EU Referendum: handing victory to Project Fear

29/05/2016  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 29/05/2016 link

EU Referendum: making the difference

26/05/2016  


Allister Heath has been writing in the Telgraph of the difficulty the "leave" campaign is having in articulating a strong macroeconomic case for Brexit. This, he says, is becoming a major issue, especially for more prosperous, middle-class, centrist and Tory-leaning voters in London and across the country who are craving reassurance that it's safe to vote for Brexit. 

Many Telegraph readers fall into this camp; and we all have friends, relatives and neighbours who are vacillating, wondering whether maybe – just maybe – there may be some truth to the endless supply of screaming, hysterical anti-Brexit reports.

The core assumption of the anti-Brexit economists, Heath tells us, is that leaving would erect damaging barriers to trade; the pro-Brexit side must take on and demolish these arguments.

The good news, he says, is that it’s quite easy to do so. The Leave campaign's long-term aim is to break away completely from the EU. But there is no doubt that, were we to vote Leave on June 23, the UK would seek to adopt, as an interim solution, a Norwegian-style relationship with the EU which ensures that we remain in the single market, giving us plenty of time to work out new arrangements with the rest of the world.

Welcome to Phase One of Flexcit, one might say, and doubly welcome to a journalist who is prepared to write that this "is both the only realistic way we would quit the EU – the only model, that, plausibly, MPs would support as a cross-party compromise deal – and the best possible way for us to do it".

Says Heath, the Norwegians would welcome us with open arms, as their own influence would be enhanced, and other EU nations would seek to join us. Such a deal would eliminate most of the costs of leaving, while delivering a hefty dose of benefits as a down payment.

As part of the EEA, via the European Free Trade Association, we would remain in the Single Market, complete with its Four Freedoms, while withdrawing from agricultural and fisheries policies, justice and home affairs and the customs union.

The City wouldn't lose access and virtually all of the anti-Brexit scare stories would be neutralised, which is presumably why that option was mysteriously absent from the Treasury's ludicrous analysis of the short-term impact of Brexit.

Furthermore, this option would make us more, rather than less, influential. We have only a small share of the votes in Brussels and can thus easily be outvoted. But Norway, which has technically no votes, has regularly moulded key rules, including the Consumer Rights Directive.

The real reason why we – as a large and powerful economy – would have greater influence is that Brussels is increasingly not the place where big decisions take place. Rules are increasingly negotiated under the auspices of global bodies: automotive norms are determined by the World Forum for the Harmonisation of Vehicle Regulations; food standards are determined by Codex Alimentarius; shipping rules are under the aegis of the International Maritime Organisation; and the crucial new banking regulations are being determined by the Financial Stability Board.

These regulations are then passed down, with the odd gold-plating, by the EU. These global bodies proceed by consensus, not qualified majority; we are currently represented by the EU at these meetings. A Brexit would allow us to have a seat at these top tables, and thus to disintermediate Brussels.

Thus, concludes Heath, the economic case for Brexit is remarkably strong. If Brexiteers want to reassure floating middle class voters, it will need to be made again and again, loudly and clearly, over the next four weeks.

That is the bad news. The bones of this scenario have been around since April 2014 – a full two years – with 70,000 people having downloaded the full version. Now, with four weeks to go, we are getting an outline of the first of the six phases in a national newspaper – without the plan being named, of course.

We already know that this is "the only realistic way we would quit the EU" and "the best possible way for us to do it", but it is good to have that confirmation from Mr Heath.

But we knew that a year ago when we sent a copy to Dominic Cummings, and we knew that when we later gave a copy to Arron Banks. Both were in a position to promote "the best possible way" of leaving the EU. Even earlier, back in April 2014, Nigel Lawson who chaired the IEA "Brexit Prize" judging panel could have made the difference. But he didn't either.

So, with four weeks to go, there are hundreds of thousands of "middle-class, centrist and Tory-leaning voters in London and across the country who are craving reassurance that it's safe to vote for Brexit" – exactly the target group that we need to win over in order to succeed in this referendum. And there is insufficient time to get the message to them.

For want of that essential "reassurance", God knows how many votes we will lose. And that will make the difference.



Richard North 26/05/2016 link

EU Referendum: the wages of stupidity

26/05/2016  


One can fully understand the sharp reaction of Vote Leave to the publication of the Institute of Fiscal Studies' report on "Brexit and the UK's public finances". For in that report is written two passages which identify clearly why their campaign has failed to dominate the economic arguments, neutralising them as contentious issues and taking them out of the fray.

Firstly, we see the Institute write that the more we can replicate current access to the single market – for example, by membership of the EEA – the lower the cost of exit will be. By contrast, it says, the further we move from that model – for example, relying on World Trade Organisation (WTO) rules – the greater the cost.

Then, as we highlight in the graphic above, we see it observe that: "Key Brexit campaigners seem to have ruled out any deal that would involve membership of the European Economic Area (EEA), like Norway".

This, of course, was the whole point of Flexcit, one about which we almost weary of writing. But the simple fact is that, to protect the UK's economic position in the first instance, we had to preserve our participation in the Single Market. And here we see the IFS confirm what we've now been writing about for several years.

However, the problem came in October last year when Cameron flew to Iceland specifically to diss the "Norway model". Despite its attractions, we had the idiotic Dominic Cummings agree with the Prime Minister, sternly declaring: "Vote Leave does not support the 'Norway option' for Britain". After we vote leave, he said, "we will negotiate a new UK-EU deal based on free trade and friendly cooperation. We will end the supremacy of EU law".

When Farage joined in, saying "I don't want a Norwegian deal", followed by Richard Tice of Leave.eu, Douglas Carswell and then John Redwood and Ruth Lea, Cameron had achieved a clean sweep of the noisemakers, and effectively taken the "Norway option" out of the game.

The IFS suggests that part of the reason for these "leavers" rejecting the option was because the UK would likely have to make a significant contribution to the EU budget, but it was as much the case that it would also require continuation of freedom of movement – something to which Farage, in particular, was opposed.

With that, though, the main campaigners are determined to proceed without a plan and cede the economic argument – with Vote Leave relying on the offset from the EU contributions, claiming to save £350 million a week from the EU budget contribution.

This pretention, though, is badly damaged by the IFS, which reminds us that this figure is ignoring the rebate, which "is clearly inappropriate". It is equivalent, says the Institute, "to suggesting that were the UK to leave the EU and not make any financial contribution to the EU’s budget then remaining EU members would continue to pay the rebate to the UK". With brutal simplicity, it concludes: "That is clearly absurd".

Yet, still the Muppets in Vote Leave don't get it. In a bizarre press statement they claim that the rebate is "a discretionary grant which the European commission can pay to the UK if it so chooses". The organisation adds that: "There is no obligation on the commission to pay it", and then seeks sustenance by citing out of context a remark by George Osborne at the Treasure Select Committee (see para 15) – a remark which in itself was disputed.

So totally without foundation are their claims that there is no easy way to describe such crass ignorance. Originally agreed by Margaret Thatcher as the Fontainebleau Abatement in 1984, the rebate relies for its legal base of Articles 311 and 312 of the TFEU and is firmly locked into EU law. It is not in any way a discretionary matter.

It is now firmly entrenched in the budgetary system, having in 2004 become the Generalised Correction Mechanism for all Member States, after a Commission Proposal (COM(2004) 501 final/2).  Currently, it is given force by Council Decision 2014/335/EU "on the system of own resources of the European Union", implementing the European Council decision of 7-8 February 2013. This concluded that the then existing correction mechanism in favour of the United Kingdom was to continue to apply.

This Decision is augmented by Council Regulation (EU) No 608/2014 of 26 May 2014 "laying down implementing measures for the system of own resources of the European Union", and by Council Regulation (EU) No 609/2014 also of 26 May 2014 "on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements" (Recast).

Vote Leave, however, have got themselves into a typical bind, trying to defend the indefensible because one of their "stars" is committed to an error and cannot row back from it - as we had with Johnson and his three-fingered banana clusters.

In this case, we have Dominic Cummings who is insisting on using the £350 million figure, come what may - even after having been challenged on it during his session with the Treasury Select Committee. Presumably on the basis that there is no such thing as bad publicity, he believes that the controversy plays into Vote Leave's hands. Despite that, almost everyone around him is telling him that the false claim just detracts from the argument. It is certainly giving the BBC endless opportunities to point out the error.

Such is the notoriety of the £350 million claim that it has even spread to the New York Times giving an international dimension to Vote Leave's stupidity, further degrading the credibility of the leave campaign. And with nowhere else to go, Vote Leave supporters are reduced to whingeing on the sidelines, having already destroyed the best and only counter to the IFS report.

Thus will they find in good time that the wages of stupidity are defeat.



Richard North 26/05/2016 link

EU Referendum: the lack of a plan

25/05/2016  


The multiple references in this piece by Asa Bennett to an opinion poll from ORB must be taken with a pinch of salt. All and any opinion polls must be treated with caution. Nevertheless, they cannot be ignored entirely, and this one from ORB seems to show the direction of travel, with the "remains" pulling further ahead of "leave". Their lead now stands at 13 points.

On the back of this poll, Bennett has picked up exactly the same vibes that we have explored in our report, only he personalises it by telling us that Brexiteers are on the receiving end of Mr Osborne's offensive, with Messrs Balls and Cable deployed yet again and the Treasury releasing its second report on why it thinks leaving the EU isn't a good idea.

Such tactics, Bennett thinks, seem to be working. The "remains" are continuing to dominate the economic battle in the referendum campaign, a crucial element for – as we have always maintained – the polls are suggesting that there are bigger issue than immigration.

When voters were asked by ORB which side would create a "stronger economy for the UK", the "remains" lead by 21 points with 54 percent, a four-point increase in their net lead since last week, the same boost for "remain's" lead on the question of who will "create more jobs".

Bennett asked how the "outers" can fight back. But the alarming truth is that they probably can't. To win this referendum, we had to get in first and pre-empt the scare tactics, laying a solid base of reassurance. Thus, the moment Dominic Cummings, for no good reason, rejected the idea of an exit plan, the leave campaign's fate was probably sealed.

We might possibly have been able to claw back from this huge error if Arron Banks had been a man of his word, and backed Flexcit as he said he would. He would also have had to have been successful in seeking lead designation for the "leave" proposition. He was our last chance, and he failed.

For an excellent review of where we could have been, Andrew Stuttaford's article in National Review is the place to be, especially as he makes the point that we have been pursuing the idea of an exit plan for years, only to have been ignored for several and different reasons.

Asa Bennett helps by making it clear that Vote Leave's refusal to adopt and exit plan – any exit plan – was never personal. This was a function of the flawed logic and ignorance of Dominic Cummings, the progenitor of a failed strategy – and also the craven response of the people around Cummings who never had the courage to rein him in.

The result has been a train-wreck campaign. Homing in on putative savings from leaving the EU was never going to be a credible strategy – and less so when the core claim was a clear and demonstrable lie, that we could save £350 million a week.

Under questioning from the Treasury Select Committee, Cummings sought to justify this position by claiming that there would be additional savings from the bonfire of regulation that would accompany Brexit. Yet he was unable to offer a credible figure, or be at all specific as to what regulations he would repeal.

Then, when he and his sock-puppet Michael Gove – together with the leering, buffoon Johnson – rejected any idea of continuing in the Single Market, there was no longer any doubt. Our fate was sealed. Watching the first of Vote Leave's referendum addresses did nothing else but confirm the paucity of their vision – distilling the greatest constitutional issue of our time down to the length an elderly relative might have to wait in Accident and Emergency.

With this level of campaigning, there is little Vote Leave can achieve. However, Bennett has it that one option left is to fulminate about the "scaremongering" from their opponents.

But, he notes – as do we – that the latest Treasury analysis looks at two models for their short-term impact assessment of Brexit. The first one is the model set out by Canada (which they say would result in an economic "shock"), and the other one relies on World Trade Organisation rules (which they think would lead to a "severe shock").

The Treasury decided not to look at the option of Britain following the "Norway option", joining the European Economic Area, despite doing so in their previous report on the long-term impact of Brexit. But then, this is precisely the option that Vote Leave have rejected. They can hardly complain that the Treasury hasn't modelled it.

Now, says Bennett, Brexiteers need an agreed plan in order to show Britons why the experts are "scare-mongering", and they need to be plugging it relentlessly over the next few weeks if voters are to be aware of it by 23 June.

For the moment, though. while they complain of how unfair the Chancellor is being, Bennett concludes in exactly the same way that we did, that Osborne's tactics were inevitable, and are working as voters are starting to drift away. The "outers" (as in Vote Leave) have no idea what they want, and they're giving them no reason to think otherwise.

There is not the slightest chance, however, that Vote Leave will admit to error, or change tack. This is simply not in their make-up, while craven sponsors and close supporters lack the fortitude or insight to force the issues. The "Titanic" is being driven onto the iceberg at full speed and there's nothing that can stop it.

What price a campaign when one of its most prestigious spokespersons, Sarah Wollaston disowns the core message, saying she would be refusing to hand out their "deliberately misleading" NHS leaflet.

When we then see even Katie Hopkins savage the ghastly Johnson as a "big, fat fraud", we know the game is over. In fact, Johnson the serial liar is only a symptom of the greater malaise. Driven to destruction by Cummings and his friends, the official campaign never had the slightest chance of success.

If the Brexit side does lose, says Hopkins, "much of the blame will lie with Boris - who will have no compunction about scampering back aboard the government bus if he gets half a chance". But the greater blame will belong to Dominic Cummings, with the likes of Arron Banks also occupying a prominent position in the hall of shame.

The only possible thing we can salvage from this wreckage is a clear understanding of where we went wrong, and why – and to out the guilty men (and women). At least then, the next time round we might be better prepared. And there will be a next time. This referendum will resolve nothing. The boil still has to be lanced.



Richard North 25/05/2016 link

EU Referendum: in the absence of a plan

23/05/2016  


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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 23/05/2016 link

EU Referendum: the louse versus the flea

15/05/2016  


There are many powerful arguments for why Britain could thrive if we left the EU (so long as this was done in the right way), says Booker in today's column.

But it is unfortunate that one that doesn't stand up for a moment is the slogan blazoned over that red "Boris bus" in which the former mayor of London is touring the country on behalf of the Leave campaign. "We send the EU £350 million a week", it says, "let's fund the NHS instead".

That £350 million a week would add up to some £18 billion a year, which was the gross payment we made last year to "EU institutions". But £4.9 billion of that came back to us in the rebate. A further £4.4 billion goes on EU policies such as subsidies to farmers, rural and regional development and academic research; which no one is suggesting we should stop spending money on. We send another £1.2 billion to Brussels from our aid budget, the size of which is now fixed in law.

If we want continued access to the "internal market" (without which we would genuinely be making such a crazy "leap in the dark" that, whatever the Leave campaign may say, it could lose the referendum), this would cost us, on Norway's example, another £4 billion a year.

Chuck in a few other commitments that would remain after we left, and there would soon be scarcely a penny left of that "£350 million a week" to spend on the NHS.

To pretend otherwise, Booker adds, is just as crackers as George Osborne's assertion that leaving would cost us £36 billion a year because of lost tax receipts due to the damage it would do to our economy. Equally as bizarre is Mr Cameron leading the "remain" campaign with the claim that leaving the EU would cost every household £4,300.

Cameron is telling us that: "If we vote to leave on 23 June we will be voting for higher prices, we will be voting for fewer jobs, we will be voting for lower growth, we will be voting potentially for a recession. That is the last thing our economy needs".

Booker ,Please, concludes can we stop playing these childish games and move on to some proper, grown-up arguments?

This, though, may not be all that simple. Despite serial liar Johnson touring the country in his "lies on wheels" bus, a ComRes poll conducted for the Sunday Mirror has 21 percent of respondents agreeing that David Cameron was more likely to tell the truth about the EU than Johnson, while 45 percent said Johnson was more believable than Cameron.

Possibly, given only these two to choose between, this is to ask people to determine the point of precedency between a louse and a flea.

But, despite Johnson getting the better score, 33 percent of respondents believed they would be better off if Britain stayed in the EU, as against 29 percent who thought they would be better off if Britain left. On this basis, it seems that the "remain" lies are doing better that those on offer from "leave". Not for nothing, therefore, do Cameron's allies predict a 58 percent victory.

Certainly, the Western Daily Press is not particularly impressed by the Boris lie, recording that the man has at last admitted the £350 million figure on the side of his big red bus was misleading – and was not the total amount of money the EU costs each week.

Yesterday, according to the WDP, was his day "of bungles and gaffes", when he allied himself "shoulder-to-shoulder with Donald Trump", claimed Britain was a "wife forced to allow European murderers into her home", and was greeted by protestors with four-letter signs in Bristol.

To cap it all, Johnson bailed out of an appearance later in the day in Salisbury, just as that controversial bus was barred from stopping in the city's Market Place.

On the other hand, Labour leader Jeremy Corbyn was in London giving a speech, supposedly to support Labour's end of the campaign to remain in the EU.

It was carried live and in full by BBC television and, having watched part of if, one can only say that it was truly dreadful. A rambling, unstructured dissertation had it that, it was "not the European Union that's the problem - it's the Conservative government". On that basis, presumably, we should vote for the EU and then vote out the Conservatives.

The funny thing, really, is that we could vote out the Conservatives if we wanted to. But if we vote for the EU this time, it's probably the last opportunity we'll ever have to vote it out. But to Mr Corbyn, getting rid of the Tories is more important. "I'm in favour in 2020 of Vote Leave - vote for the Tories to leave office", he says.

But then, this just adds to the surreal nature of this referendum campaign. The Tories are fighting each other, Labour's fighting the Tories and everybody's lying about the European Union - and now Mr Johnson is comparing the EU with the Third Reich.

Small wonder Booker, rather forlornly, wants the campaigners to stop playing games. Sadly, it doesn't look like happening any time soon.



Richard North 15/05/2016 link

EU Referendum: blowhards at the IMF

14/05/2016  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 14/05/2016 link

EU Referendum: the Booker beat

01/05/2016  


Arguably the most appropriate response to President Obama, writes Booker, when he told us "no you can't" vote to leave the EU might have been to ask him to look again at his country’s Declaration of Independence in 1776.

After the bit about the right to "life, liberty and the pursuit of happiness", it goes on to say that, if a people finds itself ruled by a form of government it cannot otherwise change (a perfect description of how we are ruled by the government we have no power to change in Brussels), it is "their right and duty to throw off such a Government".

And if we get the impression that our American friends don't really have much clue as to the nature and workings of the form of government which has increasingly ruled us over the past 43 years, this may be explained by the statement on the US State Department's website that "the European Union was founded in 1948" and that it was only set up "to democratically legislate for matters of joint interest to participating countries".

Then, Booker turn to the main theme of his column, headed: "Brexiteers! We need an exit strategy and we need it now!". Here, he also picks up on the theme he had raised earlier this month, observing that "even more astonishing ignorance of the nature and rules of the EU" is that being displayed by the main players in our referendum battle, not least, alas, by those running the official "leave" campaign.

This begins with their amazing inability to recognise that the only possible legal way for any country to leave the EU is by invoking Article 50 of the Treaty on European Union, which derives from the insistence back in the Eighties of Altiero Spinelli, the "father of the European Union" that his Union must not be "a prison" from which no country could escape.

Again and again, when two very senior experts on EU law gave evidence to a House of Lords committee on 8 March, they emphasised that Article 50 is the only conceivable mechanism for a country to leave - all it seems falling on deaf ears to those who should know this before anything else.

The transcript of the oral evidence is here, with supplementary written evidence here. There is also written evidence from David Edward here. The crucial words are: "Article 50 is the only route for withdrawal consistent with the UK's legal obligations".

This makes even more terrifying, says Booker, the quite deliberate refusal of the Leave campaigners to come up with a convincing and coherent exit plan which could reassure voters that, by leaving the EU we would not be excluded from the European Economic Area, allowing us to continue trading in the single market just as we do now.

They claim that, if they proposed a specific exit plan, they would only be attacked for it – instead of which they are quite rightly and very dangerously attacked for not having one. Polls show that easily the most important factor influencing voting intentions on June 23 is "the economy", 47 percent (twice as high as concerns over immigration); and it is this above all which plays into the hands of David Cameron's "Project Fear".

The only obvious counter to almost everything the "Remainers" are arguing would be to show that there is one simple. off-the-shelf answer to all their scaremongering: that we should apply to join Norway and other members of the European Free Trade Area, which would not only give us access to the EEA but would also give us much more influence over the shaping of its trade rules than we have now as just one country among 28.

When the history of this referendum comes to be written, nothing will be seen as more responsible for the British people having voted, many very reluctantly, to stay in than the dismal failure of the Brexit campaigners to show that we could quite safely leave by adopting the one practical strategy they refuse to countenance.

We have just seven weeks left to come to our senses on this. Otherwise, as the old rhyme has it, but for the want of that crucial "horseshoe nail", the "kingdom was lost".

Photo: Andrew Wilkinson.



Richard North 01/05/2016 link

EU Referendum: an intellectual quagmire

27/04/2016  


With less than two calendar months to go before polling day, it is nothing less than alarming to find that fundamental questions relating to Brexit are so far from being settled by Vote Leave that we're not even past first base.

This disturbing insight comes to us via Breitbart London, which has a copy of a letter from Bernard Jenkin MP, Vote Leave director.

Dated 21 April and addressed to a constituent, it rejects the use of Article 50 in the event that we vote for Brexit. Instead, Jenkin argues for negotiating with all the other 27 member states at government-to-government level. The result, he says, "could take the form of a new treaty, which would mean the UK would not need to resort to Article 50".

In the event that there is no agreement, Jenkin adds, "the UK Parliament can pass its own legislation to suspend the application of the EU treaties, but it would be preferable to do this after an agreement with the other EU member states has been reached".

Here, one would like to think that Mr Jenkin is applying the considered weight of legal advice and political experience, coming to a sound conclusion based on the facts on the ground, with due regard for EU treaty and international law.

However, there is no evidence that there is any legal weight behind these scenarios and nor is it possible to adduce any circumstances where they might realistically be applied.

In the first instance, Jenkin is making the same error (although perhaps unwittingly) that Mr Cameron has made in agreeing his supposed treaty. He has neglected the provisions of Article 61 of the Vienna Convention on the Law of Treaties, and the dictum res inter alios acta vel iudicata, aliis nec nocet nec prodocet, where two or more people cannot agree amongst each other to establish an obligation for a third party who was not involved in the agreement.

What these amounts to is that the member states, even if they agreed to carry out negotiations (which seems unlikely), would be acting inter-governmentally (which Jenkin acknowledges), which means they could not bind the European Union – which has its own, separate legal identity – to the terms of any agreement.

The inescapable bottom line, therefore, is that, if there is to be an exit settlement, the negotiations have to be with the EU. And that means working within the constraints of Article 50.

Jenkin, however, hasn't finished. In the event that the member states won't deal (which, of course, they can't), he would have Parliament pass its own legislation to suspend the application of the EU treaties.

Assuming the government would be mad enough to do this and that a Parliamentary majority could be gained, this would amount to a unilateral abrogation of the Treaties. The consequences of this would be so disastrous that one struggles to believe that an MP could even propose it.

What we have to take from this, therefore, is that the Jenkin scenarios are non-starters. There is no practical or legal alternative to Article 50. Yet, despite what should be an unarguable issue, and one settled long ago, Jenkin is not on his own. We have Gove, Lawson and Cummings all coming together to reject the Article.

Behind this, one suspects that Vote Leave officials are aware that the initial two-year duration of Article 50 negotiations makes agreement on a comprehensive free trade agreement impossible. David Cameron's jibes about the seven years taken to agree the Canada deal (which still hasn't been ratified) have hit home.

To get a deal inside the two-year period is going to require compromise – which Vote Leave cannot afford to give, as they haven't thought through the implications. Thus, to get them off the hook on which they have impaled themselves, they are constructing ever more phantasmagorical scenarios to release them from the reliance on Article 50.

Sadly, these are not the actions of adults. We are seeing an almost childish level of naïvety from a group of people who are demonstrating an increasing inability to deal with reality – all of which is creating an intellectual quagmire at the heart of the leave campaign that prevents it even beginning to present a coherent exit plan.

What is terrifying, though, is that this naivety is shared by most of the political class and, if their current work is any guide, the House of Commons Foreign Affairs Committee.

In an extraordinary shoddy and superficial report published yesterday, laughingly under the title: "Implications of the referendum on EU membership for the UK's role in the world", the MPs manage to offer an analysis of the "day after a vote to leave…" that would shame a reasonably bright fifth-former.

Recognising that two-year period immediately after the referendum would present "challenges", they then manage to elide the Norway and Swiss options, treating them as if they were essentially the same.

In exchange for access to the single market, the MPs say, "both the EEA states and Switzerland must pay into the EU budget and adopt a large proportion of EU law - including free movement of people - but they have no say in how those laws are made".

If this is as far as they have got, then the learning curve hasn't even started to lift off the horizontal, leading to a monumental parade of ignorance as they pontificate that: "From a UK perspective, these models would thus bring few benefits in terms of repatriating sovereignty over law-making and immigration, while still imposing many of the costs associated with the status quo".

Yet, having already recognised the "challenge" of the two-year period, they then go on to say that, "rather than following these existing templates, the UK ought therefore to opt to pursue a bespoke arrangement, including a comprehensive Free Trade Agreement (FTA)…".

Amazingly, bringing ignorance to new heights, they actually tell us that:
Detailed and possibly lengthy negotiations between the UK and the remainder of the EU would be required in order to achieve a deeper settlement than the terms of the European Free Trade Association (EFTA), which offers tariff-free trade on goods but - crucially, from a UK perspective - excludes services.
Seemingly, they are unaware that EFTA does not actually have a trade relationship with the EU. The deals are between the three EFTA states, Norway, Iceland and Liechtenstein, as in the EEA Agreement, and between Switzerland and the EU, agreements that were concluded outside the framework of EFTA.

Nevertheless, they conclude that "it is difficult to predict with certainty the type and terms of the new relationship between the UK and EU after a decision to withdraw".

In their view, "it cannot be assumed that the UK would retain full or partial access to the single market if it left the EU, or that it would wish to do so given the restrictions and costs that such an arrangement could potentially incur".

However, it is probable that, "due to the strong economic imperative, the UK and EU would seek to negotiate some form of trade deal as quickly as possible in the light of the political climate".

Then, we are informed that: "the Government should recognise the probability of no mutual interest deal being concluded within the two-year notice period. If no deal could be concluded within the two-year notice period, the UK would move to standard WTO relationship terms and would then need to decide which of the 6,987 directly-applicable EU Regulations would need to be replaced by UK law".

And then, in a text that should be engraved on a brass plaque to mark the nadir of political intelligence in the Commons, the MPs gravely intone:
It is, however, a reasonable assumption that in the medium term a suitable mutual interest deal would be concluded. It is possible that the transition process could be fully co-operative and disruption minimised, but this would depend on how well EU countries respond to a perceived rebuff by the British electorate. As time heals, mutual interest will progressively trump any short-term hurt feelings and both the climate for, and interest in, agreement in the mutual interest would improve.
We are actually paying good money for this extruded verbal material, to achieve nothing but a further attestation of the capacity of our elected representatives to waste time and money.

Whether by MPs or the official campaign, we are so badly served in this referendum that the issues have been submerged in that self-same quagmire. Not for nothing does Mr Brexit argue that the political game playing and personality politics of the referendum campaign is snatching the goal away from us.

When this is all done and dusted, he says, there needs to be a reckoning. We could not even begin to disagree.



Richard North 27/04/2016 link

EU Referendum: first week down, second to go

25/04/2016  


It says a great deal for the dereliction of the official leave campaign that we have Alexander (aka Boris) Johnson still bleating about this referendum being our last chance "to take back control – of £350m a week (and use some of that cash to deliver a seven-day NHS)".

This £350m figure is completely discredited and even many of the apparatchiks dutifully toeing the line don't actually believe it. But not one of them has the courage to confront Dominic Cummings, author of this stupidity.

It doubtless this, amongst other things, that has Simon Heffer asking: "Whose side is Vote Leave really on?" He refers to Cummings at the Treasury in terms of his "bizarre performance", which "left some of us wondering whether he was on day release from a secure facility".

Dan Hodges, now in the Mail also offers his penn'orth, suggesting that this is not a debate between two competing but mature visions of Britain's place in the world. "It is a debate between adults and children", he says.

To support his view, he cites the insensitive Mr Banks who claimed that a £4,300 cost per household of Brexit it represented "a bargain", Michael Gove who seemed to be offering Albania as an alternative vision for Britain, Nigel Farage raging that Barack Obama was the most "anti-British" president in history and Johnson branding him the "part-Kenyan" president.

Advocates of Brexit, he says, opted to base their entire referendum strategy on the claim Britain would be able to swiftly re-negotiate a series of unilateral trade deals with the rest of the world, yet, "it doesn't seem to have occurred to them the rest of the world might have something to say about it as well".

Unsurprisingly, therefore, we had the Telegraph on Saturday telling us that "the Leave campaign desperately needs to up its game".

"The EU referendum will be won by courting undecided voters in the centre ground", it says, "and Mr Obama' s intervention may well have an impact on their thinking". It goes on to say: "The Leave campaign can complain about 'project fear' as much as it likes, and with some legitimacy, but that does not change the fact that many voters see reasons to fear a future outside the EU".

To win them over, the newspaper thus concludes, "Leave has to show that a prosperous alternative is possible. They need to turn an intellectual proposition into a coherent, detailed plan".

That, of course, should have been the position two years ago, when we could have dominated the debate and pre-empted much of the "remain" propaganda. But that still doesn't stop the likes of Charles Moore imbibing the Cummings Kool Aid, arguing that "leave" is not entitled to have a plan.

This is on the basis that the Cabinet Secretary, Sir Jeremy Heywood, would use every possible source of official "information" to tear it apart, and the "leave" campaigners would start quarrelling with one another.

It says a great deal for Mr Moore's perspicacity that, without a plan, "leave" is being attacked for not having a plan, which campaigners are already quarrelling with one another, because they don't have a plan. In the quarrelling stakes, we even have Mr Farage complain that the campaign has "fundamental problems, even though he has carefully avoided devoting any energies to planning a strategy.

In Mr Farage's view, on problems is that it appears that the Leave campaign is just the Conservative Cabinet ministers. We've got to be appealing to a broader group of people than just the Tory electorate", he says. Farage also accuses Vote Leave of excluding him from their campaign – something that was always going to happen. He joins a growing club of "the excluded".

The second problem, he says, is that "if we debate economics and trade we can go round in circles for weeks, and the public will be none the wiser at the end of it". Instead, he feels, we should be talking about the fact we have an open door to 508 million people.

On this, it seems that Gove is preparing to go full kipper, arguing that Britain will be subject to a migration "free-for-all" as the next wave of EU expansion hands millions more people the right to move here. The NHS faces an "unquantifiable strain" if Britain remains in the EU.

Yet ceding the economic ground is seen as a fatal strategic error. Focusing on immigration will never generate enough support for them, says the "remain" campaign – something with which ComRes would agree. It has 47 percent thinking that the economy will most influence their referendum votes, as opposed to 24 percent who put immigration in the top slot.

Bluntly, as the train-wrecks mount, the only really good news is Andrew Stuttaford. He agrees that the "leave" campaign is not in a position to determine how Britain's departure from the EU would be negotiated, but it does need to show that there are Brexit routes and that they can be navigated in a safe and straightforward way.

"Many undecided voters are unwilling to take the risk (as they see it) of leaving the EU, a risk that the remainers are, naturally enough, playing up", Stuttaford says. To that end, "Brexiteers need to explain why those risks are far less than the undecideds now fear, and a pretty good way to do it is—smelling salts—a plan. Brexiteers need to demonstrate not only why Brexit, but how".

As it happens, Stuttaford thinks that the best way to go is some variant of the "Norway option" via membership of the European Economic Area (EEA). "That's a step that initially would change little (and thus would not alarm the nervous) but over time would make all the difference, to which effect, he points people in this direction".

There is another bit of good news though. Owen Paterson is giving a speech at 11.30 this morning, at 10 Carlton House Terrace. Entrance is free to anyone who wants to attend. Some of the points may be familiar to EU Referendum readers.

Note least, Mr Paterson will tell his audience that special status David Cameron "won" in his renegotiation as a sham. If we remain, we get the worst of both worlds – stuck inside the EU but with scant influence. And we will still be on the hook for future bailouts of the ailing single currency.

With that, in campaigning terms, we can only hope that things will get better. They can hardly be worse – last week was the week of the "remains". They got to wear the tee-shirt.



Richard North 25/04/2016 link

EU Referendum: the lie direct

19/04/2016  


The essence of the Treasury case for losses incurred from Brexit is that the UK economy suffers varying levels of GDP drop as a result of our changing trade arrangements.

Crucially, in respect of the "Norway option", after 15 years, the Treasury estimates that the UK would be between 3.4 and 4.3 percent of GDP better off inside the EU than the EEA. In 2015 terms, the GDP impact of leaving the EU for the EEA would equate to a long-term loss of £2,600 a year for each household in the UK.

However, notwithstanding the many false assumptions, there is a central flaw in this argument which completely invalidates the entire exercise. The Treasury is completely ignoring any compensatory effects arising from Brexit. Yet, the very essence of a flexible economy is that it reacts to changing circumstances, and exploits new opportunities arising from them.

A classic example is the response of New Zealand to losing its biggest customer – the UK – when it joined the EEC in 1972. In the late 1930s Britain took more than 80 percent of New Zealand exports. By 1960 it took 53 percent, which reduced to 36 percent in 1970, and five percent in 2007.

The overall effect in the longer-term can be seen in this graph (reproduced above). The very least one can say of the bigger picture is that the effects of the trade realignment are swamped by the larger influences of the global economy, to the extent that it is impossible to estimate the long-term effect.

On balance, though, the general view is that the change was beneficial to New Zealand. From relying on high-volume, low-margin community sales to the UK, exporters – mainly in the agricultural sector – were forced to diversify and seek higher margins to compensate for lower volumes.

This is a process which is continuing to this day, and is responsible for the buoyant NZ economy, despite the downturn in demand from European customers. Particular growth in high-value markets has been experienced in North Asia, and more growth is expected with the agreement of TPP.

The crucial point here, however, is one of balance. For anything to be worthy of the title claim "analysis", it has to look at the upside as well as the down-side. As with impact assessments for legislation, for instance, where one sees costs of implementation and benefits, what matters is the overall outcome.

In leaving the EU, one can expect a gradual realignment of trade – that, for many, is one of the main economic reasons for leaving the EU in the first place, breaking free of its economic sclerosis. Not even to attempt an estimate of potential gains, therefore, is to produce a fatally unbalanced work which has no analytical value whatsoever.

Give the wide range of possibilities, though, the only valid outcome of an honest analysis could be a range of figures. One might expect that to span the positive to the negative, dependent on policy decisions and variables which may or may not be amenable to change.

Here, there is another major lacuna, in that the Treasury exercise makes no attempts to identify these issues, or put a price on them. It does, for instance, tell us that "membership of the EEA" would give the most access to the Single Market, but – since the EEA Agreement does not cover commercial fisheries or agriculture, it argues that we would see the re-introduction of tariffs in these sectors.

What is ignored here is that the EEA Agreement is very flexible. There are provisions for country-specific protocols to bring certain within the scope of the agreement. Thus we see in Protocol 3 a list of certain agricultural products for which there are special arrangements. There is nothing, therefore, to prevent agreement on a UK-specific protocol allowing tariff-free trade on fishery and agricultural products with the EU Members States, on exactly the same lines as currently enjoyed.

Yet another issue raised is the potential cost of rules of origin (ROO), where the Treasury makes great lay of the problems, in this passage:
1.26 For example, ‘rules of origin’ specifically require exporters to obtain proof of origin certificates from their national customs authority to certify the domestic content of their exports when trade is underpinned by an FTA. The economic cost of these is significant. Without the customs union, businesses trading within the EU would have to submit customs declarations, pay Value Added Tax on their products as they cross a border, and accept delays while waiting for them to clear inspections. The OECD has estimated that crossing the border, documentation and other delays can increase the transaction costs of trade by up to 24% of the value of traded goods.

1.27 The impact of these administrative costs would be particularly pronounced for time sensitive industries like fresh food or those participating in complex pan-EU supply chains such as the aerospace and automotive industry. For example, separate evidence from time-sensitive industries in countries acceding to the EU suggests that every 1 hour of customs delay adds 0.8 percentage points to the ad valorem trade-cost rate and leads to 5% less trade.
Here what is being ignored is the Commission's own website. It tells us that, from 2017, the current system of certification of origin carried out by the third country authorities will be replaced by statements of origin made out directly by exporters registered via an electronic system.  The idea of border checks belongs with the Ark.

Furthermore, for the EEA, the system has been enormously simplified, while there are also substantial concessions to Efta states. Few products are now caught by the rules and, where there are long-standing supply arrangements, traders can benefit from the "long-term supplier's declaration".

What thus comes across from the Treasury work is an attempt to find and elaborate all manner of problems that could arise, whether real or not, ladling them into the document to make leaving the EU look as gloomy as possible. This is a tawdry piece of work that lacks credibility and should be ignored. It has no value at all.

In reality, the chances of the UK benefiting over the longer term are probably higher than any chances of us losing. The EU is a backwards-looking organisation which is consistently failing to adapt to the modern world - hardly surprising when the concept of the customs union on which it is based stems from the 19th Century.

Simply the act of leaving is a forward-looking move, while the challenge of breaking back into the real world can only be good for a modern economy. The EU can keep their customs union. We want to play in the 21st Century. 



Richard North 19/04/2016 link

EU Referendum: straw man Osborne

18/04/2016  


To make claims of a government policy paper in the public media, with the core document as yet unpublished, all to influence the EU Referendum, is to treat the voters with contempt. 

But that is the way Chancellor George Osborne has been playing it this morning, with an appearance on the BBC Today Programme, on the back of an authored piece in The Times, tucked safely behind the paywall. The Treasury website, remains blemish-free.

To keep the full report back Osborne undoubtedly needs to do, as he is relying entirely on the straw man technique in order to make this case. He creates what he himself calls a "fantasy" exit scenario and then gets his ever-obedient Civil Servants to put a price tag on it, coming up with a fantasy cost of £4,300 for every household in Britain by 2030.

The point, of course, is that this scenario is not one which any sensible government would dream of adopting. It can exist only as a phantom of the debate, only in the absence of a coherent alternative specified by the official leavers – something that they have not yet done.

We are told also that the Treasury has "carefully modelled" the impact on trade and investment of all of the alternatives to membership of the EU, including the "Norway model", where "we gain partial access to the single market but we still face custom barriers and we still end up paying into the EU and accepting free movement".

Predictably, the public media outpourings offer no detail of the Treasury findings, thereby representing a deliberate attempt to rig the debate. The Chancellor offers the cost of the fantasy option to the public but, on the assumed cost of the more realistic (albeit interim) option, he is silent.

This is a shoddy, low tactic, but it is one that graphically illustrates the weakness of the Government's case. If it had a respectable argument, it would have no need to rig the debate.

For the leavers, then, the answer is clear. We must pick a realistic exit scenario (as in the Norway option, embodied in Flexcit) and cost it out according to the Treasure methodology (but with distortions removed).

We have no doubt that, in this event, Brexit is cost-neutral in the short-term. As for the longer term, there are benefits, and these could be substantial – not only for the UK but the rest of the world. For instance, a re-energised UK, able to act freely on the world stage, could kick-start world trade in a way that the lethargic TTIP talks never could.

By the imaginative process of what we call in Flexcit, "unbundling", we can focus on priority areas which will deliver swift outcomes, for little pain. For instance, a global agreement on the classification and labelling of pharmaceuticals could save businesses upwards of $20 billion a year on inventory and stock-management costs, speeding deliveries and cutting waste.

There are hundreds of other such examples which a flexible and responsive nation can promote, while the trade juggernauts are bogged down in their "big bang" deals that take decades to negotiate and never really happen.

Interestingly, despite the emphasis on TTIP, and the oft' repeated but entirely false claim that the EU does not have a trade deal with the United States, there are already substantial agreements between the EU and US, which together account for goods and services worth €2 billion a day being traded between them, providing some 15 million jobs.

The formal cooperation goes back to 1990 with the Transatlantic Declaration, which was actively developed to become the Transatlantic Agenda by 1995.

However, these over-arching agreements, high on rhetoric and grand declarations are, to use an overworked phrase, reaching the limit of growth. The sheer size and complexity of "big bang" agreements is making them almost impossible to conclude, and very hard to deliver.

Meanwhile, fleet-of-foot nations are developing new arrangements such as partial scope agreements which deliver small, incremental gains and which are quick to negotiate and easy to repeat and enlarge.

Thus, on the plus side of the Flexcit ledger are the cumulative gains that will accrue from the ability once again to broker our own trade deals, and even more so from the leadership we can offer, making things happen on a global scale. That is what is at stake, and that is what Mr "Straw Man" Osborne and his Treasury team don't want you to know.

UPDATE: The paper is now online - 202 pages – entitled: "HM Treasury analysis: the long-term economic impact of EU membership and the alternatives". I'll post an analysis as soon as I can.



Richard North 18/04/2016 link

EU Referendum: another look at Norway

18/04/2016  


It is one of the classic examples of bias by omission that, when the legacy media talk about Norway, they tend to cite Conservative Party politicians or their allies – Europhiles who hanker after joining the EU. But, when we get even one breaking ranks, as has The Sun, we get a completely different picture.

In this case, the newspaper has gone for Trygve Slagsvold Vedum, leader of the Centre Party, the same grouping from which Anne Tvinnereim hails. And, predictably enough, Vedum tells the UK to step out of Brussels' shadow, saying: "You won't regret it - we haven't".

Veredun, or course, best represents a nation which twice rejected EU membership, first in 1972 and again in 1994, whose polling currently has a clear 72 percent against membership.

His message to the Sun on Sunday is for us "to believe in yourselves and take the plunge". He adds: "Norway is proof it can work on your own. We rejected EU membership and we've never looked back".

Echoing a sentiment we've heard from Anne Tvinnereim, Veredun also says: "Many people thought it would be a disaster, thought we would be isolated in business and left behind by the rest of Europe — but that hasn't been the case. In fact we are better for it".

There's plenty more of that from any number of opposition politicians – all the British media has to do is ask. It could even dip a tentative toe into the water and note that "experts believe a Brexit could see the UK follow the Norway model and prosper as part of the European Economic Area".

We do, however, have an awful long way to go when we get this newspaper describing the EEA as: "an association of the EU’s 28 member states which are allowed to trade freely but are not tied to Brussels' laws and regulations". This is a bizarre was of describing the EEA, participation in which requires adoption of the entire EEA acquis.

Not particularly helpful, either, is Kathrine Kleveland, leader of Norway's No2EU, who is also quoted saying she believes her country's success is mostly down to it not being fully governed by Brussels. She says: "The EU interferes with nine per cent of our laws. We are able to make most of our own laws that are relevant to our own people".

That "nine percent" is a figure the No2EU group have been pushing out, even though it is not actually true. They would be far better sticking to the figure offered by the EEA Secretariat.

However, using EEA Lex (standing at 5,046 laws currently in force), and the Directory of EU Legislation (recording 19,532 laws in force), it is always possible to work out the up-to-date figure. At the moment, it stands at 26 percent.

The other issue is immigration, which has The Sun citing Snorre Valen, deputy leader of the Socialist Left Party. He says the UK "could well thrive" out of the EU but warns that Britain should be wary if it thinks leaving would mean closing the borders to migrants. Norway, he says, takes twice as many migrants per head as the UK.

This, though, is considered partly due to the Schengen agreement, to which the UK is not a party. "There is no reason Britain shouldn't do what we did in 1994 and say no to the EU", Valen says.

So there it is. Norway, according to at least one newspaper, is an option. It is far too much to ask for the legacy media to cope with anything sophisticated, such as the idea of the EEA comprising an interim option, pending negotiation of a longer-term deal.

Interestingly, even Cummings understood this, recording in his blog in June last that Flexcit "was based on using the EEA as a transition phase – remaining in the Single Market and retaining a (modified) version of free movement – while a better deal, inevitably taking years, is negotiated". This, he also noted, was "an attempt to take the Single Market out of the referendum debate".

In one of life's fascinating coincidences, that blog was published on 23 June 2015 – exactly a year before what will be referendum day. Cummings was to discuss the merits of Flexcit when he'd "studied it more". Even though we're still waiting, at least Norway is still on the table.

And, perhaps, that's just as well. French economy minister, Emmanuel Macron is saying that Britain would be "completely killed" in global trade negotiations if it voted to leave the EU.

This is another man who doesn't know what he's talking about, but it is as well not to give such people any more scope than we have to. The UK as part of Efta becomes the fourth largest trading bloc in the world. Norway, is more than just an option. It's our pathway to freedom.



Richard North 18/04/2016 link

EU Referendum: no immediate payment cuts

15/04/2016  


It is a matter of regret that, over the next ten weeks, we are going to see much talk on the completely unimportant issue of how much Brexit is going to save. Figures are being sprayed around and hotly disputed in an increasingly tedious cycle of claim and counter-claim. By Referendum Day, probably the only guarantees are that total confusion will reign and nobody will be any the wiser.

Amongst those currently bandied about is the already discredited claim that we send about £350 million to Brussels every week. All this money, we are told, "could be better spent on the NHS, schools, and fundamental science research".

That this simply doesn't stack up has been well-rehearsed. According to the Institute of Fiscal Studies (based on official figures), last year (2015), the gross payment before rebate was £17.8 billion. That equates to about £342 million a week. However, from that was returned £4.9 billion as our rebate. This sum has no conditions attached and is absorbed back into Treasury funds. It is already accounted for and is not available for re-allocation.

Then there is the £4.4 billion returned for spending on EU policy areas. This includes the Common Agricultural Policy (CAP) and rural development. An amount goes to regional funds, and some goes to government bodies for distribution as research funding.

Although this money, after Brexit, would probably no longer be sent to Brussels, the funds are still spoken for. There are no plans to discontinue agricultural or rural support, or regional funding. This money is not available for redistribution.

This leaves what is known as the "net government contribution", which for 2015 is £8.5 billion. From this must be deducted private sector receipts which go straight to the private sector and other non-governmental organisations such as universities. Annually, the figure is about £1.5 billion, bringing the "net contribution overall" down to about £7 billion.

But that is not the end of it. There is also the question of overseas aid. Roughly £1.2 billion of the £11 billion aid budget is managed by the EU and paid as part of the annual contribution. Despite that, it goes towards the UK's self-imposed 0.7 percent GDP quota. If the sum was not paid to the EU, it would still have to be allocated to the aid budget. That £1.2 billion, therefore, is not available for redistribution.

Rounded up, we are left with about £6 billion, although that might not be the case. If we are to retain access to the Single Market on anything like the same terms as Efta/EEA states, there will be a price to pay.

On the same per-capita basis as Norway, the net cost (which would include the equivalent of EEA/Norway Grants) would be £4 billion, leaving a mere £2 billion potentially available for redistribution, or about £40 million a week. That, effectively, is the maximum saving the UK might expect – at least until a completely new deal has been negotiated.

Even then, to suggest that this might represent an immediate saving is still somewhat optimistic. This could be nothing more than a fond hope for the future. There is something else that has to be taken into account.

Given a successful referendum outcome, we might expect to devote most of 2017 to scoping discussions, lodging the Article 50 notification towards the end of the year, after the French and German elections. This means that the two-year negotiation period will not finish until late 2019.

Prior to that, however, and alongside the Article 50 talks, there will be the talks on the Multi-annual Financial Framework (MFF) for the period 2021-2027, set to kick in at the end of the current period, which started in 2014.

The UK will be entitled to take a full part in these talks, up until its point of departure. And it does have a dog in the fight.

As the end of the last budget period, there were outstanding commitments known as RAL, from the French reste à liquider. In 2012, the figure was being reported by an alarmed European Parliament as £217 billion, an issue which got very little publicity apart from Booker.

Together with other liabilities (mostly for purchases and staff pensions) of €103.4 billion excluding borrowings, this requires a carry-over into the EU budget for the 2014-2020 MFF of some €326 billion.

Here, it gets really interesting. Given that the overall budget was trimmed below Commission expectations, yet commitments are escalating, it is hard to see the EU emerging from this current MMF with the liabilities reduced. RAL plus the staff pensions and other payments could easily exceed €350 billion.

Of any liability as it currently stands, the UK's responsibility runs to about 13 percent, which in sterling terms, would put us in hock to the tune of around £30 billion.

How much of that will have to be paid by us will undoubtedly be a matter for discussion during the Article 30 negotiations. If the "colleagues" insist on everything, but "generously" allow staged payments over the MFF period to come, that would amount to about £4 billion a year.

With only a £2 billion surplus available, however, that would mean the UK having to find an extra £2 billion, or £40 million a week – up until 2027 – on top of our existing net costs. Even if we chose to pay nothing as an EEA contribution, our overall saving would only be £2 billion. That is our best-case scenario.

That then supposes that the EU will not demand any compensation for our departure. Like any other major organisation, the EU has undertaken long-term commitments, such as the provision of buildings. It can also claim that it will lose some of the benefits from economies of scale.

On this basis, there is always the possibility of the EU demanding a "divorce settlement", which could account for many billions.

Even without that, it is completely unrealistic to expect any immediate savings from leaving the EU. A realistic scenario is us paying slightly more. There is even a possibility that we will have to find a substantial severance payment.

But this is not important. We are not proposing to leave for the money, and the benefits that will accrue will come from our ability to act again as an independent state. They will amount to hundreds of billions over term. For that, any residual contributions are a worthwhile investment. And with the payments issue out of the way, we can focus on the real reasons why we need to leave the EU.



Richard North 15/04/2016 link

EU Referendum: the stupidity of the politics

08/04/2016  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 08/04/2016 link

EU Referendum: border checks for Ireland?

03/04/2016  


In the battle to leave the EU, the situation between Eire and Northern Ireland is emerging as a major fault line in the campaign. Specifically, when we leave the EU, there the land border between the newly-independent UK and the remains of the EU will also become the external border to the EU.

The implications of this are serious enough to have had the Joint Committee on European Union Affairs of the Irish Parliament in June last year express concerns about the re-imposition of border controls and customs checking, with potentially highly damaging effects on Anglo-Irish trade, with serious effects on the economies of the North and South.

This concern was amplified by Irish Prime Minister Enda Kelly and more recently in the BBC and currently in the Irish Times.

Interestingly, this latter piece, by Deputy Editor Denis Staunton, picks up on what he calls the "leave" campaign's greatest weakness - its failure to answer the question of what happens next if Britain leaves the EU and what kind of arrangement with Europe it should pursue.

Vote Leave, he notes, expects Britain to negotiate a trade deal with the EU, something it expects to be a straightforward process. "The heart of what we all want is the continuation of tariff-free trade with minimal bureaucracy", it says.

The Ukip-dominated Leave.eu campaign, Staunton adds, is even more relaxed, suggesting trade with the EU could continue on just the same terms if Britain leaves. "Given that we buy more from the EU than it buys from us, it is unlikely that the EU would seek to change this in the event of us leaving", it says.

When the government published a White Paper on the alternatives to EU membership, Leave campaigners dismissed it as a "dodgy dossier". Britain would not follow the path of Norway, Switzerland, Canada or Turkey in its post-Brexit relationship with the EU, but it would find a solution of its own, they said.

However, Staunton observes that it is an "an irrefutable fact" that in all third-party relationships with the EU, there is a direct relationship between the level of access granted to the single market and the number of EU rules any country must accept.

As a member of the EEA, Norway is more integrated into the single market than any non-EU country. "In return for such access, it must pay into the EU budget, adopt most new single market rules without being able to influence them and accept the free movement of people from the EU".

Switzerland's bilateral agreements with the EU involves similar obligations, while Canada, which has an advanced free trade agreement with the EU, has to accept EU rules when exporting to Europe but has much less access to the single market.

Says Staunton: "All of these countries, including Norway, are outside the EU customs union and, the White Paper warns, if Britain were also to be outside it, there would be a return of customs checks on the border".

Specifically, the White Paper states that, "under most of the alternatives described … the UK would be outside the EU customs union and so trade across the Border with Ireland would be subject to customs controls and rules on the origin of products".

To avoid this, the Joint Committee of the Irish Parliament recommended that, in the event of Brexit, "no external EU border is established on the island of Ireland separating North from South" – wishful thinking that is about as far from reality as it is possible to get.

With the prospect of border checks, however, there are fears there there will be customs posts on the border and huge queues as trucks wait for clearance. But this is a fantasy. It is wrong to assume that, because the UK would fall outside the Customs Union, it necessarily follows that there would have to be checks on goods crossing the border.

This perhaps harps back to the 19th Century origins of the Customs Union as the German Zollverein, as a means of removing time-consuming and costly border checks. In that case it certainly reflects the limited vision and the extraordinary lack of knowledge displayed by EU supporters.

The myopia is all the more remarkable as in 1949, eight years before the Treaty of Rome which put the Zollverein into effect for the original six members of the EEC, and organisation called the United Nations Economic Commission for Europe (UNECE) launched a scheme to remove cross-border checks of goods in transit.

This system, known as the Transports Internationaux Routiers (TIR) was so successful that it led to the negotiation of a TIR Convention which was adopted in 1959 by the UNECE Inland Transport Committee. It entered into force in 1960. It has since been updated and revised, currently standing as the 1975 Convention, as amended, forever breaking the link between customs control and border checks.

At the heart of the system is a document known as the "TIR carnet", issued to registered transport operators for each truck journey, listing the details of the consignments. These have to be kept in secure load compartments and sealed for the duration of the journeys. The specially marked vehicles are given free passage across borders, with any tariffs or other taxes becoming payable only when the final destination is reached.

Currently, thee million carnets are issued each year, equating to 10,000 trucks a day. Between them, they make 50,000 TIR border crossings daily. And the system has since 2003 been undergoing simplification and computerisation, to become the e-TIR system. As a 21st Century system, it is on its way to emerging as a fully electronic, paper-free operation.

As to Brexit, providing that the UK is prepared to re-enact the Community Customs Code and other flanking legislation to which EU recognition of the TIR system is tied, we could adopt the TIR system for Irish trans-border goods traffic.

This would allow for the worst case scenario, where no trade agreement was reached with the EU. Goods would be subject to varying tariffs and conformity inspections, but there would be absolutely no need for customs posts or border checks.

Where unloading has to be supervised and inspections have to be carried out, there is already an established system of what are known as "inland ports" or "inland clearance depots", where checks can be carried out on goods before delivery. Often, these coincide with break-bulk facilities and local distribution hubs, allowing operations to be combined.

As for the Republic of Ireland, a significant proportion of its trade is with other member states. A significant volume transits through the UK and sometimes other Member States before reaching their final destinations. For this, the EU already has a system in place known as the Community Transit System (CTS), its equivalent of TIR.

By this mechanism, goods travelling between Ireland and other EU Members States can use the system, passing though Northern Ireland, if necessary, and other parts of the UK. There will be no customs checks or physical inspections.

The UK can, of course, go further than the bare minimum provision, relying on TIR. If it joined EFTA, it could then take advantage of the Convention on a Common Transit Procedure, as amended, which initially agreed in 1987. This again allows cross-border movement without the need for border checks, bringing it into the ambit of the EU's CTS. The UK currently recognises this for shipping goods between EU member states. It is used for goods travelling through Switzerland.

Within the EU, the UK integrates the harmonised procedure into our own systems, implementing a substantial body of EU legislation. As part of the Article 50 settlement, it would also be open to the UK to re-enact this body of law, and agree to continue the harmonised system. This would have to be settled during the negotiations, but should not present any undue problems, as long as we don't seek to change anything.

Failing all that, there is the possibility of signing off a special, one-off deal. This is exactly what happened in 2004 with Cyprus to facilitate trade between the divided Greek and Turkish zones. Similar in many respects to the TIR and CTS, this could as a last resort provide a model for trade between the North and South.

All in all, therefore, the chances of a Brexit bringing chaos to Ireland, with new customs posts and border checks, is vanishingly slight. And what could be agreed for Ireland could also be applied to Scotland in the event that it became independent. There is little possibility of reactivating the modern equivalent of Hadrian's wall.

Scaremongering apart – for which the major culprit seems to be the UK Government – there is little for Ireland to fear from Brexit, in terms of any disruption to trade. The day after we leave, reporters on both sides of the border will be scratching their heads, wondering what all the fuss was about, as they find they have absolutely nothing to report.



Richard North 03/04/2016 link

EU Referendum: what the bloggers say

21/03/2016  


Having missed out last week and then having been preoccupied with the Leave Alliance launch, the Brexit bloggers this week are producing a more than usually abundant crop. 

We start with Scribblings from Seaham who, in an entertaining piece, joins me in decrying our "supine media" who regularly parrot the latest utterances on the forthcoming referendum by those MPs who still do not realise that their views are of no consequence; and that, at the end of the day, it is the views of the British electorate that matter.

This is a good theme. Despite the many years the media have had to get used to the idea that there was to be a referendum on the EU, journalists still haven't fully understood that a referendum is about people voting, and that politicians have one vote, just like everyone else.

But SfS does refer to one of my recent articles where we again share a distaste for the media's latest ploy, turning what should be an issue-led debate into a grotesque game-show parody, effectively amounting to the "Dave and Boris Show". It becomes dominated by "he says – he says" arguments, with Dave lying his socks off and Boris uttering incomprehensible tosh.

This dovetails beautifully with White Wednesday's latest blog which has him commenting that voters are concluding that the referendum debate is poor and both sides are "not at all convincing".

It didn't help, writes White Wednesday that the "leave" side didn't have a clear workable plan for how they wanted to get out. Actually that was not quite true. There was indeed a very comprehensive and workable plan but because it contained a few things that some on the "leave" side didn't like, "they put their copy in an old cupboard weighted down with concrete and buried it out at sea under cover of darkness. Anyone who talked about it after that night got shouted at and had a bag put over their head".

Oddly enough, to one of our current posts, one commenter has added a reference to Saul Alinsky's seminal work, the Rules for Radicals published in 1971. Rule twelve of thirteen says: "The price of a successful attack is a constructive alternative. Never let the enemy score points because you're caught without a solution to the problem".

Almost everywhere it seems, there is a recognition that the campaign needs an exit plan, everywhere that is except amongst the noisemakers themselves, who rival the obstinacy of a pack of mules in refusing to put one on the table.

Mr Brexit, on the other hand notes that, for a number of weeks now several sources have said that Flexcit, has been doing the rounds in the higher reaches of the civil service.

While David Cameron and his pro-remain friends have been claiming no one has set out what "out" looks like, many around Whitehall have been reading and taking on board this supposedly non-existent Brexit plan.

Yesterday, in a sign that Flexcit has been hitting the mark, the Telegraph dropped this rather pleasing detail into a story about civil servants believing Brexit "could be seized upon by ministers as a liberating moment which would trigger a revolutionary shake-up of public policy":
According to one analysis, developing a Britain-specific deal is likely to take five years, running way beyond the two-year period between a country triggering the Article 50 exit clause and it being released from the European treaties.

As such, it is likely the UK would adopt a model similar to Norway's as holding position, before gravitating to a more bespoke arrangement, according to one scenario under discussion.
This, says WW is Flexcit in a nutshell. It's the staged process writ large.

Lost Leonardo then takes us to The Leave Alliance (TLA) launch, a network of new and established political groups, bloggers and tweeters who are committed to winning the EU referendum for the "leave" side.

What makes TLA unique among the declared leave groups is its support for a credible Brexit plan, Flexcit: The Market Solution. This is a six-phase plan for recovering Britain's national independence in stages, as part of a continuous process, rather than as a one-time event.

That change of perspective, says Lost Leonardo, shifts the Brexit debate firmly in the direction of pragmatic and practical politics. The exact form that our post-Brexit deal takes is less important than our vision for what we will do with our national independence.

Self-governance means taking responsibility unto ourselves and, if our politicians are any indication, a long process of discovery and rediscovery lies ahead.

So as to short cut the economics and trade-centred debate that has been allowed (some might say encouraged) to obscure the more important political question - who governs Britain? - the Flexcit plan advocates remaining in the Single Market and then working to create a genuine free trade area in Europe whilst also rebuilding the national policy-making framework and enhancing our democracy by means of The Harrogate Agenda.

Brexit Door, however, having already sorted the Leave Alliance, moves on to the Tampon Tax, urging his readers not to fall for what is in fact, a "trifling stunt". When you see this kind of nonsense, he writes, respond in the manner that it clearly deserves – blow it a bloody great raspberry! And then focus your attention the real issues and pay the politicians sideshows no further mind.

Before leaving the subject, however, we need to revisit Pete's blog and remind ourselves as to why tax was charged on tampon in the first place – alongside many other countries outside the EU.

The answer is depressingly simple in that it was grouped by the World Customs Organisation in a single taxable category of miscellaneous manufactured goods, alongside sanitary towels, napkins and napkin liners for babies and similar articles, of any material.

Bureaucratic inertia took over from there, and the product acquired a taxable status throughout the world, including the EU. And interestingly, while the UK was willing to be pushed around, in Australia there has been a rather different outcome, although Canada has been more amenable.

Red Cliffs of Dawlish runs one of his typically impressive posts, who remarks on the "baby-ification" of British Culture. One side of the argument is being driven by a Serial Liar and the other side by a Personification of Political Infantilism of our culture.

As for other blogs, The Sceptic Isle is bringing Flexcit to his readership, serialising the pamphlet, EU and Europe looks at Mr Cameron's lies – which should be exciting continued attention, while Semi-Partisan Politics spends time on a detailed examination of Iain Duncan Smith's resignation.

To conclude this review, we look at Pete North's latest blogpost, where he tells his readers to "start fighting like you mean it". This, like many others of his, is an uncompromising piece, which harks back to last Wednesday when two MPs were so offended by my comments about the unwillingness of the breed to challenge the Prime Minister for his lies to the House (and the nation at large).

Our elected representatives should be our line of defence against an over-mighty executive, but we are in a perverse situation where our MPs and MEPs think they are part of the government and it is their role to tell us what to do. Yet, like children, we roll over and acquiesce.

Somewhere along the line we have distorted the relationship whereby we look to such people as leaders rather than servants. That is why this referendum campaign has become so perverse, putting trust in people who know so little about anything.  

Rather than sucking up to the likes of Boris Johnson and Douglas Carswell, we should despise these people for being part of the problem, says Pete. We should be ripping holes in their "worthless ideas" instead of rolling out the red carpet for them.

In this world, we don't want Boris Johnson, Duncan Smith, Grayling or Gove. We don't want Galloway or Farage either. We want rid of the whole lot of them. Brexit is our catalyst to do exactly that. So, Pete concludes, "start fighting like you mean it".

It's a sombre conclusion but one which strikes at the whole referendum campaign. We do need people to fight for themselves, to think for themselves and to make their own decisions. We are not there to serve politicians. They – nominally at least – should be our servants.

If we allow them to set the agenda, to decide for us how we think, if we allow them to take over this campaign, we are giving up the one opportunity we have to exercise our power as a united people. That's our choice and upon it rests our destiny. That will demonstrate whether we are even capable of being a functioning democracy.

We the people, as much as the government and its EU policy, are on trial.



Richard North 21/03/2016 link

EU Referendum: Flexcit, the pamphlet

19/03/2016  


After much labour, we have finally produced the Flexcit pamphlet. It is available as a free download from this link, or the permanent link on the sidebar. If you want hard copy, it can be ordered from the Bruges Group for £5.00 including p&p.

The pamphlet summarises in 48 A-5 pages the online book which has now had in excess of 50,000 downloads. It sets out how the UK can leave the European Union and is intended to show that an orderly exit is plausible and practical, and can be largely risk-free.

Leaving the EU, we acknowledge, is a big step. There can be no serious dispute that a botched process could have dire results. Export of goods and services is vitally important to us. Even in trade with the rest of the world, the EU is often the regulatory portal through which we access other markets so it has a huge influence on non-EU trade.

Any major disruption could do serious harm to our economy, well beyond just our trade with EU Member States. It could even drive us into recession. There is no margin for error. We cannot afford to get it wrong.

To achieve a trouble-free exit, we must have an exit plan. Without that, we believe the "leave" campaign will not succeed. But we expect our plan to have more than just an effect on the campaign. It would have a direct impact on the subsequent negotiations, if we decide to leave.

Our plan, therefore, has to be accurate, honest and pragmatic. And we start with a basic premise. After nine treaties and 40 years of political and economic integration, there can be no clean break. Unravelling in a single step is not going to happen, and certainly not without compromises. This is a point that cannot be made too strongly.

Behind the scenes, having been deliberately shunned by the major campaign groups and the media, that idea has already gained considerable traction. Thus we get the Telegraph today reporting that, "according to one analysis (i.e., Flexcit), developing a Britain-specific deal is likely to take five years, running way beyond the two-year period between a country triggering the Article 50 exit clause and it being released from the European treaties".

"As such", the paper says, "it is likely the UK would adopt a model similar to Norway’s as holding position, before gravitating to a more bespoke arrangement, according to one scenario under discussion" – the scenario posited almost exclusively by Flexcit for the past two years.

This reflects a crucial point in our plan - that negotiations will not take place in a political vacuum. Nor will they start with the formal exit talks. Rather, they will be continuation of a political process that will have started well before the referendum.

This means that our negotiators will not have a free hand. Theirs will not be "blank piece of paper" exercises where shopping lists are drawn up without restraints. Nor will there be room for theoretical assumptions. Negotiators will have to deal with the political realities of the day. And they will be forced to respond to the limitations imposed on them.

Another point is that these will be negotiations – i.e., a process which involves exchanges of views. It starts with each of the parties setting out their opening positions but, to achieve a satisfactory outcome, both sides will have to listen to each other. Compromise will be essential.

Commentators who suggest blue sky options that do not take account of these political realities are being unrealistic. Proposals cannot be taken seriously unless they are politically attainable and publicly acceptable. They must have regard to the political constraints and be acceptable to those with whom we are negotiating. To expect otherwise is pointless.

With this in mind, we stress that great care should be taken with exit scenarios based on economic models. Estimates cannot be any stronger than the assumptions on which they are based. Weak assumptions are poor foundations for any plan. Dazzling predictive models and complex calculations cannot remedy inherent flaws.

Then, we must point out that all solutions must fit with others. There is no point defining certain policies if they create irresolvable problems elsewhere. Partial solutions are not an answer. An exit plan has to work as a whole, even if that requires adopting sub-optimal policies in some areas in order to achieve the larger objectives.

Within these constraints we have to face some unavoidable realities. Firstly, the plan has to ensure continuity of trade with the EU and the rest of the world. No matter how attractive the eventual outcome, exit will never be tolerated if the immediate effect is to damage trade and plunge us into recession.

In our view, that means we must – in the short to medium term – stay in the EU's Single Market. However, the EU has made it abundantly clear that if we want to stay in the Single Market, acceptance of the principle freedom of movement is non-negotiable. We can abolish freedom of movement or we can stay in the single market. We can't do both. On that basis, we have come to the conclusion that, in order to leave the EU and secure the medium and long-term gains that accrue from so doing, we must accept a short-term compromise over freedom of movement.

To add to all this, there is the timescale to consider. Under Article 50 of the Lisbon Treaty, which defines the exit procedures, negotiations are set to last two years. Although we could get an extension, we believe it would be unwise to rely on a longer period.

This creates an inherent problem. Complex trade negotiations usually take a long time to conclude – sometimes a decade or more. Thus, we suggest adopting an off-the-shelf solution rather than a bespoke agreement.

That confronts another reality. Brexit presents an existential threat to the EU. If it concedes an exit deal to the UK that is better than it could achieve within the EU, other Member States might be tempted to leave. A "better deal for Britain" could collapse the entire EU. For that reason, it will never be offered.

Thus, we feel that holding out for unachievable perfection runs the risk of losing the referendum and staying trapped in the EU. We make whatever compromises are needed to get out quickly and resolve outstanding issues once we have left.

Taking all that into account, we propose six stages to our plan. Its very essence is that it is split into stages. We arrived where we are by a series of graduated steps. It makes absolute sense that we should leave in the same way. To manage the process, our six stages work as follows:

Stage one: this deals with the immediate split, for which there are several broad possibilities. There are the options we set out in what we also call "The Market Solution", there is what we call the "Swiss" (bilateral) option, or there is the World Trade Organisation (WTO) option.

Our first stage comprises three options, all aimed at ensuring continued participation in the single Market. First is the "Norway Option" in which we rejoin the European Free Trade Association (EFTA) and trade with the EU through the European Economic Area (EEA).

Whatever initial option we choose, we have to remember that membership of the EU involves much more than trade. We cooperate in a huge range of activities, from student exchanges to the management of airspace, and much else. Before reaching a final agreement, we have to decide on the activities we want to continue, and the terms.

Once we have the right exit option and have defined the areas of post-exit co-operation, we have enough to finalise an exit agreement with the remaining EU Member States. But this is only the start of a longer process.

Stage two: looks at immigration and asylum. Since we have to keep freedom of movement for the time being, we have to work out how better to manage the flow of people into our country. Here, there are many things we can be doing, to pave the way for a longer-term solution.

We will need to take action at a global level to deal with third country immigration, seeking amendments to the Geneva Convention on the Treatment of Refugees, and the 1967 Protocol. We will also have to change or withdraw from the European Convention on Human Rights. We can also limit immigration from the EU by addressing the "pull" factors that make it so attractive to come to this country.

Stage three: here we deal with the drawbacks of EEA membership. We start with the dominance of the European single market by Brussels. As long as the UK is on the edge and Brussels is at the centre, we will have a subordinate status. This is not acceptable in the longer term, so we propose a more equitable market structure.

What we want is a community of equals in a "European village". To administer the market, we propose replacing Brussels with the Geneva-based United Nations Economic Commission Europe (UNECE), on the lines proposed by Winston Churchill in 1948 and again in 1950. UNECE already plays a prominent role in global regulation and trade and is the logical choice.

Stage four: is one of rebuilding independent policy. Illustrating how an independent UK might operate, we look at foreign and defence policy, agriculture and fisheries. We also explore environment policy, and then the linked subjects of climate change and energy. We conclude with financial services and the so-called "digital market".

Stage five: we suggest a new framework for our global trade policy, with an evaluation of areas that are ripe for improvement and exploitation. This is organised into an eight-point programme which opens the way for us to break out of the EU cul-de-sac and rejoin the global trading system.

Stage six: here, we argue that there is little point in leaving the EU if we then return powers to a Parliament which gave them away in the first place. We must stop this happening again. Thus, we offer ways of restoring democracy, bringing both central and local governments back under the control of the people.

In conclusion, we explain how leaving the EU becomes a process requiring continuous and flexible development - from which Flexcit takes its name. That repeats our central point: leaving the EU is not a single event but a multi-stage process.

Even after we have left the EU, the process may take many years to complete, as we seek a steady, measured divergence rather than a "big bang" separation. The aim will be to keep the best of our agreements with the EU while freeing it to follow its own path.

In short, by leaving the EU, we are not ending a relationship. We are simply travelling separately. This is not isolation but an agreement to do many of the same things in a different way, all to our mutual advantage.



Richard North 19/03/2016 link

EU Referendum: an open goal for Cameron

06/03/2016  


"Leave" campaigners, writes Booker, may have dismissed those papers produced last week by the Foreign and Commonwealth Office (FCO) to give the Government's line on Brexit as no more than "baloney" and "scaremongering"; and certainly the FCO’s analysis is terrifying stuff.

We get the impression that it was drafted by clever lawyers, to a brief that they must paint the prospects for a British exit from the EU in as black a light as possible. But there is much in it that the Leave campaigners themselves have not yet begun to understand.

When I say "clever", this is because a lot of what the FCO says is true. It emphasises, as this column has long pointed out, that the only legal way we can leave the EU is by invoking Article 50 of the Lisbon Treaty. They point out that extricating ourselves would not be a simple, sudden act but would involve a long, very complex process – not least because it would be vital for us not to be excluded from the Single Market (which is "Project Fear's" chief argument for us to remain).

When the FCO officials then review all the different options put forward by prominent "leave" campaigners, one imagines what fun they must have had in portraying the process as a murky labyrinth in which every passageway leads only to a disastrous dead end. Again, in much of this they are right. They dismiss the ludicrous idea that our exit could be achieved just by repealing the European Communities Act, which would simply be to ignore international treaty law.

They rightly explain why one-off trade deals, such as those between the EU and Canada or Switzerland, are out of the question, not least because these took many more years to negotiate than would be possible in the two allowed for under Article 50.

When it comes to the idea of relying just on the rules of the World Trade Organisation (WTO), the FCO in fact misses a trick – by failing to point out how this could produce the most disastrous outcome of all, whereby EU countries could still export to Britain while we were barred from exporting to them.

But in other respects the FCO is blatantly dishonest, as when it claims, without any authority, that "the British people would expect" Article 50 to be invoked straight after the referendum. In practical terms, this would be out of the question, since both sides would need up to a year to prepare before full negotiations could begin.

Even more telling, however, is how wilfully the FCO misrepresents what it dismisses as "the Norway option" (clearly the one that most worries it), allowing Britain to remain part of the Single Market as a member of the European Economic Area (EEA).

When, for instance, it makes the familiar Europhile claim that Norway has no say in passing Single Market laws, this deliberately obscures the fact that, as a member of the European Free Trade Area (EFTA) and the Nordic Council, Norway has more say in the preliminary drafting of those rules than Britain.

It has even more say in drafting the ever-growing number of Single Market rules that are passed down to the EU from global bodies, such as the United Nations Economic Commission for Europe, on which Norway sits in its own right as an independent nation, while Britain is represented only by the EU, with only a small part in deciding what the EU’s position should ever be.

If Britain outside the EU was to join the EFTA and the EEA, this would not only give us more influence over much EU legislation than we have now, but, if used wisely, might pave the way to creating the kind of inter-governmentally agreed Europe-wide market envisaged by Churchill after the war, no longer dominated by the oppressively supranational mechanisms of Brussels.

If by any chance the referendum should put us in the position of having to discuss a wholly new reality outside the EU, the only way we could hope to succeed would be by keeping negotiations amicable and positive. Yet ironically, the last people we should want to represent us in the negotiations would be those same Europhile officials responsible for the wholly negative, defeatist line taken in these two sad propaganda documents.

Not that it seems likely at present that we shall find ourselves in that position. Because if anything is likely to ensure that Britain votes to remain, it is the way the "leave" campaigners are all over the shop, without any remotely plausible and properly worked-out plan for how to achieve what they claim to want.



Richard North 06/03/2016 link

EU Referendum: No F***ing Use supporting the EU

05/03/2016  


Rather predictably, the "remains" have got some agribiz luminaries together to write a letter to the Times, trotting out their own version of the pro-EU propaganda. They say:
Leaving the EU is too great a risk for UK farmers. The European single market accounts for 73 per cent of Britain's agri-food exports and gives us access to a market more than twice the size of the US. Outside the EU we could keep all or some of this market, but we would have to abide by EU regulations without a say in their formation and pay into the EU budget without receiving EU payments in return. We'd pay, but have no say.
The letter is fronted by Sir Peter Kendall, former president of the NFU, and Lord Plumb, another former president of the NFU and one-time MEP who briefly became European Parliament president, with nearly forty other signatories.

From a public relations perspective, this is ill-advised. The NFU – which represents only the minority of working farmers – is otherwise known as No F***ing Use, and has acquired for its members the reputation of "whingeing farmers" who only get interested in politics when their subsidies are at stake.

In fact, as Owen Paterson points out, of three EFTA states – Switzerland, Norway and Iceland - in Europe but not in the EU – all get much higher agricultural subsides than EU member states.

Paterson also argues – as does George Eustice - that outside the EU, we would have much more flexibility as to how we spend our money. Paterson states:
Subsidies could be more specifically tailored to satisfy the UK's unique geography and climate. In lowland areas, decisions on which crops to grow and animals to raise should broadly be left to the market. However, there are areas where food production is simply inadequate as an income generator.

The landscapes of the Lake District, the Peak District, and the mountainous areas of Wales and Scotland are the basis for a tourism industry worth an estimated £20-£30 billion per annum; there is currently no mechanism for the market to reward farmers and landowners for the public good, provided by the work they do maintaining and improving these environments.
Such issues are explored in detail in Flexcit, which open new vistas for a post-exit policy, making it clear that UK agriculture would be far better off without the dead hand of Brussels.

Despite this, the Times allows the dismal pro-EU advocates to exploit the lack of coherence in the "leave" camp by stating:
The Leave campaigns talk about trying to negotiate a free trade deal similar to the Swiss model. But that would not cover all products and would not give the same unrestricted access as provided by the single market. Where we did get duty-free access we would still be required to meet EU standards and regulations. In other words, the regulatory bonfire we've been promised by the Leave campaigns just wouldn't happen.
This is the same straw man technique that is being used across the board by the "remains", with no hint that the bulk of agricultural standards are set by the "three sisters" (Codex, OIE and IPPC), by UNECE and the OECD. Conformity within the context of continued EEA membership – where we would have greater say in the formulation of standards – would put us in a far better position.

To those who know, therefore, what we're actually seeing is not argument but the low drone of ignorant Europhiles. They tell us that "leaving the EU would mean reducing our access to our most important market, little or no reduction in regulation, no influence on future rules, the speedy abolition of direct support and an uncertain future for UK agriculture".

Yet, in the EU, the direction of travel is towards a progressive decrease in support payments, matched by increasingly onerous and intrusive bureaucracy. Only the "barley barons" and the subsidy farmers could be happy with situation – and that's who we're hearing from in this letter.

Most real farmers are conscious that the CAP is and always has been a disaster. Outside the EU, agriculture has a future. Inside, only the vested interest of those who are No F***ing Use would prosper.



Richard North 05/03/2016 link
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