would mean the UK could not strike its own trade deals.

The report then concludes that: "All the other options come with varying levels of friction and implications for the UK's ability to make trade agreements with other countries". What characterises the report in its detail though, is that there isn't a single idea in the entire tome which, we are advised, is a one hour three minute read. 

It is a turgid reiteration of a litany of establishment voices and reports, even down to churning out the same Mini crankshaft mythology that I rebutted in February.

This small example typifies the way the Brexit "debate" has been played, with the word "churning" serving as the motif. We are bogged down in minutia, assessing a succession of narrow options for withdrawal, none of which can possibly deliver the "sunlit uplands" that was the initial promise of the leave campaign.

Even the best of the best is a "least worst" option while the rabid, "Ultra" Brexiteers can only offer a tired vision of third country trade deals that cannot begin to replace what we have already, much less lead to an economic renaissance.

Brexit has become a tired, tedious, repetitious restatement of positions that is going nowhere and, if we let the likes of Mr Blair set the agenda, it will never deliver anything that anybody wants. But then, that is the purpose – to show that there is nothing to gain from Brexit, so we might just as well slide back into the EU.

We would, of course, not expect the "remainers" – former or current – to construct a vision of a post-Brexit UK. That is something for the leavers to do – something the official leave campaign should have done but didn't, beyond the manic, Minfordian vision of unrestricted free trade.

And when we see the EU showboating with the announcement of trade talks with Australia and New Zealand – that could give it better terms than we could achieve – we have to recognise that the free-trade ambitions of the "Brexiteers" are as empty as their rhetoric.

At least, in Flexcit, the Leave Alliance had a coherent vision. But, as we've seen again and again, the establishment is determined to monopolise the debate (and thereby exclude any non-conformist opinion. As I have remarked before, we are the "invisible man" of Brexit. We simply do not exist.

As long as you are in the loop, you can produce the most unutterable tosh, with scant attention to reality and without needing to get your facts right. And the zombie media will uncritically publish it, oblivious to its errors and not making the slightest attempt to correct them.

Accuracy, attention to detail, imagination and all the other attributes which are necessary for good policy, are no longer valued in this closed society, which puts its own interests before the health and wealth of the nation. It would see Brexit descend into disaster before it will open itself to outsiders and their heresies.

Thus, day after day, characters from the same limited cast of actors, their activities peppered with the language of conflict, as they "slam" each other, or "skewer" each other's arguments, against a background of "anger", where one side "infuriates" another, leading to the inevitable "backlash" and even the occasional "rebellion", all of which leads absolutely nowhere.

The protagonist stay firmly locked in their respective bubbles, talking mainly to each other, united only in rejecting outsiders with new or different ideas. They know nothing of the detail and contribute nothing, yet demand constant attention from an equally unknowing zombie media.

This is broken politics – a system which has failed to rise to the challenge of determining a new future for the UK outside the European Union. And lacking any ideas or the ability to develop them, we see an increase in the number of people retreating to their comfort zone, refighting the referendum campaign – and making as bad a job of it the second time around.

That leaves us wondering what to do next. When you have a dog-in-the manger political system which is incapable of doing its job, yet refuses to let any one in, the only short-term option tends to be one of damage limitation – at a personal level and, if possible, on a national scale.

It is said that politicians are more amenable to change when confronted with a crisis. That was the essence of Jean Monnet's technique, preparing his solutions and then waiting for the "beneficial crisis" when he could get them accepted.

Possibly, to undo the effects of our membership of the EU and to come up with a new paradigm for the future, we too need a crisis. Maybe we need Brexit to go badly wrong before the politicians start to listen and act in a sensible way. The English psyche needs its "Dunkirk", before it will concentrate on winning.

Meanwhile, there is only so much blathering any normal person can tolerate, and only so much churning of the same-old, same-old set of factoids before one is driven quietly mad.

The only consolation is that the UK's negotiating counterparts in Brussels must be feeling much the same. Their latest contribution shows how limited an effect the customs union has in securing a frictionless border, an input which is likely to be ignored as much as their previous contributions in the Notice to Stakeholders series.

I wish it could be said that we are suffering from information fatigue, where everyone is switching off because they can't cope with the overload. But, if anything, the nation is suffering from "underload" – if that is a word – as the necessary information with which to judge our options is quite deliberately withheld from the public.

If we need a crisis to change this – and that is the only thing that can do it – then all we can say is "bring it on". At some point, the churning has to stop and new ideas have to be allowed into the debate. For us, of course, they will not be new – the ideas in Flexcit go back to 2014 - but there is nothing so "new" as something the zombie media has discovered all for itself.

In an unusual burst of optimism, Pete at least concedes: "We may there yet". It would be nice, though, to know where "there" actually is.



Richard North 23/05/2018 link

Brexit: our incapable politicians

13/05/2018  


Watching our politicians going around in circles over our future customs arrangements with the EU, writes Booker in this week's column, one is reminded, in a very different sense, of that famous observation attributed to Isaac Newton: that he felt like a boy on the seashore, diverting himself with the odd "smoother pebble or prettier shell than ordinary, while the great ocean of truth lay all undiscovered before me".

With barely six weeks to go to that last crucial European Council before Brexit talks conclude in October, our politicians divert themselves with endless chatter about "customs" and "tariffs", while the real obstacle to any continued "frictionless" trade with the EU still lies virtually unnoticed before them.

This is something scarcely recognised, it seems, by the majority of people. But the traditional customs process is one of tax collecting. Not for nothing were customs officers known as "revenue" men, their specific duties being the recovery of dues levied on imported goods.

But, as with almost all payments to government these days, the bulk of these are now made electronically. Regular shippers have accounts with HMRC, they assess their own liabilities and submit their payments periodically. In more sophisticated system – such as the Swiss border system - individuals can even use their smartphones to assess and pay import duties.

The same goes for Rules of Origin and other revenue issues. None of these require border administration or checks. Evaders can be picked up by cameras and mobile patrols. Specially-equipped vans can set up in lay-bys or other stopping points, to act as mobile checkpoints. Firms are audited at their normal places of business, in exactly the same way that they are for VAT and other taxes.

The real problems, says Booker (as do I), which affect Ireland and all our EU borders when we leave, lies with all those other "border controls" which our departure will make inevitable.

Goods from the UK, in its newly acquired status of a "third country", become subject to a vast range of "non-tariff barriers" involving inspections, checking of loads and delays – which have nothing to do with customs – that threaten to put at risk much of our trade with our largest export market, now worth £270?billion a year.

Rightly, Booker reminds us that these barriers could overnight bring to a halt those 14,000 trucks now waved through between Dover and Calais every day, and a great deal else.

When I first raised this as a possibility, back in 2012 and subsequently, I was accused by some of exaggeration. But, as time has passed and others have joined in the chorus of warnings, it has become more or less accepted that border delays are a serious issue.

For all the torrent of media chatter, there are still no answers to the massive problems posed by the exports of our medicines, chemicals and aviation industries, when we leave the EU agencies whose regulations make those exports legally possible. These alone are worth £100?billion a year to the UK economy and the effect of Brexit on earnings is (at present) incalculable.

As for our food exports, products or animal origin and those of plant origin, have to be submitted for time-consuming inspections, respectively to Border Inspection Posts or Designated Ports of Entry. At least, when the new regulations kick in, we will only have to deal with Border Control Posts.

Even with (or despite) the recent select committee, there is still a comprehensive failure to understand that, short of full participation in the Single Market, these non-tariff barriers will apply to our exports come what may.

The prattle about "equivalence" and "mutual recognition" is just that. The full regimen of the EU's "official controls" will apply once we are a third country. There is no example of any country in the world, with third country status, which is exempt from these controls.

And the delays involved, says Booker, would bring an end to much more than just our export trade in Welsh lamb. They will also affect the 30 percent of food on our supermarket shelves currently imported from the EU.

The point here is that, under WTO rules non-discrimination rules, we would have to impose the same strict border checks on imports from the EU as we currently do on those from non-EU countries. And, as a Lords Committee warned last week, "the UK does not have the staff, the IT systems or the physical infrastructure to meet that increased demand. Any resulting delays could choke the UK's ports".

On the other hand, Rees Mogg argues that, if we're negotiating a free trade agreement, we can continue with existing provisions for ten years.

Such specificity, however, is an invention although WTO rules do allow exemptions under exceptional circumstances. These, though, would will probably have to take the form of waivers, which have to be directed at specific problems and extend for no longer than absolutely necessary.

Doubtless, there would be some relief as WTO rules could not be enforced if they compelled a nation to allow its people to starve. But it is unlikely that disruption to the international order will not have a political price, as other nations seek to exploit the situation to their own advantage.

Yet, the greater problem is that the infrastructure in the EU Member States is by no means ready. Therefore, what applies to the UK in terms of its inability to handle the increased checks will apply in spades when our products are exported. This, says Booker, is the real problem we face, which not one of the fantasy "customs" schemes being squabbled over by ministers could begin to solve.

As we are constantly reminded, nothing is agreed until everything is agreed. And, as prime minister Leo Varadkar put it last week, if meaningful progress on Brexit is not achieved at the June European Council, "it is difficult to see how we will be able to come to an agreement by October at all".

Yet, with just six weeks to go, Booker concludes, most of our politicians still seem incapable of recognising even that the problem exists.

Just how the politicians – as well as the media – can be brought to face reality is not easy to fathom. The EU law is clear enough and, although complicated, it is not beyond the wit of those responsible to read it and understand what it is saying. And, to make it even easier, the Commission has published its "Notice to Stakeholders" series.

Currently, the only thing standing between us and the prospect of certain disaster is a 21-month "transition" period, but that doesn't seem at all certain, given Mrs May's prevarication on the Irish border question.

Possibly. Even at this late stage, there is the possibility of a fudge, conceded only because the EU Member States themselves need more time to prepare for Brexit.

What really hasn't dawned on anybody though is that, after the June European Council, there isn't – as Booker pointed out – another meeting until October, when the negotiations are expected to be concluded. Any fudge in June might extend only to keeping the talks alive but, as a "senior Irish government source" says, come October, "We still need the backstop".

After the end of June, though, Brussels starts winding down and it closes down almost completely during August. If you wanted to mount a coup to take over the EU, then would be the time to do it.

September and the first week of October is a difficult time for UK politics, as the party conferences tend to freeze political positions, making external negotiations difficult.

Therefore, we might already be too late to secure a settlement on the current basis. We will need to look for something more radical if there is to be any rational solution to Brexit. We need those MPs and an EEA resolution more than anyone can possibly imagine.



Richard North 13/05/2018 link

Brexit: where the fudge goes to die

08/05/2018  


One is increasingly irritated by the media focus on the ongoing Westminster/Whitehall end of the Brexit drama. There is an almost total failure to understand that what happens in these tiny metro village is of extraordinarily little importance in the grander scheme of things.

Tellingly, though, we have a report from the Guardian telling us that our revered prime minister, Theresa May, is facing renewed cross-party pressure to accept membership of the EEA or risk defeat in the Commons.

This, of course, assumes that the House of Lords vote on Tuesday night isn't a damp squib and that the amendment to the Brexit Bill is carried, requiring the government to enter negotiations on our continued membership of the EEA. Only then would it get to the Commons for the drama to start all over again.

Should the amendment get that far, the hope is that there are enough MPs prepared to back Mrs May into a corner. But even in that unlikely event, there are procedural moves that government can make which would put the matter back on the table.

That might become crucial ploy as we hear that the ERG with its claimed 60 members, is holding a mass meeting in parliament on Tuesday, concerned that that Britain will never fully leave the EU.

But, confronted with a full-blown rebellion, Mrs May can still "do a John Major" and engineer a motion of no confidence. Even with the fixed-term parliament law, this can bring the government down.

If the motion is upheld, there must be attempts made to form an alternative government, but if a new government is not confirmed by the Commons within 14 days, that precipitates another general election. Tory MPs will know this and they also know that, following the local elections, Corbyn would be in with a chance.

Tories being Tories, the chances are that they will make a lot of noise but, when push comes to shove, the tribe comes first. Past form suggests they will support party above country and back away from forcing Mrs May down the EEA route.

Meanwhile, officials have been tasked with the impossible - find a deal on Mrs May's "preferred option" of a customs partnership. This is supposed to be acceptable to Brexiters and remainers in her cabinet, as well as MPs and EU negotiators. Unicorns are optional.

As an indication of the Herculean problems that Mrs May faces, we also learn that her policy paper, the one that was rejected by the "War Cabinet" last week, has been withdrawn for "further work". It is not going to be discussed at this week's regular meeting.

Downing Street is saying: "It was agreed on Wednesday that more work needed to be done to flesh out the general principles agreed – no hard border and as frictionless trade as possible". They "realise the urgency" but refer to Greg Clark's Marr interview. "It is a crucial question to get right", he said.

Moving away from the foetid atmosphere of inner London, we get a sense of the bigger picture from Dublin, where the Irish government is concerned that many MPs and peers still believe that Dublin will back down at the last minute on the hard border.

The Guardian has talked to an Irish parliamentarian who visited the Westminster village recently. He should not have been had he been aware what a closed society it harbours, but he was surprised by how confident MPs were that there could be a frictionless border between north and south without, what the paper terms, "a customs union".

The reference to "customs union" may simply be a reflection of how much the well has been poisoned, with even Irish MPs confused by the constant references to this unnecessary distraction.

This Irish MP, however, has definitely sussed out the situation – far better than our media seem to have been able. "Both May's proposals for maximum facilitation and a customs partnership have been rejected by [the EU negotiator] Michel Barnier as magical thinking", he said.

We now move to a "source close to the taoiseach, Leo Varadkar". This unnamed person is also on the ball, telling the paper: "Westminster is mistaken if it thinks the Irish government will move. And it has no understanding of Leo Varadkar. He is someone who will do the right thing for Ireland. They think we'll get to the last point of the negotiations – and the border will be the last thing – and we'll move, and we won't".

Our anonymous source insists that the EU would defend Irish interests as fiercely as Dublin – despite DUP party leader, Arlene Foster, declaring that the EU was being unrealistic. We also have the UK's former ambassador to Washington, Sir Christopher Meyer, weighing in, accusing the EU of putting the Good Friday agreement at stake by "weaponizing" the border issue.

These two noisemakers are typical of those cluttering the debate, and there are many more, not least the buffoon Johnson who is playing his usual game of undermining his own prime minister, testing the water again to see how far he can go before he is finally fired.

Nevertheless, the EU remains consistent – and unmoved. It has just issued a background briefing for Member States in anticipation of the General Affairs Council Meeting in Brussels next Monday, which gives no hostages to fortune.

In its four pages, it is made abundantly clear that there is no agreement yet on the Irish question, with the reminder that nothing is agreed until everything is agreed.

Looking at the partially agreed draft agreement again, one is reminded that the substantive requirements were set out in the Northern Ireland protocol, with the key issue being the establishment of a common regulatory area. The essence of this is the maintenance of the Single Market acquis on both sides of the border, with provision for tariff-free movement of goods which mirrors the provisions in the EEA agreement.

As regards a customs union, the one relevant reference in the draft agreement refers to maintaining alignment with its rules, "unless or until an alternative arrangement implementing another scenario is agreed". The detail in the protocol is left to the annexes, which have yet to be fleshed out, leaving a huge measure of uncertainty. 

If one assumes that the full provisions of the customs union apply, that would require goods entering from outside Northern Ireland (whether from the rest of the UK or from non-EU countries) to carry exactly the same tariffs that the goods would attract had they been exported directly to an EU Member State.

That would raise the added complication of tariffs having to be calculated and collected on the movement of goods from the mainland UK to Northern Ireland – unless, of course, the UK as a whole adopts the EU's common external tariff, and matches its preferential rates agreed with other third countries.

Such issues, and including the monitoring of VAT payments, are major issues to the EU. We have seen from the experience of the "carousel fraud" on VAT how easily minor loopholes in the export control system can amount to tens of billions in losses. And, more recently, the UK was subject to a claim by the EU for €2.7 billion in unpaid customs duty, after falling foul of systematic undervaluation fraud on goods imported from China.

On this basis, there is no question of the EU backing away from its insistence on the implementation of its backstop plan, as represented by the protocol and its yet incomplete annexes. This is not just a matter of solidarity with Ireland. The credibility of the entire EU system is at stake.

This leaves us exactly in the position that we were at the beginning of the negotiations. No amount of ducking and diving, palace coups and parliamentary plotting is going to change this. Brexit is where Westminster meets reality.

With that, Mr Juncker could well emulate President Truman with a sign on his desk, only this might state: "the fudge stops here". Chocolate-coated or not, Brussels is the place fudge goes to die.



Richard North 08/05/2018 link

Brexit: unravelling

28/04/2018  


I think it's reasonable to say that Thursday's debate in the Commons on the customs union did not enhance our understanding of what is necessary to ensure a smooth Brexit process, with a minimum of economic damage. The best thing that could be said of it, in my view, is that it was an unwelcome distraction.

At this stage of the proceedings, we should already have decided on the shape of our post-exit settlement and the focus now should be on practical needs. Businesses and individuals should, at the moment, be flooded with information and advice from government, telling them what to expect, and what they need to do to prepare for Brexit day and beyond.

It is this, it seems, that is the missing element. And in its absence, there is nothing to focus on – hence the fragmentation of the debate. We see different factions with their own preoccupations, at one extreme to plotters who would block Brexit altogether and, at the other, the "ultras" who would be happy to see us ejected without further ado.

As for the middle – there is precious little there, and no voice represented in the media or politics, that seeks a pragmatic, long-term solution and attempts to deal with the present issues, such as the Irish question, which must be resolved if we are to make a success of leaving.

For many months, though, there have been those of us who have patiently sought to engineer a way through the morass, initially hoping that there were those in government and parliament who would appreciate and benefit from good advice.

Virtually, the only substantive thing parliament as an institution has been able to offer since the referendum is Thursday's debate, where MP after MP paraded their ignorance of the issues and an almost total inability to engage with the real world. In so doing, the institution simply confirmed something which we have known for some time – that it is no longer fit for purpose.

As for the government, it comes as no surprise that DExEU, charged with finding a solution to the Irish border question, has been relying on technical solutions yet failed to approach a single external company to obtain ideas of how this technology would work.

This is the same government which, according to The Sun, blew £680,00 in payments to paid consultancy firm McKinsey & Company to help prepare the UK's Brexit customs proposals that were dismissed out of hand by Brussels as "magical thinking".

Most telling of all, though, is the report in the Guardian that reports officials at the port of Rotterdam, the largest in Europe, to be "stalling" on investments in Brexit infrastructure.

While there is concern that post-Brexit controls could lead to massive queues of trucks, Mark Dijk, the port's head of external affairs, is cited by the newspaper saying that the level of the investment required by the port and its ferry companies meant certainty was needed.

The actual level of investment will depend on the nature of the agreement between the EU and the UK which, as Dijk says, makes for "a very difficult decision". The port authority doesn't know what is going to happen and the investments don't come cheap. Dijk adds: " we do not know if they are possible".

Roel van't Veld, the Dutch ministry of finance's Brexit and customs adviser, says that even with the signing of a free trade agreement between the EU and the UK, an extra 750 new Dutch customs officers will be needed, the first 150 of whom have just started their training, with selection proceeding for the second batch.

But van't Veld, with a stronger grip on reality than we're seeing in any British officials, tells us that his government has started collecting statistics and "they are rather frightening".

"Trading between Southend and Rotterdam will be as trading between Rotterdam and Morocco, and people have to realise that", he says. "We have a huge number of companies that have no idea what trading outside the EU means. We have 35,000 companies trading with the UK who have no knowledge of customs. They are not known in our system".

Even with "maximum facilitation", a proposal by the UK for trusted trader schemes to reduce the necessary paperwork, van't Veld says there would always be companies outside such arrangements which would probably slow everyone else down at the ports.

At least in Rotterdam, there is some room for expansion, although there are concerns that the necessary land would not be available around at least one of the four ferry terminals servicing the UK. However, van't Veld suggests that Dover faces greater issues. "I saw in the UK they have larger problems with the infrastructure", he says. "The port of Dover, which has got no space to grow, and other ports are pleading for public investment to facilitate this growth".

This is reflected in concerns expressed by Bart Jan Koopman of the Dutch shippers and exporters' organisation, Evofenedex. He had told Dutch MPs: "Our concern is on the British side. Their preparations are far from the level of the Dutch. This underestimation also applies to other EU countries. That can really cause chaos".

Also pitching in is a senior official involved in Brexit negotiations, who warns that a customs fudge could fall foul of WTO rules. This is something I wrote in Flexcit four years ago but now we have this man saying that if the UK makes a preferential arrangement with a third country, outside the framework of a formal preferential trade agreement, any concessions have to be applied it worldwide under the most favoured nation rule.

Adding to the grief, we see Michel Barnier dismissing suggestions that the EU "desperately" needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today.

But this, he says, is not what we hear from market participants, and it is not the analysis that we have made ourselves. Apart from anything else, the ECB states that the risk to the euro area economy appears limited".

And while Mrs May has asked for mechanisms to continue the exchange of services in each other's markets, "based on the UK and EU maintaining the same regulatory outcomes over time", with chilling finality, Barnier states: "this will not work".

I can perfectly see the UK's logic and interest, he says, in pleading for a system of "mutual recognition" and "reciprocal regulatory equivalence" – functions brought about by the Single Market. But the UK has decided to withdraw from the Union. It will move away from EU rules and will not accept common EU supervision and enforcement tools.

Thus, Barnier says, the UK needs to understand that the EU cannot accept mutual market access without the common safeguards that underpin it. This is not something that any country in the world would accept.

Reminding the UK of another reality, he also says that certainty about the transition period will only come once the whole Withdrawal Agreement has been agreed and ratified. In the meantime, "both market participants and public authorities should hope for the best, but prepare for the worst".

As long as the ratification has not taken place, we need to be ready in case of a "no deal, no transition" scenario, he adds. "This is our collective responsibility". Market participants and public authorities must continue to prepare for all scenarios. No one should underestimate the risk of disagreement.

One can now see the reason for the reticence of the Rotterdam officials, although nothing of this seems to have percolated the studied complacency of Brexit Secretary, David Davis.

Where the EU's chief negotiator is warning of the possibility of a "no deal", the worry in the UK is that that Davis's air of stupidity may not be an act.

But, with that, any belief that the government has a grip on the Brexit process is fast evaporating, even amongst its closest allies. The only certainty on which we can rely is the endless capacity for government incompetence, while hopes of a reasonable settlement unravel before our very eyes.



Richard North 28/04/2018 link

Brexit: things can only get worse

13/04/2018  


Martin Kettle writes in the Guardian about the need to revise our views about Theresa May and her imminent political demise. One of the reasons he offers is her "relative successes" on Brexit. The deal with Brussels on the price of departure, he says, has now been followed by a deal on the transition. Almost all Tory MPs have accepted the compromises.

"None of this", Kettle adds, "was certain a few months ago" and, he says, "It could all come apart in the autumn". There again, he asserts, "it begins to look more possible than before that May's Brexit strategy could make it over the line". And, if it does, "she will be able to say she got it right".

This is not, of course, an informed view. The Brexit talks started with three Phase One issues: the money; the fate of the expats and the Irish border question. Of those three, only the first two have been resolved. The third, and the most intractable, hasn't even been dented.

As regards the transition, this represents a craven surrender on the part of the prime minister who, having rejected the Efta/EEA option on diverse grounds, has accepted something which is inestimably worse, with no end point in which we can have any confidence.

Either or both of these should have been enough to destroy the May premiership. But Mrs May has been fortunate on two counts. Firstly, although she has lost virtually the confidence of her party (and the entire nation), there is no sign of a credible replacement and none of the pretenders, in a terminally split party, can muster enough support to depose her.

Then, when it comes to the second count, that refers to the whole of the Brexit process. This has been sullied by the inability of the legacy media accurately (or at all) to analyse and report on Mrs May's Brexit failures. And because the media doesn't understand quite how badly she is performing and the peril of our current situation, she is getting a far easier ride than she deserves.

On Tuesday, for instance, we had Mrs May wrongly suggest that she could entertain bilateral negotiations with Denmark and come to a reciprocal agreement over fishing rights – despite the Commission's Notice to Stakeholders pointing out that the UK can only negotiate with the Commission.

Then, yesterday, we covered another May delusion. Having closed down any options we might have for influencing EU law through the mechanisms of the EEA, she is floating that canard that we can somehow compensate for that by negotiating continued membership of a number of EU agencies where the UK has major economic interests.

Despite the Commission having rapidly declared that this is a non-starter, we are joined by the CBI and then Tom Enders of Airbus, perpetrating the myth that this provides a solution to the UK's loss of influence. And the legacy media, having lost any ability to distinguish fact from fiction, laps it all up and reports the stupidity with not a hint of criticism.

Elsewhere yesterday, we had a turgid script from the BBC, as the lame Jorn Madslien, rejoicing under the title "business reporter", tried to hang a story on the premise that: "Carmakers fear rising trade barriers after Brexit".

For sure, he manages to work in the "escalating trade dispute between the US and its main trading partners, the EU and China", which Madslien says "looms large, after US President Donald Trump's recent threat to tax cars imported into the world's largest market".

But, as to the far more important problem of non-tariff barriers, all Madslien can manage is a quote from the European Automobile Manufacturers Association (ACEA), which has it that: "Any changes to the deep economic and regulatory integration between the EU and the UK will have an adverse impact on automobile manufacturers with operations in the EU and/or the UK, as well as on the European economy in general".

Yet, in November 2017 I was writing about the consequences of leaving the Single Market. "When this happens", I wrote, "the type approvals issued by the VCA, the UK Vehicle Certification Authority, will either no longer hold validity or not be able to be extended".

We are not, therefore, addressing in abstract terms, "any changes to the deep economic and regulatory integration", but the certainty of adverse effects brought about directly by Mrs May's precipitous and unthinking decision to withdraw from the single market.

When they might have been minimal, to the point of being barely noticeable, she has turned Brexit into a major crisis for carmakers. Yet, from the BBC, the prime minister gets a free pass. The real problems building for the car industry go unrecognised, with no possibility of any blame being attached to something that has not been discussed.

Thus, while some pundits are quick to invoke "project fear", the reality is that we are seeing endless examples of the media understating they case, at times working with fleckless trade associations and at other time just uncritically reporting their mindless effluvia.

But while the media have managed to hold the line so far, it isn't the first time that I've felt impelled to remark that reality is on hold. But, as I have also observed, while it can be deferred, it cannot be denied. You can only kick those cans so far down the road, before you stumble upon an immovable pile.

The point is that there is no easy (or any) way of circumventing Mrs May's decision to leave the Single Market, with or without a strategy. The Irish border impasse is a direct consequence of that decision, and many of the problems confronting industry also stem from it.

Thus, contrary to Martin Kettle's assertion, there is no possibility that her strategy "could make it over the line". But the great lacuna here is the idea that Mrs May even has a strategy. She doesn't. Through the period since her Lancaster House speech, she has been reacting to – but not solving – the problems that she herself has created. And her main response has been to kick the cans down the road.

However, I have also pointed out that the transition period is set to make Brexit day a non-event. A form of words will be found to ensure that the UK stays within the remit of all existing external deals concluded by the EU, which means that we have a further 21 month (at the very least) of the status quo.

Since this "vassal state" scenario has been accepted by the Tories – and not challenged by the opposition parties – the focus now returns to the Irish question and, even here, we expect some form of fudge that gets us through to 29 March 2019. The debate now moves on to the inter-regnum, from then until 1 January 2021, when a free trade agreement is supposed to take effect.

It is only then that the wreckage of Mrs May's endeavours will become so obvious that even our venal legacy media will be forced to notice it. There will be no hiding the fact that a free trade agreement is very little different from a "no deal" scenario. Industry will still be crucified, even if it takes a little longer, causing economic damage that simply cannot be concealed.

With that, the Tories seem to have a problem. They can either depose Mrs May soon after Brexit day – disguised as an honourable retirement after "successfully" piloting us through Brexit – or they can suffer the consequences of her mistakes, and lose the 2022 general election.

People then won't be thinking rationally (any more than they are now). They will be in a mood to punish the Tories, not only for botching Brexit, but for attempting to conceal what they have done. In that case, Corbyn's unsuitability for office could be his greatest asset. Voters will be sending a message, the effect of which is to say that, however bad Corbyn might be, "you're worse".

The only hope the Tories have is that, after deposing Mrs May in 2019, the new leader changes tack and goes for the Efta/EEA option – and has the sense to get advice on how best to approach Efta and then to manage the EEA negotiations. From this side of Brexit, though, that looks extremely improbable. We seem locked into the antithesis of the Blair slogan, where things can only get worse.



Richard North 13/04/2018 link

Brexit: fainting with damn praise

05/04/2018  


Exercising steely self-discipline, I am leaving the government's handling of the Salisbury poisoning and returning to our normal beat.

There are, in fact, multiple issues demanding attention, but the one of greatest immediate interest is yesterday's report from the House of Commons Committee on Exiting the European Union. This is entitled, "The future UK-EU relationship", produced under the chairmanship of Hilary Benn. It should be noted also that Jacob Rees-Mogg is a member of this committee.

The subject matters is an exploration of six possible relationships (or combinations). Listed are Canada's Deep and Comprehensive Free Trade Agreement (CETA), the Ukraine Association Agreement, the Swiss agreements, the EEA Agreement with Norway, the Customs Union with Turkey and, finally, what amounts to a non-relationship, the WTO option.

In producing its report, the committee is doing something we did in Flexcit more than four years ago and has been done by sundry pundits before and since. It is quite remarkable that the committee thus felt it necessary to repeat the exercise, and even more remarkable that there is any need for it.

Nonetheless, such has been the noise level and the amount of misinformation around the subject that such a report is indeed a necessary corrective – albeit that the recent track record of select committees on exploring and reporting of Brexit-related issues has been less than stellar.

As to whether the committee is even capable of such an undertaking is debatable, to the extent that one is reminded of Samuel Johnson's comment after being told by Boswell that he had been at a meeting of the people called Quakers, where he had heard a woman preach. Johnson had replied: "Sir, a woman's preaching is like a dog's walking on his hind legs. It is not done well; but you are surprised to find it done at all".

With that, we see the committee setting fifteen "key tests" by which any deal agreed should be judged. These are quite lengthy, with just the summary running over the page, but including certain predictable issues.

First and foremost, the committee wants the Irish border to remain open, with no physical infrastructure or any related checks and controls. It wants to maintain existing levels of cross-border co-operation on crime and terrorism, retaining involvement with Europol and the European Arrest Warrant and continuing to participate in the EU’s information-sharing systems. It then wants institutional and decision-making frameworks which enable the UK fully to participate in foreign and security co-operation.

As one might expect, it wants there to be no tariffs on trade between the UK and the trade in goods must continue to be conducted with no additional border rules or rules of origin checks "that would delay the delivery of perishable or time-sensitive deliveries or impede the operation of cross-border supply chains". Furthermore, there must be no additional costs to businesses that trade in goods or services. However, the UK must seek to maintain convergence with EU regulations in all relevant areas in order to maximise access to European markets.

Next, UK providers of financial and broadcasting services must be able to continue to sell their products into EU markets as at present, UK providers of financial and other services should be able to retain automatically, or with minimal additional administration, their rights of establishment in the EU, and vice versa, where possible on the basis of mutual recognition of regulatory standards.

There must be no impediments to the free flow of data between the UK and the EU; any new immigration arrangements set up between the UK and the EU must not act as an impediment to the movement of workers providing services across borders or to the recognition of their qualifications and their right to practise.

The committees also wants the UK to continue participation in the European Medicines Agency, the European Aviation Safety Agency, the European Chemicals Agency and in other agencies where there is a benefit to continuing co-operation.

The UK must also continue to participate in the Horizon 2020 programme, the Erasmus+ scheme, the Galileo project and in other space and research programmes in order to support the work of our world-class academic institutions and the importance of cultural and educational exchange between the UK and the EU 27.

And then, we are told, the UK must continue to participate in all relevant air safety agreements and the Open Skies Agreement to ensure no disruption to the existing level of direct flights. Finally, the UK Government must ensure maximum access to European markets while agreeing reciprocal access to waters and a fairer allocation of fishing opportunities for the UK fishing industry.

Exploring all these issues, however, one has to conclude that they are entirely unrealistic. There is no chance at all that the EU would agree to all these things, short of us actually remaining in the EU. This is seriously in unicorn grooming territory.

The saving grace to the report, though is that the committee recommends that, if these "key tests" are not met, and the negotiations on a "deep and special partnership" are, therefore, not successful, Efta/EEA membership remains an alternative and would have the advantage of continuity of access for UK services.

What, effectively, the committee is saying is that the UK should pursue the Efta/EEA option – even though it does not come out any say so, outright.

Nevertheless, this was enough to divide the committee, with Rees-Mogg and other "ultras" on the committee voted against the report. They were defeated by ten votes to six, leading to Mogg complaining that: "The High Priests of Remain on the select committee voted through another report seeking to thwart Brexit by stealth".

This brought a sharp rebuke from fellow committee member, Stephen Kinnock, expressing himself "baffled" as to why Mogg should respond thus, when there was "absolutely nothing in this report advocating that the UK should remain in the EU". His comments, said Kinnock, "are divisive and puerile".

And welcome though this all is, the committee have fudged the issue on Article 112 of the EEA Agreement, wrongly arguing only that it "could provide a route for the UK to operate a temporary emergency brake on free movement". This undoubtedly reflects the poor standard of witness giving evidence to the committee and the inability of MPs to avail themselves of other sources.

Rather than use these provisions, they would prefer the more permanent way of dealing with freedom of movement issues by amending Article 28, notwithstanding that this does not provide for a unilateral resolution.

Doubtless unwittingly, through this the MPs underline an essential discontinuity in their own report, when they argue that "the EEA option is available off-the-shelf and could be negotiated relatively quickly". This short sentence really does show that, at heart, they don't understand what the EEA Agreement is all about, comprising as it does, what amount to three individually negotiated and tailored agreements with the three Efta states.

With the UK's own specific requirements – not least agency participation and the inclusion of provisions on agriculture and fishing – inclusion of the UK in the agreement as an Efta state would require extensive negotiation which would not be a quick process, and more so if freedom of movement was to be tackled by way of treaty change.

Another lacuna, and a major one, is that while recognising that it is dealing with the Efta/EEA option, the committee barely considers what problems might arise should the UK decide that it wants to rejoin Efta. There is a brief passage only from one witness about Norway's view of our joining. Dangerously, one might take from the report that the committee sees rejoining a done deal.

This and other weaknesses in the report (too numerous to deal with in one blogpost) will make it eminently easy for the government to ignore it. It was surprising to see the report done, but it would have been better it if it had been done well. We cannot, therefore, even damn it with faint praise. 

But then, noting MPs' tender sensitivities, it is perhaps better if we do not praise the report at all. After all, we do not want the poor dears fainting with damn praise.



Richard North 05/04/2018 link

Brexit: party political lines

26/02/2018  


We had Keir Starmer on the Andrew Marr show yesterday, firming up on the Labour Party's position on a customs union. All we have to do is wait for Corbyn's speech today and it will be locked in as party policy.

That said, we have to confront the idea that the man (Starmer) is either terminally stupid, or he believes us all to be, so much so that we will accept without complaint his assertion that a customs union will avoid a hard border in Ireland.

Surely to God by now, we should have politicians who are sufficiently knowledgeable about the basics? Surely they must know that a customs union will have no effect on freeing up trade on the Irish border once we leave the EU (and end the transition period). To ensure free movement of goods (and some services) we must retain, via the EEA, participation in the Single Market.

Needless to say, despite the rank stupidity of the assertion, the idle Marr let it pass without challenge. Thus he misses, as he so often does, the key point and lets another politician off the hook. Only the BBC – apart from the rest of the media – could employ someone so utterly useless.

On the same day, though, we also had Hilary Benn, chair of the Brexit Committee tweeting about Efta, giving the firm impression that believes this to be a customs union. Thus, amongst the MPs and media, we have the building evidence that we are caught in the grip of an epidemic of stupidity.

Trying to assess why many ostensibly intelligent people manage to get it so wrong, so consistently, has been a never-ending labour on this blog and we're probably no closer to an answer than we've ever been.

But one there is one thing that does begin to stand out. These politicians and their media handmaidens don't know the basics because they don't need to know. The details are of no interest to them as they are playing (and reporting) an entirely different game.

Mr Starmer, Mr Benn, Mr Marr, Mr Corbyn and all the rest are really only interested in party politics, domestic politics. And here, in the notion of a customs union is the "clear blue water" that the pundits so much treasure and the parties squabble over.

Mrs May has pinned her policy on leaving the customs union so Mr Corbyn's party has settled on supporting a customs union. One might suppose that if the Conservatives took a different view, whatever it was, Labour would oppose that, just for the sake of it.

As it stands, in true party political style, David Davis accuses Mr Corbyn of acting like a "snake oil" salesman, making a move that "would shackle Britain to Brussels in a flagrant betrayal of Labour’s Election manifesto a year ago".

From the Labour side, with statesman-like dignity, Frank Field declared that staying in an EU customs union after the end of a transition phase in 2020 would "rat on the people's decision to leave".

Where these childish games falls apart though is that there are substantive issues at state, and the arguments are not being played out on a national stage. There are players who aren't in the least interested in UK domestic politics. The final arbiters are in Brussels and they won't allow the outcome to be fudged. between the parties as they so often are when just UK interests are at stake.

The simple truth is that Labour has no more got a solution to the Irish border question than have Mrs May's Conservatives. The warring parties have a bone to fight over, but the issue lies unresolved.

But, while they play their sterile game, Brussels is stirring and, according to the Financial Times, they are cooking up something that none of our idle politicians are going to like.

What this amounts to in the jargon of the game is that the Commission plans to "operationalise" the agreement on Ireland brokered in December and published in the Joint Report. This will created a legal structure which will form part of the final withdrawal agreement.

It was in this that the parties stated that the United Kingdom remained committed to protecting North-South cooperation and to "its guarantee of avoiding a hard border". But, the following paragraph (ironically, paragraph 50) made execution of that promise effectively impossible by refusing to allow any new regulatory barriers between the UK mainland and Northern Ireland.

This was the crunch. Either the UK as a whole (including Northern Ireland) stuck to the Single Market or Northern Ireland and the Republic remained and the border moved to the Irish Sea. Practically speaking, there are no other alternatives.

Conscious of this, Commission officials have come up with the only solution possible, elegant enough in its own terms. They have simply omitted from the new draft, which we will see on Wednesday, any reference to creating new regulatory barriers across the Irish Sea.

This scenario, according to the FT, would keep Northern Ireland entirely within the grip of Brussels and, to the likely discomfort of the DUP, offers no other options. This puts the DUP on the line and, by inference, puts Mrs May's Conservatives on notice.

And, from current performance, the DUP is not going to give up easily. Nigel Dodds, the DUP's Westminster leader, on Sunday, redefined his party's requirements, stating that he wanted an open border with the Irish Republic "but we're also very clear that there can be no border between Northern Ireland and the rest of the United Kingdom economically or politically". He added: "I think in terms of a customs union it is very clear... that you do not require membership of the customs union to preserve a frictionless border in Ireland".

For all the party political posturing, therefore, neither Labour nor the Conservatives are any further forward. But, while they play their games, they are being quietly but nonetheless dramatically undermined. They are about to have imposed on them a situation which they can neither tolerate nor resolve, but have nothing to put in its place.

Particularly, this makes today's speech by Mr Corbyn a complete irrelevance and, by the time Mrs May gets to deliver hers on Friday, it will have already have been consigned to history. Devoid of any workable ideas on Northern Ireland, and chained to her absurd "ambitious managed divergence", she will be speaking into a political vacuum.

In the meantime, the FT quotes a UK government official. "It is no surprise that the EU will continue to produce documents that push their negotiating position", he says. "However it is important they [the Commission] accurately reflect the [December deal] and include the full scope of the agreement, rather than simply the bits which best suit one side".

This is countered by an EU negotiator who says, "Next week is an important moment. We can't just listen to the grumbling, if we are to push the negotiation forward it is important to put a text on the table". He adds: "It is dangerous, but it is the only way. Otherwise it will grind to a halt. We need to kick-start the negotiations".

That might suggest that there is room for manoeuvre but the reality is that there is precious little the Commission can concede. Throughout the entire negotiations, we have seen the UK government cede the initiative time and again, only for the EU negotiators to pick up the pieces. And with Mrs May and her cabinet so short of ideas, this is happening yet again.

But, for all that, the Conservatives will be the last to recognise their plight. In addition to Kier Starmer, Marr also interviewed Liam Fox who displayed an extraordinary insouciance. He sees the EU as being "frightened" of a "less regulated Britain", arguing that "we can diverge as much we like".

These people simply are not on the same planet as the rest of us. Trapped in their Westminster bubbles, they haven't the faintest idea of how the rest of the nation sees them, much less the rest of the world, and are totally incapable of relating to anything that approaches reality.

Sadly, we have to put up with this time-wasting sham of party-political conflicts, before the grown-ups intervene to decide what is going to happen.



Richard North 26/02/2018 link

Brexit: writing the suicide note for the talks

23/02/2018  


The fact that, twenty months after the referendum, the cabinet is meeting in secret conclave to decide on the government's Brexit strategy tells its own tale. It speaks of the staggering inadequacy of the political process that it has not been able to deal with this vital policy at an earlier stage, and is unable even to address the component issues in a coherent way.

However, it is not entirely the fault of the eleven inadequates closeted at Chequers that they have been unable, so far, to come to an agreement as to how the UK should approach the vexed question of the UK's post-Brexit relationship with the EU.

Much rests on the autocratic behaviour of Mrs May in the early part of last year. Fortified by her monumental ignorance, and that of her favoured advisor, Nick Timothy, this has boxed the UK into a corner, leaving us short of options and without the flexibility we need to respond to a complex and deteriorating situation.

In many ways, Mrs May is now confronted with an unsolvable dilemma. The practical, political and legal hurdles, separately and combined, have conspired to create a perfect storm of unsolvability (if that is actually a word) which would defeat a constitutional or political genius and surely prove beyond the ken of our current prime minister, who is self-evidently neither.

The question then must not be what manner of deeds are required to cut a Gordian knot of such dimensions as to make the original look little more than a snag in a running line. If Brexit means Brexit, as a newly-appointed prime minister was keen to assure us, then unsolvable means unsolvable.

We are way past anything that will get Mrs May's "war cabinet" off the hook on which it is impaled. The task now is to put the creature out of its misery as fast and humanely as possible, and to minimise the damage and mess as it thrashes around in its ungainly and violent death-throes.

Politically, this is the embodiment of the age-old joke, occasioned when certain tourists asked for directions to Dublin, only to be told, "I wouldn't start from here". There is no way, from her current political location, that Mrs May can make it to her destination – whatever that might be.

Oddly enough, though, within the germ of the Dublin joke, there could just lie a solution. For, even if you have no idea of where you are, it is still possible to navigate to an intended position and arrive safety, where you intended to be.

This would rely on a technique used by mariners crossing the Atlantic from Europe, before the invention of the sextant made dead reckoning a reliable proposition. Thus, a captain intent on reaching, say, New York, would normally expect to make landfall some distance from is object, and then would have to sail along the coast until he reached the port.

The problem was that, on sighting land in an unexplored and unfamiliar territory, the navigator had no means of knowing which way to turn – north or south – for the final leg of the journey. And to turn the wrong way would take him away from his destination, adding days or even weeks to the trip.

The ingenious solution to this was to avoid steering directly for the destination. Instead, the captain would deliberately introduce an error, steering well south of his destination. Then, when he made landfall, although he would have no idea of his position, he would know to turn starboard and sail up the coast to get to his destination.

In political terms, the concept of introducing a known error might still take one to a destination where one doesn't want to be. But the merit of this stratagem is that it is possible from this new position to find a way to safety.

It strikes me, therefore, that this is what Mrs May must do. From where she currently stands, she has no hope of getting to where she wants to be, but she can possibly reposition herself, with better prospects of making it to safe harbour from there.

Quite possibly, that is exactly what Mrs May is doing, in accepting virtually unchanged the draconian "vassal state" transition proposals on offer from the EU. They take her to a place none of us want to be, but at least they buy her sufficient time for her to broker other solutions to get us out of the mess she has made for herself.

There is the option, of course, that once she has made landfall, Mrs May can simply abandon ship and leave the crew and cargo to its own devices. That would have her taking us through to her "implementation period" – as she insists on calling it – and then either stepping down from the leadership, or calling another general election.

Strangely enough, the weaker her electoral standing, the stronger she actually is. Rebellious Tory backbenchers can be full of fire and fury when their government has a big majority but, when the margin is slender and the opposition looks poised to win the next election, the MPs invariably rediscover the advantages of obedience, and put the party first.

If Mrs May can rely on that dynamic, then she can expect the likes of Mr Mogg and his ERG "officers" to huff and puff. But, when the chips are down, they will not trigger a general election that will hand the keys of No 10 to Mr Corbyn. As they did with the final Maastricht vote, they will cave in and back their leader.

Her game plan, therefore, will not necessarily have to extend to finding a solution to the intractable problems of Brexit, but of riding the coming storm over the transition period, perhaps making enough small concessions to soothe the fevered brows of the Moggites, sufficient for them to claim some sort of a victory.

As for the EU, what we saw in December was the "colleagues" taking fright at the prospect of Mrs May being deposed, thus giving her enough wriggle room to make it look as if she had made progress in the talks. At the time, I argued that the UK had not progressed to phase two but simply to phase one-plus, with the "plus" taking in the transition period.

This is where we still are, with the timetable for agreeing the terms set for the European Council on 22 March. And given that the UK has conceded so many points already, all we need it some carefully crafted dramatics over some last-minute glitches, and we are home and dry.

But that is to reckon without the Irish border problem, for which there are no credible solutions on offer. Yet, what has not properly sunk in is that, if the "vassal state" transition is agreed, that amounts to Armageddon delayed. Cross border trade will continue as before. There will be no queues and no disruption. Brexit, in media terms, will be a non-event.

From then on, all Mrs May has to do is make a starboard turn and sail up the coast. No matter how far off course she is, she will get there eventually.

The greatest danger, however, is that the cabinet puts itself so far out on a limb that – if we continue our maritime analogy – by the time her ship arrives, she and her crew are refused permission to land. And, from the reports emerging from the Chequers conclave, that seems to be precisely what might be about to happen.

Sources close to the Brexiteers lead by foreign secretary Johnson, we are told, are claiming victory, with one saying: "Divergence has won the day". Such is the confusion of terms, though, that former Remainers, led by Chancellor Philip Hammond, are also said to have secured a key objective, getting Mrs May to agree to ask Brussels for mutual recognition on standards for manufactured goods.

As reported, this doesn't make sense, as it is the "ultras" who have been demanding mutual recognition of standards. Nonetheless, it seems that is to be the position Mrs May will ask the Cabinet to adopt next week, which will then form the basis of the trading relationship we are seeking with Brussels.

The Cabinet has fixated on the ability of the UK "to set its own rules and regulations", allowing an "ambitious managed divergence" with the EU over time. The EU will be expected to agree with the UK "common regulatory goals", which have acquired the jargon label of "equivalence of outcomes". 

 Any such provision, though, is a throwback to the early days of the EU when directives set the overall objectives of regulation in each sector, but left Member States the discretion to achieve those objectives in their own ways. In the main, however, this approach has largely been overtaken by more prescriptive, detailed regulation, settling on harmonisation, rather than the approximation of law.

The Commission is not going to be sympathetic to the idea of allowing the UK more flexibility in product regulation than is allowed to Member States. In fact, this is exactly what the EU has said it would not allow – a situation where a state is able to improve its position by leaving the EU, while continuing to benefit from market access.

It is inconceivable that the EU will accept mutual recognition of standards and any attempt by the UK to get this accepted is doomed to failure, as has been made plain in the last few days. Equally, divergence – managed or otherwise – is a non-starter.

If the UK insists on pursuing this line, Mrs May will be writing the suicide note for the Brexit talks and her own political epitaph.



Richard North 23/02/2018 link

Brexit: all at sea on Efta

08/02/2018  


That leaked impact report has made another appearance. It hasn't been published in the ordinary sense, but it's been shown to MPs in a confidential reading room. Some of them, clearly, are able to read and enough of them were able to take notes, sufficient to give the Guardian a treat.

A no-deal Brexit, the paper is thus able to tell us, would blow an £80 billion hole in the public finances, based on the government having to borrow £120 billion more over the next 15 years, mitigated by £40 billion of gains from leaving the EU.

As always, such figures need to be taken with a pinch of salt. A full-blown kamikaze Brexit would doubtless cost the exchequer considerably more than an average of just over £5 billion year. The full £80 billion could be soaked up in the very first year.

For the rest, the Guardian "has learned" that the north-east would face a 16 percent hit to regional economic growth and the West Midlands would suffer a loss of 13 percent. And overall, a hard Brexit would mean an overall 21 percent rise in retail prices, with a 17 percent uplift in food and drink costs.

The report in fact looks at just three scenarios – the only three that really matter: the Single Market (Efta/EEA); the Free Trade Agreement; and the "no deal". MPs who have seen the documents said they showed every region of the UK would be affected negatively whatever the outcome.

Northern Ireland would be the third worst affected, with a fall of 12 percent in a no deal scenario, and that is without factoring in the impact of a hard border.

London comes out best with a loss of one percent if we stay in the Single Market, two percent in a free trade deal and 3.5 percent in the event of no deal. The South West is judged to do as well under the first two scenarios but drops to five percent if there is no deal.

But, given that the evidence is stacking up that the Single Market presents the most favourable Brexit outcome, it is unsurprising that a number of MPs are pushing for this option The only surprise is that it's taken so long for them to get organised.

Yesterday, they organised a Westminster Hall debate on the European Free Trade Association, while the Brexit select committee took evidence on what it called the "Norway option", a coincidence which did not stop committee member and Efta/EEA advocate, Stephen Kinnock, from taking part in the debate.

The option even got an airing in the "ultras'" holy temple, the Telegraph, in an article written by debate leader Stephen Hammond.

Accusing hard Brexit camp of having begun a project fear of their own against "Efta" (when did they ever stop?), he got enough of the points roughly correct to make a tolerable, if clumsy case for the Efta/EEA option. If only he and his supporters had been this far down the road in June 2016, we might by now be getting somewhere.

However, even now, MP supporters seemed on the whole to be unable to make up their minds whether it is just Efta membership they are after, or the full monty of the Efta/EEA option. Even Hammond fell into the trap, closing his speech with the peroration:
I recognise that EFTA is not a universal panacea, nor does it have all the benefits of membership of the single market and the customs union, but I believe, and I hope this whole House believes, that Britain’s negotiating position and its economic position post-Brexit will be improved by joining Efta.
We then got Paul Masterton, Conservative MP for East Renfrewshire, telling us that:
Efta guarantees to people who voted leave that we are implementing their democratic will to leave the European Union. If anything, it finds that sweet spot in reflecting that the EU referendum result, although decisive, was not overwhelming. We will be in the single market but not members of the EU. We will leave the EU sensibly - even conservatively -if we recognise that trade is only one part of our integrated and co-operative relationship that needs to be unpicked.
However, James Cartlidge, Conservative member for South Suffolk, managed to get it right. "In Efta-EEA", he said, "we stay in the single market. For everyone, there would have to be a control on unsustainable migration. In Efta-EEA, we have the control that should migration surge again, Article 112 and, importantly, Article 113, which guarantees our right to negotiate free movement, would apply and have applied in practice in the real world".

Even though the EEA was mentioned 55 times in the Westminster Hall debate, and the Single Market 30 times, the weakest links wrecked the debate. They allowed the "duty minister", Parliamentary Under-Secretary of State Robin Walker to refer almost exclusively to Efta and ignore the substantive points on the EEA.

The government, he said, did not plan to seek membership of this organisation for four key reasons, the first of which was that it did not of itself deliver any market access to the EU. Those calling for us to join Efta, he added, need to be more specific about whether they mean joining the EEA, or attempting to copy the Swiss agreement, or negotiating a different bespoke agreement.

This lack of specificity had given the minister the opportunity he needed to fudge the issue although, as to the EEA, he declared that Mrs May "has been clear" that participation in the EEA agreement would not work for the UK because it would not deliver on the British people's desire to have more direct control over the decisions that affect their daily lives.

It would also, he said, mean accepting the continued free movement of people, which both the Conservative and Labour manifestos pledged to end at the last election – thus totally ignoring the point made by Stephen Hammond that, "under protocol 15 and articles 112 and 113 of the EEA agreement, EFTA states can suspend free movement of people …".

Even then, Hammond could not get it right, referring to the suspension on a "reciprocal basis", not that it really mattered. The minister had ignored the point anyway.

As with the minister, most of the media today is ignoring the Efta/EEA option – and especially the freedom of movement issue. If the option has few friends in parliament, it seems to have even fewer in the media, most of which is focusing on the "secret report" and the economic effects of Brexit.

None seems to be aware – or have made the point - that the effects have (or will be) largely suspended if the transition period proposals go through – leaving us with something inestimably worse than the Efta/EEA option that they are so diligently ignoring.

Just supposing MPs could get their acts together, though, advocates of the option have not thought past it to define a Brexit end state. All thinking seems to stop with the three main scenarios, with nothing devoted to anything outside these very narrow parameters. For all that Flexcit is now getting on for five years old, it is still way ahead of the field.

Most MPs are not past the Janet and John stage of fully understanding the nature of Efta and its relationship with the EEA, so much so that ministers are able to skirt the issue. Parliament, when it "hunts as a pack" can be a powerful institution, but if MPs are all over the place, parading their ignorance, they get nowhere.

Yesterday, they had their chance – limited thought it was. And they blew it, as they almost always do.



Richard North 08/02/2018 link

Happy New Year

01/01/2018  


Beyond the personal level, it is extraordinarily difficult to wish anyone a Happy New Year when we confront the growing disaster that is Brexit.

Even my predilection for getting things wrong didn't work. Last year, I went out of my way to predict a disaster in the expectation that our brilliant politicians and diplomats would sweep all before them and come up with a scintillating plans, bringing home a shiny new Brexit of which everyone could be thoroughly proud.

Instead of that, we got a year of progress from Mrs May, which – in Orwellian terms – means precisely the opposite.

According to the prime minister's New Year message, in January last, she "set out our objectives for the Brexit negotiations, and in the months since we have pursued them with steady purpose".

"In March", she then tells us, "we triggered Article 50, putting the decision of the British people into action. In December we reached agreement on the first phase of negotiations with our EU partners" and "Next year we will move on to the vital issues of trade and security, and I am determined that we will keep up our progress in 2018".

The fatuity of this message is way beyond comment. Having destroyed any chance of a rational Brexit, with her precipitate and unthinking commitment to leaving the Single Market, and then having totally failed to get the measure of the negotiations, our prime minister is now asserting that "most people just want the government to get on and deliver a good Brexit, and that's exactly what we are doing".

In actuality, she's doing nothing of the sort. She has not only kicked the can down the road but – as we observed earlier – the whole cannery. With no agreement on any of the issues on the table – which themselves only comprise a fraction of the outstanding issues – all Mrs May has managed to do is buy time in the most expensive way possible, effectively extending our EU membership to the end of 2020 with her "vassal state" transition.

With the deluded Mrs May also committed to a "free trade agreement", which she believes will be agreed by the end of March 2019, we face a period of unprecedented uncertainty. The UK, notionally at least, will be pursuing a bespoke agreement for Brexit while the EU negotiators insist on a basic arrangement that will only afford minimal market access.

Before we even get to this point, though, there are the residual – and as yet unresolved – phase one issues to deal with, with the Irish border looming high on the agenda. Ireland still has the potential to scupper the talks, except that the 21-month "vassal state" transition also kicks border problems down the road.

Basically, then, the coming twelve months will be the year of delusion. UK officials will go through the charade of meaningless negotiations to agree by March a transition process that Mrs May seems unwilling to contest. We will then move on to discussion of a "framework relationship" and end up in October with a draft Article 50 agreement that must go through the "ratification" process.

By the end of this year, we will be looking forward to March 2019, when we will be able to greet our "Brexit in name only", and the hard work really starts. At the end of the year, though, nothing will have been resolved so the fiction can be maintained that we are making progress.

Between then and now we have for our entertainment a self-important but unknowing media which will continue to misreport developments, having already failed consistently to offer any sensible or informed analysis.

Thus, not only does the coming year offer us the delusions of our political masters, it promises endless tedium as we suffer the cacophony of untutored journalists and jaded pundits whose main contribution to the debate is to add to the noise.

There is no point in relying on anything from that quarter. The experience of 2011" told us that the commentariat can readily subscribe to a collective delusion. At the time, the fiction that Mr Cameron had blocked an EU treaty was never seriously challenged and survives to this day in the media record.

As of now, the media have largely bought into the Kool Aid, taking the government claims of us having moved to phase two at face value, despite the fact that we are still enmeshed in phase one issues and have no solutions to the Irish question – while the EU has shunted talks on our future relationship to April, making them dependent on resolving the outstanding phase one issues (and some that have not even been discussed).

Perhaps of even greater importance, the media is almost completely silent on the EU's "vassal state" transition proposals. It is still churning out stories which ignore their effect, while focusing on domestic politics which have very little relevance to the conduct of the Brexit negotiations.

Filtering the media noise in order to detect a coherent signal, therefore, will be one of our main tasks for the coming year, even if the eventual outcome may have more in common with confectionary than politics. We are looking to the making of a fudge of historic proportions.

That suggests that our hardest task will be trying to predict the unpredictable. If the actors were behaving rationally, one might be able to work out what was happening as the narrative unfolded. But when the situation is basically unresolvable, where the incompetents handling our negotiations go is anyone's guess.

I can see this becoming a theme for the year – watching our government making an unspeakable mess of Brexit with a sense of wonderment and despair, turned into a journey of discovery. Never in the field of human history, a famous man might have said, has so much depended on so few, to the detriment of so many – with such little expectation of success.

Yet, despite all that, I will wish all my readers a Happy New Year. As we watch the political train wreck unfold, there is no reason why we should not pursue personal happiness and fulfilment for ourselves, our nearest and dearest and our friends. We should not allow the incompetence of our political leaders to prevent us from doing that.

And once again, I must express my thanks to our readers, our supporters and our generous donors, who have not only helped me keep my head above water, but also kept Pete in the game. But for you, we would not be here.



Richard North 01/01/2018 link

Brexit: reality on hold

10/12/2017  


Reviewing the recent responses to the "Friday deal", it is quite evident that the media and the bulk of the pundits have been taken in by the theatre. The result is that there is scarcely anything in the media worth reading or listening to that hasn't either missed the point or got it plain wrong.

Nor does one have to be an out-and-out cynic to suggest that, when it comes to politicians, we should watch their hands, not their lips. Simply a little healthy scepticism is all one need ask for.

As regards the theatre, the dawn press conference after a night of make-or-break negotiations is such a cliché that one is surprised that the actors didn't get a slow handclap from the hastily assembled audience.

Where we need to be looking her, of course, is the small print. But, after several readings of the Joint Report, one can only conclude that the authors must have been using hallucinogenic drugs.

Anything of this nature that lacks essential coherence and so challenges reality cannot possibly succeed as a negotiating draft. The very lack of coherence and the inbuilt contradictions will serve to drag it down. New crises are simply a matter of timing.

In fact, the crucial document is not the Joint Report but the Commission communication. This sets out in detail the immediate negotiating parameters, pending the Council guidelines.

Next week we will see the EU's negotiating guidelines proper. Then we will begin to see the mountain facing us, and how little we have actually progressed. And it is at this point, we will realise that the UK government is not even close to a deal.

If, as expected, the focus of the next round of talks is on the transition period, then the first crisis will not be long in coming. The terms the EU is dictating amount to full conformity with the entire EU acquis - including new laws that take effect - and subordination to the ECJ.

This, in effect, will mean an extension of UK membership for the period, but without the representation . It will be the worst of all possible worlds – "pay, no say" with a vengeance. At the end of the period, we will be no further forward for having kicked the can down the road.

All the old problems attendant on our leaving the Single Market will still be there waiting for us, and the EU will have little incentive to do anything other than offer an extension.

For the moment, though, we have to go through the tedious charade of self-congratulation and misdirection, while almost everyone ignores the obvious – the crucial issue highlighted by Booker in today's column (no paywall). Simply, he says, it was in no one's interests, and especially not the EU's interest, that the talks should collapse, not least because no one on either side is yet remotely prepared for what will eventually happen when the UK leaves the Single Market.

And, when push comes to shove, it was all very well for Theresa May to say there will be no "hard border" in Ireland. But how telling, Booker adds, that she gave no hint as to how this miracle could be achieved. What we saw on Friday, therefore, was Mrs May not just them "kicking the can down the road, but the whole cannery".

And, for all that, we are still left with precisely those same problems which became inevitable when Mrs May announced in January that we were to leave not just the Single Market but also the European Economic Area (EEA). Remaining in the EEA was always the only practical way in which we could have left the EU but preserved those "frictionless" borders she said she wanted.

How telling that also on Friday morning we read of the MPs in the Public Accounts Committee slamming our "reckless" Government for its "wishful thinking" in failing to have made any proper preparations, at Dover or anywhere else, for some of the immense practical problems which will arise when border controls have to be erected on both sides of the Channel.

But for the dawn theatricals in Brussels, we might have seen the media make more of the report, especially as its findings indicated that at least some MPs (pace the PAC) are beginning to appreciate the extent of the disaster awaiting us.

Government departments, the PAC said, are assuming that the risks to managing the border will not change immediately when the UK leaves the EU, and that border checks will therefore be the same after March 2019 as they were before.

They are therefore not planning for any major new physical infrastructure at the border by March 2019, and do not expect all new or updated IT systems to be ready by that date. Departments say they are planning for a no-deal scenario, but do not expect there to be many changes whatever the position in March 2019.

The Committee went on to say that they were very concerned that the Government's assumptions are risky and do not allow for changes in behaviours by companies trading across the border or people crossing it. Particularly, it says, in the event of a no-deal scenario, the border could be exposed to risks on day one of the UK’s departure.

Officials, we were told, are relying too much on there being a transitional period in order to have the time to develop the new systems and infrastructure that may be required. The current negotiations bring significant uncertainty, but the new Border Planning Group (the Group) and government departments need to step up and be prepared for the possibility of a no-deal scenario and for the costs of all potential options.

It is worrying, the PAC then concluded, that we were told that the Group could not plan for any challenges around the Irish border and the 300 crossing points, as it needed the political process to go further before it could fully understand the issue.

This being the case, all that happened on Friday was that both sides bought extra time to prepare for the massive disruptions to trade which Mrs May's decision to leave the EEA has still in due course made unavoidable.

What is particularly weird about this, says Booker, is that we have never been given any proper explanation for that decision. We were told that remaining in the EEA would have been tantamount to remaining in the EU, when in fact it would have freed us from 15,000 of the EU's 20,000 laws, only having to obey the 5,000 relating to trade.

Yes, by wonderful irony, that is precisely what we are intending to do anyway, under less advantageous terms than would have been available. This rather makes every objection we were offered to our remaining in the EEA a caricature of the truth, clearly originating from those who had never looked intelligently or honestly at the evidence.

Instead of which we are left still chasing nothing more than that chimera of a fondly imagined but wholly undefined trade deal, which can only in some form or other give us "hard borders" and damagingly less access to our largest single export market than we have now.

And all this arose, says Booker, because Mrs May and her advisers never did their homework properly, or had any idea just what terrifyingly intractable problems this would be landing us with. If only all this could have been openly debated in that desperately trivialised referendum campaign we might not be where we are now.

The trouble is, though, we are where we are. There's little that can be done in this system to overcome high-level ignorance where issues of huge importance are decided by tiny cabals, isolated from the real world and therefore remote from the normal human interchanges which inform lesser mortals.

Interestingly, I have been reading the autobiography of Albert Speer, Hitler's architect and latterly his minister of munitions. An early member of the Führer's inner circle, he observed that the higher the ranking of Party officials, the greater their isolation and the less their knowledge of ordinary events. He also noted of some in high office that "their arrogance and conceit about their own abilities is boundless".

Much of what went on at high level in Germany during the Hitler period is special to it, but some of what Speer recounts is easily identifiable as the Dunning-Kruger effect. This is a disease of government, one of timeless effect, from the Bourbons and before, to Mrs May and her kitchen cabinet.

We talk about this in more colloquial terms as the "bubble effect" but any analogy has its limitations. There is not one bubble but many, and some are multi-faceted, with bubbles inside bubbles inside more bubbles. Not one but many transparent walls can separate the inner denizens from the real world.

In one such bubble lives our Prime Minister, taking advice and counsel from a desperately limited circle, otherwise cut off from the rest of humanity. And when those people are imbued with boundless "arrogance and conceit about their own abilities" (as is all too evident with Nick Timothy, just from the evidence of his Telegraph column), there is nothing they can learn and nothing they can be told.

The essence of the "bubble" though, is that it filters the flow of information, so that ordinary and obvious things never penetrate and low-ranking or despised sources are easily eliminated.

The media, of course, has its own bubbles, so constructed as to have filters which allow the passage of information to those in power, and between themselves, but never from those who would disturb their primary industry – the process of creating narratives. Thus the system is custom-made to foster and disseminate error.

It is unsurprising, therefore, that our leaders get things wrong and even less so that the media so often projects a joint narrative which completely misrepresents reality.

In these dark days, when so much is at stake and there is so little clarity, perhaps the only thing that will break through the multiple tiers of bubbles is the real world test of whether things keep working. To that effect, the PAC report offered rare insight – even if it was less than complete. How ironic it was that its message, issued on the same day as Mrs May's theatre, was drowned out by it.

However, facts don't go away because they are ignored, any more than does reality. Soon enough, they reassert themselves – largely because they must. Sadly, their arrival is often accompanied by turmoil and pain.

That, it seems, is the destination for Brexit. The noise level is far too high for any rational argument to survive, and is set to get higher. But, while the perpetual fudge can stave off the effects of reality for a long, long time, eventually it comes. Reality may be on hold, but it will arrive.



Richard North 10/12/2017 link

Brexit: media noise

07/12/2017  


This is just the sort of fracas the legacy media love: an environment stiff with personalities, replete with conflict and intrigue, dirty-dealing, bad faith, claim and counter-claim.

It is also the point when sensible analysts pack their bags and go home, waiting for the noise level to subside. There is little of value which can be discerned when a media frenzy takes hold and so many different voices are cluttering the terrain.

The central point – widely ignored by all – is that Mrs May's cover story (based on the adoption of "regulatory alignment") has been well and truly blown. Thus, by any rational measure, she has nowhere to go with the talks in Brussels as she will not be able to offer anything which meets the EU's requirements.

However, one senses that the "colleagues" are anxious to have the talks run on into phase two, primarily because a failure of the negotiations right now would fatally weaken the UK prime minister to the point where she could be deposed. And the current sentiment in Brussels is, "better the devil you know". Bad as she is, her replacement could be inestimably worse.

For the rest, yesterday was the day when the entire world woke to the conclusion that has been troubling us for many months – that them up there simply don't know what they're doing. Any illusion of competence, either from May or David Davis, has been well and truly shattered.

Bluntly, though, I don't know why anyone should be at all surprised. That Davis's boast of having prepared zillions of impact analyses turned out to be so much hot air is entirely in character. We observed back in September that there was something of the Walter Mitty in the man, and that his word was not to be relied upon. The only good thing we can say about him is that he is consistent.

As for Mrs May, her truculent performance at PMQs more than adequately illustrated her lack of grasp of the issues, as she was tasked about how she would bring about a solution to the Irish question.

"That is the whole point of the second phase of the negotiations", she said, "because we aim to deliver this as part of our overall trade deal between the United Kingdom and the European Union, and we can only talk about that when we get into phase two".

The point, of course – as the "colleagues" have been at pains to point out - is that solution to the Irish border must be unique, and cannot be rolled into the general trade agreement. It is Mrs May's failure to understand this (together with almost every Conservative still capable of breathing – hard enough though that might be for some) that has been partially responsible for the mess she is in.

That notwithstanding, Michel Barnier has been told that the UK government is working on another text which they hope to submit to Brussels, in lieu of the last one. Barnier, for his part, has given Mrs May until Friday to craft a plausible fudge, failing which there will be no December approval to move to phase two.

As a sign that the "colleagues" are really rooting for the stricken May, though, we hear Leo Varadkar airily dismiss the looming deadline, remarking that, if the issue fails to make the cut and it isn't possible to move to phase two next week, "well then we can pick it up in the new year".

Although the first formal European Council of the new year is not until March, there is talk of an emergency session in either January or February, allowing Mrs May to cobble something together over the Christmas break, when hostilities are traditionally at their lowest ebb.

For all the talk of Brussels being "difficult", therefore, all the signs are that the key players on the EU scene are bending over backwards to help. Had they wished to pile on the pressure, they could have stuck to last Monday's deadline and then pencilled in March for the next review, leaving Mrs May to the tender embrace of her "Ultras" and the Corbynista – not that the latter should trouble her much.

For want of any stated explanation for this sudden outcrop of European solidarity, one can only surmise that, if the talks had dramatically failed this week, by the time March can along, there would be a different prime minister sitting in the UK slot in Brussels. Since this could range from such persons as the odious Rees-Mogg to Jeremy Corbyn (asked by the Queen to form a government), one can understand why the "colleagues" want to hedge their bets.

But that alone isn't going to solve any problems, and it isn't even going to buy time. Even a January review would only leave nine months for substantive talks – assuming that the EU still wants six months to ratify an agreement. However, given the EU's new-found "caring, sharing" demeanour, M. Barnier could perhaps be instructed to revert to the device of stopping the clock.

For all that, though, charity and the EU rarely go hand in hand without there being a price. Even if M. Barnier is being overtly considerate, that doesn't change the fundamentals. Particularly on Ireland, if there is to be an invisible land border, and the UK is not prepared to adopt the full rigour of the Single Market acquis and all that goes with it, then there will have to be a "wet" border.

Here, the expectation is of a border in the Irish Sea, with controls on goods passing between Northern Ireland and the rest of the UK. But, if that is not to be, then the Irish Republic will be in the frame. To prevent the land border being a "back door" into the Single Market, the other Member States will have to apply controls on goods exported from Ireland to the rest of the EU.

Since this hasn't been mentioned recently – out in the open, at any rate – one wonders if Varadkar is fully aware of what could be in store for him. Essentially, he will have to make the choice of dumping the UK and setting up a hard border to check goods coming over from Northern Ireland, or the EU will dump Ireland, setting up border controls on its exports.

Leo Varadkar, therefore, has more at stake in this game than any other player, and given that Ireland has for some time been seeking to reduce its economic reliance on the UK, the chances are that, forced to make a choice, he will "opt for Europe" rather than throw in his lot with a newly independent UK.

The bizarre thing about all this, though, is that barely anyone is seeing the situation with any clarity. We get, for instance, Bombardier saying that it would oppose any move that would effectively shift customs controls to the middle of the Irish Sea. It gives as its reason the fact that it does relatively little trade with the Republic and most of its imported components come from the UK.

However, given the need for it to gain EU approval for its design and manufacturing operations before it can export to EU Member States, it may find that closer ties with the EU are in fact more important than easy trading links with the UK.

It is here, of course, that Mr Davis's non-existent impact assessments would have come in useful, but it is also the case that either the parliamentary select committee system, the media, or even academia, could have worked out for themselves what various exit options entail.

After all, if a pensioner sitting in his daughter's former bedroom in a converted mill on the outskirts of unfashionable Bradford can work it out using a steam-powered personal computer, then I'm sure that these better-resourced outfits should have no problems.

But that brings us back to where we started. These outfits no longer exist to make sense of the world and report what they see (and understand). Primarily, they are noisemakers. And currently, they are in their element.

But when the noise abates, the issues will still be there. And so will we, listening for the signals that are currently being drowned out.



Richard North 07/12/2017 link

Brexit: creative ambiguity

06/12/2017  


No doubt European Commission officials who watched the "urgent questions " on Monday's abortive Brexit negotiations will have come away confused and perplexed. For, if Mr Davis's definition of "regulatory alignment" is one on which Her Majesty's Government now intends to rely, there is no basis of an EU-UK agreement on cross-border trade, much less any rapprochement on the Irish question.

For the purposes of settling a form of words that could form the basis of a commitment to the Irish Government on the border arrangements with Northern Ireland, the phrase "regulatory alignment" has considerable merit, particularly in terms of providing for the "creative ambiguity" that Mrs May sought in creating a text that meant all things to all people.

Here, this term seems at the last minute to have replaced the original Irish demand for "no regulatory divergence", a phrase with little inbuilt ambiguity which would require the regulatory regimes between Ireland and Northern to be kept fully harmonised. The use of the alternative "regulatory alignment" allows for the possibility of "parallel" regimes, without having specifically to state this as a necessary outcome.

The favourable response of both Jean-Claude Juncker and Donald Tusk to the Anglo-Irish agreement which contained this phrase evidently attests to their willingness to live with ambiguity, regarding it as "sufficient unto the day" to allow the Brexit negotiations to progress to phase two. The details could always be thrashed out at a later date.

A particular merit of this approach is that, in its most severe construction, "regulatory alignment" can mean rigorous harmonisation not only of rules and regulations, but also of the entire regulatory regime. That will necessarily include surveillance and enforcement and all the other trappings which would go with a system which seeks to emulate the structure and extent of the Single Market.

On the other hand, used in looser environments, the same term can mean merely an approximation of laws and systems, sufficiently close to allow for different regulatory authorities to rely on mutual recognition. It would not require systems to be irrevocably harmonised.

Precisely that ambiguity would allow a Conservative government to present to its own supporters and the public at large a vision of a relaxed trading system. Some divergence would be permitted and the UK would have the flexibility to approve its own laws. But, for the purposes of the Brexit negotiations, the Commission could be assured that only the strictest application of the term would be considered.

If that was the plan – and it is the only possible way the Commission could have approved it – then it yesterday sustained multiple holes below the waterline, after Mr Davis blew the ambiguity out of the water.

Nemesis came when the Secretary of State for Brexit responded to a question from Yvette Cooper, who asked for clarification of the Government's position. Was regulatory alignment "really important not just for the Good Friday agreement, but for businesses right across the United Kingdom?"

Davis, in turn, referred to Mrs May's Florence speech, asserting that the Prime Minister had "made a very plain case for the sorts of divergence that we would see after we left". She said, or so Davis would have us believe, "that there are areas in which we want to achieve the same outcomes, but by different regulatory methods".

In fact, Mrs May said no such thing – not explicitly, at any rate. In fact, during that speech, she said, "when it comes to trade in goods, we will do everything we can to avoid friction at the border", adding that, "of course the regulatory issues are crucial".

Noting that the EU and the UK shared "a commitment to high regulatory standards", she accepted that, "in any trading relationship, both sides have to agree on a set of rules which govern how each side behaves". Thus, she said, "we will need to discuss with our European partners new ways of managing our interdependence and our differences, in the context of our shared values".

That, really, was as far as it went, although Mrs May did acknowledge that "the decisions we both take will have consequences for the UK's access to European markets and vice versa", an important if somewhat obvious observation.

Thus, when speaking yesterday, Davis was starting to break new ground when, continuing his answer to Yvette Cooper, he said: "We want to maintain safety, food standards, animal welfare and employment rights, but we do not have to do that by exactly the same mechanism as everybody else. That is what regulatory alignment means".

To Antoinette Sandbach, Davis reiterated "that alignment is not harmonisation. It is not having exactly the same rules; it is sometimes having mutually recognised rules, mutually recognised inspection and all that sort of thing. That is what we are aiming at".

Just to make himself perfectly clear, he then told Mark Pritchard that we could leave the single market and the customs union, yet have UK regulatory alignment, by "using things such as the mutual recognition and alignment of standards. That does not mean having the same standards; it means having ones that give similar results".

To Chris Leslie, the Labour member for Nottingham East, he declared that regulatory alignment was "not harmonisation, being in the single market, or having exactly the same rules". It was, he said, "this House exercising its democratic right to choose our own laws in such a way as to maximise our ability to sell abroad. That is how it will work".

Later on, Labour's Chuka Umunna intervened, reminding the Secretary of State that he did not think that keeping the UK overall in the customs union and the single market was the answer. So, asked Umunna, "what does he believe is?" The answer was: "a comprehensive free trade agreement, a customs agreement and all the associated regulatory alignment".

Stephen Hammond asked whether, for the continued success of legal, professional and financial services post Brexit, not only mutual recognition, but UK-wide regulatory alignment with the EU will be necessary, to have Davis declare: "If by alignment my hon. Friend means mechanisms such as mutual recognition, yes, I agree entirely".

Mike Gapes got short shrift when he asked Davis to "tell us the difference between regulatory convergence and regulatory alignment". "One is about harmonisation, one is not", said Davis, picking up the "slightly confused" Lucy Powell who asked whether regulatory alignment was "the only way to deliver the frictionless border". "The simple truth", said Davis, "is that we will need to establish arrangements whereby we get the same or similar outcomes for some areas of industry and service - no more, no less".

Then, having already told Antoinette Sandbach and others that regulatory alignment applies to the whole United Kingdom, Davis was confronted by Stephen Timms, who challenged him to confirm this.

Said Davis, "I have explained to the House that regulatory alignment is not harmonisation. It is a question of ensuring similar outcomes in areas where we want to have trade relationships and free and frictionless trade. Anything we agree for Northern Ireland in that respect, if we get our free trade area, will apply to the whole country".

So, the cat is out of the bag and there is no going back. Essentially, the UK is aiming for what it has always aimed, more or less from the start of the May administration. It wants "a comprehensive free trade agreement, a customs agreement and all the associated regulatory alignment", the latter meaning either mutual recognition or what amounts to regulatory equivalence.

Furthermore, in his haste to pacify the DUP, Davis has confirmed that Northern Ireland will not be treated as a special case – yet despite this still expects a "frictionless border".

Currently (at the time of writing), Mrs May is still waiting to speak to Arlene Foster and her Wednesday visit to Brussels has been cancelled. As far as the rest of the week goes, Mr Juncker has told her that she has the Thursday but that's it.

But, even if by then – or whenever the next meeting takes place – Mrs May has managed to square off the DUP, her Secretary of State has destroyed the Brussels pitch. As now defined, there is no possible way that the "colleagues" can accept regulatory alignment as a satisfactory basis for allowing UK goods free access to Ireland.

Such is the apparent concern of Brussels that the talks should continue, one takes the view that the EU collectively has decided that it is too early for them to fail. We can, therefore, expect another fudge, although the options for "creative ambiguity" are rapidly running out.

What we must not lose sight of though is that this current shambles has demonstrated that the UK government's strategic thinking on Brexit has not advanced one iota. It is still wanting to have its cake and eat it, and still hasn't come to terms with the consequences of leaving the Single Market.

And all of this goes back to the Lancaster House speech, my response to which was expressed in uncharacteristically blunt language. And if that's what we were then, that's what we are now. Nothing has changed.



Richard North 06/12/2017 link

Brexit: no deal means no deal

05/12/2017  


Sticking strictly to the facts, all we know of the current situation is that Mrs May went to Brussels in the expectation of making a deal with Jean-Claude Juncker. That in turn would pave the way for the European Council to approve a mandate for Michel Barnier to move to phase two of the negotiations.

From that, the only thing we know for sure is that Mrs May didn't get her deal. After the meeting, both parties held a joint press conference during which they said very little. There were no questions and Mrs May left for a meeting with Donald Tusk to ask for extra time.

As to the reasons why there was no deal concluded, most of what we're getting is speculation, based largely on leaks to the media.

Their current narrative is that the UK government had been on the brink of an agreement in which it would accept "continued regulatory alignment" between the Irish Republic and Northern Ireland – apparently based on a deal brokered between Whitehall and Dublin.

As the narrative has developed, it is asserted that the DUP intervened publicly, rejecting the Whitehall/Dublin deal. This led Mrs May to break off her meeting with Juncker to take a 'phone call from Arlene Foster, the outcome of which, it is said, was that attempts to conclude the deal with Brussels on the day were abandoned.

Foster's pitch, based on "speculation emerging from negotiations", was that Northern Ireland must leave the EU on the same terms as the rest of the UK. The DUP would not accept any form of regulatory divergence which separated Northern Ireland economically or politically from the rest of the UK. The economic and constitutional integrity of the United Kingdom would not be compromised in any way.

Crucially, we are told, Foster came away from her telephone discussion with Mrs May saying that the government understood the DUP's position. The prime minister had made it clear that there would be no border in the Irish sea and that the "territorial and economic integrity of the United Kingdom will be protected".

A popular media narrative thus rests on the scenario that "Theresa May's desperate bid to break the Brexit deadlock and move on to trade talks was dramatically torpedoed in an eleventh-hour phone call with the DUP".

That said, there are some crucial, unresolved inconsistencies in this narrative to the extent that it hardly seems to hang together. First, and most important, it relies on the idea that Mrs May went to Brussels with a proposal that she must have known that the DUP would not accept – and then had to be dragged out of her meeting with Juncker to be told this.

Now, over months that Mrs May has been prime minister, we have largely come to terms with her incompetence. But it is nonetheless difficult to believe that, with the well-known and frequently rehearsed position of the DUP, she could go to Brussels with a proposal she must have known would by rejected by this Northern Ireland party. This is carrying incompetence to a new level.

Secondly, while much has been said of the Whitehall/Dublin deal, as far as I am aware, the full official text has not been made public. All we have to go on is an "early negotiating text" leaked to RTÉ News and "sight of a key phrase in the joint text".

This "key phrase" said that "in the absence of agreed solutions, the UK would ensure no divergence from those rules of the internal market and the customs union which supported North/South cooperation and the protection of the Good Friday Agreement".

And while there is also talk of "regulatory alignment", there are no indications as to whether that encompasses the full extent of the deal, or whether there was more to it – especially in the small print.

Further, we do not know whether this deal, apparently agreed between the UK and the Irish Republic, was necessarily agreeable to Brussels. And nor do we know that Mrs May based her proposal on the exact deal that was agreed, or whether she changed some of the text, or even played around with the framing.

What we do know though is that the prime minister made it clear to Arlene Foster that "there would be no border in the Irish Sea and that the territorial and economic integrity of the United Kingdom will be protected".

This begets another major inconsistency. As it stands, there is no possible way that Brussels could accept a situation where there was a soft border between the Republic and Northern Ireland, with no controls over goods from the mainland UK. This would open a back door into the Single Market which would be completely unacceptable to the remaining EU Member States.

This again is an issue of which Mrs May can hardly be unaware, which leaves one dubious at the prospect of her proposing something to Brussels that cannot ever have been acceptable.

This, then, leaves us with two implausible options. On the one hand, Mrs May went to Brussels with a proposal she knew the DUP could not accept, or she went with a proposal that the EU could not accept. And, from what we know, it could just as easily have been the case that she went with the second proposal – her telephone conversation with Arlene Foster simply confirming something that was already in hand.

There is little doubt, however, that Mrs May did go to Brussels expecting a deal. She had booked time in Parliament today, asking the Speaker to clear "several hours" for a "major statement" on the outcome of her talks. This has now been cancelled.

Going for the other option, we have a statement from Leo Varadkar. Speaking yesterday, he claimed that the United Kingdom had agreed a text on the border that had met Irish concerns. He was, therefore, "surprised and disappointed that the British government now appears not to be in a position to conclude what was agreed earlier today".

This might be given credence by suggestions that Mrs May was relying on "creative ambiguity" in the Irish text, thinking that it would get the UK past this milestone and give her wriggle room when it came to filling the detail.

In this, May possibly banked on the full text not being published, except that most of the content was leaked by Belgian Green MEP Philippe Lamberts. He, with other MEPs had been meeting Juncker in the morning, emerging to tell journalists that the "Brits" had accepted "reality". This is said to have provoked Arlene Foster into action.

Either way, however, Mrs May's negotiation was doomed to fail – as it always was. This is the epitome on the rock and the hard place, where the only real option – the "wet" border was never going to be politically acceptable to the DUP. If Mrs May didn't realise this, and thought she could get away with a fudge, then we have a very worrying situation.

One wonders, therefore, Mrs May was going through the charade of trying to make an unmakable deal, simply so that she could say that she had tried. But even that does not square with the indications that she believed she would conclude a deal.

And despite everything, that is still on the table. Mrs May is to return to Brussels on Wednesday for another round of talks, with Donald Tusk saying that there is "still time" before the 15 December, when the European Council must meet to determine the fate of the negotiations.

Whether the prime minister can pull it off remains to be seen. I suspect it will depend on whether Brussels prefers its fudge toasted or fried. For the moment, though, no deal means no deal – the only thing clear about this episode.

For the rest, we're getting confirmation of that old saw about Irish politics: if you think you understand them, you haven't been listening.



Richard North 05/12/2017 link

Brexit: everybody gets a prize

04/12/2017  

000a Times-004 deal.jpg

On the day that Mrs May meets Jean-Claude Juncker to present him with the "final offer" which it is hoped will take us through to phase two, the Financial Times is claiming that the UK is on the brink of a deal.

With the scent of fudge in the air, the paper could be right – but then it could be hopelessly wrong. If it is, it'll quietly forget this story but otherwise we'll never hear the last of it.

As one might expect, the evidence is pretty thin, apparently based on an exchange with another of that increasingly common breed, the anonymous official. Just for a change though, this one is Irish. What's more, he (or even she) is a senior Irish official. This must mean that what he (or she) has to say must be truer than if it came from a mere official – or, heaven forefend, a junior official.

Supporting the FT narrative (not), he (or she) says that they (the Irish government) were "still awaiting signs of a definitive breakthrough". That, of course, leaves the agreement "hanging in the balance", which prompts the official to say: "As we speak at the moment, this is a very fluid situation. There are intensive contacts back and forth".

In terms of substance, that is all you get – which means that the story is not inconsistent with the Telegraph headline, which has: "Brexit timetable in jeopardy as Theresa May fails to reach deal on Irish border ahead of EU deadline".

To an extent, this is a matter of half-empty, half full, with the Tory comic reporting: "Theresa May will go into a crunch meeting with EU leaders on Monday admitting she is yet to find a solution to the Irish border problem". But to put it on the half-empty side, this paper adds that a Cabinet minister has suggested for the first time "that Brexit might not happen".

However, the paper also thinks that no agreement is in sight – thereby completely contradicting the FT - thus suggesting that "the Prime Minister is now likely to ask for a last-minute extension to the Monday deadline".

Not content with a mere "senior official", the Telegraph relies on "Whitehall sources". These, of course, are just as anonymous, but also well enough known for the paper to state that they have "bitterly complained" that Leo Varadkar had "moved the goalposts" by insisting on guarantees over the future border arrangements now, having earlier said the issue could be thrashed out once trade talks were underway.

One presumes here that the UK negotiators are relying on Varadkar's speech to the Dáil earlier last month when he said that it was "not going to be possible" definitively to settle the question of the border with Northern Ireland until the shape of the future EU-UK relationship emerges.

At that point, the Irish Prime Minister was of the view that it was "likely that we will be able to say that sufficient progress has been made at the December meeting". This, he thought, would allow the EU to move on to discussions on transition and the future arrangements.

However, that depended on what happened over the next number of weeks, and the "specific assurance and guarantees we can get in writing from the United Kingdom". He sensed that things were "moving in the right direction" and he was more optimistic than he had been in October. With that, though, came the caveat, that his mood "may change".

Nevertheless, Varadkar did address the lack of clarity in the Brexit debate, saying the way it was intended to deal with this "is not that everything in phase one has to be agreed before we move on to phase two".

It was, he added, "that sufficient progress has to be made on phase one: on the financial settlement, on citizens’ rights on issues specific to Ireland and that allows us to move on to phase two where we can talk about the transition arrangement and the new relationship".

Varadkar then concluded: "It is not going to be possible to fully resolve the border question until we start to talk about the future relationship that the UK will have with the European Union". There will come a point, he said, "when it is in our interests to actually start talking about that".

Clearly – or not so clearly – that point has not been reached and the Irish are still after written guarantees that they feel they haven't yet got. Varadkar will hold a special meeting of his cabinet today discuss Brexit, and we may get further statements before Mrs May struts her stuff.

Here, in a less than helpful manner, May has the support of her Brexit secretary, who is still insisting that it is "imperative" that the Irish border is "discussed in tandem with Britain's future trading relationship with the EU.

But, according to the Sunday Times, Varadkar agrees that a parallel process could help to ease the resolution of outstanding issues in relation to the Irish border.

He says: "I think the suggestion that David Davis has made, to a certain extent, is common sense. If we were able to have a trade agreement between the EU and UK then, of course, it will be much easier to sort out issues around the border between Ireland and Northern Ireland". But he then adds that he has not seen any evidence from the Brexit papers released to date that Britain had a solution to the trade and customs arrangements that would be necessary after March 2019.

That, if the Guardian is to be believed, puts Mrs May taking "personal charge" of the Brexit negotiations.

For all the to-ing and fro-ing, hopes remain that her meeting with Juncker will clinch the deal. And, although I have been writing of "dinner", it seems that Mrs May is actually having lunch with Jean-Claude Juncker before later meeting Donald Tusk.

Work on the final text of an agreement is being worked on by officials in Dublin and the Guardian sits on the fence, saying that the chances of it being ready in time for the May-Juncker lunch has been put at 50:50.

An added complication for Mrs May is a tedious letter signed by former cabinet ministers Iain Duncan Smith, Owen Paterson, Nigel Lawson and John Redwood, plus 30 others.

They are asking Mrs May to make any payments to the EU conditional on reciprocal free trade "without tariffs" between the UK and the EU, which must be agreed in principle by 30 March next year. They also want the UK to have freedom to conclude trade deals "across the globe" from 30 March 2019, and insist that the ECJ shall cease to have any jurisdiction over the UK from the date we leave the EU.

They also want freedom of movement to end, that any "necessary implementation period" should not exceed two years, and that no new EU regulations should apply to the UK from 30 March 2019. And as regards the Irish question, all they want is for the parties to "work diligently and act in good faith" to secure an agreement before we leave.

On the regulation point alone, these "Ultras" are seeking to build in divergence to the Article 50 agreement. While the comprehensive trade deals the EU has done require that the parties work towards regulatory convergence (while the Swiss and EEA deals require continued adoption of relevant EU measures), we are supposed to be asking for a deal that does the opposite. This, undoubtedly, will close down access to EU markets and make a comprehensive trade deal very hard to agree.

Front runner in opposing continued ECJ involvement is Owen Paterson, alongside Iain Duncan Smith. They regard a "foreign" court having jurisdiction over the UK as being intolerable to an independent United Kingdom. Paterson, it appears, is content for us to be subordinate to the European Court of Human Rights, the WTO dispute bodies and the International Court at The Hague.

All this, apparently, is perfectly acceptable. But to accept the ECJ "would be to condemn ourselves to the status of a vassal state, relinquishing power over our laws – and by extension over our people – to a court on which we are not represented". The citizens of a newly sovereign nation, says Paterson, "deserve better than that".

However, all is well with the world. This morning's edition of The Times has sided with the FT. Its senior officials are saying: "Brexit deal 90% there". It would be churlish to dwell on the ten percent. How could anything possibly go wrong?



Richard North 04/12/2017 link

Brexit: party games

27/08/2017  


The Telegraph remembered to put up the Booker column this week without prompting, apparently having forgotten to post it last week.

With no comments on the post, though, we wonder if this is another part of the deliberate campaign to marginalise Booker and, in particular, to take him out of the Brexit debate. So abhorrent are his views on continued membership of the Single Market via the EEA that editor Alistair Heath has consigned Booker's main story, covering precisely that field, to the second position.

In the new format column (consigned to the back page of the supplement), which only has one headline on the print edition, this means that the casual reader will not easily realise that there is a Brexit story. Crucially, its low profile also means that the column will not show up on the Google listings covering Brexit.

But if Heath can't bear to have arguments on the Single Market rehearsed in his newspaper, it will be interesting to see how he handles the main story in the Observer which has Labour (in the person of Keir Starmer) calling for the UK to remain in the Single Market and a customs union for an extended transitional period before finally committing to a full break with the EU.

This is backed up with an authored column by Starmer who writes that "we need a transitional Brexit deal that provides maximum certainty and stability".

Labour would thus seek "a transitional deal that maintains the same basic terms that we currently enjoy with the EU". That means "we would seek to remain in a customs union with the EU and within the single market during this period". It also means, says Starmer, "we would abide by the common rules of both".

At this point, we look with anticipation for the detail of how Labour would intend to go about achieving this miraculous transition and how, in the time left (deducting any time it would need to depose May, have a general election and install a Labour government), it would go about negotiating a customs union treaty with the EU, on top of the lengthy treaty that would be needed to afford the UK full participation in the Single Market.

In this, of course, Labour could go for the Efta/EEA option – saving us the trouble of having to write in the Single Market provisions into a new treaty. But, on this, Starmer is silent. In fact, he is completely silent on any detail as to achieve his miracle.

Telling us that, unlike MinBrex overlord David Davis, he would avoid any "constructive ambiguity", Starmer immediately moves on to indulge in his own version, by missing out the hard bit and extolling the virtues of "remaining inside a customs union and the single market in a transitional phase". We would, he says, "be certain that goods and services could continue to flow between the EU and the UK without tariffs, customs checks or additional red tape".

It is left to political editor Toby Helm to attempt to fill in the gaps, with his own piece. Gallantly, he talks of Davis's attempt "to convey an impression of clarity where little exists", and Starmer's description of the recent position papers as "bland and non-committal". But, for all the verbiage, he fails to mention the huge gap in Starmer's pitch.

Today, writes Helm, marks a highly significant turning point for Labour (and possibly for the country) in its approach to the EU – a move away from the party's previous defensive ambiguity to one of far more positive engagement.

In Starmer's article, signed off by the leadership and all key players in the shadow cabinet (albeit after days of intense argument), Labour has repositioned itself "clearly and decisively" as the party of "soft Brexit". For the first time since the people voted to leave the EU, Helm says, "there is a visible expanse of clear blue water between the 'hard Brexit' Conservative approach and the Labour one".

For that to make any difference, though, Labour must also have a plan to grab the reins of power from the Tories. The battleground, it seems, will be the EU withdrawal bill, which returns to the House of Commons on 7 September for its second reading.

The Bill, if passed in its present form, says Helm, would pave the way for an end to the UK's single market and customs union membership, and terminate the jurisdiction of the ECJ over UK affairs.

Thus, we learn, Labour's next move will be to seek support in the Commons from pro-EU Tory MPs and others for its new position, as it tries to amend the Bill and stop hard Brexit in its tracks. And by that means, "the stage is set for an autumn of extraordinary Brexit battles in Parliament, running in parallel with equally momentous ones in Brussels".

A more relevant battle, however, could be the challenge, which surely must come, as to whether the Government is to give formal notice to leave the EEA. The Government's current position is that it does not need to trigger formal exit procedures as leaving the EU will automatically mean that our EEA membership will lapse.

Few would agree with that stance, though which means that, by 29 March 2018, the Government must give notice – for which purpose it is argued that it will need Parliamentary approval. For Parliament to refuse that approval would lead to an epic battle which could have the effect of keeping us in the Single Market.

As it stands, we are getting no more clarity from Starmer than we are from Davis. This seems more like an attempt to convey the impression of a difference between the two main political parties, when in the real world, we have both committed to forms of Brexit that are unrealistic and provide no serious answers to the question of how we achieve a workable exit.

Then, even if one were to concede that Labour is on the right track, its focus on a transitional deal (and an entirely unnecessary customs union) does not address the pressing need to define the end game.

Elsewhere, we have occasionally drawn attention to the bizarre nature of the a Brexit process that has as its end game a free trade agreement. Taking on board a transitional period where we would stay in the Single Market, we have the absurd proposition of the negotiating team seeking to buy time for a final result which is worse than the interim package.

That alone illustrates the poverty of Labour's new initiative, which is seems more like a platform on which to perpetuate Westminster party politics, with little to offer by way of stable Brexit package. This isn't "soft Brexit" - it's something different from what the Tories are running with. And that's all that matters.

Unwittingly, that much is confirmed by Andrew Rawnsley, also writing in the Observer. He says:
A sniff of power has wafted into Labour nostrils since June, and that mind-concentrating scent has influenced the mood at the top of the party. The shadow cabinet has had to think about what they would face if this minority Conservative government were to collapse and an early election propelled Labour into power to take charge of the Brexit negotiations. In the probably more likely scenario that the election comes later, Labour would obviously hope to reap a dividend at the ballot box if the Tories have delivered a bad Brexit deal or a disastrous no deal.
He calculates that there are sufficient Tory MPs who will agree with the Labour position on the transition to conceive of it assembling a majority in Parliament. Mobilising them, he says, will partly depend on how artful Labour can be about waging this struggle in the Commons.

Success will also be contingent on the struggle within the breasts of these Conservative MPs between their party loyalties and their consciences. That, Rawnsley concludes, "will be the next battle to watch out for".

In effect, Labour has given the political classes and the media something they have desperately wanted – a Westminster dimension to Brexit. Now the pundits can ignore the unfamiliar and vaguely uncomfortable proceedings in Brussels and focus on a real, live biff-bam drama carried out on familiar territory.

Although Michel Barnier and his officials are tired of what they call "intra-UK debate", it looks as if they're about to get more of it. While they're focusing on phase one before moving on to trade, our London parties will be frittering away their time and energy discussing whether we are heading for a "hard" or "soft" Brexit. Despite that, he will ensure we have the former - by default.

To that extent, what Starmer and Labour want – or what they say they want – is irrelevant. The action is in Brussels, not Westminster, where the outcome cannot be fudged. But then, as long as our politicians can play their games, why should they care? They get their money, whatever happens.



Richard North 27/08/2017 link

Brexit: in danger of being grounded

03/07/2017  


So, after a complex and lengthy piece covering Booker's article about Grenfell Tower, I'm able to turn to his shorter and simpler piece on the Efta/EEA (Norway) option.

As the great Brexit shambles continues, the issue that attracts his attention is whether our politicians have the faintest clue of what they are talking about. And one of the most telling hints as to their state of knowledge is their view on whether we can somehow leave the EU but remain in its "Customs Union".

The likes of Philip Hammond and Chuka Umunna, the leader of last week's Labour rebels, clearly haven't even got to square one in their failure to grasp that a country can only be in the "Customs Union" if it is a full member of the EU (under treaty rules laid down in 1957).

It really is quite remarkable how many politicians do fail to grasp that single, fundamental point, that the EU's customs union is so embedded in the core of its founding treaty that there is not the remotest possibility of the UK staying in it after Brexit.

Not a few of these politicians doubtless confuse the different concepts of customs union and customs cooperation, and by far the majority of those believe that the free movement of goods depend intrinsically on the customs union, rather than the Single Market.

Even those who have some dim idea about the role of the customs union in abolishing tariffs between members, fail to understand that, if tariff elimination is the issue (and only that), then a basic free trade agreement will achieve the desired effect, without having to buy into the common external tariff (CET).

Not subscribing to the CET does, of course, mean that we could have to deal with rules of origin (ROO), if we were then to diverge from the EU's external tariffs. But, since we intend to adopt the EU's WTO schedules of tariffs – for the time being – there will be no divergence. The UK will not become a back door to the EU, and ROO simply will not apply. It is a non-problem.

The crucial issues then are the free movement of goods and services, to which effect – says Booker - our gifted MPs should be focusing on the EU's sophisticated system of "Customs Co-operation”, set up in 1994, which is what allows 14,000 lorries a day to move effortlessly between Dover and Calais, as also across the Northern Irish border, and much else besides.

Free movement, though, does not just cover goods. The Single Market – even if with less efficiency – also covers services, including the massive financial sector, on which the City relies.

It's not commonly thought of in such terms, but air transport is classified as a service. Alongside tourism and related services, it is as important to our economy as financial services. Thus, our politicians should also be heeding the growing alarm over what could happen if we are excluded from the equally complex EU system that governs every aspect of aviation and air traffic.

Last week, Peter Fankhauser, the chief executive of Thomas Cook, colourfully predicted that unless our politicians wake up to these potential dangers, we risk being taken back to the "medieval age", echoing the rather plainer warnings of Michael O'Leary, the chief executive of Ryanair, that in Britain we could even find ourselves no longer entitled to fly our aircraft anywhere outside UK airspace.

It is all this and more, Booker advises us, we could have held on to if we had joined Norway in Efta and remained in the wider EEA (and therefore the single market). But it is this from which, by deciding instead to become what the EU classifies as a "third country", requiring the re-erection of the full panoply of border controls, we are choosing to exclude ourselves.

Booker thus concludes that, in this way only chaos lies; as David Davis and his fellow "ultra-Brexiteers" will soon very uncomfortably come to learn.

Interestingly, of the two main Booker articles, it was this to which the majority of comments were attached – with the usual diatribes but also some more considered responses. There is a sense of the mood changing, as more people are prepared to come out into the open and support the Efta/EEA proposition.

But it isn't only the ignorance of the politicians and the "ultra-Brexiteers" that we have to deal with. We also have the formidable ignorance of journalists, those such as Patrick Wintour in the Guardian who writes an illiterate piece about Efta "associate membership" and then goes on to tell us that this could become the settled position of the UK.

Alternatively, he writes, it could be a precursor to two further stages – either full Efta membership or even potentially rejoining the EU's single market through the European Economic Area. There is a certain ambiguity there, but are we really seeing a journalist write, "either … or"?

This, fortunately, isn't the only contribution from the Guardian. Running on its front page is the headline, "British officials drop 'cake and eat it' approach to Brexit negotiations", with the story having insiders saying that ministers will have to choose between economic interests or sovereignty.

The body text lays out the detail, announcing that British officials have quietly abandoned hope of securing the government's promised "cake and eat it" Brexit deal. They are increasingly accepting the inevitability of a painful trade-off between market access and political control when the UK leaves the EU.

This comes from "government insiders" and, in a welcome change from the euphoric "sunlit uplands" rhetoric coming from Davis, they report a "dramatic change of mood" at DExEU since the general election, with growing Treasury influence helping force ministers to choose between prioritising economic interests or sovereignty.

Civil servants are now said to be presenting ministers with a more binary choice: accept political compromises similar to aspects of the European Economic Area (EEA), or settle for a much more limited trade deal such as the recent EU-Canada free trade agreement (Ceta).

"We have a problem in that really there are only two viable options", one official told the Guardian. "One is a high-access, low-control arrangement which looks a bit like the EEA. The other is a low-access, high-control arrangement where you eventually end up looking like Ceta – a more classic free trade agreement, if you are lucky".

As to the "high-access, high-control situation" – outlined in Mrs May's Lancaster House speech - that remains the official policy position. But the author of that speech [reported to be Downing Street adviser Nick Timothy] is "no longer in an influential position".

Sadly, though, Whitehall still hasn't quite (or at all) got there. Full EEA-style participation in the single market is still seen as politically toxic, "due to its requirement to accept freedom of movement".

Thus, pressure is building for a rethink of opposition to a customs union with the EU. This, it is said, "would satisfy many business leaders, who are clamouring for ways to avoid trapping manufacturers behind an inflexible tariff wall but possibly still allow new international trade deals to be pursued in the service sector".

"What we've seen post-election is that business voices that had felt bullied into silence pre-election are recovering their voice", explained a senior official. "The economic arguments that had got lost in the last six months are now being heard again and those who had tried to railroad this by saying you are talking your country down are being given a run for their money".

This, though, is layering ignorance on ignorance. This is not so much the blind leading the blind, as the changing of the white sticks – a different set of ignoramuses leading the fray.

One again, the extraordinary lack of knowledge about the European Union and its systems is coming to the fore. I was pretty shocked yesterday to read the Architects Journal and he comment of Konstantinos Tsavdaridis, associate professor of structural engineering at the University of Leeds. Both are saying, in respect of Grenfell Tower, that the UK needs to adopt system testing. Both seem completely unaware of BS8414, much less the EU role in preventing its full adoption.

If you still think that people in high places necessarily know their stuff, or that the civil service and the higher echelons of business are filled with people who know what they are talking about, you need to disabuse yourself of what is a cruel illusion. The higher you go, the more ignorance you meet.

However, some civil service insiders are aware of the need to agree "which vision will prevail before the first phase of EU negotiations is concluded over the summer" (has it really taken them this long to realise?).

Our prescient senior official warns that, "there is still a fudge and before we get down to negotiating in October/November we have got to decide once and for all which of those two options we are going for". He then adds: "What you can't do is sustain a fudge because then you are going into negotiations without knowing what you want".

One is pleased that the message is finally getting through to the senior level but, if this is only the point that they have reached – a year since the referendum – then we will be seeing the turn of the century before they come up with a credible negotiating position.

We really haven't got time for this. We need our officials out of the crèche and into the real world. We're not paying them for Janet & John lessons.



Richard North 03/07/2017 link

Brexit: delaying the inevitable

20/04/2017  


Given that some of them were voting for their own redundancies, you would have thought that more than 13 would have voted against a general election. But such is the obsession of the political classes with elections that, offered the prospect of a contest, 522 MPs piled in to give Mrs May what she wanted.

The immediate effect of this, however, is malign. As election fever takes hold, the political noise level increases exponentially while the information quotient drops almost to zero. Equally, the "colleagues" won't make much of a showing, knowing full well that anything they say now will fall on deaf ears.

And then we have in Jeremy Corbyn a leader of the opposition who seems unable to discuss anything of substance, except in terms of mind-blowing clichés, delivering "ten pledges to rebuild and transform Britain" which makes no mention of the EU.

Thus we have the bizarre situation where the so-called "Brexit election" will be about everything other than Brexit. And since we were getting little enough before Mrs May's Tuesday announcement, those anxious to explore the deeper ramifications of Brexit are going to be disappointed. They might just as well pack up and go home for the duration.

The irony here is that, after the election, Mrs May will claim that the vote (assuming she wins it) will give her the mandate she needs to continue the Article 50 negotiations, when it will do no such thing. The exit options will have been no better aired by 8 June than they have been to date.

This, though, is the time for ironies – witness the Guardian which has Stewart Wood tell us that: "May wants a hard Brexit without scrutiny. It’s Labour's job to stop her getting it".

Even if it was actually true that Mrs May was hankering after this suicidal course of action, it would be hard to find anyone in the real world who could deal with the idea of Labour performing as an effective opposition without breaking up into uncontrolled giggles.

But them, as the Guardian points out elsewhere, even with the best will in the world, it would be difficult for any opposition to perform effectively.

The election, the paper says, is an invitation to voters to buy Mrs May's Brexit terms sight unseen. She has declared that she wants support "for the decisions I must take", but we do not know what those decisions will be. It goes on to say:
They depend on negotiations that have barely begun with some EU partners who face elections of their own, as well as on events. All this will involve give and take. Mrs May is seeking a mandate to do something of which not even she knows the main planks, the details and the trade-offs. She wants to get parliament off her back in making the Brexit terms. This election must ensure that this does not happen.
There goes someone, an anonymous scribe, who really isn't of this world. This election – if it is to perform any function – is to get the electorate off Mrs May's "back".

What very few of the pundits seem to be doing is asking what the consequences for the Prime Minister would be if she didn't call a referendum just now.

Picking up on the very words used by our earnest scribe, we have a politician confronting the unknown where, at some time shortly before what would have been the next election, was going to be forced into making unpopular concessions to the EU. She would then have to turn to the voters and ask them to elect her party, so that she could spend the next five years in office, putting into action a programme with which her natural constituency would most probably heartily disagree.

This was a situation where, as a result of a bodged Brexit, we hypothesised, could arise the only possible circumstances where Jeremy Corbyn could actually win an election.

Any sanguine analysis, therefore, must conclude that the primary purpose of this election is to buy the Prime Minister more time to conclude negotiations before having to face the nation in a make-or-break election.

Even with the extra time, though, it is going to be difficult for Mrs May to square the circle – maintaining full participation in the Single Market while also giving the impression that she has broken free of the EU and is able to decide on immigration policy and other matters for which we supposedly sought to leave the EU.

Thus we have a politician faced with an intractable problem and it should come as no surprise that her response is to kick the can down the road. That is what politicians tend do when confronted with intractable problems.

At best, the extra time strengthens Mrs May's hand in the negotiations, reducing the pressure that comes with an imminent election. But despite that, she has only gained two years and that seems hardly enough. She could still find herself facing an incomplete settlement, having to fudge a messy transitional period that leaves us half-in and half out of the EU.

That is no more likely to be popular in 2022 as it would have been in 2020, in which case the only gain could be delaying the inevitable, when the electorate wreaks vengeance for a bodged Brexit and votes the Conservatives out of office for a generation.

That is the other side of the coin. There are few commentators who believe that this election will be anything other than a disaster for Labour, the immediate consequence of which will be the removal of Jeremy Corbyn as leader.

In 2022, therefore, Mrs May could find herself up against a reformed and strengthened Labour Party under a new leader, better capable of pointing out the weaknesses of her Article 50 settlement, ready to provide a lightning rod for public dissatisfaction.

That being the case, winning this election could be just delaying the inevitable. To survive, she need to use the extra time wisely, crafting a solution that will ensure we are fully out of the EU by the time she again goes to the electorate, with a sustainable relationship which will ensure the continuation of trade and other cooperative ventures.

And there lies the final irony for, if this is to be a central part of Mrs May's plans, the very last thing she can do is reveal it at this stage. Her "Ultras" and former Ukip supporters, contemplating moving over to the Tories, must believe this is a hard lady heading for a hard Brexit. Not one of them could handle the truth which, in Churchillian terms, must be protected by a bodyguard of lies.

Modern politics, though, is more sophisticated. With the media adept at hunting down obvious lies, our leaders lie by omission rather than by commission. And that turns modern political speeches, as Sam Hooper points out, into "nothing but soulless, prefabricated word clouds designed to deliver vacuous soundbites to a cynical public".

We're going to get a lot of those in this campaign, and very little else.



Richard North 20/04/2017 link

Brexit: oral confirmation

05/04/2017  


Illustrating just how much the news agenda is driven by its oral culture, yesterday saw Sky News political editor, Faisal Islam, tell us that we will not get a free trade agreement within two years. This could have been picked up from the European Council draft guidelines document, which was on the record last Friday, but that is not the way of the legacy media.

Instead of reporting something which would have come from his own efforts, acquired from actually reading a piece of paper, Faisal Islam has to go to Jordan to interview the Prime Minister, putting to her that the UK will act as a "third country" when it comes to a trade deal with the EU.

The response he then takes as Theresa May confirming that Britain's final signed trade deal with the EU will have to take place after the two-year Article 50 process, on which basis he concludes what we've already known for days without his help – that there will be no trade deal until we have left the EU.

This, incidentally, is a conclusion already reached by Christopher Howarth, he of ERG "Ultra" fame, desperate to prove to his masters that there is nothing preventing concurrent negotiation followed by a conclusion at 00:05 on Saturday 30th March 2019.

The guidelines, bleats Howarth, go on to say "an overall understanding on the framework for the future relationship could be identified during the second phase of the negotiations … as soon as sufficient progress has been made in the first phase".

Sadly for the little gofer, though, before we get to that phrasing, the European Council noted that Article 50 TEU requires to take account of the framework for its future relationship with the Union in the arrangements for withdrawal, only then adding: "To this end, an overall understanding on the framework for the future relationship could be identified during a second phase of the negotiations under Article 50".

But then, in the bit that Howarth leaves, out, it says: "The Union and its Member States stand ready to engage in preliminary and preparatory discussions to this end in the context of negotiations under Article 50 TEU", before then declaring that this will happen "as soon as sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal".

What we have, therefore, is a statement that makes it abundantly clear that there will only be "preliminary and preparatory discussions" before the Article 50 process is concluded. Only in the foetid little mind of a Tory "Ultra" could there be any question of a deal being concluded in anything short of a few years after we become a "third country".

The implications of this are obvious – not least that Mrs May will be going into the next general election having not closed the deal with the EU. The crucial talks will be still to come. This is why I wrote in my previous piece that the spin machine will be out in force.

But the delusion spreads further than the paid help. In response to Faisal Islam's questioning, Mrs May had said: "There's obviously a legal situation in terms of how the European Union can conduct trade negotiations".

She then says: "I'm clear that by that point at which we leave the EU, it's right that everybody should know what the future arrangements, the future relationship, that future partnership between us and the EU will be. That's the sensible thing. It's a pragmatic way to look at this and I believe that’s what we'll do".

So, the Prime Minister was clearly acknowledging that the Article 50 process would be confined to defining the "future relationship". And when Islam asked whether all of this could be done within two years, Mrs May replied: "Yes". This, as the Financial Times rightly observes, blurs her initial response and the distinction between an agreement on "the future relationship" and a fully formed trade deal. Taken literally, Mrs May is confident only in defining our future relationship within the two year period.

The Mail though, conveys a conflicting interpretation. Having sampled the Howarth Kool-Aid, it triumphantly declares that: "The Brexit trade deal CAN be done in two years Theresa May insists despite German sneers that it is too difficult".

The latter reference is to Sigmar Gabriel, Germany's foreign minister, who says that new trade relations would be "a laborious endeavour". He told the Independent: "First, we have to get things right on the orderly withdrawal, then we will want to talk as soon as possible about our future relationship and get as far as we can within the next two years".

This is very much in accord with the draft guidelines but, despite this, the Mail calls in aid the self-same Sky News piece, crowing that "Theresa May has insisted a Brexit trade deal can be ready to sign in two years". This, of course, is exactly what she hasn't done.

On the other hand, the Evening Standard has Labour commenting that Mrs May's stance amounts to a "significant retreat" from the Government's previous position that a trade deal could be done within the two-year deadline. The party's Brexit spokesman Paul Blomfield said: "It is less than a week since the Prime Minister triggered Article 50, and it seems every day brings another broken promise from the Government".

That much is effectively endorsed by the Independent, which headlines a story: "Theresa May admits defeat on crucial Brexit policy", telling us that: "Prime Minister accepts trade deal with EU will not be possible before Britain leaves union".

Thus, the cat is out of the bag, just in time for our idiot foreign secretary to tell the world: "Britain will 'more than survive' if it leaves the EU without a deal". Unsurprisingly, this is contradicted by the Brexit select committee which states that the "no deal" scenario:
… represents a very destructive outcome leading to mutually assured damage for the EU and the UK. Both sides would suffer economic losses and harm to their international reputations. Individuals and businesses in both the UK and EU could be subject to considerable personal uncertainty and legal confusion. It is a key national and European Union interest that such a situation is avoided.
That prospect, however, has receded to a second order issue, as the scope of the talks has contracted to such an extent that the scenario not longer has the same immediate significance.

For sure, the talks could break down over the money, but I fully expect Mrs May to fudge that. When the decks are cleared over this and expat rights, the main issue of substance will be the transitional deal. That is where Mrs May could find herself eating crow, and just maybe she will find it too much to bear and will walk out. May equals mayhem, so to speak.

My money, though, is a fudge covered by "spin", especially as she seems to be ready to ditch her principles and allow free movement to continue through the transition period. This, according to the Mail, could extend to five years while the free trade deal is negotiated.

In that article, the Mail has changed its tune about closing the deal, writing that: "Mrs May insisted the Brexit deal could be completed within two years, but acknowledged that the full trade deal, which would have to be signed off by every EU parliament, might take longer".

This means that the spin-meisters are going to have their work cut out. Mrs May has already started, by confusing "transition" with "implementation", but no doubt they will emphasise the prime minister's "success" in extracting us from the EU (not). Details will be glossed over and she will be presented as the victor whom we must choose in the general election to close the deal.

I would not care to bet on it, but it would not surprise me if some genius coins the slogan: "give me the tools and I'll finish the job", while everybody conveniently forgets that any lack of closure will be entirely down to the prime minister's poor judgement.

Despite that, Downing Street currently insists that Mrs May's position has not changed, only that "her language has shifted to bring her more closely in line with the EU's Brexit negotiating draft". It seems that anything goes in this crazy world, where the media read nothing and rely on court gossip for their reports.



Richard North 05/04/2017 link

Brexit: the worst possible option

28/11/2016  


The advantages of adopting the Efta/EEA option are that it gives us the much-needed transitional breathing space by keeping us in the Single Market, yet takes us fully out of the EU and the remit of the ECJ.

When the time is right, and we want to upgrade to a different arrangement, leaving the EEA could not be simpler. We simply give one year's notice.

These make attempts to block the option particularly obtuse as, if we reject the idea of staying in the EEA, the only other alternative which keeps us in the Single Market is to stay in the EU, with a phased withdrawal over a number of years. Come the end of the Article 50 negotiating period, we would arrange to stay in the EU, and only several years later (if at all) would we be fully clear of the EU and the embrace of the ECJ.

Unattractive though this is (and one can quite accept any true Brexiteer objecting to it), this seems to be what the governor of the Bank of England, Mark Carney, has in mind. According to the Sunday Times yesterday, he is working on a secret plan to keep British businesses in the single market for at least two years after the country leaves the EU.

Carney has held a number of private meetings and dinners in the past two weeks at which he has appealed to business leaders to set aside their differences over Brexit and focus on a common goal. Whether or not Britain remains in the single market over the longer term, business will need time to adapt to the new arrangements, he has argued.

What he is after has acquired the standing of the "continuity option", which kicks in after the Brexit negotiations conclude, in order to prepare for the terms of whatever deal the government can strike with Brussels. In the City though, just to be different, they are calling it the "Brexit buffer" and, dangerous though it is, being thought of as "an elegant solution" to a political stalemate building between business and the government.

As one might expect, the CBI is backing this "continuity option" which is claimed to allow the government to offer a degree of comfort about the future without revealing its broader strategy - if one exists. It would also cushion the financial sector, and broader economy, from post-Brexit turbulence.

The plan, according to the ST went into high gear Monday last, when Carney addressed 50 senior investment bankers at Chatham House and a group of finance directors of the high street banks on Wednesday.

"Carney knows there needs to be a two to three-year extension to allow Britain to adjust from the old rules under Europe to the new order. His key word is continuity", a banker who attended the Chatham House dinner is reported to have said. The governor is now to make an appeal for a smooth transition in Europe, via the G20's Financial Stability Board – of which he just happens to be chair.

And, of absolutely no surprise at all, the ECB is also said to be concerned about the spectre of a "hard Brexit". The ST notes that London is Europe's dominant financial centre and a departure from the single market could choke off the flow of capital for companies across the EU.

Furthermore, the Germans are said to want a handover period but don't want to be seen asking for one. Carney is thus offering what appears to be "a diplomatic solution that works for everyone".

What none of these geniuses seem to have put together though is that this "continuity option" would most certainly need a treaty change for the UK to operate within the Single Market, outside the Efta/EEA framework, on anything like current terms.

That will most likely amount to a succession treaty which presents its own set of problems, not least in requiring ratification of all 28 Member States, including the UK. But what amounts to a fudged exit would, most certainly, trigger uproar which could put parliament on the spot when it comes to ratification.

Then, if it is not ratified, we're into a WTO option, which is the worst of all possible options – but one which would be politically sustainable, while Carney's "continuity option" wouldn't be.

Meanwhile, in a move which is probably not entirely unrelated, Lord Kerr is predicting that the government has a less than 50 percent chance of securing an orderly exit from the European Union within two years.

In his view, the UK will potentially have to accept a phased departure lasting much longer, prompting "a decade of uncertainty".

Predicting a crunch point in the Article 50 talks in the autumn 2018, he argues that the Government is likely to table proposals next spring, whence they would be immediately rejected by the "colleagues", leading to "an extremely nasty bout of xenophobia in the Daily Mail and Sun in the summer, far worse than the recent attacks on the judges as enemies of the people".

According to Kerr, "the fog in the channel is getting thicker all the time", adding even if an agreement was reached by spring 2019 there was a chance "a demob happy European parliament" in its final months before elections in 2019 would refuse to ratify the deal. Hence his prediction that the chances of a deal within two years is now lower than 50 percent.

Kerr challenged those who claimed an interim deal would be easier to negotiate, saying even an interim deal would require an agreement on the long-term destination.

On that point, he cannot be faulted. After all, an interim deal cannot be an interim deal unless you have an end game in mind. And if continued membership of the Single Market within the matrix of the EU is your aiming point, one can see up being trapped there when business objects to dropping out into something that does not offer better terms.

However, Kerr clearly hasn't thought through to the end game. "No one concedes something in an interim agreement that they would not be prepared to concede for a permanent agreement", he says. "In a transition or a bridge, you have to know where you are going, and have a second pillar on the other side of the river, and that is just as hard to negotiate".

This is not actually the case, if your interim is the Efta/EEA option and the end game is to relocate the management of the Single Market to Geneva. But then Kerr – as well as Carney – probably have their own end game, which is called keeping us in the EU by stealth.

The crucial element here is that, at the end of the Article 50 negotiations, we really must leave. We cannot accept a succession treaty which effectively keeps us in the EU, disguised as a transitional agreement, with an option to reverse course and bring us fully back into the EU maw.

Perversely, the best of all defences against such a ploy is the Efta/EEA option and those blocking this are in fact exposing us to the greater danger of getting trapped in the EU. Some people need to do some hard thinking, because the way we are going is looking more than a little dangerous.



Richard North 28/11/2016 link
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