Brexit: keeping us in the dark

16/02/2020  


This government's preference for keeping us in the dark seems to be to the fore, once again, as an indignant Independent on Sunday complains that ministers are refusing to release "secret" studies which are believed to show that there is little gain to be made from trade deals with the United States and Asia.

The complaint arises after the paper tried to smoke out details of analyses into three trade deals carried out by the Department for International Trade (DIT), using freedom of information requests. But, in time honoured fashion, where information requests are always refused if they might yield anything of strategic value, the Department refused to open its books, claiming that its data were "work in progress".

This allows an exemption to be invoked, when "information clearly relates to the development of government policy", with the DIT asserting that: "Premature release of this analysis would be detrimental to the progress of future trade discussions once the UK has left the EU".

Never mind that these analyses were actually completed as long ago as 2017 – or that EU counterparts will undoubtedly have done their own evaluations into the potential benefits for the UK (not) of non-EU trade deals. Ministers are adamant that us mere plebs are not to be allowed information that will allow us properly to assess policy choices.

Taking up the cudgels on our behalf, Alan Winters, professor of economics at the University of Sussex, observes that: "The entire Brexit debate has been conducted in a great fog of obfuscation".

He is not wrong there, even if this is something of a statement of the bleedin' obvious. But Winters goes on to allege that the studies are being concealed because they would reveal that significant damage from new trade barriers with the Continent will far outweigh the gain from other deals - all on the basis that independent studies have indicated the current policy path will deliver a hit to the UK economy of anything between £70 and £130 billion in the long run.

With some justice, Winters argues that, "If the government thought it had a very strong case that these deals would be big and strong then they would publish these studies". He adds: "It's an indication that there's nothing there. To the extent that we have any analysis, it suggests that the benefits of these deals are very small".

If Winters is even close to the mark, then one might have thought that the government might be a little cautious about burning bridges with Brussels. However, both the Mail on Sunday and the Sunday Telegraph are running a story which suggests that Johnson is taking an even more robust view of the coming trade talks.

This comes as Brussels seems to be ramping up its demands, insisting – if we are to believe what we are told – that they should retain control over UK tax rules and state subsidies, committing to dynamic alignment with the EU's standards.

Some senior Tories are said to have described such demands as "ridiculous". But the UK's official response to this is apparently to come from David Frost, Johnson's chief Brexit negotiator. He is to use a lecture to students and academics in Brussels tomorrow to say that these demands far outstrip terms the EU has struck with countries such as Canada, Japan and Korea.

Setting the scene, an anonymous source is enlisted to tell us that the UK government is "not asking for a special, bespoke or unique deal – just the same requirements that the EU has agreed with other like-minded countries".

On Monday, we are told, Frost plans to point out that, for example, the EU removed 99.5 percent of tariffs in its deal with Korea, 99 percent with Japan and 98.7 per cent with Canada – and they did not expect regulatory alignment with any of those countries.

While this may be the rhetoric being delivered, it is not strictly true as all three of these agreements pursue regulatory alignment and, as the Canadians are realising, unless their products conform to EU standards, they are simply not allowed in.

And then, the issue at large is the degree to which products are subject to border checks – not so much a problem with long distance sea traffic where there is plenty of opportunity to review the paperwork before the goods arrive, but extremely problematic with ro-ro traffic where the goods arrive only hours after loads have been notified.

Nevertheless, there is still a feel about these pronouncements that we are going through the pre-negotiation rituals, like prize boxers at the weigh-in, shaping up for the fight. And yet, the Mail on Sunday tells us that there is "concern" among some Member States that the negotiating avenues could be closed off even before the two sides sit down to talk in the first week of March.

The Sunday Telegraph, however, feels that this clash over a fundamental demand by the EU appears to increase the likelihood that trade negotiations could end without a deal at the end of this year.

One thing that is emerging from this, that hasn't taken a high profile in earlier stages of the talks, is the view that the Commission is taking a tougher line because of the UK's "geographic proximity to the EU". In terms of level playing field requirements, though, it is asserting that the EU-UK agreement "should rely on appropriate and relevant Union and international standards".

Any such demand – which relies on conformity with international standards – would be very much in line with the limited number of comprehensive "new generation" trade deals that the EU has already agreed. In all of them to date, for instance, parties are required to adopt the provisions of – and agree to work to – the WTO's Technical Barriers to Trade Agreement and the SPS Agreement.

We also see a uniform requirement, written into all of these treaties, to adopt the WP.29 UN regulations on motor vehicles.

Thus, while Johnson's negotiators are setting their stall out to resist any suggestion that the UK should be subjected to more stringent requirements than Korea, Japan, and Canada, there is a possibility they are protesting too much.

Considering that none of the trade deals so far agreed allow for any significant concessions on drugs, medical devices and chemicals – all major export interests for the UK – then some concessions will need to be made if our manufacturers are to have anything approaching frictionless access to the EU/EEA market.

What isn't being said with any clarity or emphasis though is that, whatever deal we do get (if any), there is going to be considerable disruption to UK trade. And we get some indication of this from the Irish Times which warns of precisely this.

A confidential memorandum to be circulated to Irish Ministers will tell them that even the best-case scenario for an agreement between the EU and UK would cause serious problems for businesses importing from, and exporting to, the UK. "Even an ambitious and deep agreement, if such were achievable in the short timeframe, will not be the status quo and will involve considerable disruption", it states.

Furthermore, Irish officials – like so many of us - express doubt any significant agreement can be concluded by the end of the year. Even now, there remains a possibility of no agreement at all – a scenario which could impact the Irish economy.

Just to confound Johnson, their report tells the Irish government that, regardless of the outcome of the negotiations, they will have to prepare for checks and controls at ports and airports, business readiness and possible disruption of the UK land bridge.

Yet, for all that, there is no commensurate clarity from the Johnson administration. Long on rhetoric and hyperbole, it remains wedded to mushroom management, treating the long-suffering public with contempt.

And, for this, there may be a price to pay. With China in lockdown, in the thrall of the coronavirus epidemic, with economic and political effect mounting, if the disease does spread to the UK, the effects could be equally drastic. "Public health", we are told, "relies on public trust". If nothing else, Johnson is fast using up that commodity – and he had precious little to start with.



Richard North 16/02/2020 link

Brexit: a paucity of deals

14/02/2019  


One of the more prominent scare stories during the EU referendum campaign was the claim that, after Brexit, we would have to renegotiate all the existing EU trade deals with over 50 different countries.

At the time, I was suitably scornful about this claim, arguing that we could apply the "general presumption of continuity" in respect of the treaties and request of the parties that they continue to apply the provisions.

Continued participation would not be automatic and the consent of all parties would be required – including the EU where relevant. But the "continuity" process is well-established requiring formal notifications to be made, followed by straightforward administrative procedures.

The point I made at the time, therefore, was that third country treaties were manageable. For the most part, ensuring continuance was a relatively minor administrative task that could be resolved relatively simply. There was (or should have been) no question of any need for major renegotiations.

Latterly, there have been several reports on this issue, including a comprehensive study for the European Parliament, which looked at future trade relations between the EU and the UK. The 52-page report was published in March last year.

To a great extent, the findings confirm the essence of the argument I had made two years previously, in the March just before the referendum. However, it did make the distinction between the transition period and the future relationship.

During the transition period, it noted that the UK would still be bound by EU law in exactly the same way as any Member State. Although non-EU contracting parties could point out that their agreements no longer appeared to apply to the UK, as it was no longer an EU Member State, absolutely nothing would have changed for the export and trade relationships.

On that basis, all that would be needed was for the EU and the UK to confer with the third countries concerned, and to reach an agreement with them. This could be done by simple exchange of letters, whence all parties could continue to apply the trade agreements as before.

Post-transition was not quite as straightforward, as the legal position would be different. Not least, the UK would no longer be an EU Member State, and would not be able to claim that EU law continued to apply in its territory.

The crucial point, though, would be the UK's degree of disassociation from the EU's internal market. Substantial differences would enable third countries to exclude the UK from their EU-related trade deals. Thus, the report said, whether the UK can continue to benefit from EU free trade deals with third countries "will depend enormously on the future terms of EU-UK trade".

Had the UK decided to take up the Efta/EEA option, ensuring treaty continuity would probably have been relatively simple. Most of the third country relationships that we wished to keep up would have survived – long enough, at least, for us to negotiate new deals without any disruption.

At the other extreme, in a no-deal Brexit, the degree of formal disassociation from the EU's trade arrangements would be absolute. The general presumption of continuity would not apply and we would need to renegotiate 50-plus treaties.

Actually, it isn't even as "simple" as that. We have often pointed out that UK trade relations via the EU are not managed entirely through registered Free Trade Agreements. We also rely on a network of trade-related agreements which are not registered with the WTO and therefore do not qualify as FTAs.

Nonetheless, these are vital to the conduct of our trade and, when I last counted, we were the beneficiaries of 881 bilateral treaties between the EU and third countries, together with 259 multilateral agreements.

Now, with a no-deal Brexit beginning to look a real possibility, we need to be looking hard at these agreements. Even if we stick just to the FTAs, it seems we have something of a problem. According to The Sun, it appears that we have something like 70 FTAs that need renegotiation to cope with a no-deal, with the government promising to conclude 40 of them by Brexit day.

As it turns out though, the likely number that will be concluded is a mere six. Four have already been agreed: Switzerland – signed on Monday - Chile, an Eastern and Southern African block, and the Faroe Islands. Two more deals, with Israel and the Palestinian Authority, are "on track".

Fairly obviously, this relative lack of success is down to international trade secretary, Liam Fox – he who, at one time, boasted that: "The free trade agreement that we will have to do with the European Union should be one of the easiest in human history".

He made a similar sort of claim for the rest of the trade deals. In October 2017, during a fringe event at the Conservative Party Conference, he famously promised that the UK would easily be able to copy and paste all 40 of the EU's external trade deals "the second after midnight" on Brexit day.

"We're going to replicate the 40 EU free trade agreements that exist before we leave the European Union so we've got no disruption of trade", he told his audience, adding – to resounding cheers: "I hear people saying 'oh we won't have any [free trade agreements] before we leave'. Well believe me we'll have up to 40 ready for one second after midnight in March 2019".

All he has left now is to play down his failure, insisting that trade deals are "not a numbers game". The focus, he says, should be on the "proportion of trade we can maintain".

Unhelpfully, one of Fox's civil servants, speaking for him, "would not deny the leaked tally's grim prognosis". Instead, he pointed out that, in 2018, around 12 percent of UK trade took place under formal EU Free Trade Agreements. The Guardian then put the numbers together, recording that the concluded trade deals covered just £16 billion of the £117 billion relying on the trade deals.

Furthermore, when the impact of the additional non-FTA agreements is taken into account – on which we rely for much of our £45 billion exports to the US and our £22 billion to China – then the lack of continuity could prove devastating to our overall export effort. Agreements such as the comprehensive Mutual Recognition Agreement (MRA) on Conformity Assessment with the United States are every bit as important to our trading performance as the FTAs – many of which actually include such MRAs.

Directly confirming the essence of the European Parliament report cited earlier, Fox does at least say that the best way to avoid disruption is for parliament to ratify the Withdrawal Agreement. This, he says, which would maintain Britain's current trading relationships for the duration of the two-year transition deal, until alternative arrangements could be made.

What he doesn't say, but perhaps should, is that the situation makes a nonsense of the "ultra" claims about the WTO option. Clearly, if trading solely under WTO rules was all that it was made out to be, we wouldn't have Fox struggling to replace the EU trade deals before we drop out of the EU.

If we ever get so far as to suffer a no-deal Brexit, those who believe that WTO rules will sustain UK trade will at least be fully acquainted with their folly.



Richard North 14/02/2019 link

Brexit: Matryoshka

26/01/2018  


One of the great unknowns in the Brexit process is what is going to happen when the many trade deals agreed between the EU and the rest of the world cease formally to apply to the UK after Brexit. To this day, it is not clear how and under what terms arrangements will apply to the UK during the transition period.

What is certain, though, is that once we are clear of the transition process – however long that takes – we will be on our own, having to make direct agreements with the rest of the world to replace those forged by the EU upon which we have been relying.

To that effect, the government has set up the Department for International Trade under the leadership of Liam Fox, specifically to negotiate trade agreements with non-EU countries. And now, according to the National Audit Office (as conveyed by the national media and available here), the department is being criticised for falling behind schedule. It is, we are told, struggling to make deadlines and recruit staff.

Specifically, NAO auditors found that the department was falling behind in some areas. "Delivery of the work streams will be challenging and DIT has put back some of its delivery milestones as the timetable for legislation and the overall negotiation process has moved on", their report says.

As big a problem, it seems, is that the traditional civil service model, which sees staff move every few years, is "not best suited" to developing specific trade and negotiation skills, and there would be a "premium" on retraining and recruiting outside employees. "Considerable work will need to be done to build skills that have not existed in government for a generation", the NAO says.

Considering these findings in the round, however, there should be no real surprise that the situation is as found. The civil service is not known for its flexibility and speed of adaptation and it has not had responsibility for negotiating trade agreements since we joined the (then) EEC on 1 January 1973.

It would be wholly unrealistic to expect it to acquire the full spectrum of skills needed to function as an independent trade department within the relatively short period since the 2016 referendum.

As relevant, since the referendum, there has been a long period of uncertainty as to government intentions as to its future relationship between the UK and the EU, and in particular the nature of the "end state" trading agreement. To this day, it is not possible to say with any certainty where we are going and what are the precise intentions of the government.

On that basis, it must be very difficult – if not impossible – to firm up any trading arrangements with the rest of the world (RoW). The details will rely to a very great extent on the nature of the relationship with the EU, not least to avoid any conflict between EU and RoW expectations.

Although I feel no great compunction to be fair to Dr Fox and his cohort of civil servants, in the interests of equity it has to be said that we could not reasonably expect much more from the DIT than it has already delivered - which seems to be very little indeed.

That notwithstanding, that is not to say that the inability of the DIT to make deals with other countries is not problematic. It is. Within the current international trading framework, bilateral deals between countries form an important element of the whole.

As it stands, though, if the real work of negotiating non-EU trade deals cannot start until we have finalised our trading relationships with the EU, and we will not have finalised our relations with the EU until the end of the transitional period, then it is questionable as to whether Dr Fox's department can get fully to grips with its brief until the beginning of 2021 (assuming the transition period ends at the end of December 2021).

This much seems to be recognised by NAO auditors. Their report says: "While DIT continues to plan for successful delivery on the key scenarios, uncertainty around the nature of the UK's future relationship with the EU and any implementation period mean that it needs to be flexible and keep its plans under review". A DIT spokesman then adds to our understanding of the problem with the observation that, "the final shape of our capability will be determined by the outcome of EU xit negotiations".

Thus for the NAO to criticise the DIT for its lack of performance is perhaps to miss the point. Dr Fox and his not-so-merry men have been set an impossible task. That there are small individual failings are a matter of detail and largely irrelevant.

Yet, the lack of delivery begs the question of how the UK can manage its trading relations with the RoW until such time as new trade agreements have been finalised. There looms the probability (if not possibility) of an uncomfortable gap between the point when the UK formally leaves the EU (on 29 March 2019) and the completion of the trade agreement with the EU – which will not be the end of the transition period.

About what happens during that period we get an uncommon vagueness. We know that, under proposed transitional arrangements, the EU intends that the UK should obey the acquis communautaire in its entirely and from that, there seems to be an assumption that existing trade agreements between the EU and the RoW will continue to apply to the UK.

By what magic this alchemy is to be achieved has not been specified by either the EU or the UK government. Although there is no automatic presumption of continuity, one might expect the EU to ask the parties to its trade agreements to treat the UK as an "honorary member" an thus to allow existing trade arrangements to continue unchanged.

There are legal and practical precedents for this type of arrangement but, in that implementation will require the formal assent of all the parties involved, this will require from the EU external action services a considerable investment in time and diplomatic resource to secure such assents.

The UK will, therefore, will need the active cooperation of the EU and its goodwill throughout the process. And for that, there will be a price in terms of political capital expended. Our vulnerability is such that we are in no position to call the shots.

Assuming we can get cover over the transition period, Dr Fox's moment will come during that period when he must systematically work through the list of countries with which we wish to do business, agreeing draft deals which must then come into force to coincide with the end of the transition period.

In volume terms, that is a Herculean task. Taking into account technical but nevertheless trade-related agreements, such as the civil aviation accords, there are well over 1,000 individual instruments which must be renewed – with or without an element of redrafting and renegotiation. Some of these are so technical (such as the aviation agreements) that they will require a multi-agency approach and the careful coordination of several different departments.

To proceed with any degree of speed, Dr Fox's department will – as his spokesman indicates - need a very clear "steer" from Mr Davis and his Brexit department as to the nature of the agreement Mrs May will want negotiated with the EU. But then, of course, there is the response of the EU to factor in – what we ask for is not necessarily what we will get.

So far, though, there is no indication that any of the required elements – needed for Dr Fox successfully to perform his tasks – will be in place in good time, sufficient to allow his civil servants to complete the many agreements that we need.

More and more, then, the idea of an extension to the transition period begins to look not only realistic but essential, especially if mainstream EU negotiations are only concluded by the end of the transition period. It is then and only then that Mrs May's implementation period will start for real.

Until then, there is no real value in asking for or expecting miracles from Dr Fox. The trade and other agreements for which he is responsible will take as long as they take, and there is no rushing them.

In the context of the current Brexit debate, what is now remarkable, therefore, is not so much the reality of our situation – where concluding new trade agreements is going to take a long time – but that so few people appear to appreciate the likely outcome of the process we are undertaking.

We have, for instance, Mr Rees Mogg complaining about the nature of the transition process. Evidently, he has yet to focus on the RoW trade agreement negotiation process and doubtless will have a litany of complaints when he realises what is involved and the delays likely to be encountered.

Had he put all the elements together, one likes to think that he might have realised that his objections to the Efta/EEA option were inappropriate. But what we see with such people is that, where they think about such things at all – those that are even capable of creative thought – they tend to think in compartments, one issue at a time. Rarely are they willing or able to look at the whole picture, a process which requires joined-up thinking.

Brexit as we are experiencing it, therefore, is taking on the aspect of a collection of Russian dolls (Matryoshka), only one visible currently but each one concealing another. By the time they are all laid out, we will be responding to their discovery, rather than planning for them.

Planning for the event, it seems, was too much to ask. We had to wait until each problem emerged and address each one in sequence. And that is one of the reasons why the Brexit process is going to take so long and is going to be such a mess.



Richard North 26/01/2018 link

Brexit: an elephant in transition

17/01/2018  


It is heartening to see Lost Leonardo pursuing a theme similar to this blog on the inadequacies of the media and our politicians.

Referring to the Peston interview which we noted briefly yesterday, he records that we have the leader of the opposition and the lead journalist on one of Britain's leading Sunday news programmes talking "total toilet" about the most important political issue facing the country.

This, says Lost Leonardo, is not a failure to understand arcane technicalities, these are the basics, and Britain's political class, even after 18 months, has apparently failed to grasp any of them. "I'm not sure", he concludes, "how it is possible to be this out of touch".

Although it is a constant theme of this blog, the inadequacies of our political and media classes cannot be overstated. They go to the heart of our democracy and impact on the legitimacy of the entire political process.

If our politicians simply don’t know what they are doing, and the media are incapable of explaining what is happening with any deal of coherence, then the fundamental building blocks of our society are missing. It really is that bad, and therefore warrants our constant attention.

One of the most serious failures of the political process, amplified so readily by the media, is the continued presence of Alexander (aka Boris) Johnson and, in this instance, his readiness to repeat the "side of the bus" lie and even add to it.

According to this ghastly man, the UK's weekly gross contribution to the EU would rise to £438 million by the end of a post-Brexit transition period – still picking on the gross payment as the source of his putative largesse.

Even then, Johnson admits that not all the money would go to the health service. "As and when the cash becomes available – and it won’t until we leave – the NHS should be at the very top of the list", he says. This left the shadow Brexit minister, Matthew Pennycook, to state the obvious, that Johnson had no shame after parading a "bogus claim" during the referendum and now inflating it.

On the other hand, we get endless attempts to quantify the costs of Brexit, the latest one coming from Oxford Economics. This time this organisation is suggesting that the UK would still be the biggest loser from crashing out of the EU without a new trade deal – with a cost to the economy of £125 billion by 2020.

It is asserted that the EU would also suffer a "big economic hit" and although the estimated effect on the UK economy is not so very different from our own, the truth is that no one really knows what will happen – even to the extent of being within the same order of magnitude.

Everything in this context depends initially on the nature of the transition period agreed between the UK and the EU – and its duration. And about that, very little is being said – a staggering omission when the importance and the potential impact is considered.

What tends to happen in such instances, when something really important looms, is that the media come late to the party and, invariably, get it wrong. Having devoted so little time to the issues before the event, its people rarely have the depth of knowledge or the grasp of the issues to do the matters justice, whence we get the turgid sludge that is so often our fare.

Yesterday, though, we did get a mention of the transition period from the Financial Times with a front-page story suggesting that Brussels was going to take an even harder stance than had so far been suggested – although it is difficult to see how much more rigorous their approach could be, or whether it could add to the 20 December Commission proposals.

However, according to the FT, referring to as yet unseen revised "directives" drawn up by EU member states for Michel Barnier, the talks have been complicated by demanding that Britain abide by stricter terms on immigration, external trade agreements and fishing rights for the entire transition period.

Apparently, these include extending free movement rights and a special status to all EU citizens arriving before the final day of the transition at the end of 2020. They will also require British ministers to seek "authorisation" from Brussels in order to continue benefiting from EU trade deals that it would otherwise fall out of on Brexit day.

On the immigration issue, the FT is asserting that the changes are being made at the behest of Poland and other central and eastern European countries, and will limit the UK's ability to apply a new immigration system to EU nationals arriving during the transition.

Highlighting what is likely to become one of the hardest parts of the negotiation, the text also clarifies rules for setting fishing quotas. Diplomats said the language aimed to underline that Britain's share of catches in UK waters - fixed for decades under the "relative stability" quota arrangement - was not open to negotiation.

This was something we reported on recently when it appeared in the Guardian and now it seems that there will not be a special procedure to negotiate the total allowable catch in British waters. Instead, EU Member States want to restrict discussions to "specific consultations" which remain "in full respect" of EU law. The UK will only be invited to attend regulatory committees "exceptionally on a case-by-case basis".

Then, to rub salt in the wound, the Member States add language making clear that the legal effect of EU law will be the same on Britain as any other EU Member State. This will mean that the direct effect and primacy of union law should be preserved.

That, we had expected. The essence of the transition already proposed is that of the status quo where we remain bound to the EU acquis for the duration. This is the only way, short of the Efta/EEA option that we can retain full access to the markets of the EU Member States. And if we go this way, the immediate financial penalties should be minimised.

Since, under current proposals, the transitional period does not end until the end of December 2020, only in the extreme circumstances of the talks collapsing before that could we see the worst projections of Oxford Economics come to pass. Such doomsday scenarios now seem to be redundant.

It would make more sense, therefore, for the focus to be entirely on the progress of the transition proposals. So far, we have not seen any formal response from the UK government and the response in general has been so muted that we keep having to pinch ourselves to remind that the proposals have been issued.

Possibly, because the directives are subject to a near-constant process of revision up until they are approved, and they could well change again before a key meeting of the General Affairs Council on 29 January, at which they are expected to receive final sign off, the media and politicians are not taking them entirely seriously.

Thus, the only high-profile politician who seems prepared to put himself in harm's way at the moment is Jacob Rees-Mogg. He is to lead the notorious European Research Group, replacing Suella Fernandes who has been appointed junior minister in MinBrex.

Mogg has been one of the few "ultras" to make fuss of the so-called "vassal state" transition proposals, raising questions as to why the Tory right is being so quiet about something which, on the face of it, goes against everything they value in Brexit.

If you Google for "Brexit" and "transition", though, very little shows up, apart from Mogg complaining that accepting the EU's proposals would mean that the UK was remaining in the EU for a further two years. That, he says, is not government policy, adding that "free movement ought to end in March 2019 not two years later".

For many years we got used to the idea that the EU was something that UK politicians didn't talk about, creating an elephant in the room of mammoth proportions. It's replacement now, however, seems to be the transition period. And if only Rees-Mogg and a limited band of his supporters is prepared to talk about it, we are really in trouble.

Come the 29 January, we will see whether the "elephant in transition" is taken seriously. One hopes it will be. The entire Brexit process is going to be shaped by it.



Richard North 17/01/2018 link

EU Referendum: those trade deals

05/03/2016  


One of the more egregious lies perpetrated by the "remain" campaign, and repeated by Philip Hammond in his Chatham House speech, is the canard about having to renegotiate "EU trade deals with over 50 different countries".

Said Hammond last week, these deals have been based on the negotiating muscle of a bloc with 500 million consumers and a quarter of the world's GDP.

Renegotiating them as a single country, he claimed, would take many, many years. Years in which British businesses would be squeezed out of traditional markets and with no guarantee at the end of the process we could get terms as good as we have now.

If this was actually true, this would present a serious problem – and far bigger than the ill-briefed Hammond makes out – but then he relies on his Civil Service, so you can't expect too much.

Illustrating the scale of the problem, we see that the European Union lists 881 bilateral treaties on its treaty database, together with 259 multilateral agreements.

These treaties cover a vast range of subjects from the "Agreement between the European Union and the Republic of Moldova on the protection of geographical indications of agricultural products and foodstuffs" to the "Agreement on fishing between the European Community and the Kingdom of Norway". Norway, in fact, is party to 166 agreements, and 215 are listed to which the UK is also party.

There is a further distinction as between treaties made jointly between the European Union and its component Member States, and other parties (whether bilateral or multilateral) – the so-called "mixed" treaties, and those concluded only between the European Union and third parties, such as under the Lisbon Treaty Article 207 powers, known as "exclusive" treaties.

On the face of it, Britain is excluded from all treaties once it leaves the EU. Therefore, it would appear that each treaty will have to be examined and, where necessary, the agreements between Britain and the relevant third countries renewed.

That is the thrust of the "remain" lie. The administration and negotiations potentially required in such an event, together with the procedural requirements associated in maintaining treaty continuity, could on the face of it take longer than the Article 50 negotiations needed to exit the EU. They would prove resource intensive, and probably outstrip our current diplomatic capabilities.

However, Hammond and his remainers need to come clean. There is what is known as the "general presumption of continuity", which is cited by authorities on international law. This applied in the "velvet divorce" between the Czech Republic and Slovakia, when on 19 January 1993 the two republics were admitted to the UN as new and separate states. In respect of international treaties, they simply agreed to honour the treaty obligations of Czechoslovakia.

The Slovaks transmitted a letter to the Secretary General of the United Nations on 19 May 1993 expressing their intent to remain a party to all treaties signed and ratified by Czechoslovakia, and to ratify those treaties signed but not ratified before dissolution.

This letter acknowledged that under international law all treaties signed and ratified by Czechoslovakia would remain in force. For example, both countries are recognized as signatories of the Antarctic Treaty from the date Czechoslovakia signed the agreement back in 1962.

Exactly the same option would be available to the UK. It would, of course, need to prepare the ground before committing to an Article 50 notification – which is another reason why we would be unwise to go ahead immediately.

Once alternative arrangements are in place, an exit agreement with the EU would hold no terrors. As we dropped out of the EU treaties, we would simply invoke the procedures leading to treaty continuity.

Conveniently, there is also a template which the UK could use, in the Vienna Convention on Succession of States in respect of Treaties, even though it is not a party to it.

The Convention sets out the procedures for carrying over treaties, where all parties agree to their continuation. It allows for the newly independent State – in this case the UK – to establish its status as a party to an existing treaty by way of a formal notification of succession, lodged with the depository of each treaty.

Nevertheless, participation in the treaties will normally require the consent of all the parties, and the newly independent State may establish its status as a party to these treaties only with such consent. It does not seem likely, though, that many (if any) parties will want to withhold consent.

This procedure, however, might not apply to exclusive EU treaties, where the EU as the contracting party concluded the agreement on behalf of its members, without the individual members acting as contracting parties.

In this case, the UK has no direct locus and, on withdrawal from the EU might have no part in such treaties. But there again, the principles of the Vienna Convention could be deemed to apply, given the political will. In those cases, where the third country is the beneficiary – as in the Mutual Recognition Agreement on Conformity Assessment between the EU and Australia – it would be irrational for that country to withhold consent.

In any event, there are currently very few exclusive treaties, with the EU treaty database listing only 17 made under Article 207, of which only three relate to trade, of the 250 trade agreements listed in the database.

Nevertheless, there is an option which would avoid the possibility of being held to ransom by third countries which do not consent to an independent UK as a treaty partner.

This would involve an agreement with the EU of a treaty giving Britain notional membership status for the strict and exclusive purpose of taking advantage of the third country treaty provisions. Any such arrangement would most certainly be of limited duration, giving time for selective renegotiation and/or re-enactment with the original parties to the treaties.

Even if a few have to be renegotiated, that is not necessarily a significant problem. Talks may be relatively trouble-free and speedy to conclude. For instance, on third country trade deals with developing and less-developed countries, the UK may be willing to offer more generous terms than were available from the EU, in return for a speedy conclusion of deals.

Where for instance the EU is currently demanding that Kenya (and EAC partners) progressively reduce tariffs on imports, the UK may be more inclined to carry over ACP arrangements in the interests of promoting employment and development, all with a view to reducing migration pressure.

With the groundwork already done, draft treaties might be in place long before the Article 50 deadline supervenes.

The point that thus arises is that third country treaties are manageable. For the most part, ensuring continuance is a relatively minor administrative task that can be resolved relatively simply. There is no question of any need for major renegotiations.

For the rest, there is a premium on negotiation, which will form part of the Article 50 exit agreement, but there is nothing which cannot be resolved with goodwill on all sides.

And then there is the get-out-of-jail-free card. Should we take the option of joining EFTA, then we can rely on Article 56(3), which allows for state acceding to the Association to apply to become a party to EFTA free trade agreements.

This, potentially, is a huge short-cut. Parallel negotiations with EFTA, while Article 50 negotiations are in progress, could allow for an orderly transition. As we leave the EU, we could arrange it so that the EFTA agreements could kick in at the same time.

Needless to say, nothing of this will come from Mr Cameron, his sidekick Philip Hammond, or any of the "remains". But the facts are the facts. Third country deals are not a crisis. They are an opportunity.



Richard North 05/03/2016 link
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