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

Brexit: the lack of vision

24/11/2016  


If you feel inclined to take the word of ITV's Robert Peston, the cost of Brexit has just soared to £220 billion. Even less extravagant estimates put the cost at close to £60 billion over the next five years.

Given that Vote Leave was looking to save £350 million a week from Brexit – and there are unlikely to be a compensatory savings from reduced contributions to the EU, it is beginning to look as if their "side of the bus" slogan might qualify as one of the most egregious campaign lies in recent history.

However, the remnants of Vote Leave, rather than hanging their heads in shame, are picking up Nick Clegg's contradictions over membership of the Single Market, while supporting an exit option which – if the Government was foolish enough to adopt it – would ensure that Brexit cost a great deal more than even £220 billion.

Fortunately – as Pete points out - we didn't vote on the money issue. And while that, in itself, is enough to render the Vote Leave campaign a waste of space the likelihood is that the people were expressing an anti-establishment sentiment, with the EU taking the hit primarily because it had the support of the establishment.

That does not in any way negate the referendum result – for good or bad, that's the way the country voted. Short of Richard Branson's shock troops forcing a second referendum, we're on our way to redefining our relationship with the EU.

Whether that actually means we leave the EU remains to be seen. Brexit may mean Brexit, but there are graduations to the process which means that we could end up still in the EU for a long while yet, as a convoluted transitional deal takes effect.

Perversely, the "zealoteers" who are intent on blocking continued participation in the Single Market via the Efta/EEA route are making this fudge more likely. If we can't get a clean break by switching over from the EU to the EEA, then Mrs May could be forced to keep us in the EU for the transitional period in order to give us the trade deal that we need.

The ridiculous thing about all this though is that there never were going to be any short-term savings from leaving the EU and the best we could ever have hoped for was the cost-neutral switch offered in Flexcit, based on continued membership of the EEA.

Under this plan, the primary aim for the longer-term was not to deliver any savings as such, but to improve the UK's trading position and thus enhancing economic performance.

Now, for the short- to medium-term, it looks as if we must take an economic "hit", although there will be an ongoing debate as to how much of that is attributable to the Brexit which has yet to come, and how much was going to happen anyway. In the nature of things, this is something we will never know – making ideal conditions for endless argument.

But the fact is that, unless we have a vision for improving our trading performance – on a European and global level – and the determination to push through the necessary changes, Brexit is going to be seen as a "catch-up" exercise. It is going to be portrayed as a struggle to make good the position we would otherwise have gained, according to whichever pundits have the ear of the media.

As regards that "vision", it is quite clear that we have a long way to go, witness the facile piece from one commentator who expected Hammond, in his autumn statement, to deliver it.

Rather, the vision should have been central to the Brexit campaign. The lack of any unifying theme and the reliance on claims of cost-savings as the core element of the official campaign represents its greatest failure.

Expecting the Government, headed by a former remainer, to offer a vision is rather like expecting the police to reduce crime. And the current Labour opposition is clearly in no position to fill the void, witness the toe-curling performance by shadow secretary Rebecca Long-Bailey (from 3:37), displaying a lack of knowledge all too typical of MPs (along with Andrew Neil who seems equally confused).

Nevertheless, the lack of a vision as an issue will not go away. The referendum 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.

This lack of vision will cost us a great deal more than money.



Richard North 24/11/2016 link

Brexit: Monograph 15

16/11/2016  


The last month or so, following the Conservative Party conference and Mrs May's speeches, has been a period of intense frustration.

A media, obsessed with the "hard Brexit" narrative and then with its "Trump mania", has distorted the debate, dragging it away from the substantive issues, and losing focus on the things that matter, effectively concealing a the lack of progress in Government as the self-imposed Article 50 deadline draws nearer.

For better or worse, The Times story yesterday has refocused attention on Government and while attempts have been made to reduce its impact, we are seeing a continuing discourse over its relevance.

Whether or not the claims in the memorandum used by The Times - written by a consultant, thought to be from the firm Deloitte, whose analysis was part of a pitch for work – have been exaggerated is, at this particular moment, impossible to tell.

But it indisputable that, whether or not the Government has a Brexit plan, it has not publicly revealed it. On the other hand, the signals coming from various quarters in Government are opaque and at times contradictory, and the departmental ministers charged with dealing with Brexit are not building a coherent picture, or telling us anything that might inspire confidence that they are on top of the game.

The crucial thing about Brexit is that it can't be fudged. When our representatives finally go to Brussels and make their case for an exit settlement, they will be working within impossibly tight constraints on, as yet, the most complex political scenario of the Century – and they have to get it right.

It is, therefore, not unreasonable for those of us who have devoted so much time and effort to the cause of leaving the EU to expect more than we are given.

Nor is it unreasonable of us to point out that, for all the self-congratulatory narratives that are hitting the bookstores, the main "leave" campaigns, and especially the official Vote Leave campaign, have made a monumental mess of things by failing to offer a coherent exit plan prior to the referendum, which would have constituted a mandate, on which we could pressure Government.

The front page of the latest edition of Private Eye - used with the express permission of Ian Hislop - sums up the situation beautifully. A campaign built on the most shallow and crass of lies is unravelling after the event, putting us in the situation where, having won the war (despite, not because of the noise-makers) we are in danger of "losing the peace".

With that in mind, though, I have published yet another Monograph. This is Monograph 15, the first of two parts, on leaving the Single Market.

This is a subject on which an extraordinary amount of nonsense is being talked, alongside a continued failure to understand that, in seeking a sensible withdrawal package in the time allotted, we are going to have to trim our expectations, and work towards an interim solution.

Were it the case that we were not in the EU's Single Market, there would be no question of us seeking to join it, as part of our exit settlement. But we are part of it, so we have to deal with the world as it is, not as we would like it to be.

Whether or not the Single Market is a "good thing", it is unarguable – except to the crazies – that precipitate, unplanned exit would cause a great deal of economic (and probably political) damage. Therefore, the issue of the moment is not whether we should leave, but how - and the answer to that is "slowly and very carefully".

But, as my new Monograph points out, asking whether we should leave the Single Market is the wrong question. This has been an extremely difficult pamphlet for me to write, because it took me a great deal of time for that conclusion to dawn on me.

The point about the Single Market is that, in the final analysis, it is a system of market regulation. Out of the EU, the UK still needs a system so, when we leave, it will have devise one of its own, unless of course, we continue to participate in the EEA.

What we actually lose from withdrawing from the Single Market, would not be the regulation, per se. Rather, we would cease to coordinate our measures with other countries in the EEA, the result of which would be to lose access to their markets.

With our withdrawal would come the freedom to devise internal regulation more in keeping with domestic needs, but the price would be the closing down of trade with former EEA partners. That could prove unacceptable – and most likely would be rejected as an option.

That leaves the UK in a position where it will have to look for a different set of arrangements – with the same or different partners - trade barriers. But the greater the divergence from the status quo, the greater will be the loss of access.

Viewed from that perspective, even if the UK fully withdrew from the Single Market, it would not so much be leaving as switching from one system to another.

Come what may, the UK market will not be unregulated when we leave the EU. These fantasies of a bonfire of regulation are just that – fantasies. The best we could hope for is that the market would be differently regulated with a different balance of advantages.

Logically, therefore, there is no specific issue for the UK in deciding to withdraw from the Single Market, and no great gain in so doing. The real concern has been the use by the EU of the Single Market to further its political agenda.

If that agenda was fully and reliably separated – which it would be when we formally leave the EU - there could be less reason for rejecting the concept of a single market. The issue might then be best couched in terms of how that single market was managed, and by which body. Whether to leave the Single Market, therefore, is perhaps the wrong question.

It might be a better idea to ask how the Single Market could be changed to make it unnecessary for the UK to leave, and politically possible for it to maintain an active trading partnership with EU Member States. That is the conclusion I draw in this new Monograph and I will explore how we go about doing this in Part 2, attempting to repair the wreckage left behind by Vote Leave.



Richard North 16/11/2016 link

EU Referendum: so what next?

24/06/2016  


While they're sweeping up all those chicken heads, we have Flexcit for you: it's all worked out here. Just follow the instructions and you won't go far wrong. Written by hundreds, read by thousands (currently over 80,000), this is the definitive exit plan, as noted by The Register.

There is also the video which helps explain some of the issues, and the short version here.

Over the next hours, weeks and months we are going to be assailed by ill-informed comment in super-tanker quantities, much of it from the BBC whose David Dimbleby referred to Article 50 as "Chapter 50" - reflecting the degree of knowledge and insight in the institution.

In this and other media organisations - and in government itself - there is terrifyingly little knowledge of the workings of the EU, and next to none about how we should extract ourselves from it. Listening to some of the offerings is painful.

However, with the promised resignation of Mr Cameron as Prime Minister, the excellent news is that he has had the sense to to defer the Article 50 notification to his successor. It will not - as Cameron suggested it might (another example of FUD) - be invoked immediately.

That gives us some time for reflection and planning, and also some mature consideration as to timing.

Key events are the French presidential elections in May next year and the German federal elections, which will be held between 27 August and 22 October 2017. Until those are over, and the new (or existing) German Chancellor is bedded in, there is not much point in invoking Article 50. There will be no-one on the other side of the table, capable of making a decision.

The new prime minister must also decide on whether he (or she) wants the two-year article 50 negotiating period to run into our own general election period. There might be some sense (but also some hazard) in setting the period so that the tail end straddles the election. That way a putative settlement can be part of the election mandate sought.

There are advantages and disadvantages to this, and a national conversation might be appropriate.

Also, we have to deal with the assumption that the negotiation period will necessarily be two years. It can be extended by unanimity. However, there is nothing in the book which says the application for an extension has to be left to the last minute. It could, in fact, be the first order of business. A British government could start the talks with a proposal to extend the period - taking the pressure off negotiators.

And there, we are going to have to see some serious realism. Even with the best will in the worlds - adopting the EEA core acquis unchanged - concluding the settlement within two years is going to take Herculean effort. We are going to have to throw a huge number of concessions off the sledge to make it happen.

The end result, therefore, is going to be neither pretty nor clean. And there are going to be plenty of naysayers warbling: "I told you so", when we see no immediate savings on contributions, and no immediate cut in immigration.

But even Dan Hannan has managed to understand enough of Flexcit (not that he would ever admit it) to realise that Brexit is a process, not event. By the time he has repeated that point enough times, he will have convinced himself that he invented it, and will dine out on his own cleverness

The crucial element, though, is that the extraction will be phased. The legal-politico task of withdrawing from the EU treaties is only the start of a long process, a means to an end - an opportunity rather than a reward (some more slogans for Mr Hannan to steal). What we do then will determine whether Brexit will have been worth it - there is danger as well as opportunity.

A government and media bereft of ideas, however, will need guidance. And it is a truism that most new policy initiatives come from outside government not within. After all, the very idea of joining the EEC came as a result of external agitation and lobbying. A tolerable post-EU order, therefore, is going to be driven by minds outside the bubble.

Fortunately, so much of the work is already done. It is there to steal, and any number of clever Hannan-clones can read our work and claim authorship. We can't stop them doing it and, if that is what is necessary, some of it will have to be tolerated. Small minds can't cope with "not invented here" syndrome.

Nevertheless, Flexcit is sufficiently well established for many of its readers to recognise the origin or parts when they appear. To see them used will be something of a reward. To know that their users could not bring themselves to acknowledge the origins will tell its own story - one we can see unfolding for our entertainment over the next two years.

A new sport is born - Flexcit spotting. Step forward Mr Hannan. In the meantime, as Mary Ellen says, we can spend a little time partying.



Richard North 24/06/2016 link

EU Referendum: handing victory to Project Fear

29/05/2016  

000a Booker-028 Fear.jpg

Last week, as the fog of "Project Fear" rolled out thicker than ever and polls showed the "remains" leaping into a dramatic lead, even newspapers most critical of David Cameron's propaganda blitz were at last zeroing in on why the "leave" campaign is so dismally losing the argument.

So writes Booker in the week's column, noting that "some of us have long tried to point out that the one thing vital to winning this battle was a properly worked-out 'exit plan'".

It cannot be said enough how important this plan is to an effective campaign. It is not (or should not be) an optional extra. Above all, says Booker, it was essential to reassure voters that it would be perfectly possible for us to leave the EU while still being free to trade as part of its single market.

And here's the rub. Vote Leave's deliberate refusal to offer such a plan (as confirmed by the Commons Treasury Committee) has left a black hole at the heart of its campaign.

The lack of a plan, which should have been published before the campaign proper started, has distorted the entire debate. Alone, it could have transformed the argument by pre-empting every scare story on which "Project Fear" relies. Most of the lurid claims of economic devastation simply would not have got off the ground.

As pointed out by Alistair Heath, the "best possible way" for us to leave is for Britain to join Norway in the European Economic Area (EEA).

Rich Norway is as fully part of that market as Britain. But of the 19,532 laws shown on the EU website as currently in force, it has only to obey 5,046 of them, 26 percent. And, as an independent nation, Norway has in fact more influence on shaping those rules than we do, as just one of 28.

The unique advantage of the "Norway option" is that it could provide an off-the-shelf means to neutralise all "Project Fear's" catalogue of horrors. No more "leap in the dark": shut out of the market, millions of jobs lost, house prices collapsing. Problem solved.

This is the point that Vote Leave have singularly failed to grasp. We are not in the soothsayer business and it is not possible accurately and completely to chart a way through the Brexit process. But the fact of committing a plausible scenario to paper, and endorsing it as a credible option, would be enough to reassure most people that the risks of leaving were acceptable.

The main purpose, then, is to neutralise the FUD, leaving Mr Cameron and his "remain" campaign with nothing to say. They have not otherwise been able to give us a single positive reason why remaining in the EU is so wonderful.

But, instead of biting the bullet, Vote Leave have determinedly left this black hole in the official Brexit campaign. It is this that has given "Project Fear" the room to exploit the political vacuum so shamelessly.

But what makes this still more shocking is that Vote Leave were told by their focus groups in the summer of 2014 – two years ago - that the “risk” of leaving would be the decisive factor in the campaign.

Yet the very man who organised this research also ignored it. Dominic Cummings, the one man at the centre of the Vote Leave campaign who could have made the difference, arbitrarily decided against adopting one, and no one else in the Vote Leave campaign had the gumption or foresight to over-ride him.

In June last year, Cummings's perverse rationale was that "creating an exit plan that makes sense and which all reasonable people could unite around" seemed "an almost insuperable task". But when he observed that eurosceptic groups had been "divided for years about many of the basic policy and political questions", that was the real issue to hand. The warring sub-tribes of Westminster, each with their favoured gurus, where not about to submerge their egos for the good of the cause.

Cummings did note that Flexcit had been produced. This, he acknowledged, was based on using the EEA as a transition phase – remaining in the Single Market and retaining a (modified) version of free movement – while a better deal, inevitably taking years, was negotiated.

Furthermore, he acknowledged that this was an attempt to take the Single Market out of the referendum debate. And with that, he promised to "discuss the merits of this idea", when he had "studied it more".

That discussion never happened. There was no discussion at all, not in the open. Snippets of objections emerged, with sniping round the edges, and the egos of Westminster loftily declared the plan a "non-starter". But there was no debate – no honest attempt to resolve the issues. All we got was back-stabbing and snide put-downs. Then, without anything being said openly, the whole idea was quietly shelved.

Much of the reluctance to proceed was based on a misunderstanding of the process. Cummings gave some clue to this when he argued that the "complexity of leaving" would involve "endless questions" that could not be answered, even if the plan were http://www.theguardian.com/politics/2016/may/28/economists-reject-brexit-boost-cameronto be 20,000 pages long".

This specifically reflected the failure of Cummings and his backers in Vote Leave to understand that Flexcit involved the adoption of the EEA and repatriation of the entire acquis, pending a longer term review. Not having properly studied the plan, or discussed it with me, he had not realised the extent to which it simplified the whole process.

The aim was for the day after leaving to be exactly the same as the day before. Only after a gradual, evolutionary process would changes emerge, and then these would be carefully managed, to minimise disruption.

But the great Cummings had already decided. "On top of the extremely complex policy issues", he wrote, "is a feedback loop". Constructing such a plan, he gravely informed us – having given the idea only minimal thought - "depends partly on inherently uncertain assumptions about what is politically sellable in a referendum, making it even harder to rally support behind a plan".

This was the bullshit factor creeping in. Cummings and his backers were already deciding what they wanted to "sell". Without declaring it openly, they had fixed on the idea of pushing savings from no longer paying contributions to Brussels. From this, the "£350 million a week" meme emerged – the same one that is now giving us so much trouble.

At the heart of this was (and is) a core of condescension and contempt for the voting public. From the "market research" he had done, it was clear that 15 years after the euro debate the general public knew nothing more about the EU institutions than they did then.

Less than one percent, he claimed, had heard of the EEA and few MPs, he averred, knew the difference between the EEA and EFTA or the intricacies of the WTO rules. That much, about the parlous state of knowledge of MPs, was doubtless true, but as we have learned, their ignorance is in a class of its own.

But what was very clear was that Cummings was not prepared to entertain the idea that the public could be effectively educated about such things in the time available. This was to be a "dumbed down" campaign, focusing on giving £350 million a week to the NHS.

Thus, when Mr Cameron went to Iceland last October to claim that the Norway option wouldn't work for Britain, Cummings rushed to agree with him.

Having rejected the principle of an exit plan, Vote Leave were being forced to discuss the possibility. But they now rejected the best one because joining the EEA would mean accepting the EU's freedom of movement rules (which could at least be tightened up later) - and it might cost us £4 billion of those billions we pay to Brussels each year. In any case, by then, the obsession with giving this money to the NHS had come to dominate what passed for Vote Leave's thinking.

The trouble is that, by so explicitly rejecting the "Norway option", Cummings was opening the way for the worst exit scenarios possible to be placed in front of the public – on the basis that if you don't come up with an exit plan, the opposition will pick the worst one for you.

How telling it was, therefore, that the Treasury's latest dollop of "Project Fear" on Monday, quite rightly explained why neither a "Canada-style" trade deal nor the WTO option would work (let alone some illusory one-off UK-EU trade deal which would take far too long to negotiate).

God knows how many times we've written on the flaws of these options, but nothing has any effect on Vote Leave. It is there that you see the obduracy of the SW1 claque that has been so apparent in its dealings with the Treasury Select Committee. Simply, they know best, and will not be told. There is no debate – not the slightest discussion. The word is handed down from on high, and that (as far as they are concerned) is the end of it.

Nevertheless, given such a perfect canvas on which to play, it is entirely understandable that George Osborne's civil servants didn't even need to consider the one option they most feared, joining Norway in the EEA. Vote Leave had already turned it down. At least the Institute for Fiscal Studies conceded that it would be much less costly than any other option suggested, but that soared above the heads of Vote Leave, as they sought to rubbish the Institute.

So, given a free pass by Vote Leave, "Project Fear" rolls triumphantly on, with the official leave campaign having given the game away before it started.

All that is left to the rest of us is to vote on 23 June for what might have been, in the knowledge that Mr Cameron has been allowed to get away with fighting this campaign so dishonestly that the core problem will in no sense have been resolved.

We shall, concludes Booker, remain just as resentful of being ruled by our weirdly dysfunctional EU system of government as we were before Cameron sought to bamboozle us by setting this cynical little charade on its way.



Richard North 29/05/2016 link

EU Referendum: procurement - a WTO agreement

27/05/2016  


On the Vote Leave grid yesterday was another of those "bent-banana" style of shock-horror-probe "revelations", concerning the cost of EU laws, this time "foolish" EU procurement rules, obligingly given space by the Guardian and the BBC.

The rules are something of an obsession of Dominic Cummings and he has been keen to see them in the frame. Thus, Vote Leave is telling us that they are costing UK taxpayers of £1.6 billion a year - which, of course, could be better spent on "new hospitals and flood defences".

The claims are published online, referring to Directive 2014/24/EU, approved after a 2011 White Paper COM(2011) 896 final. The current Directive, which came into force on 18 April, builds on the experience of the 2004 Directive, simplifying and redefining procedures to make them more user-friendly.

The cost is supposedly based on a 2011 study for the European Commission, which is said to have estimated the cost of (EU) procurement legislation at 0.7 percent of the total value of spending on procurement in the UK.

There are, in fact, several studies in 2011, but Vote Leave links to this one from PWC. Interestingly, this does not offer a 0.7 percent figure as an increased cost. What it does tell us is that the (average) cost of public procurement in Europe is estimated at about 1.4 percent of purchasing volume and that the total UK cost is 0.7 percent (see figure 2.15).

Crucially - and a point missed entirely by Vote Leave - the report warns that these costs are not fully attributable to the procurement directives. "All costs are captured whether or not they are direct results of obligations from the directives. Procurement costs include business as usual costs that would be incurred even in a world with no EU-wide procurement legislation", it says.

This much we have no problem in understanding. With or without EU intervention, public procurement always carries a cost. UK defence procurement, for instance, costs £1.3 billion annually (around four percent of the budget), where EU involvement is minimal.

However, there was another 2011 report - this one - which refers to yet another report, this one by Europe Economics. In this you will also find a reference to a 0.7 percent cost (as an EU-wide figure), representing an EU-wide increase attributable to the procurement Directives. But it also states that overall the administrative costs for awarding authorities have gone up by 20-40 percent (on average by 35 percent). The would only put the overall UK cost increase, as a percentage of spending at 0.25 percent, as opposed to the 0.7 that Vote Leave claims.

Furthermore, there is also an interesting conclusion that is not mentioned by Vote Leave. As a result of the tendering process, this report says, overall prices of goods and services purchased were 2.5 percent lower than they would otherwise have been. If this is representative of the UK situation, the Directives would actually deliver net annual savings of about £4 billion to the UK taxpayer. These could actually be higher, as Commission modelling in 2009 indicated that savings of 5.5 percent were possible (see p.147).

Cost issues are is further elaborated by another Commission report, which stated (p.19):
The total cost to society of procuring the goods and services covered by the Directives is estimated at around €5.26 billion per year (for the EEA-30 in 2009), which is less than 1.3% of the value of invitations to tender published (by the EU-27) in the same period (i.e. €420 billion). This estimate covers the whole cost incurred during the entire procurement process i.e. from the pre-award phase, through the preparation of offers by all participating bidders, the selection of a successful bidder, and including any costs of litigation. Much of this cost would be incurred whether the Directives were in place or not.

As a result, this global figure would not reduce to zero if the Directives were repealed. Procurement carried out below EU thresholds, as well as private procurement, has associated costs. In fact, the additional cost imposed by provisions of the Directives is likely to be relatively limited, as has been pointed out in an earlier evaluation of the public procurement Directives carried out in 2006. That evaluation put the additional cost of the compliance with the EU Directives compared to national/below-threshold procurement at 0.2% of total contract value for public purchasers, and a further 0.2% for suppliers – or approximately €1.68 billion in 2009.
This much emerges from a proper evaluation of available data - leaving us with a scenario where Vote Leave substantially exaggerates the cost of the Directive and ignores the benefits. But it wasn't just this work that brought me into the fray. For some days, I had already been working on an article about public procurement, specifically to reassure readers that the Directives would not be affected by Brexit.

The point here is that the opening up of public procurement is seen as advantageous to a considerable section of British business – and is a vital step if we are to build on our knowledge economy and develop service industries internationally. It is also considered an important way of increasing the efficiency of public spending.

Crucially, though - and this was what caught my interest - opening up public procurement does not stem primarily from the EU. It relies on the WTO 1994 Agreement on Government Procurement, which is reckoned to have opened up procurement activities worth an estimated US$ 1.7 trillion annually to international competition. It was this that led to an EU Green Paper in 1996, and has driven progress ever since.

Interestingly the Agreement has not only been behind intra-Community legislation but also an agreement with Switzerland, liberalising respective public procurement markets, and with the United States. It has also filtered into third country deals.

Such is the importance of this market liberalisation that we saw recently an article in the trade magazine Supply Chain, dealing with the potential effects of Brexit on public sector procurement. Fortunately, in a refreshing change from the usual FUD, the author reassured readers that UK legislation had been put in place to deliver the benefits of the EU Directives, and "would continue to have an effect".

In the article, the belief was expressed that the Government was unlikely to reverse EU based procurement laws, which had "firm principles aimed at transparency, equal treatment, open competition, and sound procedural management".

And indeed that is likely to be the case, and specifically because this is another example of the UK implementing via the EU an international agreement that would remain in force even after the UK has left the EU.

Given the apparent advantages of the Agreement, and its potential, it would appear that the very last thing a "leave" campaign needs to be doing is claiming that the procurement Directives (or their UK implementing legislation) will be abolished.

One wonders why, then, that the two most enthusiastic media publishers of the Vote Leave claims have been the BBC and the Guardian, giving chief executive, Matthew Elliott the opportunity to tell us: "Pernicious interference from Brussels not only stifles business, it makes government more bureaucratic and less responsive".

Perhaps, before this totally undermines the reassurances in Supply Chain, someone will tell Elliott that this "pernicious interference" is actually implementing a WTO agreement, and is saving us money – with the prospect of creating more business for UK Plc.



Richard North 27/05/2016 link

EU Referendum: in the absence of a plan

23/05/2016  


The whole point of having an exit plan was to pre-empt attempts by the government to project leaving the EU as a risky option. Crucially, we had to get in first, demonstrating to people that the exit could be ordered and safe, with no significant economic impact.

This is exactly what Flexcit did, and it was freely offered to Dominic Cummings for use by Vote Leave, precisely to head off the scaremongering (FUD) which we knew was to come. Yet, as we all know, Cummings didn't even have the courtesy to respond to me.

And now we have, exactly as we predicted three years ago, a reliance on FUD, with the government cynically exploiting concerns about the economy, exactly as we predicted in July 2014, when we warned of the need to pre-empt it.

With those warnings unheeded, the official "leave" campaign has paved the way for today's Treasury analysis which, accompanied by a lurid graphic (above), tells us:
A vote to leave would cause a profound economic shock creating instability and uncertainty which would be compounded by the complex and interdependent negotiations that would follow. The central conclusion of the analysis is that the effect of this profound shock would be to push the UK into recession and lead to a sharp rise in unemployment.
Two scenarios have been modelled to provide analysis of the adverse impact on the economy. These deliver a "shock" to the economy or a "severe shock". You can take your pick, but what you cannot do is pick the Flexcit scenario. Even Ed Conway of Sky News notices its absence.

But then the Treasury's game is to capitalise on the uncertainty which would necessarily follow from any of the post-exit scenarios proposed by Vote Leave. The moment this organisation rejected the "Norway option" (as did Leave.eu) and then had Cummings and Gove both specifically reject continued participation in the Single Market, they paved the way for today's scare. 

To build its picture of uncertainty, the Treasury tells us that four processes would need to be completed:
Process 1: agreeing the UK's terms of withdrawal from the EU under Article 50 of the Treaty on European Union.

Process 2: agreeing the UK's new trading relationship with the EU.

Process 3: agreeing the UK's new trading relationships with the rest of the world including over 50 countries with which the UK would need to negotiate new trade arrangements.

Process 4: changing the UK's domestic regulatory and legislative framework.
Each of these four processes, we are then told, "would be complicated in their own right". But then we get: "conducting them all at the same time, on any terms that would be acceptable to the UK and within the specified two-year period for leaving the EU would almost certainly be impossible".

This, of course, is straw man territory. None of this presents the slightest problems if we adopt Flexcit. The terms of withdrawal and the trading relationship with the EU are largely settled by continued participation in the EEA.

The trading relationship with the rest of the world is maintained as at present, relying on the presumption of continuity and, as far as the UK's domestic regulatory and legislative framework goes, there would be no change. We would simply repatriate the entire acquis and take our time with any necessary changes or revisions.

Vote Leave, though, has no answers. In the Gove/Cumings scenario, they throw everything into the pot, with absolutely no idea of whether any settlement can be achieved, or what the timescale might be. They then talk grandly of a vast bonfire of regulation, from which they supposedly gain most of the economic benefits from leaving.

In other words, Vote Leave have set us up for the fall. They gave the game to the government, which can make the unanswerable case that leaving will cause a recession. Where we needed certainty, reassurance and predictability, Vote Leave gave us uncertainty and revelled in creating even more. 

With "recession" headlines plastered over today's newspapers, Vote Leave needs to revisit Galatians 6-7. This is the sort of stupidity that has cost us the referendum - and they can't say they weren't warned.



Richard North 23/05/2016 link

EU Referendum: blowhards at the IMF

14/05/2016  


We knew this was coming. When the IMF last month offered less than favourable comments on the effect of Brexit on the British economy, they also said that they were preparing a special supplement to their "Article IV" annual country assessment. And, as promised, here it is.

Writing of the "possible economic effects of an exit from the EU", however, they seem to be making the most pessimistic construction of event possible. And one can only assume – although probably correctly – that this is a deliberate attempt to interfere with our referendum, with a view to influencing the outcome in favour of the "remain" proposition.

A crucial part of their case is that a vote for exit would precipitate "a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output".

We actually deal with this yesterday in respect of Carney's comments, and that claim is no more valid coming from the IMF than it was from the Bank of England.

For sure, one might expect short-term market volatility, but there is absolutely no good evidence that there will be an adverse effect in the medium- to longer-term. After the initial market shock (much of which will be discounted anyway, as is invariably the case with such things), a properly handled post-vote process need not cause any undue alarm.

But, says the IMF, following a decision to exit, the UK would need to negotiate the terms of its withdrawal and a new relationship with the EU, unless it abandoned single market access and relied on WTO rules, which would significantly raise trade barriers. It seems likely, it then says, that ratification of a new deal would require unanimous consent of all EU member governments, making agreements subject to considerable political risks.

This, of course, would only apply with a comprehensive free trade agreement which, as a mixed agreement, would require ratification by all 28 states (including the UK). But, in the event of the UK going down the Efta/EEA route, there would be no such requirement and none of the political risk to which the IMF lays claim.

Needless to say, the IMF hasn't finished there, arguing that, as EU-level agreements also cover the UK's trading relationship with 60 non-EU economies (and prospective arrangements with another 67 countries are in the works), the UK would also need to simultaneously renegotiate these arrangements, or else see them revert to WTO rules.

These processes and their eventual outcomes, it says, could well remain unresolved for years, weighing heavily on investment and economic sentiment during the interim and depressing output. In addition, volatility in key financial markets would likely rise as markets adjust to new circumstances.

This point, however, is picked up by Ambrose Evans Pritchard, citing this writer. These deals, he says, could be switched easily enough under the principle of "presumption of continuity" enshrined in international law. All they need do is to sign a document of continuation in force, an administrative procedure.

Variants of this have been done repeatedly: after the Czech and Slovak "Velvet Divorce", after the break-up of Yugoslavia, or in the post-colonial transition.

As to many of the other points made by the IMF, Ambrose deconstructs them with considerable finesse, also dwelling on the organisation's less than stellar record on its recent predictions.

Noting that it completely missed the onset of the global financial crisis, that it was blindsided when the US fell into recession in November 2007, and its forecasts for Greece were wrong every single year following the rescue of the euro and the North European banking system in 2010.

"I don't wish to denigrate the Fund", says Ambrose. "It remains a superb institution. I use its research all the time in my work. But on this occasion it has been misused for political purposes".

"There may be compelling reasons for Britain to remain in the EU", he adds, "but they have nothing to do with the bogus claims advanced today by the IMF. So take your rotting pile of damp wood elsewhere Madame Lagarde".

And this is possibly our saviour. Damaging as the claims are, on their face, and high may their prestige be, the relentless attacks on Brexit by the IMF, the Bank of England and others are so extraordinary one-sided that they are quite obviously politically motivated.

Most assessments, the IMF tells us, point to sizable long-run losses in incomes, as increased barriers would reduce trade, investment, and productivity.

The wide range of estimated losses - from 1½ to as much as 9½ percent of GDP - does not represent fundamental disagreement among these experts that exit would be costly, but largely reflects differing assumptions about the UK's future economic relationships with the EU and the rest of the world.

Basically, it argues, this is the difference between Norway, Switzerland and WTO, with even the offset savings of one-half of one percent of GDP in EU contributions being insufficient to wipe out the 1½ percent loss in what is argued is the best-case scenario.

Yet, there is absolutely no reason why the Efta/EEA option, with continuing external trade enabled by the "presumption of continuity", should carry any economic penalty. Even with ongoing payments to the EU and clearing our RAL liability, one would expect this Brexit option to be economically neutral.

Herein, though, lies an important, basic point. There would almost certainly be substantial economic penalties attached to the bilateral route, and the costs of the WTO option would be prohibitive. If anything, a loss of 9½ percent of GDP through this route is an understatement.

Had the cost-free exit already been mapped out by the official leave campaign, there would be less room for the likes of the IMF to play its dire little games. It claims would already have been pre-empted and discounted.

However, our one advantage seems to be that the "remains" are overplaying their hand. The torrent of FUD has reached such proportions that each additional day stretches their credibility, which must now be at breaking point.

Now, I think, would be a good time for a counter-attack. Short of a plague of boils and the death of the first born, there is little the IMF or any other institution can offer that could be worse. Flexcit round the corner, offering a risk-free option, might be just what is needed to sweep away the IMF blowhards.



Richard North 14/05/2016 link

EU Referendum: multilateralism is the key

06/05/2016  


It's election time again but, compared with the forthcoming referendum – where we decide who really governs us - these polls are an irrelevance. In fact, I cannot recall any time when I've been less interested or enthused by such events.

With such a short period for the referendum campaign, to have also to deal with a complex of local and PCC elections, Scottish and Welsh Assembly elections, and a couple of by-elections thrown in, is an unwelcome distraction. At the very least, it has put the referendum campaign on "pause" while the commentariat entertain themselves at our expense.

With or without these elections, though, it seems to me that the referendum campaign has stalled. On the Vote Leave side, the narrative has foundered on the single-shot NHS meme, which seems less convincing with every one of the thousands of repetitions. The Remains, meanwhile, are flooding the ether with torrents of increasingly tedious FUD.

What struck me about our side is that we should be making far more of the globalisation issue, capitalising on the sterling work done by Pete North, Ben Kelly and others, especially the likes of Lost Leonardo with his excellent piece on "rediscovering our global voice".

But there is a perspective here that so far has not received anything like enough attention – the tension between bilateralism and multilateralism in trade deals. The former is reflected in the growth of bilateral agreements, as in Regional Trade Areas (RTAs) also known generically as Free Trade Areas (FTAs), as opposed to the range of global agreements hosted through GATT and then the World Trade Organisation (WTO).

In what is a very contentious subject, one can quote diverse sources, some from interesting origins, that suggest that the true interests of global trade are served not by bilateralism but by multilateralism. Even the august Economist noted, back in 2013, that regional trade liberalisation is better than no liberalisation at all, "yet it interferes with globalisation in several damaging ways".

Insofar as there is consensus, it is that the multilateral approach is the preferred method of trade liberalisation, as opposed to "exclusionary" (and often selfish) regional trade blocks. Some academics will argue that the "preferential trade agreement" is a stumbling block, preventing the proper development of the multilateral trade system.

Here, the "leave" campaign has missed a trick. Rather than lauding our ability to make our own (bilateral) trade deals once we leave the EU, it could instead be speaking up for multilateralism, breaking clear of a failed (or failing) system that is holding back the global economy.

That is not to say that we could rely on what is known as the "WTO Option". Contrary to the views of many ill-informed commentators, there is not a single advanced economy in the world that relies exclusively on WTO rules. Most rely on a mix of bilateral and multilateral agreements. Only the most advanced, as in the EU's Single Market, is there complete reliance on regional agreements.

Thus, for the time being, a post-Brexit UK would have to continue the skein of bilateral agreements, just to maintain current trade flows. But, rather than seeking to replace the EU's external trade deals with our own agreements, we should be committed to supporting the global system.

To that effect, we should be building up the Bali Trade Facilitation Agreement, implementing its provisions on a global scale, rather than focusing on stitching up the system between trade blocs, as in TTIP.

The interesting thing here is that multilateralism seems to be able to rely on intergovernmental agreement – free cooperation between sovereign nation states – while regional deals increasingly rely on compulsion, taking on aspects of supranationalism, with mandatory harmonisation and dispute systems with supreme powers.

Furthermore, the multilateral approach is potentially far more valuable. While TTIP is said to be worth £10 billion to the UK in enhanced trade, implementation of the trade facilitation deal is said to be worth globally $2.6 trillion in annual GDP enhancements, with the UK share topping $60 billion.

Not only can multilateralism be adopted without the same hazards to sovereignty and democracy, therefore, it is potentially far more valuable than the bilateral route.

The trouble is for the "leave" campaign, though, that it is totally compromised. Looking internally at narrow domestic savings, it fails to see the bigger picture and argue that the greatest financial gains come from re-engaging in the global trading system, rather than seeking to emulate the EU with a replacement network of regional trading agreements.

The other problem is that very few people realise how much damage has been done to the multilateral system by the selfish focus on RTAs. Had the "leave" campaign been on top of its game, it could be arguing for a truly global perspective in world trade, thus by-passing the naysayers who warn how difficult it would be for the UK to replicate the EU's network.

Yet another problem is the "leave" campaign's obsession with deregulation. Wrongly claiming that there are massive savings to be made by abolishing EU laws, it is totally compromised when it comes to arguing that the real savings come from harmonisation on a global rather than European level.

However, it is not too late to refocus the campaign. In the seven weeks left, we can make it clear that a Britain supporting global multilateralism is better for us, and better for the world - as indeed Lost Leonardo has been doing. The EU as a regional trading bloc is a cul-de-sac. We need to break clear and rejoin the world.



Richard North 06/05/2016 link

EU Referendum: Cameron, the little European

22/04/2016  


In a classic application of FUD (Fear, Uncertainty and Doubt), David Cameron is targeting micro-audiences with a particularly insidious claim.

Writing for the Gloucester Citizen, he warns that "Cider, single Gloucester cheese and old spot sausages [are] under threat with Brexit", losing their "protected status" under EU law. He also claims that Brexit could also threaten products such as Scotch whisky, which at present can only be applied to whisky that has been made in Scotland.

As usual though, the fear tactic relies on half-truths and deception – and the ignorance of the media and politicians. And not least of these deceptions is the omission of rather crucial information: the scheme also applies to third countries.

Applicants from outside the EU can register their products with their national authorities, which then pass on the details to the EU, where they are then – after due process – recognised as protected process.

The system can be seen at work here, when in May 2011 four Chinese agricultural products received protected status in the EU, bringing the total to five, with another five being processed through the system.

In a reciprocal move, the Chinese authorities set in motion the recognition process for "ten celebrated European products". These were: Grana Padano; Prosciutto di Parma; Roquefort; Pruneaux d'Agen/Pruneaux d'Agen mi-cuits; Priego de Cordóba; Sierra Mágina; Comté; White Stilton Cheese/Blue Stilton Cheese; Scottish Farmed Salmon and West Country Farmhouse Cheddar.

Thus to represent British products being at risk when we leave the EU is a plain, outright lie. And even if the Prime Minister doesn't know he's lying, some of the people briefing him must know the truth. There is almost certainly calculated deceit being perpetrated here.

Furthermore, these reciprocal arrangements are only the tip of the iceberg of what is, in fact, a vast global scheme based around the World Intellectual Property Organization (WIPO), administering what are known as "geographical indications".

The scheme relies on a network of treaties and agreements, starting with the Paris Convention adopted in 1883, the Madrid Agreement of 1967, the Lisbon Agreement of 1958 and the protocol to the Madrid Agreement concluded in 1989.

These tie into the 1995 WTO TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), which enabled the system to be extended globally. Part of the WTO Doha round, this agreement is opening the way for other trading nations to protect their own traditional products and brands, to the same level enjoyed under EU law.

Despite this, there are complaints The EU is using its coercive power and the UK outside its system could provide a vital corrective, helping other nations to develop their own systems. Sadly, nothing of this makes the media. Instead, we get the likes of the Guardian and the Mail picking up the story, with no attempt to verify Mr Cameron's claims.

In the Mail, however, we do get to hear from "Brexit supporters" – presumably Vote Leave – who "dismiss" Mr Cameron's claims and argue that Britain would "take back control" of product regulation if it left the EU. They say that the Government "could ensure our products remain protected in European markets by striking a new deal with Brussels".

Therein, the lack of knowledge and preparedness of the "leave" campaign comes to the fore. But, most of all, it illustrates the narrowness of vision of the "little Europeans", and especially Mr Cameron. We should not be letting Mr Cameron set the agenda on these matters. The world is where we need to be.



Richard North 22/04/2016 link

EU Referendum: the stupidity of the politics

08/04/2016  


Reaching 27 million households with a 14-page colour brochure, we now know, costs the better part of £9.3 million. That's what the government is spending on delivering its message, and it's money we can't match.

Nor can any but the most naïve of campaigners ever have imagined the Mr Cameron wouldn't pull this stunt. It's a variation on the ploy which Wilson ran in 1975. It worked then and it was thus reasonable to expect it to happen again. We predicted as much last year.

Actually, what we thought might happen was the distribution of a White Paper. But we can see why Mr Cameron wasn't tempted by that move – that would have exposed his "dodgy deal" to further scrutiny. Instead, he took advantage of the open goal created by the "leave" noise-makers when they refused to get behind a coherent exit plan.

Through filleting the pamphlet, it is easy to see the main thrust of Mr Cameron's attack. "Remaining inside the EU guarantees our full access to its Single Market. By contrast, leaving creates uncertainty and risk", the narrative starts.

Then we are told that, "Losing our full access to the EU's Single Market would make exporting to Europe harder and increase costs", following which we treated to the "killer" argument that:
Voting to leave the EU would create years of uncertainty and potential economic disruption. This would reduce investment and cost jobs. The Government judges it could result in 10 years or more of uncertainty as the UK unpicks our relationship with the EU and renegotiates new arrangements with the EU and over 50 other countries around the world.
Predictably, the usual mantras are then trotted out: "No other country has managed to secure significant access to the Single Market, without having to follow EU rules over which they have no real say, pay into the EU and accept EU citizens living and working in their country".

And then again, we are told: "A more limited trade deal with the EU would give the UK less access to the Single Market than we have now – including for services, which make up almost 80 percent of the UK economy. For example, Canada's deal with the EU will give limited access for services, it has so far been seven years in the making and is still not in force".

There are no less than six separate mentions of the "Single Market", around which, as the Financial Times remarks, are woven around the main themes, "that remaining in the EU benefits Britain and that leaving would create uncertainty and almost certainly be bad for the country".

Says this newspaper: "Since the Leave campaigns cannot agree what Britain's relationships with Europe or the rest of the world would be after Brexit, these points are well made".

This exactly mirrors the point made in the second edition of a book from the Centre for European Policy Studies (CEPS). In an otherwise terrifyingly superficial account, it tells us:
Plan B, or the terms of secession, in the immortal words of Sherlock Holmes, is "the dog that did not bark". The ‘leave’ choice is unknown territory, since it has not been specified by the secessionists beyond vague statements like regaining freedom from Brussels and being able to engage in freer trade with the world at large. Since the posing of a choice between a "known" and an "unknown" is a big hazard in democratic deliberations, this study does some homework that the secessionists have been unable or not wanted to do.
The absence of a plan is then the focus of an opinion piece in The Times. Barely a day goes by without an economist prophesying doom should the UK vote to leave, it says. Yet Oxford Economics modelled nine plausible Brexit policy packages, from which "the most striking conclusion is that, far from being inevitably catastrophic, Brexit has almost no ill-effects in some scenarios".

It also notes that "there is no agreed blueprint for post-Brexit Britain", but remarks that such an agreement would require – amongst other things – the repudiation of free movement.

Striking an economically good deal with the EU "would reek of betrayal to the majority who voted to leave". We're told that the problem with Brexit is the economics, it concludes, but: "In reality it's the stupidity of the politics that would hit the UK hard".

Interestingly, the CEPS came to the conclusion that the "only risk-free economic scenario would be to join Norway in the EEA, but that is also rejected by the noise-makers.

Thus, while the likes of Hannan whinge about the government leaflet, it is his refusal, and the refusal of all the main "leave groups" to endorse a credible exit plan, than has given Mr Cameron an opening to play exactly the scare card that we warned he would.

The way then to have dealt with the government's leaflet, therefore, was to head it off at the pass – pushing our own plan with an intensity that so undermined Mr Cameron's claims that he dare not make them.

Furthermore, no one in the leave campaigns can say they were not told about this. In June last year, I wrote to Dominic Cummings, warning him that the pro-EU side intended to rely mainly on fear. More specifically, I wrote, "it is using FUD - fear, uncertainty and doubt - powerful tools which act in favour of the status quo". Therefore, I said:
… in addition to our negative pitch, and our positive vision, we need a FUD neutraliser. When the enemy argues that leaving the EU is a terribly dangerous venture, we have to counter by illustrating that leaving the EU is a perfectly practicable proposition, entirely reasonable and safe. That is the purpose of an exit plan. It is not to second-guess the government. It's primary purpose is to demonstrate to the wavering voter that leaving the EU is possible and safe.
To that, I didn't even get the courtesy of a direct reply – not that much different from the way Arron Banks's has handled matters, agreeing to my face to adopt a plan and then, month after month, doing absolutely nothing about it.

When we come to analyse the high points and the low points of this campaign, we will most definitely see in it "the stupidity of the politics", where a succession of very stupid and malign people refused to commit to that vitally necessary exit plan.

There are no excuses for this. There is an informal, unspoken consensus that the EFTA/EEA option is the only sensible move, in the context of a structured, multi-phasic exit plan that has this as a compromise answer, opening the way for a longer-term solution once we are out of the EU.

The wilful rejection of a stratagem that would have given us the initiative and put us in the lead has now put us on the back foot, with no answers to an attack that could so easily have been neutralised before it got under way.

As a result, what was always going to be difficult just got immeasurably harder. The "stupidity of the politics" has created new, unnecessary burdens that we will have to fight to overcome. The sad thing is that we can so easily deal with the enemy. If anything is going to bring us down, it is indeed the stupidity of our own side.



Richard North 08/04/2016 link

EU Referendum: missing the mark on FUD

13/03/2016  


Spread far and wide is David Cameron's latest attempt at FUD, this one aimed specifically at farmers, telling us that Brexit could cost livestock producers as much as £330 million on lamb and beef exports alone.

The Prime Minister delivered this little nugget as he visited a farm in north Wales, prior to addressing the Welsh Conservative conference. The pitch is that more than 90 percent of UK lamb and beef exports - worth around £605 million - currently go to the EU.

On this basis, he says, if farmers had to rely on WTO rules rather than EU membership to secure trade access to the EU, they could be faced with tariffs costing £240 million a year for beef and £90 million for lamb, he said.

"British farmers and food producers rely on the single market", he claimed. "It gives them access to 500 million consumers, to whom they can sell their goods on an open, unrestricted basis. No tariffs, no barriers, no bogus health and safety rules designed to keep our products out".

And, like all "good" FUD, this has a basis in fact. Currently, beef imported from third countries into the EU, including the UK, does attract basic tariffs, with beef ranging from 12.8 percent plus, between €176.80 and €265.20 /100 kg.

Given that we were unwise enough to leave the EU without a trade deal, our exporters would have to be paying these rates to for the privilege of selling product to the remainder of the EU. However, nothing is ever quite as it seems. Overall, the UK is only 72 percent self sufficient in meat – about 76 percent in beef and veal. We import more than we export.

Now, if the EU imposed tariffs on us, we could impose similar amount on their product, which would mean that EU-sourced beef would not be competitive with home produced meats. Producers currently exporting to the EU would have an expanded opportunity on the domestic market, and one doubly attractive as it would be without the currency risk.

Even that, though, is not the whole extent of it. With current third country suppliers, the EU has a low tariff quota regime, brokered under the aegis of WTO rules, known as the Hilton quota. It was so named after being negotiated in the Hilton Hotels in Tokyo as part of the GATT agreements in 1979.

This allows for a quota of 58,100 tonnes of high-quality fresh, chilled and frozen beef from Argentina, Brazil, Uruguay, Paraguay, USA, Canada, Australia and New Zealand – at a lower fixed tariff rate of 20 percent. But, since reports indicate that much of this quota goes unused, this is something that the UK could relatively easily tap into.

Of more interest, though, is the duty-free beef quota Duty-Free Beef Quota (otherwise known as the Duty-Free Tariff Rate Quota – TRQ), which currently stands at 48,000 tons, taken up on a first come, first served basis. Although the UK would not automatically have access to this scheme, it does set a precedent for duty-free access to the EU market that the UK could invoke during Article 50 negotiations.

But therein lies our strongest suit. The willingness – some might say desperation - of the EU to do trade deals means that its own traditional beef markets are under threat. At the moment the Canadian deal, so loved by Boris Johnson, is causing alarm in Irish circles and the prospect of TTIP, opening European markets to US-produced beef, represents an even bigger threat.

Putting this together, it turns out that the one way of protecting UK livestock producers from cheap US beef is to leave the EU, opting out of TTIP (something that will keep Labour supporters happy) and imposing tariffs on EU goods.

On the other hand, we also have the option of a free market solution. Currently, we are only 55 percent self-sufficient in pig meat (which includes bacon and other cured products). The main imports come from Denmark and Holland, with additional supplies sourced from Germany, Ireland, France, Spain, Belgium and Poland.

The UK, therefore, has considerable leverage over a wide range of EU suppliers. In return for quota and tariff-free access to our pig meat market, it would be relatively simple to do a deal on beef – and also broker access to the valuable lamb market.

Mr Cameron's FUD is precisely that. The chances of the livestock industry being adversely affected by Brexit are slight and, in all probability, less than the effects of wider market access if we stay in the EU.



Richard North 13/03/2016 link

EU Referendum: a Duff deal

04/03/2016  


He may inhabit the dark side but Andrew Duff is still a penetrating commentator on the ways of the EU, and of British involvement.

Writing for the Policy Network, he has now produced a short paper on "Britain's Special Status in Europe", sub-titled: "A comprehensive assessment of the UK-EU deal and its consequences".

Confirming what we already knew, he tells us that the actual Decision "belongs to the heads of state or government alone and not to the European Council". This point is familiar to readers of this blog, but it remains to be seen how many pundits really understand this.

Furthermore, Duff tells us, under the terms of the Treaty of Lisbon, the European Council cannot legislate for the European Union. Neither can the Council initiate, still less bypass, the EU's official treaty revision process, laid down in Article 48(2).

The procedures for revising the treaties, we are reminded, "involve not only the heads of government but also the European Commission, the European Parliament and national parliaments, meeting together in a convention.

It is true that the heads of government have the last word on EU treaty change, but they do not have the first word. So the Decision takes the form of an intergovernmental agreement lodged at the UN and applicable under international, not EU law.

That Decision, says Duff, will become legally binding under international law if and when the British decide to stay in the European Union. In theory, as the European Council asserted, the Decision will remain legally binding until revoked by a unanimous decision of the 28 governments.

Nevertheless, as the personnel at the summit changes, which they do fairly frequently, the deal will become less authoritative, and may be amended, reversed or ignored.

But then we come to the money quote. "In any case", Duff adds, "the substance of the Decision will not be binding on the EU as such until its provisions have been transposed into EU law".

This must be primary law via treaty change with respect to the sovereignty and economic governance dossiers, and through secondary law via the ordinary legislative procedure in the case of the social welfare and migration issues.

In other words – and there is no other construction that can be put on Duff's interpretation, while the Decision may be binding on the current signatories (but less so on future office holders), for its execution it requires action by EU institutions, and they are not bound by the Decision.

Duff does not say it - although he does make reference to the Vienna Convention on the Law of Treaties – but if a treaty requires for its effect actions by third parties which were not signatories to the treaty, and by virtue of this is incapable of execution, it cannot be a valid treaty and cannot, in any event be biding.

This is the crux of the matter which Duff – Europhile though he might be – is too honest to conceal.

The Decision does not, he writes, bind the European Court of Justice, the European Parliament or the European Central Bank – all of which are set to play important roles in the transposition of the content into the primary and secondary law of the European Union.

The authors of the Decision, he thus concludes, make the bold claim that it constitutes a "new settlement" between the UK and the EU. But, at best, all it could do is "contribute to a successful campaign backing a referendum decision to remain in the EU".

At worst, however, controversy surrounding the Decision will sow confusion in the referendum campaign and further aggravate Britain's relations with the rest of the European Union.

And nor does it end there. Separately, in Euractiv, we hear from Daniel Schade, head of the Project for Democratic Union, and James Bartholomeusz, a policy officer at the same institute.

They say that there is nothing of substance to the UK's renegotiation agreement, but it has been sold as a full revision of the country's EU membership. The concessions David Cameron claims to have won are entirely cosmetic, if that.

The pair concludes that many of those who support the UK's continued membership of the EU, but hold nothing but contempt for his rebranding exercise, must now grit their teeth and pretend that he has done a substantial job.

As for the leavers, I fear we have let go too early. Distracted by talk of Dave's "dodgy dossiers", we have not pursued with the vigour necessary the dishonesty inherent in Mr Cameron's renegotiation settlement, and have allowed him to run with the claim that the UK has achieved "special status".

History is repeating itself – the Wilsonian fudge of 1975 has been transformed into the Cameronian fudge of 2016. Fool me once, they say, shame on you. Fool me twice, shame on me. Are we to be fooled twice, and with something which is so transparently a lie?



Richard North 04/03/2016 link

EU Referendum: a change of tactics?

09/02/2016  


Although the BSE campaign and its fellow-travellers have been pouring out a non-stop torrent of FUD, the Prime Minister – as effective leader of the "remains" - has not been amongst those prominent in the use of scare tactics.

For him then to come out with a scare story about the Le Touquet Treaty, and its possible discontinuance if we leave the EU, is something of a new development.

As it stands, the treaty can be ended at any time by written notification, the termination taking effect two years after the date of the notification. Thus it is always possible that the French could end the treaty if we leave the EU, perhaps giving notice at the same time we sent our Article 50 notification to Brussels.

However, outside the EU – and in any event – we could repudiate the 1951 Convention on the Treatment of Refugees (and the 1967 Protocol), and also the European Convention on Human Rights.  Freed of such obligations, we would be well-positioned to counter any action taken against the UK. Should the French allow migrant free access to the ports (and Channel Tunnel), we could simply pack them on a return ferry and send them back to France.

This could perhaps lead to an unedifying situation with one or more ferries carrying thousands of refugees shunting between British and French ports, prohibited from discharging at either, until one or other of the parties blinked.

For this to happen would be no more in the interest of the French than the British. It was in the interests of regularising the situation that the French signed the treaty in the first place.

Even without it, there are carrier liability provisions in place which impose heavy fines on ferry companies and Eurotunnel for permitting access to undocumented passengers. So, treaty or not, large numbers of would-be asylum seekers would be denied passage. As a result, you would be seeing camps spring up in Calais, just as they did before the Le Touquet Treaty.

With the treaty in place, the French have a considerable degree of leverage over the British. They have been able to extract, via the Evian Arrangements, many millions in cash from the British taxpayer, to assist the Calais authorities in dealing with the problem.

For various reasons, therefore, it is likely that treaty would remain in place after the UK left the EU – for the very reasons that such treaties are upheld. They are, as White Wednesday points out, beneficial to both parties.

Therefore, that Mr Cameron should choose an issue so transparent a scare story that even Vote Leave could see though it suggests something more profound than just opportunistic propagandising. Either he is losing his grip or he is changing his tactics.

Here, one should note that the comments were made in a prepared speech to the Policy Exchange on prison reform. They were flagged up well in advance, sufficient for newspapers to run overnight headlines on the "scare".

This points to premeditation, supporting a view that we are seeing a deliberate change in the "play". And there are further indications of this being the case in this Guardian piece, where Mr Cameron talks of the value of EU membership in assisting our fight against terrorism.

But if we're seeing a change in pace, that might have considerable implications for the referendum campaign. Rather than play the "deal" card and go for an early (June) referendum, relying on a poll boost from public approval, the Prime Minister might have decided to play the long game (if that had not always been his intention).

The point at issue here is that Mr Cameron could expect a boost of twenty points of more from bringing a deal back from Brussels which the public perceived as "good", contrasted with a smaller but none-the-less significant boost to the leavers in the event of the deal being seen as poor.

Given that we have seen various polls giving the advantage to the leavers, at a point where a change in sentiment might actually mean something, this could be enough to convince Mr Cameron to return to safer territory and argue the broader case for EU membership.

This, necessarily, would require Mr Cameron to put distance between him and the deal to be brokered in Brussels in ten day's time. If this is his "play", then we must expect some downbeat mood music over the next week or so, preparatory to an orchestrated failure of the "summit". This piece from the BBC on Portugal might be an early example.

Most likely, there will be some carefully stage-managed objections, followed by Mr Cameron adopting a "battling for Britain" pose and rejecting the deal – thus buying him time to build on his alternative scenario. He could then come back some time later with a marginally better deal and thus claim victory.

This then puts into perspective the way Mr Cameron is gaming the designation process, brought into high profile by a piece from Asa Bennett in the Telegraph. By keeping the rival leave campaigns in the dark as to when he will start the designation, they are forced to devote their energies to the designation competition, rather than the main campaign.

In particular, Mr Bennett has picked up on the possibility that Mr Cameron could fold the six-week designation process into the 10-week referendum period, leaving only four weeks for the campaign proper.

Interestingly, after Booker had raised this possibility, we were referred to a debate in the Lords when Ukip's Lord Willoughby de Broke gained from FCO minister Baroness Anelay an assurance that this would not happen.

On 18 November last year, she stated that "the referendum period will be a minimum of 10 weeks and in advance of that is the designation period". The Baroness went on to say: "The two cannot be conflated … there is no way of concertinaing it, if I can put it that way".

That contradicts a typically ill-informed piece on the BBC website which states (wrongly) that the Electoral Commission will publish details of the designation process once David Cameron has named the date for the referendum. As we know, there does not have to be any linkage between designation and the referendum date.

The BBC suggests that Mr Cameron could make an announcement as early as Monday 22 February, "if a deal on his draft renegotiation package is agreed by EU leaders the previous weekend". But, as long as the designation is not folded into the referendum period, his deadline for a referendum on 23 June is on 9 March.

Allowing that Baroness Anelay is calling it correctly (although there seems no legal bar to a later date), if by 9 March the designation process has not started, then there cannot be a referendum on 23 June.

However, even if the regulations are laid by this date, that does not mean there will be an early referendum. Mr Cameron could call for early designation and then still leave the referendum until next year. In this context, it should be noted that in the Scottish referendum, the campaigns were designated on 23 April 2014, with the referendum held just under five months later on 18 September.

If Mr Cameron is playing the long game, he could launch the designation period early and then leave the campaign groups on tenterhooks, leaving the announcement of the referendum date to the minimum ten weeks before the poll, perhaps at the need of August 2017, for an October poll.

Significantly, though, the Electoral Commission has already put the main campaigns on notice to prepare preliminary submissions for designation by March, which suggests that there is not going to be a formal announcement any time soon.

That also would make sense, as it is to Mr Cameron's tactical advantage to have the rival leave campaigns fighting each other for as long as possible. And even when that battle is over, there is the exit plan to agree – an issue which the "leave" camps have been evading and which could spark an even bigger battle.

All in all, it seems, we're back in Northern Irish political territory where it is said of the political situation, if you think you know what's going on, you haven't been listening. But that notwithstanding, my money's still on the long game.



Richard North 09/02/2016 link

EU Referendum: learned nothing, knows nothing

04/01/2016  


The latest encyclical from Vote Leave's Dominic Cummings has hit the inboxes of devotees and others, listing nine "lessons" for campaigners. Soon enough it will be posted on the illegible website, where only a few more people will manage to read it.

In better times, I might have been inclined to give these "lessons" a detailed analysis – just for the intellectual exercise. But such self-indulgence could scarcely add to the single observation that, in seeking to offer us so many "lessons", Mr Cummings is simply demonstrating his failure to learn the single most important lesson of them all.

This comes not from a lesser mortal such as myself, but from the undisputed master, Sun Tzu, whose choice of words we reproduced earlier and evaluated more recently, all to convey the crucial point. No campaign is ever going to succeed unless strategy is developed with reference to the enemy's intentions, and then continually modified to take account of circumstances as they develop.

If there weren't such thing as an enemy – such as our Prime Minister who will take to the field in due course – then Mr Cummings's nine "lessons" might be useful in a Janet and John sort of way. However, the absence of any serious attempt to divine the enemy's intentions renders his attempts at strategising almost completely valueless.

This is evident in his first item of instruction, where he tells us that we must "persuade people that the scare stories about a 'leave' vote are wrong" – a focus on neutralising the FUD that we were looking at three years ago. But since then we've seen Mr Cameron adopt a triangulation strategy which largely renders the fight over FUD irrelevant.

Ideally, Mr Cameron would like us to engage in a stand-up fight with the opposition, preparing the ground for him to waft into the "moderate middle". We will then find him "sharing our pain" and positioning himself to take the moderate view, graciously acknowledging some merit in both side's claims.

For his second "lesson", Mr Cummings then wants us to "build a dense national network of business supporters to explain locally the benefits of a 'leave' vote". This is all very well – but for our experience in this matter. By and large, we find most business people are too busy running their businesses to make reliable campaigners.

Where our instructor skids badly off the track though, is in his third "lesson". Here, he tells us that "we must explain that the choice is not between 'change' versus 'status quo'". Not only does the EU takes more power and money every year, says Cummings, "the official EU plan is now for another Treaty centralising more power in Brussels".

The problem with that stance is that we're kicking at an open door. Mr Cameron probably has no intention of selling us the "status quo". Instead, he too will be attacking it - as he already has done, telling us we need a "new relationship". To resolve that, he will offer us the "British model", neutralising any complaints we might make. 

I suppose, though, that we must concede something to Mr Cummings when he tells us that we must explain how a "leave" vote means we will end the supremacy of EU law and take back vital powers over issues such as tax, regulating our economy, migration and so on. This is our fourth "lesson", and if you and your audience can stand the boredom, be my guest.

Likewise, we can humour Mr Cummings on his sixth "lesson" and explain how the EU is going in the wrong direction, with economies in debt and unemployment rising. There is always room for negative campaigning as a baseline, although the Stokes precept suggests we go lightly on this.

But we will not agree that we should "explain how the money we will save could be better spent on our priorities, like the NHS and fundamental science research", etc., etc, expressed in terms of the "£350 million per week we send to Brussels". Apart from the fact that the figure is misleading (we do not pay that sum), getting into a bun-fight over money is a big no-no.

Nor do I see any value in explaining how a vote to "leave" will help Europe - not just Britain. It's a nice thought, but David Cameron got there first. We'll simply be fighting a battle over who is the nicest of them all. That isn't going to win us any Brownie points.

That brings us to "lesson" eight, where we are supposed to "explain the record of the Establishment" and how they have "consistently misunderstood the process of European integration". "They have", Cummings tells us, "consistently made wrong predictions. They have consistently promised things that have not happened. They cannot be trusted". 

"Whitehall", in Mr Cummings's opinion, "has no answers apart from the same people sitting in meetings and failing every year". He thus instructs us: "We need a new path".

And now to the finalé – lesson number nine. Firstly, though, we must bear in mind Mr Cummings's warnings about people who have "consistently misunderstood the process of European integration", the "establishment" which has consistently "made wrong predictions" and "promised things that have not happened". They "cannot be trusted".

With these warnings in mind, we are prepared for the stroke of absolute genius from Mr Cummings. After we vote to leave, he says in his ninth lesson, "a new government team will negotiate a new UK-EU deal". Yet is this not the Establishment? Is this not the very same Whitehall, about which Mr Cummings has been so uncomplimentary? 

Nevertheless, he believes that their deal should be put to the people in another vote. According to Cummings, we can reassure people: "You can vote leave safely because we must have another vote on the new deal - it is the only sensible path for our democracy".

What he doesn't tell us, of course, is what happens if Whitehall delivers a bum steer. What happens if we are forced to vote against it – after the Article 50 negotiations have been completed. What then, Dominic?

Clearly, our man has learned nothing. Desperate to avoid coming up with a "plan", he does not understand that, if Mr Cameron reveals his bright, shiny new "British model", enough people could vote for it to win the referendum for him.

Therefore, we need to be quick off the mark. As soon as it emerges, we must tell as many people as possible about its disadvantages. But then we must offer an alternative vision. We cannot rely on the men in Whitehall to write it - we have to do this ourselves. And, to go with that, we must reassure people that there is a credible way of delivering our vision - the so-called exit plan.

But these "lessons" are not for Mr Cummings. He's happy to trust the untrustworthy Whitehall to define our new deal. And this is the "genius" we should trust to lead the campaign? 

We trust not in Cummings.



Richard North 04/01/2016 link

EU Referendum: back on the treadmill

26/12/2015  


The Politico website on Christmas Eve ran a speculative piece on Angela Merkel and François Hollande having suggested "a counter offer of three years to Cameron's initial demand of a four-year ban on social benefits for EU migrants".

The source cited is an anonymous "French official with knowledge of the negotiations", which means that it is unattributed and unverifiable. Its evidential value is nil.

However, that hasn't stopped the legacy media's finest from running the story for the Boxing Day editions, despite the slender provenance of their stories. So far, we've see the Telegraph, the Independent and the Express run with it.

This, in itself, is interesting. Very often, the Christmas period will kill a story as it fails to leap the gap and the lose interest in it. But the fact that they're willing to run a non-story over the break suggests that there is a determination to keep the issue going, and to build on the momentum.

Sadly, this doesn't mean that the media is going to be any more careful in its choice of material, or expend any effort in verifying its sources. And nor can be expect any slowdown in the volume of uncritical re-tweeters, indulging the media coprophagia with homage of their own.

The thing is that, having regard to the strict terms of the treaties, and of recent ECJ judgements, there is almost certainly room to fudge a deal within the framework of existing EU law.

In terms of the ECJ, we have the Dano judgement, in which we were reminded that "free movement was a qualified right and not an unconditional one", and always had been.

Then there is the more recent Alimanovic case. In this, rather interestingly, the court extended (or clarified) the Directive 2004/38 right of a Member State to withhold benefits if the "become an unreasonable burden on the social assistance system".

Specifically, we see the court conceding that, while the grant of a specific benefit to a single applicant could scarcely be described as an "unreasonable burden", the Member State concerned is entitled to consider the accumulation of all the individual claims which would be submitted, in determining whether or not the burden was unreasonable.

This latter case also concluded that Member States were under certain circumstances permitted to refuse non-contributory cash benefits to foreign jobseekers, even though they constituted "social assistance" and were paid to their own nationals. Remarkable, these do not contravene the principle of equal treatment.

While it is often the case that the ECJ is extending the bounds of integration, what we are seeing here is the court gradually unpicking certain elements of free movement which, cumulatively, could give EU lawyers more room than is supposed. They may end up with enough wriggle-room to accommodate some of Mr Cameron's needs without needing treaty change.

By February, therefore, it is possible that the "colleagues" will have cobbled together something superficially convincing, that our Prime Ministers can parade as a concession.

Even with a complete deal on this particular issue though, Mr Cameron hasn't got enough to go to the country and make a convincing case. There are still another three "baskets" to be sorted – not least the "ever closer union" and protection for the non-eurozone.

It may be quite significant, therefore, that we see Reuter's John Lloyd bring up the Armellini article, which he applauds, telling us that a two-tier Europe (and with it Associate Membership) is an idea whose time, many more than Armellini believe, has come. It would be, Lloyd avers, "an enormous political transformation".

Thus, while the media is cranking up the treadmill and concentrating on the benefits issue, the wider agenda is still running free, and there "colleagues" have yet to focus on reining it in. But that is where the developments – and the interest – will lie.



Richard North 26/12/2015 link
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