Brexit: to crash and burn

15/10/2017  


In this week's column, Booker resorts to quoting Dr Samuel Johnson. "Nothing more wonderfully concentrates a man's mind", the Doctor observed, "than knowing that he is to be hanged in a fortnight".

It is true that Christmas is a little more than a fortnight away, but with speculation that the Brexit talks might collapse by then, and Theresa May talking about leaving without a deal, it seems that the proximity of disaster is having a similar effect.

This is seen in the emergence of ever more people who know what they are talking about. They are coming out of the woodwork to warn that this could face us with an unthinkable catastrophe.

The seeds of that catastrophe were sown back in January when Mrs May first sprung on us that she wanted us not just to leave the EU single market, but also the wider European Economic Area, which could have given us, outside the EU, much the same "frictionless" access to that market that we have now.

But what she and her more recklessly bull-headed colleagues had chosen instead was that we should become what the EU classes as a "third country", making it inevitable that entry to our largest export market would face a maze of "non-tariff barriers" and time-consuming border inspections.

Amongst those that Booker identifies as beginning to sound the alarm, we have the chief executive of the UK Chamber of Shipping. He warns that the collapse of talks could overnight bring to a halt the ferry service that carries 12,000 trucks a day from Dover across the Channel.

Another alarm is raised by the head of the British Airline Pilots Association who warns that "UK airlines could find that they have to stop flying". The effect on "the entire UK aviation sector", which employs more than a million people, would be "devastating".

An equally devastating prospect was painted by a report from the European Fresh Produce Association, representing the growers who supply annually to the UK 3.1 million tonnes of fresh fruit and vegetables, worth about €4 billion. Meanwhile, the chief executive of the British Retail Consortium predicted we can expect empty shelves in our supermarkets.

All this and very much more is what Booker has been trying to explain ever since that fateful day last January. And at the top of the political tree, the only minister who seems to have a glimmering of what is bearing down on us is Philip Hammond. And his reward is to be screamed at for being "treacherous" and a "saboteur".

Yet this was after his paper on customs arrangements pointed out that we will need several years and hundreds of millions of pounds just to put into place our own border controls – in accordance with international rules – without mentioning the billions of euros we will expect our continental and Irish neighbours to spend on setting up theirs.

The ostrich-like behaviour, Booker asserts, is the price we are paying for having spent 44 years enmeshed in a system that our politicians never really tried to understand is that they may now have to learn about it in the hardest and most damaging way possible. But their likely response will simply be to blame those dreadful foreigners for being so "difficult".

If only, our man laments, they could have taken on board the realities of what we are facing in a more clued-up and grown-up fashion. Then, perhaps the catastrophe they are heading us for really could and should have been avoided.

Yet, to look once again at the comments on the column (something which, these days, I try to avoid), we see many of the same, familiar names, lambasting Booker for being a "remainer", dismissing his piece in often quite insulting terms. And to support their diatribes, we often see a cascade of ignorance which hasn't changed since the very start.

All of this makes the so-called debate on Brexit utterly tedious. Against the ardent, "hard Brexit" polemicists, we make no more progress than is the UK in its Brexit talks – and for much the same reason. There is an almost complete lack of empathy combined with an obstinate refusal to confront even the most basic of facts.

Thus do we hear trotted out time and time again the false assertion that the EU doesn't have trade deals with the likes of China and US and that, since we already supposedly deal with them on WTO terms, sliding out of the EU without a deal holds no fears for them.

There is absolutely no point in challenging the errors and false assumptions on the Booker comments. The very same people who are peddling their wares have been doing so for months, despite repeated correction. They are totally oblivious to the facts.

Nonetheless, in the absence of rationality, all these people are doing is producing noise. The real game is going on elsewhere – mostly in Brussels, where the decisions are going to be made without assistance from the Sunday Telegraph commentariat.

Insofar as there is any meaningful activity this side of the Channel, we may be seeing the re-emergence of the remainer caucus in the Westminster Parliament, which might be beginning to flex its muscles once again.

This is the view of the Observer, which reports that "a powerful cross-party group of MPs is drawing up plans that would make it impossible for Theresa May to allow Britain to crash out of the EU without a deal in 2019".

Predictably, we're looking at the "usual suspects" including Kenneth Clarke and several Conservative ex-ministers, together with prominent Labour, SNP, Liberal Democrat and Green MPs. The idea is to give Parliament the ability to veto, or prevent by other legal means, a "bad deal" or "no deal" outcome.

The mechanism is the EU withdrawal Bill, to which several hundred amendments have been tabled. One of those is from former cabinet minister Dominic Grieve who, together with nine other Tory MPs and members of all the other main parties, had tabled an amendment saying any final deal must be approved by an entirely separate act of Parliament.

If passed, says the Observer, this would give the majority of MPs who favour a soft Brexit the binding vote on the final outcome they have been seeking. That would amount to the ability to reject any "cliff-edge" option.

For my money, I doubt whether this or any of the other high-profile amendments will succeed, including one tabled by Clarke and the former Labour minister Chris Leslie. This requires Mrs May's "plan" for a two-year transition period after Brexit to be written into the withdrawal Bill, without which – supposedly - exit from the EU should not be allowed to happen.

There is something in the claim that a sense of crisis is engulfing the government, with whips fearing a series of Conservative rebellions and defeats over the Bill. Ministers have thus been forced to postpone the committee stage of the legislation, which was due to start this week.

Predictably, though, this will have no effect whatsoever on the "Ultras", one of which (at the very least) is expected to break cover and call for the suspension of Brexit negotiations until the EU agrees that trade talks can begin. This line already has much support in the country and the first out of the traps is more or less guaranteed a slot in a Sunday politics programme, as the media salivate at the prospect of more Tory splits.

However, while David Davis is trotting off to Brussels tomorrow for unscheduled talks – the nature of which have not been disclosed - as expected, elements of the media are beginning to review the consequences of a "no deal" scenario, starting with the much rehearsed fate of the airline industry.

While the focus is very much still on tariffs, there is a recognition that we will be seeing a return to customs checks, with the consequential effect of a hard border between Northern Ireland and the Irish Republic. Nevertheless, the detail is pretty thin and it's quite evident that journalists are out of their depth.

Mostly, though, the papers are staying within their comfort zone, devoting far more time and space to the Westminster soap opera. High on the list is the dumping of Hammond, the prospect of a reshuffle and the endless speculation about a possible replacement for Theresa May.

For most normal people, this simply adds to the tedium, leaving us to count down to Friday when the European Council, meeting as 27, deliver their verdict. Since there is nothing new expected there either, Brexit-watching becomes a treadmill where events blur, one into the other to create a perpetual groundhog day.

Yesterday, I spent some time completing an Airfix model of the DUKW – something I first built when I was about 10. Today, I think I'll have a bash at building the IGB "Otter" armoured car, although I may build the Heller AMX-13 first, as a "quickie". It's getting so bad that a boyhood hobby is once again proving more interesting than what passes for the real world.



Richard North 15/10/2017 link

Brexit: kicking the can down the road

13/10/2017  


It was actually on Tuesday, when Donald Tusk raised the possibility that talks on phase one of the Article 50 settlement could continue through into December, thus allowing - as we observed - for the possibility of the December European Council re-examining the decision on whether the talks could progress into phase two.

By that time it was already clear that the fifth round of the Brexit talks in Brussels wasn't going to achieve anything. It thus came as absolutely no surprise when Barnier addressed the concluding press conference and declared: "I am not in a position, as things stand at present, to propose to the European Council next week to open discussions on the future relationship".

The only mild surprise is that he was so unequivocal, not in any way hedging his bets. There had, after all, been attempts by the UK to appeal direct to the Council over his head, in the hope that the Member States would over-ride their own chief negotiator and instruct him to move to phase two.

In fact David Davis, in his own press conference address alongside M. Barnier, asserted that "substantial progress" had been made, and looked to the October European Council, hoping that the Member States would "recognise the progress we have made, and take a step forward in the spirit of the Prime Minister's Florence speech".

All the same, M. Barnier must be pretty confident that he has the full support of the Member States, and have no fears that they will break ranks. Thus, he was able to say that "with a political will, decisive advances are within our reach in the next two months", adding: "We are going with David Davis to fix several negotiation meetings by the end of the year". That leaves the way open for the December Council to make the final decision.

Inevitably, the media homed in on the money story, mostly reporting that the talks were "deadlocked", repeating with zest the very word that Barnier himself had used in respect of the final settlement.

The hang-up, according to Barnier, is that while Theresa May in her speech in Florence affirmed that the UK would honour its commitments made as a member of the Union, the negotiating team was not prepared to specify which particular commitments it was prepared to honour. Consequently, there had been no negotiations on this subject. The parties had to content themselves with "technical discussions".

Despite this, Davis remains buoyant - perhaps unrealistically so. He argued that these technical discussions were "an important step", declaring: "When the time comes, we will be able to reach a political agreement quickly and simply".

Barnier's words on the financial settlement, however, may have partly responsible for misleading the media. Always keen to miss the point, it has presented the talks as being stalled over the money, without mentioning that the other two phase one issues haven't been settled either.

For sure, the parties seem to be edging to an agreement on expat civil rights, and that movement of people across the Irish border is more or less settled, with the terms of the Common Travel Area (CTA) being carried over into the Brexit settlement.

However, even though the BBC's self-important political editor, Laura Kuenssberg, managed to offer an analysis which completely omitted any reference to Ireland, the trade issues and the Irish border are very far from being settled.

Oddly, although the Commission offers a version of the Barnier address, as delivered, when it comes to the Irish question, it omits almost a full sentence, which can actually be found in the BBC report.

The Commission version tells us that the EU negotiating team had "continued our intensive work on mapping out areas of cooperation that operate on a North South basis on the island of Ireland", but then it leaves out Barnier's observation that, "There is more work to do in order to build a full picture of the challenges to north-south cooperation", which result from the UK and therefore Northern Ireland leaving the EU legal framework.

The omission is curious, but cannot be ignored. This suggests that the parties are so far apart that they have not even got to the stage of listing the issues they are prepared to disagree about. In other words, there has been no progress at all on this vital issue.

That then leaves two more negotiating rounds (with the possibility of an extra session being thrown in) to resolve an intractable problem that has seen no movement so far in five rounds. It seems hard to accept that the border question, which is so politically sensitive to the Conservatives, should be resolved in just two months, allowing the December Council to give the go-ahead to move to phase two.

The thing is that the hacks do not understand the issues here, while the Kuenssberg's of this world regard the detail as "boring" and "nerdy". They prefer to stay in the more familiar territory of personality politics, reporting on the Brussels talks as an extension of the Westminster soap opera, but with a few foreign actors.

While they obsess about the cash settlement, though, the Irish problem will fester unresolved, ready to block the entire talks on points of detail that the media refuse to spend any time on. They, like many of the politicians, are going to be caught out simply because the EU is about detail. You cannot get away with the cavalier "biff-bam" treatment which so often dominates the reporting of UK politics.

It is this lack of attention to detail which allows pompous idiots such as Nigel Lawson to blather about the WTO option as if it was a fashion accessory, arguing that "it's a perfectly acceptable solution", because "we already do far more trade with rest of world than rest of EU" and the great bulk of that trade is on WTO terms".

Such a stupid statement should be ripped apart by even a half-sentient media commentator but, as the idiocy is trotted out, one after the other they sit there nodding gormlessly as if the jabbering idiot was actually talking sense. And therein lies the core of the problem. Unless or until the political classes and their media handmaidens come to terms with the devastating consequences of a "no deal" Brexit, they will continue to treat such stupidity as a rational alternative to a negotiated settlement.

Such is the incompetence of both commentators and media that, when the Chancellor tentatively raised the prospect of an interruption of air traffic, post-Brexit, he was screamed at by the idiot Lawson and accused of "sabotage". Yet this demented diatribe was treated by the media as a rational contribution to the Brexit debate, while some Conservative MPs demanded Hammond's sacking.

Not to be left out in the race to reach the Nobel laureate equivalent in the stupidity stakes, the Daily Telegraph then argued for the Prime Minister to be accompanied by her sociopathic Foreign Minister when she goes to Brussels next week – heedless of the offence that would cause.

Meanwhile, courtesy of Reuters we get to see a draft of the European Council statement of the 27, on Brexit. In a clear snub to UK aspirations, the Council will reject the "invitation" to over-rule their chief negotiator and instead call for continued negotiations "in order to be able to move to the second phase of the negotiations as soon as possible".

As regard the Irish question, it notes the "major challenge" that the UK's withdrawal represents. It reminds us of the need to avoid a hard border, and therefore expects the UK "to present and commit to flexible and imaginative solutions called for by the unique situation of Ireland".

With the ball firmly in the UK's court, it then confirms what we expected. At its next session in December, the European Council "will reassess the state of progress in the negotiations with a view to determining whether sufficient progress has been achieved".

If this near mythical state of "sufficient progress" has been achieved, and only then, it will it "adopt additional guidelines in relation to the framework for the future relationship and on possible transitional arrangements".

Even then, on the transitional arrangements, it adds the rider that they should be " in the interest of the Union and live up to the conditions and core principles of the guidelines of 29 April 2017". That, of course, means accepting the continued jurisdiction of the ECJ, something which is going to be politically very difficult for Mrs May to accept.

The one small concession given is that, in order to be ready for any phase two talks on transition, the Council "together with the Union negotiator" is willing to "start internal preparatory discussions". But that is going to be a two-edged sword, as it gives the EU the political initiative and puts the UK on the back foot.

Overall though, after much labour, the net outcome of all this activity is simply to delay the determination of whether the talks will continue, kicking the can down the road from October to December. Undoubtedly, then, there will be a price to pay. If agreement can't be reached by December, I am taking the view (for the moment) that the talks will be over.



Richard North 13/10/2017 link

Brexit: playing with fire

11/10/2017  


As people begin to absorb the implications of Mrs May's Commons statement, it is clear that the UK Prime Minister is taking a path which inevitably leads to a "no deal" – if only by default.

It is also becoming clear that her stance is having little impact on the Commission, evident from the Commission's responses so far – and the lack of them. And this is a view endorsed by Politico.eu which detects no indication that the EU27 are worried by a precipitate British departure.

Politico.eu notes that Michel Barnier has spent the last five months of negotiations repeating the EU's offer and watching the U.K. government creep closer to it. But he hasn't felt the need to shift his own position in any significant way. And nor, in my view, is he likely to between now and the 20th October, when he is due to report to the European Council meeting as 27.

On that basis, discussion about the merits (or otherwise) of Mrs May's implementation period are largely moot. We must reconcile ourselves to the near certainty that the October meeting of the European Council is not going to agree to progress to phase two of the talks.

That leaves the possibility of two further rounds of talks with M. Barnier's team before returning to the Council in December when, again, the 27 have the opportunity to judge whether there has been sufficient progress for them to allow the talks to continue.

Earlier, I pondered on the possibility that the Council might be reluctant in December to break away from its schedule to afford yet more time to Brexit. But, we learned from Donald Tusk yesterday that if there is no further progress then, both sides might need to move into an emergency footing to address the consequences of failing to reach a deal.

What Tusk has actually done, therefore, is extend the life of the talks by two months. Otherwise, the general feeling might have been that the October session was going to be "sudden death", marking the end of the process. After that, there would be no point in holding further talks.

On the other hand, this stay of execution has its price. If the UK has not by December offered constructive proposals on the phase one issues, then the talks will effectively be at an end. It truly will be all over by Christmas.

As it stands, there are no indications that Mrs May is prepared to put anything more on the table to resolve the phase one logjam. She is still treating her Florence speech as her final "offer" and has expressed her "confidence" that she will get her way in October.

However, it is all but impossible to predict what effect a rejection by the European Council might have on Mrs May, and on political sentiment generally – especially if it is known that we have another bite of the cherry in December. Political allies (or even enemies) may intervene to prevent her walking until all avenues have been exhausted.

Where we go if both sides agree to abandon talks is then another of those imponderables – near-impossible to predict. But, without them being specific, it appears that EU negotiators have stepped up contingency planning for a breakdown in talks.

For the moment, though, Tusk is simply acknowledging that the UK government is preparing for a "no deal" scenario, while denying that the EU is doing likewise. "We are negotiating in good faith", he says, "and we still hope that the so-called 'sufficient progress' will be possible by December".

It is there that his hint of a final break comes. "If it turns out that the talks continue at a slow pace, and that 'sufficient progress' hasn't been reached, then – together with our UK friends – we will have to think about where we are heading", he says.

In fact, if nothing is agreed by the December Council, the perilously short time allowance leaves little chance of agreeing anything substantive. The best that might be hoped for is a basic customs agreement, which will allow a limited flow of goods to and from the continent.

Certainly, the idea of concluding a full-blown "transition" or interim agreement does not seem to be a workable proposition. Given the wording of Article 50, there is no provision for extending the acquis after the UK has withdrawn. Selectively to re-apply elements of the treaties would require a completely new treaty, outside the scope of the Art 50 withdrawal agreement.

The most logical way forward is for the UK to ask for an extension of the negotiating period but, since that has been ruled out, we are left with the cumbersome and time-consuming process of negotiating a bridging treaty to keep us in the game. And such is the lack of thought that has been given to this that it is not even certain that a short-term preferential trade agreement is permissible under EU rules.

Even under the cover of a trade agreement, though, the UK will find that its "third country" status will not exempt goods from customs and other checks when they are exported to EU Member States. And, as I explained in yesterday's piece, throwing money at the problem this side of the border will not address choke points on the EU's external borders.

But now, it appears, Chancellor Philip Hammond is not even prepared to spend any money on a "no deal" exit. It would be irresponsible, he says, to spend taxpayers' money on this. We will only spend it when it’s responsible to do so.

The effect of this is more serious than Hammond might think. In order to accommodate UK goods, collectively the EU Member States will need to commit several hundred million euros to upgrading infrastructures at sea ports and airports, and along the land border with Northern Ireland.

This expenditure will be required with or without a trade deal but making arrangements within a "no deal" scenario will probably be that much harder. And if the UK Chancellor is not prepared to spend any money, it will be hard to argue that his counterparts in EU Member States should open their coffers to deal with a situation that is not of their making.

As time progresses, therefore, we are accumulating at an alarming rate a number of problems to which there are no solutions in the time available. That leaves the two sides to work on what are being called "emergency arrangements". Under such a regime, we are probably looking at imposing limits on the amount of traffic that can use the Channel ports, with the issue of permits to allow essential goods to be transported.

It does not seem possible in the 21st Century, with all the sophisticated systems and resources available, that we are seriously considering what amounts to the rationing of road access and a system of state authorisation before vehicles are allowed to travel to Continental ports. Not since the Second World War will movement have been so restricted.

Perhaps it is the seeming implausibility of such developments which are hampering the negotiation process. Neither side can fully comprehend the degree to which logistics will be disrupted. Hence, warnings of a complete collapse of trade are simply not believed.

On that basis, we seem to have Conservative politicians (in particular) who are convinced that, on Brexit day, officials on the EU side of the border will be instructed to wave UK traffic past the checkpoints, without formality. Suggestions that the full panoply of border checks will be applied are regarded as scaremongering or a bluff.

By way of a reality check, though, yesterday the suggestion by the Prime Minister that a Brexit "no deal"’ was now an option brought BALPA General Secretary Brian Strutton out of the woodwork to say that the entire UK aviation sector which employs nearly a million people and carries more than 250 million passengers per annum would be devastated by a Brexit "no deal".

"UK airlines could find they have to stop flying", he says, "it's that serious. And this would impact passengers long before March 2019 because airlines couldn't sell advance tickets and, frankly, would passengers risk buying them?" Strutton continues:
It is utter madness for anyone to think that a Brexit "no deal" would be anything but a total disaster for our world leading UK aviation sector and beyond. After all, without air cargo we will not be able to export or import freely. The entire industry has said that we have to see evidence of the post-Brexit plan for aviation now if we are to avert a catastrophic crisis of confidence.
Then, with their feet planted firmly on the ground, British retailers have reiterated their warning that the UK faces "gaps on shelves" if the country does not reach a new post-Brexit deal on trade and customs with the EU.

The British Retail Consortium (BRC) has responded to Theresa May's trade plans with a warning that without a robust new deal with the EU, UK shoppers "will be hit with reduced availability of affordable goods with almost immediate effect". CEO of the BRC Helen Dickinson writes:
The UK's future trade policy is the most significant aspect of the Brexit negotiations for consumers. ... Annual customs declarations would jump from 55 to 250 million and with four million trucks crossing the border between the UK and EU each year, new red tape, border controls and checks would mean delays at ports of up to two to three days for some products. Businesses and consumers would face higher costs, gaps on shelves and product shortages.
This is not scaremongering – and nor is the picture we have used. Sophisticated though they may be, modern logistic systems are extraordinarily fragile. Brexit involves tearing up the rule books and rewriting them around completely different systems. You do not have to be an expert to know that this means trouble.

Mrs May and her colleagues are playing with fire.



Richard North 11/10/2017 link

Brexit: overtaken by madness

09/10/2017  


I remarked in an earlier piece that it required no great insight to realise that Mrs May had essentially given up on the Brexit negotiations. Unable to take any initiative that would break the impasse in Brussels without mortally offending one or other of the factions in her party, the indications have been that she is frozen into immobility.

Latterly, though, we have The Times (no paywall) tell us that the Prime Minister is today to use a statement to the House of Commons to warn European leaders that the UK will make no more concessions on Brexit until they compromise on opening trade and transition talks.

Mrs May will, we are informed, tell other Member States that "the ball is in their court", thus implicitly warning of the risk of talks breaking down. She will call for both sides to be constructive and "prove the doomsayers wrong".

Senior government sources, The Times report continues, have said the prime minister's statement makes clear that she has "offered what we were going to offer" in her speech in Florence. It is now up to the EU leaders to decide whether sufficient progress had been made to move the talks on at next week's European Council meeting.

This stance is not incompatible with the first. This is not a serious attempt to negotiate: the "colleagues" have already dismissed the Florence speech as not constituting a negotiating position, Therefore, Mrs May (or her advisers) must know that the EU negotiating team cannot respond positively to her statement.

This means we are drifting inexorably towards a "no deal" Brexit – not the result of any conscious action but a default option arising because no one knew how to stop it, or is prepared to take the necessary steps to engage constructively with the EU. We end up with the worst of all possible worlds, the "accidental Brexit" which no-one ever wanted.

One might have thought that the very prospect of such an outcome might serve to concentrate minds and provoke a flurry of focused activity, aimed at preventing something which will undoubtedly prove economically (and politically) disastrous. But such is the unreal state into which UK politics have descended that no serious moves are being made to head off the disaster.

Instead, we read in the Telegraph the claim that Mrs May "has decided to commit billions of pounds on preparing Britain to leave the European Union without a deal".

This is supposed to be a ploy to save her premiership as the spending, which will be "unlocked" in the new year if no progress is made with Brussels, is intended to send a signal to pro-Brexit MPs that she is serious about regaining the upper hand in the negotiations.

The cash, we are told, will be spent on new technology to speed up customs checks at the borders "if the UK has to revert to a World Trade Organisation tariff system, and a range of other measures". And, we learn, the Government is already working on plans to deal with air traffic control and migration in the event of a "hard Brexit".

However, if we are to take this at face value, the ploy appears not to be a serious attempt to deal with the consequences of a "no deal" Brexit. In truth, no amount of money thrown at this problem will have anything but a marginal effect on it. Once we walk away from the EU, the solutions no longer lie in our hands.

Instead, this fits in with an utterly mad idea expressed in a Telegraph editorial.

The political embarrassments of the conference season, allied to several errors made by the Government over the past year, says this newspaper, mean that many in the EU think Britain is weakened – that Brussels can just sabotage the talks and that Britain will ultimately take whatever it is given.

To this, in the mind of the editorial writer, "there is an obvious answer to this crisis: the UK must make it crystal clear that it is prepared to walk away without a deal".

Readers might be comforted to learn that this "should absolutely not be our primary objective". The residual sanity left in Telegraph towers does at least acknowledge that a no deal Brexit "would be very costly, for us and the rest of Europe". "But anyone with any experience of business", it goes on to say, "will tell you that the best way to win a negotiation is to have a serious fallback option".

Sadly, this preposterous idea seems to have taken root at the highest levels of government, without the realisation that we are not dealing with a business negotiation, but with arrangements between the UK and 27 other nation states, represented by the European Union, as to our post-Brexit relations.

Right from the very start, there have been those who have seen these negotiations in terms of bartering for a cut-price Turkish carpet in a souk, whence the "walk-away" strategy is entirely valid. There is always another seller with whom one can do business.

In this case, though, it is inconceivable that a mature, developed nation should not have a complex of relationships with its neighbours, spanning a vast range of issues, with formal agreements which establish rights, obligations and procedures. And, inasmuch as the Brexit talks are about restoring such agreements after the fracture of our withdrawal, failure is not an option. We cannot walk away without an agreement.

Despite that, the children in the Telegraph assert that it is "maddening that while the Government insists it has been preparing for a no deal outcome, it hasn’t been spending serious money to do so". Britain doesn't want to abandon the Brexit talks, say these children, "but, if it is seriously prepared to do so, the threat of walking strengthens our hand". Crucially, they say:
… it would also focus minds in Europe. If Britain has done too little to prepare, the EU has done next to nothing. They too would have massive problems with their financial systems and they too would face queues of lorries waiting to go to take goods across the Channel. Several member states would suffer more as a share of GDP from a no deal Brexit than we would.
Outside the purview of the Telegraph, though, we have a report from the Irish broadcaster, RTE, which tells of an internal report by the Revenue Commissioners which has "spelled out the enormous physical and economic impact Brexit will impose upon both Ireland's customs infrastructure, and on the tens of thousands of companies who trade with the UK".

This as yet unpublished report, we are told, sets out in stark detail the vast increase in paperwork, human resources and physical space requirements at ports and airports. And, in a devastating rejection of the fantasies of Tory politicians, it declares that an open border between Northern Ireland and the Republic will be impossible from a customs perspective.

It is interesting that the Irish Revenue Commissioners began exploring the potential impact on the customs interface between Ireland and the UK, a full year before the referendum. Then, of course, our own people should have been doing the same, but they didn't.

In terms of scale, 91,000 Irish companies trade with the UK. After Brexit, their customs declarations will create an eight-fold increase in paperwork volume. There will be special permits, extra investment, more paperwork and potential delays. Ports and airports will need extra infrastructure, such as temporary storage facilities for customs clearance. The Revenue itself will need a big increase in staffing levels.

For traders, the report says, the administrative and fiscal burden cannot be underestimated. Even the Ploughing Championships will be hit, since heavy equipment brought over from the UK will need to be declared under a Temporary Importation Procedure. Extra staff will be needed for the Irish postal service, An Post to manage customs checks on parcels coming in from the UK. Even smaller regional airports will now need customs infrastructure.

The report goes on to says that every day 13,000 commercial vehicles cross the Irish border and thus, a completely open border is not possible from a customs perspective. It would be naive to believe a unique arrangement can be found.

Something you simply do not see in UK references is then stated with utmost clarity: "Once negotiations are completed ... the UK will become a third country for customs purposes and the associated formalities will become unavoidable". And, of course, not only will this affect Ireland as the only EU country to have a land border with the UK, it will affect all other Member States.

Looking at this aspect, if the UK Government is beginning to acknowledge that billions must be invested in customs services to keep trade flowing (albeit not as freely as when we were in the EU), then it follows that other Member States, and especially France, Belgium, Holland and the others which have direct shipping links, must do likewise.

Addressing the myth that technology in any way provides an answer, the Report explores certain hi-tech options. There could, it says, be e-flow style number plate recognition allowing goods vehicles to move without having to stop in cases where a pre-departure/arrival declaration has been lodged and green-routed.

A vehicle could be identified by the ANPR system associated with a particular pre-declared consignment and signalled as to whether clearance has been provided. However, it says:
For a system of this nature to work with maximum effectiveness it would require an interface between both countries' electronic systems and it is unclear whether any such system could be commissioned and installed in the time available. A detailed analysis of the cost/benefit and the associated technical challenges is required before the practicality of such a regime can be evaluated.

Regardless of any efficiency arising from an ANPR system, the inevitability of certain consignments being routed other than green and goods or documents having to be examined would still require investment in suitable facilities at all designated crossing points.
To return to unreality, we had yesterday Justice Minister Dominic Raab being asked by the BBC why there was no visible sign of preparations for no deal - such as the recruitment of more customs officers and more infrastructure at ports.

This buffoon responded by saying that the planning "goes on", but: "What we don't do is run around advertising it demonstrably. Why? Because we want to send the right, positive tone to our EU partners. So we don't go talking about what happens if we end up with no deal, but quietly, assiduously, those preparations will be in place".

Once again, we see this naïve parochialism, where any thinking – such that it is – stops at our border. Not a single synapse is employed to consider what might be happening on the other side of the Channel where, as far as we can ascertain, no preparations at all are being made for Brexit.

On reading the lengthy extract from the Irish Revenue report, it is absolutely clear that a "no deal" Brexit is a non-starter. No matter how many billions the UK Treasury might throw at the problem, this is not going to resolved the deep-rooted problems that come with "third country" status. If the UK persists in following its current non-strategy in Brexit talks, we are headed for disaster.

The Dominic Raab nostrum, therefore, is one of utter foolishness. Commission officials, and especially M. Barnier, will have a very good idea of what a "no deal" Brexit involves. Using it as a negotiating ploy is akin to telling the EU, "give us what we want or we'll shoot ourselves".

One can scarcely believe just how badly these negotiations are being managed, and how dangerously exposed we are. Yet, as the UK negotiating team travel to Brussels today, we see no sign of any acknowledgement that the talks are on the brink of irrevocable failure - not least as Mr Davis is, apparently, not even bothering to turn up until Thursday.

If there is no breakthrough at this week's talks – and none is expected – and the October European Council refuses to move to phase two, the next realistic chance of the matter again being considered is in the March Council. For all that could then be achieved before the deadline, we might just as well disband our negotiating team.

Such is evident from the article written by Bernard Jenkin in the Guardian today, which charts our descent into madness. As long as there are people close to power who believe that a "no deal" Brexit is an option, we are doomed.



Richard North 09/10/2017 link

Brexit: looking beyond our shores

08/10/2017  


In the Observer today (although still under the Guardian brand online) is a piece about the impact on the continental port of Zeebrugge.

As we drift towards a "no deal" Brexit, such pieces will become more and more important and, one hopes, more frequent, as journalists and their editors break out of the claustrophobic confines of the Westminster bubble and do what this blog has been doing for years – looking at the wider impact of our withdrawal from the EU.

The theme of this piece is that, in the Belgian port of Zeebrugge, which does 45 percent of its trade with the UK, there is growing concern about the impact of the worst-case scenario – no deal, and the resumption of WTO tariffs.

As such, it is useful to have a journalist, in this case Jennifer Rankin, look at a European port but there is still this narrow obsession with tariffs which, even in a no deal scenario, balance out to roughly 2.5 percent of traded value, compared with costs of non-tariff barriers estimated at 20 percent in established trading relationships.

Trapped in the obsessions and lacking the basic understanding of the complexities of the non-tariff barriers (NTBs) and their potential effects, there is also the failure to understand that, in the early stages until the necessary adjustments have been made, the immediate impact of NTBs may well be to bring trade to a complete halt.

This piece does at least recognise the prospect, starting off with the narrative: "Gridlock at the border, vast motorway car parks and jobs lost: British ports have been vocal about the risks of a hard Brexit".

Rankin then observes that, in case Conservative MPs missed the message, the Port of Dover advertised at the party conference, warning that an extra two minutes on lorry inspections could lead to queues of 17 miles at Dover and similar "chaos in Calais and Dunkerque".

It's the point about the similar chaos in Calais and Dunkerque that is so often missed when trade with the EU is discussed. But here we have Rankin writing that "continental ports are worried about the great unknowns of Brexit".

One of the most exposed, we are told, is the Belgian port of Zeebrugge, which does 45 percent of its trade with the UK. The trouble is that Rankin, in accordance with most modern journalistic practice, then goes to a prestigious source to tell the story, ending up (as is so common) with someone who quite obviously doesn't know what he's talking about.

The unfortunate victim here is port chief executive Joachim Coens, who tells Rankin, "We are vulnerable if something happens to the trade from the UK to the continent. So what I mainly hope is that we could continue having a good trade relationship with the UK … as we have been doing for centuries".

Crucially, he fails to mention (and perhaps does not realise) that, come what may, once we leave the EU and with it the Single Market, we move outside the protection of the EU's external border and all sorts of barriers automatically take effect. The UK's newly acquired status of "third country" will make sure of that and Mrs May's "deep and crisp and even" trade deal isn't going to make a lot of difference.

What is interesting about Zeebrugge is that it is a major European transport hub and has invested heavily in rapid distribution. Thus, says Rankin, this sprawling port complex "is a hidden link in Britain's everything-on-demand economy". If a British supermarket in Glasgow orders a pallet of washing-up liquid from Zeebrugge's distribution hub before lunchtime, she writes, "it will be at the shop door the next day".

Every bottle of Evian and Volvic water on British shop shelves travels from France, via Zeebrugge, she says. Tens of millions of litres of Tropicana orange juice are bottled for British breakfast tables at the port, after the juice has been shipped in from Brazil.

But here we get the obsessive focus on tariffs. In the worst-case scenario – of no deal – the port, we are told, "would be hit by the resumption of WTO tariffs – 10 percent on cars to 25-30 percent on orange juice". In actuality, it is so very easy for the UK to strike a standstill on customs duties, wrapping it up in a formal agreement that would make it WTO complaint, that relations would have to deteriorate to an enormous extent before we were troubled by such matters.

The real problem is partly expressed by Isabelle Ryckbost, the secretary general of the European Sea Ports Organisation – but then only partly so. She tells us: "Nobody knows what Brexit will be, what will come after it", then adding: "What we know is that you will have to reorganise your port to do the border checks".

Ryckbost then goes on to say: "It is not very clear how important these additional checks will be. Will there be an agreement between a UK port and an EU port to facilitate these checks? Then you have phytosanitary checks (on plants and plant products) – will the legislation be different?".

Actually, she should know the answer to this. Zeebrugge is one of those ports which does have a Border Inspection Post (BIP) on the complex, so she should know something of how the system will work. And she must know that when the UK becomes a third country, any food products imported will have to go through the BIP, with anything up to 50 percent of consignments having to be physically inspected.

She should also know that the food products which are shipped out to the UK will have to go through a similar process once they reach their destination, to ensure that our systems are WTO compliant. And, on both sides of the divide, there can be no doubt that there is insufficient capacity to deal with the additional inspection load.

As to what will happen when the UK leaves, Ryckbost is asking the wrong questions. The EU legislation is already in place. It is not going to change once the UK leaves the EU, so the full system will be applied. Any concessions to the UK would also have to be made to all other trading partners, and the EU is not going to dismantle its entire food import control system just to suit the UK.

However, not only is she asking the wrong questions, she is struggling under the same misunderstanding that afflicts the likes of Owen Paterson. "If the British remained aligned to European standards", says Ryckbost. "then the checks are 'not so burdensome'", although she did have the sense to add: "but for now this remains 'very unclear'".

Yet, this is not true, As we know, regulatory conformity is only the starter for ten, and logic tells you this must be the case. If one takes fresh meat production, for instance, having EU equivalent legislation on the statute book - dictating standards for slaughterhouses and the handling and distribution of meat – can never be sufficient.

A slaughterhouse might comply with statutory requirements when it is approved, but buildings deteriorate and require maintenance. They get dirty and require cleaning, waste must be disposed of, drainage systems must work efficiently, and the basic operational procedures must be kept up to scratch.

Such matters will require ongoing supervision and enforcement, with active intervention by the authorities. Left unchecked, standards can very quickly deteriorate, no matter what is written into law.

Within the Single Market areas, the members earn their freedom from checks at the border by agreeing to a range of draconian checks at the point of production, during processing and right through the distribution chain. And within the internal market, the Commission has direct control over enforcement. It can reach out and instruct a member state to close down an offending establishment, or enforce the necessary remedial action.

Outside the EU, we are released from the "tyranny" of Commission intervention and are free to enforce our own rules in our own way. But, since the Commission no longer has direct control, there is a price to pay. That price is checks at the EU's external border.

It really is quite surprising how difficult people are finding it to understand the basic tenets of the Single Market. There is a direct trade-off which comes with EU Single Market membership. We not only obey common rules, we give the Commission (backed by the ECJ) the power to enforce those rules and to take action in the event of non-compliance.

We wanted to be free of that jurisdiction – which is fine. But we cannot go on pretending that there is no price to pay, that everything is going to carry on as normal after Brexit.

And here, our really big problem, in a way not appreciated by many, is that the nature of our trading with the EU relies on the Single Market freedoms. Take those away and the market cannot perform as currently configured. Massive changes will be required to restore equilibrium.

Meanwhile, the writing is on the wall. Port chief executive Joachim Coens, says Rankin, is optimistic about the future, citing Zeebrugge's increasing traffic with Ireland and other countries, including Turkey and Iran. In July, the first cargo train from China - loaded with Daqing-made Volvo cars - chugged into Zeebrugge, making this windswept corner of Belgium a final stop on the silk road.

Those are the sort of changes will see, as trading patterns adapt to the new reality – and they won't be in the UK's favour. And, in the short-term, disruption is inevitable, more so if people continue to fail to understand what is at stake and what is needed to mitigate the consequences of our departure.



Richard North 08/10/2017 link

Brexit: the iron lady of conference?

03/10/2017  


Such is the frenetic pace of the news cycle that an item published at the beginning of the day has very often by evening lost its immediacy. Unless reinforced by new developments, it will often disappear into obscurity.

Nevertheless, reports convey information and, if relevant, the information retains its potency which, added to the rest, helps us understand something of that corner of the world we are looking at.

One such report appeared in the Mail yesterday but, before we go there we must recall another report a few days ago which had the Leave Means Leave group stating in a letter: "If the EU is not seriously negotiating a free trade deal by Christmas 2017, the Government should give formal notice that we will move to World Trade Organisation rules in March 2019".

Now we get this Mail report popping up telling us something which, if true, is nothing short of a miracle. "Brexit trade talks", we learn from the headline, "WILL starts (sic) by Christmas". Theresa May, it is said, "believes her speech in Florence has led to a breakthrough with Brussels".

As we know, The European Council is due to decide later this month whether "sufficient progress" has been made on the Brexit "Phase One". And despite all the indications that there has been insufficient progress, "EU leaders" appear to have indicated directly to Mrs May that talks on the "future relationship" could start by end of year.

This "miracle" must have happened at Tallinn last Friday where, according to an unnamed "senior Tory source", the Prime minister had been "pleased with the reaction to her [Florence] speech". And when asked if the PM thought that trade talks would begin by Christmas, the source said "yes".

His upbeat tone, we are told (is if we hadn't guessed) "contrasts with the verdict of European Commission president Jean-Claude Juncker", who warned last week it would take a "miracle" to move to trade talks in the coming months. Despite this – and indeed despite M. Barnier's observations at the end of the fourth round of the talks, ministers believe significant progress has been made. Sources said a deal on guaranteeing the rights of EU citizens is "close" and EU leaders have welcomed Mrs May's confirmation in Florence that the UK will pay into the Brussels budget during a two-year "implementation period".

And, while progress has been slower on Northern Ireland, ministers believe they are winning the argument that it is impossible to agree arrangements at the Irish border until both sides know the details of customs arrangements that will be finalised in trade talks.

Such is the narrative that we are supposed to believe, repeated in the Sun where the story seems to be a direct copy-out of the Mail story, adding nothing new.

We then see the same assertions in the online edition of the Express bolstered by a comment from Legatum favourite, Steve Baker, who also works as a minister in MinBrex.

He says he's "hopeful" that EU negotiators would agree to move on to discuss future relationships soon, having told a fringe meeting at the Conservative Party conference: "I am very hopeful that everyone will see the mutual advantage of moving on to a discussion of the future relationship in October".

So far, we do not seem to have had any corroboration of this original source, and no other newspapers have repeated the claims. The Standard, on the other hand, has a senior minister saying that hopes of kickstarting trade talks with Europe this month have faded. The belief is that the October European Council will rule that too little progress has been made on the so-called "divorce" issues.

That does rather leaves the Mail story hanging. But one wonders if this is No. 10 "flying a kite", to test opinion prior to Mrs May's speech on Wednesday. Could it be that, despite its implausible nature, the Prime Minister is to tell the faithful that her Florence speech actually worked, and the talks are back on track? Is this her secret weapon to bring the "Ultras" into line and to silence the Foreign Minister?

Whether or not this is the intention, Mrs May's advisers should be looking closely at the meetings calendars of the General Affairs Council (GAC) and the European Council. Assuming that European Council the agree to allow the talks to progress to Phase Two at their October meeting, the negotiating mandate for the next phase must be prepared and approved, and these two bodies are involved.

If we then go by the procedure adopted for the first phase, draft guidelines for the new mandate must be issued to the 27 leaders of the EU Member States. These must then be discussed by the GAC, with the first possible dates available on either 15 or 20 November.

That then clears the way for the European Council to approve the mandate, but its first possible meeting is not until 14-15 December. And although we haven't been given meeting dates for the Brexit negotiations, I very much doubt whether M. Barnier and his team will want to be attending a further round of talks that close to Christmas.

The chances are, therefore, that the earliest round of trade-related talks could not be undertaken until January, at the very earliest. And that assumes the European Council is prepared to give the go-ahead in October.

If that slot is missed, then things start to look very interesting indeed. The Brexit negotiating teams will presumably have time to squeeze in two further sessions – one in November and one in early December - before the European Council meets again, whence it could again be asked to give the go-ahead to proceed to Phase Two.

However, the earliest opportunity that the European Council would have to agree the new mandate would be at its spring meeting – the first of the year – held on 22-23 March. That would move the first round of trade talks to April 2018 – over a year since Article 50 was invoked.

There is a possibility, of course, that the European Council could convene a special meeting, but there is nothing that requires it to do so. And to drag all the 27 leaders to a winter meeting would not be popular. Weather conditions might even make one difficult.

All of this makes it even less likely that a trade agreement will be concluded by 29 March 2019, when the UK is scheduled to leave the EU. But that is largely academic, as this was never on the cards. But it does leave the time perilously short to agree a transitional arrangement, to buy time for the trade negotiations.

That also assumes that there will be agreement on Phase One which, with the latest development, looks even less likely.

In a bid to come over at the "iron lady" of conference, it appears that Mrs May could be going much further than the Mail story indicates. She may be looking to make the payment of EU contributions during her two-year so-called "implementation period" conditional on the conclusion of a trade deal. This impossible demand – on top of a refusal to look at other liabilities – would effectively torpedo any chance of reaching a Phase One agreement.

Should this be the May strategy to pull the conference behind her, then we are almost certainly looking at a "no deal" Brexit. Such an ultimatum might enable the Prime Minister to strengthen her grip on office, albeit temporarily, but it would be at the cost of jeopardising the entire Brexit process.

With that, there will be some merit in the "remainers" float touring Manchester during the conference (pictured). Brexit will have become a monstrosity, set to destroy our economy and our global political standing. The only up-side is that it will almost certainly take the Conservative Party with it. and even that will be poor compensation for what we might be about to endure.



Richard North 03/10/2017 link

Brexit: the €31 billion question

29/09/2017  


"There is no doubting that this was a vital round of negotiations", said David Davis in his "closing remarks" at the end of the fourth round of EU exit negotiations in Brussels.

And indeed there is no doubt at all that this was a vital round. What a very great pity it was, therefore, that it wasn't important enough for Mr Davis to spend the time in Brussels actually taking part in the negotiations – all of the time.

In his pre-prepared remarks, rather predictably he emphasised the role of his boss, Theresa May, and her Florence speech. This, he said, "had at its heart a desire to drive progress this week. It was intended to change the dynamic and instil real momentum".

According to Davis, the speech "set out a clear, pragmatic approach designed to help secure an agreement that works for all sides". It built, he said, "on the hugely significant work that has gone on across Government over the last year that has seen us publish 14 papers covering technical negotiation detail and the United Kingdom's vision for the future relationship, the Article 50 letter and two crucial White Papers".

This exercise in self-justification was clearly intended to talk up his "negotiating team", which had come to Brussels "armed with the detailed thinking that underpins the proposals set out by the Prime Minister".

And from there, the self-delusion was not very far away. He believed that this "detailed thinking" inevitably "requires further discussion", thanks "to the constructive and determined manner with which both sides have conducted these negotiations we are making decisive steps forward".

Davis was thus "clear that we have made considerable progress on the issues that matter" and made "no secret of wanting to talk about the future, and the importance of this to business and citizens both in the European Union and the United Kingdom". That – of course - included "our proposal for a simple, clear, time-limited period of implementation". This, he asserted, "should be quick to agree, once Michel has a mandate to explore it with us".

"As the Prime Minister said last week", he said to Barnier, flashing one of his trademark smiles, "our shared future can only be founded on partnership, friendship and most importantly trust. This is what discussions this week have been about".

To spare you the details, we can now fast-forward Barnier's pre-prepared remarks, read out once Davis had finished. On Monday, he had said, "we need a moment of clarity". By the Thursday, he was saying: "We managed to create clarity on some points". On others, however, "more work remains to be done". So said the man, "We are not there yet".

Undaunted, he declared to the world at large: "We will keep working in a constructive spirit, until we reach a deal on the essential principles of the UK's orderly withdrawal". But, he said: "there remain a few matters outstanding".

On citizen's rights, Barnier was concerned about whether the UK would apply EU law concepts in a manner that is consistent with EU law after Brexit but, as always, "we failed to agree that the European Court of Justice must play an indispensable role". This, he said with an uncommon degree of understatement, "is a stumbling block for the EU".

Needless to say, there were others. A big gap remains between the positions on family reunification. The export of social security benefits also remains to be discussed.

As to the financial settlement, Barnier noted that Mrs May had said that no Member State should pay more and no Member State should receive less because of Brexit. Second, she said, "the UK will honour commitments taken during its membership". But now, the UK negotiating team made it clear that applying the first principle would be limited to 2019-2020. The UK had also explained also that it was not in a position yet to identify its commitments taken during membership.

For the EU, however, Barnier was uncompromising. "The only way to reach sufficient progress", he said, is if "all commitments undertaken at 28 are honoured at 28".

Then for the third area, it was Ireland once again. Both the EU and the UK recognised that Ireland was in a unique situation but that's as far as it went. Both parties confirming the commitment towards maintaining the Common Travel Area and started drafting common principles. In other words, they were no further forward. There had been not the slightest move in the right direction.

And that, believe it or not, was "a constructive week". Heaven forefend what it would have been like if it had not been so "constructive". And. despite all this constructiveness, said the EU's chief negotiator still had to say: "we are not yet there in terms of achieving sufficient progress. Further work is needed in the coming weeks and months".

So, where does that take us? In three weeks, we have the October European Council. That, says Barnier, will be an opportunity for him to take stock of the negotiations with President Juncker and President Tusk and the 27 Heads of State or Government. He is also looking forward to the European Parliament's resolution next week. This, he says, is important.

What he's done, quite cleverly, is kick the can down the road. He didn't come out and state, unequivocally, that he was going to tell the European Council that there had been insufficient progress. He left just enough wriggle room for there to be doubt about the outcome.

This takes account of what Barnier calls "the new dynamic created by Prime Minister May's speech in Florence". He hopes this will "continue to inform the negotiators' work" when they assemble for the fifth round of talks which start in the week of 9 October.

So, everything is cool. Except it isn't. Several people have been arrested under the Official Secrets Act, for "leaking" information – some to this blog. Another one has been picked up for passing material to the Commission (now deemed an "enemy power"). Civil Servants are deserting MinBrex in their droves, and others are moving to an alternative power centre in the Cabinet Office. Under the surface, things are bubbling.

Meanwhile, Mrs May is in Tallinn today, meeting those 27 heads of state or government. Then she has to address the Conservative Party conference, when she has to convince the faithful that things under control. 

Having arrived at Tallinn for the pre-summit dinner – where talk of Brexit is not allowed - she brings with her a coterie of journalists, to whom she aims to communicate (some of) her inner thoughts. What those will be, we cannot know, but we do know that nothing has changed in terms of her vulnerability to a party coup. She will have to deliver something as the "money quote" from Barnier is damning. He said the words and they mean what they mean. So far, there has not been "sufficient progress".

In reality, it is going to take "weeks and months" with no promise that the core issues are going to be resolved. Is the Party going to be satisfied with a prospect that maybe, just maybe, there might be a breakthrough in round five? Is, as some suggest, Davis going to come armed with "further concessions" which will "unlock talks on a Brexit transition"? Will that be anything like enough?

Inevitably, what will play heavily on a Party obsessed with the financial settlement is that the RAL liability has been assessed at €239 billion, adding a potential €31 billion to the UK bill. As yet, there is no commitment to meet that sum, and many of the faithful will demand that their leader rejects any demand for payment.

This, undoubtedly, will be the headlines issue at the conference. And if money talks, will May walk? That's the €31 billion question. I guess the answers cannot be long in coming.



Richard North 29/09/2017 link

Brexit: at the end of the day

28/09/2017  


Since he went over to Brussels on Monday, ostensibly to lead the UK Brexit delegation, David Davis has met Michel Barnier once – and that was on the Monday.

He then went on to meet Dutch Foreign Minister Bert Koenders (pictured), "to discuss future cooperation", Danish Foreign Minister Anders Samuelsen, "to discuss our ambition to be the strongest friend and partner to the EU", and European Parliament President Antonio_Tajani, "to discuss our ambition for a new era of cooperation between the UK and the EU".

In other words, Mr Davis is doing everything but the job he was appointed to do as the UK's chief negotiator. Not even for the highly sensitive question of the Irish border does it appear that Davis was on the case when it was discussed yesterday by UK and EU negotiators.

He is back in the fray today, when he meets Barnier again to review progress before the final press conference for the session. And, unless there has been a remarkable breakthrough – of which there have been few hints – we expect M. Barnier to tell us that he will not be able to inform the European Council that "sufficient progress" has been reached on the Phase One withdrawal issues.

That there have been barely any leaks from the negotiators of either side could be taken as a sign of progress, but it could reflect the determination not to let premature media comment stress an already strained relationship.

However, it has been suggested that the EU might be prepared to bring forward talks on a transition period, even though Phase One issues haven't been fully satisfied, in an attempt to keep the UK at the table. This will be a concession on the structure of the talks, rather than on any substantive issue.

Despite that, it appears, the European Parliament has already decided that the UK has not made sufficient progress, without waiting for the outcome of this week's fourth round. It is planning to hold a debate next week, coinciding with Mrs May's conference speech, from which a resolution is expected to state that there should be no move to Phase Two.

Of course, it will be for the European Council to decide whether to allow the negotiations to proceed to Phase Two. They will listen to the Parliament but the advice from M. Barnier will be crucial. Nevertheless, the Council will make up its own mind, which is why Davis and his ministerial colleagues have been carrying out their "charm offensive", appealing to Member States to give Barnier a mandate to move on.

EU officials are not impressed. They are saying that this "divide and conquer" approach is unlikely to work. There is "resounding support" for M. Barnier as the single point of contact between the EU and the UK – as Barnier himself has been quick to point out, followed by Donald Tusk on Tuesday.

One cannot but help conclude that it would be illogical of the UK to put so much effort into "love bombing" the Member States if they were confident of a positive report from M. Barnier, especially as this risks irritating the Council members, triggering an unfavourable reaction.

Mrs May herself will get a chance to sound out sentiment personally on Friday when she goes to Tallinn, Estonia, for the autumn "informal summit" of the European Council. There, the holders of the rotating presidency are using the platform "to launch high-level discussions on further plans for digital innovation with the aim of keeping Europe ahead of the technological curve while becoming a digital leader, globally, in the years to come".

Ahead of what is being styled the "Tallinn Digital Summit", there will be dinner attended by the 28 heads of state and government (HSG). During this and the following day, the Prime Minister is expected to hold a number of meetings on the fringe the events, sounding out colleagues on their intentions for the Council meeting of 19/20 October.

Brexit is not on the formal agenda for the Tallinn meeting but, in a letter to colleagues, Donald Tusk does warn that Brexit "remains one of the main tasks" for the European Council. It will, he writes, be "the subject of our next meeting of 27 [members] in October, on the basis of Article 50".

Pointing to an increasingly urgent concern, Tusk notes in the letter that the Council has "a big task in front of us when it comes to the next multiannual EU budget", taking effect from the beginning of 2021. The discussion, he says, which will shape our policies for the years to come, "will start in earnest once we have concluded the agreement on the UK's withdrawal".

The Council President acknowledges that the issues arising cannot be dealt with, let alone decided on at Tallinn, but the meeting "will be a good opportunity to discuss how we approach this debate". In order to ensure "an open, frank and informal exchange on these issues, there will be no texts on the table, and no written conclusions will be drawn from our discussion".

The linkage with the Brexit is instructive, and reminds us that the Council will have difficulty concluding its budgetary planning until it has an outline of the UK financial settlement. Doubtless, Mrs May will be under pressure to be more explicit about her intentions – assuming that matter has not been resolved by David Davis in Brussels today.

Outside observers note that this Council is Mrs May's last opportunity to meet all of the "colleagues" in one place before she goes to her Party conference in Manchester. It is an opportunity to make a high-profile announcement, if she is so minded, as well as to listen to the views of the other 27, individually and collectively.

Rumours continue to the effect that Mrs May is preparing to walk away from the talks, and Tallinn would be a good opportunity to announce her intention to do so. In particular, the timing is especially significant. Unless the UK decided to plead "special urgency" (which it could well do), this is the last but one day that it could give the three month notice required by Article 65 of the Vienna Convention on the Law of Treaties (VCLT), in time to leave the EU by 1 January 2018.

This is the procedure that must be followed if the UK intends to abrogate the EU Treaties, invoking either Articles 61 or 62. Only after this period of notice can it lodge the instrument of termination, to be communicated to the other parties.

Surprisingly, this is not as drastic a move as might seem at first sight: the process can be suspended by any party raising an objection. In that event, the parties must seek a solution by arbitration or other means specified by Article 33 of the United Nations Charter.

Even though a "walk away" threat is judged to be a bluff (not least because no preparations seem to have been made for it), this could still have the effect of forcing the "colleagues" onto the back foot. It would put them into the position of supplicants, and could liberate the UK from the "tyranny" of Article 50. In so doing, it would take jurisdiction from the ECJ and place it with the International Court of Justice at The Hague, actionable by a request to the United Nations Secretary-General.

Sometimes, just the threat of such action – without it even being publicly articulated – is enough to un-jam delicately poised talks, but the very fact that there is a VCLT option means that the UK's shot locker has not yet been emptied. The downside, of course, is that if the EU sits on its hands and does not make an objection, we would be out on 1 January. That would make such a move a huge gamble.

Much will rest on the outcome of the talks today and, as before, the only certainty is that by the close of business, we will know more than we did at the start.



Richard North 28/09/2017 link

Brexit: no sufficient progress

27/09/2017  


We have no means of knowing what Mrs May expected from the visit of Donald Tusk to Downing Street yesterday, but there was a marked contrast between his arrival and departure. Greeted in the street on the way in by the Prime Minister, he was left to do a solo press statement afterwards, the tone of which can hardly have been what Mrs May wanted to hear. 

"I feel cautiously optimistic about the constructive and more realistic tone of the Prime Minister's speech in Florence and of our discussion today", he said. "This shows that the philosophy of 'having a cake and eating it' is finally coming to an end, or at least I hope so".

For Tusk, that was "good news", although he had to add that "no-one will ever tell me that Brexit is a good thing because, as I have always said, in fact Brexit is only about damage control, and I didn't change my opinion".

The sting was in the tail, though. "As you know, we will discuss our future relations with the United Kingdom once there is so-called 'sufficient progress'". The two sides, he said, "are working hard at it. But if you asked me and if today Member States asked me, I would say there is no 'sufficient progress' yet. But we will work on it".

A joint press conference might have helped convince us that the two sides were working together, but we didn't even get a statement from Mrs May. Instead, all we got was a terse communiqué from her spokesperson.

In the meeting, we are told, the Prime Minister began by re-stating her wish for a "bold and unique new economic partnership" with the EU, based on a joint commitment to free trade and high standards.

Returning to the theme of her Florence speech, Mrs May then repeated her wish to see the UK and the EU being "imaginative and creative" about the way this new relationship was established. She said she was "optimistic about a joint future which benefits both the EU and the UK".

The rest was in similar anodyne vein, revealing absolutely nothing. The PM and President Tusk, we learned, "welcomed the good progress that had been made on citizens' rights in the talks so far, and restated their commitment to finding a positive solution to the issue of the border between Northern Ireland and Ireland".

The PM "also stressed the importance of agreeing a period of implementation once Britain leaves the EU in March 2019". She said this "would build a bridge to that new relationship that ensures the process is smooth and orderly and creates as much certainty as possible for everyone".

Then, at the end of the meeting, the PM said her Florence speech had been "intended to create momentum in the ongoing talks". She said "it was important for EU negotiators to now respond in the same spirit". And that's all you get – statements which tell us more through their omissions than the extruded verbal material that was actually dished up.

Meanwhile, across the Channel, David Davis has decided to stay on the continent until Thursday. But he hasn't been meeting his opposite number. Instead, as part of a Europe-wide charm offensive, he has been talking to Belgium's foreign affairs minister.

He then travelled to The Hague to meet the Dutch foreign minister, while Liam Fox met the Dutch minister for foreign trade and business organisations before heading to Brussels to attend a meeting with European Commissioner for Trade, Cecilia Malmström. On Monday, Foreign Secretary Johnson embarked on a "two-day, three-country European trip", focusing on "security", visiting Prague, Bucharest and Bratislava.

But if these moves are part of Mrs May's plan to sideline Michel Barnier and appeal directly to Member State leaders, they are all wasting their time. Barnier has already made it clear that he has the full confidence of the Members, and the statement by Donald Tusk would seem to confirm that.

Pointing to the difficulties negotiators face is Belgian MEP Philippe Lamberts of the European Parliament Brexit Steering Group. He thinks the Irish border issue could play a bigger part in negotiations than the financial settlement, even to the extent that it could "derail" the talks.

The principles put forward by the UK Government, where the UK is out of the Single Market and the customs union, means there has to be a border and at the same time no border. " You can't have it both ways and I really fail to see how we can reconcile those differences", Lamberts says.

Thus do we get a tiny glimpse of the reality that the key players seem to be skirting round, perhaps recognising that their differences truly are irreconcilable. The Irish question is assuming that characteristics of an elephant in the room – of gigantic proportions.

Mixing metaphors outrageously, the Irish question is also the canary down the mine, the ultimate test of whether the Phase One issues can be resolved.

And it fruitless complaining that the EU has set an impossible test to pass. The moment Mrs May decided that the UK was going to leave the Single Market, she created the problem of turning a land border into one of the EU's external borders. As its creator, it is for Mrs May to resolve the problem.

The fact that the differences are irreconcilable, though, explains why the Prime Minister is being driven inexorably towards a "no deal" scenario. But, unable or unwilling to admit to problems of her own making, she seems intent on blame transference, putting the EU in the frame.

This gives her the opportunity of pulling the plug on the negotiations on Wednesday week, when she addresses conference. But there are persistent rumours that she may move even earlier than that, setting in train the moves necessary to secure and early departure by the end of this week.

If some feel that the idea of moving Brexit to 1 January 2018 is "far-fetched", they need to think back to the day after the referendum. Could anyone on 24 June 2016 have imagine that - 15 months down the line – the Prime Minister would have boxed herself to such an extent that she is running out of options.

Lamberts is not wrong in his analysis of the Irish question but, for different reasons, the financial settlement and the citizens' rights issue are just as irreconcilable. Without changing some of the key parameters (such as staying in the Single Market), Mrs May's only real option is to pull out of the talks.

What makes this, in her terms, an acceptable proposition is the belief that the resultant withdrawal from the EU is not damaging, politically or economically. This is someone who is convinced that the WTO option is sustainable and that any losses arising from reduced trade with EU Member States can be made up from increased trading with the rest of the world.

However, May also seems to be investing considerable effort into the scheme to sideline Barnier and appeal directly to the Member States. According to The Sun, this includes a social media campaign, conveying to hundreds of thousands Europeans key quotes from her Florence speech, plus targeted messages. The intention, it appears, is to explain the PM's new "grand bargain" offer directly to them.

The existence of this scheme and the other initiatives introduces an inconsistency into the grand scenario that Mrs May is planning to pull out of the talks. Why would such efforts be made to appeal directly to Member States is there was no intention to pursue negotiations.

Possibly, this points to an insurance policy, or it could simply be an attempt to build a relationship so that, when Mrs May does pull out, the "colleagues" are more inclined to seek a resumption of the talks. In other words, pulling out may be a bluff, in the expectation that unilateral action will shock the EU into making concessions to the UK.

We are now, however, introducing complexities which challenge the analysis, bringing us to the limits of plausibility. That brings us back to a step-by-step approach, where we rely on interpreting developments as they arise.

The next important development remains the response of M. Barnier to the current negotiation round, and whether he decides to tell the European Council that there has been "no sufficient progress" in the talks. Only when we're there can we take the next step.



Richard North 27/09/2017 link

Brexit: a moment for clarity

26/09/2017  


If news is about repeating what someone has already said twice in the last week, then the news of the moment is Barnier saying that Britain's request for a transition agreement will only be discussed once the UK has settled the withdrawal issues.

The man's exact words were: "transition can only begin once we have reached an agreement on an orderly withdrawal", which came after a meeting with the EU's General Affairs Council, and prior to Barnier standing alongside David Davis to tell him exactly the same thing, for the umpteenth time.

You can pack an awful lot into a five minute address and this is precisely what Barnier did when he came out of that Council meeting.

Theresa May in Florence, he said, had been "constructive in her speech". The "colleagues" had read it "with great attention". But clearly, she had no monopoly on being constructive. "This constructive spirit", said Barnier, is the same thing we have. It's a state of mind which is expressed unanimously by the Ministers of the 27 Member States this afternoon".

Getting to the point, he then said: "given that we have a short amount of time, a limited amount of time, and everyday we're getting closer to the 29 March 2019, the day when the UK will become a third country as it wished and as it's asked to do … what's important now is for the Government of the UK to translate Theresa May's speech into clear negotiating positions".

It is interesting that, M. Barnier reminds us at every possible opportunity that we will become a third country. And just as frequently, the UK media ignores his reference. That's despite that addition here of the observation that it was the UK that wished to become a third country and had asked to become one.

That, said Barnier, is the basis which we are discussing in detail. We will do this around the negotiating table. We need, he added, "clarity" and "in particular when it comes to citizens' rights and on the financial settlement". Separately, he went out of his way to emphasise that "we also need to find a unique solution when it comes to the island of Ireland".

Here it was again, a "unique solution", a coded reference but crystal clear to the negotiators that the EU would not accept the issue being bundled with the general trade talks.

In other coded message – this one directed at No.10, he said that the 27 Members of the Union had reaffirmed their unity. That unity, he said, "is also shared with the political groups in the European Parliament, groups which I met this morning once again". Any idea that Mrs May can appeal over the head of M. Barnier to the Member States should be firmly parked.

Turning to Theresa May's speech again, he noted that this was the first time that the UK had asked for a transitional period for "a limited period". It would start on the day the UK leaves the institutions and the Union, on the 29 March 2019.

This, however, was not something covered by Barnier's mandate. Nonetheless he pinpointed "a number of conditions which the European Council had already expressed". Any transition had to respect the regulatory and the financial framework for the Single Market. It was about, "prolonging, extending EU legislation for a certain period of time and that would mean we have to continue with such things as the budget, supervision, judicial control, controls of EU rules and regulations".

Essentially, Barnier was pricking the bubble of illusion in which the idiot Johnson and others reside. They want the UK to be released from ECJ jurisdiction when we move into this phase, but the EU's chief negotiator has sternly reminded the UK government that this has already been ruled out.

Finally, said Barnier, because the UK is asking for this transitional period does not mean that we will no longer need to achieve sufficient progress on the withdrawal issues. The progress under the three key points remains more necessary than ever, creating the trust which we need in order to set up and build upon our future relationship.

"We are not", he declared, "going to mix up discussions on debts, on the past commitments. We're not going to mix up those subjects which are part of the orderly withdrawal with a discussion on our future relationship". In conclusion, he hoped that, in the fourth negotiating round, it would be "possible for us to make progress on each of these key areas". This, he hoped, would "ensure that we have the clarity which we need".

Barnier actually started his address with the observation that he was "keen and eager" to understand what Mrs May's speech meant "in practice". This, of course, was from a French technocrat who would doubtless be just as happy with the comment: "it may work in practice but will it work in theory?". So far, it would appear, Barnier hasn't even got to the stage where he's happy with the practical aspects of Mrs May's speech.

For all that, though, it looks as if M. Barnier is likely to be disappointed – noted by the Guardian and others. They are quick to point out that our negotiators are already at odds.

When Davis took the stage alongside his counterpart, he declared that progress on the financial settlement would be "in accordance with our new deep and special partnership". The Secretary of State insisted that there "could be no excuses for standing in the way" of progress. It was "obvious", he said, that discussions on the financial settlement had to be held in the context of talks on the future relationship.

Davis is thus expecting the current round of talks to build on Mrs May's Florence speech, creating a clear conflict with Barnier's instructions. "The UK is absolutely committed to working through the detail", Davis said. "We are laying out concrete proposals and there are no excuses for standing in the way of progress... It will take pragmatism from both sides to make headway and I hope we can achieve that this week".

Barnier, on the other hand, is simply restating the position set out by the European Council in its mandate to him. We are, therefore, entertaining the dialogue of the deaf. Mr Davis is permanently on "send" mode and isn't listening to anything that would serve to frustrate his ambitions.

With wearying predictability, we're back where we started. For all the effort expended on Florence, Barnier's position hasn't changed – but then it never was going to. Oblivious to this, Davis is running away with the idea that Florence has changed everything. The mismatch will not make for a productive meeting of minds.

So, while Labour groans on, consigning the party to irrelevance, the real deal is in Brussels where we count down to Thursday and the final press conference. Then we expect Barnier to warn us all that he will not be able to advise the European Council in October that "sufficient progress" has been made. They will then tell Barnier he cannot move on to phase two.

In that event, I've already sketched out what I think May will do at the Conservative Party conference the following week. This takes little imagination as the media is already talking about "senior Brexiteers" being "infuriated" by the response from Brussels.

Johnson is amongst those who thinks the deal should be in the bag, saying "the ball is in the [EU's] court". He thinks it is sufficient that: "We are offering a great deal on citizens, a great deal on money and an unconditional commitment to the defence of Europe". On that basis, he believes "we can move this thing forward and get these negotiations going".

To my mind, when Barnier refuses to play, the only question is whether May will decide to walk away immediately or defers action until after the European Council on 20 October. But if she gives the Council an ultimatum, demanding that we move to phase two or she walks, my guess is she'll be booking another Swiss walking holiday.

Yet, for the moment, this remains speculation. The only certainty is that, by Thursday, we will know more than we do now. By the following Wednesday when Mrs May speaks to conference, we will know even more. Meanwhile, at chez EUReferendum.com, we're stocking up on essential foods. That, for us, is our own moment for clarity.



Richard North 26/09/2017 link

Brexit: all over by Christmas?

24/09/2017  


It isn't exactly rocket science. Even the occasional journalist might have been able to work it out, had they not become obsessed with the chimera of Mrs May's two-year "implementation" period.

Listening to Mrs May's Florence speech, I was reminded of that old joke about President Lincoln's assassination. "Apart from that, Mrs Lincoln", said the obsequious theatre manager as the distraught lady rushed for the exit, "did you enjoy the play?"

Seen in the same context, Mrs May's "open and generous offer" – said to be in the order or £20 billion - has about as much impact on unblocking the stalled Brexit negotiations as the rendition of Our American Cousin had on Mrs Lincoln's state of mind shortly after 10pm on 14 April 1865.

The sticking point, which is preventing the talks moving to cover the transition period and future relationship, is the settlement of the so-called "conditions of the UK's withdrawal". Time and time again, Barnier has told the UK – directly and indirectly that, until there has been "sufficient progress" on the three outstanding issues, there can be no discussion on other matter.

Even the day before the Florence speech, M. Barnier was telling a parliamentary audience in Rome that "the sooner we make real 'sufficient progress' on the conditions of the UK's withdrawal, the sooner we can begin discussing our future partnership".

"This", he said, "was the approach set out unanimously by the European Council on 29 April in its guidelines. Above all, this approach is an essential condition for the success of these negotiations".

Yet, the following day it was precisely this "essential condition for the success of these negotiations" that was ignored by Mrs May. Pointedly, she offered nothing of substance on any of the three outstanding issues.

On perhaps the most troublesome of the three, the Irish question, her superficial treatment of the issue verged on the insulting. She loftily declared, "we have both stated explicitly that we will not accept any physical infrastructure at the border", adding: "We owe it to the people of Northern Ireland – and indeed to everyone on the island of Ireland - to see through these commitments".

The point here is that was all she said. And with the Commission already having rejected the ideas put forward in its position paper, there is nothing currently on the table. Mrs May came to Florence and left the table bare.

So it was that the very same day, M. Barnier responded to the speech with a formal statement,virtually repeating much of what he had said the day before. Wryly, he also noted: "Today's speech does not clarify how the UK intends to honour its special responsibility for the consequences of its withdrawal for Ireland".

As to Mrs May's request for a transition period, once could almost sense the weariness as M. Barnier declared: "The sooner we reach an agreement on the principles of the orderly withdrawal in the different areas – and on the conditions of a possible transition period requested by the United Kingdom – the sooner we will be ready to engage in a constructive discussion on our future relationship".

"David Davis and I", he said, "will meet in Brussels next Monday to begin the fourth round of the negotiations", then telling us that: "We look forward to the United Kingdom's negotiators explaining the concrete implications of Prime Minister Theresa May's speech".

With the sting in the tail, he concluded: "Our ambition is to find a rapid agreement on the conditions of the United Kingdom's orderly withdrawal, as well as on a possible transition period".

Concentrating on the play rather than the assassination, though, newspapers such as the Mail chose to home in the opening lines of M. Barnier's statement, headlining: "EU chief negotiator Barnier praises the 'constructive spirit' in May's Florence speech as he says the landmark address is a 'step forward'".

In fact, what he actually said was: "In her speech in Florence, Prime Minister Theresa May has expressed a constructive spirit which is also the spirit of the European Union during this unique negotiation". But he then went on to say: "The speech shows a willingness to move forward, as time is of the essence".

In the very next sentence, he said: "We need to reach an agreement by autumn 2018 on the conditions of the United Kingdom's orderly withdrawal from the European Union. The UK will become a third country on 30 March 2019". That was the message that should have been on the headlines, with the observation that Mrs May had brought agreement no closer.

As to the tone of his statement, it is not M. Barnier's style to be overtly critical of his negotiating partner and, doubtless, he wished to avoid giving the Labour party material it could use in its conference which starts today. To have done so would have opened him to the charge of interfering in UK domestic politics.

Nevertheless, he could not have been more unequivocal: no talks on transition or trade until there has been "sufficient progress" on the withdrawal issues. And, on those very issues, Mrs May had nothing at all to offer. Measured in terms of whether she has unblocked the talks, therefore, the Florence speech was a dismal failure.

Despite that, we are in the bizarre position of the media, almost unanimously focusing on the transition period – or "implementation" period, as Mrs May insists on calling it. Scarcely any have made the point that, without the "essential condition for the success of these negotiations" being satisfied, there is going no agreement and no transition period.

If there was any doubt about this – or the solidarity of the Member States – we then saw an intervention by Emmanuel Macron, echoing Barnier by stating: "Before we move forward, we want to clarify matters concerning the settlement of European citizens, the financial terms of exit and the question of Ireland". He added: "If these three points are not clarified, we will not be able to advance on the rest".

Macron was flowed by Germany foreign minister, Sigmar Gabriel, who told reporters that he had been disappointed by the Florence speech, saying: "We heard nothing concrete. It is time for the government of Great Britain to clearly state under what conditions it wants to leave the European Union". And once she has been re-elected chancellor today, Mrs Merkel will be echoing these sentiments.

We now have to wait for Monday and the resumption of the Brexit negotiations, when Mr Davis will be expected to explain the "concrete implications" of Mrs May's speech, coming up with proposals for resolving the withdrawal issues – the so-called "Phase One" issues.

Upon this will depend on whether M. Barnier goes to the October European Council with a view on whether there has been "sufficient progress" for the talks to move on. But, one suspects, if there was anything forthcoming, Mrs May would have at least dropped a few hints at Florence.

As this stage, the likely outcome is that Mr Davis will bring nothing new to the table. Back in Whitehall, the cupboard is bare. Like Old Mother Hubbard, Mrs May has nothing to give him – the cupboard is bare.

Predictably, M. Barnier will then reiterate his points, with the Thursday press conference dominated by his regretful announcement that there has been insufficient progress for the talks to move to the next stage. And, no matter how diplomatically couched, this will be interpreted as a rejection of Mrs May's "open and generous" offer.

That gives us a few days for the febrile elements of the Conservative Party to stoke up their indignation before the start of the annual conference in Manchester. And, after a warm-up speech by Davis on the Tuesday, we will have the Prime Minister delivering her conference speech on Wednesday, under the banner: "Building a country that works for everyone".

By then, she will have had the measure of the mood of the party. If there has been a hostile response to Barnier's announcement, Mrs May will be under huge pressure to respond to the "humiliation" dished out by the "Eurobullies of Brussels". On the back of her general election disaster, Mrs May is already fighting for her political life. A weak response – or one perceive to be weak – could trigger the process that will have her deposed.

At this point, the Prime Minister will have very little room for manoeuvre. She could, perhaps, go for the long game (in political terms) and ask the party to wait for the European Council to decide on its next move. After all, part of the Florence strategy is to sideline Barnier and appeal over his head to the leaders of the Member States.

A stronger move would be to issue an ultimatum to the Council, telling it to accept her offer, or she will walk away from the talks. She might even propose a "summit" of the 28 to thrash out the issues, in a huge make-or-break gamble. Or she could, quite simply, decide to walk.

The latter would certainly please the "Ultras". They are convinced that the EU is bluffing on its withdrawal demands, and have persuaded themselves that the UK would suffer no damage by trading on WTO terms with the EU Member States. A "no deal" exit holds no terrors for them.

The big question, therefore, is how far will Mrs May go? To my mind, with the cupboard bare on the withdrawal issues, she has to tough it out or go under. My bet is on her either walking, or delivering an ultimatum which will have us walking after the European Council on 19-20 October.

Thus, while the general thrust of the media coverage yesterday was that Mrs May had extended the Brexit process by two years, the actuality could be the polar opposite. The Prime Minister could have set in train events which, if they follow their logical course, could dramatically speed our exit from the EU.

Far from waiting until March 2019 – or 2021 as some newspapers would have it – it could be all over by Christmas. For form's sake, departure date could even be set for 1 January 2018 - with not a transition to be seen.



Richard North 24/09/2017 link

Brexit: going with the Flo

23/09/2017  


I'm going to run this post through as my overnight post, having started it as a live blog through Mrs May's Florence speech - billed as possibly the most important event since the referendum (or perhaps not). As to the title of the post, the diminutive form of Florence (when it's a girl's name), is Flo, pronounced "flow". In that sense, therefore, one could say that Theresa May is going with the flow.

In another sense - recalling the fatuous slogan coined by William Hague, "In Europe but not ruled by Europe" - if the previews on the transition process are correct, we are about to be: "Not in Europe but ruled by Europe". Having rejected the Efta/EEA option on the basis on the tired old canard, "pay, no say", the Muppet tendency has driven the Prime Minister to accept precisely that - the worst of all possible worlds.

And so it's started. Britain has always stood with its friends. We may be leaving the EU but we're not leaving Europe - paste in extruded verbal material. Perhaps it is just as well that, as this point, the ever-useless Winhost server crashed, saving me from making instant comments that I might have regretted.

It is almost as if anything Barnier said yesterday never actually happened. He might just as well have been speaking into the void: Mrs May has filled the airways with vacuity that failed to address satisfactorily (or at all) any of the substantive points. Has she not understood that, until ther has been "sufficient progress" on the Phase One issues, the EU is not even prepared to discuss transition?

Essentially, May has conceded nothing on the payment of the RAL. Continuation of payments to the end of 2020 under the current MFF period was in any case a given, so she has made no attempt to deal with the bones of the financial settlement. On "citizens' rights", the EU demand that the ultimate guarantor of any agreement should be the ECJ has been ignored, and no attempt has been made to define a solution for the Irish question.

In short, all the issues that were left unresolved prior to Mrs May's speech, causing the impasse, are still unresolved. Mrs May seems to think that wafting into Florence and speaking in lofty terms about a "New Economic Partnership" is somehow a magic wand that can unlock the talks. She is going to be mightily disappointed. 

One struggles to understand what was in Mrs May's mind and that of her advisers when she was writing this speech, the text of which is now on the No.10 website. Were they aware of the Barnier speech? Did they even read it? And, already, Barnier has responded. It is about as measured as we could expect, diplomatically stating that "Prime Minister May's statements are a step forward but they must now be translated into a precise negotiating position of the UK government".

On the Irish question, he then observes that the speech "does not clarify how the UK intends to honour its special responsibility for the consequences of its withdrawal for Ireland". And then, as regard the financial settlement, he tells us that the EU stands ready "to discuss the concrete implications" of Mrs May's pledge. "We shall assess", he says, "on the basis of the commitments taken by the 28 Member States, whether this assurance covers all commitments made by the United Kingdom as a Member State of the European Union".

Given in the latter event that she has not mentioned the RAL, it is hard to see that the Member States could be satisfied with what's on offer.

However, it is in the response to Mrs May's reference to the transition period that Barnier really puts the boot in. "Today, for the first time, the United Kingdom government has requested to continue to benefit from access to the Single Market, on current terms, and to continue to benefit from existing cooperation in security", he says.

He then adds: "This is for a limited period of up to two years, beyond its withdrawal date, and therefore beyond its departure from the EU institutions. If the European Union so wishes, this new request could be taken into account". 

However, Barnier then says: "It should be examined in light of the European Council guidelines of 29 April 2017: 'Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply'". 

And here it comes- the coup de grâce: "The sooner we reach an agreement on the principles of the orderly withdrawal in the different areas – and on the conditions of a possible transition period requested by the United Kingdom – the sooner we will be ready to engage in a constructive discussion on our future relationship".

In other words, he simply reiterates what he told us in Rome. When the Phase One issues are sorted, then the EU will be prepared to look at other matters - and not before. The May speech is already dead in the water. Her "offer" hasn't even survived long enough for her to get home.  She has completely wasted her time - and ours.



Richard North 23/09/2017 link

Brexit: a pre-emptive strike

22/09/2017  


We fully expected the EU to respond to Mrs May's Florence speech in good time, but they seem to have taken this a stage further by getting their retaliation in first with a well-judged pre-emptive strike.

This comes in the form of a speech by Michel Barnier in front of the Committees of Foreign Affairs and the Committees of European Affairs of the Italian Parliament, and even in his venue he seems to have upstaged Mrs May. While the Prime Minister delivers her speech in Florence, Barnier has gone to the eternal city – Rome.

To start his speech, Barnier knocks on the door of reality, stating: "At midnight on 29 March 2019, the United Kingdom will leave the European Union and will become a third country". And it is the last phrase which needs repeating again and again: the UK "will become a third country". It should be repeated continuously until the UK government finally understands what it means.

For the rest, it is almost as if he is addressing Mrs May personally, with him declaring that the best outcome for the EU in the Brexit negotiations is an agreement. But, he says, time is of the essence. Deducting the six months already expended and six for ratification, we have only a year left.

In that year, the parties must swiftly reach an agreement on the UK's orderly withdrawal and provide certainty where Brexit has created uncertainty: for citizens, for beneficiaries of EU programmes, for the new borders, particularly in Ireland.

They must subsequently define the length and precise conditions of a short transition period, if the British government requests one. And then they must begin scoping the future relationship, in parallel to the finalisation of the withdrawal agreement.

The use of the word "scoping" is an interesting one. I'm not sure I've heard it before from Barnier in the context of Brexit. It is a technical term which effectively covers the process defining the scope of a future agreement and the work which needs to be done in order to conclude it.

By talking only of scoping, Barnier is confirming that there will be no trade agreement concluded at the end of the withdrawal process, and nor will we be able to sign one immediately afterwards. Previously, he has been telling his audiences that a trade accord "will take years to complete".

On that basis, there really can't be any doubt about the UK government wanting a transition period. But, back in Rome, Barnier reminds us that there can be no discussion on this and other matters until we make real "sufficient progress" on the conditions of the UK's withdrawal.

This, he said, was the approach set out unanimously by the European Council on 29 April in its guidelines. Above all, he added, "this approach is an essential condition for the success of these negotiations".

If Mrs May thinks she will get anything different after her speech in Florence, all she needs to do is refer to this speech. The man from the Commission, he say no! "We will listen attentively and constructively to Theresa May's important speech tomorrow in Florence", he says, but then the Commission will go right back to demanding a resolution of citizens' rights, the financial settlement and the Irish border question.

Once we have clarity on these points, Barnier then says, we should also define the "precise conditions" for a possible transition period. This would begin on 30 March 2019, when the UK is no longer a member of the European institutions, and therefore no longer takes part in the decision-making process.

He then makes what he calls "an important point". This short transition period, he says, "will be part of the Article 50 withdrawal agreement" and, "without a withdrawal agreement, there is no transition. This is a point of law".

But I'm not sure he's right there. Once the withdrawal agreement takes effect, the EU treaties cease to apply to the UK, which relieves us of any obligations to obey their provisions. Crucially, though, it also relieves the Member States and the EU institutions of any obligations towards the UK.

The transition period, according to Barnier, is an extension of the EU acquis for a limited period – which means re-applying provisions of the treaties, thereby creating new obligations between the parties. If that is the case, the Article 50 settlement cannot be the vehicle, as new obligations require the unanimous agreement of all parties. That means a new treaty – a secession treaty.

But there is also another twist: "If we are to extend the acquis of the EU, with all its benefits", says Barnier, then logically "this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply".

For the UK, this would be the worst of all possible worlds. This really is the "pay no say" scenario, whereby we are effectively still in the EU, bound by all its provisions, but without taking part in the decision-making processes. By contrast, in the EEA, we would have the two-pillar consultation structure to rely on, and we would only be obeying about 20 percent of the laws.

This notwithstanding, Barnier repeats that, even for this to happen, an agreement on orderly withdrawal is a precondition. And if we ever get past this, to discussing trade relationships, any new deal "will be less about building convergence, and more about controlling future divergence".

"Naturally", says Barnier, "if the United Kingdom wanted to go further than the type of free trade agreement we have just signed with Canada, there are other models on the table. But one thing is sure, he adds: "it is not – and will not – be possible for a third country to have the same benefits as the Norwegian model but the limited obligations of the Canadian model".

And then, this new relationship will go well beyond a trade relationship and will also involve an external, security and defence dimension. We want to invest together, to do research together and to develop our common capabilities, with particular thanks to the European Defence Fund, as proposed by the European Commission, he says.

The UK will also become a third country in these areas. But because this is about the stability and security of our continent, the EU and the UK should be ready to cooperate in due course. There should be an unconditional commitment to the security and stability of our continent.

But even then, he isn't finished. Speaking directly to his audience in the Italian Parliament, he told them that the dialogue they were having – as in all national parliaments – was essential because our future partnership with the United Kingdom, and its legal text in the form of a treaty, "will have to be ratified by you, when the time comes".

That at least positions any free trade agreement as a mixed agreement, requiring the unanimous ratification by all the Parliaments in the 27 Member States, and in the UK.

For the time being though, that is in the distant future – at the very earliest by the end of March 2021 – although likely much later. In the meantime, we have the withdrawal agreement and the transitional arrangements to settle, with much uncertainty in the latter area. 

The people who objected to the EEA as a transitional arrangement are absolutely going to hate what Barnier has in mind. Come what may, though, Barnier and the Member States are simply not going to budge on their stated requirements. We will see later today what Mrs May has to say but, if she expects any deviation from Barnier's current position, she is wasting her time.

Throwing €20 billion into the pot – or whatever "open and generous offer" Mrs May eventually makes– is not going to resolve the current impasse, and neither is anything short of settling the three issues set out in Phase One.

And nor will any attempt to appeal above the heads of the Commission, to the Member States, have any chance of working. The "colleagues" are rock solid on this and will not entertain British "divide and conquer" tactics. Even to try that one will be treated as an insult.

Furthermore, with this pre-emptive strike, Mrs May cannot say she did not know. In the face of the EU's unequivocal position, re-stated many times and right up to the ever of the Florence speech, she simply cannot claim that it is at all realistic (or reasonable) to expect the EU to change its agenda. She simply lays herself wide open to the charge of wishful thinking.

When the formal answer comes from the EU – most likely in the next round of negotiations which starts in 25 September - to no one's surprise it will be exactly the same as before. And, as Mr Barnier is prone to say, that clock just keeps on ticking.



Richard North 22/09/2017 link

Brexit: between rocks and hard places

21/09/2017  


We've written extensively about the Irish question and Brexit and can add little more to the overall discussion, other to remind ourselves that the most promising practical option for the border is likely to be politically unacceptable to the DUP.

Confirmation of that came during a visit to Ireland by Guy Verhofstadt, which has had the DUP's MEP Diane Dodds reject the idea of a special arrangement, allowing Northern Ireland to stay in the customs union or single market. While stressing that the DUP wanted a "seamless border", Dodds said: "We will not countenance a solution that makes us different from other parts of the United Kingdom".

There is a work-around to this, though. An arrangements can be made which can make the border between Ireland and Northern Ireland disappear, without having to give it a specific label. Any agreement can then be formalised and given treaty status as bilateral agreement between the UK and the EU.

But the re-emergence of this issue on the eve of Mrs May's Florence speech underlines the fact that the Irish question is one of the sticking points in part one of the Brexit negotiations. Although much of the media would like to focus solely on the money (as, no doubt, would the politicians), a solution here must be part of the package before the EU will allow the talks to move on to discuss trade and related issues.

Generally speaking, neither the media nor the politicians like talking about Ireland. They regard it as an irritant and a distraction, preferring to discuss more weighty issues closer to home – like what the Foreign Secretary had for breakfast, or some such. Thus, on this side of the Irish Sea, we do not see any serious attempt to explore solution – with most of the momentum (predictably) coming from Dublin.

When we add to that an almost pathological determination of the "Ultra" commentariat, - including MPs such as Owen Paterson and John Redwood, buoyed by the idiot Andrew Lilico – to discount the effects of leaving the Single Market, we find Mrs May in a position where there is no pressure on her to reverse previous policy statements and rethink her position on continued membership of the EEA.

Nothing of recent events, in fact, indicates that Mrs May has any intention of reconsidering that position. As far as we are aware, it is still her intention to give notice to quit the EEA. She seems content to follow the path of a Canadian-style deal, despite multiple and long-standing warnings that there is insufficient time to negotiate a comprehensive deal.

The Canada deal is the favoured option of the "Ultras", but none of them seem to realise that even the most comprehensive of trade deals is but a pale shadow of the EEA Agreement. They exhibit an almost Pollyanna demeanour, brushing away warnings of complications with breathless assurances that things will be alright on the night - with no substance at all to their claims. 

But then the "Ultras" are also entirely comfortable with the prospect of a "no deal" walk-away option. That latter idea may have sufficient traction for it to be attractive to Mrs May, especially as she is being assured that it will so shock the EU that it will cave in under the pressure and give her all she wants – albeit at the last minute.

Yet, as we had cause to remind people, yet again, the consequences of leaving just the Single Market are so troublesome that it is difficult to see how we can deal with them.

And, right on cue, the Guardian has weighed in with a piece about the potential consequences of Brexit on commercial aviation. Semi-literate at best (relying on a US source never leads to coherence on EU issues), it nevertheless highlights the perils to which the industry is exposed.

As before, though, there is not a single newspaper – nor other media organ – that has been able to convey the damage to the economy that would be caused by an ill-considered exit from the EU. And no one in the London establishment, not politicians, academics, think tanks or anyone else, has even got close to describing the chaos that will result from the "no deal" scenario.

If Mrs May had any real understanding of precisely what was at risk, she would taking the greatest care to avoid it but everything we see seems to point to her taking an almost reckless approach to the negotiations.

To an extent, this is borne out by latest speculation, which seems to confirm that the Prime Minister is determined to sideline the Commission negotiators and appeal directly to Member States leaders. This emerged after comments made in New York, when Mrs May stated while in the UN general assembly that: "What I'll be doing on Friday is setting out where we are and looking ahead at negotiations".

She added: " The negotiations are structured within the EU so, of course, the Council has delegated with a mandate to the Commission, and the Commission has appointed Michel Barnier. But the decision will always be one that will be taken by the leaders".

This, incidentally, was after Mrs May had met Dutch premier Mark Rutte, Italy's Paulo Gentoloni and France's Emmanuel Macron in the margins of the UN General Assembly. We have no information on what was discussed, and nor even whether Brexit was even raised.

If Mrs May is truly planning to break away from the Brussels talks, that will leave us in an irrecoverable position. It comes to something when getting us into such a position seems to be a sought-after objective. While we should be seeing the Prime Minister focusing on the issues that will mitigate the effects of Brexit, we are instead seeing a succession of steps that will ensure that negotiations cannot progress in any meaningful way.

As it is, the UK is akin to a worker who has just received a lethal dose of radiation. With no immediate symptoms and no outward signs of the event, for a short period he can pretend nothing has happened. Tragically, though, he is already dead. It is just a matter of time.

On that basis, even the best we can expect from Florence isn't very much. So many mistakes have been made, and so many wrong turns, that it would need all the skills of a remarkable statesman just to salvage anything from the wreckage of the UK's Brexit policy. Mrs May, however, is not even a statesman. She clearly has no grasp of the bigger picture and, if she slams the door on the EEA, the game truly will be over. The disaster capitalists will have their way.

As far as I see it, therefore, Florence can be little more than an exercise in blame avoidance – the greater part of which is transferring the blame to the EU for the eventual failure of the talks. One expects her to set up a series of scenarios which make her look reasonable, and unbalance the EU.

The EU, on the other hand, can neutralise this ploy – at least partially – by reacting quickly to reject any ultimatum that Mrs May might give. Perhaps it might even issue one of its own, pointing out, yet again, that until the Phase One issues are addressed, there can be no progress.

A swift EU response (even a tweet by Barnier) would open the way for the Labour conference to charge that the talks are set for failure. That would put Mrs May on the defensive in front of her own faithful, still lacking a strategy for breaking the deadlock. If she goes so far as to offer €20 billion and still fails, she could be in serious trouble with her own party.

From there, we can't describe Mrs May as between a rock and a hard place. We have to use plurals. There are so many constraints on her actions that she seems to have no room whatsoever for manoeuvre. But then, she is author of her own misfortune. The great pity is that we are forced to share it with her.



Richard North 21/09/2017 link

Brexit: a series of imponderables

17/09/2017  


Picking up on Juncker's state of the European Union address, Booker writes in this week's column that, if ever there was a reason why Britain should leave the EU, it was that blueprint for its future laid out by Juncker, in his speech.

The moment Britain leaves, he proposed, the EU must take a further giant leap forward to becoming a single state, with a single president, completely controlling the financial affairs of the countries making it up, which will all have to join the euro.

In fact, writes Booker, there is so little new about this plan that in essence it is merely fulfilling a blueprint first sketched out 84 years ago, in a book called The United States of Europe. It was written by a close ally of Jean Monnet, the man who years later was to do more than anyone else to shape the details of what would eventually become the EU.

The only difference was that, by the Fifties, Monnet realised that their dream could not be realised overnight. It should, therefore, be assembled stealthily, bit by bit, without for a long time declaring its real goal. And they should begin by pretending that it was just an economic arrangement, a "Common Market"; which was why, when Booker and I first unearthed this story, we called our book The Great Deception.

Nevertheless, however pleased we may be to be no longer a part of it, it is little comfort to contemplate what a mess we are making of leaving it. Ever more people are recognising the consequences of our choice to become what the EU calls a "third country", facing much of our £230 billion a year export trade to the EU with crippling border controls.

Even Philip Hammond told MPs last week that to leave without a deal threatens an end to the traffic which currently rolls "frictionlessly" across the Channel from Dover.

The Irish are waxing even more apocalyptic over the realisation that there is no possible practical solution to the “devastating” problems which will arise between them and the UK. Three thousand delegates to the National Food and Drink conference last week heard one speaker after another warning that in 2019 their trade with Britain could collapse.

To build and staff the facilities needed to check loads coming across the frontiers from Britain and Northern Ireland will take years (the same applies to our trade with the continent). The real problem, said the director of an EU-wide trade association, is that the EU "is negotiating with people who haven't done their homework".

This, Booker concludes, looks alarmingly like the epitaph for one of the greatest catastrophes we have ever walked into, with both our eyes and our minds firmly shut.

Interestingly, these words are written in the week leading to the Prime Minister's intended speech in Florence – so closely guarded that next to nothing of it is being leaked. Possibly, it is the case that Mrs May herself doesn't yet know what she intends to say.

We can be fairly well assured, though, that on the eve of the Labour Party conference, she will not want to be giving any hostages to fortune. And when she goes in front of her own conference the following week, she will be fighting for her political life.

These two key elements must surely be influencing the tenor of the speech but one might expect that the dominant influence is the need to break the negotiating logjam in Brussels. That, at least, is the logical inference.

However, ever since her Lancaster House speech, we've been aware that logic has not been the driving force behind Mrs May's actions. It would be unwise, therefore, to assume that the purpose of the speech is anything that we would recognise or regard as logical.

Earlier on, we were getting intimations that Mrs May was poised to pull the plug on the Brussels talks and invoke the "nuclear option" walking away without a deal. This would have been on the basis that her advisors are convinced that EU negotiators are bluffing, and will be prepared to give the UK the deal we want if only we hold our nerve.

More recently, there have been straws in the wind that have suggested that the game plan is to give formal notice of the intention to withdraw from the EEA and then to invite the governments of Efta and the other EU Member States to join with the UK in an all-nation conference with the view to reforming the EEA Agreement – thereby taking the trade discussions outside the ambit of the EU negotiators.

This in part explains Florence as the venue. It takes her outside the Franco-German "motor of integration" but puts her in the territory of one of the original Six and in the country most likely to be sympathetic to an appeal for direct talks.

Should this be acceptable, that would then just leave the "housekeeping" issues to be dealt with in Brussels, with Mrs May being prepared to sugar the pill by offering cash up-front on the financial settlement, sufficient to allow the existing talks to be kick-started. The fourth round in September would then enable the Commission to make progress in settling the outstanding issues, sufficient to give a positive report to the European Council in October.

Nevertheless, even if this is informed speculation, it is still speculation. We cannot claim to know what Mrs May has in mind. Outside her notorious inner circle, no one has any firm idea of what may come to pass. Worryingly though, the Prime Minister has been consulting with our joke Foreign Secretary Johnson, although it is near impossible to determine what effect that might have in the light of his incoherent intervention in the Telegraph, where he published his "10-point plan" for Brexit, laughingly called a "bold vision" by some of his more moronic supporters.

Even more worrying is that recently Mrs May had a private session with Patrick Minford, doyen of the "Ultras" and High Priest of the "walk-away" doctrine. This can only reinforce our concerns that that option is still on the table.

Brussels officials are already warning that they have low expectations of the speech and if in pursuit of her domestic political agenda Mrs May goes for a crowd-pleaser, the game will be over.

For a start, it seems unlikely to the point of near-certainty that Member States would not entertain the idea of cutting out the Commission and negotiating directly with the UK. And then, unless Mrs May is prepared directly to address the Phase One "housekeeping" issues, and put forward concrete proposals, the Commission talks won't be going anywhere either.

Here - whatever the rumours might be – it hardly seems plausible that Mrs May will concede post-Brexit payments to the EU, much less allow ECJ oversight over expat rights or even a "one-Ireland" solution to the Irish border problem. Labour would have a field day and she would be eviscerated by the Right in her own party.

We are left, therefore, with a series of imponderables to which there are no obvious answers. But, for all the delusional rhetoric pouring out of some quarters of the legacy media, there are no short cuts. Either Mrs May delivers the goods on Friday or we are precipitated into a crisis of unprecedented severity.



Richard North 17/09/2017 link

Brexit: playtime's over

13/09/2017  


What we saw yesterday, from my analysis of the Institute for Government's report on "Customs", is that there are people at (or close to) the top of the information chain who simply don't know what they are talking about.

But it also illustrates other tendencies which tend to kick in when facing insoluble problems. If one ignores some of the key factors that make a particular problem insoluble, or redefines the problem in such a way that constraints disappear, then all of a sudden one can find answers which previously could not exist.

This is where IfG went with the Border Inspection Post problem. As we have defined it, it is insoluble. There simply isn't enough capacity in the Channel ports to handle UK consignments after Brexit. And there isn't enough time to install that capacity by Brexit day, even if we started now. Since no attempts is being made to remedy the capacity shortfall, there is not the slightest chance of seeing "frictionless" trade in the sectors affected, after Brexit.

However, if you ignore the "official controls" that regulate the movement of such goods, and instead use the Union Customs Code (which actually doesn't apply), you can invent a solution that couldn't otherwise exist, in the form of pre-export clearance.

As long as the likes of the IfG can do this, and the media fails to call out the fantasists, then we can soldier on in a fog of ignorance, pretending that things aren't as bad as they actually are and that, when Brexit finally arrives, we can continue trading much as we did before.

Unfortunately, where the IfG goes, others follow - and some may even be leading the way in the fantasy stakes. That much is evident from the Legatum Institute paper on Northern Ireland.

By way of background, we have recently had Michel Barnier speaking on the subject, declaring in no uncertain terms that, "The solution for the border issue will need to be unique. It cannot preconfigure the future relationship between the European Union and the UK. It will require both sides to be flexible and creative".

But what he then saw in the UK position paper on Ireland and Northern Ireland worried him. The UK, he said, wanted the EU to suspend the application of its laws, its Customs Union and its Single Market at what will be a new external border of the EU. And it wanted to use Ireland as a kind of test case for the future EU-UK customs relations.

"This", said Barnier, "will not happen", adding: "Creativity and flexibility cannot be at the expense of the integrity of the Single Market and the Customs Union. This would not be fair for Ireland and it would not be fair for the European Union".

With that unequivocal position in mind, we return to the Legatum Institute. It offers its own interpretation of "the challenge" facing us. Despite the talk of an "invisible" border and the UK position paper arguing for "avoiding a hard border", the Institute only wants to make sure that Brexit "will not lead to an unnecessary hardening of the border between NI and ROI".

It then goes on to say that the challenges posed by the border "mirror those that must be resolved between the UK and EU". It also considers that: "The problem presented requires solutions that can be deployed between the UK and the rest of the EU, and could become a model for other border arrangements around the world".

In other words, the very thing that Barnier declares "will not happen" is precisely that which the Institute suggests could happen while also arguing for an all-UK solution rather than the "unique" solution that the Commission has specified must happen.

In quantum terms, this leaves the IfG trailing in the fantasy stakes. In Legatum, we have a think tank going out of its way to suggest options which have already been unequivocally ruled out by the EU's chief negotiator. This simply cannot be considered rational behaviour – unless, of course, there is another agenda at play.

Truly, though, the Legatum Institute is in the land of the fayries. It is not just addressing the Irish question, or even Brexit. It is developing an advanced case of megalomania, seeking to create "a prototype for ensuring smooth, low friction border between nations" which will not only solve the problems for Ireland and Britain, but "can serve as a prototype for ensuring smooth borders around the world".

"Much has been made", says Legatum, "of potential special arrangements between ROI and NI", but it believes that, "any settlement will be determined by the wider agreement between the UK and EU". This creates, it avers, "an opportunity to deploy the kinds of solutions in the Irish context that would also work in the UK-EU".

Not content with this, we are also told that the situation presents "an opportunity in the UK-EU negotiations to seize the initiative and discuss the future trade relationship now, as we cannot discuss the issues between the ROI and NI without discussing the future relationship between the UK and the EU".

This is a special kind of madness. Once again, the very thing that the Commission has said it will not do – discussing the future relationship between the UK and the EU, in the contest of the Irish border – is the very thing Legatum is suggesting we should do.

To follow the Legatum route, therefore, would simply ensure a failure of the Brexit Article 50 negotiations, triggering a "no deal" scenario, which could well be what Legatum's sponsors really want. We really need to go no further with this madness.

However, there is a section in the report which touches on the same ground dealt with by the IfG, where there is a discussion on the cross-border trade in food and live animals. Legatum's solution here, is innovative – to say the least.

Not for Legatum is there the fiction of pre-export clearance. Instead, it advocates the use of the WTO Agreement on Sanitary and Phyto-sanitary measures (SPS Agreement) to put pressure on the EU to agree suitable mutual recognition provisions on the date of Brexit.

Article 4 of the SPS Agreement, says Legatum, provides that members should recognise each other's regulations, even where they are not technically identical. Thus, it says, even, if the UK chooses to adopt different food safety standards after March 2019, the SPS Agreement gives the UK the right to take legal action to ensure that it is able to continue exporting to EU member states, provided that the purpose of the regulation (maintaining effective food standards) is secured.

Here, we can see a different fantasy being played out. The Institute is confusing the terms "mutual recognition" and "equivalence", treating them as if they are the same things. They are not. And Article 4, to which it refers, does not mention mutual recognition. It refers to "equivalence" and requires that the exporting state "objectively demonstrates to the importing Member that its measures achieve the importing Member's appropriate level of sanitary or phytosanitary protection".

For sure, there is then a provision that requires WTO members to "enter into consultations with the aim of achieving bilateral and multilateral agreements", but these are on the recognition of the equivalence of specified sanitary or phytosanitary measures.

Legatum, therefore, is being unrealistic in arguing that the SPS Agreement gives the UK the right to take legal action against the EU, should the UK choose to adopt different food safety standards. It would be for the UK to demonstrate its "equivalence" to the EU.

As much to the point, though, Article 4 requires that "reasonable access shall be given, upon request, to the importing Member for inspection, testing and other relevant procedures", which thus legitimises the EU's prior approval system. The UK cannot, come what may, demand access for its goods, simply on the basis of notional equivalence.

Article 3 then requires Members to "base their sanitary or phytosanitary measures on international standards, guidelines or recommendations, where they exist". The EU's standards are Codex compliant and the very existence of such international standards would enable the UK to be excluded from EU markets if it deviated from those standards.

If we then look at Annex C of the SPS Agreement, we see provision for control and inspection of imported foods, with the proviso that procedures must be carried out "in no less favourable manner for imported products than for like domestic products".

As I explain here, internal controls on foodstuffs in the EU are just as rigorous as those applied to imports. But, while controls are applied internally at the points of production and during distribution and marketing, the EU has no jurisdiction over the production of food within third country territories so it compensates by applying controls on imports at its external borders.

Its indifference to real world considerations, though, tends to confirm that Legatum is working to a different agenda. And we got more than a hint of that the day before yesterday, in The Times and the Independent.

In those papers, we saw Crawford Falconer, a former member of the Legatum's "special trade commission", backing a paper produced by the Institute last year. What makes this interesting is that the New-Zealand-born Falconer was last month appointed chief trade negotiation adviser to Liam Fox's Department for International Trade, and now has considerable influence in Whitehall.

What amounts to Legatum's Brexit template wants us to leave the EEA in order to negotiate a series of free trade agreements with a "Prosperity Zone": nations which include Australia, New Zealand, Singapore, Canada, US and possibly Mexico and Switzerland. Access to UK markets will be offered in exchange for commitments to regulatory reforms, especially in the service sectors, potentially enabling the UK economy to make substantial gains.

And the person following this agenda is Mrs May. She is now expected to give formal notice to leave the EEA in her speech due within the next two weeks. In anticipation of this, the EU has announced it is postponing next week's scheduled round of talks with the UK, while they wait to see what she has on offer.

Sources are suggesting that Mrs May might abandon the UK's attempt to agree a comprehensive FTA and instead by-pass the Commission by calling for direct talks with EEA members. The target would be a replacement EEA deal, under a different name, focusing on services and shorn of unrestricted freedom of movement.

Things can change very rapidly but anything close to this would confirm that the Legatum Institute is shaping Brexit, bringing it closer to the agenda of its New-Zealand-born sponsor, multi-billionaire Christopher Chandler.

Someone clearly not in the loop is Philip Hammond who, yesterday, warned the Economic Affairs Committee that UK ports could be plunged into chaos if the country crashes out of the EU without a deal which kept customs arrangements similar to those in place now.

"Anyone who's visited Dover", he said, will know that it "operates as a flow-through port". Current volumes of trade "could not accommodated if goods had to be held for inspection", even just minutes. This "would still impede the operation of the port".

Roll-on, roll-off traffic at Dover, Hammond said, "is predicated on trucks rolling off a ferry immediately, out of the port and the ferry reloading and departing pretty rapidly – Ryanair style turnaround times. Anything that caused delay in vehicles exiting the port, delay in vehicles offloading, would cause significant disruption to patterns of movement".

Work, he said, was under way on contingency arrangements to try to maintain smooth operations even if the UK crashed out of the EU without a deal. But, he admitted, "We have had less engagement than we would like with customs counterparts in our immediate neighbours at the technical level, both to discuss possible deal scenario challenges and no deal scenario challenges".

Clearly, we're not going to get a customs deal and, on current form, it doesn't even look as if Mrs May will try for one. Thus, it's beginning to look as if playtime is over. On 30 March 2019, it isn't quite going to look like the picture I've used. But soon afterwards, it may feel like it.



Richard North 13/09/2017 link

Brexit: a serious lack of urgency

12/09/2017  


As we slide closer to the abyss called Brexit, we face a crisis of unknown proportions, the cost of which could be measured in hundreds of billions of pounds over the next decade or so, depending on how badly the process is handled.

At the epicentre of the crisis is our relationship with the EU, where the ability to continue trading will be determined to a very great extent by the border controls in place once Brexit takes effect. Onerous and inflexible controls have the potential over the short-term so seriously to disrupt trade that we could see a period where there is scarcely any movement of goods to and from the continent via the main Channel ports, with serious long-term damage to trading levels.

Where we are also seeing a lack of engagement by government and a sense of drift, with no signs of leadership from the May administration, the main impetus for change and direction must come from outside government. In such occasions, it is not unusual for think tanks to take a lead.

Away from the sterility of the Westminster debate on the Withdrawal Bill, therefore, the publication yesterday by the Institute for Government (IfG) of a report, entitled: "Implementing Brexit: Customs" was potentially of some importance.

A well-focused and properly framed report from such a prestigious institution could have revitalised this flagging but nonetheless important corner of the debate and provoked the Government into taking urgent action. Alas, though, whatever expectations there might have been, they have not been realised.

The report's problems are in part illustrated by its title which, to say the least, is unfortunate. Focused on "customs", it fails to convey adequately (or at all) that the problems we are confronting are not confined to customs per se, but to the wider issue of border controls as they affect the trade in goods, post Brexit.

The EU system of border controls does include customs but - not properly appreciated by many – it also encompasses separate and distinct "official controls" dealing with live animals, foods, plants and related goods, including timber products. These are the so-called sanitary and phytosanitary controls.

These goods that come under this category comprise a significant part of EU-UK trade. The border controls applied to them, separately from customs, will have a significant impact on the UK and its EU trading partners in the aftermath of Brexit.

Yet, running throughout the IfG report is a fundamental failure to understand the impact of these separate controls. In my view, this failure, together with other important omissions which I will discuss, seriously diminishes the impact of the report. That is a pity as the IfG is one of the better think-tanks and is one that is attempting to explain Brexit issues in a dispassionate manner.

Without nit-picking on the detail, we can see the problems with the report emerging early on, with the summary telling us that:
…responsibility for different elements of the customs process sits right across the public sector. From HM Revenue and Customs (HMRC) to the Horticultural Marketing Inspectorate, from Border Force to over 100 port health authorities across the country, day-one delivery depends on a very large, disparate group all working closely and effectively.
This, as readers of this blog will know, is plainly wrong. The port health system in this country – run by local authorities – works to the EU's "official control" regime and is entirely independent of the customs system. The same goes for the systems in the other 27 EU Member States.

This error is repeated in the body of the report, where the Institute (page 8) tells us that: "What we call customs goes beyond simply the collection of tariffs on goods as they are traded. It involves enforcement of a wider set of rules and regulations that determines what can be traded and how it is treated by authorities". Then, set out in a table (Table 1) is a list of Customs controls which wrongly includes: "Environment and health: Phytosanitary, veterinary and hygiene controls".

The report goes on to say that with falling tariffs and higher volumes of trade, focus has shifted from revenue generation and towards security, regulations and standards.

Governments, we are told, are focused on the careful management of what is going in and out of their country – preventing smuggling, making sure that animals aren't carrying diseases, checking that food is safe to eat, ensuring that chemicals are properly handled and car parts aren't faulty and, crucially, making sure that their domestic traders aren't being unfairly undercut.

These rules and regulations, it rightly says, are just as important as duties and taxes being collected (if not more so).

We then begin to get a sense of how intrusive have become the "rules on agri-food" as currently applied in the UK. Between 20 and 50 percent of shipments of beef and lamb imported from outside the EU, we are told, must be checked by a food safety agency at the border.

We are also told that "the UK is party to agreements such as the one between the EU and New Zealand, which exempts most checks". The EU–NZ deal only requires two percent of lamb shipments to be sampled at random. "Which shipments are randomly sampled", the report claims, "is determined by HMRC and relayed to freight services agencies at ports and airports via CHIEF (the computerised customs declaration service).

Tellingly, there is no source attributed to this claim. But then it is hard to see how one could be a valid reference. The claim is fiction. According to EU guidelines, prior notification of the physical arrival of the products on the EU territory must be provided to the border inspection post where the goods will arrive, using the Common Veterinary Entry Document (CVED). This is sent directly to the "competent authority" at the point of entry. HMRC is not involved in this process.

Once we leave the EU, we have to deal with the problem that the UK will become a "third country". And, as specified by Regulation (EC) No 882/2004, no third country can export food of animal origin to the EU unless it is on the list of approved countries.

Under normal circumstances, only a third country can apply to be on the list of approved third countries, which puts the UK in an interesting Catch 22 situation. In order to export to the EU after Brexit, it must be on the approved list. But it can't apply to be on the list until it has left the EU. And, given that approval is not automatic, there could be a time lapse of weeks or – more likely – several months - when exports mat not be possible.

As for the reverse flow, the Institute tells us that, currently, 70 percent of the UK's food imports by value come from the EU. At the moment, these are not subject to checks. Following Brexit, the UK could unilaterally continue allowing EU goods to enter the UK without regulatory checks, on the basis of trust. To do so would be within the UK's gift as an independent nation.

However, without a trade deal in place, there is an argument – which the Institute does quite neatly rehearse – that it must dismantle the checks on all other food imports or fall foul of WTO anti-discrimination rules.

On the other hand, if we have to inspect all EU food imports, says the IfG, this "will place substantial new burdens on the UK's border operations". In particular, we are told, shipments of agri-food which require a Border Inspection Post (BIP) for checks and – unlike most other goods – cannot generally be cleared inland due to the risks of spreading pests and diseases while in transit.

What I find lacking here, though, is the flat, neutral tone of the discussion. There is no possible way that the UK system could handle the increased inspection burden. There simply isn't the capacity, either in terms of the facilities or the trained staff. It takes three years to train a qualified food inspector, and probably longer to build the extra BIPs.

If we decided – which the IfG says is a possibility – to forego the checks, and face down any WTO complaints from our other trading partners, then there other issues, to which the Institute does not refer. To what extent, one needs to ask, can the UK rely on the good faith of EU Member States to ensure that food exports to the UK will be maintained to the requisite standards? How will we be able to tell if some traders start using us to offload the rubbish that they could not sell on their own domestic markets?

Now we come to an area not directly related to the food issues, amounting to one of those important omission that I referred to earlier, which fatally weakens the report. This comes in page 20 (and subsequently), where we are told that our ports could "grind to a halt".

I actually take no great issue with the thrust of the section, in terms of the predicted outcomes. We see rehearsed the familiar litany, whereby the total number of customs declarations will undergo a five-fold increase and there will be an increase in customs checks. Movements will rapidly grind to a halt as vehicles back up waiting to be processed by customs authorities.

Where I take exception to the narrative is the assertion that the adverse outcomes are all predicated on a "no deal" scenario. What the IfG fails to do is come to terms with the fact that so many of the effects it reports will occur whether there is a deal or not. As with so many others, the Institute simply don't seem to be able to come to grips with our coming status as a "third country".

There's the rub. On Brexit day and thereafter, the UK has moved outside the EU's external border. Irrespective of whether we have a free trade agreement with the EU, all exports to the Union will have to be declared and routine checks will be made at the point of entry.

As we are intending to be outside the Single Market, there will also be other complications which will affect the movement of a wide range of products. Medicines which have been manufactured in the UK under market authorisations held by UK companies, will no longer be permitted entry. The same applies to chemicals, to aviation components, to some types of machinery, to vehicles, and many other products.

Unless businesses have been given plenty of information and advance warning, it is almost inevitable that there will be problems and misunderstandings at the new border, with the potential for endless delays. Yet nothing of this is conveyed by the Institute report.

But the failure doesn't stop there. In a major breakdown of understanding, as we get into recommendation territory, the Institute optimistically asserts that that there is "one alternative to border checkpoints".

We could, it says, "carry out investigations and compliance audits at the source of production rather than at the border". For instance, conducting onsite veterinary controls of cattle and sheep going for slaughter could allow them to be pre-cleared electronically, avoiding the need for testing and checks at the border. This is not true.

To compound its mistake, the Institute calls in aid the Union Customs Code which permits pre-clearance for imports. But, the Customs Code does not apply to sanitary checks. And under the official controls regime which actually does apply (see Article 23), pre-export checks do not remove the need for import controls. They simply reduce the frequency of those controls – as in the case of New Zealand lamb. 

Elsewhere in this blog, many times, I have written of the serious lack of BIP capacity in EU Member States, to the extent that, when and if we are able to resume animal-based food exports, there won't be sufficient facilities to inspect the consignments we send. If vehicles delivering loads are not intercepted before they leave the UK, they will be held up in continental ports awaiting veterinary clearance that will never come.

In a fine turn of phrase, the Institute calls this not a "cliff edge" but a canyon. We descend one steep wall and then have to climb the other. The main report author, Joe Owen, tells the Financial Times that the scale of disruption is not something the British side will be able to control easily.

The UK, he says, is working hard to get its border arrangements ready. "But", he adds, "unless Calais, Dunkirk, Rotterdam or other European ports are also ready for Brexit, British exporters will face significant disruption to their supply chains". Bluntly, this is a bizarre description. Faced with an almost total collapse of cross-Channel trade, all Owen can manage is the anodyne "significant disruption".

What is even more bizarre though is the action the Institute recommends to head off this "disruption". The Government, it says, "should undertake detailed bilateral engagement activities with authorities in France, the Republic of Ireland, the Netherlands and other EU member states to ensure that both sides of the UK–EU border are prepared for Brexit".

And that's it. That's all you get. Confronted with a looming crisis of monumental proportions and a Government that is unable yet to tell us what kind of agreement we are aiming for, with not even the hint of a draft agreement in place and no sign that EU negotiators are willing even to discuss trade, all the IfG can do is recommend "bilateral engagement activities" with our main European trading partners.

It would have us ask these nations to commit unknown amounts of money to deal with an unknown settlement against an unknown timetable, handing an unknown level of traffic delivering goods under terms which – you guessed it – are unknown. And that is considered to be a rational recommendation, as proposed by a top London think tank.

If nothing else, this illustrates the parlous state that the Brexit process has reached, where we are rapidly descending into a state of crisis. But, given that is the case, you would expect alarm bells to be ringing, with calls for immediate measures.

Instead,. for its headline issue, the Institute chooses to highlight the potential costs of one part of the system. On the basis that there could be 200 million customs declarations, and a typical broker charge of £45 for making a single declaration on behalf of a client, it calculates a nominal total of £9 billion incurred by the trade as a cost to business.

This is an entirely fictional sum as most shippers make their own declarations. Ironically, the sum annually is not very different from what we pay as a nation in net EU contributions. But all this spurious calculation does is distract from the already weak findings in the report.

As to its general thrust, the IfG has seriously understated the gravity of the situation. A well-meaning attempt at neutrality downplays what are very serious dangers at a time when a damning critique would have been entirely appropriate. Polite diplomacy is valueless: we are way past diplomacy.

Consequently the report is a damp squib when we needed a stick of dynamite with a burning fuse. If there is one thing we have learned, moderate opinions in immoderate times cannot punch through the noise. Unless IfG is prepared to take a more critical stance, its efforts will be forgotten within hours of publication.

And if it is not making an impact on the most important political issue of the century that this country faces, what is the point of its spending £4.4 million (in its last year of operation)?



Richard North 12/09/2017 link

Brexit: saturation point

08/09/2017  


Yesterday - in terms of maintaining coherent coverage of events - represented something of a crisis. Information flow, covering a wide range of events, effectively reached saturation point – more than could be properly reported in any one post, and way beyond the capacity of the average reader to absorb it.

What grabbed my attention and what in normal times might have made the substance of a single post is this report which features David Dingle, the chairman of Maritime UK, the organisation which represents marine and shipping industries.

In a press briefing, he said he was "very nervous" about the future and concerned the government was putting £16 billion-worth of business in jeopardy with threats of no Brexit deal, his concerns stemming from the reality of developing new customs declarations systems in time to prevent gridlock at ports and their approach roads.

Dingle, who is to lead a delegation to see Theresa May and Liam Fox on Monday – the first such meeting since the referendum - said it had taken HM Revenue and Customs "eight to ten years" to put its latest customs declaration system in place. It is due to go live in October, suggesting a Brexit system will take many years to put in place.

He warned that there would be an "awful shutdown" in trade if the government ended up with no deal, branding such a scenario as "daft". As to HMRC delivering a new system that could do electronic matching of trucks and their cargo to enable continued speed in roll-on-roll-off ports such as Dover and Holyhead, Dingle said: "It has taken an extremely long time to build the new system planned before Brexit – eight to ten years – and then suddenly it [HMRC] is supposed to have another step change in just two years?"

"That", he continued, "makes me nervous. It's why we need to have… a lengthy transition period so that work is completed. We need to land this. We need to land this in a really sensible and pragmatic way".

Supporting him was the chairman of Carnival UK, which operates cruises for P&O. He said: "Having looked at the time it takes, even in my own company, to build complex new systems, I would be sceptical we will be where we need to be in two years". Dingle thus concluded that the transition period must be extended "until frictionless trade could be guaranteed".

What is worrying here is that Monday's meeting will be the first with government since the referendum – yet Dingle is conveying crucial information which should be playing an important part in exit plans. Somebody in his position talking of an "awful shutdown" in trade is someone who needs to be listened to, and should have been talking to government for some time.

Clearly, though, there is little connection between the real world and the foetid bubble of Westminster politics, although we are to see a select committee look at the customs situation. Nevertheless, May and her ministerial team are more likely to listen to the European Research Group than they are real people with experience of cutting-edge operations.

This secretive group, supported by 60-plus "Ultra" MPs with very suspicious funding arrangements – and dubious arrangements with Brexit minister Steve Baker - is about to launch a "major drive" in an attempt to keep Mrs May on track for a "hard" Brexit, eschewing continued participation in the Single Market even as part of a transitional arrangement.

To an extent, though, they are knocking at an open door, with David Davis at yesterday's Brexit questions responding to John Whittingdale who rehearsed the tired canard that continued membership of the Single Market "would negate many of the advantages of leaving the European Union, while requiring us still to accept decisions that we could no longer influence".

To the charge that "it would actually be worse than continued membership as a full member", Davis agreed that, "In many ways, it is the worst of all outcomes". "We did consider it", he said: "I gave it some considerable thought, maybe as an interim measure - but it seemed to me to be more complicated, more difficult and less beneficial than other options".

This is a shorter re-run of the answer he gave in Washington but how Mr Davis can assert that adopting an off-the-shelf option is "more complicated" and "more difficult" has yet to be explained – by him or anybody else.

But then, it is very far from clear that Mr Davis actually understands the purpose of transition arrangements. It is my understanding that, in the absence of a full-blown trade agreement with the EU, we will need such arrangements to enable us to continue trading with EU Member States, giving our companies access to their markets without, as Dingle puts it, an "awful shutdown" in trade.

This, however, does not even feature in Davis's explanation to Keir Starmer. The Secretary of State believes they will meet three different requirements: "to provide time for the British Government, if need be, to create new regulatory agencies and so on; time for companies to make their arrangements to deal with new regulation; and time for other countries to make arrangements on, for example, new customs proposals".

That, says Davis, "is what will be required. That is why we need to be as close as we are to our current arrangements. It does not mean that, in the long run, we are in either the customs union or the single market".

What then does the man propose to do about REACH, and the fact that UK registered chemicals will no longer be afforded access to EU Member State markets? What are his plans for marketing in the EU the British medicines which no longer carry valid authorisations? What happens to food export when there are no facilities to inspect them in EU Member States?

We could fill this whole post with details of unresolved issues, which must – in the absence of a final trade agreement – be addressed in a transition agreement, and which do not fall within the scope of Davis's idea of such an agreement. And once we become a third country, our "current arrangements" will no longer suffice – which is why Mr Dingle is so concerned.

Personally, when we get little more than vague generalities from the person supposedly masterminding our Brexit effort, I think we are entirely justified in feeling more than a little concerned – especially in the context of what we know of David Davis's behaviour and the general conduct of the negotiations.

We can recognise, therefore, the sentiments behind Barnier's observations, expressed to the Commission after the first round of negotiations. The EU's chief negotiator noted that the UK "had not yet really engaged in the negotiations or spelled out its positions" and that Davis "did not regard his direct involvement in these negotiations as his priority".

This we saw for ourselves last week, when Davis spent only an hour in Brussels at the beginning of the session, then only returning for the final session and press conference, then to jet off to Washington to address a private seminar on business unrelated to his duties as chief UK negotiator. This is not a man demonstrating full engagement in or even direct involvement with the talks.

Barnier himself emphasised the importance of being able to negotiate with a "stable, accountable and authorised interlocutor who was available for the negotiations", and regarded these as "a fundamental condition" for the smooth conduct of the negotiations.

In this context, we see Commission President Juncker express his own concern about the question of the stability and accountability of the UK negotiator and his apparent lack of involvement. This, he though, "risked jeopardising the success of the negotiations".

Specifically, Juncker wanted Barnier to avoid discussions "at the purely technical level with negotiators who had no political mandate, while fundamental political questions still remained". In other words, he wanted each of the chief negotiators to be negotiating directly with each other – something which is scarcely happening.

Nor more so was this evident than in the Irish question, the "extreme sensitivity and the complexity" of which Barnier has acknowledged. Interestingly, he noted "the particular problem of the trade in animals and animal products owing to the sanitary issues raised and the difficulty of ensuring controls without reintroducing a physical border with Northern Ireland".

We've heard very little indeed of this "absolute nightmare scenario" from Mr Davis, and in the government's position paper we had the suggestion that border controls could be avoided through what amounted to mutual recognition of standards, based on "regulatory equivalence.

This is something to which the EU could never agree. Where food and animals have not been subject to control by officials under the jurisdiction of the Commission, working to EU standards, the Union has always insisted on imposing its own official controls at its external border. It cannot afford to concede on that point without weakening its entire animal health system.

With no agreement on the border question, therefore, we have got to the stage where yesterday the Commission published its Guiding Principles for the dialogue on Ireland/Northern Ireland. It states:
Issues unique to Ireland include the protection of the gains of the peace process and of the Good Friday Agreement ('Belfast Agreement') in all its parts, the maintenance of existing bilateral agreements and arrangements between the United Kingdom and Ireland including the Common Travel Area, and specific issues arising from Ireland’s unique geographic situation, including the aim of avoiding a hard border between Ireland and Northern Ireland. The invisible border on the island of Ireland is one of the major achievements and societal benefits of the Peace Process. Border issues are broader than economic questions. The physical border itself was a symbol of division and conflict.
Making absolutely no concessions to the desire of the UK to have the border question rolled into the broader trade deal, the Commission is stating that: "The onus to propose solutions which overcome the challenges created on the island of Ireland by the United Kingdom's withdrawal from the European Union and its decision to leave the customs union and the internal market remains on the United Kingdom".

And, in what amounts to a clear a rejection of the UK's position paper as we'll get, it tells us that, "a thorough understanding of the other issues beyond customs arrangements which are relevant to the border is also required in order to move forward to discussing solutions in the context of the dialogue with the United Kingdom".

"It is the responsibility of the United Kingdom", the Commission says, "to ensure that its approach to the challenges of the Irish border in the context of its withdrawal from the European Union takes into account and protects the very specific and interwoven political, economic, security, societal and agricultural context and frameworks on the island of Ireland".

"These challenges", it adds, "will require a unique solution which cannot serve to preconfigure solutions in the context of the wider discussions on the future relationship between the European Union and the United Kingdom". And any solutions "must respect the proper functioning of the internal market and of the Customs Union as well the integrity and effectiveness of the Union legal order".

For all the noise generated by the Second Reading debate in the Commons today, that was the least important event of the day. Ireland has become the make-or-break. The UK is expected to come up with a solution that can be integrated into the Article 50 withdrawal agreement and now with an additional proviso that it "must be achieved in a way which ensures that Ireland's place within the Internal Market and Customs Union is unaffected".

So important is this issue that Barnier held a press conference in Brussels to mark the publication of the Guiding Principles. "The UK wants to use Ireland as a kind of test case for the future EU-UK customs relations", he observed, telling his audience: "This will not happen".

In unequivocal terms, he went on to declare: "Creativity and flexibility cannot be at the expense of the integrity of the Single Market and the Customs Union. It would not be fair for the European Union".

Pete rehearses the best options for Ireland in one of his Twitter threads, the bottom line of which is that the entire island of Ireland becomes a single administrative area for the purpose of managing external trade. The CTA also becomes the Common Trade Area.

This is spelt out by the Irish Times which writes of the North retaining "a special status", which "would mean border checks on goods leaving and entering the North for Britain". This, the paper notes, would be "unacceptable for the DUP and for the North's businesses, who trade more with Britain than the Republic".

But Barnier had a bombshell in his press conference which he left until last. "The sooner we see sufficient progress, real progress", he said, "the sooner we start discussing at the same time a possible transition period, if requested by the United Kingdom, and our future relationship which will require a second treaty. He thus continued:
Through this second treaty, he said, we want an ambitious agreement with the United Kingdom, not only for trade but also for our necessary cooperation in security, counter-terrorism and defence.

This second treaty must be founded and built on a balance of rights and obligations, as is the case with each of the agreements we have already concluded with third countries.

I am thinking, for example, of Norway, Iceland and Liechtenstein, which have chosen to be part of the single market, to accept its rules and to contribute financially to European cohesion.

I am also thinking of Canada, with whom we have just negotiated a very ambitious free trade agreement, AACC. Canada is not part of the domestic market. It does not have the opportunities or the obligations.

It is well understood that it is not possible and will not be possible for a third State to have at the same time the benefits of the Norwegian model and the weak constraints of the Canadian model.

And it is in the light of these principles that the United Kingdom knows well since it has been applying them for 44 years, which we look forward to and that we will study with objectivity and I promise you constructively the next proposals of the British government that we need to make progress.
Had Mrs May decided to keep us in the Single Market, the Irish problem would largely have gone away. And now we are getting the clearest of hints from Barnier as to the best direction to take. It is thus so ironic that the Walter Mitty-like David Davis regards this as being "more complicated, more difficult and less beneficial than other options", when it is the one thing that could resolve a problem that he isn't even beginning to address.

For my part, I see the irony of an issue which is largely being ignored by the mainstream, and widely misunderstood, but which could collapse the entire Brexit negotiations, dropping us out of the EU without an agreement.

Then, at least, the "Ultras" will get an education in what the WTO option really means, as we queue outside nearly empty supermarkets for supplies that are no longer reaching the shelves. But what an expensive education that will prove to be.



Richard North 08/09/2017 link

Brexit: an absence of harmony

07/09/2017  



I really didn't want to get embroiled in the growing controversy over the government's leaked document on immigration, a production which has been denounced by the Irish Times as "collective lunacy" and by other somewhat partisan sources, as "completely confused", "economically illiterate" and "a blueprint on how to strangle London's economy".

But I did rather enjoy Joris Luyendijk's commentary on it. Luyendijk is a non-fiction author and former writer of the Guardian's banking blog and he offers a view that many of us would endorse. "One of the hardest questions surrounding the British government's approach to Brexit", he says, "is how much of the blundering is down to incompetence and how much to duplicity".

That is a question that has exercised many of us but, as a useful guide, he argues that duplicity suggests a plan towards which the lying is meant to contribute. It also requires a basic understanding of the facts. You cannot deliberately lie until you know what the truth is.

In some respects that exonerates the government from many of the charges of lying which might be levied against it. Rather than mendacity, we are dealing with incompetence at an almost heroic level.

The EU, however, is not taking a passive role in this ongoing soap opera. While the UK has just produced a lightweight and premature paper on science collaboration, the Commission is, according to the Guardian, about to risk "heightening tensions" by publishing "five combative position papers" in the coming days.

These, we are told, includes one that puts the onus on Britain to solve the problem of the Irish border, calling on the UK to work out "solutions" that avoid the creation of a hard border and guarantee peace on the island.

Despite the media attention on the financial settlement, and another attempt by the Ultras to assert that we owe nothing to Brussels, the Irish question is the most complex of the issues raised by Brexit, a point underscored by Brussels' acknowledgment that the Irish document is "different from other papers".

Mandelson hits the nail on the head, warning that Northern Ireland may have to choose between political identity or economic interest. He would not, he says, bank on the latter prevailing.

In a move that will probably not go down too well in Whitehall, Brussels intends to say the UK should shoulder the responsibility for resolving the border question, spelling out that the Brexit vote has caused the problem. The paper, which has been seen by the Guardian, thus states:
The onus to present solutions which overcome the challenges created on the island of Ireland by the United Kingdom's withdrawal from the European Union and its decision to leave the customs union and the internal market remains on the United Kingdom.
The paper is due to be discussed by EU diplomats today, along with the others. And what is interesting here is that the Guardian is saying that they are focused exclusively on the "divorce issues", spurning Davis's call for the EU's negotiating team to be more "flexible and imaginative".

Making no concessions to the desire of the UK team to discuss trade, the papers "lay bare the complexity of disentangling Britain from the European Union", delving into technical minefields not aired during the referendum campaign.

The fact that these papers are being leaked to the Guardian also suggests that the Commission isn't at all minded to bury the hatchet (except in Davis's skull). It seems also that the Independent has seen copies and it is adding its own details.

Says this newspaper, around two-dozen pages worth of content covers data protection regulations, intellectual property rights and public procurement – three areas omitted from an earlier round of EU position papers.

Crucially, the paper then relays an observation from an EU official, reinforcing the line from the Guardian. He says the papers represent a move by the Commission to make sure not only that its positions are unambiguous, but to make clear the EU’s insistence that issues being discussed are purely "separation issues", as far as Brussels is concerned.

There may be a link here with what the Ultras' favourite newspaper is reporting. It says that the UK's leaked migration paper has provoked fury in Brussels, where it has been described as "simply toxic" by an influential group of Liberal MEPs.

With expats now describing the UK as a "hostile environment", the Telegraph is also claiming that Barnier was left "incensed" by last week's round of negotiations and has told officials that British hopes of negotiating a "bespoke" transition deal had been "killed off" as a result of the UK delegation's attitude.

As always in these matters, we are relying on anonymous sources, and here it is a "senior EU diplomatic source with knowledge of Mr Barnier's feedback to EU capitals". He is cited as saying: "The Brits have passed the threshold when anything 'bespoke' is possible". Instead, we are told that Barnier suggested that Britain will have to settle for an "off the shelf" transition deal, similar to the Efta/EEA option.

This meshes with a report in the Irish Times which says that the leaked proposals on immigration "would represent a hardening of Britain's approach to Brexit, making impossible the kind of transitional arrangement suggested by UK ministers".

It is hardly surprising, therefore, that a number of FTSE 100 CEOs have refused to sign a letter endorsing the government's Brexit policy, in what is being described as an "embarrassing own goal".

And today, Mrs May has to deal with a "growing rebellion" in the Commons over the Withdrawal Bill. With the second reading due today, that gives the opportunity for domestic politicians to come out to play, but apart from increasing the noise level, nothing constructive is expected.

The localised vacuity makes an interesting contrast to Germany where the biggest industry group has set up a task force including companies such as Airbus, Siemens and Deutsche Bank "to prepare for a disruptive British departure from the European Union".

But what we're not getting anywhere is any sense of harmony. Clearly, the Commission is not prepared to make any concessions on sequencing. Instead, it seems to be piling on the agony over the Irish question, as well as adding other "technical minefields" that cannot help but slow the negotiation process. Everywhere one looks, there is friction.

This cannot augur well for the future. Issues come into focus, bringing with them controversy but we then see the controversy abate without resolutions. In time., the same issues then emerge, and the process repeats itself. If anything, the antagonism is intensifying as more issues are piled into the cauldron.

It is hard to see how, in the absence of harmony, that the negotiations can progress. When every step generates controversy, we seem to be going backwards. That cannot continue.



Richard North 07/09/2017 link

Brexit: no Irish solutions on the horizon

05/09/2017  


The thing about Brexit is that there are an awful lot of players. This isn't a cosy little tryst between Westminster MPs and the lobby, so we don't have to rely on that self-referential little claque for our information. And perhaps that's just as well, given that the UK media is rated (by some way) the least trusted in Europe.

It's still interesting, though, how much we're getting from the Irish who, of course, have a massive dog in this fight. And one such source being especially helpful at the moment is Ireland's foreign minister, Simon Coveney.

He has just been meeting Michel Barnier in Brussels (pictured), along with Guy Verhofstad and Irish MEPs Matt Carthy, Brian Hayes, and Luke Flanagan. Also in attendance was Danuta Hubner, the EU parliament's European People's Party chair of its constitutional affairs committee.

Showing the sort of headline solidarity that has frustrated David Davis and his colleagues, Barnier told the Brussels press corps that, "Ireland's concerns are the Union's concerns", adding, "all member states and EU institutions are fully united in this regard".

This, the Irish Times noted, is by now a familiar refrain, but nonetheless it was reassuring to Mr Coveney who was only in Brussels for the day. And that reassurance, it is expected, will be reflected in detail in the Commission negotiating paper on Ireland which is expected next week.

For the moment, though, London – and the "incompetent" Mrs May - will not have wanted to hear Coveney's comment to the effect that, unless the UK makes a more detailed proposal on the financial settlement, talks would not move forward to negotiations on trade. "Clearly", says Coveney, "unless there is progress on that issue, we are not going to get to phase two".

He also dismissed reports in that "least trusted" British press that it is the EU's fault that progress on the Irish border is not moving faster. "I've seen some media coverage to suggest that this is all the EU's fault and Britain wants to resolve all of these issues, but because of the EU it can't be done".

"I think really that that is a distortion of the facts", he said. "Britain is the country that has decided to leave the European Union. Britain in my view has a responsibility to its neighbours and friends".

One area where there has been "very good progress", according to Coveney, is on the common travel area, which allows citizens across Ireland to travel freely across the border. The minister said reaching an agreement on this was seen as "a confidence-building measure" that would allow for negotiators to find a way forward "on some of the more contentious and difficult areas".

Nevertheless, we are told that there is "disappointment" from both the Commission and the Irish that the UK position paper on Ireland was "long on aspirations but short on detail, particularly on how to preserve the many elements of all-Ireland co-operation which were enshrined in the Belfast Agreement.

On the Border issue, Coveney said it was clear that UK aspirations to a frictionless border "were not credible answers" to the problem, without threatening the integrity of the Single Market.

Speaking of the need to continue discussions on the issues associated with North/South dialogue, he said: "The decision to leave was the UK's decision not the EU's decision or Ireland's and we respect the decision". The challenge would be, "that any solution we look at it will have to be fully compatible with union law and the single market".

What was then extremely interesting was the comment of MEP Matt Carthy, who argued that Ireland needed to "toughen up" its negotiating position and to campaign for "special designated status" for the North. In effect the North would remain part of as many of the EU institutions and programmes, such as the customs union, post-Brexit.

When the UK has been insisting that there will only be an all-UK outcome, this in effect is the "moving the border" solution, in this case moving it to the Irish Sea between Northern Ireland and the mainland.

According to Politico (not the most reliable of sources), the UK's proposals on how to maintain free trade between Ireland and Northern Ireland have raised eyebrows in Dublin and Brussels.

Britain has committed to having no physical infrastructure at the border and instead implement so-called waiver systems for traders who undergo strict audits on items such as livestock and agricultural products. But such suggestions have not convinced the EU.

Says Coveney: "Certainly there was a lot of scepticism coming from the [EU's Brexit] task force as to whether those solutions [would work]. The response from our own customs team in Ireland was also one of real scepticism… We cannot be part of essentially creating some kind of back door into the Single market that's not properly regulated and that we can't stand over".

Directly from the Revenue Commissions, though, we see that a "hard border" – predictably – would raise all sorts of capacity issues for Irish customs, for other government control agencies, for ports and for everyone involved in supply chains into and out of this country.

The only certainty is that there is no one big solution to the problems. A senior Revenue official states that, if faced with a worst-case scenario in April 2019, they are going to have to use all possible measures to mitigate the capacity issues. The greatest contribution may come from using simplified customs procedures that are already available under the Union Customs Code.

Currently, trade with non-EU countries relies very much on the EU's "trusted trader" scheme in which AEOs (Authorised Economic Operators) enjoy cooperation with customs and are given expedited clearance through the border. There are less than 200 AEOs in the country but they handle 85 percent of third-country imports to and exports from Ireland.

In a less than felicitous comment though, the Revenue official states that, "if the UK were to become a third country in two years' time and they had to handle the trade, their workload would need to increase by 500-700 percent". The thing here is that there is no conditionality. Come what may, the UK will assume the status of third country.

"In any event", says the official, "we can't just assume that the AEO programme will continue to be recognised by UK customs. It is an EU scheme so by definition recognition of British AEOs and vice versa falls away with Brexit.

Thus, he tells us, "new agreements would be needed in the form of a Mutual Recognition Agreement". Similar agreements are already in place with a number of the EU's larger trading partners and it would seem that "such an agreement is likely to be part of the second stage of talks on a final trade deal".

And there is the rub. With Coveney suggesting that the talks might not move on to the second stage, we are looking at the prospect of the AEO scheme lapsing, with all operators having to be checked.

There is also a recognition that capacity issues and bottlenecks are likely to arise in food and agricultural products, which account for almost all the non-Customs control procedures. One complication, says the Revenue official, is that while customs control procedures can theoretically be operated outside the ports, that option "may be unsuitable for food and agriculture checks which under current legislation must be performed at Border Inspection Posts (BIPs)".

Here, then – at last - we are beginning to see a recognition of the practical difficulties of managing a hard border, reinforced yesterday by Sainsbury's chief executive. He says that fresh food could be left rotting at the British border if strict customs controls for EU goods are put in place after Brexit.

This is Mike Coupe, who says that anything disrupting established food supply chains, currently governed by EU customs arrangements, would be "detrimental". He claims that the repercussions of supply chain disruption are "not fully recognised" in Westminster and cautions that if it gets nearer to March 2019 and a solution has not been found, retailers and food producers will "make that point and make it very strongly".

Going back to our Irish Revenue official, he also remarks about the problem of goods from Ireland transiting through the UK to other destinations in the EEA. Once the UK leaves the EU, he says, Ireland will need to rejoin the Common Transit Convention.

However, membership is not a right. The Irish must be invited to rejoin, and any contracting party may object. The alternative would be the old TIR (Transport International de Routiers) system, but it is not computerised so we would be back to sheaves of paper forms in lorry cabs, with a carnet to be stamped at every border crossing.

Recently the Irish Revenue modelled a lorry carrying goods from Paris to an approved premises in the midlands via England. That could be eights stops and stamps and checking of the load. If each one takes an optimistic 15 minutes, that's two hours. Multiply that all across a just-in-time supply line and you can see the sort of problems business will face.

There is, we are told, another aspect to border controls which gets little public attention: EU safety and security regulations require that goods entering the union be checked by customs at the first point of entry to determine whether there are threats of any kind.

The situation right now is that 75 percent of all non-EU goods come to Ireland via another member state, so someone else is carrying out those checks, and paying for them, often the UK. If the UK leaves the safety and security zone, the Irish would have to do their own check at the border – yet another complication and one that would obviously have resource implications.

In short, only a fraction of the border issues have been addressed and, where practical problems arise, there is nothing even close to a solution.

As regards the Irish customs service, this suffers from many of the same problems as the rest of the public service in terms of resources and renewal. It is currently below its establishment figure, it has an ageing cohort of staff and is losing some of our most experienced people to retirement.

Even without Brexit, the service has considerable training needs to maintain its skills set. Put Brexit in any form into the middle of that and, obviously, there are going to be capacity issues.

As to the resources needed, there are no explicit estimates, and there can't be any until the outcome of any trade deal is known. Some other Member States have made projections and are anticipating a need for up to 30 percent extra staff in circumstances where the proportion of trade with the UK is far lower and there is no land border.

While the talking goes on (or not), the Irish Revenue service has made no plans for physical customs infrastructure on the land border. That, says the Revenue official, "is a decision for government". And, as Mr Barnier keeps saying, the clock is ticking.



Richard North 05/09/2017 link
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