Brexit: business fears

21/05/2017  


Pete, in his recent blogpost features the self-important Chris Grey, who happens to ask exactly the questions many of have been asking, and for some time.

For instance, he asks in respect of Brexit: where is the detailed discussion of different options and their consequences, to which he adds several more: What exactly does the government's White Paper Brexit plan, endorsed in the Tory manifesto, mean? Is "no deal better than a bad deal"? How would a "bad deal" be defined? What does a "no deal" scenario look like?

What Grey finds most extraordinary of all, though, is the lack of discussion on the costs of the Brexit plan. Every single other policy, from whatever party, is relentlessly scrutinised for affordability, he says, but not this one. "How will this or that spending pledge be paid for? ", he asks.

So obvious are such issues that similar thoughts have even occurred to Telegraph columnist Juliet Samuel. She notes – as others have done before her – that anyone hoping for a detailed picture of Brexit the Mrs May's manifesto will be disappointed. Our Prime Minister has stuck resolutely to her favoured strategy: reveal as little as possible and maintain maximum room for manoeuvre.

This leads Samuel to the equally obvious conclusion that it's impossible to know what the Brexit negotiations will bring. "The government", she writes, "is determined not to show its hand any sooner than it has to", adding: "If that leaves EU negotiators in the dark it also, unfortunately, leaves voters in the same place".

And much the same sentiments have occurred to Booker who, in this week's column also records that the Conservative manifesto told us nothing new about the Government's Brexit plans, other than repeating the promise of a "smooth, orderly" withdrawal.

Scarcely a day now goes by, he adds, without further signs of how difficult this may be to achieve, reinforced by Angela Merkel who told a G20 trade union conference last week that it would be up to the British to work for a settlement that would cause "the fewest possible distortions" to trade.

But it is not only the pundits who are reacting to the strange political vacuum represented by Mrs May's moribund manifesto. Last week also, as Booker records, there was a "startling report" from the international body representing all those firms whose products are dependent on components imported from other countries.

This was a survey of 2011 UK and European supply chain managers by the Chartered Institute of Procurement and Supply (CIPS). It found that, thanks to our decision to leave the Single Market, almost half the European firms reliant on British suppliers are so fearful of the new "customs procedures and regulatory hurdles" this will bring that they are already arranging to source those products on the continent.

Of British firms reliant on parts imported from Europe, 32 percent are likewise looking for alternative suppliers in the UK (of all cars made in Britain only 41 percent of their components are currently sourced in the UK). As the institute's president put it, "the separation of Britain from Europe is well under way".

This, in its own way, constitutes a vote of no confidence in the Prime Minister – one shared by many enterprises in the City of London, where international banks, such as JP Morgan, are quietly making preparations to move part of their operations to the continent.

But, says Booker, businesses have only been waking up to all these potential problems since January, when Theresa May announced the reversal of her earlier insistence that Britain would remain "within" the European market.

By choosing instead to leave the Single Market, Mrs May is opting to have the UK become what EU rules classify as "a third country". This status makes it inevitable that we are caught by all those new "customs procedures and regulatory hurdles" which so many businesses in Britain and Europe are now contemplating with such concern.

This is why we learnt last week from the Frankfurter Allgemeine Zeitung of a warning from the council of advisers to Germany's economics ministry that there is "little chance of a sufficiently deep agreement being concluded by the planned exit date of 2019".

The only way to "minimise disruption", they say, would be for Britain to join Norway in the European Free Trade Area, an option which Mrs May has already ruled out.

And gradually, the consequences of that decision are coming clearer. In Ireland, for instance, the sharpest cry of alarm yet went up last week from its racing industry, worth £1 billion a year, which depends heavily on its freedom to move 200 horses a week to race in Britain and back again.

Its spokeswoman recalled that last year Cheltenham had 19 Irish-trained winners, along with a third of those at Royal Ascot. She fears that new controls requiring "valuable horses to remain in horse boxes for prolonged periods at border checkpoints" would, on welfare grounds alone, make it difficult for this to continue. But Britain, she said, had so far shown no sign of needing to address this problem at all.

Much of all this concern has only arisen, of course, because of the huge cloud of uncertainty over what Britain will actually be seeking when the talks begin in Brussels next month.

It is one thing to offer bland assurances that we are hoping for a "smooth, orderly" withdrawal. But for many the strain of waiting for the details on which their livelihoods depend is becoming hard to bear. More to the point, the potential damage from a "botched Brexit" is so great for some firms that they must take precautions in order to protect their operations.

Not all of this is necessarily bad. As this report indicates, the Swedish furniture retailer Ikea is considering making more products in the UK in order to help offset risks from importing goods.

That other companies are looking at this option is confirmed by CIPS and, depending on the volume of trade substitution, this type of arrangement could have a significant effect on offsetting export losses.

The thing here is that we have no way of knowing what the balance will be. This is the gift Mrs May has bestowed on the nation. Where there could have been clarity and purpose, we have confusion and uncertainty. Small wonder, business fears are increasing, as is the case with any sensible person trying to find a way forward.



Richard North 21/05/2017 link

Brexit: playing for high stakes

20/05/2017  


Following the front-page euphoria in the Mail on Mrs May's election manifesto, it was rather amusing to see a Twitter comment to the effect that, if May announced slaughter of the firstborn right, the paper would describe it as a boon for overstretched parents.

Certainly, we've seen nothing unduly critical about the Brexit aspects from the media generally, much less the Mail in the wake of the manifesto publication. It took Chris Johns of the Irish Times, therefore, to note that the manifesto was "strong on economic illiteracy".

By and large, it is still the Irish who are making the running on Brexit news, with the Irish Times also in the frame, recording, amongst other things, the exploits of Taoiseach Enda Kenny.

He was in London yesterday addressing people at the Ireland Funds of Great Britain's City lunch, telling them that his Government would seek to protect the interests of Northern Ireland, warning that a hard Border was "unacceptable".

"My Government", he said, "has sought to protect the interests of the island as a whole in its extensive preparatory work on Brexit and will continue to advocate very strongly for Northern Ireland’s interests to be protected". But, he added, "it is important to recognise that the UK leaving the EU changes the context and presents very real challenges to us on the island of Ireland".

Meanwhile, the "fantasy land" we noted in our earlier piece is still very much in evidence. Under the title: "New Border: 'Cars being stopped and searched isn't going to happen'", this piece in the Irish times has a senior Irish revenue official saying border controls could be automated, allowing checks to be made "without customs points".

This is from Tony Buckley, the assistant secretary in charge of customs, who says the new plan will involve a type of self-assessment and audit regime, possibly with, for convenience reasons, service offices close to the border. But the regime can be automated and simplified and does not need customs points with Northern Ireland.

All this illustrates an absolute determination to play down the potential impact of Brexit, but also with an element of a straw man argument. For instance, no one is seriously expecting the Common Travel Area (CTA) to be junked, so the prospect of private cars being stopped and searched at the border was never really on the cards.

Buckley was asked if he envisaged a system such as the one that exists between Norway and Sweden, to which he responded that that border involved delays of approximately 15-20 minutes for trucks, adding: "We're looking at that in seconds".

Because a border would be being "built from nothing", Buckley said, there was an opportunity to use very sophisticated tracking and surveillance systems that satisfied the EU, managed the risk, and achieved the Government’s objective of a "very soft borer" (sic).

The new regime, he admitted, would probably give rise to temporary criminal and economic issues that would have to be dealt with. However, he said, overall Ireland has two big advantages in terms of dealing with the new situation. The Republic's trade with Northern Ireland is only two percent of all exports, and Ireland is an island at one end of the EU without another land border. If something comes into Ireland, it is in Ireland and that's it, he said.

Why this strikes as fantasy is that the border with Norway and Sweden is between a fully-fledged EU Member State and an Efta/EEA state, with an established agreement on customs cooperation. Nothing like this exists at any land border between an EU state and a third country. To suggest that the EU can (or will) instantly approve a system far in advance of anything that currently exists in the EEA is truly dreaming.

Not least, as Angela Merkel has recently reminded her own people, the European Union needs to guard against the U.K. gaining an economic edge by easing regulation when it leaves the bloc.

That apart, the real issue at the border is not private cars but commercial traffic: all such vehicles would have to be monitored. But the current Border has approximately 300 crossing points, with one million heavy and 1.3 million light-goods vehicles crossing each way each year.

An automated regulatory system would require automatic number recognition, with gantries at each crossing point. It would we totally unrealistic to expect all of 300 crossings to be kitted out. Some restrictions on the number of crossings would be inevitable.

Then, there will be a significant number of physical inspections, with the volume being constantly under-rated. Even if deferred inspection was allowed (and there is no reason why it should not be), the number of inspection points would be limited. A considerable amount of traffic would have to be diverted.

The crucial issue, though, is not the technology but the nature of the agreement between the EU and the UK. And with Theresa May still talking about a "no deal" scenario, that leaves the possibility of a hard border, with no concessions to speed up the flow of traffic.

As an aside, the implications of a hard border between North and South are so horrendous that one could hardly envisage any sane government allowing it. But if that is the case, it makes a mockery of Mrs May's "no deal" threat.

Despite this, we have Buckley and friends saying that parties moving goods across the border would have to lodge documents with the two customs authorities, which they would put into a computerised risk-assessment system, thereby facilitating rapid processing of clearance documents.

But the point we've made before is that any sharing of computer data will require the UK to conform with EU data protection rules – and then for electronic systems to be compatible. Neither is assured. Nor can it be assumed that the existing authorised economic operator system will necessarily carry over. This will depend on the outcome of negotiations and full conformity with data protection rules.

There is, however, no end to the Buckley fantasy. The practical difficulties of searching 40ft refrigerated trucks along the Border, he says, was not something anyone wanted to contemplate. "So let’s not do it", he declares – as if that was a solution.

Whether a facility such as a Border Control Post is on the border, or a few miles from it is neither here nor there. Being required to divert traffic through the BCP is the problem.

The bigger problem, though, seems to be the institutional ignorance and unwarranted optimism we're getting from officials. No one is going to suggest that the technical problems are not insoluble. Given the political will between the parties, a satisfactory arrangement will be concluded. But simply to pretend that these problems do not exist is the height of foolishness.

Nevertheless, there is one area where Buckley has it right. If Ireland fails to operate an adequate EU external border, he says, it could compromise Ireland's position in the EU market and maybe with the whole world, he says. "So we are playing for very high stakes".

Never were truer words said.



Richard North 20/05/2017 link

Brexit bullshit

18/05/2017  


In a classic example of the power of prestige, the BBC is quoting the head of Ireland's customs authority, who is stating that [only] up to eight percent of freight crossing the border will have to be subject to checks after Brexit.

This is Revenue Commissioner Liam Irwin who has been giving evidence to the Irish parliament's finance committee, whence he said that the authorities would try to minimise customs controls but they are required under EU law. On that basis, he argues that this would mean checks on 6-8 percent of freight, mainly on documents but with a "small number" of physical inspections.

Furthermore, Irwin says, checks would not happen at the border but at "trade facilitation posts" which would be "10 or 15 kilometres back from the border". He adds that there would also be some form of random, or risk-based, customs checks carried out by mobile units.

In the Commissioner's view, customs declarations would be made electronically and most transactions would be immediately approved. There would not be a return to a pre-1992 situation when there were customs posts at the border.

Bizarrely, the man then goes on to admit that Irish customs authorities are not currently in "any form of discussion" with the UK, which rather negates his earlier comments. At best, these could only be considered aspirational, dependent on the nature of the agreements on customs cooperation between the UK and the EU.

Not least, when it comes to customs declarations, the ability process these depend intrinsically on the degree of cross-border exchange of data which, in turn, will depend on UK conformity with EU data protection rules. This is currently open to question.

Then, Mr Irwin seems to be neglecting entirely the problem of conformity assessment, to which extent he must be presuming that the UK and the EU will be able to conclude a mutual recognition agreement (MRA). Without such an agreement, one would expect physical inspections (and specialist testing) of goods coming into Ireland from the North vastly to exceed a mere eight percent.

And this, of course, does not take into account the cross-border movement of livestock, agricultural goods and foodstuffs, which must be subject to veterinary or phytosanitary checks before they can even be submitted for customs clearance. For live animals, inspection rates can be 100 percent, while the rate might vary from 10-50 percent for the physical inspection of foodstuffs.

There is a way round this – what amounts to the "Swiss option". But this would require the UK to comply fully with EU animal health and food law, and all other relevant law, as well as carrying out full EU-style checks on imports from third countries.

For these sectors, the net effect would be the same as if the UK had never left the EU, with the proviso that the "fax law" jibe would come true. The UK would have to comply with EU law, with no direct input in its making – notwithstanding that many of the standards underwriting the law originate at global level.

What precisely businesses will have to plan for, therefore, depends on the level of agreement between the UK and the EU – nothing of which can be taken for granted. When it came to Irwin's presentation, it was perhaps just as well that Sinn Féin's Pearse Doherty questioned whether talk of an invisible border was "fantasy land stuff" as nowhere in Europe had such arrangements.

Despite that, Michel Barnier was in the European Parliament yesterday for a debate on Brexit, when he urged businesses to "move fast" to prepare for Brexit in under two years. They should not count, he says, on long transition periods to cushion the impact of Britain leaving the European Union.

"We might be working on transitional measures post-Brexit, on a phasing-out period and a phasing-in towards the new relationship, but the real transition period is now, before exit", he said. "I would like to recommend all economic players, all economic operators, to make use of this period, so that the day of this exit, probably March 2019, is as orderly as possible".

However, notwithstanding my earlier piece, this report would have it that very few have made firm decisions, and cannot until they see what kind of new trading relationship can be agreed. Putting clothes on that assertion, we see a report which tells us that 98 percent of Irish companies have no plan in place to deal with the consequences of Brexit.

This sort of finding is very much in accord with my experience working for trade bodies. Invariably, when new regulations were introduced, business owners would leave it until the last possible minute before taking steps to comply.

There is every reason to believe that we will see the something of the same dynamic with Brexit. Most will delay taking action but those who do act – such as BNP Paribas, the latest bank to announce that it is moving staff out of London - will assume the worst.

Such companies cannot be faulted. There is a good business case for assuming the worst, especially when confronted with the sort of institutional ignorance and unwarranted optimism exhibited by the likes of Irwin. His claims seem to be much of the same order as assurances on Singapore's safety after the Japanese invasion of the Malay Peninsula.

The unwarranted optimism looks even thinner when one sees this survey conducted by Deloitte, which suggests that very nearly half of German enterprises support the idea of completely excluding the UK from the EU Single Market if it does not adhere to the four freedoms.

Nor is this by any means the first time we have seen such sentiment, which reinforces the premise that Germany is not going to roll over and demand an easy ride for the UK just so that we will continue buying BMWs.

If this needed any more emphasis, we need go no further than Angela Merkel who was addressing a G20 trade union event in Berlin yesterday. She took the opportunity to remind us that everything from just-in-time auto supply chains to the free movement of workers and even their pet cats and dogs will be thrown into question by Brexit.

While Britain would be free to change rules to its own advantage after leaving, she said, the EU would have to take steps to preserve a level playing field. "If the British government ends the free movement of people, that will have its price", she said.

"That's not malice", she added. "(One) cannot expect to have all the good sides and then say there will be an upper limit of 100,000 or 200,000 EU citizens, no more, or just researchers, but please nobody else. This will not work".

The fact that so many areas of policy have for decades operated under EU rules meant that the disruption following Brexit could extend into wholly unexpected parts, she warned. "Currently, the 250,000 pets, cats and dogs that travel from Britain to the continent or the other way around each year are managed within an EU framework," she said. "Now they'll need veterinary certificates - things we don't even remember".

So, in Berlin if not Dublin - the penny is finally dropping: border controls mean more than just customs checks. Belatedly, the Financial Times is waking up to the impact Brexit will have on food safety, albeit addressing only a fraction of the issues we rehearsed in January. Give the paper another year and it might start to catch up, whence the rest of the legacy media can copy its errors.

It was, after all, the Financial Times which invented the €100 billion "divorce bill", only now to have Barnier confront Nigel Farage in the European Parliament after the former Ukip leader claimed that Brussels was trying to "bully" Britain by seeking this amount.

Dismissing the allegation that it was a "ludicrous ransom", Barnier pointed the simple truth that has evaded Farage and most of the legacy media: "There is no figure for a financial settlement between Britain and the European Union yet", he declared.

Said Barnier, such a figure "can only be established once both sides agree on a common methodology of calculations, taking into account the date of exit". The amount will depend on the methodology we adopt and the actual date of the UK's exit. It is not (me) who will set a figure", he added.

Returning to the vexed question of trade, it isn't only the Germans who are going to be playing hardball – not that this was ever the case. The Irish Times is gloomily recording that a prominent French farm leader has lobbed a proverbial grenade into the upcoming Brexit negotiations by calling for the re-establishment of a hard Border between Northern Ireland and the Republic.

This is Christophe Hillairet, a council member of Copa, Europe's largest farm organisation. He expressed fears that the UK would sign agreements to import food from Commonwealth countries after Brexit.

Raising the prospect of the internal border becoming a back door into the single Market, Hillairet warned that the only way to stop these imports finding their way into the Republic and the wider EU was for strict border controls to be reintroduced.

"Ireland is a big problem but for the French farmer we will need to have a hard Border between the North and the Republic as otherwise we will have a lot of products that will cross from North to South. That would be very dangerous for our producers", he told the Agra Europe website.

That once again strikes at Irwin's "fantasy land stuff", not made any better by a timid and dismally unimaginative report from the Institute of Government. While it recognises that free trade areas are "just one tool for boosting trade" and "other options may be much more effective in achieving trade policy objectives", it fails to offer any serious detail on those "other options".

Cutting through the bullshit bonanza, though, is the Frankfurter Allgemeine Zeitung which has the Scientific Advisory Council of the Federal Ministry of Economic Affairs writing to economy minister Brigitte Zypries warning that the Brexit process risks "unnecessary damage to economic relations".

The Council concedes that the mutual economic contacts are so important that it is necessary to conclude a "deep and comprehensive free trade agreement" but considers that the conclusion of such a treaty "will hardly be possible" by the planned exit date in 2019.

The Council's economists, therefore, advise Zypries to push for an intermediate step towards a free trade agreement, seeking to ensure that London joins Efta in parallel with Brexit. This, they say, would minimise disruption.

Interestingly, this follows an unrelated intervention by Liechtenstein's foreign minister Aurelia Frick, who is telling us that Iceland, Liechtenstein, and Norway could be part of the EU's deal with the UK after it leaves the EU.

"Solutions to soften the landing should be available to us", she said ahead of a meeting with Michel Barnier, who then promised that he would keep Efta/EEA States not only informed but consulted about the Brexit negotiations.

The UK has not yet triggered a clause in the EEA treaty, notifying the EU that it intends to leave the EEA. If it neglects this formal obligation, the clause will likely be triggered by the EU, said Dag Werno Hotler, deputy secretary general of Efta (notwithstanding that there is no expulsion clause).

Frick and her colleague, Norway's EU minister Frank Bakke Jensen, said they were "open-minded" about the UK re-joining Efta. "But the initiative would have to come from the UK. For the moment, the question is not on the table", the ministers said.

Once again, therefore, there is rustling in the undergrowth. Cut through the media bullshit and the colossal ignorance afflicting the establishment and there is sense to be had.



Richard North 18/05/2017 link

Booker: Irish border woes

14/05/2017  


This was the week, according to the Irish Times that Ireland discovered it was on its own when it comes to Brexit. The discovery came on the back of Michel Barnier's two-day visit to the Republic - snooping around the Northern Irish border, having previously been the first non-head of state or government ever to address both houses of the Irish Parliament.

And that brings Booker into the fray with this week's column, noting that the Irish border question - the need to keep a "soft border" between Ireland and the North - is one of the three items at the top of Barnier's agenda for the Brexit talks, along with the rights of EU citizens in the UK and that "divorce bill".

In a piece headed: "'Hard borders' post-Brexit will make red tape even worse" (not Booker's choice of headline), he writes that many of us voted to leave the EU to free us from the suffocating thickets of EU bureaucracy. We little realised, he says, that outside the EU we might find it even worse than when we were in.

And it is very evident that Barnier knows that this is a massive conundrum. As he made clear to the Irish MPs, Britain's decision to leave both the Single Market and the European Economic Area (EEA) means that the UK automatically becomes what the EU calls a "third country"; which in turn means the re-imposing border controls.

This was always going to present some problems, as even between Norway and Sweden (with both countries in the EEA), there are some border controls, but remaining in the EEA would have reduced them to a tolerable minimum.

It was on the assumption that we would remain in the Single Market that, in April last year we were able to write two pieces (here and here) suggesting that the residual problems could largely be overcome by the intelligent use of technology, with a variety of stratagems and devices which would reduce, if not eliminate, border checks.

However, with Mrs May having decided that we would leave the Single Market, she has opened up a raft of problems that were best avoided – problems which will have a significant impact on all our trade with the EU.

But, writes Booker, whatever problems this may create elsewhere in the EU, they are particularly acute in Ireland, because the two parts of that island, not least their economies, are so closely intermeshed.

For some idea of what this means, we could start by looking at the cross-border trade in what are called "products of animal origin", accounting for a significant part of total trade on both sides of the border.

These range from the 10,000 pigs and 1,000 cattle which cross the border each week in both directions, for slaughtering and processing, to the huge quantities of milk, cheese, butter and other dairy products which, also for processing, may cross the border up to five times before being sold on the retail market.

All these movements, post-Brexit, will become subject to EU Regulation 2016/429, laying down the five-stage requirements whereby any "third country" can export such products into the EU market.

The point which many seem to miss is that these stages apply on to "third countries" and therefore will apply to the UK when it leaves the EU. As we drop out of membership, the ability to export to the EU is not automatic. Firstly, the UK will have formally to apply to the European Commission to be designated as an "approved country" in order to be listed on the relevant databases.

Then, each individual business wishing to export has to be inspected and certified as an "approved establishment". These procedures alone could take months to complete and only then are the businesses allocated an official "establishment number", which must be marked on all goods exported to the EU.

As it stands, all food manufacturers and processors are already awarded establishment numbers, under Single Market provisions. It is possible that the EU will agree to carry over the approvals, post-Brexit. But this is unlikely to happen unless the UK agrees to enforce EU law in these establishments, and apply any new rules that are made. Attempts to "deregulate" could result in establishments being delisted.

Thirdly all products, including live animals, must be certified as compliant with the EU's animal health requirements and all other relevant regulation. This goes beyond merely being produced in approved establishments. The operational procedures under which goods are produced (or animals kept) must conform with current EU rules.

Fourthly, goods must then be accompanied by certificates and other relevant documentation required by EU export regulations. This can mean having to obtain veterinary certificates from "official veterinarians", or certificates of conformity from the relevant enforcement officials.

Then, finally, such goods may only enter into circulation in the EU via a a "Border Inspection Post" (now renamed Border Control Post), where they are subject to a series of checks.

These may be as straightforward as a simple documentation check, ensuring that all the relevant certificates have been provided. But they can include load verification – physical checks of vehicle or container content, to ascertain whether they match the descriptions on the documents.

Checks can also extend to opening packaging, to verify that contents conform with the labelling, and goods may be physically inspected to ensure that they comply with quality and marketing regulations. Samples may also be taken, which can be sent away for testing, for such things as the presence of microbiological contamination, or pesticide residues.

The time taken may vary from a few hours or, where samples are taken for testing, several days or even a week, But only when they have passed the checks and been certified as suitable for free circulation can they finally be presented to customs for admission to the EU.

None of this of course applies to our present borderless trade within the EU, which is one reason why so few businesses either in Britain or Ireland are yet aware of it. But outside the EU/EEA, there are no exceptions. Even countries which have free trade agreements with the EU still have to go through the hoops.

Not the least problems with the Irish Republic is that there are only three EU Border Inspection Posts in the country: two in Dublin, the other at Shannon Airport. To avoid having to divert food consignments to these places, tens of millions of pounds would have to be spent on building and staffing new facilities, and even then it would not be possible to cover every single crossing along the 300-mile border.

As for live animals, we have already reported that Ireland's racing industry fears the implications of all this for trainers and breeders wishing to bring their horses back into the EU from Cheltenham or Newmarket.

But other bureaucratic hurdles will await many other cross-border exports, such as pharmaceuticals, chemicals and all that vast range of products which require a "CE mark" (for Conformité Européene), some of which can only be granted by a "notified body" based in the EU.

The most public warning so far has come from the chief economist of the Irish Central Bank, who claimed that a "hard border" could in coming years cost "40,000 jobs" in southern Ireland alone.

Barnier may blithely hope that he can arrange some "special case" deal with the UK, to ensure a "soft border", minimising all this bureaucracy. But here they could find they are falling foul of WTO rules which prohibit discrimination between third countries.

And already we are hearing from EU politicians, such as Manfred Weber last week, the leader of the largest group in the European Parliament, that no such "cherry picking" can be allowed, because it might encourage other EU members to follow our lead by leaving as well.

But one crucial question Booker asks is whther Mr Barnier and his UK counterparts have actually read Regulation 2016/429. Are they really aware of what they are taking on? The probabilities are that officials at all levels have failed to understand the implications of their own rules.

The learning curve that our own officials are having to surmount may well have to extend to the higher reaches of Brussels officialdom, for Barnier to realise that there is no way of maintaining the integrity of the Single Market, as he demands, while also permitting a "soft border" with Northern Ireland.



Richard North 14/05/2017 link

Brexit: "in a very odd place"

10/05/2017  


I'm actually wondering if I dreamt that Mrs May kicked off the general election by calling it the "Brexit election". So far, the Brexit element has been a non-event, with no further (or any) details of the prime minister's strategy on offer.

So unreal has the election become that we have John Harris in the Guardian asking whether we should hail it as "the strangest British contest in living memory". We have a prime minister, he says, who affected to go into the campaign full of vim and vigour, but now seems to recoil from the absolute basics of what electioneering entails.

Referring to the rather strange behaviour of Mrs May's team when she recently visited Cornwall, Harris remarks that, if your people shut journalists from a big regional website into a small room for fear they might video something as banal as a visit to a manufacturer of diving equipment, "you are surely in a very odd place".

To be fair (not that fairness has any place in modern politics), this sort of control freakery came to us in the Blair era, where meetings were rigorously controlled and the sort of vetting one had to undergo to get access to the prime minister put defence screening to shame.

Fresh from her experiences in Cornwall, we had Mrs May up in Yorkshire yesterday, but she was talking about capping energy bills – and avoiding the obvious question that Booker has been framing – as to why we should be grateful to the Government for mitigating a tiny part of the increase brought about by the climate change impositions.

But if Mrs May wasn't talking about this, she wasn't talking about Brexit either. We don't even know that anybody asked about Brexit because, according to the Cornwall journalists, revealing what questions were not allowed was, er … not allowed.

Corbyn, on the other hand, was being open about not talking about Brexit, refusing to say whether he would take the UK out of the EU if he became prime minister. Proving that it is not only the English who do understatement, we thus had Deutsche Welle headline its report: "UK opposition leader Corbyn unclear on Brexit status".

The opposition leader focused on getting "a good deal with Europe", without actually setting out what that might be, other than the usual generalities of "tariff-free access to the EU's single market, the rights of EU nationals living in Britain to be guaranteed and protection for workers' rights".

It was left to aides later to say that Corbyn would definitely take us out. But since we really have no idea of his strategy, it is of very little interest, either way – especially as he is not going to win the election and the only real question is how big the melt-down is going to be.

All this makes for a huge vacuum, where none of the substantive issues are being discussed. The media has lost interest in the detail (not that it ever have a grip on the issues) and nothing serious is coming out of Brussels, with Junker having gone "dark", having apparently upset Angela Merkel with his revelations about The Last Supper with May.

Corbyn, like May, seems intent on turning this into a non-Brexit election, pinpointing tax cheats, "greedy bankers" and "crooked financiers" as his major targets, promising to fleece them for more tax, while ending the "epidemic" of low pay and halting profiteers "feasting" on the NHS – without, of course, mentioning Labour's PFI debt.

Unsurprisingly, the polls are favouring "Theresa May's Team", still obstinately styled as the Conservatives in the public domain, even if the prime minister seems to be trying to distance herself from her own party. Lately, ICM put the Conservatives on 49 percent against Labour on 27, giving the party its largest lead recorded by the polling company since 1983.

Even the New Statesman has given up pretending that Labour is still in the game, instead devoting is space to an open letter to Theresa May, declaring: "A Tory landslide does not equate to a mandate on Brexit". In quite strident tones, it goes on to say:
They say opposition parties don't win elections, governments lose them, but in this instance it was the other way around. You, a highly trained heavyweight boxer, just picked a fight with a frail old man. You won, yes, but it was hardly a fair fight. You called the election when you knew you would win. Your own party passed a law to try to stop this happening, precisely because it is not good for our democracy or the country. You did not win this election, the Labour party lost it. That does not equate to a vote for you. This is not a mandate, and to claim it is would be cowardly and dishonest. You have manipulated the political process – very cleverly – to strengthen your career and wipe out your opposition. That is not a win. It is not a mandate.
There illustrated is a troubling characteristic of contemporary politics – one finds oneself agreeing more with enemies and rivals than one does with what one once imagined to be one's own side. So we have a great deal of sympathy with that view.

On no account can we say (yet) that Mrs May has set out her stall. She seems to be pitching for a blank cheque – the freedom to do what she likes without having to trouble herself by stating in advance what she has in mind. We don't even know if she has a strategy, any more than Corbyn.

Certainly, without a decent opposition, Mrs May is likely to get a free run in Parliament, especially if – as he threatens – Corbyn stays on as opposition leader after a trouncing at the election.

But on Brexit, the real opposition is not in Westminster but in Brussels, where Mrs May's vagueness and direction may meet its Waterloo – with her taking the part of the French, with no Prussians marching to her rescue.

Tucked way down the agenda though is the inkling of a solution though, with EUObserver reporting that there are moves afoot to bring together all the Efta states under one roof, merging the EEA agreement with the Swiss bilaterals to create a comprehensive EU-Efta agreement.

This is the sort of formulation that the EU has been wanting for some time, as part of its overall endeavours to streamline its neighbourhood policy, reducing the diplomatic and administrative burdens currently presented by the plethora of different deals.

A new, revised EEA is precisely the sort of framework into which the UK can slot, and if the agreement is rebranded, with a suitable name change, that would give Mrs May her opportunity to claim that she has negotiated a bespoke agreement, denying that she has gone for the "Norway option", or some such.

With this happening out of the limelight, with the UK media picking the bones from a tedious election campaign, is probably no bad thing. No doubt one or other of our media sages can, at an opportune moment, "discover" this brand new, all-singing and dancing option, then to allow it to sweep the legacy media for its "brilliance" to be proclaimed.

Then, at least, we might be halfway towards a reasonably tolerable solution – tolerable in the sense that it isn't a plane crash Brexit, but still leaving us with the problem of securing an independent existence, free from the grip of Brussels.

For the moment, though, we must reconcile ourselves to the political reality, that nothing will be settled by this election, On 9 June, all the old problems will we waiting for us, just as we left them. Brexit may mean Brexit, but still no one will know what that actually means.



Richard North 10/05/2017 link

Brexit: the battle goes on

09/05/2017  


It was in April that we saw reports that the Commission might be interested in pursuing an EEA-style option for the UK transitional scheme.

More recently, we had the former Greek finance minister Yanis Varoufakis tout the same solution. His view was that Mrs May should ask for a "Norway-style agreement" for five years as an alternative to a hard Brexit in order to give Parliament time to iron out the specifics.

Then, in the last few days, the bandwagon has acquired another customer in the form of Lord David Owen, supported in the Telegraph by Liam Haligan – he of WTO option fame.

Lord Owen is following exactly the same line promoted by Varoufakis, arguing that the EEA option buys time to negotiate a EU/UK trade agreement. But if there is undue delay, he argues, the UK only has to give a year's notice to leave the EEA. We would, he says, then exit on WTO terms, but at a time of our own choosing.

The essential flaw in these nostrums, though, is that in committing to an EEA-type agreement as a precursor to a free trade agreement over the longer term, all we are doing is agreeing to a managed decline in two stages rather than one.

The problem is that even full-blown Efta/EEA participation represents a less advantageous position than full Single Market participation, while a bilateral free trade agreement represents a further deterioration. Thus UK negotiators would be in the unique and unwelcome position of seeking staged negotiations, the outcome of which - after considerable expenditure and time - would be a less advantageous position than we have now.

Varoufakis and Lord Owen, therefore, are just more of those who, in realising the obvious (that we cannot conclude an FTA inside the two-year period), are struggling for a solution without really having thought out what it is we need to achieve.

The great danger, of course, is that if the UK pursues an interim solution where the final step is worse, the interim will become permanent. There will be no incentive to move beyond it. Through this, we could see the EU absorbing the EEA into its membership structure, which is possibly why the "remainer" faction is so keen on the idea.

It was for this reason that we went further with Flexcit. The key to the European dimension of the exit plan is not Phase One, which deals with the mechanics of leaving, but Phase Three, which offers the opportunity to develop a vastly improved trading scenario, separated from the EU's political agenda.

The mistake we have all made is in concentrating far too much on the mechanics of extraction and not sufficiently on the end game. But our further mistake, as we pointed out in an earlier piece, was to think that the government actually had the capability to take us out of the EU in the time period allocated. This isn't possible and never was possible.

In this context, I referred to the hugely important book by Alan S Milward, published in 2002 under the title: "The Rise and Fall of a National Strategy, 1945-63", which I acquired when Booker and I were writing The Great Deception.

To revisit the argument, I noted that the author's thesis was that the UK came out of the Second World War determined to avoid entanglement with the developing plans for European political integration. Milward charted the progress through the next 18 years, which is the time it took for successive governments to come terms with joining the European Community, arguing that it took that long to achieve a change of strategy.

Prior to the referendum, this government had no intention of leaving the EU, and that the result of the referendum was unexpected – for which it had done no contingency planning. For it then to cope with a complete reversal in the long-term national strategy is simply too much to ask.

With that in mind, we're in the process of making another mistake – assuming that winning the referendum campaign was the end of the matter. Assuming that we do end up with an intermediate settlement which then drags on, we are going to have to fight yet another campaign before we see this thing through to the end.

Whatever the outcome of this current process, it is not going to be anything like satisfactory – simply because it is not within the Government's capability to achieve anything that we would find acceptable.

Perhaps, if we do end up with something close to an EEA option, what we need to be doing is working with the No2EU faction in Norway, and with the other anti-EU factions in the Efta states, to seek a fundamental reform of the EEA.

We need to revert to the idea foreseen in the original EEA concept, the European Economic Space with equality of decision in the management of the Single Market and the related decentralised agencies.

With "houses" of equal status in the European "village" - as originally promised by Delors) – we have a tenable, longer term solution which, I suspect, the Norwegians would particularly welcome.

Earlier, when I mooted this idea, I was less than confident that this could happen after May had burned so many bridges. But if the idea of using the EEA as an intermediate does come from the Commission, with an element of popular support in the UK, then it could still happen.

Here, there is one point that Lord Owen makes which does have some validity. "It is very important", he writes, "that Brexit does not become the property of the Conservative Party or Conservative MPs during this General Election". And with that we can agree. Brexit belongs to us all, and it is for us all to decide its final shape.

The whole issue though, as Pete points out, is unfinished business. The referendum started a revolution but its execution is being hijacked by the very people against whom we were all rebelling.

To accept that this general election gives an unrestricted mandate to Mrs May - to do whatever she chooses - is, therefore, not an option. The battle goes on. Far from being over, it's only just started.



Richard North 09/05/2017 link

Booker: Brexit illusions about to be shattered

30/04/2017  


For months we have been predicting this, and now in today's column, Booker gets to acquaint his readers with some "very uncomfortable realities" which are about to intrude on the bubble of make believe in which our Government has been hiding.

Last Wednesday, before the EU's leaders gathered for Saturday's "summit" where they proclaimed their united response to Britain's demands, the loudest alarm bell yet was sounded by Angela Merkel in a speech to the German parliament.

The British, she said, have simply been "wasting time" living in a cloud of "illusions" but now we will have to start facing the consequences of excluding ourselves from the system which gives us unrestricted access to easily our largest export market, and the source of 30 percent of our food.

Without some very deft negotiations and some serious concessions on our part – which may include continued subordination to EU law and the ECJ – there is no question that border controls will be re-established on all our frontiers with the EU (including that in Northern Ireland). The days when 12,000 trucks a day could cross freely from Dover to Calais, and much else, will be over.

And only yesterday, the European Council made it clear yet again that there is no way Theresa May and her colleagues are going to walk away with any one-off "trade deal" of the kind they are imagining. And the practical implications for Britain of a poor deal (or none at all) are horrendous.

That is precisely why some of us have long tried to point out that the only conceivably sensible way for us to leave the EU, wholly desirable though that is, would be to have remained in the EEA and to join Norway in the European Free Trade Area (Efta).

But, instead of a sensible debate in the aftermath of the referendum, we have seen the noise-makers predominate, dragging the discourse down to a terrifyingly superficial level.

At the centre of all this we have the politicians, led by the "Ultra-Brexiteers" around Teresa May, refusing to consider what this could have given us: continued trading as we have now; exemption from most of the rulings of the European Court of Justice; freedom to negotiate our own trade deals with the outside world; even a unilateral right under the EEA agreement to exercise, in our national interest, some selective control over immigration from the EU.

While failing to do the necessary homework, and by rigorously excluding contrary voices, the Ultra-Brexiteers have sought to dominate the debate – with the willing help of their friends in the legacy media. They have not begun to grasp the realities of what would be needed to achieve a properly workable disengagement from that system of government we have been part of and ruled by for 44 years.

Earlier on, where it came to considering our approach to the Article 50 negotiation, we should recall that people such as Sir Ivan Rogers were recommending that we should "go long", setting out our proposals in some detail, thus forcing the "colleagues" to react to our agenda.

Instead, Mrs May chose to keep the notification letter short, packing it with "motherhood and apple pie" clichés and vague – and unrealistic – aspirations. She skirted the "hard" issues and made no attempt to defuse what were obviously going to be key issues in the negotiations.

As a result, the UK Government has largely handed the initiative to the EU which has been steadfast in setting out its agenda, and sticking to it, leaving the "Ultras" huffing and puffing at the indignity of it all.

In actuality, the EU's agenda is pretty pedestrian but, compared with what Mrs May had to offer, it has far more substance. Furthermore, it sets out the structure for the negotiations which are going to work to the disadvantage of the UK, in refusing parallel negotiations on trade.

Thus, "Team Brexit" will shortly be brought up against all those hard realities to which they have remained oblivious – or have been trying to avoid. And in many ways, they are going to be far more unpleasant than they can yet imagine. Having talked up expectations, Mrs May is going to find it very hard to row back on her statements about EU payments and the writ of the ECJ.

Says Booker, that is what Sir Ivan Rogers was hinting at when he spoke of “ill-informed and muddled thinking” at the top of government, before he resigned last December as our top man in Brussels.

And it is what Mrs Merkel means when she says that British ministers have so far just been wasting time in chasing "illusions". But how many of our own politicians over the next few weeks of election campaigning, Booker asks, will be pointing any of this out; any more than we will hear it from the BBC and the rest of the media?

For reasons long predictable, we are heading for some very nasty shocks and real trouble. The Brexit dream stage is over. Merkel's chilling words last week were only the start of the new stage we are now so blindly drifting into.

Nor can there be any comfort in the thought that the EU's negotiating guidelines are simply an opening gambit which can be discarded when the going gets tough. In procedural terms, these guidelines form the mandate for the negotiating team and have biding effect. If the negotiators need to depart from them, then they will have to go back to the European Council.

Nor can it be said that the elements are new or different from the normal procedural steps adopted by the EU. For instance, their stance of "nothing is agreed until everything is agreed" is a standard principle which the EU adopts almost universally. Within that context, insisting on a phased approach to the negotiations makes absolute sense. Taking part in complex and highly technical trade negotiations requires a considerable investment in time and scarce manpower resources, so it stands to reason that they will not want make the commitment until the basics are agreed.

These, according to the guidelines, have been distilled down to three essential – the fate of expats, the financial settlement and the status of the land border with Northern Ireland.

Considering that the negotiations proper cannot start until mid-June (at the very earliest), ten weeks have been clipped off an already perilously short negotiating period. And any one of the three headline issues could take many months to resolve.

But it would be dangerously wrong to believe that only the three headline issues need to be resolved before we can happily sit down and discuss trade.

Tucked into the negotiating guidelines are the requirement, for instance, that the Union should agree arrangements as regards the Sovereign Base Areas in Cyprus and recognise in that respect bilateral agreements and arrangements between the Republic of Cyprus and the UK.

That is by no means as simple as it sound, but then the guidelines observe that, following Brexit, the UK will no longer be covered by international agreements "concluded by the Union or by Member States acting on its behalf or by the Union and its Member States acting jointly".

Yet, says the European Council, it expects the UK to honour its share of all international commitments contracted in the context of its EU membership. In such instances, it says, a "constructive dialogue" with the UK on a possible common approach towards third country partners, international organisations and conventions concerned should be engaged.

Bearing in mind that there are currently over 900 such agreements - including some costly and highly contentious provisions on climate change – on refugees and other matters, it is not sensible to believe that all these matters can be dispensed with quickly. These agreements have been concluded over many decades, and many will require detailed scrutiny before we can continue to support them.

Not content with that, the European Council also asserts that the withdrawal agreement will need to address potential issues arising from the withdrawal in other areas of cooperation, including judicial cooperation, law enforcement and security. These matters could take some time to conclude.

Then there is the matter of the future location of the seats of EU agencies and facilities located in the UK, with the UK expected to facilitate their transfer. Not said, but nonetheless necessary, is continued participation in other agencies – and the price to be paid.

Following that, there is the extremely sensitive issue of making arrangements to ensure legal certainty and equal treatment for all court procedures pending before the ECJ. The European Council is insisting that the ECJ should remain competent to adjudicate in these procedures after Brexit.

Similarly, says the European Council, arrangements should be found for administrative procedures pending before the European Commission and Union agencies upon the date of the withdrawal that involve the United Kingdom or natural or legal persons in the United Kingdom. It adds that arrangements should be foreseen for the possibility of administrative or court proceedings to be initiated post-exit for facts that have occurred before the withdrawal date.

There is then the issue which nearly broke T-TIP. The withdrawal agreement has to include appropriate dispute settlement and enforcement mechanisms regarding the application and interpretation of the withdrawal agreement, "as well as duly circumscribed institutional arrangements allowing for the adoption of measures necessary to deal with situations not foreseen in the withdrawal agreement".

This should be done, says the Council, "bearing in mind the Union's interest to effectively protect its autonomy and its legal order", including the role of the ECJ. Almost certainly, the EU will be looking for the ECJ to adjudicate on the withdrawal agreement.

And beyond all this, of course, there is the matter of negotiating the transitional agreement. If this has to be tied in with a secession treaty, it alone will be a complex document which, in the ordinary course of events, would take years to agree.

Standing back, therefore, to suggest that anything other than the most basic of frameworks on trade can be settled by the time we leave is being highly optimistic – unrealistically so. This is going to have to wait for the UK as a third country to make the running.

The worst of this is that many of the problems we are confronting were avoidable, had we decided to follow the Efta/EEA route. And even now, it is not too late to make moves in this direction – allowing the negotiations to continue via the EEA, after we have left the EU.

But now, as Booker says, we must wait to see what impact this has on the election campaign. None of us are sanguine that the issues will be given a proper airing, although the less that is clarified now, the greater will be the problems of the future.



Richard North 30/04/2017 link

Brexit: Macron – neither good nor bad

25/04/2017  


It says something of the general election campaign – still cranking into gear – that, briefly, the English media have found the French election marginally more interesting than our own.

But it should come as no great surprise that the English press is just as ill-informed about French politics as it is about everything else. Thus do we have the Daily Mail proclaiming a "New French Revolution", marking the success of Emmanuel Macron in the first round of the presidential contest, with Marine Le Pen taking second place.

Only an English paper, though, could describe a process which puts a Jesuit-trained enarque in pole position as a "revolution". As a former member of the Socialist Party, a senior member of President Hollande's staff and then Minister of Economy and Finance, Macron is nothing if not a political insider, from the very heart of the establishment.

Furthermore, although the English media is also making great play of the "wipe-out" of the traditional parties, political parties by no means have the same resonance in France as they do in the UK.

The centre-right, in particular, has been playing fast and loose with party names, from de Gaulle's Union for the New Republic (Union pour la nouvelle république or UNR) onwards. Having been started up as a platform for de Gaulle, it was replaced for the 1968 legislative election by the Union for the Defence of the Republic (Union pour la défense de la République or UDR).

In December 1976, the UDR was replaced by the Rally for the Republic (Rassemblement pour la République or RPR), a New Gaullist Party, devised as a machine of reconquest behind one man, Jacques Chirac (who, as presidential candidate later took on Le Pen senior).

Before the 2002 presidential election, RPR and non-RPR supporters of Chirac gathered in an association: the "Union on the move". It became the Union for the Presidential Majority (Union pour la majorité présidentielle or UMP), largely as a personal platform for Jacques Chirac.

Then in May 2015, with a Socialist government in power, the party was renamed and succeeded by the Republicans (Les Républicains). This party, formally less than two years old, provided the platform from which François Fillon mounted his challenge, gaining seven million votes and 19.94 percent of the poll, against Macron who took 23.7 percent, and Le Pen with 21.53 percent.

With parties of the right tailored to provide platforms for presidential candidates, it was entirely logical for Macron to set up his own party for the centre-left, to replace the hugely unpopular and discredited Socialist Party.

Although Macron now calls himself an "independent", his dependence on a tailor-made political platform is entirely in keeping with traditional French politics. The "wipe out" of traditional parties, therefore, is meaningless.

As to his stance on Brexit, he made this very clear before the referendum. France, he said, would not allow its British neighbour to be given any special status. "We are inside or outside, and the day after the departure, there will be no financial passport for the British establishments", he added, stating that the European Council must issue an ultimatum to the British about their intentions.

As far as the President of the Republic was concerned (and that most likely will be he), Macron had a very clear message: "If the United Kingdom wants a commercial treaty for access to the European market, the British will have to contribute to the European budget like the Norwegians or the Swiss. If London does not wish it, it must be a total exit".

Bizarrely, Norway does not contribute to the EU budget, but you would not expect French politicians to be any better informed about EU matters than their UK counterparts. The "invincible ignorance" we experience is not confined to this side of the Channel.

Looking at the "challenge" that would follow this referendum, in his view, the EU had two priorities. It had to: "avoid the contamination of the 'Brexit' and immediately relaunch the momentum of a positive project for Europe". 

Even if "Remain" prevails, Macron said at the time, France will take the initiative. "If we allow 'Brexit' to gnaw at the European adventure, you will have similar debates among the Danes, the Dutch, the Poles, the Hungarians, and this is already the case". Thus, he says, "we must return to the original promises of the European project: peace, prosperity and freedom". 

This, then, is a man from whom we cannot expect too much, although he will at least be predictable. And if the UK can offer a "European" solution to Brexit, then we could find in the new President a friend and an ally. It will be easier to deal with a "European" than a French nationalist from the de Gaulle mould.

However – assuming Macron gets the presidency – the real effect will not be felt until we see the outcome of the German federal election. And there, it seems more and more likely that Merkel will be re-elected chancellor.

Given that Macron has married a woman 24 years his senior (his one-time school teacher), one might be able to make tentative assumptions about his relationship with Merkel – positing that the Franco-German "motor" might be re-energised.

And it is this combination of two strongly Euro-centric leaders that will make the difference – even if it is not necessarily decisive. The one thing about which we can be certain is that the European Union performs best (in its own terms) when there is harmony between Berlin and Paris. And this, above all else, is what Macron may bring to the table.

As for Marine le Pen, it is doubtful whether she could ever overcome the electoral inertia that grips French politics and, while some voters are happy to have their fling on the first round, they invariably come into line in the run-offs. We have no reason to believe otherwise in this election.

The only real dampening effect on Macron's ambitions is likely to come in the legislative elections in June later this year. With the Socialists in disarray, the established party is unlikely to prevail. Macron's En Marche "movement", on the other hand, has not been around long enough to build up an effective party machine.

On that basis, one can speculate that Les Républicains will gain the majority of seats in the Assembly. And if that is the case, the newly-minted president may be forced into a period of cohabitation, limiting his freedom of action.

However, when it comes to Brexit, there is no discernible difference between Macron and Fillon, with the latter arguing for it to be "fast, hard and uncompromising". If that represents the position of Les Républicains, we will, if anything, be better off with Macron. But it also means that there will be few divisions that "Team Brexit" will be able to exploit.

All in all, from the election just past and the ones to come, we are probably no worse off, but no better off than we could expect. We are going to have to deal with Brexit, and if there was any expectation that the political calculus could change with either the French or German elections, that is fast evaporating.



Richard North 25/04/2017 link

Brexit: the vision thing

15/04/2017  


A good friend to this blog is Andrew Stuttaford of National Review. And in typical form he picks up and runs with the Politico.eu article on the "Norway Option", and identifies some of the flaws in it.

If, however, the Efta/EEA option has any running power then we must applaud those behind it for coming to the same conclusions that we drew those years ago when we put some serious thought into the issue.

The point we need to keep reminding people about is that we didn't wake up one day and decide that the "Norway option" was such a spiffing idea that we should buy into it. It came to us though the process of elimination, after exploring all the other options – and became adopted as the "least worst" answer to a complex issue that cannot be resolved in a mere three years.

That other people are trailing in our wake and coming to the same conclusion is thus hardly surprising. We would not be at all surprised if some of the chatterati discover it and claim it for their own. That's what they do – and nothing at all exists until they have invented it for themselves. That is why National Review is so refreshing.

But the point that then arises that, if the "Norway Option" - aka the Efta/EEA option – becomes the favoured interim (or transitional) option, then it still begs the question of what the final destination should be.

And this is where Flexcit really comes into its own. While some dismal critics have been keen to write it off, the core of the plan, in respect of our future relations with our European trading partners lies not in Phase 1, which deals merely with the mechanics of exit, but in Phase 3.

The point of Phase 3 is that, unlike the pedestrian thinkers who are obsessed with the only thing they know – the free trade agreement – this offers a real alternatives which give us at least the equivalent if not better access to European markets than existing arrangements.

As it stands, Brexit offers nothing but pain. From full participation in the Single Market, even the EEA gives us a less advantageous relationship. To treat that as a transition, buying time to negotiate a free trade agreement, puts us in an even worse position when the deal is finally struck.

This is not what Brexit was supposed to be about, where we end up worse off than when we started. The whole point was to improve our situation, not to make us second-class citizens in a "Europe" that's calling the odds.

And it's here that we leave the chatterati behind. Free trade deals are sooo last century. The progress to be made is in regulatory harmonisation on a global scale, which makes IRC (International Regulatory Cooperation) the thing of the future.

One of the leading proponents of IRC is, of course, UNECE with the development of its WP.6, refined to produce common regulatory objectives (CRO) which are actioned initially by ISO and then promulgated as international quasi-legislation.

Given that the EU is a subscriber to this process, WP.6 effectively creates a standard-setting process which trumps the European Commission's regional monopoly of proposal where only it has the right to initiate legislative proposals. Under IRC, the Commission becomes the subordinate entity, with WP.6 members calling the shots.

This is so far above the paygrade of the chatterati though, that they scarcely realise that the concept exists. In fact, it is almost totally beyond their comprehension, which is why they stay so firmly in their comfort zones, never daring to venture out into the real world.

That real world is the modern world, where tariffs are of decreasing importance and where non-tariff barriers are the impediments that the grown-ups are having to deal with. This is a world where common regulation replaces the free-for-all and hidden barriers, facilitating trade rather than slowing it down.

For all the verbiage expended on free trade agreements, we should not be wasting our time on chimera that will bring us little in the way of increased wealth, and instead concentrate our efforts on where they really matter.

And this is why the Efta/EEA option is such a good idea – not only because it is the least-worst option but also because it is tolerable for the decade or more that it will take us to craft alternatives and bring them into fruition, paving the way for a genuine European single market, rather than the narrowly focused regional version that the EU administers.

Crucially, we should not be allowing our negotiators to go into the Article 50 process with their hands empty, knowing that whatever they bring home will be worse in some senses that we have already.

The driver of any successful talks, and the progenitor of a sustainable deal is the vision our negotiators take with them. For them to put real effort into their endeavours, they need to know that they are working for something better, not merely marking time or undertaking damage limitation.

And that is what is lacking from our current stance. Tired clichés about a "Global Britain" are largely meaningless if we are unable to resolve the issues on our doorstep and then break out of the cul-de-sac of selfish bilateralism and kick-start the process of multilateralism, addressing real world issues rather than the lazy mantras of the Tory right.

All of this, though, could be too much to ask of a government that is showing little imagination and even less competence. And in that case, Efta/EEA is still a good option as a place to park while we allow the politicians to catch up. 

At least staying in the EEA for a while will do no harm, which is more than can be said for any other option on the table.



Richard North 15/04/2017 link

Brexit: a second chance for the Norway option?

14/04/2017  


Having virtually written off the Efta/EEA solution – after the joint efforts of Mrs May and the "Ultras" – we now see it re-emerging from an unexpected quarter, the European Commission, which seems to be suggesting this option as a way of squaring the circle on the transitional phase.

The source of information on this surprise development is Politico.eu but, noting the outpouring of ignorance of its two authors, Guardianista Simon Marks and Hans Von Der Burchard, it seems we have a long, long way to go.

As to the substance of their report, the sub-heading gives the game away, as it declares: "Mimicking deal EU has with Norway would keep UK in single market during Brexit transition". But, in a way that is hardly gauged to promote wild enthusiasm from the Brexiteers, we are told that this would not only keep UK trade going with the EU after Brexit, it would "also keep Britain under the EU umbrella".

Thus, the idea, which we have been floating for more than three years in Flexcit - for precisely the opposite reason - has now become Brussels' "plan B", with the commission suggesting that the UK temporarily becomes a member of Efta.

But in a narrative which demonstrates the Mr Marks and his partner have learned precious little over the years, we are further told that Efta membership "would allow the U.K. to apply for membership in the European Economic Area", which "grants free access to the EU's single market".

Yet those of us who are better informed (which is an awful lot of people) know that we are already in the EEA. Furthermore, there is a distinct possibility that, as long as we can arrange Efta membership to cover us when we leave the EU, we need not re-apply. Our EEA membership should carry over with our new (or resumed) status.

Nevertheless, one European diplomat has it right, telling Politico.eu: "It's an interim solution that causes the smallest possible disturbance for business on both sides of the Channel". And like Norway, the UK would not be part of the customs union, which means it could strike its own trade deals with countries around the world".

The problem, however, is that both "hard-line Brexiteers" and the likes of Mr Marks share a strand of profound ignorance that is difficult to breach. Say Marks and his colleague: "Such a plan … is a toxic idea for many hard-line Brexiteers because it would require the UK to accept the four founding EU freedoms of goods, services, people and capital".

In the rarefied and detached little world inhabited by this pair, Article 112 does not exist. The "Liechtenstein model" never happened. And, to add to the litany of ignorance, we are told that, "Britain would also have to continue paying Brussels in exchange for access to the EU market".

After all this time, and all the debate we've having on this matter, you'd think that these people would at least get the basics right. "Norway will have paid €1.3 billion to the EU between 2014 and 2021", they say – making an assertion that simply is not true. For sure, Norway pays for services rendered through the decentralised agencies, but it retains control of its expenditure on EEA/Norway grants.

Sadly, not only do we get this low drone of ignorance, it embellished by the the same tedious mantra, that the UK "also would have to fully implement EU laws and regulations - while losing any say in drafting or vetoing them" – again an egregious untruth.

Called in aid to make the option appear even less attractive, we then have Guntram Wolff, director of the think-tank Bruegel. He obligingly tells us: "It still means accepting supranational jurisdiction", adding that, although Efta's members are not directly bound by the ECJ, the Efta court, which largely follows the jurisdiction of the ECJ, does have oversight.

Then, just to rub it in, Andrés Delgado, a trade lawyer from the Max Planck Institute Luxembourg, says: "The Efta court judges on the basis of EU law, so it's not as if you were really leaving the realms of EU jurisdiction".

The way this is couched, therefore, it is almost as if our narrators don't want it to fly. Remarkably, though, officials in Brussels still hope that once the reality of a "hard Brexit" comes closer, the UK might become open to the Norway option, "at least as a temporary solution".

What is apparently attracting Brussels to the idea is that it would ease fears of legal problems at the WTO, where other countries might challenge the interim agreement if negotiations on a succeeding trade deal drag on. "An EEA-type transition would help avoid complaints during the transition phase", says the senior Commission official who is so willingly keeping Politico.eu informed.

For all that, I've been taking the view that the existing Efta members would not necessarily be terribly keen to see the UK on board, if this is presented as the second choice by a less than enthusiastic Mrs May.

But, it seems, there could be an opening. Oda Helen Sletnes, Norway's ambassador to the EU, says: "Overall, it is in Norway's interest to maintain as close trade policy cooperation with the UK as possible, with as good a level of access to the British market as possible".

However, there is nothing at all here that makes the idea attractive to the "Ultras" who have made it their business to be opposed to the Single Market. The idea of the "Norway option" was so roundly trashed by both "leavers" and "remainers" during the referendum campaign, and then by Mrs May, that it is going to require considerable rehabilitation before it will be entertained – if at all.

Neither does this story help. With the Single Market having been enthusiastically embraced by "remainers", thereby poisoning the well, endorsement of the "Norway Option" by the "heart of evil" – none other than the European Commission – could be just a tad counterproductive. Those who mistakenly believe that continued membership of the EEA means that we stay in the EU will now be convinced that that their beliefs are correct.

For the Government, things may not be that much better. If this plan gets wider circulation, then any chance Mrs May might have had of convincing her "Ultras" that the Single Market is a good idea has probably evaporated.

For all the self-importance of Mr Marks and his friend, however, the story so far is confined to Politico.eu. The rest of the legacy media hasn't touched it yet, and it doesn't look as if it will.

Nevertheless, there is a huge irony here if the Commission really is supporting the idea of the UK taking up the Efta/EEA option. It will be promoting perhaps the best chance we have of making a clean break from the EU – and then most likely meeting resistance from those who profess to be keenest on leaving.

Not even Lewis Carroll could have dreamed this one up.



Richard North 14/04/2017 link

Brexit: reflections

08/04/2017  


If there is one thing I hate more than Windows in general, it's Windows 10. And while I have it on my current laptop, I've been resisting installing it on my desktop, determined to keep XP for as long as I can – the best system so far, in my view.

However, as more and more software (and especially browsers) are no longer supported, and the system is no longer being updated – creating serious security weaknesses – I decided the time has come to make the change.

As it was, I didn't feel much like writing, after the untimely death of Helen Szamuely, so I decided to do the deed and take the computer to my local shop for an upgrade. At the same time, I took the opportunity to deliver the much-promised model of HMS Poppy to Booker (pictured) and to have dinner with Pete in Bristol, before hammering back to Bradford to face reality once more.

To my horror, though, the technician doing the upgrade decided to delete all my files (twenty years-worth of accumulated work), without telling me, so I was confronted yesterday with a computer with just the bare operating system and nothing else.

Although I do have some back-ups, not everything was covered and what I do have is spread over several systems, on different media. I have to collect all that together and reload it, as well as install new copies of all the software use onto the "upgraded" computer.

As for the lost files, Boiling Frog – who is something of an expert in this matter – advised that data recovery is possible, even from a formatted disk. And so it is proving to me, and I am now going through the time-consuming and expensive process of salvaging files, which is proceeding even as I write.

Perversely, one of the reasons I wanted to upgrade to Windows 10 is so that I could network all our home computers and thus keep a running back-up in real time. That is to be the next task, a housekeeping endeavour that is much overdue, having been on hold for far too long.

These distractions, necessarily, mean I've taken my eye off the ball for a couple of days – no bad thing as it gives the opposition a chance to catch up … even if they are months, and in some cases years behind us. It also has given me a chance to reflect on what we have been doing and where we are going.

As to what we have been doing, the few days of reflection do not change my view that we basically got it right … that the UK government was never going to conclude a successful Brexit deal inside two years and will need to negotiate an interim deal in order to buy time for a long-term solution to be negotiated.

And (so far) having turned down the best (or least worst) option, going for continued participation in the EEA via Efta, it is finally dawning on Government that anything they manage to resolve by way of an interim arrangement is going to be incomparably worse than what they rejected.

Another thing both the media and Government are beginning to realise is that all the talk of complications isn't just (or even) "project fear". In fact, the remainers largely picked on the wrong things (like the Norway option), and missed out on issues such as entry barriers for our exports – customs procedures, veterinary, etc., checks, and data protection, all conspiring to turn Brexit into an administrative nightmare.

Then we have Ed Conway in The Times providing a little sense to the egregious stupidity of Matt Ridley and his ilk, arguing that making trade deals outside the EU is not going to be that simple, while the yields will be slender and hard-won.

Altogether, the Government, egged on by the clapping seals of the ERG and the Tory Right have manoeuvred us into a position where we are headed for the worst of all possible worlds as a non-voting member of the EU for half a decade of more, while we salvage a second-rate deal with the EU and get next to nothing from the rest of the world to compensate for our losses.

That mess, though, is nothing to do with "leavers" as such. We in the Leave Alliance did our very best to bring issues to the fore, and were the only group offering a coherent, fully worked our exit plan. We have nothing to apologise for and our advice, if it had been taken, would be giving us certainty and strength where, at the moment, we have neither.

There must be those in the media – as well as Government – that find the events in Syria and Sweden a welcome distraction, taking the edge off the Brexit debate while attention is focused elsewhere.

These problems aren't going to go away though and, with the Government having positioned itself firmly between a rock and a hard place, is going to find there is no escape from the mess it has created. And nor will there be any sympathy from us. All that can happen over term is that more and more people catch up with us and realise that we were the only ones properly and intelligently to evaluate our options.

In then considering where we are going, I was much taken by Helen's comments from beyond the grave. On the value of the blogosphere. Certainly, at the time, it was perceived to be a threat to the established order, so much so that the legacy media have conspired to isolate and denigrate us.

One can see this where the media will happily give space to describe girly bloggers offering fashion or make-up hints, or other such trivial pursuits, yet have quite deliberately frozen out the independent political blogosphere. Even when I wrote for the Mail, they would not allow me to describe myself as a blogger.

It is small wonder that many of the active Brexit bloggers during the campaign lost heart at the lack of recognition, and looked to easier, more productive means of spreading the message. What they never realised, though, that the establishment fears the message and, in the absence of effective counter-arguments, choose to attack the messengers.

Thus, as they have found, the only way to get even a grudging recognition from our political élites is to change the message. But that way, they fade into obscurity, having nothing to offer while having removed or diluted the very thing that had the establishment take note of us in the first place.

Thus, for the future, I think we need to remind ourselves why we came into this business in the first place and, as Helen did, realise that we have had more influence than is often credited to us.

The referendum campaign, for instance, did not start when Cummings, Elliott and their ghastly crew bodged a jumble of lies and half-truths to get themselves into the limelight. That campaign started in earnest in 1992, gained strength from Goldsmith and his Referendum Party in 1996-7 and then solidified round the refusal to give us a referendum on Lisbon, and the lies that were attendant upon it.

Had we really understood what was happening – which now in retrospect seem to be obvious – it was people like Helen, Alan Sked – the true founder of Ukip – myself, Booker, and many more – like Edward Spalton of the CIB – unsung heroes and a few heroines like Christina Speight, who laid the foundations of the victory that was to come.

So, on reflection, in these dark days where the charlatans and opportunists gather to brag about their wondrous skills and their winning ways, I think we need to renew our faith in our own abilities and influence. As Helen reminds us, we all had a much greater part in the battle than we have been given credit for.

And, as the people who have spent most time exploring the issues and getting to understand what really is involved in Brexit, we still have a vital part to play in the battles to come.

Furthermore, the very fact that the establishment so detests independent blogs, and their authors and supporters – attests to our strength. If we had the same vapid irrelevance as girlie bloggers, doubtless we'd be all over the papers. We have the strength of the Davids against the Goliaths. All we need to do is make sure our aim as as true.



Richard North 08/04/2017 link

Brexit: devil in the detail

08/03/2017  


One of the more pernicious of the enduring fallacies of the Brexit zealots is the belief that leaving the EU with only a free trade agreement to sustain us will relieve the bulk of UK businesses from their obligations to comply with EU law.

The argument was put pre-referendum by Simon Richards of the Freedom Association, in these terms:
Most British companies do not export at all, yet they are burdened with regulations designed for exporters. In 2013, the Office of National Statistics (ONS) found that, of 1,979,600 businesses in the UK, just 223,000 export at all. That leaves 1,756,600 businesses (89 percent of the total) that never export, but are still subject to often draconian EU Single Market legislation.
Richards went on to quote work that had suggested that no more than 4.27 percent of UK businesses exported to the EU, then asking (rhetorically): "Where's the sense in a hundred percent of British businesses being subjected to EU Single Market regulations that need only apply to five percent of them?"

Nevertheless, we gets the likes of Peter Lilley and many other arguing for trade agreements such as the Canadian CETA (Comprehensive Economic and Trade Agreement) as a suitable model on which to base future trading relations with the EU, precisely because it will only apply to those businesses engaged in export.

Brexit, therefore, will allow the UK their yearned-after bonfire of laws, leaving the majority of businesses free to ply their trade under the more benevolent and less rigorous write of domestic law.

It is often further argued that we can adopt the CETA model for trade with the EU because it allows us abandon the damaging regime of regulatory harmonisation which is a feature of the Single Market. Instead, we can rely on mutual recognition of each other's standards, as long as there is rough equivalence between them.

However, even before CETA was agreed, the writing was on the wall, with Swedish economist warning that the EU had not in any way conceded equivalence in its technical regulation, and was boasting that no regulations had been changed as a consequence of the agreement.

Now, the agreement coming into force, the Canadians are beginning to learn the hard way that, when you dine with the devil, you need a very long spoon – that lesson coming by way of the specialist Canadian agricultural journal, the Western Producers.

Canada's free trade accord with the European Union, it observes, has failed to remove many of the barriers to shipping red meat to Europe, then offering a quote from Ron Davidson, head of international trade for the Canadian Meat Council. He says: "We do not have what we would call commercially viable access to the European market".

Under the Comprehensive Economic and Trade Agreement (CETA), Canada is allowed duty-free exports of 81,011 tonnes of pork, but three obstacles stand in the way.

Firstly, the EU wants trichinella-free product and Canada is not officially recognised as free of the parasite, which can be transferred from pork to people in raw or undercooked meat. It is hoped a trichinella-free standard could be developed according to guidelines set out by the World Organization for Animal Health. However, that would be expensive and there is no certainty the EU would accept it. The quota with the EU includes fresh and frozen meat.

Secondly, the EU also requires its own health mark on boxes of meat over a tamper proof belt at the time of manufacture in the processing plant. The boxes go into a refrigerator and the serial numbers on the health mark must be in sequence. That would create a lot of additional handling logistics for Canadian companies who ship to many other markets outside of Europe.

Thirdly, Canadian meat processors also express problems with equivalency inspection requirements with the EU. "We supposedly do have equivalence in the meat inspection systems. If it is a real equivalence, the Canadian Food Inspection Agency stamp should be sufficient", Davidson says.

Nor does the pain stop there. On the beef side, Canada was granted duty-free exports of 64,950 tonnes of beef and veal. Here, there is the stumbling block on the use of antimicrobial treatments to remove pathogens like E. coli. Because Europe would not be buying entire carcasses, Canada would be left with items like trim used for grinding meat.

Those are exported to the United States, where there is a zero tolerance policy for E. coli. That means the entire carcass is treated with antimicrobials in Canadian packing plants to avoid the risk of losing the US market.

"If we turn off interventions, the risk of having an incident at the U.S. border goes up", Davidson says. Canada plans to submit applications to Europe for the addition of two antimicrobial products, which are like vinegar and citric acid. The EU has approved lactic acid for washing carcasses, halves and quarters.

Meanwhile, European meat suppliers have wide open access to Canadian markets. "The day that CETA goes into effect, the 26.5 percent tariff comes off so the European Union is going to have a huge opening of the Canadian market for beef and veal", Davison adds: "The agreement is not balanced. We would just like to be able to take advantage of the quota we've got".

And there lies a story all on its own. According to the Irish Examiner, although Canada gets an extra 50,000 tonnes of tariff-free quota for its beef, it must be high-quality, hormone-free beef.

Currently, the US and Canada only take up three percent of their combined 11,500 tonnes tariff-free annual quota that is already in place. It is likely Canada may be unable to avail itself of the additional CETA quota. Furthermore, sources in the Canadian beef industry say it is unlikely any of their larger processors will have much interest in trade with the EU, because the EU also rejects antimicrobial washes used in Canadian beef plants.

In this is the Canadian dilemma. In seeking to service two markets with conflicting regulatory regimes, the incompatibilities are such that producers must choose to service one or the other. They cannot do both, and maintain profitability.

Had they looked at the small-print in CETA, however, they would have seen this coming. The chart on page 302, for instance, shows that the EU is not in the least interested in regulatory equivalent – only obedience.

In order to export meat to the EU, producers must obey Regulation (EC) No 852/2004 on the hygiene of foodstuffs; Regulation (EC) No 853/2004, laying down specific hygiene rules for on the hygiene of foodstuffs; Regulation (EC) No 854/2004, laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption; Commission Regulation (EC) No 2073/2005 on microbiological criteria for foodstuffs; and Commission Implementing Regulation (EU) 2015/1375, laying down specific rules on official controls for Trichinella in meat.

And yes, that does mean, as the Canadian Meat Inspection Agency concedes, that every Canadian meat establishment must be approved by the EU, and listed on the official schedule, before it can export to the EU.

The meat must be stamped with the official EU-approved health mark (thereby making it unmarketable in the US) and, of course, on arrival at its EU port of entry, the meat must be routed via a Border Inspection Post, where it must be subjected to special checks (for a fee) before it can be passed to customs for clearance.

In other words, the free trade agreement does not give Canadian meat processors a free pass into the EU. They are treated just like any other "third country" – just as the UK will be when it leaves the EU.

It could be argued, of course, that the EU law only applies to establishments which choose to export to the EU. And that is true. Those that do not wish to export can adopt the local, equally rigorous but different Canadian regulations, or the US federal regulations if they wish to trade with their closest neighbour.

However, if the Canadian plants do elect to trade with the EU, they cannot pick and choose, switching conformity on and off to suit the market they are servicing. In order to export, they must be approved establishments, which means they must go through the laborious processes of demonstrating full conformity with EU law, which must be maintained if they wish to stay on the approved list.

For UK establishments, servicing their closest external markets, this presents a "no brainer" choice. Even if ten percent of the product is exported, the business must comply one hundred percent of the time. And even if there are no direct exports, most plants feed into the wholesale market, produce from which is exported.

Then, much of the meat ends up with food manufacturers which will export (or may want to export) a portion of their processed food to the continent. And since they don't want to run parallel production lines, and different handling and labelling regimes, they will demand from their suppliers EU-compliant product.

Those meat plants which restrict themselves only to the domestic market, therefore, will tend to find their market very restricted indeed, often becoming part of a second-tier low-price market, shunned by supermarkets and chain outlets.

As we found before EU meat hygiene standards became compulsory in this country, with the advent of Directive 91/497/EEC, most plants complied "voluntarily". In practice, they had no choice. It was either that, or exclusion from the volume trade.

In the Canadian instance, the bigger, more attractive and more profitable export market is the US. Producers there will continue to service this market. CETA does them no favours. As the man says: "We do not have what we would call commercially viable access to the European market". Elsewhere, he had already complained that the deal was "unbalanced" against Canadian meat.

For the UK, a free trade agreement with the EU will require de facto conformity with the entire EU animal health acquis just as it does now. And this will bleed into other sectors.

Medicines producers, for instance, will not be putting their products through separate UK and EU approval systems – they will have to choose one of the other, and most will go for the EU standard, to take advantage of the bigger market – even if just a small part of their production is exported.

The same will apply to chemicals, to motor cars, aircraft spares and components, cosmetics, construction materials, and much, much more. Effectively – except at the margins (where derogations often exist anyway), business will still be dominated by EU regulation.

This makes the rejection of the "Norway option" a cruel irony. At least in the EEA, we would have had some input into the Brussels machine. As free trade "partners", we will have none at all. Except, of course, we will be able to pursue our interests in global standard-setting bodies, but we could have done that as members of the EEA.

Altogether, though, as the Canadians are finding, free trade agreements with the EU do not offer equivalence, much less equality. They simply offer another opportunity for traders to obey yet another set of laws.



Richard North 08/03/2017 link

Brexit: losing control

13/02/2017  


What was intriguing about my exploration of the timber industry was the way industry pundits were prepared to hold fire on the effects of Brexit on their sector, awaiting more information. And months after the referendum, they are still holding their breath.

In fact, the impact of Brexit on the industry as a whole might be relatively slight, although those few companies which do export timber to the EU may have difficulties, while some UK enterprises would regret the absence of EU law.

B&Q, for instance, had a long-standing policy of selling only sustainable timber to its customers. But it went early, before the adoption of the EU timber regulations, putting it at a competitive disadvantage. EU law, therefore, restored the level playing field, reducing the penalty for "doing the right thing".

But, as we are seeing, many industries aside from just the timber business have been muted in their responses to Brexit. And here, a particularly glaring example is Air Traffic Management (ATM), the system which controls commercial flights and keeps them safe.

After the referendum, the trade magazine was quick to respond, posting a comment piece on 24 June. But then it only noted that, "the industry fallout… will take some time to become clear". Nearly eight months later, it has yet to return to the subject.

That the magazine should have been so cautious is probably wise. The provision of ATM in Europe is anything but straightforward and even describing the system is not simple.

Basically, day-to-day management of controlled airspace is vested in national entities, such as NATS in the UK. This is a public private partnership between the Airline Group, which holds 42 percent, NATS staff who hold five, UK airport operator LHR Airports Limited with four percent, and the government which holds 49 percent and a golden share.

The legislative framework for this and other Member States is provided by a complex of EU legislation. The main instrument is Regulation (EC) No 550/2004 on the provision of air navigation services in the single European sky, as amended by Regulation (EC) No 1070/2009, all under the designation Single European Sky (SES).

The SES programme was established in 1999, and there have been several additions and revisions to the legislation and structure since. Amongst other things, it carves European airspace into what are known as Functional Air Blocks (FABs), related to traffic flows rather than national borders. Currently, UK airspace is part of the UK-Ireland FAB, the first of its kind to be fully operational.

However, the legal framework which defines the overall ATM system is no longer confined to the EU Member States. In December 2005, the EU concluded an agreement on the European Common Aviation Area (ECAA), extending the entire aviation acquis to partners in South-Eastern and Northern Europe. These were: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia, Kosovo under UNSCR 1244, Norway and Iceland.

In addition to EU institutions, there is the 41-member intergovernmental Eurocontrol, which was founded in 1960 by the Eurocontrol Convention, and ratified in 1963. It was set up with the idea of harmonising ATM throughout Europe but scuppered by the French and British, largely due to concerns over control of military airspace.

The body lingered in a sort of half-life existence, running the Upper Area Control Centre (MUAC), located at Maastricht Aachen Airport, which started operations in 1972. This managed traffic above 24,500 ft over Belgium, Luxembourg, the Netherlands, and north-west Germany, alongside a military control unit, handling the conflicts between military and civilian traffic.

In 1997, though, its mandate was renewed and the European Union became a member of Eurocontrol in its own right, able to vote on behalf of its members, rather as it does in the UN or the WTO. This led to a new lease of life for the organisation when, in 2011, the Commission, using its voting power, set it up as the Network Manager for the whole of European airspace.

Its job is to take charge of the wider European air traffic system, with the brief to ensure that the whole system functions efficiently. Additionally, it provides policy-setting and regulatory support to the Commission, and plays a part in the research and development of the ATM system.

Crucially, Eurocontrol also runs the Central Route Charges Office (CRCO), through which airspace users pay for the air traffic services they use. The CRCO calculates the route charges due to the Member States for the services provided, bills the airspace users and distributes the route charges to the States concerned.

The other major part of the matrix is the SESAR project (Single European Sky ATM Research), which was jointly founded by Eurocontrol and the Commission.

Established in 2007 as a public-private partnership, the SESAR Joint Undertaking (SESAR JU) is responsible for the modernisation of the ATM system by coordinating and concentrating all ATM relevant research and innovation efforts in the EU. For its legal base, it relies on Council Regulation (EC) 219/2007, modified by Council Regulation (EC) 1361/2008 (and last amended by the Council Regulation (EU) 721/2014).

This is the bare bones of an extremely complex system but, without at least a basic understanding of its components and how they interrelate, it is not possible to ascertain what the potential effects of Brexit might be.

Assuming no agreement is reached under Article 50, one can assume that the UK will remain a member of Eurocontrol and will also keep control of NATS, ensuring continuity of management in UK airspace. The UK Government, though, would have to negotiate with the Irish Government to maintain the UK-Ireland FAB, particularly to ensure management of trans-Atlantic flights.

As regards the Single European Sky (SES), the extensive aquis - largely comprised of Regulations which have direct effect – would fall with the advent of Brexit. The Great Repeal Bill would have limited effect as the SES is a Europe-wide system of ATM. As before, while the UK can legislate for its own territory, it cannot require the EU or its Member States to recognise its provisions.

Thus, while the UK could import the EU regulatory structure to govern its own airspace, its ATM would not longer be integrated with the rest of Europe. As the UK would no longer part of the acquis and without the benefit of bilateral agreements brokered under ICAO, Member States would be under no obligation to provide ATM to UK registered aircraft and there would be no mutual agreement of the charging of fees for services provided.

If we took the reducto ad absurdum premise of a totally isolated UK, refusing to negotiate with its neighbours, commercial flights to (and potentially from) the rest of Europe would cease, although not necessarily immediately.

Through its membership of the European Common Aviation Area, the UK benefits from the Single European Sky and, by one reading of the Agreement, services would cease one year after we left the EU. Even then, air services operated at the date of expiry of the Agreement are still allowed to continue until the end of the scheduling season.

Should the UK wish to continue ATM cooperation – and it is hardly conceivable that it would no – then it must look to renewing its membership of the European Common Aviation Area (ECAA). That, of course, pre-supposes that its membership does lapse as a result of Brexit. But since this depends explicitly on its status as a EU Member State, one must assume that it is out on its own.

By some ironic quirk of fate, however, the UK cannot apply to rejoin. The Agreement states that "enlargement" – as it would become – can only take place by invitation of the Commission. Therefore, the UK Government would have to go cap-in-hand to Brussels, asking the Commission to invite it to join. One can only guess as to the price that might be extracted.

The standard condition for membership of the ECAA, though, is full compliance with not only the EU law on ATM but with a wide range of aviation and related law. This is listed in Annex I, and includes consumer protection issues such as the package holidays directive, the regulation on air carrier liability and much, much more.

Rather frustrating Mrs May's commitment to "taking back control", EU Directives and Regulations listed "shall be binding upon the Contracting Parties and be, or be made, part of their internal legal order".

That said, provided the UK commits to full and continued compliance with EU law – over which we would genuinely have no say (as opposed to the EEA where we have some consultation rights, and can invoke safeguard measures) – we should have no particular difficulty ensuring continuity of air traffic management.

The tremendous irony, though, is that while the rights of the EEA Agreement Contracted Parties are protected, the UK outside the EEA would have fewer rights. And, in terms of the dispute procedures, a role is allocated to the ECJ, on similar terms to those found in the EEA Agreement. Thus, anyone objecting to EEA participation on the grounds of ECJ jurisdiction must object to this agreement on exactly the same grounds.

Notwithstanding this, it is inconceivable that the UK could stand apart from the European Common Aviation Area, while it is scarcely possible that anything else would be on offer from the Commission. The UK will either have to bite the bullet, or face the prospect of terminating flights to and from mainland Europe (and even overflights over the ECAA territories, including Norway and Ireland). The alternative is to broker an entirely new agreement under the aegis of ICAO, with all the attendant complications of having to start from scratch.

At the very least, this could make for some entertaining, if protracted negotiations in Brussels over the next two years, to add to all the other issues that must be resolved.



Richard North 13/02/2017 link

Brexit: a Jumbo-jet crash

18/01/2017  


There has been much speculation as to whether we would be exposed to a car-crash or a train-wreck Brexit. But what Theresa May appears to be giving us with yesterday's speech is a Jumbo-jet crash (perhaps an Airbus A-380) on top of Whitehall.

Although some might regard that as an improvement, or might want the epicentre to be moved to the Palace of Westminster, the underlying message is clear. Mrs May has set her face against a rational, measured Brexit and is embarking on a wild gamble, the outcome of which she has no way of predicting.

Such is her idea of pursuing "a bold and ambitious Free Trade Agreement with the European Union", an undertaking which others have tried in the recent past – the most recent being Canada, which has spent eight years now in trying to bring an agreement to fruition, and we're still waiting. The possibility, therefore, of the UK negotiating a deal (and getting it ratified) inside two years is, to say the very least, remote.

Nevertheless, there are those who think otherwise. They argue that, because the UK is already in the EU and achieved full regulatory convergence, transition from one type of agreement to another should be relatively straightforward and swift.

That, however, is completely to understate the complexity of modern trade agreements. In addition to regulatory convergence, there must be a dynamic arrangement that will ensure the automatic uptake of new regulation, and also the changes mandated by ECJ judgements. There must also be internal market surveillance measures, agreed conformity assessment measures, customs agreements, dispute settlement procedures, agreements on competition policy, procurement and intellectual property rights, as well as systems to deal with rules of origin.

These and much else, will require an institutional structure to facilitate communication and ongoing development, a form of arbitration panel or court, and a consultation body, which allows input into, and formal communication with the EU's regulatory and institutional system.

With modern trade deals, there is also a huge element of conditionality, where parties are required to subscribe to common values on human rights (one of the main barriers to a free trade deal with China), on workers' rights, on environmental protection, wildlife protection and many other incidental matters.

Not for nothing do we see over 300 heads of agreement in the EU-South Korea FTA, of which regulatory issues are but a small part. And on this agreement, negotiations started in 2006 and the final agreement entered into force on 1 July 2011. However, this was only the last stage of a process which had begun in 1993. Delivery of the current 1,336-page trading agreement, alongside a broader-ranging 64-page framework agreement on political co-operation, took almost 18 years.

In the comments on a previous post, I have likened the commitment to securing a free trade agreement (signed and ratified) within two years, as akin to a British commander addressing his troops on Salisbury Plain, telling them they are to invade Iraq the next day – but they have to walk all the way from the UK.

This is my way of saying that to achieve a "bold and ambitious" free trade agreement with the EU inside two years is not just difficult. It is impossible. It cannot be done. And it doesn't matter how many times it is discussed amongst the chattering classes, it still can't be done.

And as if that is not bad enough, Mrs May is also talking about a transitional agreement, a "phased process of implementation, in which both Britain and the EU institutions and member states prepare for the new arrangements that will exist between us will be in our mutual self-interest".

The point here is that she tells us she wants us to have reached an agreement about our future partnership "by the time the 2-year Article 50 process has concluded". That will, of course, have to include ratification of her "bold and ambitious" FTA, a unanimous decision which includes some devolved governments. But only then can the transition process be planned.

This in itself will be complex – far more so than people imagine. We are not signing up to a new treaty, de novo, or extending an existing treaty. We are transitioning from a very complex treaty organisation, out of the EU treaties, into a completely different relationship bound by an entirely new treaty. For a seamless transition, that is going to require changes to the EU treaty, by way of a separate succession treaty, which itself is going to require unanimous agreement and ratification.

Assuming that we get our FTA inside two years – which I've already suggested is impossible – we then have this further hurdle, a complex additional treaty, against an unknown and unspecified timetable.

In what appears to be a sideways swipe at the Efta-EEA option, Mrs May nevertheless rails against a transitional status, "in which we find ourselves stuck forever in some kind of permanent political purgatory". This is one of many places where she has quite evidently supped liberally at the Brexiteer kool-aid. How can it ever be permanent when we can leave the EEA with one year's notice? 

But where she has sated herself with the kool-aid is in her comments about membership of the Single Market. "European leaders", she avers, "have said many times that membership means accepting the 'four freedoms' of goods, capital, services and people".

"And being out of the EU but a member of the Single Market would mean complying with the EU's rules and regulations that implement those freedoms, without having a vote on what those rules and regulations are. It would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country".

Says Mrs May, "It would to all intents and purposes mean not leaving the EU at all", speaking straight out of the Janet and John playbook on the "Norway option". But if Norway is most decidedly not in the EU, and is a member of the Single Market, how is the same arrangement for the UK keeping it in the EU? To claim that represents a total departure from reality.

And it is there that the German media finds her, with several journals suggesting that she has entered a fantasy world. Spiegel describes her as realitätsblind, which one of our commenters says you could translate as "in cloud cuckoo land".

The Germans appear considerably less than impressed with May's threat to "walk away", and her assertion that: "no deal for Britain is better than a bad deal for Britain". They are right to be unimpressed. As Pete has pointed out, this is not something the UK can sensibly walk away from. The Article 50 process is a matter of negotiating an administrative de-merger. Absence of a deal would create an impossible situation.

But if Mrs May does "walk", it is straight into the WTO option, the dangers of which she apparently dismisses on the basis that "we would still be able to trade with Europe". She does not in any way acknowledge the administrative complications that would arise, or the very real danger of a complete collapse in trade with the EU Member States.

Yet, if we were excluded from "accessing" the Single Market (i.e., trading with EU Member States), she seems to believe that there would be adequate compensation conferred in our ability "to change the basis of Britain's economic model". Missing completely, though, is any sense of timescale. While the effects of the WTO option would hit us within days, it could well be years before positive effects (if any) were felt from a new economic model. And what do we do in the interim? Rather than an answer, as always, there is silence.

Where there is no silence - and perhaps there should have been - is over Mrs May's comments on the EU's Customs Union. She repeats the error that full Customs Union membership prevents us from negotiating our own comprehensive trade deals. She then gets tangled up in the further misunderstanding about border controls - which lie outwith the customs union. The woman knows nothing, and has learned nothing.

She wants, or so she says, cross-border trade to be as frictionless as possible, not realising that border controls were only removed with the Single Market, the very thing she wants to extract us from. Inexplicably, she adds, "that means I do not want Britain to be part of the Common Commercial Policy and I do not want us to be bound by the Common External Tariff".

This is a confused person, one who goes on then to tell us that "these are the elements of the Customs Union that prevent us from striking our own comprehensive trade agreements with other countries".

In a small shaft of light, though, she then tells us she wants a customs agreement with the EU, but then – bizarrely – tells us that: "whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position".

This is almost akin to the Pope revealing that he has no "preconceived position" on Catholicism, mainly because he doesn't really understand it. And if Mrs May is out on her own, where the hell have her advisors been, feeding her this tosh? How can any nation possibly be an "associate member" of the customs union?

Pete picks up with his own analysis, as does Sam Hooper, so the final point I will make in this analysis, which is the first of what will have to be several over the next few days, concerns the money. Says Mrs May, "because we will no longer be members of the Single Market, we will not be required to contribute huge sums to the EU budget". This is issue illiteracy. We pay as members of the EU, not as members of the Single Market. And neither do Efta-EEA members pay into the EU budget.

What then follows in Mrs May's comments is worrying. "There may be some specific European programmes in which we might want to participate", she says. "If so, and this will be for us to decide, it is reasonable that we should make an appropriate contribution. But the principle is clear: the days of Britain making vast contributions to the European Union every year will end".

One can accept that the "principle" is clear. But we might have expected the Prime Minister to be a little more forthright about what else we are going to have to pay – not least for the decentralised Banking and Medicines Agencies. These, we are probably going to lose, but we will still want to participate in them, plus many others. But they get no mention. Nor does the equivalent of EEA/Norway grants, or even RAL.

It is my expectation that the "colleagues" will put the money issue up-front in the negotiations and, in respect of trade and other issues, insist on conditionality. We either agree to pay up, or the negotiations go no further. And despite the glib talk about the EU exporting more to us, it has been made perfectly clear that the integrity of the EU will come first. Even German industrialists and politicians are prepared to take a hit to preserve that.

Given the immediate reaction of the German media, I don't think Mrs May's threats will carry much weight. If the UK threatens to "walk", the "colleagues" will stand aside and let it happen. The UK is not the only entity that can restructure its economy. There are plenty of Eastern and mid-European nations which would be happy to pick up the slack.

All in all then, my view of Mrs May's speech is that it has been a giant misstep. If she has introduced clarity and a certain amount of certainty into the debate, it is at the cost of the UK's credibility. As such, her speech yesterday may turn out to be the most expensive and ill-conceived uttered by any politician since the war.

Looking back to recent events, one perhaps now has a better idea of why Ivan Rogers resigned. One might also take the view that the wrong person resigned. Whether the men in grey suits come calling, to invite Mrs May to book a trip to the Palace, remains to be seen. But every day now that she remains in No 10 will add to the growing sense of disaster.


Comments: a record number of 700+ on the previous thread shows what happens when this blog becomes so completely marginalised, as we are told it has. To continue our marginalisation, I have closed down the previous thread leaving this thread open, so avoiding duplication and (additional) confusion.



Richard North 18/01/2017 link

Brexit: Theresa "Humpty Dumpty" May

17/01/2017  


"When I use a word", Theresa May said in rather a scornful tone during today's speech, "it means just what I choose it to mean - neither more nor less". So, when I say that we do not seek to adopt a model already enjoyed by other countries, it means exactly what I choose the word "model" to mean.

You may care to use the words "Norway model" to describe rejoining Efta and retaining our position as a contracting party to the EEA Agreement. But, to me, a "Norway model" looks rather like the picture above. If choose to call the Efta-EEA idea the "Norway option", then it is an option, not a model. And you don't need Humpty Dumpty to tell you that "model" and "option" are different words, with different meanings.

If you want to take my words literally, you're going to have a serious problem anyway. After all, you could call a free trade agreement a "model". And since other countries have enjoyed this "model" in their trading relations with the EU (if "enjoyed" is the right word to use), I could not possibly entertain, or even enjoy an FTA with the EU.

On the other hand, if we look in detail at the structure of the EEA Agreement, you will find that the basic core is the Agreement itself, but much of the detail is contained in the attached protocols and annexes, which are very much part of the treaty.

You will also find that each of the Efta members, Norway, Iceland and Liechtenstein, have defined their own specific terms via country-specific references in these attachments, which effectively make them unique – bespoke agreements for each of the countries.

In that respect, I could easily define a "bespoke" agreement with the EU via the EEA Agreement. With multiple protocols and annexes specific to the UK, it would be unique to this nation. And it would not be a "model". It would be the real thing, 1:1 scale.

Similarly, going for the Efta-EEA option means that we are truly out of the EU. It is practically and legally impossible for the UK to be a member of Efta and also hold EU membership. Efta-EEA membership is not partial membership of the European Union. It is not associate membership of the European Union. It does not leave us half-in, half-out. 

- - - -

So much for Mrs May's speech. As to whether she is going to make use of the Efta-EEA option, and thus avoid a "hard" Brexit, no one out here actually knows. She could very easily kill the controversy by stating, unequivocally, "I will/will not withdraw from the Single Market", or words to that effect.

If she does not use those specific words, and makes no direct reference to the Single Market, then it means she is keeping her options open. And if she is keeping her options open, that means nothing has been settled – whatever the legacy media might report.



Richard North 17/01/2017 link

Brexit: the cheating Lyons

17/01/2017  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 17/01/2017 link

Booker: the Ridge line

15/01/2017  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 15/01/2017 link

Brexit: where time stood still

11/01/2017  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 11/01/2017 link

Brexit: Mrs May's cunning plan

09/01/2017  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 09/01/2017 link

Brexit: our plague of experts

30/12/2016  


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



Richard North 30/12/2016 link
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