Brexit: another fine mess


Not for the first time, and doubtless not the last, I'm having to point out that the conclusions we came to in Flexcit were not arbitrary. In particular, the "Norway" (aka Efta/EEA) option became our choice not for its specific merits but after eliminating the less favourable alternatives.

There was a brief period when it became fashionable to list as many variations and sub-variations as possible but, in truth, there were only ever three: the unilateral (WTO), bilateral (Swiss) and the multilateral (Norway) options.

The great advantage of our choice – which makes it the least-worst option – was (is) that the systems and infrastructure already exist. That gave us something that could at least be implemented within the two-year time span afforded by Article 50, buying us time for a longer-term solution.

In fourteen months or so since the referendum, it looks as if our Government has been going through the same process, eliminating choices one by one until it ends up with what it believes to be the only available option.

Interestingly, when the Treasury published its evaluation in April 2016, it came to roughly same conclusion that we did. The net impact on tax receipts, it concluded, would be £20 billion a year in the central case of the EEA, £36 billion a year in the case of the negotiated bilateral agreement, and £45 billion a year in the case of the WTO. By that measure, the EEA was the "least worst" scenario.

What we have seen from the last two days, though – with the publication of the first two "partnership papers" – is that the Government has come to a different conclusion. At least, it is now favouring a different outcome, opting for a messy series of bilateral deals, roughly following the Swiss model.

We are not privy to the Government thinking on this matter – assuming that "thinking" is one of the processes involved – but it seems to have come to this different conclusion by employing a different filter.

While we chose practicality – i.e., that which was practically possible – the government test seems to have been one of political acceptability, defined in terms of notional "red lines". For entirely political reasons, which have a lot to do with internal Conservative Party politics, it has rejected the Efta/EEA option.

Having then been forced to walk away from the idea of relying on the WTO (also known as the "no deal" option) on the grounds of practicability, that has left it with nowhere to go other than the messy compromise of seeking multiple bilateral deals to cover the territory.

Then, because the Government has quite evidently concluded that these deals cannot be finalised within the two years allowed, it is talking of a transitional or "interim" deal, despite not having the first idea of how to go about achieving one.

As for the end game – the longer-term solution - this exists in name only, the fabulous, all-singing, all-dancing "bold and comprehensive trade agreement", the like of which no man's eyes have ever seen (or probably will see). Despite its pivotal importance, the Government has not seen fit to publish any details – or even tell the European Union what it wants.

This is a mad situation. There is no other way of putting it. We have a government that has rejected – by its own estimation – the least-worst option, in favour of a less attractive scenario, and one that it can't possibly deliver. It is doing so in order to buy time for an end game that it has not defined and is now arguing for an "interim" deal that is almost certainly unattainable.

Still though, the chatterati don't understand. We've long given up on the media, academia (if we're allowed to generalise) has lost the plot and the think-tanks are engaged in the detailed exploration of their lower intestinal tracts – without the aid of equipment.

Latest in a long line of dereliction is the Institute of Government, which is still talking of a "single market and a customs union arrangement" as if it was an option worth considering.

If endless platitudes were the answer to our problems, then the IoG would be our saviour, but it offers the idea of Single Market as the option that would lead to the least impact on supply chains, putting us back to where the Treasury report was in April 2016, with the EEA as the least-worst option.

Beyond this fictional "bold and comprehensive" free trade agreement, for which there is no substance, no draft on the table, or even a scoping report to work with, no one seems to have the faintest idea of what Brexit really looks like. Apart from the ideas set out in Flexcit, there is not the slightest attempt to address the end game in any realistic sense.

All we have to go on therefore, is the Commission pouring cold water on the UK Government's ideas, insisting that its "phase one" housekeeping matters take precedence over the aspirations published in the last few days.

Meanwhile, as Mr Barnier keeps telling us, the clock is ticking, and will keep ticking. This is ironic, in a sense, given that Big Ben has lost its "bong", but then life relies on such symbols to send us a message.

The trouble is that, there are only the platitudes left. The Government has managed to make such a mess of Brexit that there is no obvious (or any) way forward. To keep the conversation going, we must keep churning out more and more extruded verbal material, with meaning long departed.

Right from the beginning, of all the short- to medium-term options, Efta/EEA was not only the best but the only way forward. We offered as a fall-back, the "shadow EEA" which, while less acceptable, could have at least been workable, had we sought from the very beginning to put our resources behind such a plan.

But, as we see time is dribbling away, with the media talking of only ten months being left for trade talks – assuming the "housekeeping" issues can be resolved.

Not only can't we do a trade deal in that time, we could not even produce a working draft of a transitional deal within that period. Already, we have run out of time, and there is no turning back.

The real test for analysts, therefore, is to identify the point at which business will wake up to the coming disaster and start bailing out. Every now and again, we see reports of businesses preparing contingency plans – led by the banks – but there must soon be a realisation that Government is set to deliver only chaos.

There are, however, concerns for small- and medium-sized businesses that may not have the capacity to conduct detailed contingency planning, but these will have to go down with the ship like the rest of us. But the "big boys" will jump ship, leaving only skeleton crews behind.

That may just be sufficient to jolt the Government into taking emergency action, although such is the air of unreality in Whitehall that even with the "rats" pouring down the sides of the ship, the likes of Mr Davis will be reassuring us that everything is under control.

Whitehall, however, looks to be in the final stages of a Laurel and Hardy comedy film, where we all await the predictable punch line that everybody but the actors must know is coming. But this is not comedy - it's tragedy played out on a vast scale. The results are not going to be pretty.

Richard North 18/08/2017 link

Brexit: no solution at all


One of the great lies perpetrated by remainers and "Ultras" alike is the claim that pursuing the "Norway" (Efta/EEA) option would require us (the UK) to continue obeying EU laws, with "no say" in their creation. That never was true, even within the constraints of the EEA institutional arrangements, but it doesn't stop those opposed to a "soft" Brexit trotting it out at every opportunity.

With no doubt unintended irony, however, it is exactly that scenario which the Government is proposing in its latest "position paper", this one on the Irish border, in respect of cross-border movement of animals and foodstuffs.

So desperate is the Government to avoid a hard border in relation to checks on particular types of goods, those it terms "Sanitary and Phytosanitary (SPS) measures for agri-food" that it is suggesting that the EU allows us to adopt the "Swiss option", which "could ensure that there would be no requirement for any SPS or related checks for agri-food products at the border between Northern Ireland and Ireland".

You have to look quite carefully for the Swiss reference as it is confined to a footnote – the one exception outside the EEA where routine border checks on these products have been all but eliminated.

But the price paid for this "freedom" is one which the "Ultras" are seriously not going to like – and nor it is going to be without complications. Firstly, as with Switzerland and the EU, the UK will have to be defined as a "common veterinary area" for the purposes of disease control.

This though rests on a comprehensive EU-Swiss treaty known as the Agriculture Agreement which includes 11 Appendices covering 37 pages on animal health matters, bringing Swiss law into line with the lengthy list of EU legislation.

This agreement also creates a Joint Veterinary Committee between the EU and Switzerland which has the authority to frame joint "acts" binding the parties, one purpose of which, as illustrated here is to keep Swiss law updated and in line with EU provisions.

This is not simply a question of "equivalence", as the UK Government would like it to be, but more-or-less complete harmonisation of law, systems and procedures, with the EU setting the agenda.

Sanitary and Phytosanitary agreements between the EU and third countries are by no means unusual, with the Commission website thirteen such, of which the Swiss agreement is clearly the most comprehensive. Mostly, such agreements are either free-standing treaties (as with the Swiss) or built into broader free trade agreements. Special "simplified procedures" apply to Efta/EEA states.

To ensure effective collaboration between Switzerland and the EU in the event of the detection of a listed animal disease, Switzerland is fully linked via a computerized network to the veterinary authorities of the European Commission and individual Member States of the EU through the Trade Network and Expert System (TRACES) and the Animal Disease Notification System (ADNS). Furthermore, Switzerland participates in different working groups and meetings of the Standing Committee on the Food Chain and Animal Health (SCFCAH).

All this could be replicated to form an agreement between the UK and the EU, with the added proviso (also built into the Swiss agreement), that any agri-food products entering into the UK from other third countries has to be subject to the same import regime as applied by EU member states to similar products entering their territories.

This would include the provision of Border Inspection Posts and the diversion of imports to them before they were submitted to customs clearance. Any goods coming into to Ireland with a final destination in the UK or an EU Member State must be inspected by the Irish authorities at a BIP (or other approved location). The combined effect of this regime would be to rule out independent trade deals in the agri-food sector with other third countries, where more relaxed or different standards were applied.

As far as agri-food products go, this would certainly give us the "invisible border" that the UK Government so much wants. What is not going to happen though, is the EU exempting traders and farmers from checks – as the Guardian avers.

The UK will have to maintain the full spectrum of internal checks, and paperwork, applying EU law to its fullest extent. But the effect would be that, in respect of this major sector, the UK would gain no relief from Brexit. To all intents and purposes, it will not have left the EU.

As to whether this would political tenable in the UK remains to be seen but it would quite obviously contradict any claim to us having regained control over our laws.

One possible advantage though is that, in the Swiss agreement, there is no judicial element in relation to dispute settlement. The Joint Committee acts as an informal arbitration body. Failing that, there is always the WTO dispute settlement procedure. Thus, there is no problem with ECJ jurisdiction.

Whether the EU would allow the same informal approach to apply in an agreement with the UK also remains to be seen. If it wanted more, then this could become a sticking point. That aside, a comprehensive sanitary and phytosanitary agreement (whether or not part of a more general agricultural agreement) would be a complex and time-consuming thing to negotiate.

Now that the UK has tentatively put it on the table, by way of its position paper, it is open for the parties (the EU and the UK) to place it firmly on the agenda. However, Barnier has already made it clear that he is keeping to the sequencing outlined in his negotiation mandate, so it is unlikely that we could see talks on this complex subject start until the end of the year, if not later.

Then to conclude an agreement before Brexit day would be possible, given that our laws and systems are already fully integrated with the EU- provided there are no unexpected glitches. The key though is whether the parties can find a slot in what will be an increasingly crowded agenda. The sheer volume of issues to be negotiated is going to make that difficult.

And that is just one small part of the whole, which will have to go to making the Irish border "invisible". All the other sectors, from aviation to chemicals, pharmaceuticals and engineering, each with their own specific regulatory requirements, will require their own agreements, on top of broad-ranging mutual recognition agreements on conformity assessment.

At least, though, for these position papers, the UK government is beginning to think in concrete terms about what is necessary to secure a working settlement with the EU. But, as it does so, the complications multiply rather than fade away while, as Mr Barnier keeps reminding us, the clock keeps on ticking.

Many of the problems, of course, would melt away should the UK – even at this late hour – adopt the Efta/EEA option – which offers a far better deal than the UK is seeking through its position paper. This is a bizarre example of negotiators turning down an option only to go for something less advantageous.

And even then there are countless other issues which need to be addressed, with the Irish Times recording that IT experts are dismissing the idea of a frictionless border altogether.

When push comes to shove, the border will form the EU's external border and the EU is not going to allow Northern Ireland to become a "back door" into the single market. With agri-foods as the model, that could see the Irish tail wagging the British dog, with the UK having to erect barriers at the borders between itself and third countries in order to preserve free movement across the Irish border.

And on that basis, the Irish solution that we have seen outlined yesterday could end up being no solution at all.

Richard North 17/08/2017 link

Brexit: an ocean of incoherence


As our confidence in the handling of Brexit deteriorates by the hour, Politico is telling us that our government is shortly to counter suggestions they are underprepared by releasing a series of position papers.

These papers, it would appear, will "reveal" that the UK wants a smooth route out of the European Union and will seek a "transitional customs agreement" before moving to a new permanent relationship.

This dramatic disclosure, we are told, has been pencilled in for the week of 14 August, then to be followed by a paper outlining the government's long-awaited solution to the Northern Ireland border problem. This is considered to be bound up with its customs relationship with the EU.

London is insisting that the Irish border question is considered alongside future customs arrangements, cutting across the EU's own priorities. It hopes to persuade Barnier that the two cannot be dealt with separately.

Alongside this, up to a dozen papers will form part of what officials describe as a "big push" to counter a perception among the EU27 that the UK is underprepared for Brexit, the first dozen to be published over the next two months, ahead of the European Council meeting in October.

With no real detail being offered, we are to understand that the government is seeking to preserve trading relations, although it is not clear whether the transitional arrangement to be proposed would allow the UK to strike trade deals with third countries outside the EU.

According to Politico, the bulk of the work on the position papers was completed some time ago, but in recent weeks there has been a discernible "pickup of the pace". There is an "awareness" that the UK has to show "seriousness" to the European Council, which has seen the "machine" being cranked up into another gear.

At talks scheduled for later this month, the UK will make a concerted effort to agree on a final package on expats' rights. Officials say that there is a determination to put the issue "to bed as soon as possible". Supposedly, "We will exert some pressure to get that one over the line at the next round".

However, in an almost certain show stopper, it seems that the government is still not prepared to agree a financial settlement. That would seem to render all this inside information somewhat redundant. Until the money question is settled, this ain't going anywhere.

Even that may not be cut and dried. The Telegraph (no paywall) claims that the UK might pay about €40 billion, which is not so very far from the the figure we suggested in April last year. Here, though, it is paid off over three years, rather than the seven years I suggested. Needless to say, a Number 10 official tells the Independent that the figure is "speculative and wrong".

Racking up the pain in other directions is former Commission President Romano Prodi. He has been telling the Observer that Britain will be committing economic suicide unless it is prepared to compromise to reach a comprehensive Brexit deal. He also says that more and more people are suggesting to him in private that a second referendum may be needed.

Prodi believes a "historic compromise" will eventually be reached because the Europe-wide economic consequences of failure had been heavily underestimated. "Maybe I am biased, being an economist", he says, "but it may be that there is still an imprecise [understanding] of the real economic consequences of Brexit". A compromise must be found "to avoid suicide", he says, justifying the "strong language" because of "the damage for the UK” that would come as a result of crashing out of the EU with no deal".

Looking at the EU side, Prodi is calling on Brussels to preserve as much trade with Britain as possible to avert serious economic damage. "It is so clear that it is impossible to dismantle this type of agreement without real damage on both sides", he says. "In this case, the weight of damage is probably heavier on the UK side, but there is damage on both sides".

As an interesting counterpoint to the Politico report, and the Telegraph, his intervention – says the Guardian - comes with no sign that the EU is prepared to cut a deal that would dilute the principle of free movement. Barnier, we are told, is signalling that he may not even sanction the beginning of talks in October unless the UK begins to compromise over finance or the expat issue.

The plot then thickens with Britain's most senior union bosses calling for free movement to remain in place. This is Dave Prentis, general secretary of Unison, saying: "The government must give European workers the right to remain, or face losing skilled and experienced health and social care staff for ever".

Prentis thinks that any trade deal should be without tariffs and guarantee future free movement of EU labour. He adds: "It must protect employment standards, jobs, and economic growth. It should also provide for well-funded public services safe from any further privatisations".

Adding more noise to the mêlée is Nigel Farage, telling an American audience that he thinks "the great Brexit betrayal has already begun". He says: "I'm hearing British Ministers speaking about fisheries, speaking about financial contributions, speaking about immigration and frankly doing so in a way that is backsliding, is gutless and is weak and I think we're gonna get Brexit but we may finish up in two years' time with Brexit in name only".

That is actually a possibility, not least through the failure of the likes of Farage to frame or endorse a workable exit plan. Wedded to their empty mantras, he and his followers have no ideas of their own, beyond wanting out "yesterday" and at any price.

His noise, though, is no more coherent than the input from Mervyn King - another "former" – this one having served as Bank of England governor. His great contribution to a debate, that is also deteriorating to the point where it's getting surreal, is to argue that more work needed to be done to show the European Union that the UK was serious about walking away if there was no agreement.

"If you are going to have any successful negotiation", he says, "you have got to have a fallback position which the other side understands and believes is credible. So we need to able to say if we can't reach an agreement we will nevertheless leave and we can make it work". Needless to say, he doesn't go so far as to tell us what this fallback position should be. It is simply "a practical thing that the civil service ought to be taking a lead on".

Clearly, he hasn't been reading Andrew Adonis who bemoans the lack of expertise in the very same civil service. Without saying as much, he argues that our people couldn't negotiate their way out of a paper bag – which augers ill for them devising some amazing fallback plan that would overcome the disaster of leaving the EU without a deal.

In this ocean of incoherence, you will find few islands of sense, although this on the Efta/EEA option is worth a read. Otherwise, the only constant is that those who believe there are simple solutions, such as Mr Fysh-out-of water, are the ones who don't have the first idea of what is going on.

Those are the ones that you find trotting out the Legatum briefing notes, telling us that regulatory conformity, mutual recognition and trusted trader schemes are the answer to a maiden's dreams. The higher they pile the jargon, the more it is clear that they lack even the most basic of understanding.

But, if we leave the Express to add its unique brand of incoherence to the rest, with the observation that, "Theresa May 'will not compromise with Brussels' and be pushed into a soft Brexit", we end up with a picture of almost total confusion – just another synonym for the incoherence that is swamping the Brexit debate.

Richard North 06/08/2017 link

Brexit: reality creep


On the back of yesterday's piece on the fishing industry, we get a key intervention by the Guardian which has Environment Secretary Michael Gove telling the Danish fishing industry that vessels from EU Member States will still be able to fish in UK waters after Brexit.

The rationale for this, it would seem, is that the UK fleet does not have enough capacity to catch and process all the fish available in UK waters, apparently prompting complaints from the Lib Dems and SNP that the government's stance on the issue was confused.

The initial comments do not come directly from the environment secretary, but have been conveyed by Danish fishing leaders after they met Gove on Monday. Specifically, Niels Wichmann, head of the Danish Fishermen's Association, has said that Gove told him that the UK: "does not have the capacity to catch and process all the fish in British waters and thus boats from EU nations would be allowed continued access post-Brexit".

This has been contrasted by UK politicians with a statement by Gove in July when he said Britain was "taking back control" of its fisheries by ending its participation in the Common Fisheries Policy.

Needless to say, there is no conflict at all between the statements, as the return of control over UK fisheries does not preclude foreign vessels being allowed to exploit the resource under license. Allowing foreign vessels to mop up surpluses is a normal feature of many national fishing policies.

Thus we have Defra confirming that the plan had always been to allow other nations some access to UK territorial waters after Brexit. But in accordance with the intention to "take back control", the extent of this "could now be decided by the UK".

Wichmann , for the Danish fishermen, says, "It is a logical announcement, but it is still very positive and a little surprising that it comes … so early in the negotiation process". But he said Gove did not make clear whether Danish vessels would be able to keep the same quotas or would have them reduced.

Esben Sverdrup-Jensen, head of Denmark's Fish Industries Association, told the Danish language Jyllands-Posten that while the quotas remained uncertain, it was positive that the UK was "being constructive and has not slammed the door".

It is, however, the Lib Dems' Brexit spokesman, Tom Brake, in a harbinger of the storm of criticism to come, who is making the mischief. Demonstrating a lack of grasp of the issues which typifies UK politicians across the board, he says Gove's comments showed promises by the leave campaign about fishing were being broken.

In his view, "Michael Gove chose to put stopping EU fishing in British waters front and centre of his campaign to leave the EU, yet is now telling Danish fishermen the opposite".

Brake is joined by the SNP which says that the government should clarify what was to happen. Stewart Stevenson, the party's MSP for Banff and Buchan Coast, said the government would not "stand up for rural Scotland's interests" on the issue. He adds: "They might well be trying to keep voters and fishermen sweet at home with all sorts of promises, yet Michael Gove is jet setting around Europe reassuring EU members that there will be nothing of the sort".

Grown-up politicians, however, might have held back the empty rhetoric, recalling that the pre-referendum calls mainly centred around leaving the CFP. There were never any serious suggestions that there should be a free-for-all or that foreign vessels would be excluded from UK waters.

Instead of going for cheap shots, they might have analysed the disturbing statements from the Defra spokeswoman who pitched in to support the environment secretary.

She said the issue was that the UK would be able to control which foreign ships fished within its territory. "Leaving the EU means we will take back control of our territorial waters", she said. "As we have always said, other countries will be able to access our waters – but for the first time in 50 years it will be on our terms and under our control".

The spokeswoman went on to say: "We will allocate quotas on the basis of what is scientifically sustainable, making sure we have a healthy marine environment and profitable fishing industry in the UK".

If this is an accurate rendition of what was said, then there are clear indications that Defra has not got a grip on the post-Brexit policy requirements and is heading for a chaotic exit. The tone of the statement clearly indicates that the department is looking to a unilateral solution, allocating rather than negotiating quotas on the basis of a bilateral treaty with the European Union.

Attractive though it might seem, we are seeing reality creep out of the back door. If the UK seeks to impose a settlement unilaterally, it opens the way to multiple disputes with vessel operators from EU Member States who consider they have been disadvantaged by the new regime. Without the cover of an international agreement, the UK will find it impossible to enforce any quotas it may set, without the risk of them being overturned by the international court at The Hague. 

What we are thus seeing is the strongest evidence yet that the UK government is failing to prepare adequately for the post-Brexit environment. It should be talking in terms of placing commercial fishing on the agenda in Brussels, and initiating talks on a bilateral fisheries agreement with a view to a rapid conclusion.

The reference to quotas is also troubling as it could be taken to suggest that the government has not yet given any thought to the allocation of the fisheries resource, beyond simple quantitative measures. By now, it should be turning its thoughts to operating a days at sea regime, and the adoption of a wide range of technical measures which make quota-based systems of control obsolete.

It is in fact the quota system, at the heart of the CFP, which makes it such a damaging and inequitable policy – implemented for administrative convenience rather than as an effective means of managing the marine resource.

But not only should Mr Gove be looking for a more effective management system, he needs to be acutely conscious of the need for an international agreement, and the difficulty in securing a settlement in the short time available. He also needs to be aware that the absence of an agreement could create a new "wild west" in national waters, with the UK unable to regulate the fishing effort with existing resources.

That he is showing no sign of appreciating what is needed to secure a stable, post-Brexit commercial fisheries environment, and is failing to display anything of the urgency that this issue requires, suggests that we are likely to see a chaotic exit. But then, this will not only be a government failure. The media hasn't a clue and none of the opposition politicians seem to have any more idea of what is needed than the government.

Even Owen Paterson seems all at sea, lost in nationalistic rhetoric which fails to take account of the legal realities of a negotiated withdrawal. He forgets that, when we crafted the draft fishing policy in 2005, this predated the Lisbon Treaty and Article 50. We were, therefore, only considering the technical aspects of fisheries policy.

Where we have a negotiated withdrawal using Article 50, we have to consider the broader legal framework, within the context of treaty law. Whatever technical measures are adopted, they must exist within that framework. This, to me, does not seem to have been considered.

Within that, of course, is the problem of "flag boats" and the controversial practice of quota hopping, where foreign-owned boats registered in the UK and flying the Red Ensign are able to buy UK quota. This is not a problem specific to the CFP but rests with the treaty provisions relating to free movement of capital.

In Iceland, Article 112 of the EEA Agreement (safeguard measures) is invoked to ensure that fishing in their economic zone is reserved for Icelandic nationals and only Icelandic registered vessels may be used. For joint stock companies wishing to engage in fishing, at least half the capital has to be owned by nationals of Iceland. Companies must be domiciled in Iceland, the directors must be Icelandic nationals and at least half the board of directors must live in Iceland.

As to Norway, fishing vessels must be owned by Norwegian nationals or joint-stock companies established in Norway, where all members of the board are shareholders and Norwegian nationals with residence in Norway (and at least 60 percent of the capital is owned by Norwegian nationals). Here, they rely on an OECD derogation.

The UK needs to secure similar provisions if it is to safeguard the UK fleet and prevent quota hopping, but the best and easiest way of securing this is via the Efta/EEA option. This is the very option that the "Ultras", who are so keen to protect British fishing, refuse to adopt.

Unless there is a rapid change in direction on this and the current approach to withdrawing from the CFP, the inevitable chaos which will result could take many years to sort out, creating unnecessary disturbance and uncertainty.

Richard North 04/08/2017 link

Brexit: dross from on high


"Following the EU Referendum result and Mrs May's election of the Conservative Party", says the Policy Exchange in its 2016 report to the Charity Commission, "the Trustees agreed that the priorities and character of Policy Exchange's research agenda should be adjusted to take account of the radical change in the UK's political landscape". It continues:
At the heart of this is the nexus of policy issues thrown up by the UK's departure from the EU. These range from constitutional and legal questions, to issues around trade and the future of UK foreign policy and Britain's place in the world.

The new political landscape and change of administration has redefined the objectives and purposes of policy. They will now principally focus on matters relating to Brexit, the economy and industrial strategy, and social reform Central to this readjustment is a much greater emphasis on economic research.
The no doubt accidental omission of a couple of words in the first sentence, those referring to Mrs May's leadership status, is rather a poor show for a supposedly leading think-tank, as is the erroneous assertion that Mrs May was elected to the office. After her rivals fell away, her candidature was uncontested and no election was held.

Small things sometimes tell their own story, and the lack of attention to detail from a think-tank reporting a £2.5 million income for the year could be considered revealing.

It is certainly something to bear in mind as we begin to see the fruits of the "research" on Brexit this organisation is producing, the latest of which is a report called Farming Tomorrow, offering views on a post-Brexit agricultural policy.

Here, though, the think tank avoids making small mistakes, such as leaving out a few words. Instead, it goes for the grand slam, filling 70 pages with what could easily be described as unmitigated trash – if one was of a kindly disposition. It includes a turgid repetition of the CAP hagiography, which could have benefited from a read of The Great Deception, helping them understand the politics of the EU's agriculture policy.

This report isn't just trash, though, it's Tory Boy trash, that unique meld of arrogance and ignorance in which the London Tory think-tank scene excels, churning out the same tired nostrums which are treasured by the bubble they inhabit. 

Page 29, for instance, takes us to this classic piece of dissimulation where lead author Warwick Lightfoot and his seven co-authors tell us:
In the case of a UK/EU FTA, assuming it is the wish of EU27 to reach an agreement with the UK, then negotiating an FTA should be straightforward. The UK and EU are deeply integrated with completely free trade as the starting point, and the UK's rules and regulations are currently based on the EU acquis.
Once again, we are seeing the classic Tory myth, the blithe assumption that, because we have regulatory convergence, hooking up with the EU in an FTA is going to be easy. These people are children.

Recently, Oliver Norgrove picked up this theme, calling in aid Professor Grey at Royal Holloway University, to debunk the myth.  But not for one minute does Policy Exchange look beyond their simplistic mantras and explore the real situation where, as I wrote recently, regulatory convergence is just a starter for ten. Their idea of "research" is to collect up the mantras from their peers and to regurgitate them.  

The point one should not evade is that Lightfoot and his colleagues are the cream of the Tory think-tank research establishment. And even though none of them can claim any agricultural experience, they regard themselves as competent to write a report on the highly specialist and complex area of agricultural policy. This takes arrogance into new dimensions. 

Predictably, all you get is the repetition of discredited myths and not the slightest attempt to verify their assertions. The factoids have become the perceived wisdom, cast in stone. 

The arrogance is their undoing. For instance, they know of my work, and occasionally they read it. But they ignore it. They know better than me with my 30 years experience in the food, farming and related industries, and years working on EU policies. Sixteen years ago, I wrote Death of British Agriculture, which is still ahead of the game on policy, much of which is reflected in Flexcit. But we have superior beings here. They need nothing from us lesser mortals.

And then there's the tribal loyalty. The regulatory convergence myth has been perpetrated by none other than Liam Fox and, since he is one of their own, he cannot be contradicted. By such means is error reinforced and disseminated, to be repeated by all the derivative Tory Muppets and wannabes, as the gospel from on high. And this is why the work from Tory think-tanks is worthless, even where, in this case, the over-generous donors have spent £2.5 million on it.

For that money we also get another of their treasured little mantras, to the effect that a "significant cause of higher prices" of food in the UK "has been the combination of tariffs and agricultural support", from the CAP, "increasing costs and subsidising inefficient methods of production".

Lightfoot and his team particularly vent their spleen on the high rates of agricultural tariffs protecting EU produce, point out that it averages 8.5 percent across the board. Against this, they compare tariffs with Australia and their poster child, the subsidy-free New Zealand, which applies the equivalent of only a 0.4 percent tariff to agriculture.

What these precious little Muppets never seem to do, though, is look at the comparative price of a grocery basket between their heavenly New Zealand and the subsidy-ridden, protectionist UK, in the thrall of the CAP. Yet, only in June, the New Zealand Herald was complaining that a typical grocery shopping bag in Auckland was twice as expensive as it was in London. A comparison two years earlier came out at 46 percent higher on nine basic items.

This compares with the cost of living generally in New Zealand, which is only 17 percent higher than in United Kingdom. And New Zealanders in Australia are united in saying that Kiwis pay too much for food.

The way Lightfoot et al get round this inconvenient problem is by comparing UK prices with global commodity prices, claiming that UK consumers also pay above the odds for food indirectly through the tax system and wider income support. In the European Union, they say, this is equivalent to another 20 percent boost to farm prices.

The fact is, though, that global commodity prices bear little direct relationship to supermarket prices, which are affected by so many other factors that actual raw material costs can be the smaller part of the finished price. Furthermore, there is considerable variation between retail food prices throughout the EU, even where the subsidy system is supposed to be uniform.

And, outside the EU and the CAP, Norway, Iceland and Switzerland all pay higher subsidies than Brussels allows for its farmers, deciding that it is in their national interest to keep the countryside populated, and traditional farming methods alive. 

While the EU average total subsidy is about 18 percent of farming income, Norwegian farmers gain just short of 60 percent, slightly ahead of Switzerland, while Iceland farmers are paid just short of 50 percent. All three are at the top of the list for food prices, yet consumers pay less in the shops than New Zealanders do for their food.

Across Europe, retail price indices range from 58 (Macedonia), where the EU-28 = 100, to 173 (Switzerland). Denmark, with its country name synonymous with bacon, comes in at 148, compared with the UK at 98, slightly below the EU average. Eurostat offers further interesting statistics.

In short, the subsidy argument, in the way presented by the Tory right, is utterly crass. The removal of subsidies, per se, will not necessarily – or at all – see a reduction in retail prices. With other factors taken into account, we could in fact see major increases in some commodities.

What will certainly be a consequence of precipitate tampering with the subsidy system, though, is considerable damage to farming. Furthermore, Lightfoot and his friends talk glibly of the CAP "subsidising inefficient methods of production". Yet, it is the more inefficient methods which produce the most spectacular scenery, which underwrites a £12 billion rural tourism industry. It keeps the countryside populated and provides much-needed jobs.

Not once in 70 pages does the Policy Exchange report mention the economic value of scenery, or that this is a tangible by-product of farming. It is created by farmers, for which they receive no direct compensation. And not only does scenery have a significant economic value, it shapes our perception of ourselves, and contributes to the quality of life. 

Instead, they quote Matt Ridley, prattling on about "gardening", completely failing to understand that the scenery that makes England (Scotland, Wales and Northern Ireland) stems from its farming practices. To preserve the countryside, you must preserve "inefficient" farming - not turn farmers into gardeners.

Without more than a sideways look at such issues, which should actually be driving a post-Brexit agriculture policy, the Policy Exchange argues that "the UK should work to phase out direct subsidies and tariff protection for production, and instead look to create a more productive, innovative and ultimately sustainable sector". Do they not realise that production subsidies have been almost completely phased out already? Forgive them Lord, they know not what they do. 

And in that category, nowhere at all do we see any reference to the probable impact of Brexit on agricultural exports to the EU. This is a huge lacuna, as the impact of border controls could bring UK exports to an end for a considerable period, and have a massive effect on the economic health of both agriculture and the food industry.

Unbelievably, there is not a single reference to border issues, or inspection requirements or any of the related issues. And Ireland, it seems, is to be addressed in the next report.

But this simply underlines the obvious. We are not going to get anything sensible from the Tory right on agriculture, and this think-tank has totally lost the plot. All you get from it is dross from on high. What they are offering is wrong, and dangerously so. They would destroy British farming as we know it, for no gain at all.

Richard North 02/08/2017 link

Brexit: transition from nothing to nowhere


With Theresa May on holiday, we get something of a feel of the mice playing while the cat's away – if Philip Hammond can in any sense be regarded as a mouse. I'm not sure what sort of animal I'd cast him as but, if limited to rodents, I'd put him down as a lean, sharp-toothed rat.

Anyhow, Mr Hammond has been making waves with his BBC interview in which he argues for a "transitional deal" in the period after Brexit, but suggests that it must end in time for the election in June 2022 – allowing just over three years.

The first thing to note is that, four years after we first worked up the idea and three years after we formally lodged the concept of an interim settlement, in our very first edition of Flexcit submitted for the IEA Brexit competition, the Chancellor of the Exchequer is at last putting it on the table, albeit in a less-developed form than we offered.

However, it is fair to say that, had the debased IEA run an honest competition, we might have been there sooner with the only logical response to the wholly unrealistic two-year Article 50 timetable.

This is a point that needs to be made time and time again. We've been round the houses with the Muppets arguing that Brexit was straightforward. The idiot Redwood argued that it could be settled in a morning in Brussels, while the feline Lilley even suggested it could be done in ten minutes.

Any dispassionate and halfway intelligent analysis will inevitably come to the conclusion that the two-year period is too short and, therefore (unless we were going to bid for extra time), we needed to arrange an interim or "transitional" plan.

While Flexcit currently argues for the Efta/EEA option, it should be remembered that we offered a menu of options. We allowed for the failure of the so-called Norway option, proposing in its stead the adoption of a "shadow EEA" plan, or even what we called the "Australian process", relying on political declarations rather than binding agreements – the ultimate in flexibility.

But there is a lot more to Flexcit than just a transitional phase. That is only phase one, dedicated to the procedural task of extracting us from the EU. Phase two deals with the important issue of immigration but the real meat of the plan – as far as Europe is concerned – is phase three.

This sets out ideas for a genuine European Single Market, constructed on intergovernmental lines and freed from the political integration agenda that Brussels has superimposed upon it. Relocated in Geneva, using the already established UNECE, the idea has the merit of mirroring the 1948 structure offered by Winston Churchill at The Hague conference, while working with the very latest developments in globalisation.

And while Hammond has just about got his brain around the concept of a transitional phase, no one in the mainstream has given any serious thought to what comes next, having told businesses he wants a "standstill" transition leaving companies with full access to the single market and customs union.

Hammond believes such a deal should allow people and businesses to "get on with their lives" without "massive disruption" where, in the immediate aftermath, goods would "continue to flow across the border between the UK and the EU in much the same way as they do now". Many things, he says, will look similar – including, it would appear, freedom of movement of persons.

That is an intelligent objective but, as I have pointed our many times, it is fundamentally flawed if, at the end of the process all we are going to have to show for our efforts is a free trade agreement (FTA). This will put us in a considerably less advantageous position than we have now, something which neither the nation in general nor business in particular is going to tolerate.

As Pete points out in a study that is far ahead of the field, the idea of an FTA is simply not a sensible option. We need drastically to rethink our trade policy, confronting a massive learning curve which should bring us finally to the realisation that FTAs are 19-20th Century solutions which are not appropriate for the needs of the 21st Century.

Remarkable, four years down the line, Allie Renison of the Institute of Directors wants us, for the sake of business, to phase in Brexit slowly.

She believes a "short spell" in the EEA "would certainly remove much of the potential for disruption to trade". And it would also give our regulatory agencies the time to build up capacity to take over functions from - and negotiate new relationships with - their European counterparts, who currently act as a one-stop shop for regulating our access to the EU market.

Nevertheless, she falls for the idea that we would need to renegotiate our way back into the EEA agreement once outside the EU, via rejoining Efta first, and then negotiate our exit from it later. She does not understand that it is possible to stay within the EEA without have to renegotiate entry.

But the ultimate flaw is the same lacuna we get from Hammond. Accepting that we will have a time-limited transition "for political reasons", her horizons stop at a free trade deal to replace our current arrangements. But, with nothing better than the EEA on offer, the danger is that the transitional becomes permanent.

In that, I have a great deal of sympathy with those who oppose the EEA because of the danger of it becoming permanent. Where I have less sympathy with these people is with their inability to come up with sensible alternatives that will give us something better.

And neither are we getting any realism on the timing. Hammond obviously wants to get Brexit out of the way before the next general election – just supposing the Conservative government lasts that long. But dropping out of the EEA into a less favourable position within an FTA is not going to confer any electoral advantages. It might be reasonable to expect that Labour is still in a mess by then, but if they are not, the Tories could struggle to get re-elected.

But then, Hammond doesn't seem to have thought through the mechanics of a transitional deal either. He may want goods to "continue to flow across the border between the UK and the EU in much the same way as they do now", but that is not going to be easy to arrange.

Within the terms of Article 50, the EU treaties cease to apply on Brexit, and the UK assumes the status of a "third country". For this to be any different, the "colleagues" will have selectively to re-apply treaty provisions to the UK, a process which necessarily constitutes changes to the existing treaties.

There is, of course, only one way that can happen, and that is through treaty change. It is a long-held principle in international law that the only way a treaty can be modified is with another treaty. For convenience's sake, we can call this a secession treaty, but whatever it is called, it will need the unanimous assent of all [28] parties, and ratification.

I've been thinking more and more about this, and especially the UK situation. When we arrive at Brexit, Article 50 cuts in and all the existing treaties fall away. If provisions are then to reapply, that means a new treaty must be agreed, one which actually undoes Article 50 and gives powers to the EU that it had just lost.

Under the terms of the European Union Act 2011, that seems to be a case of conferring new competences on the EU, in which case the "referendum lock" cuts in and we end up with another referendum. This is still in force, and although scheduled for repeal in the European Union (Withdrawal) Bill, it would still be in force when (if) any secession treaty has to be ratified. 

I'm not going to argue that this will necessarily be the case, but one cannot rule out someone might preempt the repeal and take the UK government to court (again) to fight out the legality of a transitional (aka secession) treaty. Any case would be fought on the basis that the treaties end with Article 50 and Brexit, so any transitional powers granted to the EU must be treated as new powers.

What we now have to confront is the prospect that what looks like progress, with Hammond's initiative, is nothing of the sort. Even if the Prime Minister endorses it, when she gets back from holiday, and the Cabinet lines up behind it, we are no closer to a workable Brexit settlement.

In fact, we are making a transition from nothing, and the overall plan is going nowhere.

Richard North 29/07/2017 link

Brexit: a surplus of stupidity


One of my seminal experiences when researching for The Great Deception was to follow the media coverage of our applications to join the EEC and then to compare the public record with what was being said in secret by officials and politicians.

One also sees how, in crucial areas, a lack of knowledge or communication distorted contemporary perceptions of events. People, doubtless, were making statements which they believed to be truthful which, with hindsight, were (at best) misleading.

The experience, for me at any rate, serves as a reminder that nothing about Brexit currently coming out of Brussels, or leaking from Cabinet, can be trusted. Even discounting the normal fog of war, there may be active attempts in play either to confuse, distract or even misinform.

In this respect, the recent media reports on transitional periods, and extending freedom of movement past exit day, must be taken with more than a sprinkling of salt. And this is especially so, given that the latest source is Michael Gove, a man not exactly known for his non-partisan views.

However, the leaked report that Philip Hammond is pushing for a lengthy transition period is credible, especially in view of the context, where he was apparently reassuring jittery bankers that the government was seeking to avoid a "cliff-edge" Brexit.

Even the BBC, which dismisses many of the reports as "kite flying", concludes that there appears to have been a "hardening of opinion" in Cabinet around the concept of a transitional period, with greater willingness to accept that certain aspects of EU membership (such as free movement of persons) must continue after exit day.

This is borne out by the Irish Times which writes of a significant change in mood around the British Cabinet. It has it that "senior sources" have suggested that a major shift in opinion is under way that will delay the full implementation of a Brexit deal until 2022.

The irony of this is that, if the Cabinet is indeed willing to accept an extension of free movement, then this rather undermines the Prime Minister's case for leaving the Single Market. During her Lancaster House speech on 17 January, she specifically made the linkage, arguing that we could not continue with the Single Market, as that "would mean complying with the EU's rules and regulations" that implement the four freedoms.

However, it is not only the badgers who seem to be moving the goalposts. Owen Paterson is arguing that the problem with the Single Market – in the form of continued EEA membership – is that "we need to have authority over domestic regulation in order to strike new trade deals".

This is a rather odd assertion, especially coming from one who previously favoured EEA membership, but it pales into insignificance with the Moronic Mogg who is actually arguing that those advocating a transitional phase are seeking to undermine the result of the referendum.

The man told Newsnight: "If we are subject to the rules of the single market and the regulations of the single market, and subject to the fiat of the European Court of Justice, we are paying for the privilege and we can't do free trade deals with the rest of the world, then we are in the EU".

This bovine stupidity gainsays the fact that the Single Market/EEA acquis comprises less than a quarter of the EU legislation in force – and ignores the fact that a large and increasing proportion of rules originate at global level. In or out of the Single Market, we would still have to comply with them.

Mogg also fails to recognise that Efta/EEA members are subject to the Efta Court rather than the ECJ, a confusion that clearly irritates former ECJ Judge David Edward. The EU treaties don't apply directly in the Efta/EEA states, he says, so a soft Brexit wouldn't necessarily mean that the UK would be within the scope of the ECJ jurisdiction any more than Norway is. He then goes on to say:
But if you're going to trade and the whole point of being in the single market is to have freedom of movement, then the ultimate authority on what the rules are within the EU 27 is the ECJ. So for example if there's a question over pharmaceutical standards and there's a dispute as to what the directive on particular pharmaceutical standards says, then the ultimate arbiter is the ECJ. And to that extent traders in the UK who want to trade with the EU 27 have to obey those standards. And the same thing applies in all aspects of freedom of movement.
The other element of Mogg stupidity encompasses the finances. The bulk of Efta State payments (such as Norway/EEA Grants) are not even paid to the EU, yet this venal man wants to turn them into Single Market budget contributions. And as for free trade deals, if he is not aware that Efta/EEA States make their own agreements across the world, then he is competing with cabbages in the IQ stakes.

Most bizarrely of all, with talk of a transitional period lasting five years, during which we will be subject to some EU rules – and thereby fall under the jurisdiction of the ECJ – the one way of ensuring a clean break, taking us out of the EU completely, would have been the Efta/EEA option. Membership of Efta is practically and legally incompatible with EU membership.

And nor, as we keep having to say, do Efta/EEA states adopt EU laws. The EEA Joint Committee takes the laws and converts them to EEA laws, adding them to the relevant annexes, thereby making them integral parts of the EEA Agreement. Once the changes are ratified, they become binding – as treaty obligations.

Sadly, the Moggish tendency to over-simplify (to the point of being grossly over-simplistic) reflects what appears to be a similar tendency in the legacy media. They have managed to turn the debate into a fight between "remoaners" on the one hand, who want a "soft Brexit", and "leavers" who are pushing for a "hard Brexit".

This binary treatment takes no account of nuances, which means that Flexcit supporters have been "disappeared" (along with all other "leavers" who want a "soft" Brexit). The simplistic narrative favoured by the media can only handle a black-and-white representation. There are only "leavers" or "remoaners" and nothing in between.

Nonetheless, the Government does seem to be capable of taking a more nuanced view and looks to be funnelling its thinking down the obvious and necessary route of a transitional agreement. But if that is what it is doing, it is only coming to the same conclusion that we reached over four years ago, having wasted more than a year thrashing around trying to avoid the obvious.

What no one seems to be doing, though, is revisiting the Liechtenstein solution, and exploring means by which freedom of movement can be limited. That has been well and truly buried by the legacy media and the noisemakers who provide most of their copy.

Even now, its adoption could transform the debate, to the extent that one really does wonder whether any of the major players actually want a solution. When one thinks it through, though, even if the UK Government did negotiate limits on citizens of EU Member States, the Borders Agency and the Home Office are so inept that they most likely would fail to enforce them.

The spectre of hard-won concessions from the EU (and the cost of reduced mobility for UK citizens), which are then undermined by enforcement failures, could almost be enough to deter the Government from seeking a settlement.

Still, there are two more glaring omissions. The first is the absence of any clearly defined "vision" from the Brexit team, highlighting the obvious but scarcely discussed premise, that one cannot define a transition agreement until we know what we are transitioning to. We are in very great danger of letting the process define the destination, which can only lead to the mother and father of all messes.

The second omission is one to which we have made constant references, but which is even more invisible than Flexcit. This is the need for a secession treaty to implement a transitional agreement. So far, I have seen nothing written (outside this blog and a brief reference on Booker) on the mechanics of an agreement. This could cost us dearly, if the agreement founders not on content but on execution.

Yet, for a nation that only woke up the detail of Article 50 some months after the referendum, and seems to have difficulty telling the difference between a customs union and a customs agreement, the lack of focus should perhaps be unsurprising.

After all, it has taken long enough for the idea of a transitional period to take root. It is far too much to expect there to be any broad understanding of how this should be achieved – especially in a political community where Rees-Mogg is actually regarded as intelligent.

But this laborious process of discovery, dealing tardily with issues only as they emerge rather than pre-empting the pitfalls and planning for them, does not auger well for the negotiation process as a whole. If it takes to the end of the year before we even start discussing the need for a secession treaty, we will have left it far too late. At the current rate of progress, it will probably take longer.

In the broader scheme of things, though, it probably is already too late. The train left the rails half a mile back and, in truth, we're just waiting for it to grind to a halt. We can handle anything in this country, I have averred – except Tory stupidity. And that we have in surplus.

Richard North 22/07/2017 link

Brexit: Humpty Dumpty facts


Brexit: trying to make sense of the world On 6 July, the European Commission published a press release stating that the EU and Japan had reached agreement in principle on Economic Partnership Agreement.

This was accompanied by an explanatory note, offering the summary of the agreement, alongside this disclaimer:
The negotiations between EU and Japan on Economic Partnership Agreement are not concluded yet, therefore the published texts should be considered provisional and not final. In particular, the provisions which appear in brackets are still under negotiations. However, in view of the growing public interest in the negotiations, the texts are published at this stage of the negotiations. The texts are published for information purposes only and are without prejudice to the final outcome of the agreement between the EU and Japan. Any such texts become binding upon the Parties under international law only after completion by each Party of its internal legal procedures necessary for the entry into force of the Agreement, and after the final texts are submitted and approved by the legislators.
From this, two things should be very clear. First, the EU hasn't signed a trade deal with Japan. Secondly, the EU has not claimed it has signed a trade deal with Japan.

Strangely, even the Daily Telegraph understand this, headlining its report, "EU and Japan promise to commit to free trade deal", with scribe Tim Wallace writing: "Japan and the EU have reached a “political agreement” on a free trade deal in a sign that both parties will commit to negotiating an agreement to reduce barriers between the two".

Turning now to the dross in yesterday's Sunday Telegraph view (prop. Allister Heath), however, we see written": "Last week the EU excitedly announced a trade deal with Japan, but all that was actually unveiled was an agreement to talk".

That is a pretty good indicator of the degree of respect for that truth that the paper holds. But then it adds:
Speaking to the BBC, the Japanese ambassador to the UK said that it took more than four years to nail down the principles of an EU deal and will take yet more time to hammer out the detail. It is conceivable that a deal between Tokyo and London, which the ambassador implied ought to be straightforward, could be concluded before one with Brussels. Switzerland took just two years to do this, which underscores an important fact: bilateral trade deals are a lot easier than multilateral ones.
But in this, the art of lying flourishes to an extraordinary extent. For sure, the starting point for the Swiss-Japan free trade agreement was in January 2007, and the agreement was signed on 19 February 2009, together with an implementing agreement.

But what is rather germane to note is that, while the EU's last three major treaties (South Korea, Ukraine and Canada) have each been in excess of a thousand pages, the Swiss-Japan treaty was a mere 119 pages. The implementing treaty was a further 24. Furthermore, the agreements were the fruition of "bilateral economic consultations between the Japanese and Swiss governments" which have been held "on a regular basis" since 1995.

That has the Sunday Telegraph effectively lying by omission – putting it in John Mills territory when he made similar claims about the Norwegian free trade agreement – only this was with the EEC, taking only two years. That, however, was 113 pages.

In other words, we get "Humpty Dumpty" facts. They mean what people want them to mean. When it is important that the UK does a deal with the EU quickly, it can be done in two years because, in 1993, Norway signed a deal in two years.

When it is important that the UK does free trade deal with Japan quickly. It can be done quickly because in 2009, Japan signed a deal in two years (on the back of talks starting in 1995).

And those are just brief observations. I wasn't going to write anything at all for overnight - I'm too tired. This, then, is a starter for ten. Pete will pick up some more threads tomorrow, when we'll both continue trying to make sense of world. I'll do Booker and Grenfell as well.

Richard North 10/07/2017 link

Brexit: Barnier - "that is not possible"


In the wake of Mrs May's Lancaster House speech in January, I wrote that her idea of a "bold and ambitious" free trade agreement with the EU inside two years was not just difficult. "It is impossible", I said. "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".

Just to re-emphasise the point, in March, I wrote a whole post under the title "impossible means impossible", where I reminded people of my view, that the commitment to securing a free trade agreement (signed and ratified) within two years, was akin to a British commander addressing his troops on Salisbury Plain, telling them they were to invade Iraq the next day – but they had to walk all the way from the UK.

But then who am I? Just a mere "blogger", with the best part of 40 year campaigning under my belt and 14 years devoted to writing about the EU – with the most comprehensive published exit plan yet written under my belt. Clearly, I'm a know-nothing – not even an "expert" who knows so much more than us mere plebs.

Mostly, people like me, therefore, can either be ignored (apart from the inconvenient fact that we've had upwards of 50,000 people in a day on this site). If we persist, the bubble-dwellers excel in treating non-conformist views with utter contempt.

But then, some four years after we first started writing seriously that the "free trade" option for Brexit is a non-starter (only to have the wondrous IEA, along with Lord Lawson, reject the warning), we now have somebody else pop up and say more or less the same things.

This time, though, it just happens to be Michel Barnier, speaking in Brussels to the European Economic and Social Committee. As the chief EU negotiator for Brexit, this man has a certain status – and in this man's world, status is everything. To get a hearing, you must have status (aka "prestige"), and once you have it (or been given it by the media), the media listens.

At this event, speaking "frankly and sincerely" on the theme of Brexit, M. Barnier pulls no punches, taking his line straight out of the Flexcit playbook. "There will be no business as usual", he says. "The UK will become a third country at the end of March 2019".

The number of times we've seen the Muppets on the Booker column comments and elsewhere deny this is legion. There is nothing quite so calculated to wind up the kippoid tendency as to point out this simple fact. I even wrote a post on precisely this point, but they still don't get it.

Anyhow, here we have M. Barnier stating the obvious (and not for the first time), but this time he goes further. The UK government, he says, has defined a number of "red lines" for the future relationship. Mrs May, Davis and the rest of the motley crew, want no more free movement for EU citizens, full autonomy over UK laws, autonomy to conclude its own trade agreements and no role for the ECJ.

This, says Barnier, implies leaving the single market and leaving the EU Customs Union – and he's not wrong in saying that. But he goes on to say that, "on the EU side, we made three things very clear". The particular point he and others have been making is that "free movement of persons, goods, services and capital are indivisible", on the basis that "We cannot let the single market unravel".

Not to put too fine a point on this, however, the doctrine of indivisibility applies only to EU Member States. It does not apply to Efta/EEA states, where both Iceland and Liechtenstein have modified the "four freedoms" without causing the Single Market to unravel.

Nevertheless, Barnier lays out his pitch: "There can be no sector by sector participation in the single market: you cannot leave the single market and then opt-in to those sectors. You cannot be half-in and half-out of the single market". He then adds:
The EU must maintain full sovereignty for deciding regulations: the EU is not only a big marketplace. It is also an economic and social community where we adopt common standards. All third countries must respect our autonomy to set rules and standards. And I say this at the moment when the UK has decided to leave this community and become a third country.
That is fighting talk if ever I saw it. It's also bullshit – but never mind, Barnier probably believes it. He is, at his heart, a French politician – and they have the ability to believe ten contradictory things before breakfast. They then rest until dinner, so the end of the day count is the same. But a pre-breakfast count is so much more impressive.

However, those are his red lines, and one can almost hear the echoes of Verdun: Ils ne passerons pas. These three points, he says, were already made clear by the European Council and the European Parliament. But, he says, "I am not sure whether they have been fully understood across the Channel".

That is something of an understatement, but deserves repeating: "I am not sure whether they have been fully understood across the Channel". This is what is known as diplomacy. Barnier knows full well that they haven't been "fully understood". All he has to do is tune into the drivel filling the UK media, day after day, after day.

Thus, he says: "I have heard some people in the UK argue that one can leave the single market and keep all of its benefits", to which he adds, with disarming frankness: "that is not possible".

He then says: "I have heard some people in the UK argue that one can leave the single market and build a custom union to achieve 'frictionless trade'", to which he adds, with disarming frankness, "that is not possible".

"The decision to leave the EU has consequences", says Barnier. "And we have to explain to them, the businesses and civil society on both sides of the Channel, what these consequences mean for them". He adds: "Let me be clear: these consequences are the direct result of the choices made by the UK, not by the EU. There is no punishment for Brexit. And of course no spirit of revenge. But Brexit has a cost, also for business in the EU27".

Rubbing the salt in the wound, Barnier says that, "Whatever the outcome of the negotiations, at midnight on 29 March 2019, the United Kingdom will at the present stage be a third State, which will therefore not have the same facilities and rights as a State Member of the European Union. It's its choice. Not ours".

This, apart from anything else, is as clear a statement as any that we will not have anything like the "bold and ambitious" free trade deal that Mrs May wants". All Barnier is prepared for is travail préparatoire, with no question of concluding a deal.

As to trade in general, he reminds us that Member States benefit from a "frictionless" trade for goods because they form part of the internal market. This, he says, has made it possible to harmonise the rules or to ensure their mutual recognition by ensuring that goods lawfully produced in one Member State can be sold in all the other Member States without further formalities.

He further argues that there is little use in having no customs duties if at the same time divergent national regulations prevent products from circulating freely – thus highlighting the problem of non-tariff barriers. Only the combination of the Customs Union and the rules of the internal market allows us to trade freely, "without friction". One does not go without the other.

By choosing to leave the Union, Barnier then says, the UK moves to the other side of the external border. This not only delimits the customs union, but also the space for the adoption and application of internal market rules. That is exactly the point I made in February, using the analogy of a medieval walled city. And, as Barnier says, it's our choice."

Inevitably, Barnier concludes, "a trade relationship with a country that does not belong to the European Union obviously involves frictions". For example, economic operators from third countries do not enjoy the same facilities as the Member States on VAT returns.

For another country, he says, 100 percent of imports of live animals and products of animal origin - and this is a former Minister of Agriculture who is talking - is and will be subject to controls. There it is – for the first time from a public figure, you get what I've been saying on this blog again and again and again. What price the racehorse industry now?

Barnier goes to some trouble to emphasise this point. The border of the European Union, he says, it is one of the challenges that we must face in Ireland's unique case, without recreating a hard frontier. He adds:
On the other hand, the general sanitary and phytosanitary conditions of such exports must always be established before the export of a product of this nature from a third country to the European Union is possible. We can clearly see, if I speak frankly, the constraints that are there, especially for the agri-food sector.
He then further reminds us that these constraints apply equally to all companies that derive their dynamism from the integration of production centres in Europe within the common market.

As to the "no deal", scenario, this says Barnier, means a return to the status quo. In the case of Brexit, "no deal" would be a return to a distant past. It would mean that our trade relations with the UK would be based on WTO rules. It would be a good idea to have the customs duties of almost 10 percent on an average of 19 percent for alcoholic beverages, and an average of 12 percent on lamb and also fish, for which the vast majority of British exports go to the EU.

While leaving the customs union in any case involves border formalities, "no deal" would mean very cumbersome procedures and controls, without facilitation. This would be particularly damaging for companies operating on a "just in time" basis.

In practice, he warns, "no deal" would worsen the "lose-lose" situation which is bound to result from Brexit. Objectively, he thinks, the UK would have more to lose than its partners. He is thus entirely unequivocal. "I therefore want to be very clear", he says, "to my mind there is no reasonable justification for the 'no deal' scenario. There is no sense in making the consequences of Brexit even worse".

Whether this sinks in, I don't know. But for many months, on this blog, I've been attempting to spell out the problems and consequences of leaving the Single Market, and going for the "no deal" scenario – only to be derided or ignored. Booker has had much the same treatment, with his own management undermining him in the letters pages.

Now, chickens are coming home to roost. Says Barnier: "Business should assess, with lucidity, the negative consequences of the UK's choice on trade and investment. And prepare to manage them". Of course, most of business hasn't. With some honourable exceptions, they've had their heads in the sand – or been pursuing a far more sinister agenda.

Ironically, one of my commenters yesterday posted on my article about Grenfell Tower some detail on Cameron's Damascene conversion to the Norway option. He prefaced it by saying: "to move away from Grenfell and back to Brexit for a moment…".

I can quite understand the point, but my response was that, in pursuing the truth behind Grenfell Tower, "we never left Brexit". Forces which brought us the Grenfell disaster are the key to understanding Brexit.

Note here that Barnier refers to the UK "red line" of "full autonomy over UK laws", reflecting the Vote Leave slogan of: "Let's take back control". But what we also have to recall is that Vote Leave was not a people's campaign. It was funded mainly by a small number of very rich business people, who saw in Brexit an opportunity to promote a "deregulation" agenda for their own commercial advantage.

It is no coincidence that these same people are inimically hostile to the "Norway option". In an attempt to stop it happening, they are supporting the Leave means leave campaign, the Tory "ultra" European Research Group" and, latterly, the secretive Red Tape Initiative.

These groups are supporting their paymasters who see in Brexit profit-creating opportunities which would be limited if we were still bound by the Single Market acquis represented by the Efta/EEA (aka "Norway") option.

Deregulation, of course, can be no bad thing (although I have long preferred the term "re-regulation"). But, as we've been seeing with Grenfell, the problem can just as easily be that existing regulation is not rigorous enough, with progress held back by the EU.

Thus, while returning control of the legislative agenda affords the chance to make our own laws (as long as they don't conflict with international standard-setting), this does not necessarily imply getting rid of laws. Many should stay, and be tougher – remember horse meat, anyone?

The thing is, "Let's take back control" never did mean restoring control to the people. Whether in the EU or supposedly as an independent nation, in Vote Leave's scheme of things, we don't get a look in. In the view of its wealthy business backers, control goes to born-to-rule Tories, who will look after their friends by reducing their legislative "burdens".

In this, Monbiot does have a point, except that he just wants the control to pass from "big business" to his green NGOs. He and his likes are no more interested in giving power back to the people than are the Tory right.

Thus – even if for the wrong reasons – Monbiot has correctly identified Grenfell Tower as a key Brexit battlefield. But if the question is: "who rules Britain" (or the UK) - as between business and unelected NGOs (his preferred NGOs) – he wants his green NGOs to take the prize. Nowhere in Monbiot's scenario do the people even feature.

Our battle, therefore, is in ensuring that we have a measured exit from the EU and that when powers are eventually returned from Brussels, they go back to the people, rather than just to a different set of masters. That is why Flexcit in its Phase 6, includes The Harrogate Agenda.

For the time being, though, the "mad deregulators" are driving the Brexit agenda up a dangerous cul-de-sac. It is that totally selfish agenda which is blocking a sensible approach to the Article 50 talks and is the real reason why the right is blocking the Efta/EEA option. But, as Pete points out , deregulation is not a viable option. It isn't going to happen. Thus, if we are going to make any progress, we are going to have to reclaim the agenda, and put the "deregulators" back in their box.

And that has to be possible, or Brexit will be a disaster. But then, readers of this blog already knew that.

Richard North 07/07/2017 link

Brexit: in danger of being grounded


So, after a complex and lengthy piece covering Booker's article about Grenfell Tower, I'm able to turn to his shorter and simpler piece on the Efta/EEA (Norway) option.

As the great Brexit shambles continues, the issue that attracts his attention is whether our politicians have the faintest clue of what they are talking about. And one of the most telling hints as to their state of knowledge is their view on whether we can somehow leave the EU but remain in its "Customs Union".

The likes of Philip Hammond and Chuka Umunna, the leader of last week's Labour rebels, clearly haven't even got to square one in their failure to grasp that a country can only be in the "Customs Union" if it is a full member of the EU (under treaty rules laid down in 1957).

It really is quite remarkable how many politicians do fail to grasp that single, fundamental point, that the EU's customs union is so embedded in the core of its founding treaty that there is not the remotest possibility of the UK staying in it after Brexit.

Not a few of these politicians doubtless confuse the different concepts of customs union and customs cooperation, and by far the majority of those believe that the free movement of goods depend intrinsically on the customs union, rather than the Single Market.

Even those who have some dim idea about the role of the customs union in abolishing tariffs between members, fail to understand that, if tariff elimination is the issue (and only that), then a basic free trade agreement will achieve the desired effect, without having to buy into the common external tariff (CET).

Not subscribing to the CET does, of course, mean that we could have to deal with rules of origin (ROO), if we were then to diverge from the EU's external tariffs. But, since we intend to adopt the EU's WTO schedules of tariffs – for the time being – there will be no divergence. The UK will not become a back door to the EU, and ROO simply will not apply. It is a non-problem.

The crucial issues then are the free movement of goods and services, to which effect – says Booker - our gifted MPs should be focusing on the EU's sophisticated system of "Customs Co-operation”, set up in 1994, which is what allows 14,000 lorries a day to move effortlessly between Dover and Calais, as also across the Northern Irish border, and much else besides.

Free movement, though, does not just cover goods. The Single Market – even if with less efficiency – also covers services, including the massive financial sector, on which the City relies.

It's not commonly thought of in such terms, but air transport is classified as a service. Alongside tourism and related services, it is as important to our economy as financial services. Thus, our politicians should also be heeding the growing alarm over what could happen if we are excluded from the equally complex EU system that governs every aspect of aviation and air traffic.

Last week, Peter Fankhauser, the chief executive of Thomas Cook, colourfully predicted that unless our politicians wake up to these potential dangers, we risk being taken back to the "medieval age", echoing the rather plainer warnings of Michael O'Leary, the chief executive of Ryanair, that in Britain we could even find ourselves no longer entitled to fly our aircraft anywhere outside UK airspace.

It is all this and more, Booker advises us, we could have held on to if we had joined Norway in Efta and remained in the wider EEA (and therefore the single market). But it is this from which, by deciding instead to become what the EU classifies as a "third country", requiring the re-erection of the full panoply of border controls, we are choosing to exclude ourselves.

Booker thus concludes that, in this way only chaos lies; as David Davis and his fellow "ultra-Brexiteers" will soon very uncomfortably come to learn.

Interestingly, of the two main Booker articles, it was this to which the majority of comments were attached – with the usual diatribes but also some more considered responses. There is a sense of the mood changing, as more people are prepared to come out into the open and support the Efta/EEA proposition.

But it isn't only the ignorance of the politicians and the "ultra-Brexiteers" that we have to deal with. We also have the formidable ignorance of journalists, those such as Patrick Wintour in the Guardian who writes an illiterate piece about Efta "associate membership" and then goes on to tell us that this could become the settled position of the UK.

Alternatively, he writes, it could be a precursor to two further stages – either full Efta membership or even potentially rejoining the EU's single market through the European Economic Area. There is a certain ambiguity there, but are we really seeing a journalist write, "either … or"?

This, fortunately, isn't the only contribution from the Guardian. Running on its front page is the headline, "British officials drop 'cake and eat it' approach to Brexit negotiations", with the story having insiders saying that ministers will have to choose between economic interests or sovereignty.

The body text lays out the detail, announcing that British officials have quietly abandoned hope of securing the government's promised "cake and eat it" Brexit deal. They are increasingly accepting the inevitability of a painful trade-off between market access and political control when the UK leaves the EU.

This comes from "government insiders" and, in a welcome change from the euphoric "sunlit uplands" rhetoric coming from Davis, they report a "dramatic change of mood" at DExEU since the general election, with growing Treasury influence helping force ministers to choose between prioritising economic interests or sovereignty.

Civil servants are now said to be presenting ministers with a more binary choice: accept political compromises similar to aspects of the European Economic Area (EEA), or settle for a much more limited trade deal such as the recent EU-Canada free trade agreement (Ceta).

"We have a problem in that really there are only two viable options", one official told the Guardian. "One is a high-access, low-control arrangement which looks a bit like the EEA. The other is a low-access, high-control arrangement where you eventually end up looking like Ceta – a more classic free trade agreement, if you are lucky".

As to the "high-access, high-control situation" – outlined in Mrs May's Lancaster House speech - that remains the official policy position. But the author of that speech [reported to be Downing Street adviser Nick Timothy] is "no longer in an influential position".

Sadly, though, Whitehall still hasn't quite (or at all) got there. Full EEA-style participation in the single market is still seen as politically toxic, "due to its requirement to accept freedom of movement".

Thus, pressure is building for a rethink of opposition to a customs union with the EU. This, it is said, "would satisfy many business leaders, who are clamouring for ways to avoid trapping manufacturers behind an inflexible tariff wall but possibly still allow new international trade deals to be pursued in the service sector".

"What we've seen post-election is that business voices that had felt bullied into silence pre-election are recovering their voice", explained a senior official. "The economic arguments that had got lost in the last six months are now being heard again and those who had tried to railroad this by saying you are talking your country down are being given a run for their money".

This, though, is layering ignorance on ignorance. This is not so much the blind leading the blind, as the changing of the white sticks – a different set of ignoramuses leading the fray.

One again, the extraordinary lack of knowledge about the European Union and its systems is coming to the fore. I was pretty shocked yesterday to read the Architects Journal and he comment of Konstantinos Tsavdaridis, associate professor of structural engineering at the University of Leeds. Both are saying, in respect of Grenfell Tower, that the UK needs to adopt system testing. Both seem completely unaware of BS8414, much less the EU role in preventing its full adoption.

If you still think that people in high places necessarily know their stuff, or that the civil service and the higher echelons of business are filled with people who know what they are talking about, you need to disabuse yourself of what is a cruel illusion. The higher you go, the more ignorance you meet.

However, some civil service insiders are aware of the need to agree "which vision will prevail before the first phase of EU negotiations is concluded over the summer" (has it really taken them this long to realise?).

Our prescient senior official warns that, "there is still a fudge and before we get down to negotiating in October/November we have got to decide once and for all which of those two options we are going for". He then adds: "What you can't do is sustain a fudge because then you are going into negotiations without knowing what you want".

One is pleased that the message is finally getting through to the senior level but, if this is only the point that they have reached – a year since the referendum – then we will be seeing the turn of the century before they come up with a credible negotiating position.

We really haven't got time for this. We need our officials out of the crèche and into the real world. We're not paying them for Janet & John lessons.

Richard North 03/07/2017 link

Brexit: a year of learning


Briefly less concerned with immediate events, I've been upgrading the First Year of Brexit, adding a front cover to it, designed by a reader (pictured) and trimming forty pages from the length. If anyone who has already bought a copy and wants the upgrade, drop me an e-mail and I'll send you a copy. Otherwise, you can buy one for £4 from the link on the sidebar.

Going back through the year was extremely useful, reminding me of half-forgotten events and, in particular, illustrating how much I've learned over the year.

There is an interesting dynamic at play here, in that you tend to think you know about many things until you start to write about them. It's then that you discover how little you know, making the process of writing the blog one of the most educative processes I know. If readers have learned a great deal – and many tell me they have – I have learned a great deal as well.

Speaking with other bloggers, I find they share the learning experience which one gains from writing. In the case of, though, there is the volume effect, and the sheer relentlessness of the coverage. In the space of a year, writing over 440,000 words on one subject (before editing) with a post almost every day, linking to over 2,000 references (from newspaper cuttings to reports hundreds of pages long), covering over 1,000 A4 pages, cannot but help make its mark.

Of the previous coverage, one post I edited yesterday I had posted in early July last year, drawing attention to a paper by the Robert Schuman Foundation, which explored how the UK could stay in the Single Market.

What was particularly interesting were the observations on the EEA, where it was suggested that the UK could explore the opportunity to revise the EEA rules so that the non-EU members of the latter have a right to vote (like Norway, for example) on policies in which they participate, notably those involving the Single Market.

This, as we now know (as recorded in Monograph 9), was the original intention of Jacques Delors, which had been articulated as early as 1987 and had begun to take form as the European Economic Space (EES), with "houses" in a European "village", each with equal decision-making rights.

In this scenario, the Robert Schuman Foundation says, "the UK would continue to participate in the internal market and apply the corresponding rules", adding that it would have to contribute to the EU’s budget, "but only for certain policies" – presumably to cover things like the decentralised agencies in which we continued to participate.

Almost as a throw-away line, the Foundation also said that freedom of movement would continue to apply, "but the EEA Agreement provides safeguard mechanisms that can be activated unilaterally".

After all the pompous, self-opinionated rubbish that I've had to read, this is so refreshing. Of course the EEA Agreement provides for safeguard mechanisms, and of course they can be activated unilaterally (by Efta states). If the Robert Schuman Foundation knows this, you can bet that the Commission knows it – and has as few hang-ups as the Foundation. The measures are a treaty provision and there to be used.

But what is also especially encouraging is the thought that this type of scenario, "might eventually lead to the realignment of the Economic and Monetary Union (EMU) with the European Union". Thus, we see the "greater EU" splitting into two parts – the one as a fully-developed economic entity called the Eurozone, and the other the EEA, which would offer an institutional framework for the single market.

This is very much along the lines of Flexcit, where Brussels no longer has the exclusive right to manage the Single Market, the functioning of which becomes the shared responsibility of all its members. Says the Foundation, a modification of the EEA Agreement would therefore allow to settle several difficulties facing the EU at present, whilst providing welcome clarification for citizens, as well as economic and financial actors alike.

It adds that this type of arrangement might also offer an alternative to candidate countries, which could opt to enter the EEA rather than the EU, as was originally mooted for the former Soviet satellites. And there is no reason why we should see it limited to candidate countries. The EEA should also open its doors to the Russian Federation and to non-aligned states.

Specifically, the Foundation says that the EEA would be open to States which want to take advantage of the internal market above all, without taking part in all of the other aspects of integration. It is highly likely, it says, that the UK would be tempted to join the EEA.

With simple logic, it says that this kind of arrangement would be advantageous to the UK in that it would offer it a compromise, thereby avoiding a brutal break from the EU. Crucially, it adds, it would also provide a solution to the Scottish and Northern Irish questions.

The UK would continue to participate in the internal market and apply the corresponding rules, which it would continue to help define. Of course it would have to contribute to the EU budget but only in certain policy areas (the UK would no longer take part for example in the common agricultural policy).

Bringing us up-to-date, yesterday Brexit Secretary David Davis was on the Marr show – about the only Brexit news in an otherwise thin day. But about the only things of even marginal interest was his assertion that he was "pretty sure" there would be a deal, and that the transitional period would run from one to two years.

Neither statement is particularly encouraging. There are many levels of deal potentially on offer and there is nothing to say that Davis can bring home anything that will be needed by our businesses. And, as to the "one to two years", this is so unrealistic as to be laughable.

One must remember though that Davis has a recent history of making unrealistic statement and then altering his position later one – right up to the "summer row" that never was.

What we continue to see is a poverty of vision and a generally response-driven strategy coming out of Downing Street. But, the closer we get to the crunch, the closer we get to the reality that there is no way on God's earth we can conclude a trade agreement in the time - "impossible means impossible". We must focus on a transitional agreement.

Here, reality hits us between the eyes. Following on from the Robert Schuman Foundation, we can use the EEA acquis and seek a sensible "modification" which could overcome the worst feature of the Agreement and give us something we could live with.

Even though the end product might look very much like the EEA Agreement, there is no reason why it should keep its name. Something like a European Enterprise Zone (EEZ) might be sufficient to calm nerves, which red-white and blue "bespoke" additions could tailor it for the UK. In fact, the EEA Agreement is already a series of bespoke agreements stitched together under one treaty roof.

At a domestic level, unless she is to be bogged down in the aftermath of Grenfell Tower, Mrs May has got to take the initiative. She must storm the high ground, or be seen to be reacting to the EU's agenda. In other words, we need a plan. But it needs to be bigger than that. We need to engage the EU, and make them feel they have a dog in the fight.

Given that it has been floated by the Robert Schuman Foundation, I'm sure there would be political support in Europe for a "modified" EEA. Oddly enough, 2019 is the 25th anniversary of the EEA Agreement coming into force, so there is some logic in tying in Brexit with EEA enhancement and merging the agendas.

In a nutshell, we buy time by agreeing a transitional agreement - leading up to March 2019 when, with the "colleagues" we jointly announce (alongside Efta) the commencement of talks to build a 21st Century version of the EEA, with a target for completion (say) of 2025.

We might even call it, "Agenda 2025", and the EU could also take in reform and rationalisation of its Neighbourhood Policy, building a "positive, forward-looking" agenda. That way, we all own a slice of the action and it justifies the political investment. It is no longer just about Brexit. UK withdrawal has become a catalyst for something much bigger and better.

And isn't it just amazing what a year of learning can do.

Richard North 26/06/2017 link

Brexit: the first year


I didn't think we'd win – mainly because of the execrable campaign run by Vote Leave. The Cummings-Elliott nexus, backed by Johnson, Hannan and their "bus of lies" did their level best to lose it for us. We should have had more faith in the British people. They won the referendum for us.

But the big mistake (made by some) was thinking that this was the final victory. It wasn't. This was Churchill and el Alamein: not the end, not the beginning of the end but the end of the beginning.

An even bigger mistake had already been made, though – the craven, short-sighted refusal of the eurosceptic "movement" to get its act together and settle on a credible exit plan. This was compounded by the stupidity of the likes of Cummings and Arron Banks in walking away from the idea of a plan when one was offered to them on a plate.

A year on from the referendum, we still don't have a plan. We've lost a prime minister, gained another, gone through a general election and now a weakened government had started negotiations by surrendering to the "colleagues" … and we still don't have a plan. We don't even have a bus.

Instead, the entire politico-media nexus is thrashing around, the denizens parading their ignorance – hardly any of them, if any, able to tell the difference between a customs union and a customs agreement.

Just beginning to realise that they're not going to their fabled "comprehensive trade agreement" in time, they're climbing on board the "transitional" bandwagon without the first idea of what it entails or how to get there. For them, ignorance is bliss – to be cultivated and embraced.

In the beginning, it was so much easier. We had a choice between the unilateral, bilateral and multilateral – the WTO, Swiss and "Norway" options. Now, the options have grown exponentially, from the "no deal" at one extreme to carrying over the entire acquis on a long-term transitional agreement that is distinguishable from full membership only because we have lost any voting rights or influence in the system.

The irony of this is that the "Ultras" have spent so much time and energy thrashing around trying to avoid the obvious that they've failed to understand that, the longer a settlement is delayed, the less likely it is that they will get what they want. And if they keep muddying the waters, Brexit could go belly-up. It ain't in the bag yet and it ain't in the bag until it's in the bag.

Meanwhile, Theresa May has been in Brussels, giving away her leverage on expats. She has told the "colleagues" that no nationals of EU Member States living lawfully in the UK will be thrown out on Brexit day.

At the European Council, she said she wanted to offer "certainty" to the estimated three million expats living in the UK, making sure that families would not be split up. The deal, though, is that UK citizens living in EU Member State territory must be given the same rights.

However, there is still room for another cave-in. Mrs May has not yet agreed the cut-off date, when residency rights will end. And she has not yet conceded that the ECJ will retain jurisdiction in disputes over the finer details. But there is plenty of time for that.

As each concession is made, Mrs May's hand gets weaker, while the complexities mount. And breaking ranks from the consensus is JP Morgan which has its key economist declaring that the UK's expectations of Brexit talks are "unrealistic".

This is from Malcolm Barr, his company one of the world's largest banking institutions. And of the state of the UK , he said, "I'm not convinced that (the UK is) really very well prepared at all, to be perfectly blunt".

"I think that some of the expectations which this administration has encouraged people to have about what can be delivered through the Brexit process are a little bit unrealistic", he added, casting doubt on what the process can deliver.

Barr dismisses the idea "that we're going to be able to move directly [to control of migration, control of our regulatory and legal structures] as we leave at some point in probably March 2019, or perhaps a little after". He thinks "we need to be pretty realistic about realising that this is probably going to end up being a more phased and gradual process than much of the debate has suggested so far".

And there's the rub. Not in any conceivable way is this government or any other going to be ready for a full exit by March 2019. And yet, they've not even begun to think of how we're going to manage the transition.

The fact is that a transitional option is not a quick fix. It was simply the only way we had any hope of securing a stable exit within two years. And that pre-supposed that we were prepared, with all the ducks lined up, ready to hit the ground running. But weren't. We didn't have a plan.

The lack of clarity is reflected in the EU's position. The European Parliament's new president, Antonio Tajani, condemns the UK's negotiating position as "unclear". He raises the possibility of Britain staying in the Single Market after the Article 50 exit talks end, hinting at a longer-term transitional agreement.

Tajani raises the prospect of cooperation on the basis of the Swiss and Norwegian participation in the Single Market. But this, it is said, would "torpedo" Mrs May's exit strategy – such that it is.

The European Parliament President argues that the problem is what Mrs May and what the UK Government want to do. Do they want to leave Europe and nothing more, he asks, or do they want to have closer cooperation?

His own answer, rhetorical though it might be, speaks for us all: "Nobody knows", he says. And all because they didn't have a plan.

Richard North 23/06/2017 link

Brexit: insults


If we followed the Muppet book of political influence, in order to make an impact on the current debate, we should calmly and diplomatically present our case, suggesting the changes we would like to see, and then sit back and hope that the powers that be will kindly listen to us and respond positively.

Back in the real world, it doesn't really matter how calm and considered we are. In fact, the more emollient our presentation, the less likely it is that any notice will be taken of it. Politics is about pain – the more pain we create, the greater is the chance of creating some disturbance, if nothing else.

The chances of achieving change are, in any case, remote. Politicians at the peaks of their careers, having attained cabinet rank, themselves report how difficult it is to achieve even modest change. I remember Margaret Beckett once (perhaps not the best of examples) saying that a new minister should limit themselves to perhaps one or two things if they were to hope of any success.

On the other hand, the siren voices who tell us to conform, to be polite and well-mannered, are part of the system of suppression and control, holding out the prospect of influence in exchange for obedience and abstinence. If we are "good boys" and promise not to rock the boat, we might get to decide the colour of the office stapler for the junior under-secretary.

Given a system that is so resistant to change, therefore, there is actually no premium in committing to conformity, or in making the effort to be polite to – or about - those in power. If you obey all the rules, you are ignored. If to make a lot of noise, and make your own rules, you'll probably be ignored as well. But there is a very slight possibility that they'll listen to you, if for no other reason than to find out how best to shut you up.

On balance, therefore, unless you are at the centre of power and in command of the levers, the greater advantage goes to the noisemaker – the attention-seeker and the non-conformist. That may be unfair, but it’s the way the system has developed in this country and throughout the developed world. The meek do not inherit the earth.

That said, if the chances are that your efforts are set to achieve absolutely nothing in the short-term, and there is entertainment to be had in poking the stick through the bars, one might just as well get as much sport from an activity as possible, be it mockery or something stronger.

Into that category leaps the Financial Times and a report headed: "A path that would avoid Brexit calamity" – the newspaper's idea of what we should be doing to secure a stable relationship with the EU, and an economically viable Brexit.

On this blog and elsewhere over the years, I've received much advice on how to respond to such pieces – most often along the same lines as the counsel on how to behave with government. In effect, we should be calm, polite and measured.

What those who proffer advice rarely take into account, though, is the fact that so much of the material to which we are reacting is of such poor quality that it is an insult to our intelligence – lazy, ill-considered and generally unhelpful to the cause. Unless one is of a particularly Christian demeanour, prepared to turn the other cheek, one is minded to respond to insult with insult - especially if one is to be ignored.

In fact, being ignored is the insult. This blog has for many years been the premier, independent anti-EU blog, and few will dispute that the quality of research is high, with a wide range of issues covered, to a depth seldom seen elsewhere. Yet, quite deliberately, it is ignored by the legacy media.

In this, we are by no means alone and there are several reasons why this should be so. An important one is a general antipathy, bordering on paranoia, to the independent blogosphere. In the middle of the first decade of this century, when it looked as if the British political blogosphere was about to follow in the steps of the US pioneers and take off, a failing legacy media, lacking in confidence, took fright.

Unable to compete on immediacy and quality of comment, it did everything it could to undermine independent bloggers – partly by setting up competing platforms and (mainly) by refusing to acknowledge our presence. Largely, this succeeded. Unlike the heady days towards the end of the decade, the blog movement is a mere shadow of its former self.

The expansion of social media (Facebook and Twitter) hasn't helped either. Perversely, I've found that promoting the blog through these avenues has met with very limited success. Yet, when I abandoned Twitter, the hit rate soared.

As to the legacy media, there is something of the chicken and egg question here. Some say that if we were gentler, more emollient and positive in our approach, we would not be shunned in the way that we are. But, on the other hand, the reason we are not gentler, more emollient and positive is precisely because the legacy media has a general policy of ignoring independent political blogs.

They are happy to steal our stuff when it suits them – but since they steal from each other, we can hardly take any great exception to that. The greater insult is exactly as posited – the way we are consciously excluded from the debate. But when you look at the quality of the debate, you can immediately see why they are so anxious to avoid exposure to the competition.

This brings us back to the dire piece in the Financial Times which is offering as a means of avoiding a Brexit calamity, a "British reset". After Mrs May's disastrous election, it says, the government does not have the numbers to legislate for a clean break. Nor does it have the time or administrative capacity to negotiate a bespoke arrangement.

The answer, therefore – or so it tells us - is a two-stage process. "In the first", it says, "lasting perhaps five years beyond 2019, Britain would remain in the customs union and the Single Market through an arrangement within the European Economic Area - similar though not identical to that enjoyed by Norway".

At this point, one simply groans. Where to start? First, if the UK is going to stay in the EEA, what about the need to join Efta? Don't the four Efta states have to be consulted and their approval gained? And is it wise to take this for granted?

Secondly, as we have wearily pointed out, the UK cannot stay in the EU's customs union and leave the EU. Staying in definitely does mean staying in the EU. But, a country cannot stay in the EU and join Efta - the two are wholly incompatible. And , in the ordinary way of things, unless we join Efta when we leave the EU, we can't stay in the EEA.

Then there is the issue with the timescale. Although not as complex as negotiating a free trade agreement from scratch, shoehorning the UK into the Efta side of the EEA Agreement would need some pretty substantial adjustments to the Agreement on the back of intensive and time-consuming negotiations. Are the three Efta states and the EEAS really going to commit the resource to something that is only going to last five years, benefitting just the UK?

Furthermore, that pre-supposes that the UK stays on board for that long as the FT suggests that there should be a break clause, requiring two year's notice, if either side wants to quit. But then, given that the EEA Agreement already has a one-year notice clause, why should it be extended to two?

Altogether, this concept, as presented, is wholly impracticable. And since its main if not only purpose is to allow the UK enough time to negotiate a "permanent association pact, embracing security and foreign policy as well as trade", why not just agree a time extension to the Article 50 process? That way we stay as part of the customs union, the Single Market and the EEA – until we're ready to leave.

The FT then goes on to discuss the notional pros and cons for this arrangement, but the whole concept is so absurd that we should not bother with it. One just has to observe that the FT simply hasn't thought this through. Yet, if we delivered such shoddy work, we would be a laughing stock – or worse. The legacy media, however, is free to insult the intelligence of its readers, and still feels entitled to respect (and money).

As much to the point, if the authors actually read – which they can do without a paywall or charge – they would not make such basic mistakes (assuming that they understood what they were reading and acted on it). Yet, by word and deed they assume a superiority over us – yet another implied insult.

Another of these arrogant, self-important know-it-alls is David Owen - as in Lord Owen. He would have us leave the EU in 2019 yet stay in the EEA until 2022 – a mere three years. Yet Lord Owen relies on the highly tendentious Yarrow thesis arguing that we could stay in the EEA without being members of either the EU or Efta. This is an intriguing thesis, but one which is wholly untested.

Yarrow himself argues that it is not necessary for the UK to be a member of Efta to be able to participate in or rely on the supporting institutions of the EEA/Efta pillar, although he concedes that it would require the development of cooperative arrangements with Iceland, Liechtenstein and Norway.  

The point here is where would we go if these other countries refused to entertain cooperative arrangements? What would happen if the EEA members as a whole refused to accept the continued participation of the UK, and invoked Article 62 of the Vienna Convention? What then if, as a collective, they all withdrew from the Agreement (then to set up an identical organisation without the UK).

Nothing of this is rehearsed by Lord Owen, in his documentation or his website yet the man blithely assumes the EU and Efta members would allow the UK to use (or abuse) the process as a transition to allow the completion of an EU-UK trade agreement. The proper course of action would be to seek an extension to the Article 50 negotiation period.

Basically, though, this is the option Ambrose Evans Pritchard would have us adopt, despite its incoherence, in  preference to Flexcit, which he doubtless hasn't read – although he probably hasn't read Owen's work either.

The same goes for Daniel Finkelstein in The Times who prefers the prestige of Lord Owen and his shambolic plan to the carefully thought-out practicalities of Flexcit, He then airily suggests that Mrs May should announce that we intend to remain members of the EEA while we carry on negotiations after leaving the EU – as if it was that simple.

This cavalier disregard for the realities of Brexit is an insult to everyone exposed to it. The journalists promoting such shoddy work insult those who have made the effort to produce something which has a chance of working. And in not realising that deeds can have the same effect as words, these unspeakable people are causing offence without even being aware of what they are doing.

Richard North 16/06/2017 link

Brexit: the spectre at the feast


Hamish McRae of the Independent has come up with a Brilliant idea, all by himself, which will save the Bexit, Britain, the Planet, the Universe and Everything.

This Brilliant idea is that there is an off-the-shelf solution in the European Economic Area, "the Norway relationship", says The Brilliant Hamish. But the really Brilliant idea that we can use this as an "interim deal" which "will change as little as possible".

"We leave the EU", he says," as required by the referendum, but follow most of its rules and pitch into its coffers. It is not ideal, as Norway acknowledges, and there is one big sticking point: freedom of movement of people. But you could envisage a modified version of that, with some restriction of movement for jobs, being saleable to both sides".

Now think longer term, Hamish tells us. "Assume we are members of a slightly modified EEA. We use the next few years to refocus our trading links towards the rest of the world. It is happening anyway; it just happens a bit faster". Then, he says, "because EEA membership was always a transitional arrangement, we renegotiate it to enable us to have free trade deals with the US, which is already our largest export market, though smaller than the EU as a whole".

Sadly, though, Hamish is too late for the Nobel Peace Prize to celebrate his brilliance. According to Ambrose Evans Pritchard, he got there first. "Like others", he says in his latest column, "I have floated the Norwegian option as a half-way house for five to ten years".

One has to acknowledge that this truly is Brilliance. For sure, the "Norwegian option" has been around forever. We saw a reference to it in The Economist on 7 October 2004, where a particular enthusiast was Peter Hitchens who, on a recent pilgrimage to Oslo, discovered a "real nation which controls its own destiny".

Strangely enough, though, if you search the unforgiving internet from 2007, the earliest point from which Ambrose dates the "floating" of his Brilliant Idea, it is strangely hard to find any reference to it.

On 15 December 2011 we get Reuters columnist, Martin Hutchinson, offer in the pages of The Daily Telegraph, the idea that we should leave the EU and join the European Economic Area. The EEA was established in 1992, he says, describing it as "a sort of half-way house between full membership in what was then called the European Community and total autonomy".

The challenge, Hutchinson warned, would be to make the transition to the EEA amicable. But, he said, it is worth making an effort to keep the benefits of the EU's large market while minimising costs, friction and bureaucratic meddling. Quietly and non-confrontationally, the EEA should be Britain's goal.

But as for Ambrose's Brilliant insight, if he was floating it around 2011 or before, it was so totally invisible that it must have been a submarine. Furthermore, search as one might, this "submarine" seems to have remained invisible for many years thereafter. 

Although in 2014, I formally launched Flexcit on the waiting world, in which I – with the assistance of the readers of - suggested the adoption of the "Norway Option" as an "interim solution", Ambrose must already have been years ahead of us.

In 2015, though, the Telegraph offered us this:
Owen Paterson, the former environment minister who might lead the Leave campaign, says that if Britain joins Norway in the European Economic Area, Britain would be "perfectly at liberty to pursue participation in the single market without being saddled with the EU as a political project". Since Norway does not abide by the EU’s agriculture, fisheries, regional or foreign policies, Daniel Hannan thinks it is "not a bad deal".
Nevertheless, it took another year for Ambrose's "submarine" to surface and become publicly visible for the first time. This was on 2 June 2016, when he had published a piece headed: "Leave camp must accept that Norway model is the only safe way to exit EU".

If Brexiteers wish to win over the cautious middle of British politics, he wrote, they must make a better case that our trade is safe. This, he added, "means accepting the Norwegian option of the European Economic Area (EEA) - a 'soft exit' - as a half-way house until the new order is established".

Further down, he then made a specific reference to "two excellent reports on the EEA option", one the plagiarism of my work by the Adam Smith Institute and the other "entitled 'Flexcit' by Richard North from the EU Referendum blog".

After this long period of invisibility, however, there is now no stopping Ambrose and his Brilliant idea. On 13 June 2016, less than two weeks after its first public appearance, his "submarine" re-emerged, with him writing a piece headed: Brexit vote is about the supremacy of Parliament and nothing else: "Why I am voting to leave the EU". He tells his readers:
The Leave campaign has offered no convincing plan for our future trading ties or the viability of the City. It has ruled out a fall-back to the European Economic Area, the "Norwegian" model that would preserve - if secured - access to the EU customs union and preserve the "passporting" rights of the City.

The EEA would be a temporary haven while we sorted out our global trading ties, the first step of a gradual extraction. The Leavers have not embraced this safe exit - or rather, less dangerous exit - because it would mean abandoning all else that they have pledged so promiscuously, chiefly the instant control of EU migrant flows.

By this fourberie they have muddied the water, conflating constitutional issues and with the politics of immigration. We risk a Parliamentary crisis and shrieks of betrayal if the Commons - discerning the national will - imposes the EEA option on a post-Brexit government, as it may have to do.
It doesn't seem here as if there are many others who support this "temporary haven" idea, and there is no mention of Flexcit. But never mind. Ambrose's "submarine" is powering ahead in full sight. Nine days later, on 22 June 2016, he writes under the heading of, "UK and Europe face Mutual Assured Destruction if they botch Brexit". And again he is telling us that: "My preference is the European Economic Area, the Norwegian option".

After keeping his Brilliant Idea submerged for all these years, Ambrose makes up for lost time, asserting that it is "a temporary way-station to retain unfettered access to the EU market and 'passporting' rights for the City". It is, he adds, "a withdrawal in safe stages, with all the compromises that this entails". This, entirely coincidentally, exactly matches the Flexcit proposal of a phased exit.

Then, only days later, on 24 June 2016 - a day after the referendum – he tells us that the pro-Remain group TheCityUK already has a plan to limit the damage, insisting that the City can prosper outside the EU. They want, he says, unfettered access to the EU single market and passporting rights for the City, and this means either pushing for the Norway option of the European Economic Area (EEA), or a hybrid variant.

But, Ambrose says, "this safe-exit is a compromise, and an olive-branch to the EU since we would continue paying into the EU budget and accepting the EU Acquis. It would last until we have negotiated our bilateral trade deals with the rest of the world".

Oddly enough, the reference to TheCityUK and the Norway option was repeated by Reuters on the 27 June 2016, except there was no reference to an interim or temporary option. However, the day before, EU Law Analysis has stated that, "the EEA could be used as a purely interim measure while negotiating a longer-term arrangement, which could take the form of amendments to the EEA itself".

By now, of course, the idea is gathering a head of steam. Last Saturday, Liberal-Democrat Voice was taking the view that, "it is becoming more and more crazy that this country has not, at least as an interim “holding” solution, gone for the Norway (EEA/EFTA) option".

So, where does this take us? Prior to 2014, we can find no reference to the Efta/EEA option (in any guise, including as the Norway option), specifically or in any way discussed as an interim, transitional or temporary solution.

Post 2014, there are multiple references to the "interim solution", but mostly related to Flexcit in some way or another. The first time I can find to Ambrose referring to the Norway Option in that context is on 2 June 2016, alongside his reference to Flexcit. And that is after I've had several discussions with him over the telephone, and sent him a copy of the work.

But then, on 10 June 2017, Ambrose re-appears to promote the EEA (the Norwegian option) as a "natural fit", attributing it to Lord (David) Owen, "one-time Labour foreign secretary and doyen of the EEA camp". He says: "We should use the EEA as a vehicle to lengthen the transition time". And now Ambrose tells us: "Like others, I have floated the Norwegian option as a half-way house for five to ten years".

That's the way it's going to play out. That's the way we do business in this country. Despite my beating the drum for years for the EEA as an interim option, and being largely ignored, the legacy media have now "discovered" it all by themselves. They are now in the process of owning it, with Ambrose in the vanguard. In a few weeks, they will have re-written history and Efta/EEA as an interim option will be their unique property.

Give it a few more weeks and the interest will either have subsided or it will have been "reinvented" by the politicians, whose "brilliance" will be applauded by fawning Tory Boys in Conservative Home, or somewhere elese in the system. Flexcit, the spectre at the feast, will remain invisible.

Richard North 15/06/2017 link

Brexit: a scorched earth policy


I'm getting extremely weary of the nonsense being spewed out from the politico-media nexus about staying in the customs union. The degree to which this virus has lodged itself in the brain of the collective is tiresome in the extreme, and there seems no way of rooting it out. 

But it does point to the sickness pervading the establishment - that they absorb so easily false information and repeat it endlessly without the slightest understanding that they are perpetrating a falsehood and parading their ignorance.

So pervasive and uniform is this error, though, that it acquires a status all of its own. So often is it repeated by so many that there is virtually no "above-the-line" figure left who appreciates the nature of the error and why the whole idea of staying in the customs union is wrong.

It is thus only us, the untertanen, who remain unafflicted by this virus and are able to see the extent of the infection, and how deeply it is embedded.

Once could devote a whole blogpost explaining the error but, of course, we've already done that, not once but several times. To the above-the-liners, it doesn't make any difference. These people are totally impervious to information – to correction. That they could be wrong does not constitute part of their mental make-up.

This is why they are making such a brilliant job of Brexit – why we are bang on target and why are so clear about want we want for the UK and how we are going to achieve it. Surely, all these clever, above-the-line people, the ones who are so totally error-free (in their own minds), deserve nothing but praise and our wholehearted admiration.

But there seems to be one person who doesn't seem to be all that impressed, a man who goes by the name of Michel Barnier. Viewing from afar the utter chaos and confusion pervading the Brexit process, he is now warning the UK that, if it doesn't get its act together, and soon, it risks crashing out with no exit agreement.

"Next week", he says, "it will be three months after the sending of the Article 50 letter" – the letter that was supposed to trigger the formal exit negotiation process, starting the two-year countdown. 

Far from hitting the ground running, though, Barnier observes that, "We haven't negotiated, we haven't progressed". He adds: "We must begin this negotiation. We are ready as soon as the UK itself is ready". London, he says, must start talks "very quickly” and appoint a negotiating team that is “stable, accountable and with a mandate".

However, as if we didn't already know, it has become manifestly clear that we are not ready. David Davis is delaying the talks scheduled for 19 June, a day on which there was supposed to have been the Queen's speech, which may or may not also be delayed.

There is no clarity, whatsoever, about the line the UK wishes to take, and there is utter confusion as to the final objective, or even whether whatever objective it is that we decide upon will be final or transitional.

The Conservative party itself is in disarray, while high profile figures, pace Dominic Lawson in yesterday's Mail spout utter tosh about the "Norway model". As an indication of how the brains of these luminaries have ossified, he tells us that, adopting this option presents "three difficulties":
It means the UK would still have to pay billions of pounds a year into the EU budget. It means we would still be subject to ‘freedom of movement’ — so no control over immigration. And it means the British parliament would still be subject to a higher judicial authority, the court of the European Free Trade Association, which is a mere transmitter of the decisions of the European Court of Justice.
This is a man who has not moved his position for four or five years. The debate has completely passed him by as the establishment mantras remain locked, immovably in his brain. Not even an earthquake would move him.

In that sense, Barnier is piggy-in-the middle. We are actually starting to have the debate about the type of Brexit we should have had before the referendum, suppressed when the idiot Dominic Cummings on the one side, and Arron Banks on the other, dodged the bullet and refused to commit to an exit plan.

While the "soft" and "hard" brexiteers battle it out – mostly arguing from a basis of zero knowledge - Barnier stands like a jilted bride at the altar, lamenting: "My preoccupation is that time is passing, it is passing quicker than anyone believes because the subjects we have to deal with are extraordinarily complex". He adds, with forlorn simplicity, "I can't negotiate with myself".

Reflecting the turmoil on the UK side, Barnier says that, once his three initial points are addressed, he is then open to discussing all options on future relations - even if they differ from Theresa May's original vision of "leaving the customs union and single market".

"I don't know what hard Brexit or soft Brexit means. I read yesterday 'Open Brexit' too! Brexit is withdrawal from the EU - it's the UK’s decision. We're implementing it", he says.

This is a man who keeps in his office a mug emblazoned with the legend "keep calm and negotiate". So far, he's been able to keep to the first part of the dictum, but the second is proving elusive. Even if Mrs May is able, eventually, to field a negotiating team with some sort of a mandate, she has absolutely no way of making it stick.

As long as Westminster remains in its febrile state, no sensible person would put money on Mrs May staying in office for the duration of the talks. That she will be deposed is a given - it's simply a matter of time: days, weeks, or perhaps months. Not whether, but when.

Under such conditions, the "colleagues" cannot be certain that any agreement reached will stick. No sooner settled, then it could be undone by her successor. And they will hardly be able to resist trying it on, exploiting Mrs May's weakness – a process which may serve to hasten her demise.

And none of this is helped by the pathetically superficial level of the Brexit debate in the UK. With the media permanently locked in at key stage one, and the politicians no better, the chances of a coherent position being reached seem increasingly remote.

We are beginning to have to confront, for real, the prospect that the Brexit process is too complex for our political classes to manage. They have neither the intellectual capacity nor the knowledge to set up a sensible position and stick to it.

Furthermore, as the delays accumulate – if we do not actually crash out, there is the danger that the UK is sucked back into the Brussels orbit and Brexit is abandoned. A possible outcome is that the process is delayed for so long that the "colleagues" come back with an amended treaty which gives us "associate membership" in all but name, keeping us trapped as a second-class member of the Union.

One can, therefore, understand the siren calls of the "ultras" for an immediate, clean break. But these are the people who would drive us over the cliff edge, the fear of which will actually prevent us making the final break.

On that basis, the only certain Brexit is one that commands the assent of the majority, and the support of sensible former remainers. A self-harm Brexit will be resisted from all quarters, with the risk that we are locked in to the EU forever.

Quite how we deal with the competence problem, though, it not one for which we have ready answers. Clearly, with the political establishment not up to the job, ordinary people and businesses are going to have to take a more active role in demanding sensible measures, and fending off the zombies.

And there, there is the glimmer of a possibility. The likelihood is that, this autumn, we will be seeing another general election. In anticipation of this, it can be made abundantly clear to Conservative MPs that they are in the Last Chance Saloon. If they continue to mess us, they will find the nation voting for Corbyn, not as a matter of choice, but to punish the inadequates currently in power.

A botched Brexit, Conservatives need to be told, will have them out of power for a generation. If they play games, we the people are just as capable of a scorched earth policy as any Russian general. And Corbyn has made himself a usable weapon.

Richard North 13/06/2017 link

Brexit: broader solutions


When the noise level gets this high, the only sane thing to do is take shelter in the bunker and wait until it subsides. There is absolutely no chance of divining anything coherent from the current tumult.

The thing about noise it that it is meaningless – it does not convey any useful information. Thus, while we can listen with some optimism to discussions about the emergence of the Efta/EEA option, we have to appreciate that most journos and politicians have very little idea what they are talking about. What they convey, therefore, has no meaning.

Steaming at high speed out of the gloom, though, smoke and sparks pouring from its funnels, is this article from the Guardian claiming to be an "exclusive". It tells us that if Theresa May insists on discussing trade and divorce bill at same time, the EU negotiating team will have to delay the start of the talks for at least a year while they draft new mandate for Michel Barnier.

From the look of it, with the source being another of those anonymous "senior EU diplomats", this doesn't look to be a serious proposition. Rather, it is a reflection of the EU's response to the UK's refusal to entertain phased talks. It has the feel of a coded message telling Mrs May to accept the negotiating structure already set out, or face significant delays in the talks.

However, if there is to be any serious move towards the Efta/EEA option, then it is not the "colleagues" to whom we should be looking but to the Efta States, for early talks on re-accession to their group. And, should that hurdle be overcome, much of the substance that we need to cover would be routed through the EEA Joint Council, with a view to agreeing country-specific protocols to cover the UK's post Brexit needs.

Yet, this is so far ahead of the current thinking that it won't dawn on the journalistic fraternity for some time yet. It will take a briefing from a "Brussels insider" to a favoured Financial Times journalist, before he can invent it all on his own, and "reveal" it to his adoring audience of lesser hacks.

Without that, the talk of a "soft Brexit" and remaining in the Single Market is just so much hot air. The only way this can happen (currently), outside the framework of the EU, is for the UK to work within the two-pillar structure of the EEA Agreement, using the standing committees of the Efta States.

Should this be put on the agenda, of course, it renders unnecessary the need to discuss, within the framework of the Article 50 settlement, free trade agreements and many of the other administrative arrangements (such as a customs cooperation agreement) that will be essential for a successful Brexit. Another issue that can be accommodated within the EEA framework is the vexed question of the continued participation in the EU's decentralised agencies – including the all-important European Medicines Agency. 

On the specific question of the Medicines Agency, and the location of its headquarters in London, I think the UK needs to be a little more inventive. It can note that the EU has been quite relaxed about passing the all-important responsibility for vehicle safety and construction regulation to Geneva, under the aegis of the UN agency, UNECE, which is hosting WP.29 (World Forum for Harmonisation of Vehicle Regulations).

In like manner, it would be entirely sensible and realistic to propose that the EU passed the overall responsibility for medicines regulation to Geneva, creating a genuine, Europe-wide medicines regulator which took in Switzerland and Russia.

This would then allow the London headquarters to remain where it was, as it would no longer be a specific EU agency, requiring its location within an EU member states.

To propose such would be an example of the UK taking the political initiative instead of passively responding to (or obstructing) EU proposals. Putting the "colleagues" on the back foot, for a change, would also give us some much-needed negotiating leverage.

A similar solution could be found to the question of aviation safety, with is getting Airbus (and many others) worked up. If we dropped out of the airworthiness certification system currently administered by the European Aviation Safety Agency (EASA), it could have a dramatic effect on the retention of Airbus manufacturing in the UK.

To detach EASA from Brussels and, for administrative purposes, make it responsible to UNECE in Geneva would exactly follow the process pioneered by automobile safety and the establishment of WP.29 hosted by UNECE. And, as a UN agency, the UK would continue to take an active part, making the financial contributions appropriate to its membership status.

These are not ideas plucked out of thin air. We are seeing an extensive programme of regional and global standard-setting, with the establishment of numerous bodies, from Codex Alimentarius to the Basel Committee on Banking Supervision, to help manage the process. It makes absolute sense to fold these developments into the Brexit talks.

Because working within the regional and global environments also has implications for developing countries, which are either members or benefit from their activities, there are development implications here. This means that some of the UK contributions made could be taken out of the foreign aid budget, allowing what were previously EU contributions to be offset, yielding an overall saving to the taxpayer.

We must appreciate though, that nothing of this can happen – or even be attempted – without a much more sophisticated understanding of how global and regional standard-setting systems work, and of their relationships with the EU.

Improvement in the efficiency of the market authorisation of medicines and work towards a global system of approvals could potentially save far more, and yield greater trading opportunities, than could be delivered by free trade agreement, especially if the efforts were broadened out to cover other sectors.

But as long as the media and the politicians whom they inform are trapped in their shallow little mantras about the "Norway option" and losing influence over the making of regulation, the advantages of pushing for regulatory cooperation will not be recognised and will remain unrealised.

Ironically, given these possibilities, and the need to pursue Efta and then EEA negotiations, the UK would actually benefit from a short delay while UK negotiators re-orientated their positions. In the long run, it could even save time as we reap the benefits of a stable trading position without having to devote years  to negotiating a free trade agreement with the EU.

Necessarily, much of this will depend on the willingness of Efta States to entertain the UK's re-accession. If there are blockages there, we would have to be thinking in terms of reform of the EEA Agreement, permitting participation by members who were not in the EU or Efta.

That is more complicated than might at first appear, as it would require structural modifications to the two-pillar structure, to the Efta Court, and to the overall administration and funding of the Agreement. But again, these are the sort of things a UK government that was on the ball would be looking at.

As much to the point, a better-informed media would be generating the political momentum needed to advance such solutions, and a wider discussion on such issues would make a refreshing change to another round of churning on the "Norway option" and ill-informed speculation on "soft" Brexits.

Richard North 12/06/2017 link

Brexit: the pomposity of it all


Nearly four years ago, for our IEA Brexit competition submission (July 2013, to be precise), we were researching the complications arising from bilateral treaties made between the EU and third countries.

There are, we wrote in the submission, nearly 800 of these registered on the EU treaty database. Some of these are merely memoranda of understanding. Others are time-expired. Many, however, are substantial agreements, from which Britain gains advantages, but only by virtue of membership of the EU.

On the face of it, we opined, Britain is excluded from the terms of such treaties once it leaves the EU. Therefore, it would appear that each treaty will have to be examined and, where necessary, new treaties agreed between Britain and the relevant third countries.

That, we said, would require extensive negotiations, with replacement treaties agreed and ratified before Britain withdraws from the EU. The need to carry out so many negotiations in a relatively short time would stretch diplomatic resources, risking delay in the withdrawal timetable.

We returned to the theme in Flexcit (see page 23 in the current edition) ,where we wrote:
Although the primary concern of the post-referendum negotiating team is the pursuit of an exit agreement with the EU, the UK may well find itself in the position of having also to renegotiate or renew hundreds of other treaties which are in some way dependent for their functioning or even existence on membership of the EU.

Illustrating the potential scale of the problem, currently the European Union lists 881 bilateral treaties on its treaty database, together with 251 multilateral agreements.13 They cover a vast range of subjects from the "Agreement between the European Union and the Republic of Moldova on the protection of geographical indications of agricultural products and foodstuffs" to the "Agreement on fishing between the European Community and the Kingdom of Norway".
But now, with EU treaty database currently listing 946 bilateral agreements (and 268 multilateral agreements) – and all those years after we started looking at them the Financial Times emerges in all its glorious pomposity to "reveal" that its "research" has found "at least 759 agreements with 168 countries must be renegotiated just for the UK to stand still".

This is absolutely typical of this newspaper and the legacy media in general, where nothing exists until their gifted hacks have "discovered" it and where blogs – especially independent political blogs such as – are invisible.

The legacy media would sooner be uninformed or lagging years behind the curve, as it so often is, than acknowledge that there are other (and better equipped) toilers in the vineyard. Slow, and often wrong, it simply cannot handle the competition so it tries to ignore it.

Here, the FT does indeed get it wrong, claiming 759 "separate EU bilateral agreements with potential relevance to Britain", and getting confused about the many multilateral agreements which also have relevance to the UK (not just Britain) – those where the EU is the party making treaties with groups of countries.

At least, though, the newspaper is finally picking up on the issue, telling us that the agreements run "to hundreds of thousands of pages" and span "168 non-EU countries". Within them, it says, are covered almost every external function of a modern economy, from "flying planes to America and trading sows with Iceland to fishing in far-flung seas".

On Brexit day, says the FT, that will all fall away. "By law Britain will overnight be excluded from those EU arrangements with 'third countries', entering the equivalent of a legal void in key parts of its external commercial relations".

Thus does the newspaper suggest that the situation "poses a formidable and little-understood challenge … While Brexit is often cast as an affair between Brussels and London, in practice Britain's exit will open more than 750 separate time-pressured mini-negotiations worldwide, according to Financial Times research".

With that, we are informed that "there are no obvious shortcuts: even a basic transition after 2019 requires not just EU-UK approval, but the deal-by-deal authorisation of every third country involved", before the newspaper then mixes its arguments with comment from "prestigious" talking heads.

Critics fear that these third country treaties, we are further informed, "will open a bureaucratic vortex, sapping energy and resources". According to the paper, "Each agreement must be reviewed, the country approached, the decision makers found, meetings arranged, trips made, negotiations started and completed - all against a ticking clock and the backdrop of Brexit, with the legal and practical constraints that brings". It adds: "Most inconvenient of all, many countries want to know the outcome of EU-UK talks before making their own commitments".

Actually, though, it isn't as bad as the paper makes out – although in some respects it could be worse. The crucial distinction (one the FT doesn't make) is between "exclusive" treaties – those concluded between the Commission and the other parties, where EU Member States are not signatories – and "mixed" treaties, where Member States are co-signatories.

The Air Transport Agreement with the United States, for instance, is a mixed agreement. That means that, although the EU concluded the treaty, all the Member States - including the UK – are named parties to it.

We wrote about this sort of situation in November 2015, pointing out that, under certain circumstances, we could rely on a "presumption of continuity", whence the treaties could be carried over unchanged, as long as we had the agreement of all parties to the treaties.

Since, invariably, the EU is a party, that means we will have to get the agreement of the EU. And in event of a "no deal" walk-away by the UK, that isn't going to happen – another example of how we would be totally screwed if we went for Mrs May's option.

But, as long as we remain on cordial terms with the EU, and get their cooperation on this matter, only the "exclusive" treaties present serious problems, as we discussed here in March last year. Those "exclusive" treaties will have to be renegotiated from scratch, but then, since they only came in with the Lisbon Treaty, there aren't very many of them.

Even then, not all of these are going to be problematical, as with the Acquisition and cross-servicing Agreement between the European Union and the United States of America (ACSA), the purpose of which is to "further the interoperability, readiness, and effectiveness of the respective Military Forces of the EU and the USA through increased logistic cooperation".

Clearly, this replicates Nato provisions and, if the EU can't work though Nato on this, we also have the ABCA programme, set up in 1947 and still in force after an overhaul in 2004.

In revisiting the "mixed" agreements, though, there is the possibility some countries will want to reopen them, and will not permit a simple carry-over. The FT suggests that "there will be a lot of countries with a beef with the EU or the UK and will see this as a golden opportunity to bring up a nuisance issue", but that probably over-states the case.

That notwithstanding, it cannot be stressed enough that a smooth transition will require the active co-operation of the EU. Without it, the FT "worst case" scenario could easily happen. Amongst other things. That could see the cessation of international flights on Brexit Day, and only a gradual resumption of services as new deals come into force.

Anyone who doubts this merely has to look at Article 3 of the EU-US Air Transport Agreement, where each party grants to the other the right to fly across its territory without landing; to make stops in its territory for non-traffic all points in the United States and to perform international air transportation between the United States "any point or points in any member of the European Common Aviation Area (ECAA)".

Without an agreed carry-over, on Brexit Day, the UK ceases to be part of the ECAA, and the Agreement no longer applies to UK-registered airlines. Nor indeed will US registered airlines be able to fly their aircraft to the UK. The chaos we've been witnessing after the British Airways IT failure will be looked upon with fondness, as a mere dress rehearsal.

Interestingly it isn't only the Financial Times which is waking up to this potential disaster. We also see the New Statesman point out that, if Britain leaves the EU without a deal, its right to participate in Open Skies will also end. It is hard, says Stephen Bush in the magazine, to see how for anyone in Britain who likes flying to Europe or America … 'no deal is better than a bad deal'".

So, with painful slowness, struggling to grasp the basic facts, the legacy media is gradually waking up to the implications of a "no deal". But still the Beleavers are convinced that a deal will be struck. The small print, though, says otherwise. And when the whole media does finally wake up to this reality, there will at least be some people who remember that they saw it here first – many years ago, and many times.

Richard North 31/05/2017 link

Brexit: business fears


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


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


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

Brexit - the first year - New e-book by Richard North
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