Brexit: the cheating Lyons

17/01/2017  


For those of us who trail in the wake of Dietrich Bonhoeffer (see page 9) and regard stupidity as social phenomenon rather than a congenital defect (like an infectious disease, with transmission characteristics similar to STDs), Dr Gerard Lyons is an excellent subject for study.

This is the man who, in August 2014, while he was still working for the current Foreign Secretary, wrote a treatise called The Europe Report – a win-win situation. Amongst the gems he offered was the claim that: "Article 50 explicitly states that the other remaining members of the EU would decide the terms of the exit, not the country that is leaving", thus confirming Bonhoeffer's thesis.

In considering how we would leave the EU, Lyons also argued that the UK should "be proactive in seeking an amicable separation", to which effect he suggested that "not invoking Article 50 would make more sense". It could be seen as "starting with a clean slate in determining the future relationship with Europe".

Basically, all the mad nostrums that were floating around at the time, Lyons Hoovered up and regurgitated on the pages of his report. This led us to conclude that it was a "disgustingly superficial piece of work, technically illiterate, flying in the face of treaty provisions, written under the hand of a man who is as ignorant of the EU as his master".

The thing about Lyons and his ilk, though, is that they occupy their own, intellectually sealed bubble, where contact with the outside world is rigorously controlled and anything but unconditional adulation is totally ignored. Even more temperate criticism from prestigious sources doesn't make the cut, so that where – as was averred – he makes errors of judgement and fact, these remain uncorrected.

I like the measured tone of the piece that tells us that Lyons "states factually that every IMF Chief has been a European and every World Bank President an American". Writes George Magnus, "Jim Yong Kim might beg to differ. He is a South Korean by birth and current President of the World Bank. This doesn't mean Lyons's case for Brexit is irrelevant, but it betrays an inattention to detail".

That same "inattention to detail" had Lyons claim that "the terms of the Norwegian Option [the EEA Agreement] were negotiated by Norway in anticipation of joining the EU, but its people subsequently decided not to join".

This is so absolutely and demonstrably untrue that one despairs that it is so often trotted out – not least because, as we record here, the EEA Agreement stemmed directly from the Oslo Declaration of March 1989 as Efta's response to the plans of Jacques Delors on the completion of the Single Market. The Agreement was crafted as an alternative to EU membership, not as a preparation for it. The Norwegian political elites subsequently tried to join the EU because the EEA Agreement (in refusing common decision-making) did not satisfy their ambitions.

The persistence of this myth illustrates the refusal of Lyons and the co-denizens of his bubble to engage with the outside world. Their arrogance - in assuming that their flawed and often totally inaccurate versions of events represent the truth - makes them the dross they are. But it also ensures that their work will continue to be riddled with errors, false assumptions and the clinical stupidity with which we are all too familiar.

At the time he produced his 2014 report, I wrote of Lyons that he and his like had done us one small service. They had shown us with absolute clarity that the establishment was not the place to look for a workable EU exit plan.

Yet, such is the continued arrogance of the man that, fortified with his own ignorance, he has teamed up with fellow illiterate, Liam Halligan – the "leading Telegraph economics commentator" - to produce a report on the eve of Mrs May's speech. This one is called "Clean Brexit" – purporting to be the very thing he has shown himself incapable of doing – a workable EU exit plan.

In this, we get the ritual demolition of the Single Market (couched as the "Norway option"), with the same tired arguments. Nothing of the debate of the last two years has percolated the man's excuse for a brain.

But it is a measure of how successful we have been in shaping the agenda that Lyons adds to his diatribe by introducing what he calls the "Liechtenstein model". This is what he has to say about it:
Liechtenstein, despite EEA membership, has negotiated its own tailored EU immigration policy, leading some to suggest it could act as a model for Britain outside the EU but retaining Single Market "membership". Liechtenstein, though, is a rather densely-populated microstate, while the UK is the second-largest EU economy and a major immigrant destination.

It is almost impossible, given growing public disquiet across the EU relating to Schengen, that the EU27 would grant the UK the perceived economic benefits of EEA/SM membership, while waiving "freedom of movement". Were Britain to gain such a concession having voted for Brexit, that would fuel already growing demands for EU referenda across other large members states - something Brussels and incumbent EU leaders are desperate to avoid.
Such as this is a more than adequate demonstration of the arrogance of Dr Lyons - and also his almost complete lack of understanding of this subject. Like so many, while he is forced to acknowledge the issue, he does not identify the main source of argument. Instead, he misrepresents it and, in two short paragraphs, purports adequately to have responded to 20 pages of the closely-reasoned argument here and here.

It is this approach which poisons the debate. Lyons sets himself up on high as the arbiter of a sterile argument which he himself defines, having run away from the real issues and avoided engaging with knowledgeable critics. He speaks only to his adoring claque from whom he gets no dissent.

Those less inclined to adoration, however, might note that in 2014, this much-revered man was promoting a comprehensive free trade agreement as "the most likely UK option". Negotiations would be "improved by the threat of Article 50", in which the UK would push for full market access. And that was a serious proposition.

In the view of the Great Man, it was unlikely that the EU would grant full access, a position which he conceded was "not optimal". Despite that, he thought that the "bespoke negating (sic) relationship" would give the UK "the broadest possible operating environment from which to pursue its post exit future".

What is interesting from today's perspective, though, was – in 108 pages – the minimal reference to the WTO option. With only seven mentions, the most substantive comment was when Lyons took note of an Open Europe observation that: "Britain is unlikely to face what some may call a worst case scenario of having to fall back on World Trade Organisation rules".

As a baseline for the current report, this could not be more extreme. With his "Clean Brexit", the UK would pass its "Great Repeal Bill", when the Article 50 window expires. Outside the Single Market and the customs union a Clean Brexit also means, he says, "we are able to walk away without a deal from the Article 50 negotiations, if any deal which is offered is poor".

The UK Government, Lyons avers, should say we are fully prepared to trade with the EU27 outside the Single Market and Customs Union, under WTO rules, with so-called "Most-Favoured Nation" status - "so the EU cannot legally discriminate against the UK, even if some Commission bureaucrats say that might happen". Thus, in the space of less than three years, we have seen an almost complete volte face.

Nevertheless, it is not for the Great Lyons to set out the consequences of a "walk away" policy. All we learn from him is that, if the EU insists on WTO-tariffs on UK goods and services, the UK will retain those tariffs on them in return. "And because we know we can walk away, that should encourage the UK to keep the Article 50 negotiations as simple as possible, giving us the scope to seek sector-specific deals - and that, indeed, is what we would advocate", he says.

It was three years ago that we were discussing this in Flexcit, pointing out the simple truth that, if the UK walks away from the table without an agreement, it confers on itself "third country" status. As such, the EU is obliged to levy its WTO "bound" tariffs. This happens automatically – the EU has no choice.

Then, if UK chooses to match these tariffs, levying them on imports from the EU, in order to conform with WTO rules against discrimination, it must levy the same tariff rates on other MFN partners – in practice all other counties. The Chancellor would enjoy the hit, but it would not do much for the prices index or the "just about managing".

That Lyons apparently doesn't know these basics is the price he pays for his self-induced intellectual isolation. You can ignore your critics, but that means you are doomed, groundhog day-style, endlessly to repeat the same mistakes. He shares this handicap with Peter Lilley who grandly acquaints us with the schoolboy howler, that under MFN terms, "our exporters would pay only £6.5 billion tariffs to continental governments". Does he really not know that importers, not exporters, pay the tariffs?

As much embedded in cloud cuckoo land, though, is Lyons. Under his "Clean Brexit", with the UK "trading under WTO rules with the EU if a separate agreement has not been reached", he actually believes "our exporters would have access to, but not membership of, the Single Market".

The fatuity of this statement almost beggars belief, even if we know what he is trying to say. The man is attempting to convey that we would still be able to trade with enterprises in EU Member States. What he doesn't state are the terms and conditions, and how hard it would be to get our goods into those markets.

This is actually cheating. Unless you are prepared to identify the difficulties and barriers that a preferred option might encounter, and state in some detail how you could overcome them, you are not being straight with your readers.

Being anything but straight, Lyons avers that his Clean Bexit is "quick and predictable" and "helps make leaving the EU as smooth as possible. This is a travesty of a claim. The WTO option would almost certainly precipitate a crisis. 

Yet, the man says, "by acknowledging we will be outside both the Single Market and Customs Union now, the Government can then also put policies in place for changes we know need to happen by the time Article 50 expires - avoiding the 'cliff edge'". What he doesn't say is how we convince the EU Member States to adopt policies which will allow us free access to their markets.

If we go back to 2014, the policy option that Lyons then preferred was the comprehensive free trade agreement. What we're getting now is that declaring Clean Brexit: "allows ministers and officials to reach out to various sectors for their on-the-ground advice, helping the Government to secure long-term UK-EU trade arrangements that ultimately benefit our people".

As we sift through the verbiage, we then get to the kernel: "the UK intends to leave both the Single Market and the Customs Union, as part of our broader exit from the EU". On top of that, Lyons says: "We should also make clear that while we are very happy to trade with the EU under WTO rules, as a consequence of a Clean Brexit, we would also be willing to strike UK-EU sector-specific deals of mutual benefit".

But, the man says, "to assume that the UK must strike any form of trade deal with the EU, though, during the two-year Article 50 window, would be a major strategic error". He tells us: "There is no need at all for the Government to attempt to shape any form of trade negotiation between now and March 2019, if the EU27 is not so inclined".

We cannot leave it there without stating that these "sector-specific" deals with the EU would almost certainly breach WTO rules, which means that even if the UK tried to pursue them, the EU would probably refuse to play. Thus, what we are basically left with is the UK operating under WTO rules in respect of trade with the EU, with nothing much else. This is supposed to sustain us while we expand trade links with the rest of the world.

The madness of this approach speaks for itself. In the thousands of words we have written on this subject, we have been at great pains to point out the pitfalls. No one has, sensibly and honestly, attempted to argue our points or come up with a credible rebuttal. But Lyons doesn't even try. He does what the rest of the bubble-dwellers do – he simply ignores them. He does not even concede that there might be any problems.

This is not only madness – it is fundamentally dishonest. It speaks of a system that is also dishonest, which survives only because it rigs the debate and excludes critical comment. Halligan, as the co-author, is a journalist, ostensibly committed to free speech. But he is part of that system too, one that seeks to shut down debate rather than entertain it.

As we hear Mrs May's speech later today, we can pause to reflect how much dishonesty and outright stupidity has been poured into attempts to influence her. If it succeeds and we even get close to what Lyons has in mind, we are in serious trouble.



Richard North 17/01/2017 link

Booker: the Ridge line

15/01/2017  


Sunday week last feels a long, long time ago, making the debut Sophy Ridge show a thing of the distant past. Oddly enough, according to a puff in the Guardian, her aim was "to show how politics affects those outside the Westminster bubble". In that, at least, she failed.

Instead, the facile woman went for the easy shot, trying to get Mrs May to admit that we would "leave the single market". And when the Prime Minister contradicted her and said wanted us to remain "within" the Single Market, Ridge took this as confirmation of our leaving, triggering a further costly slump in the value of the pound.

But, says Booker, in his latest column, had Ms Ridge been more on the ball, she would have pounced Mrs May's words and asked how, outside the EU, such a thing as remaining "within" the Single Market was possible.

She could have pointed out (as Booker has been doing consistently) that there is only one conceivable way in which, on leaving the EU, we could still do this. That is by rejoining the European Free Trade Area (Efta) to remain, like rich Norway, in the European Economic Area.

Says Booker, there are no ifs or buts here. Despite the efforts of so many to deny it, this is the only solution that ticks all the boxes of what most people say they want from Brexit. While freeing us from three quarters of the EU's laws, we could continue participating in the single market as we do now, thus avoiding a catastrophic disruption to our trade.

We would, he says, no longer be subject to the European Court of Justice. We could regain selective control over immigration from the EU. We could negotiate independent trade deals with the rest of the world. And we would buy ourselves time to discuss all those 30 other major policy areas needing to be resolved in the mere two years allowed for negotiations.

Ms Ridge may have got her headlines. But if only she'd been clever enough to ask the right question, she might just have prodded Mrs May into saying something more meaningful than all those vacuous headlines suggested. Now we must await Mrs May's promised speech this week to see whether we get more substantial clues than anything achieved by that silly interview.

Already, though, the mice are nibbling at the corn, with the Sun on Sunday claiming that Mrs May is expected to announce the UK "is prepared to leave the single market, the customs union and European Court of Justice".

Relying on "senior sources", the paper is able to divine that Mrs May will unveil her "secret masterplan" (should it be mistressplan?) for a "swift and clean" Brexit, and declare: "We're on our way out". Thus are we to get a "triple whammy departure from the EU to be triggered within 75 days": out of the single market, out of the customs union and out of the control of European judges.

The other Murdoch title, the Sunday Times, says much the same but at greater length. It is also declaring that Mrs May will announce that Britain is seeking a "clean and hard" Brexit, pulling out the Single Market and the customs union in order to regain control of immigration and end the jurisdiction of the ECJ.

This is the bog-standard media trope which has not changed in months since promotion to the collective "line to take", now having become "the Ridge line", to coin a phrase. However, in the ST story, David Davis adds to this, telling us that a "transitional deal" is on the cards. According to him, if necessary, the government will "consider time for implementation of new arrangements".

No more than speculation at this stage, this is embellished by the Sunday Telegraph which decides that Theresa May is "to side with Eurosceptics in major Brexit speech revealing what she wants from negotiations". Once again the trope emerges unscathed, with May supposedly seeking to appease the Eurosceptic wing of her party. The same phrasing emerges, as she contemplates a "hard", or "clean" Brexit.

But, in the Telegraph's case, their front-page lead is all based on the most tenuous of threads – not even on sources inside government. We now have to depend on "sources familiar with the prime minister's thinking". Whatever that might mean, it marks a new low in this journal's diminishing claim to be a purveyor of news.

Written before it got its hands on the Telegraph story and copied it out, the Guardian website was recording this "intelligence" as a "growing expectation". So, effectively, we're not being told the news, but simply what the media pack thinks might be the news on the day.

For all the speculation, the only thing substantive the media have to go on is an excerpt of the speech, described as "light on specifics". This has Mrs May calling for an end to the division and the language associated with it – "leaver" and "remainer" and all the accompanying insults. We must all "unite to make a success of Brexit and build a truly Global Britain" - as if.

Meanwhile one former "remainer", Nick Clegg, is calling for Mrs May to go for a "Norway-style trade deal", even if he seems somewhat confused about what is involved. He lauds Efta for allowing its members "the potential to suspend rules on free movement if a case can be made for doing so". In his whole article, the EEA is not mentioned.

This Sunday, therefore, the entire politico-media nexus is living up to its unenvied reputation for ignorance and ill-informed speculation. They make it up as they go along to compensate for the lack of facts, copying off each other in a frenzy of coprophagia, as they all feed off the same inventions.

Building of the torrent of speculation, the Independent builds the next stage of the fabrication. It pitches in inviting reactions from politicians to the event that has not yet happened. Thus it has Tim Farron tell us: "This speech proves that Theresa May is driving the country towards a divisive and destructive exit from the European Union".

"If the UK had voted 52-48 to remain you can bet that Theresa May would never be pushing towards a hard Remain. There would be no embracing of the Euro, no joining the Schengen Zone", he says. "But the Prime Minister seems hell bent on ripping up everything we share with the European Union no matter how damaging that is to the UK".

We also get Anna Soubry saying: "The Government has no mandate for this. To go into the negotiation conceding on the single market and the customs union is extremely serious and very bad news".

Following the example of the Independent, the Mail on Sunday adopts a similar stratagem, using Nicky Morgan to respond to an as-yet-undelivered speech. She believes that leaving the single market "would exact a disproportionate economic toll on UK businesses due to lost trade opportunities".

With all that, there is obviously no need now for the Prime Minister to give her speech. The media and the politicians have already decided what's in it and, in the style of Sophy Ridge, even if she says something completely different, they can ignore it and tell us what she "really" said.

On the other hand, we might just wait until Tuesday to see what she actually says. Even if we are not pleasantly surprised, at least we will be better informed.



Richard North 15/01/2017 link

Brexit: where time stood still

11/01/2017  


Before I go any further, let me give you all notice that we're planning a public meeting in One Great George Street for 7 MARCH (provisionally 2-5pm), sponsored by Anthony Scholefield and his Futurus think tank. I will blog on this shortly, in more detail (note the corrected date).

As to the substantive subject of this blogpost, we turn initially to the Financial Times and a most extraordinary piece by Andrew Lilico, executive director and principal of Europe Economics, headed: "How Britain can make the most of leaving the single market".

Lilico's thesis is that, outside the Single Market, "the UK will be able to choose rules and regulations for itself", a claim that is so bizarre that one wonders where Mr Lilico has been all these years. Reading his article is like being trapped in the computer game "Where time stood still, derived from the seventies film, The land that time forget".

The plot in each case involves travellers stumbling across a hitherto undiscovered spot where time has stood still and dinosaurs freely stalk the land. Since prehistoric times, nothing has changed.

So it is with Mr Lilico. His mind has frozen around ideas culled from debates decades ago, and not a single new idea has entered since. Once we have left the EU (and the Single Market), he asserts, "the flexibility to try things, make mistakes and try again could allow the UK to become a world leader in the regulation of innovative sectors, attracting businesses and incubating new firms and ideas".

It's a lovely idea, of course – harping back to Queen and Empire, when we made the regulation for half the globe. But trotting out this sort of argument now suggests that globalisation never happened, that there are no global standard-setters and things like the WTO Agreement on Technical Barriers to Trade never existed. In effect, the entire post-war timeline has been re-written.

To allow Mr Lilico to inhabit a time-warp, however, is to be quite gentle with him. Otherwise we might have to suggest that he is the epitome of arrogance. In that event, we might observe that he is a man who has ignored many of the studies and writings in this field, treating them of no value, while elevating his own opinions above those of us mere mortals. The Mighty Lilico has spoken – and we, the plebs, don't count.

Another player seemingly locked in his own private time warp is Christopher Howarth, writing in Conservative Home, seeking to tell us that "EEA membership is incompatible with running our own migration policy".

In passing, Howarth offers us a gem on the "Norway option" so archaic that Noah must have wearied of it. "Membership of the internal market" he tells us, means accepting a legal structure which encompasses a "vast body of EU rules, subject to the European Court".

In addition, he says, Lichtenstein, Iceland and Norway automatically accept all of the EU laws but have no say in how they are made (via the EEA agreement). They are therefore something close to being "non-voting members". This is what David Cameron, to his credit, saw as a disastrous arrangement – "fax democracy" - where EU rules spew out of a machine in Vaduz, Reykjavik and Oslo without any recourse.

However, despite the antediluvian nature of this argument (and the fact that he confuses the "internal market" with the "Single Market"), one is less inclined to accept that Howarth is trapped in a time warp. There is after all a certain malevolence in the way he addresses our arguments on freedom of movement as "yesterday’s game played by yesterday's people". Arguing that there is room for manoeuvre on this issue, it seems, is - according to Howarth - a "rogue belief" which should be ended "once and for all".

This is Mr Howarth's idea of debate, which makes it rather entertaining to find one of his supportive commenters airily declaring of me that I have "no talent for persuading people" and am "increasingly ... intolerant of any alternative view, no matter how gently it is expressed". Whatever these people might have, no one could accuse them of being over-endowed with self-awareness.

Returning to Mr Howarth, another of his little debating tricks is to frame the argument before he gets to the substance. We are being asked to believe, he asserts, "that the UK could take the EEA deal and negotiate an exemption to free movement (reprising the issues raised in the Cameroonian negotiations) or potentially use the small print of the EEA agreement to junk this central EU tenet".

We will deal with the question of negotiating an exemption to free movement, as it relies on the EEA Agreement but, as anyone with eyes to see will find out, there is no question of Article 112 – on which we rely – being "small print". It is exactly the same sized font as the rest of the Agreement.

What Howarth is trying to do is signal that Art 112 is somehow a exceptional get-out rather than being a core element of the Treaty. Denigration is all part of the package.

The supporting arguments from "yesterday's people" are set out in my Monograph 1 - ten pages of closely argued prose, densely referenced to primary sources. But Howarth does not refer his readers to this material. He doesn't even mention it. Instead, it becomes a "theory" which rests on two pieces of "evidence" (embellished with scare quotes) which he alone defines.

Intentionally or not, though, Howarth gets it wrong. One rather suspects that it is intentional, taking us into straw man territory. It has all the hallmarks of setting up a flawed argument in order to make it that much easier to knock it down.

"First", he says, "the EU has granted Lichtenstein a semi-permanent exemption from EU free movement rules. Lichtenstein is a small mountain state, and when it joined the EEA in 1995 it negotiated a protocol which has allowed it to restrict EU migration to 72 permits per year. This is reviewed every five years".

"Second", he adds, "the EEA agreement has a 'safeguard' (art 112) mechanism within it which would allow a state to resile from a treaty provision if 'serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures... '".

In fact, the sequence (and emphasis) is different in important respects. First of all, Liechtenstein invoked in the Final Act setting out the EEA Agreement a reservation on freedom of movement, invoking Article 112. This was accommodated in the Agreement by exemptions written into a transitional Protocol. This expired on 1 January 1998.

With no extension agreed, Liechtenstein thus again invoked Article 112, unilaterally, which allowed it to keep its exemption in force. That action precipitated further discussions which led to an amendment to the EEA Agreement, incorporating "sectoral adaptations" to Annex VIII, approved by the EEA Joint Committee.

Although this is subject to a five-year review (as indeed is the entire EEA Agreement subject to a periodic review), it is a fully-fledged amendment to the Agreement which cannot be changed without the consent of Liechtenstein, effectively making it permanent.

These are the facts of the situation – verifiable and verified by reference to the primary sources. But Mr Howarth does not trade in facts. Taking the first (straw man) argument, he in turn argues that, while the UK "is arguably suffering extreme population pressure", it is "probably not acute enough to persuade the EU that the UK deserves a special protocol of the type that previously eluded David Cameron".

All this, of course, is irrelevant. The UK as an Efta State (a status which we argue it should seek) can, as of right, invoke Article 112 unilaterally, and suspend freedom of movement. It does not need a "special protocol" and it does not need the assent of the EU.

For sure, under Article 114, if the action taken by the UK "creates an imbalance", any other Contracting Party may "take such proportionate rebalancing measures as are strictly necessary". In the circumstances, one might expect one or more of the parties to impose their own "tit-for-tat" restrictions on the free movement of UK citizens, although measures adopted must "least disturb the functioning of the EEA", which rather restricts their scope.

So far, so good, but Mr Howarth falls back on the tired old canard that: "The UK is not Lichtenstein, we are not a micro-state that the EU can afford to make an exception for". Yet size is not a qualifying issue specified in Article 112. Furthermore, safeguard measures stand alone. They are not a matter for the EU, but are, in respect of Efta States, unilateral action.

Still Howarth does not give up. "In any case", he says, "this is not a permanent opt-out, and if mirrored would require the UK to go through a process every five years – a very uncertain basis for a new relationship". Again, however, his argument is irrelevant. The UK, if it followed the path of Liechtenstein, would use Article 112 to broker a permanent amendment to the EEA Agreement. And that would, effectively, make it permanent.

This leaves Howarth then to argue that the use of Article 112 is "superficially attractive" but (in his opinion) "highly implausible". It would, he says, "require the UK to provide evidence and explain why its measures were appropriate in a way that would satisfy an unsympathetic EU". But it would not. Invoking Art 112 for an Efta State is a unilateral right. It would have to make its case, but then go ahead anyway.  

Now confusing himself completely, as well as his readers, Howarth avers that, in Cameron's renegotiation these factors were hard fought over, were time-limited and related to benefits. But, "if the UK announced it was to join the EEA" and then immediately and permanently overrode its rules, using the safeguard mechanism, "it is unlikely that the UK would be allowed to join by the other 30 states who would need to agree".

For this "killer point", though, we have observed that the UK is already a Contracting Party to the EEA. Provided it made an uninterrupted switch from EU to Efta membership, precedent suggest that it could continue as an EEA member. It would not need agreement from the other parties.

All Howarth has left is his final throw, that the Efta Court has adopted much of the EU's case law on free movement. The UK, in his opinion, "would end up in a running dispute with the EU, which would leave it expending all its political capital". There again, the ECJ does not make EEA law, so there is nothing in case law that could interfere with Article 112. It doesn't stop Liechtenstein exempting itself from freedom of movement.   

Nevertheless, Howarth stands by his opinion that Article 112 "is not an option that is designed to give states control over migration policy – and nor would it". But, if he's entitled to an opinion, that's all it is – an opinion. That hardly justifies him calling our research a "rogue belief" - "yesterday’s game played by yesterday's people" - which should be ended "once and for all".

And there, Howarth really is in a time warp. Long gone is the time when he can dominate the debate, seeking to take ownership of it, sneering at people who are his senior in age, experience and qualification.

These snide creatures – Lilico, Howarth and many like them - poison the debate and damage the political system with their arrogance, their assumptions and sloppy, low-grade research. They need to realise that they no longer have the monopoly of opinion, and while their prattle may satisfy their Tory Boy fans and the bubble dwellers, out in the real world it looks exactly what it is – smug, ego-driven platitudes of very little value, in a land where time stood still.



Richard North 11/01/2017 link

Brexit: Mrs May's cunning plan

09/01/2017  


People so quickly forget, but the first person recently to put "muddled thinking" into the political lexicon was not Sir Ivan Rogers, but Mrs May. She complained of it during her Conference speech of 2 October last year.

Talking about "our vision" for the "future relationship we will have with the European Union", she believed there was "a lot of muddled thinking and several arguments about the future that need to be laid to rest".

"For example", she said, "there is no such thing as a choice between 'soft Brexit' and 'hard Brexit'". Continuing with this theme, she added: "This line of argument – in which 'soft Brexit' amounts to some form of continued EU membership and 'hard Brexit' is a conscious decision to reject trade with Europe – is simply a false dichotomy".

Just to remind readers, this was on 2 October, when we also recorded the Prime Minister saying that she wanted: "to give British companies the maximum freedom to trade with and operate in the Single Market – and let European businesses do the same here". We wondered at the time as to how that could be done. If this was not EEA membership, it's something very close to it, we observed. 

One now wonders whether the "muddled thinking" to which Sir Ivan Rogers was referring actually related to Mrs May or whether he was simply reflecting the views of his political boss. But he could most certainly extend the description to the media, which has got itself in the most frightful muddle over this issue. We could see this with the fatuous Mz Ridge, in her debut programme for Sky, determined to get her very own "scoop".

Thus we found her telling the Prime Minister that what she had been saying sounded like she was taking us out of the Single Market, so "why don't you just admit it?" To this, Mrs May responded that: she wanted "the best possible deal for trading with and operating within the Single European Market", thereby neatly spiking Mz Ridge's peashooter - not that she noticed.

Earlier, Mrs May had been emphasising that we were leaving the EU: "We are leaving. We are coming out. We are not going to be a member of the EU any longer", she said - and therefore, we should not think in terms of holding on to "bits of membership". Yet one wonders how this could be done. If this is not EEA membership, we might observe, it's something very close to it. In fact, the only possible way we can operate "within the Single European Market" and leave the EU is to remain in the EEA.

And that's where the muddled thinking comes. The legacy media Muppets have absolutely convinced themselves that the Single Market and the EU are indivisible. Thus, to leave the latter is to leave the former.

However, as we well know, the EEA Agreement is a device for separating the Single Market acquis from the more general EU acquis communautaire. The institutions of the EEA convert EU Single Market law into EEA law, which the Efta States then adopt. Thus, to be an Efta State within the EEA is to trade within the Single Market without being a member of the EU. This is something even the Independent recognises – although not, apparently, Michael Gove.

On the other hand, there is no way of separating the customs union acquis from the general body of EU law. It is an integral part of the EU treaties. Thus, to retain membership of the customs union (if it was actually possible) would entail holding on to "bits of membership".

What we are seeing, therefore, as respects the Single Market, is an almost exact re-statement of Mrs May's conference position. If we have achieved clarity in anything, she has effectively confirmed that we are not going to remain in the customs union.

Nevertheless, the hacks are also clutching at the linkage between freedom of movement (as in control of our borders) and the Single Market. Their narrative also has these indivisibly linked, so any re-affirmation of a commitment to control over immigration is taken as a "hint" – or more – that we are leaving the Single Market. The media simply don't do anything other than absolutes.

This is despite Mrs May saying that: "Anybody who looks at this question of free movement and trade as a sort of zero-sum game is approaching it in the wrong way".

This, though, is obviously far too "muddled" for the self-important Susana Mendonca, the BBC's "political correspondent", who takes it upon herself to provide us with analysis, purporting to tell us what to think. "While she [Mrs May] didn't go as far as to say she would ditch single market access in favour of being free to control EU immigration", warbles our Susana, "she certainly appeared to hint at it".

And now we see the media narrative to the fore, as we are told: "Mrs May said the UK would have control of its borders and the best possible trade deal with the EU. She didn't commit to maintaining 'single market access', and she suggested that people who thought the country could keep 'bits of EU membership' were missing the point that it 'would be leaving'".

But actually, Mendonca can't even get that right. Mrs May quite distinctly said that: she wanted "the best possible deal for trading with and operating within the Single European Market". As far as it can possibly go, that is a commitment to keeping us in the Single Market.

Yet, the BBC political correspondent concludes: "This failure to commit to the single market will be music to the ears of Brexiteers. To Remainers it will raise concerns that a 'hard Brexit' could be on the offing". Having thus resorted to inane generalities (thereby rendering us invisible), she then has the nerve to say: "But, as with so much in the Brexit debate, clarity over the UK's position in the negotiations, due to start very soon, remains lacking".

These people really are dross, right down to the BBC's idiot-in-residence, Nick Robinson, who gleefully tweeted: "Bye bye EU single market - 'We're leaving the EU not keeping bits of membership' says PM".

Nothing, however, compares with the intellectual destitution of the Express which proclaims: "Theresa May yesterday gave her clearest signal yet that she plans to pull Britain out of the European Union's Single Market in a decisive break with Brussels". You can't get much lower on the media food chain.

For all that, the crucial uncertainty remains. We got a taste of this in the Observer which was offering the front page story headed: "UK at risk of Brexit 'catastrophe' warns Canadian trade expert", telling us that Sir Ivan Rogers had been "absolutely right to say replacement deal may take a decade to sort out".

As the story runs, Britain risks this "catastrophic" because the government is so dismissive of the concerns of trade experts - according to Jason Langrish, one of the key figures behind the EU-Canada trade deal.

He argues that Rogers' analysis of the time-scale "seems realistic", but says his discussions with UK government officials suggest that there is little chance of minimising serious potential damage from Brexit. The impression he has been left with is that unless the British government shows more flexibility it will probably have to revert to WTO rules – hence the "catastrophe" warning.

This ties in with a Sunday Times story which has Ivan Rogers, before his resignation, secretly dining with David Cameron. Rogers, it appears, has told friends that he fears a "hard" Brexit will lead to "mutually assured destruction" between Britain and the rest of the EU, a view which is said to be shared with Cameron. When Rogers spoke to Cameron, his biggest fear was whether we have an orderly or a disorderly Brexit.

"He thinks we are heading for a car crash, where we don't get a deal and we crash out with nothing", said a friend. "Downing Street's view was that he should stop being such a pessimist. Yet Rogers thinks we need to plan for a disorderly Brexit on our terms rather than theirs, but that No 10 has not given that the priority it deserves".

Some further insight on this comes from Cameron's former aide Sir Craig Oliver, who says that some people thought that Rogers was being overly pessimistic.

That, he told Andrew Marr, "seems to be at the core of this dispute this week. If you read between the lines, Ivan Rogers seems to have been suggesting that he is worried about a disorderly Brexit, the idea that we crash out of the EU without having a proper deal. Others are saying 'you've just been way too pessimistic, you are not being as optimistic as you should be in these circumstances' and that's where the real tension seems to have been".

The thing is, though, if we are to stay within the Single Market – and that requires Efta membership – we should already be talking to the NILS (Norway, Iceland, Liechtenstein and Switzerland) countries. In fact, negotiations should be well advanced, as the fate of our application to rejoin will dictate the nature of our Article 50 submissions.

As Efta is based in Brussels, it can hardly be the case that Ivan Rogers can have been unaware of any approaches to this organisation. And perhaps it is that lack of contact, amongst other issues, that has Sir Ivan so worried.

Here, there is an interesting twist. Relations with Efta States are managed on behalf of the UK by the FCO, but separately from UKREP headed until recently by Sir Ivan. They are handled directly from Whitehall by the FCO's EU Directorate, specifically by the Deputy Director EU-External, known as EU-X. And a previous holder of that post was Tim Barrow KCMG LVO MBE, Sir Ivan's replacement.

Is this wheels within wheels, or just a coincidence? Probably, we will never know. But, at least, we can enjoy the National Review and its "take" on Mrs May's "cunning plan".



Richard North 09/01/2017 link

Brexit: our plague of experts

30/12/2016  


Change Britain
brings out a press release masquerading as a report, which is then followed by the IPPR bringing out a picture book also pretending to offer serious commentary on Brexit (among other things). The author tells us:
Given the likelihood of significant new barriers to trade, a managed depreciation of the currency is also likely. A more mercantilist, interventionist political economy will drive sectoral change, increase consumer costs, and hit living standards. Socially, migration is likely to decline and become more controlled. Politically, Brexit underscored the UK's economic, social and cultural divisions and is likely to be the trigger for a decade of constitutional and political upheaval.
So, that is what we're getting from the London-based think-tank cesspit. It is a long time since have we expected anything original or coherent, and certainly there is nothing that would indicate that there is an adult presence at the helm. The Brexit debate is degenerating before our very eyes.

Even the great dragon slayer, Jonathan Portes is part of the public-funded UK in a changing Europe setup, which seems capable only of lacklustre offerings. Latterly, he relies on plagiarist Sam Bowman to make the case against Gove.

Portes, with co-worker Anand Menon, had taken Gove to task before the referendum on the issue of trusting experts, the pair "categorically" stating that Gove was wrong in asserting that people in this country have had enough of experts.

For their evidence, the pair relied on an Ipsos Mori poll on trusted sources in the referendum campaign. This put "academics" only just behind "friends and family" and alongside "small business owners" when people were asked: "Who do you trust on issues relating to the referendum?"

However, Portes and Menon are making a basic mistake in eliding "academics" and "experts". While the former may on occasions be the latter, we know from our experiences with Michael Dougan that this is not necessarily the case. In fact, ignorance is a frequent visitor to the halls of academe.

On this issue, my view is that they've all got it wrong. There are very few of us who do not trust experts in their own fields. I was, quite literally, prepared to put my life in the hands of a heart surgeon (although we did check his credentials first). Likewise, one assumes that the teams up front in the passenger jets taking us places are experts. We certainly trust them.

As I wrote yesterday, though, our real aversion is to the ranks of all-purpose experts – people such as economists and lawyers who may or may not be expert in their own fields, but who then trade on this slender base to claim expertise in far wider areas than is warranted by their qualifications and experience.

Many of these are "media experts" – talking heads brought on to fill space with their opinions which most often have no basis in well-founded research – mostly used because they confer academic prestige to an otherwise unsupported argument.

The lack of expertise in academia is actually well-illustrated in the latest report from the UK in a Changing Europe, which hosts a galaxy of stars to inform us lesser mortals about Brexit, six months on, featuring once again Portes and Menon.

This, amongst other things, rehashes the same, trite, superficialities on the "Norway model", having Angus Armstrong, Director of Macroeconomics, National Institute of Economic and Social Research (NIESR), tell us that acceptance of EEA membership "implies acceptance of free movement". Dr Armstrong may be an expert macroeconomist, but he sure as hell knows very little about Efta/EEA membership.

On this, when I took my PhD, one of my supervisors was Jim Duguid. Author-editor of the seminal textbook on medical microbiology, he knew as much about microbiology as any man alive. 

Doing a favour for a journalist friend, I once asked him to contribute to a story about a viral disease which was hitting the headlines. In characteristic fashion, Professor Duguid refused. He might have been a microbiologist but his specialism was bacteriology. He was not, he said, an expert in virology and would not allow himself to be called one in that context.

A bit of the same humility would be welcome from the Changing Europe academics, including Jonathan Portes, who writes in that latest report on immigration and free movement. Portes also works for the NIESR as a principal research fellow but his expertise is in economic policy - and he fails to make any mention of Article 112.

Portes, Menon and the whole rag-bag of authors Changing Europe have collected together are perfectly entitled to write about the subjects they do – as am I. But they are not entitled to call themselves experts on Brexit, or imply that they are. They are not. As I have written before, there are no experts on Brexit. And on many issues in this area, their painful lack of knowledge is all too evident.

Now we hear that Portes and Gove are to debate Brexit issues. On current and past form, though, it will be the blind leading the blind. Portes may be able to tackle Gove on his Big Lie, but then a ten-year-old could do that. In other areas, Portes (and Gove) will quickly be out of his depth.

Currently, Portes is arguing in the Guardian that we need a mature Brexit debate – and we're not getting it from Michael Gove. On that, he's absolutely right. But we're not getting a mature (or even informed) debate from academia either.

Interestingly, Gove has been quick to complain that Portes lacks humility, but that clearly cuts both ways. Putting these two together is going to be a fight between chimney sweeps. Politicians and academics both need to up their games. Neither group have got anything to shout about.



Richard North 30/12/2016 link

Brexit: it isn't research, it's junk

28/12/2016  


Throughout my career I've done some serious, research-led journalism but, as an outsider, whenever I've submitted a story I've been put through the mill to prove every point – quite often being asked to provide corroborative evidence as well.

I have no problems with that approach - it's how it should be. So, when I see low-grade claims masquerading as "research" in the newspapers, I find it offensive.

And leaping into that category is a trivial piece of dross produced by Change Britain - work so dire that when the former chief economist at the Cabinet Office, Jonathan Portes, says, "it isn't research, it's junk", we have no hesitation agreeing with him.

Change Britain, chaired by Gisela Stuart MP, comprises the dregs of the Vote Leave conglomerate, left over after the referendum. Backed by the likes of Michael Gove, they are seeking to define the Brexit settlement, but largely campaigning for what has been termed a "hard Brexit", which will maximise the political and economic damage done by our withdrawal from the EU.

These are the people, we recall, who deliberately set their faces against a Brexit plan, arguing that this should be left to government. But, having done next to no work on the issue, they are now in the post-referendum period, planting stories with a willing and gullible media which should not, in the ordinary course of events, qualify even as toilet paper.

Predictably, this is the sort of dross which makes the front page of the Express, then to be tweeted gleefully by fellow travellers who believe anything they get from that source.

But what marks this out is the implied (or actual) rejection of massive and sustained criticism of the Vote Leave stratagem of highlighting supposed savings of £350 million a week from leaving the EU. Instead of stepping back from this figure, the same people are contemptuously upping the ante, claiming not £350 but £450 million a week "savings".

The figure, of course, is moonshine. Equivalent to £24 billion a year, we see allocated a saving of £10.4 billion from no longer having to contribute to the EU budget, £1.2 billion from "scrapping burdensome Single Market rules" and a gain of £12.3 billion from increased exports arising from our leaving the customs union.

In terms of savings, however, the three categories cannot be compared. The first is a potential saving to the exchequer, the second – if realised – accrues to business and the third isn't a saving at all but a measure of increased export sales.

As Jonathan Portes therefore says: "Adding increased exports and reduced government expenditure is literally meaningless. The results mean nothing". One of our commenters suggests it is a methodological error so crass that a ten-year-old could spot it.

There can be little dispute that no great expertise is needed to identify the flaws in this tawdry work. It should be well within the capability of a newspaper editor, and easily discernible by the supposed researchers for Change Britain. That they haven't even bothered to offer credible work to the media says much for the drop in standards in what was once Fleet Street.

There is something especially intriguing about the second category, though, offering £1.2 billion savings from "burdensome regulation". It is based on the list produced by Open Europe, from which this group thought that £33.3 billion a realistic figure that could be saved by leaving the EU.

The £1.2 billion has been whittled down from the larger figure because, Change Britain argue, may laws would be kept because they stem from international agreements, while others reflect the UK's political priorities. Yet that minimal sum still includes a figure for the Motor Vehicles (EC Type Approval) (Amendment) Regulations 2008, even though it is acknowledged that these stem from UNECE.

Discounting this figure, all we have on offer is less than £1 billion regulatory saving from leaving the Single Market – a trivial sum compared with the potential risks. Equally fragile is the £10.4 billion EU budget saving, with Change Britain obstinately refusing to concede that we may well be struggling to make any savings at all.

Yet, if any newspapers want research, they can have Monograph 3 which sets out the possibilities in some detail. Change Britain - and the newspapers which publish its work – are ignoring reality.

However, this is all part of a parcel of propaganda that had Change Britain claiming in late November that, over the course of three years from 2020, the UK stands to save £31.9 billion from not making EU transfers.

What they've effectively done now is fold in the pitiful sum from regulatory savings and their £12-plus billion supposedly accrued from increased exports, gained from leaving the customs union. In this, they've added their ignorance to the collective, falling for the false assumption that membership of the customs union necessarily stops the UK making independent trade deals.

However, for the Express - as is so often the case – the litany of error does not stop there. In a separate piece, it gives space to John Mills to argue against the "Norway option" as a transitional deal.

After Norwegian voters rejected membership in 1972 he says, "Norway finished up with transitional arrangements that in the end got turned into the EEA in 1994 - more than 20 years after their referendum. And they're still there". He adds: "The EEA was really a stepping-stone to full membership, which hasn’t happened between 1972 and 2016, over 40 years".

The point here is that Mills has fallen for the Lilley canard, asserting that the EEA was a halfway house to membership – something easily disproved by reference to the historical background. Furthermore, we know that Mills has been told his assertion is false - but he chooses to believe Lilley's falsehoods. 

I was thus intrigued to read yesterday a scientific paper courtesy of another of our commenters, which offered evidence from observation of brain activity that ".... when people are confronted with challenges to their deeply held [political] beliefs, they preferentially engage brain structures known to support stimulus-independent, internally directed cognition".

"Defending one's beliefs against challenging evidence is a form of internally directed cognition", these researchers found, "involving both disconnection from the externally presented evidence and a search through memory for relevant counterarguments".

In other words, once people have settled on their political beliefs, they shut off external stimuli and rely on an internal stock of arguments to validate them. This, effectively, is a description of the "bubble effect" which we encounter so often and explains the determination of so many people to shut out information that does not reinforce their beliefs.

Nothing we can do directly can alter this. Our own experience shows us that to attempt to change the minds of people such as John Mills was ultimately sterile, while the media is largely beyond salvation.

That apart, we can assume that the rational element of the "leaver" majority, which favours a measured Brexit, together with those "remainers" prepared to work towards the same end, actually comprise the majority of the electorate.

By contrast. the dinosaurs of Change Britain and their fellow travellers most likely comprise a minority and one which may well be shrinking as the realities of Brexit sink in. We can thus afford to ignore the noise makers and push our own positive agenda.

The media may ignore it, but then the public can ignore the media and its diet of junk - as it is increasingly doing. They - as do we - have better things to do with their time.



Richard North 28/12/2016 link

Brexit: none the wiser

21/12/2016  


Even after twice watching her in front of yesterday's Liaison Committee, I still don't know what quite to make of Theresa May's performance. I earlier remarked that her answers to the MPs' questions were a master class in studied ambiguity and the passage of time has done nothing to change my view.

My great worry is that the Prime Minister's responses may actually represent not ambiguity but a lack of clarity, reflecting her own confusion. Nothing she said in any way suggested that she was master (or mistress) of her Brexit brief and had decided on a clear direction for the forthcoming negotiations.

The one area where we did get clarity was in her determination to see the negotiations completed within two years. She fully expects to meet the negotiation timetable and seemed to allow for a "transition period" in respect of time to implement whatever settlement she had agreed.

One did not get the idea that she was looking at a two-stage (or more) agreement, where we settled for a short-term settlement and then immediately starting negotiations to work towards the end game. Instead, Mrs May was talking of a "new relationship" with the EU, and remained "ambitious" about what that relationship would be, without in any way clothing it with any detail.

Thus, the net result of a ninety-minute session on Brexit, in front of some of the most senior backbenchers in Parliament, left us not really any the wiser than we were before she started. The only vague element of entertainment was her refusal, unequivocally, to commit to giving Parliament a vote on the final settlement.

While David Davis, last week, told MPs that he couldn't imagine a situation where Parliament wouldn't get a vote, Mrs May would only commit to making sure that MPs "had ample opportunity to comment on and discuss the aspects of the arrangements that we are putting in place".

In the words of the Independent, this sets the Prime Minister on a collision course with Parliament. However, this may be the least of our worries. Mrs May says she's more concerned about "actually delivering on the vote of the British people, which is that we will be leaving the EU".

Before we get that far, though, we need to put together the separate pieces of what Mrs May is saying. And when one attempts to analyse them, we start to wonder whether she really understands what she is dealing with.

If, for instance, the Prime Minister is going for a transitional deal on the lines she is suggesting, then we are almost certainly going to be looking at a succession treaty. And in that case, Parliament will doubtless have the last word as any such treaty will require parliamentary ratification.

That apart, the bigger concern is her apparent confidence that the negotiations can be concluded within two years, without revealing the magic formula which is going to square the circle. With so many different people telling her that it is not possible to conclude a deal within two years, she must have something really special lined up. It would be helpful if we knew what it was.

Meanwhile, Nicola Sturgeon is coming up with her own ideas for Scotland, arguing that her region (as the EU insists on calling it) should remain in the EEA, and thereby the Single Market, even if the rest of the United Kingdom doesn't.

Yet, in a one-sentence put-down, Mrs May told the Liaison Committee that she is looking for a United Kingdom solution to Brexit, which precludes any specific settlement for Scotland. And nor, as The Scotsman observes, does she buy the idea of Scotland gaining independence if it doesn't get its way.

Despite this, one should perhaps be encouraged that Sturgeon sees the "Norway option" as her answer, except that she sees it as the end game, rather than an interim option. And Sturgeon's report also lays undue emphasis on continued membership of the customs union, also wanting the rest of the UK to remain inside.

As to what Mrs May has in mind, we are going to have to wait until the New Year, when she promises us a "major speech". Until then, and in any event, all of us could do without Sturgeon playing her games.

Much more of a focus is going to be required if we are to see off an emerging threat which the New Statesman sees as potentially scuppering our chances of a Brexit – much to its delight.

It sees a scenario where the EU 27 is unwilling to compromise the integrity of the four freedoms (free movement of goods, capital, services and people), and the authority of the ECJ is required to ensure that the rules of the Single Market are adhered to, while MPs demand unimpeded access to the Single Market, the re-establishment of border controls and freedom from the jurisdiction of the ECJ.

This story ends with the UK falling back on WTO rules, cross-Channel supply chains being disrupted, and non-tariff barriers crippling UK-based firms.

Against that, as the electoral calculus throughout Europe shifts in favour of greater controls on immigration, we hear the siren song of "reform" once again, offering an alternative to the precipice of a hard Brexit. When we reach the edge, this scenario has the UK pulling back its Article 50 notification, with the ultimate decision on this decided by the ECJ - assuming the European Council does not agree an interpretative guideline.

Thus, in two years, when the EU has started on a path to reform, the possibility of withdrawing an Article 50 notification has been confirmed and the exit terms look singularly unattractive, there are still those who believe that public opinion could change and we end up staying in the EU.

Yet, so often have we heard the mantra of reform that I cannot see the public being taken in by yet more promises. When it comes to trust in EU institutions, the well is dry. And then Mrs May would have to be certain that a retreat from Brexit would secure her more votes than it would lose her, and would not rip the Conservative Party apart.

On that basis, the greater threat is not that we step back from Brexit, but accept – and even insist upon – exit at any price. And here, it is not that any necessary price is unacceptable, but that we should be asked to pay a price that is unnecessarily severe.

There is no reason why we have to damage our economy, or create avoidable political stresses just to secure our withdrawal from the European Union. We should be able to engineer a successful Brexit without these traumas, and that should be our overall objective.

I'm thus minded of General Patton's advice to his troops that their duty was not to die for their country, but to make the enemies' soldiers die for theirs. We do not have to "die for our country" in order to leave the EU. But the idea of Mrs May slaughtering the opposition doesn't particularly appeal either. We need a workable settlement.

However, until Mrs May tells us what she has in mind, we are none the wiser as to what this will be.



Richard North 21/12/2016 link

Brexit: no one in control

07/12/2016  


The New Statesman has published an article with the headline: "Who is the EU's chief Brexit negotiator Michel Barnier?", offering a potted biography. 

It would have been better had it inserted a comma, making the header read: "Who is the EU's chief Brexit negotiator, Michel Barnier?" By that means, it would have been addressing Mr Barnier, posing a very relevant question. 

The answer, of course, is no-one. As we pointed out at the time of Barnier's supposed appointment, until Article 50 is invoked, the chief negotiator cannot be appointed. Then, rather than the Commission making the appointment, the post is entirely within the gift of the European Council - the leaders of the 27 Member States who will decide on the outcome of the negotiations.

More than a few people have seen in Juncker's action a pre-emptive move in what is the ongoing power struggle between Council and Commission, with the Commission getting in first to stake its claim.

But, leaving nothing to doubt in an extraordinary act of hubris, the Commission is now describing their man as "Chief Negotiator with the United Kingdom under Article 50 of the TEU", an arrogant presumption that deserves to be slapped down with little ceremony.

Perhaps though, Juncker thinks that by launching Barnier in a high profile role, with a gullible press rolling over and accepting his coup at face value, he will box Tusk into a corner, making it almost impossible for him to choose someone else without a very public and damaging row.

On the other hand, almost daily we are seeing changes to the composition of the European Council. Two of the three figures who so publicly gave homage to Spinelli, back in August,will no longer be around when the negotiations get under way.

There is also a possibility that the President of the European Council, Donald Tusk, will no longer be in charge past the first few months of the negotiations, His second term as president is by no means assured.

All we would need is for Chancellor Merkel to take a fall and we would be dealing with a very different – and more unpredictable – European Council. Junker could find himself with far stiffer opposition that he had anticipated, with the appointment of an entirely new face to manage the negotiations.

That said, yesterday, Barnier was cock of the walk, giving his first "press briefing" in Brussels as usurper-in-chief, setting out his  view of how he sees the negotiations developing.

Sadly, as it was a briefing rather than a formal speech, all we got on the publicly-available video was 13 minutes of introductory remarks, spoken in English and then repeated (more or less) in French, with no record of the press questions.

However, the "take home" point was Barnier stating that the settlement would require approval by the Council and the European Parliament, and then ratification by the UK Parliament. He is allowing six months for these processes which, he says, only gives 18 months for substantive negotiations. If Mrs May invokes Article 50 by the end of March, that means that talks must be wrapped up by October 2018.

This was much the point made by Guy Verhofstatd, when he recently warned that there would be an "intense" window of 14-15 months for negotiations which "need to be finished in any case before the next European elections (in May 2019)".

Verhofstadt, of course, is another pretender, posing as the European Parliament negotiator, for talks in which the Parliament has no formal status. At best, he can be an observer, taking part in discussions on the margins. He cannot demand a seat at the table, as of right.

Both Verhofstatd and Barnier warn against "cherry-picking", reiterating the now well-worn mantra that the four-freedoms are an integral part of the Single Market and, as such, are non-negotiable. This is something Angela Merkel has also been keen to repeat.

However, Barnier does not rule out a transitional settlement, although he declined to go into what kind of relationship would be possible. Nevertheless, he cites the example of EEA members, stating that Norway and Iceland indicated how a transitional arrangement could operate.

By coincidence - one assumes - Norwegian foreign minister Børge Brende was in London on Monday to meet Boris Johnson, David Davis and Liam Fox for talks over post-EU future. Predictably, for a Norwegian conservative with long-standing Europhile tendencies, he took a downbeat view of UK following his country's path.

Britain must understand that there is no "silver bullet", he said. "Being a part of the Single Market, as we are, also means to implement all directives, and we are not in the room when these directives are decided on", he added.

This is the usual misleading rhetoric, more so as we have never regarded the Efta/EEA route as anything other than the least-worst option, suitable only as an interim settlement. Here, there is some encouragement as Brende concedes that Norway's access to the Single Market "had served our country well". He confirmed that if Britain chose to "go through an EAA agreement", his country would assess its interest.

But what no one is putting together – at least publicly – is the degree to which continued EEA involvement changes the game. It cannot be repeated often enough that the EEA Agreement is a distinct treaty with its own rules, entirely separate from the EU treaties. The UK, following the Efta/EEA path, would be dealing with and entirely different set of actors, outside the Article 50 process. And in that environment, the "four freedoms" are not a fixed quantum, no matter what the Prominenten say.

To that extent, Barnier might have less control than he thinks, and be less capable of influencing events than he likes. With the internal power play between the Council and Commission, and the dynamics of new faces at the table, the outcome becomes a whole lot less predictable than he and the general run of pundits would have it.

That much also applies to the domestic front, where Theresa May, against her own inclinations, has been manoeuvred into promising to present her exit plan to MPs before she invokes Article 50 in March. This is being regarded in some quarters as "a major climb down" to avoid a humiliating Tory rebellion in the Commons today during an opposition day debate.

Yet, on a visit to Bahrain, Mrs May is talking of a "red, white and blue" Brexit, thereby scotching ideas of a so-called "grey Brexit". This was a half-baked idea which was being floated over the weekend, involving a CETA-like agreement with the EU. It has not even survived into mid-week.

Furthermore, those who understand that the EEA option is almost infinitely flexible will know that her rhetoric does not rule out going in this direction. But, as always, it does not rule it in either. And neither can anything be inferred from Liam Fox's announcement that he intends to shadow the EU's WTO schedules of commitments.

While Lib-Dem leader Tim Farron believes this is "a clear sign the Government is steering the country towards an economically disastrous hard Brexit", The Sun reports that Fox is launching a bid "to join [the] World Trade Organisation as independent member". Despite the rampant ignorance, though, this is a necessary administrative step towards independence, very much along the lines we envisaged.

What that says is that reality remains in the driving seat, while none of the players are totally in control – not even the Supreme Court, which seems to be so distant from real world issues that, by the time it delivers its judgement, we will probably have forgotten what it was ruling on.

There is still a very long way to go and about the only thing about which we can be sure is that the direction of travel is anyone's guess. As we have seen, and continue to see, the pundits have an unerring capacity for getting it wrong, while even the best are finding the way hard to divine.



Richard North 07/12/2016 link

Brexit: the wages of incompetence

04/12/2016  


The big mistake we have all been making has been to focus too much on the mechanisms for leaving the EU, with not enough given to what we want out of Brexit. Thus, it is perfectly fair to observe that, in the referendum, we voted for a departure, not a destination.

Even now, the public discourse is largely avoiding the question of where Brexit is taking us, with the end result more likely to be a consequence of our mode of leaving rather than the result a deliberative policy. Rather than defining a direction of travel, therefore, the Government seems to be devoting more effort to containing the effects of different leaving options.

Raising the issue from outside the bubble, though, is not going to be easy - although Pete has made a start. The bubble-dwellers are so behind the curve that they haven't even begun to think seriously about an end game. And neither are they temperamentally or intellectually equipped to do so.

In any event, for the next week we are going to be distracted by the Supreme Court hearing, which is going to trigger interminable comment on Article 50 and related matters, with no resolution in sight until mid-January. That will shunt discussion on an end game further down the line.

Despite most journalists having a basic education and at least average intelligence, they nevertheless seem to be making an incredible meal over the term "interim", or "transitional". We assume most of them know what these words mean, although they seem to have difficulty in translating them into practical effect.

Thus we have the likes of Simon Watkins in the Mail on Sunday whingeing about the aims of Brexit being "diluted". One by one, he writes, "the much-vaunted aims of Brexit are being diluted. The core objectives were surely leaving the single market, scrapping our payments to the EU and controlling immigration".

But those objectives were not part of the referendum which, as we all know, was confined to the question of whether we should leave the EU. There was no plebiscite on the Single Market, and many of us did not consider (and still do not consider) that EU payments were a core issue.

As to immigration, despite the recent surge on movement from EU Member States, it is still the case that more immigrants come from outside the EU – where we have the means of control but choose not to use them.

Where immigration from the EU is concerned, a post-Brexit UK that stays in the EEA (via Efta) would have the unilateral right to restrict movements, under Article 112 of the EEA Agreement. It is only the absolute determination of the politico-media nexus to remain ignorant on this issue which allows the likes of Watkins to make the point he does.

But what he and so many of the others ignore is that concessions which might be unacceptable if they were part of the final settlement may be tolerable – and even welcomed – if they were part of an interim settlement which paved the way to a stable long-term solution.

The degree to which we would be prepared to accept concessions would doubtless depend on the nature and attractiveness of the end game. But it is not unreasonable to posit that the more attractive it is, the more we are prepared to concede in order to attain it.

Ironically, within Flexcit we have long held that an option which keeps us in the EEA and thus the Single Market for the short-term is the best we can hope for. Our longer-term aim is the abolition of the EEA as we know it, with the reconstitution of the Single Market under different management, with the headquarters moved out of Brussels to Geneva.

Doubts about the practicality of this come mainly from people who have not read (or understood) Flexcit and, amongst that sub-group, there are many who dispute that the idea is at all practicable, couched in terms of the EU never permitting it.

Yet, entirely of its own volition, Brussels has ceded legislative authority over vehicle construction and safety, and on vegetable and fruit marketing standards, and is now a law-taker in these spheres. It has not made new laws here for many years.

Add to this the WTO TBT and SPS agreements, and the Vienna and Dresden agreements on standards, and we see that much more of the Single Market acquis has been ceded to regional and global organisations – to say nothing of the global nature of financial services legislation.

Totally under the horizon, we have also seen the emergence of a systematic process for standard-setting, via UNECE's WP.6, which has the support of the EU and the participation of all EU Member States. For a post-Brexit UK, this would be the obvious – and effective – forum for cooperation on standards setting, keeping the UK full in the loop on developing the Single Market.

Such matters, though, are totally above the "pay grade" of the average journalist, most of whom are still wittering about the "loss of influence" and "fax law" if we take the EEA option. The idea that Norway could actually have more influence, rather than less influence outside the EU, is totally beyond their grasp.

Eventually, we suppose, some of them will catch up – but the process is painfully slow. Issues we were writing about three years ago have still to be settled by the legacy media and many of the politicians, who seem stuck in their own laborious version of Groundhog day. At least, in the film, the loop came to an end. There is no certainty that it will do so in real life.

Perversely, we see in The Times Matthew Parris complaining that: "The British disease is now rank ineptitude", writing that, "whatever the trade or profession it seems to be considered bad form to root out the stupid and the incompetent". Significantly, though, he does not include journalism in his list of failing trades.

Then we get the likes of Nigel Jones in the Telegraph telling us that the Leave majority in the Conservative party should set aside their differences with Ukip, and working with Ukip's new leader Paul Nuttall to mount a grassroots campaign to press the Government in the direction of the EU's exit door, with a view to achieving a "clean break".

Clearly, Jones has not noticed that there is not a fag paper between the position of the Tory Right and Nuttall's Ukip, which now has Gerard Batten for its Brexit spokesman calling to ditch Article 50 and repeal the European Communities Act – exactly the stance taken by John Redwood.

As we begin to see in Nuttall another of those Walter-Mitty figures with extremely ambiguous CVs, one would have thought the best option for the Conservatives would be to put as much distance between them and Ukip as they possibly could.

Little did we think for all those many years when we have been dreaming of leaving the EU that, when the great event finally came, the driving force would be the incompetence of the major players – from ministers who don't know the basics, to MPs locked in their private miasmas of ignorance, and a legacy media which inhabits a different planet.

One can only hope that, deep within the bowels of government, there are people who do know what they are doing. But if there are such people, they are keeping themselves extremely well-hidden.



Richard North 04/12/2016 link

Brexit: reality takes a seat

02/12/2016  


Reuters have picked up and embellished the story that most of the media were running with all day yesterday, reporting that Chancellor Philip Hammond says that Britain needs to keep open the possibility of continuing to pay fees to the EU even after it leaves. 

This was after Brexit minister David Davis, in answer to an oral question in Parliament, had said that Britain would consider making payments to the EU after it leaves, if that was necessary to achieve the best possible access to the Single Market.

Hammond is cited as saying: "We have to look at any deal in the round ... and I think David Davis is absolutely right not to rule out the possibility that we might want to contribute in some way to some form of mechanism".

Despite a sharp reaction from the likes of Peter Bone and the squealing of anguish from the Brexit morons, this was always going to be a possibility – verging on certainty.

Needless to say, the loudest squeals have come from Ukip, with their new Brexit spokesman, Gerald Batten, saying: "David is already going weak at the knees. It is ridiculous to offer to pay to trade with the EU. Every country in the world has access to the single market".

But there is a lot more to this than Batten's simplistic nostrums – the man who wants to ignore Article 50 and go straight to the repeal of the European Communities Act.

As it stands, none of the Efta/EEA countries pay for market access. They pay grants in aid to help the emerging economies of Eastern and Central Europe and they pay for participation in decentralised agencies and programmes.

But there is also the question of what might be termed "legacy payments". These we deal with in Monograph 3, pointing out that, at the very least, we will have to honour the MFF commitments, which means that we will be paying a sum equivalent to our net annual payments until the end of 2020.

For that, we can barter participation in the decentralised agencies and programmes, so the net effect on expenditure will probably be neutral.

It is the next MFF programme that is going to be really interesting, when the RAL kick in and the "colleagues" demand the UK "share" of repayments, on top of agency and programme contributions. As Booker observed, with our own payments to farmers and others we could end up paying more overall than we are now.

The media far and wide, however, are casting this as a "concession", as if there was any choice in the matter. Short of a cold, hard Brexit, though, we are going to have to pay something to the EU. The only question will be how much we will have to pay.

What we are seeing in the responses is the media and politicians playing catch-up, as they are right across the board.

Only now are pundits getting to grips with the idea of a transitional deal, and the need for an end game, while many remainers, having rejected the idea of the "Norway option" before the referendum are now embracing it with zeal.

The payments issue, though, is likely to be particularly sensitive, given the rash claims made by Vote Leave and their fellow travellers. Arron Banks has called Davis's words "incredibly foolish".

Yet, the foolishness comes in failing to recognise and acknowledge that the UK cannot expect a cost free exit from the EU, and walk away from long-standing treaty commitments without offering something in the way of compensation. To refuse to accept this simply isn't practical politics.

Over the next few months, even running to years, we are going to see a lot of this – silly, shallow people like Banks, who have no grasp of the realities of international relations, making their facile statements. Meanwhile, the business of grown-up politics will have to continue, simply because it must.

That, in the end, is going to drive the outcome of the Brexit talks. The government is going to have to "concede" certain issues because, unless it does, there simply won't be a workable settlement. The pundits will just have to catch up as best they can.

But the same reality will have to drive the "colleagues". With the latest immigration figures just in, they will have to recognise that the UK government will not be able to agree a settlement that does not involve some real concessions on freedom of movement.

But then, there are no constants in this ever-changing political kaleidoscope. We heard yesterday, for instance, that Hollande was not going to stand for a second term as French president. This comes as no particular surprise but it confirms that there will be at least one new face at the table when the negotiations start.

When those talks do finally start, there will be something else at the table – something which is currently missing – a sense of reality. The parties will agree because they must agree. Meanwhile, the noisemakers will do what they do best – make noise.



Richard North 02/12/2016 link

Brexit: a crisis of competence

01/12/2016  



Recently, and many times on his blog, Pete has been writing of what amounts to a crisis of competence amongst MPs.

Although there has to have been a time when they weren't wall-to-wall drooling imbeciles, in his latest piece, Pete surmises that – possibly as a consequence of having handed over so many functions of government to the EU – our representatives no longer have the mental capacity to perform their functions.

One MP (or many) determined to demonstrate that this is the case is Peter Lilley who, last Sunday had published in The Sunday Times a piece on how we should leave the EU. 

His conclusion was that "our main objective should be a speedy conclusion", to which effect his idea for Brexit was straight out of the Redwood school. Aiming to bring the issue to a head before the French, German and Dutch elections, we should, Lilley wrote:
… simply announce that we will continue to give EU imports tariff-free access - unless it chooses to impose WTO tariffs on us, in which case we will reciprocate. The onus would then be on the EU 27 to continue free trade or take the blame for triggering tariffs on their exports to their biggest market. Continental governments threatening this would face the wrath of German car makers and unions, French wine growers, Dutch horticulturalists and so on for initiating an unnecessary tariff battle in which they lose more than we do.
The stupidity of this – for a man who is reckoned to be one of our brighter MPs – is beyond measure. If we leave the EU without a trade settlement, we will afford ourselves the status of a "third country" in relation to the EU.

This means that we place ourselves outside the tariff wall, whence goods exported to the EU Member States will automatically attract the prevailing duties. This is not something the EU does. It is something we will do by virtue of turning ourselves into a third country.

Furthermore, under WTO rules, the EU must levy MFN rates on all third countries without discrimination. If it gave preferential access to the UK outside the framework of a formal trade agreement, it would have to concede the same to all other third countries. This, it would be unlikely to do, as it would damage its trade policy.

On the other hand, if the UK opens up its markets, tariff-free, to the EU – outside the framework of a trade deal – under WTO rules, it must remove tariffs completely for all other countries – thereby removing any incentive any country might have to sign a free trade deal with us.

The point about all these matters, though is that we've explained them many times – not least in our Monograph series, which Mr Lilley claims to have read. It is not something special or made up. This is basic WTO law. But Mr Lilley thinks he knows better. And he has no need of evidence. As one of the chosen ones, he evidently feels he has a right to make wild assertions and be believed.

What is particularly tiresome about such people is that they all tend to adopt the same polemical strategy. For instance, when John Mills was confronted with the prospect of negotiations taking a long time, he argued that, after Norway rejected EU membership in 1972, the Norwegians negotiated a trade deal with the EU in just under eight months.

Never mind that this agreement was 113 pages long, including schedules. The substantive treaty was six pages. It was a very basic treaty, dealing with a very limited range of products, concerning tariff reductions. And never mind that the treaty was replaced in 1994 by the EEA Agreement – which took from 1984 to 1992 to agree.

Thus we have Lilley argue that the government's claim that the process would take 10 years should be consigned to history. The two years laid down in article 50 is a maximum. It need not take that long, he writes.

He goes on to tell us that negotiating to join the European Economic Community took barely two years. That was far more complex than leaving: we had to introduce VAT, implement existing European law, replace Commonwealth preference and much else. Furthermore, he adds, the North American Free Trade Agreement (NAFTA) took only 14 months to negotiate.

The thing is, it doesn't actually take very much to show how dishonest this strain of argument is. For instance, the UK accession negotiations were carried out in two tranches, 1961-63 and then 1970-72. Much of the ground-breaking work was completed in the 1961-63 period, dusted off and carried over.

In between, as we now know, President Pompidou had decided as early as the Hague Summit in 1969, long before the second phase of the negotiations had begun, that Britain's accession could no longer be resisted by France. Thus, when the second phase began, it was already pre-ordained that they would succeed.

Not only is this hardly the case with the Brexit negotiations, we also know of the '70-72 period that our chief negotiator Con O'Neil famously took the line "swallow the lot, swallow it now", as the approach to the negotiations, in order to expedite proceedings.

As for VAT, this was introduced in the 1971 Budget by Anthony Barber. It did not impinge upon the negotiations. We were then negotiating a treaty which, with all the protocols and additions eventually came to 200 pages. By contrast, the current consolidated treaty runs to 410 pages – more then twice the length.

As to NAFTA taking "only 14 months to negotiate", this is misleading. Such agreements do not come out of the blue – there is always a lead-up to them, which is an essential part of the process.

In this case the impetus for NAFTA actually began with President Ronald Reagan who in 1984 gained Congress approval for the Trade and Tariff Act. That gave the President "fast-track" authority to negotiate free trade agreements more freely.

The Act led directly to negotiations with Canadian Prime Minister Mulroney, culminating in the Canada-US Free Trade Agreement, signed in 1988. Meanwhile, Mexican President Salinas and President Bush began negotiations for a trade agreement between the two countries. Into this, the Canadian agreement was folded, making it a trilateral agreement which then became NAFTA.

NAFTA was finally signed into law by President Bill Clinton on 8 December 1993, effectively taking nine years for the entire process to come to fruition.

Part of the game-playing by people such as Lilley, though, is to make the Article 50 negotiations appear much less problematic than they actually are, and this is one of the techniques.

Another technique is the "straw man", misrepresenting the nature of the options available. Thus, according to Lilley, "three options" have already been ruled out by government: remaining in the single market; remaining in the EEA like Norway or staying in the customs union. Never mind that the EEA option is an EU-free Single Market option. He doesn't want you to know that. 

In his assessment that leaves "only two realistic outcomes for Britain's future trading relationship with the EU". Either, he writes, the UK and EU 27 continue trading freely with each other without tariffs. Or we both apply to imports from each other the same World Trade Organisation (WTO) tariffs that we currently apply to the EU's biggest trading partners. Both options, he asserts, "are pretty simple and better than our present situation".

And there speaks a man only of tariffs. Like so many of his ilk, non-tariff barriers simply do not exist. They are not mentioned at all in Lilley's dissertation.

It is here that Pete's crisis of competence kicks in. Lilley spends a goodly proportion of his piece writing about financial services passporting, and a little about services, but nothing about non-tariff barriers.

Yet it is not possible to talk sensibly about Brexit options without discussing how this issue is going to be addressed. Trying to do so is like acting as if the Single European Act, the "completion of the single market" by 1992 didn't exist.

That, albeit unspoken in Lilley's current piece, is actually part of his scenario. He would have it that other countries can trade with the EU without being members of the Single Market, so there is no reason for us to remain in it.

The point he evades is that most other countries have some form of trade agreement with the EU, agreements that suit their own trading situations. The UK is in the Single Market – that is our "trade agreement" with the EU. If we leave it, we need to negotiate an alternative, and one that gives us access to Member State markets on much the same terms.

But that is not in the Lilley scenario. He would have us, in his own words, bring the issue to a head before the French, German and Dutch elections. That means concluding our exit settlement by April next year – one month after Mrs May plans to invoke Article 50.

His whole scenario isn't just unrealistic. It's plain stupid. And this is from an MP who sits on the Brexit Select Committee, supposedly scrutinising the Government's plans. On this form, he isn't even qualified to scrub the floors in the committee room. For that, you need an NVQ – more of a qualification than is necessary to become an MP.



Richard North 01/12/2016 link

Brexit: a Damascene conversion

29/11/2016  



So opposed to the "Norway option" was Peter Wilding, director of British Influence, that in February of this year – well before the referendum - he invited the Norwegian Europe minister, Vidar Helgesen, over to the UK to tell us how awful it was.

We got the usual low-grade BS from Helgesen, with him telling us that British Eurosceptics often say the Norwegian experience is evidence of how a country outside the EU, but enjoying the benefits of the single market through membership of the EEA, can prosper without having to commit itself to full membership.

Helgesen, on the other hand, said that this arrangement often created frustrations and difficulties, which meant Norwegian ministers and officials spent a lot of time – sometimes without success – trying to find out what was going on in EU meetings that would affect their country directly.

"We [Norway] are fully integrated into the EU single market as members of the EEA, but what we don't have is the right to vote on those regulations that are incorporated into our law when they are made by the council of ministers", he added.

On occasion, Brussels has sprung surprises that the Norwegians could not predict. The same kind of frustrations could well face the UK. "You would not have all those Brits staffing the commission where the decisions are made", said Helgesen. "Britain being on the outside would obviously not have that amount of people on the inside. You would find it more difficult, as a result, to affect the regulations".

On the back of this, Wilding roundly declared: "Eurosceptics who peddle the myth that Norway is the best [model] for a non-EU Britain are deceiving the British public. They say leaving leads to more democracy and security. This is nonsense".

In full spate, Wilding then said: "We now have the Norwegian Europe minister himself telling us to get a grip, get real and get involved in shaping Europe. Little England cannot be an option".

But now, a mere eight months later, this same Mr Wilding is so convinced of the merits of belonging to the EEA that he is preparing a legal challenge to the government to decide whether it can withdraw from it.

Wilding's rabidly "remainer" campaigning platform has now morphed into a "pro-single market think-tank" and has hired lawyers to argue that leaving the EU does not automatically take Britain out of the European Economic Area (EAA), in which the single market operates.

They will claim that the decision to take the additional step must be decided by parliament separately from any vote to trigger Article 50, the mechanism for exiting the EU.

British Influence has written to David Davis informing him it is seeking a judicial review of that position. It warns that the government may be in breach of the law if it seeks to take Britain out of the EEA along with the EU without clear legal justification.

"We believe the government has not understood how we leave the EEA, and has not understood that we do not need to leave the EEA in order to respect the red lines the 23 June referendum established", Wilding says. "This is not about stopping, thwarting or delaying Brexit, but getting a smarter Brexit that delivers for the UK and doesn’t destabilise the continent of Europe".

Interestingly, British Influence invokes Liechtenstein, saying that it has used some provisions of its EEA membership to limit free movement of people. Its lawyers will argue that Britain could also use these provisions to satisfy the demands of those who voted for Brexit to limit immigration.

The argument hinges on whether Britain joined the EEA as a member of the EU or in its own right. Lawyers are focusing on the case of Croatia, which acceded to the EEA nine months after joining the EU, to prove that the two entities are separate.

They will argue that to leave the EEA, Britain must separately trigger Article 127 of the EEA agreement, in addition to Article 50. Article 127, which Wilding calls "a game changer", requires members to give 12 months' notification to leave without reference to Article 50, while Article 128 says that countries acceding to the EU "may" apply to join the EEA but are not compelled to.

Actually, this argument is very thin indeed, making this a false move by Wilding. We dealt with it at length in October, arguing that the EEA Agreement was quite evidently a treaty between EU Member States and Efta States. To be a party to the Agreement, the UK must either be a member of the EU or Efta.

Failing this, the other members can invoke Article 60 of the Vienna Convention on the Law of Treaties, and eject the UK. Article 60(2) entitles, in the event of a material breach of a multilateral treaty by one of the parties, entitles the other parties by unanimous agreement to terminate the treaty in the relations between themselves and the defaulting State.

In practice, it would be very hard for any state to participate in the EEA unless it was either a member of the EU or Efta, as the management of the Agreement is conducted via the institutional frameworks of both organisations. That would allow the parties to terminate the Agreement on the grounds of "the impossibility of performing a treaty" (Article 61), or the parties may prefer Article 62, citing "a fundamental change of circumstances".

For once, though, we're not on our own on this. The media's all-purpose "leading authority on European law has also poured cold water on Wilding's thesis. This is Jean-Claude Piris, a former head of the European council's legal service.

"The UK's withdrawal from EU will mean an automatic cessation of its membership of EEA as an EEA-EU member", he says. "In order to become an EEA member you have either to be an EU member or an Efta member". Thus, the UK would not be able to remain in the EEA unless, on withdrawal from the EU, it rejoined Efta.

The crucial point then, which would be much more interesting for Wilding to explore, is whether the UK participation in the EEA Agreement would then automatically lapse, requiring the government to re-apply, or whether we could claim continuity.

In the latter event, this could be very helpful as the UK could then unilaterally invoke Article 112 (safeguard measures) to impose restrictions on the free movement of persons – without requiring the assent of any other party.

Needless to say, a Government spokesman dismissed the challenge, saying: "As the UK is party to the EEA Agreement only in its capacity as an EU Member State, once we leave the European Union we will automatically cease to be a member of the EEA".

Nevertheless, continued EEA participation is possibly the best option for a trouble-free extraction from the EU, which makes it all the more perverse that the lunatic fringe is objecting to it, and absolutely bizarre that those who most strenuously opposed it are now supporting the idea.

Welcome to the topsy-turvy world of Brexit were, as Booker ventured over the weekend, the most serious barriers to a smooth exit from the EU comes from the Tory eurosceptics – as well as their fellow travellers in Ukip.



Richard North 29/11/2016 link

Brexit: Labour to save a Tory Prime Minister?

27/11/2016  


How ironic, Booker writes, that possibly the greatest obstacle to Britain achieving a sensible exit from the EU is that group of 60 Tory MPs who last week ganged up to oppose Theresa May's repeated insistence that we must remain "within" the EU Single Market.

According to a report on Channel 4 News, they believe that to stay in the single market would be "virtually the same as remaining in the EU", still subject to "virtually all its laws".

So blind are these hardline Brexiteers to the practical realities of what we are up against that they seem not to realise that, by leaving the EU but remaining free to trade in the Single Market as members of the wider European Economic Area (EEA), we would in fact be subject to only 5,288 of the 19,868 EU laws in force.

Far from having to obey "virtually all" the EU's laws, we would escape almost three quarters of them, leaving only those that would give us the right to continue trading within the Single Market much as we do now.

In this short piece – subject to the Sunday Telegraph's space limits Booker can't take this to the next level, point out that many of those laws – and increasingly so – originate at regional or global level and are simply handed down to the EU. In or out of the EU, we would be adopting them any way.

And yet, this is no secret. In his 2014 speech, Owen Paterson discusses these influences. He said:
As DEFRA Secretary, I was only too well aware of how these changes affect us. Many of the Single Market food standards my former department has to implement are no longer made in Brussels.

They have gone up a level and are now made by Codex Alimentarius, which reports to the UN's Food and Agriculture Organisation (FAO), in Rome. Yet we would often learn of them only after they had been handed down to Brussels and when it was too late to change anything.

This is no small matter. As well as Codex, the FAO hosts two other standard-making organisations, the Office International des Epizooties (OIE), which deals with animal health, and the International Plant Protection Convention (IPPC).

Both fix standards which are adopted by the EU as Single Market legislation, only then for it to be passed back down to us. Once they are set at international level, Brussels does not have the power to change them.

I was particularly struck on a visit to New Zealand 18 months ago how my counterparts saw how vital it was to build alliances and work with like-minded nations to promote legislation or amend other countries' proposals.

At that time they were particularly exercised about a specific proposal on the OIE affecting the sheep industry crucial to NZ farmers. They were particularly pleased to have got the Australians on side and believed that gaining the support of Canada and the US would see a key amendment through.

When I asked why they had not asked for the UK's influence on this matter, they said that the UK's position was entirely represented by the EU: even though we have one of the largest sheep flocks in the world.

I left feeling stung by these comments and totally disheartened by our lack of influence but also galvanised by the belief that we could serve our own industries so much better if we, as a sovereign nation, retook our rightful place on these various global regulatory bodies.

Similarly, Norway's position is abusively dismissed as simply submitting to EU law by fax machine. Norway is a member of the EEA, the area of the 28 EU member states and the three EFTA states. Norway has a huge fishing industry and plays an enormously important role in promoting regulations concerning fish in Codex.

The fact that when a regulation is finally agreed, it is formally disseminated to all members of the EEA including Norway, is wholly irrelevant to their key role in negotiating the detail alongside the EU.

Once the regulation is agreed at international level by Norway and the EU it cannot be changed by the EU. Norway makes representation to Codex by itself, and the UK could do the same. These are regulations we will need to submit to either way, so why not submit to them having had a decent chance to influence them as Norway does?

The range of international standards shaping the Single Market acquis is staggering. In the all-important car industry, for instance, the regulatory focus has moved from Brussels to Geneva. There, the EU's Single Market standards start as "UN Regulations" produced by the World Forum for the Harmonisation of Vehicle Regulations. Known as WP.29, it is hosted by the United Nations Economic Commission for Europe (UNECE).

European vehicle production is extraordinarily integrated; the UK produces 1.6 million cars but produces 2.6 million engines. Most of these engines are exported to Europe. As we move to world standards of vehicle production we would be at a massive advantage if we were directly represented, on the body influencing standards, in our industry's interest.

Then there is the regulation affecting the financial services industry - which is of such great importance to the City of London. In the past, much of this was made in Brussels. Now, most of the important rules come from the Basel Committee on Banking Supervision.

As important is the Paris-based Financial Stability Board (FSB), chaired by Mark Carney. Founded in April 2009 by the G20 and working with the OECD, it has a mandate to coordinate national financial authorities and international standard-setting bodies. It is also tasked with developing and promoting the implementation of effective regulatory, supervisory and other financial sector policies.

In the past, Ministers had to travel to Brussels to make their case, and to keep an eye on new laws, but with the advance of globalisation we now need to be represented in Geneva, Paris, Berne, Rome and elsewhere.

Outside the EU, we would be working directly with these organisations, building alliances with likeminded nations, deciding the rules the EU is obliged to adopt – as do Norway, New Zealand and the United States.
This is an optimistic and realistic view, but it says much of the "Tory 60" that they wilfully ignore what comes from their own kind.

Yet, as Booker writes, any of their suggested alternatives would in one way or another be an economic disaster. Furthermore, we could hope to gain other advantages, including the right to exercise some control over immigration and no longer being subject to the European Court of Justice.

A further irony is that, if Parliament is given a vote and those 60 Tory MPs choose to oppose Mrs May's wish to remain in the single market, she might be saved by all those Labour MPs, led by Jeremy Corbyn, who want us to stay in it.

On October 28 1972, also faced with a backbench rebellion by Eurosceptic Tories, Edward Heath only won his crucial vote to take us into Europe with the aid of 69 Labour MPs, led by Roy Jenkins, who rebelled against their own party to support him.

After Labour MPs helped overcome a rebellion to take us into Europe, it could be Labour MPs enabling Mrs May to survive a Tory rebellion over the best way to take us out.



Richard North 27/11/2016 link

Brexit: confusion upon confusion

23/11/2016  


One accepts that Brexit negotiations present special problems for the Government, so no-one is arguing that the refusal to give a running commentary is unreasonable.

On the other hand we are, in theory at least, a democracy. That requires Government to seek a broad mandate for any action it proposes to take, to which effect it needs to hosting what amount to a national conversation.

Over the past five months, however, the Government has been noticeably absent from that process, opening the way for a torrent of (largely ill-informed) medial commentary, bolstered by politicians and pundits who have been doing little more than parading their ignorance sowing the seeds of confusion.

Now, and not for the first time, we have the Brexit minister himself, David Davis who, according to the Financial Times (and many other media sources), is piling confusion on confusion over whether or not the Government intends to keep us in the Single Market.

In Strasbourg, briefing MEPs, Davis is claimed by Manfred Weber, chairman of the centre-right European People's party, to have said that Britain wanted to stay in the Single Market. Yet Downing Street is still insisting that the Government has not changed its "opaque" position.

Thus, we have a key minister apparently being quite specific about Government intentions, while all we are getting from the centre is the anodyne "trading relationship that allows UK companies to trade both with and within the single market".

The one possible mitigating factor is that Mr Weber may have been confused by Mr Davis's "circumlocution", brought about by an intention to keep Britain's EU negotiating partners guessing on exactly what line the UK will take.

However, Mr Weber has confirmed that he has been told that the British government, as far as the economy is concerned, wants to stay in the Single Market, but he did add: "What we expect are clear proposals. Today in my talk with David Davis, unfortunately I have not heard anything new. I have not received any new information: quite the opposite is true".

To my mind, this "dance of the seven veils" – redolent of David Cameron's game-playing over the date of the referendum – is now going too far. There is a world of difference between a "running commentary" and outlining the general direction of travel. That, we are entitled to know.

The absurdity of the Government's current stance is that, once Article 50 is invoked, Mrs May is going to have to present the European Council with its broad proposals for an exit settlement, so that it can respond with its "common position". If the Government keeps this up, therefore, the European Council will be told of the UK intentions before we the people know what is intended for us.

There is, of course, the added complication of the Supreme Court appeal, which must constrain the Government – until the verdict is published. But, again, this should not stop the government setting out les grandes lignes, allowing us some insight into official thinking.

What is behind this, at the moment, is a lack of confidence that the Government has got a grip of the issues, and is capable of stitching together a coherent exit plan. MPs and other politicians in public have shown little understanding of what is involved, so we have good reason to be concerned that the official position may also be lacking.

The trouble is that, if the Government really doesn't know what it's doing, it will be too late to find out when the formal talks get under way. There is little enough time as it is, and little chance of recovering from a false start.

Nor really is there any sense in the Government being too close-mouthed about its negotiating position. In truth, the options are very limited and, if the "crazies" are kept out of the loop, they boil down to variations on theme of a "transitional deal".

Here, the possibilities get interesting. The Government can either go for the full Efta/EEA option or seek continued participation in the Single Market outside that framework.

If we take Mrs May at face value, though, she is not going for the "Norway option" which leaves the UK looking for a deal which, most probably, will require treaty change – the "secession treaty" to which we have referred previously.

Short of a clean break – with all the devastating consequences that that would imply – it is in fact hard to imagine a situation where such a treaty will not be needed, this requiring agreement from all 28 Member States involved, and then ratification by all of them – including the UK.

That this possibility has scarcely been part of the public debate makes one wonder whether Mrs May's advisers have fully taken on board what is needed – specifically the ratification process which may take some time and involve the risk of one or more countries refusing to ratify.

Should this option be on the table, then the public needs to be prepared for the possibility that an exit agreement with the EU Member States will not necessarily lead to our immediate departure from the EU. We might find that the UK is still a member in 2020 when Mrs May seeks re-election in the expectation of a second and full term as Prime Minister.

Of course, failure (as it may be seen) to extract us from the EU by then might have a considerable impact on the Conservative's electoral prospects, with completely unpredictable consequences. One cannot see Mrs May being happy about this.

And, perhaps, this is the real reason why we are not being told anything about Mrs May's plans. Faced with the task of making Brexit mean Brexit, it could just be that she simply hasn't yet worked out how to break it to the British public that she might not deliver this side of an election.

Putting this together, it would also tend to explain the near-suicidal determination of the "Tory 60" to engineer a clean break. Doubtless, they know too well the potential risks in not delivering on time, and perhaps have judged that a rapid exit is worth the cost, especially if they judge that the adverse effects will not be felt until after the election.

Buying time, therefore, might seem the least-worst option for Mrs May, keeping us in the dark until she has been able to work out a narrative that will not risk costing her the election. But the longer she delays in revealing her hand, the more likely it is that she will see an erosion of confidence, and the loss of trust that goes with it.

Mrs May's best bet, therefore, might be to commit to the Efta/EEA option and get negotiations with Efta under way as soon as practicable. And if that puts her at war with elements in her own party, she can probably rely on the Labour vote to carry the day.

In this, she might recall Ted Heath, in the all-important vote in the House of Commons on 28 October 1972, to join the EEC, relied on the votes of 69 Labour pro-marketeers to get his majority. Without their support, entry would have been rejected by 36 votes.

How fitting it will be if the votes of pro-EU Labour MPs are instrumental in getting us out.



Richard North 23/11/2016 link

Brexit: CBI noise

22/11/2016  


CBI president Paul Drechsler kicked off proceedings yesterday, addressing "one thousand business leaders at the Grosvenor House Hotel".

On the need to mitigate economic uncertainty on Brexit, he said: "When it comes to negotiations, no-one understands the need for discretion better than business. We're not asking for a running commentary - but we are looking for clarity and – above all – a plan.

Drechsler conceded that there had been "encouraging signs". The Government, he said, "has set a deadline for triggering Article 50. It's given guarantees on EU funding programmes that have already been allocated. And it's offset uncertainty around Brexit with greater certainty on Heathrow and Hinkley Point".

"But in other areas", he complained, "uncertainty remains. Business needs to know we won't close our borders to Europe's talent, or lose our privileged access to Europe's markets". Then came the billion-dollar question: "what happens on the day after Brexit?"

"When the clock strikes midnight, and our two years' negotiating time is up? Today, businesses are inevitably considering the cliff edge scenario – a sudden and overnight transformation in trading conditions. If this happens, firms could find themselves stranded in a regulatory no man's land".

This is exactly the scenario we've been positing, and it is all very well for critics to say that we can adjust, and that there are work-arounds.

But the issue Drechsler raises is "a sudden and overnight transformation in trading conditions". That is the cliff-edge scenario which, even if unlikely, could happen and is quite evidently giving industry nightmares.

"And even if our legal obligations are clear and in place there would also be real, practical implications", says Drechsler. "Our ports, airports and logistics firms, if faced with new trading rules, could suddenly need new and potentially complex paperwork, which would take more time and money to process".

"As a result", he says, "they'd need more warehouses to store more goods on-site, and more supply roads for the vehicles waiting to deliver them. At short notice – this would be impossible. So – for many firms it's not about a 'hard' or 'soft' Brexit, but a 'smooth' Brexit, which avoids these cliff edge problems".

Some actually welcome the idea of a "hard Brexit", and regard the prospect of massive disruption as an exaggeration – an extension of "project fear". But the reality of a "hard Brexit", as we understand it, is the Article 50 talks yielding no agreement – for whatever reasons – precipitating the UK into a "WTO option" scenario.

Those who then talk about the EU "not daring" to raise barriers to trade simply do not know what they are talking about. Those barriers already exist. We are inside the fortress, trading freely with our EEA partners. By adopting the WTO option, we would voluntarily place ourselves outside the fortress. As a unilateral move, it is something we would do to ourselves.

But, the 1000-strong gathering was expecting clarity they didn't get it. All they got from the Prime Minister was: "Obviously, as we look at the negotiation we want to get the arrangement that is going to work best for the UK and the arrangement that is going to work best for business in the UK".

She then went on: "And I’m conscious that there will be issues that will need to be looked at", adding: "I understand the point that Paul [Drechsler] has made. Others have made this point, that people don't want a cliff edge, they want to know with some certainty how things are going to go forward". But, to conclude, all she could offer was: "That will be part of the work that we do in terms of the negotiation that we are undertaking with the European Union".

Starved of anything more substantive, however, the media have gone into overdrive with the idea that Mrs May was hinting at a "transitional deal".

The demand for a transitional deal has arisen, says the Guardian "because there is a severe mismatch between the two timetables that will apply when the government negotiates Brexit". Triggering article 50, it adds, "will lead to the UK leaving the EU after two years. But if the UK wants a free trade deal with the EU, as seems likely, negotiating that within two years is almost certain to prove impossible. Most experts believe this would easily take five years, or more".

To lend credence to the supposition, though, we had Mrs May's spokeswoman telling us yesterday that there is no question of the government seeking to extend the withdrawal negotiations beyond the two-year limit set out in article 50. "We will not be seeking to extend the article 50 process", she said.

It is that, more than Mrs May's comments, that effectively confirm that we are going for a transitional settlement.

As to the shape of that deal, the Guardian rightly suggests that this would be a matter for negotiation, "but the assumption in the business community is that it would be an arrangement that preserved single market membership, akin to Britain remaining in the European Economic Area. Or the Norway option, as it was called during the EU referendum campaign".

This, says the newspaper, would allow businesses to carry on trading with the EU much as they do now, "but it would also require the UK to pay into the EU budget and British firms to comply with EU regulations" – thus demonstrating that, in five months, it has learned nothing.

It then guesses at a possible duration of such a deal, suggesting that: "it is quite possible that this could last for five years, meaning that the UK would not achieve full Brexit until perhaps 2024". For businesses, it concludes, that would be a relief. "But for hardline Brexiters who want to leave the EU quickly, this would look like a betrayal".

Even as they bleat, though, potentially dangerous moves are afoot to destablise Brexit. According the Independent, Richard Branson's Virgin is to help bankroll a secret Blairite campaign to stop Brexit.

An email seen by the newspaper, we are told, highlights the scale of backing the group has already secured. It shows the campaign has been months in the planning and claims "substantial progress" has already been made, including the identification of "an excellent potential CEO".

The memo was written by Alan Milburn, who was one of Tony Blair’s closest Cabinet allies and reveals the group has heavy financial, political and corporate backing and is receiving advice and support from a host of high-level business and communications organisations.

High-profile MPs including former Deputy Prime Minister Nick Clegg and Labour MP Chuka Umunna are believed to have had contact with the group, as have celebrities such as Bob Geldof.

Freuds, a leading public relations agency that was founded by Matthew Freud, a close friend of both Mr Blair and David Cameron, is understood to have been commissioned to manage the strategy and marketing of the campaign.

To counter this new assault, the "hardline Brexiteers" need to up their game. Rather than bleating about "betrayal", they need to be pre-empting any of Mrs May's moves, and demanding to see he proposals for an end game.

It is all very well her talking (or just thinking) about a transitional deal, but someone has to ask why the CBI, having secured continued participation in the Single Market, will be keen to drop this in favour of a "free trade agreement" which will offer less access to European markets than we have now.

Longer term, what we are looking at is the possibility of each step away from the EU resulting in a deteriorating trade position. To regain the high ground, we need something inspiring, something better than we have now, otherwise the work of Branson and his pals might gain some traction.

And in this, one can be fairly certain that pushing for an economic catastrophe isn't the best option on the table.



Richard North 22/11/2016 link

Brexit: time is running out

20/11/2016  


There has been no neater comment on where we have got to on Brexit, writes Christopher Booker, than the two pictures on the cover of the current issue of Private Eye

The first, labelled "Then", showed that grandiose bus hired by Vote Leave, carrying the claim that, by pulling out of the EU, we could give an extra £350 million a week to the NHS. The second, captioned "Now", showed a clapped-out, windowless bus stuck in a field, going nowhere.

In Booker's view, our progress towards invoking Article 50 does indeed look ever more of a shambles. The real problem, as it has always been, he says, "is that so few people really understand the incredible complexity of what a successfully negotiated Brexit would involve".

That is certainly evident if we turn elsewhere to the Sunday Telegraph where we see an "exclusive account" of how: "Heavyweight Brexiteers among 60 Tory MPs to demand clean break from the EU".

These MPs, including seven ex-Cabinet ministers, are concerned that pro-EU figures in the Cabinet are fighting to soften the Government's Brexit position and are demanding that the Prime Minister pulls Britain out of the single market and customs union.

They say that only the "cleanest Brexit" can fulfil the country's referendum call to "untie ourselves from EU shackles and freely embrace the rest of the world".

This initiative coincides with the relaunch of the European Research Group (ERG), a pro-Brexit Tory body that claims it will produce "new thinking and policy ideas" for Britain's future after Brexit, as well as being "a constant reminder to ministers of the strength of Euroscepticism on the Tory backbenches".

As for these "new ideas", we are going to be waiting a long time, if a parallel piece in the ST is any guide. This is from Suella Fernandes, one of the 60 Tory MPs and vice chair of the ERG.

For her, we get the usual collection of issue-illiterate mantras, starting with the red herring of the customs union which was not even an issue until a few weeks ago, and was hardly – if at all – discussed during the referendum campaign.

The substantive issue is, of course, continued participation in the Single Market and here Fernandes claims that she and most of her Parliamentary colleagues took the referendum as an instruction to untie ourselves from EU shackles and freely embrace the rest of the world.

Fernandes also claims that it was "made clear in the referendum campaign" that remaining in the EU’s internal market, like Norway, or in a customs union like Turkey, "is not compatible with either of these commitments and doing so would frustrate the will of the electorate".

This is simply not true and these 60 have no more right than the lacklustre Vote Leave, Leave EU or Ukip to dictate the shape of the Brexit settlement. All of them consciously refused to adopt an exit plan prior to the referendum and, since that time, none of them have come up with any coherent ideas of how we manage the exit negotiations.

And that is the point that Booker makes in his column. None of the major "leaver" groups nor indeed the "remainers" were remotely prepared for the outcome.

The Remainers simply relied on their absurd Project Fear to ensure that the problem would never arise, but the Leavers were just as bad by deliberately refusing to work out any practical exit plan. Rather than come up with anything sensible, the "official" campaign believed they could wing it on vapid little make believe slogans such as the one blazoned on the side of their silly bus.

Five months later, with only four months to go before Mrs May invokes Article 50 and formally tells the European Council that we intend to leave, and here we are with the general debate no further forward or better informed.

All we can see is a dawning realisation by ministers that it really is turning out to be far more complicated than any of them ever realised, and that we have nothing like enough civil servants to cope with it all.

Booker reminds us that the Prime Minister, Theresa May, continues to keep her cards almost invisibly close to her chest, except for insisting that we must continue trading fully "within" the single market (because anything else would be a disaster), while staying hung up on how this could be made compatible with her wish to "control immigration".

This tension is why she added last week that we cannot be hoping for an "off-the-shelf" solution. Whatever she intended that to mean, there is only one way we can hope to achieve a deal that meets her primary requirement.

Only if, on leaving the EU, we nevertheless remain within the wider European Economic Area (EEA) can we hope to continue trading "within" the single market much as we do now.

But this would also allow us, outside the EU, to escape from the three quarters of its 20,000 laws that cover issues other than trade. It would even, under the "safeguarding" clauses of the EEA Agreement, give us limited control over internal EU immigration.

Whether or not Mrs May would regard this as the kind of "off-the-shelf" solution she now seems to be rejecting, its other immense advantage is that it would enable us, in the short time available for these negotiations, to focus on all those countless other issues that will need to be settled as part of our disentanglement from the rest of the EU system of government.

Look at the 35 different policy areas set out in the template for a treaty of accession to the EU and we can see just what will have to be unravelled in reverse, in the "Secession Treaty" that will be needed at the end of our negotiations. Only six of these 35 categories cover trade.

But our talks will also have to resolve the 29 other areas, such as what is to be done about our involvements in the EU’s common foreign and defence policies, its policies on justice and home affairs, our relations with the EU's 27 different agencies, and a whole host more – including, heaven help us, the unbelievably tricky questions of how we manage to extricate ourselves from the common agricultural and fisheries policies.

All this has so far been scarcely mentioned in the public debate, although it does help to explain why some are now suggesting that we may need to recruit 30,000 more civil servants just to cope with the myriad further issues needing to be resolved, including those ongoing financial commitments to the EU which, over a decade or more ahead, could amount to a staggering £60 billion.

The truth, Booker concludes, is that, in all directions, we are still hopelessly unprepared for what we let ourselves in for on 23 June. And the time left to get our act together is now fast running out.

And with that, the nonsense offered by the "Tory 60" is something we can certainly do without. As Pete observes, these people are dishonestly risking our global standing and flirting with recession on the basis of a delusion – a delusion that there is any credible alternative to continued participation in the Single Market, for the short- to medium-term.

Interestingly one person who in November 2014 saw this very clearly was Owen Paterson. "It is critical to remember, he said, that the economic Single Market and the political EU are not one and the same thing. We are perfectly at liberty to pursue participation in the Single Market without being saddled with the EU as a political project".

"Membership of the EEA", Paterson averred, "allows full participation in the Single Market without being in the EU, as enjoyed by Norway, Iceland and Lichtenstein. Those such as the CBI, who confuse the memberships of the Single Market and the EU are making a basic error and misleading the British people".

"We can leave the political project and enter into a truly economic project with Europe via the European Free Trade Association (EFTA) and the EEA", Paterson said. "We would still enjoy the trading benefits of the EU, without the huge cost of the political baggage".

And what was true then is true now. We cannot afford to be messing in the way we are doing. We need to move on. Most of all, if an "interim solution" is to be at all credible, we must define the end game. And that is something most people have scarcely considered.



Richard North 20/11/2016 link

Brexit: complications multiply as time runs out

17/11/2016  


In general, I tend to assume that European politicians are more knowledgeable about EU issues than our home-grown breed. And to watch two of the domestic species under the Andrew Neil microscope yesterday, my faith in this simplistic nostrum wasn't challenged.

The pair was housing minister Gavin Barwell and shadow minister without portfolio Andrew Gwynne. Both were questioned about the UK remaining in the EU's customs union and both managed to parade their ignorance in a fashion to which we have long become accustomed.

Gwynne, in particular, made a special fool of himself, asserting that Switzerland was in the customs union. This is a man clearly at sea, unable to tell the difference between a free trade agreement and a customs union, telling us that the customs union was "an important part of the operation of the single market".

Once upon a time, I suppose, we elected politicians to Westminster, but now we get political oxygen thieves, people who don't even know the basics – yet these are the people who would claim to have a better standing when it comes to judging the Government's Brexit plans, when Mrs May finally deigns to let us know what they are.

Nevertheless, despite my low opinion of British politicians being amply confirmed, my long-term views about the intellectual supremacy of continental politicians is also under challenge (not that I was terribly wedded to the idea).

The proximate cause is a similar confusion over the customs union idea, this displayed by Dutch Labour politician Jeroen Dijsselbloem, currently holding down the posts of finance minister for his country and Eurogroup president.

He was reacting to Foreign Secretary Johnson who has been in the Czech Republic where he revealed to a Czech newspaper that the UK would "probably" leave the customs union.

As usual, the media steps in with its own brand of ignorance – in this case the Guardian - confusing a customs union with customs cooperation and telling us that this move "is likely to alarm businesses that move goods to and from the EU as it would mean extra checks at the border".

Disinformation sprayed out by the media, though, is an occupational hazard and we have to get past that in order to confront Mr Dijsselbloem who argues that Johnson is promising the British people a Brexit deal that is "intellectually impossible" and "politically unavailable".

According to Dijsselbloem, it is "impossible" to be inside the internal market but be outside the customs union. That option, he says, just doesn't exist. On the other hand, he says, the opposite does exist. We have a customs union with Turkey but Turkey is not part of the internal market.

These gems were delivered to James O'Brien from BBC Newsnight who, showing typical form for the programme, was unable to recognise that he was being fed a diet of tosh. It was left to Andrew Neil the next day to point out that Norway is in the Single Market but not in the customs union.

Partially rehabilitating himself, though, Dijsselbloem moved on to speak at an event in London which was reported by Reuters. There, he told his audience that negotiations over Britain's departure from the EU are "very complex and are going to take longer than the scheduled two years".

In Mr Dijsselbloem's playbook, we have the British government's stance toward Brexit starting to show signs of splintering and "Europe" eager to pull together and prevent a populist backlash that could fracture the EU further. And in this scenario, he says, talks are likely to be strained and drawn out.

This, of course, is nothing new to the readers of EUReferendum.com but, when a politician gets something right, I suppose they should be applauded, even if he trails in our wake by more than two years.

Nevertheless, it was worth noting Dijsselbloem's observation that many in Europe were also unprepared for Britain's vote in June. "People make jokes about the UK not having a Brexit plan", he said, "but many Europeans didn't have a plan either".

And there lies a further hurdle to plans for a speedy exit. It is not only UK politicians who have to come up to speed, but their continental counterparts. Even if our Government gets its act together, it may well have to wait for others to catch up.

That said, it looks as if there is a suggestion of compromise from Angela Merkel on freedom of movement, once again confirming our assertion that the issue always was (and is) negotiable.

However, Die Welt is taking a less optimistic view than some British newspapers. If the British are exempted from the principle of freedom of movement and therefore the right of EU citizens to work in all Member States, "other countries within the EU will try to follow", the paper has Merkel say. "This would weaken a pillar of the EU".

From this, we are being schooled to expect that the British cannot hope for a "special position", although the German Chancellor does say that the EU should be talking about how this freedom of movement should be modified in the future.

It is not only the British who are criticizing the short period before immigrants from other EU countries are able to claim benefits, so Merkel is saying that we need to discuss the qualifying periods for rights resulting from freedom of movement.

Despite this, it is early days yet, and the parties have still to focus on the safeguard measures built into the EEA Agreement. But given the general lack of knowledge we are finding amongst politicians (and, of course, the media), it is going to take some time before we see any sense talked about this.

What is emerging, though, is a wider recognition that we are not going to be able to walk away from the EU without paying a hefty bill.

The Times is running a story headed: "£60bn divorce demand could wreck May's hopes of a deal", conveying the not altogether surprising news that Theresa May will be unable to enter Brexit talks because the EU "will set impossible demands, including the condition that Britain agrees to pay £60 billion to Brussels".

According to several officials and diplomats, the European Commission is drawing up a schedule of Britain's financial liabilities until 2020 and beyond, suggesting that the UK will have to pay between £50-£60 billion over three years from the end of next year until Britain's exit.

This, apparently, includes a UK contribution to the RAL commitment, which almost certainly means that the time period is incorrect. RAL does not become payable until the next MFF period, starting in 2021, and becomes due over the seven year period, so the phasing of payments will probably be extended through until 2027.

But news this isn't, having been dealt with in detail in Monograph 3. The conditions are hardly "draconian", as The Times suggests, and a commitment of about £60 billion over the next ten years or so is about right. Despite Vote Leave's stupidity, there never was a case where we were going to leave the EU without the Government putting its hands in our pockets.

With the well poisoned by Vote Leave's inept propaganda, though, the payments issue is undoubtedly going to be a difficult one for Mrs May to present. But sooner or later, she is going to have to break it to the electorate that there are going to be precious few savings from leaving the EU, for at least a decade, if not longer.

Given the sensitivity of the issue, one can surmise that haggling over the precise sums to be paid will absorb a significant proportion of the time available to us under Article 50, especially as The Times is indicating that Mrs May will be asked to meet all of Britain's financial commitments and liabilities as a precondition for Brexit negotiations even taking place.

How this will work out, we have no means of telling. But the EU is expecting will be aiming to have a Brexit package on the table by autumn 2018 and we are hearing from Brussels that the deal is expected to take the form of several agreements: a divorce agreement, including liabilities and issues such as policing and defence, accompanied by transitional agreements providing a bridge, lasting a maximum of three years, to a future framework.

If exit talks are completed in two years, Britain's future trading relationship must then be settled in the transitional period, during which time – one assumes – the status quo will prevail.

Yet there can be little dispute that, as the complexities involved in Brexit multiply, the idea of completing talks within two years is looking more and more uncertain. Even a transitional agreement does not solve the problem as this, in the form of a secession treaty, will require approval and ratification by all current 28 Member States.

Small wonder, PMQs yesterday got a little heated, with Corbyn challenging the Prime Minister over her lack of a published plan. Mrs May's tribal response was not encouraging, giving the impression that she is living off borrowed time.

If ever there was a political "honeymoon", that is rapidly coming to an end. Mrs May says she can deliver. Very soon, she will need to give some substance to her claim.



Richard North 17/11/2016 link

Brexit: playing catch-up

08/11/2016  


Even though it's the Guardian, it is helpful to see it reported that Ministers are pressing Downing Street to make an interim deal with the EU.

This, it appears, they want included when Government sends its formal letter to Brussels to trigger article 50 as the only way to prevent a "cliff edge" in the negotiations "that would plunge the UK into legal, trading and financial uncertainty".

As we know, external support for a transitional deal is also coming from the financial services industry, former UK diplomats and prominent Labour MPs including Hilary Benn, the chairman of the Brexit select committee.

It is, says the Guardian, argued that the "fiendishly complex issues" of financial passporting for the banking and insurance industries, the terms for access to the single market, including as many as 50 sectoral deals, the issue of continued UK payments to the EU, membership of the EU Customs Union and the possibility of negotiating a new schedule with the WTO mean a deal could not be negotiated in two years.

This, however, really does not make the case as the Customs Union is not an issue and dealing with the WTO schedules is not a problem. On the other hand, cooperation on justice and home affairs, foreign policy and defence, and issues outwith the single market – specifically the agriculture and fisheries policies – will all need intensive discussion.

Whatever the detail, though, the message is increasingly getting through. European diplomats are adding to those saying it will be impossible to reach a full deal by spring 2019 on both the terms of exit and a future relationship due to the complexity of the issues.

At least, the issue is getting an airing but, as one would expect, "hard Brexiteers" fear an interim deal is a Trojan horse that will leave the UK too closely bound with the EU.

This is the Farage madness, aligning himself with the Tory Right in insisting that the WTO option is a realistic proposition. Fortunately, the political consensus in the UK economic departments – business and Treasury – is that this would be too risky. It could mean tariffs on UK goods exports as well as of a loss of access to the EU services markets.

One minister has told the Guardian: "This may take 20 years to disentangle. Brexit is like the creation of the universe. We have had the first half hour of all the chaos and explosions. It is only beginning to come together, beginning to coalesce, but it is going to take a long time".

This is precisely what we've being saying for years but some believe that an interim deal is a way of minimising the disruption and keeping open the possibility that the UK "will never move to a further stage of complete divorce".

As such, the most likely interim deal is seen as a version of Norway's European Economic Area (EEA) agreement, but allied to changes to freedom of movement agreed across the EU. Senior figures in the EEA, we are told, are lobbying the UK to look again at this option.

Once again, though, there is confusion on the part of the newspaper. The EEA option may be useful as an interim option, but it is fully out of the EU. There are no special privileges afforded to non-EU states wishing to join the EU. They must go through the full candidature process.

As to freedom of movement, it is being suggested by EU diplomats that there is still scope to revive or develop aspects of David Cameron's EU deal on migration, negotiated in February. They highlight the right of all EU governments under existing directives to remove any EU citizen who has failed to find a job within three months.

Ministers in their public remarks are also increasingly emphasising the need for continuity and order in the exit. Simon Kirby, the Treasury economic secretary, told MPs last week: "Given the strong level of interconnection between our economies, continuity of service and an orderly withdrawal from the EU are also very much in the interests of both sides".

Sir Simon Fraser, permanent secretary at the Foreign Office until 2015, has argued that the complexity "will inevitably mean some sort of interim relationship between leaving and establishing the long-term, permanent relationship.

William Hague is yet another, according to the Guardian, who is saying it would be a "miracle" if a full deal could be wrapped up in two years.

Then we have Sir Robert Cooper, a former UK diplomat and special adviser to the European Commission. He says: "The negotiation the UK needs to have with the EU is not one that can take place over two years. It is too complex, no matter how hard you try. The number of issues that need to be negotiated are too big. The risk of a disorderly exit is very real. If I was Theresa May I would be extremely worried".

Another voice is Douglas Alexander, the former shadow foreign secretary. He is saying: "A more likely scenario as realism impinges on UK negotiation will be the urgent requirement for transitional arrangements – what in insurance parlance might be called bridging temporary cover".

Alexander believes that, "once the clock starts ticking a lot of thinking will turn to what are the terms of a temporary arrangement that would in reality last several years, and define the future relationship between the EU and the UK".

He adds: "It is incredibly difficult to envisage that even a comprehensive free trade agreement signed by Canada after seven years can be secured in two years, and even if we replicated it, the deal would exclude services making up 79 percent of the British economy".

Yet all of this is simply people coming to the obvious conclusion. There never has been the slightest chance that negotiations could be concluded within two years. The only thing left is a decision as to what interim option to go for.

Then, of course, there is that small matter of the end game – but it is probably too much to expect that all these important people start focusing on such an important issue.

Such brains can only deal with one thing at a time, and it's taken them long enough to think about interim options. Give it a couple of years and they might just get to the next stage. The question we have to ask is whether we can wait for these people to catch up.



Richard North 08/11/2016 link

Brexit: cutting through the media-think

31/10/2016  


While the media has been blathering about a "hard Brexit", all the while absolutely convinced that Mrs May was taking that path, we have maintained consistently that it was never going to happen.

This much was evident from Mrs May's first conference speech, and we said so at the time. But despite repeating it, confidently asserting that it ain't gonna to happen, the boys and girls in the media all knew better – and different. To them a "hard Brexit" was a done deal and nothing else was going to get a look in.

Now, following the Nissan announcement, they are having to eat their words, along with the Tory Boy think tanks that have been stuffing themselves with Bamford gold in exchange for telling us what a bad deal the Single Market is.

And yesterday it got even worse for them, with business minister Greg Clark telling the idiot Andrew Marr (transcript here) that the Government's negotiating objective would be "to ensure that we have continued access to the markets in Europe and vice versa without tariffs and without bureaucratic impediments".

The "demeanour of the UK Government" he added, "will be to reach a deal on access to the EU market, due to the extent to which UK industry supply chains are integrated with Europe". The aim, he said, "will be to avoid a breakdown in these talks, or a hard Brexit", then telling Marr: "We haven't made decisions yet … in terms of what we want to achieve".

Helpfully, Clark has confirmed that Nissan cannot be directly compensated if the UK fails to meet its negotiating objectives of no tariff barriers, as this would breach WTO rules. Thus, if it wasn't already clear to those with brains enough to read the runes correctly, Greg has made it abundantly clear that the EEA represents the direction of travel.

This is now so obvious that even the Guardian understands that a "hard Brexit" is a non-starter. Moreover, the egregious Wolfgang Münchau has acknowledged that "the EEA is the best of the remaining options".

This, however, is way beyond Andrew Marr who, during his interview with Greg Clark decided that, because Clark was "talking about a customs-free deal", this ruled out a "Norway-style economic deal" as conflicting with the commitment to take back control over migration.

There we have the received wisdom of the media, which has convinced itself that there can be no concessions on freedom of movement if we go for the EEA option. That's as far as it goes. The media machine has made its decision, indulging in its "media-think", its very own form of group think.

Imbued with this enhanced form of self-delusion, Marr thinks we do have another option. "We'd have to have what is called a customs union as Turkey and other countries have", he tells Clark, suggesting that this was "where we're heading".

Interestingly, Clark didn't bite, leading Marr to speculate that, if we get some deal, "something like a customs union", there would still be a gap in the service sector, "which is still the majority of our economy". Unable to reconcile this with the kind of deal that he thinks has been offered to Nissan, he ventures that: "alongside any customs union deal you would need some kind of deal to help the financial services industry".

What Marr has missed, of course, it Clark's reference to "bureaucratic impediments". It wasn't just – or even – tariffs that Nissan was worried about, but the non-tariff barriers that could interfere with their integrated supply chain.

But, like so many of his breed, Marr is completely deaf to this. Obsessed with tariffs and unable to see beyond them, his slender grasp of the issues simply does not allow him to reach the same conclusion that is now so obvious to Münchau and has been to us for three years.

That leaves the media to do what it does best: spreading confusion and misinformation. Having fixed in its collective brain that the "Norway option" is off limits, it is struggling to make the "Customs union" fit into the narrative.

Yet, if one was to ask any one of these hapless beings precisely what they understood by this term, they would most likely have trouble defining it. Even Lord Mandelson's henchman seems confused on the issue. 

But at least his master has got the story straight, emphasising that we "must keep the single market". "We are leaving the European Union because there is a mandate to do so", says Mandelson. "The terms on which we leave, however, have no clear mandate. For the sake of our economy and future growth, we should stick to the Prime Minister's original prescription and do everything we can in the first instance to find the best terms on which to continue being in the single market".

Nevertheless, the Muppets are completely unrepentant. They are so busy telling us how terrible the Single Market is that they haven't yet grasped the point that, good or bad, withdrawal has to be carefully managed. We are not arguing about whether we should leave, but how and when, and what should replace it.

It is ironic, therefore, that William Keegan in the Guardian is articulating a sentiment that would not be out of place on this blog, declaring that "people in high places have been shocked by the ignorance of the leading Brexiters".

Fortunately, those "leading Brexiteers" are not in the driving seat, any more than is the media. It was not, after all, David Davis with but Greg Clark, the business secretary, who has cut through the media-think and fried Andrew Marr's brain. There is no hope for Marr, but at least the Government seems to be taking us in the right direction.



Richard North 31/10/2016 link

Brexit: EU support on immigration?

27/10/2016  


In her report to the Commons on the European Council last Monday, Prime Minister Theresa May found herself complaining about the tendency of MPs to reduce Brexit to "binary decisions between either being able to control immigration or having some sort of decent trade arrangements".

"That is not the case", she said: "We are going to be ambitious for what we obtain for the United Kingdom. That means a good trade deal as well as control of immigration".

And now, it would seem, there are stirrings in the brush which may indicate that Mrs May has a far stronger hand on controlling immigration than has been imagined, with allies who may be willing to support her when the chips are down.

The clue lies in a recent report in Hungary Today of a multi-national manpower survey, which had 57 percent of Hungarian employers having trouble filling positions.

Of this, 32 percent were struggling with a lack of applicants for the vacant positions while 31 percent complained of a shortage of skilled labour. Overall, the shortage of skilled labour in Hungary exceeded the global average by 17 percentage points.

Furthermore, there is no doubt as to the reason for this shortage. Hungarian employers are finding that they not only have to compete for skilled employees with domestic competitors but with employers from western Europe and other surrounding countries.

The most significant disadvantage in this competition is the low payment Hungarian companies offer, but there has been a reluctance to increase rates for fear of risk competitiveness. But now the shortage of skilled labour has increased so significantly that it, too, endangers competitiveness.

Thus, while Hungary may toe the line in public, when it comes to supporting the "colleagues" on concessions over freedom of movement, behind the scenes there may well be some support for restraints imposed by the UK after it leaves the EU.

Nor is Hungary alone. Only last year, we were being told that desperate Polish authorities were trying to encourage the hundreds of thousands of workers who moved to the UK to return home amid fears a brain drain is leaving the country short of talent.

With the UK having become the top destination for Polish emigrants, the Warsaw government had set up a Powroty (Returns) programme, and in 2015 launched an internet portal aimed at persuading back the army of well educated and skilled workers who had flocked to the UK. Officials feared they were losing much needed talent and are now trying to provide new opportunities for their expats if they return.

The same year, the Guardian was telling a joke about Bulgarians: three Bulgarian men, dressed in traditional Japanese costume and armed with swords, were walking down a street in Sofia. A passer-by asked them what they were doing. "We are the seven samurai and we want to make this country a better place", the men said. "Why are there only three of you then?", the passer-by asked, "The other four are all working abroad", they replied.

Written by Bulgarian Ivan Krastev, he went on two write that mass emigration of people, mostly aged between 25 and 50, had dramatically hurt the Bulgarian economy and its political system. Businesses were complaining about a shortage of qualified labour. Bulgaria's health system had been deprived of well-trained nurses who could earn several times more by taking care of a family in London than working at a low-paid local hospital.

More recently, we have seen an obscure protest party in Lithuania with just one MP in parliament storming to power in a shock general election victory after pledging to tackle the country's emigration crisis.

Hundreds of thousands of Lithuanians had been lured abroad by higher wages in an alarming "brain drain" that has seen the population plummet to less than 2.6 million It has lost more than 370,000 people - of which roughly half had gone to Britain - since the eastern European country joined the bloc in 2004.

But concern has been evident for more than five years with President Dalia Grybauskaite in 2011 telling the Irish Times: "We are a small nation, and we are losing the most active people between 25 and 40 years old after we have trained them and invested in their education. It is a huge loss".

With a declining population, emigration is now considered to be the most urgent national problem and it is thus unsurprising that the issue has gained so much political traction.

It is not only politics that might work in our favour, though. A crucial driver of migration has been the ability of workers here to send remittances home – worth €13.2 billion in intra-EU flows in 2014. But with the current weakness of the pound, this is becoming less attractive for migrants to Britain.

There is also some sense that economically, after years of recession, the EU-27 are turning the corner, with optimistic forecasts projected for the Autumn Economic Forecast, due in November.

Part of the reason for the rush of migrants to the UK is its relatively buoyant economy, with workers coming to this country instead of Germany and other traditionally high-employment areas. But if the relative balance between the UK and mainland economies changes, there could be commensurate changes to migrant flows.

This relationship is well-proven, with Norway reporting that foreign workers are leaving the country at record levels as the economy dips into recession. Some 3,500 Poles have left Norway, with net losses also experienced amongst migrant workers from Sweden, Lithuania and Germany.

All of this points to the distinct possibility that, when it comes to the Brexit settlement, the "colleagues" may be prepared to tone down their rhetoric and start talking sensibly about immigration quotas. Already, there might have been behind-the-scenes talks, which could explain Mrs May's optimism.

But then, as we have already indicated, freedom of movement always has been negotiable. And just now, the odds of a favourable outcome are looking better by the day.



Richard North 27/10/2016 link
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