Risk management of Brexit to date

Politicians generally don’t give much thought to risks and risk management. After all, risks are part of the downside of their policies (or ‘bright ideas’) and they try to airbrush or spin them out of the narrative.  Whilst risks and their effective management are serious concerns across all areas of government from agriculture, through defensive and security, education, international relations, justice, law and order, to the economy, the National Health Service etc., a successful Brexit presents unique challenges. Furthermore, it does not help that the government has had to start from a state of total unpreparedness; Messrs Cameron and Osborne prevented the Civil Service from preparing any viable Brexit plan.  So how well are Mrs May and Mr Davis doing – both in understanding the risks involved and effectively managing them?

‘In-depth’ subject knowledge is obviously essential to being able to ‘tease out’, understand and manage risks. An aircraft pilot who knows nothing (if allowed to fly at all) is potentially dangerous, and so is a clueless politician. Sadly, this government has not given any serious indication that it knows much about how trade deals are negotiated or even how the EU works. There is very little, if any, detail in Mrs May’s and Mr Davis’s pronouncements. We hear predominantly robotic mantras, aspirations and wishful thinking. There also seems to be an unwillingness to acquire that necessary in-depth knowledge.

Subject knowledge is not enough to manage risks. Our Brexit team needs to understand the subtleties of the EU’s approach to risk and its effective control, and hence how these impact on the Article 50 negotiations.  The EU in general – in theory if not in practice – follows something like the Prussian edict ‘everything is forbidden except that which is allowed’. Pre-emptive mandatory standardised (inflexible) regulation controls risks at each stage of activity, with the result that an acceptable outcome is achieved.  Regulation gives rise to surveillance, monitoring, oversight and ultimately centralised control by the EU’s bureaucracy. Anyone with some exposure to this environment in one field should be able to recognise the same general approach, some of the terminology and regulatory or monitoring agencies, and role of the centralised EU bureaucracy, when they encounter it elsewhere.  The EU’s approach also fits in well with extending control into an ever-increasing number of areas, thus fulfilling its mission of creating a superstate.

The traditional alternative to the EU’s approach to risk management is to emphasise accountability. When things go wrong there are the options of civil courts, damages, or even criminal prosecution. In the case of politicians, they will be ejected from office. In English law, everything – in theory – is allowed except that which is expressly forbidden.  In practice, this purity is often replaced by some form of hybrid of ever-expanding regulation and increasingly punitive accountability.  Mrs May and Mr Davis, perhaps because they were schooled outside the EU loop, seem unable to understand or accept the EU’s rigidity, its risk control rationale or the implications for the Brexit negotiations and the resulting risks posed.

Mrs May’s commitment to leave the Single Market and instead negotiate a bespoke free trade agreement supposedly providing equivalent utility appears indicative of poor risk management.  This decision was reportedly made by her alone after consulting her closest advisor and without involving the cabinet or even discussing it with them.  It was a similar story regarding her decision to call a general election in last June, with disastrous results for her party and her reputation.  Mrs May does appear to make decisions based on flimsy advice, ignoring sensible safeguards and risk management tools.

Mrs May has ended up choosing the most difficult and complex Brexit option, requiring the greatest flexibility and cooperation from the EU and the most (competent) resources. We are not told what other options for leaving were considered, what risks were posed and why they were dismissed.  There also appears to be nothing actually in place (or comprehensively planned) to absorb any potential problems or risks.  To date, little or no progress appears to have been made in successfully delivering her ambitions or mitigating the risks. Meanwhile, time is marching on.

The approach to negotiating a free trade agreement with the EU has once again demonstrated a cavalier approach to the management of risk. We are told it will be all right in the end, because at the eleventh hour the EU will cave in and give everything wanted.  It is highly unlikely that it will do so, but even if it does, leaving a significant part of the future economic wellbeing of the country in a state of uncertainty until the last minute is a huge risk. It is a wild gamble based on successfully negotiating a myriad of potentially show-stopping trade (and other) conditions and one which totally ignores the EU’s general approach to risk management, which I have outlined above.

Just suppose that the EU caved in to Mrs May’s demands for an ambitious, innovative, deep and special relationship. It would create a precedent which would cause much concern in Brussels. Granting any exceptions to one country (even if possible) would open up disorderly and uncontrolled challenges elsewhere and could violate the EU’s general risk control philosophy.

Then the European Union (Withdrawal) Bill, spun as providing certainty in the fundamentally changed situation of ‘third country’ status outside the EU and the Single Market contains many undisclosed potential problems and risks. Some pieces of transposed EU legislation may not actually function as intended, because they were designed to operate in an environment of close integration with the EU and its administrative apparatus. The Fisheries regulation 1380/2013 is a good example.

It would be a tragedy if we ended up with a poor Brexit because of poor risk management. Brexit provides us with a tremendous opportunity to escape the clutches of the EU’s political folly with its unaccountable, extravagant agenda to create a superstate regardless of the costs to its subsumed peoples. Effective risk management historically does not form part of the EU’s political agenda or mitigate its actions. By contrast, the return of full responsible government to these shores should mean our elected representatives will once again respond positively to the wishes of the people, accepting responsibility for their actions and – most importantly of all – behaving responsibly.

Being European – is it geographical, cultural or political?

During last year’s referendum campaign, one helpful piece of advice we were given was to make sure we made a differentiation between “Europe” and “the European Union”. My experience was typical inasmuch as our opponents – deliberately, so it seemed – tried to confuse the two, as if leaving the EU meant somehow leaving “Europe”.

In fairness, however, no one against whom I debated went as far as Nick Clegg, who seemed to believe that leaving the EU would somehow change our physical location. “There’s nothing bulldog about Britain hovering somewhere in the mid-Atlantic” he once said on the Andrew Marr. Well, Nick, old chap, to my knowledge Dover is still only 21 miles for Calais after the Brexit vote and even the most astute observers of the Brexit process have not heard a whisper of any plans to move our island further away from the European mainland in March 2019.

Seriously, though,  what does it mean to be European? I had always believed it was a matter of geography.  The UK is not an Asian or African country; we may feel a closer cultural affinity with North America or the Commonwealth realms than, say, with Estonia or Portugal, but these places are thousands of miles away. We may also place immense symbolic and historical value on those 21 miles of water separating us from France, but we are Europeans, like it or not.

The EU, however, seems to think otherwise. In 2023, there will be a number of new European Capitals of Culture and Brussels has told Leeds and Dundee, among others, that they are not eligible to bid because by then we will be neither in the EU, the EEA nor an EU accession state. It seems quite bizarre when you look at the list of countries which have already gained this designation and consider that there in the heart of our continent is Switzerland which is excluded. Yes, even a great city like Geneva which has exercised a huge influence in the development of Europe cannot be regarded as “European” by the EU! Russia likewise, which includes Peter the Great’s European-style capital city and which has given us composers in the European tradition like Glinka, Borodin and Tchaikovsky is also excluded.

And now we will find ourselves made shut out as well.  The EU has decided that being European is a matter of politics. We can only regret that the EU will not swap competences for the Capitals of Culture with the European Broadcasting Union, which currently determines eligibility for the Eurovision Song Contest. Being excluded from this display of banality and mediocrity, in which our artists fail year after year, would not perhaps be the biggest benefit of leaving the EU but one which, if on offer last year, might nevertheless have helped secure us a larger majority!

Where our Brexit negotiators are going wrong – and it’s not just fishing!

When anyone says they want “a deep and special relationship you know they are only looking at their side of negotiations and are oblivious of the other side’s position.

The EU isn’t in a position to give us such a relationship. The project must come first – in other words, the first duty of the European Commission and Parliament is to preserve the unity of the remaining 27 members. They don’t want other countries leaving and expecting a special deal.

The UK Government also states that The same rules and laws will apply before and after Brexit. There is nothing wrong in moving the EU acquis across into domestic legislation through the European Union (Withdrawal) bill for areas that apply only within the UK. It is a different matter with any legislation which include a degree of interaction with EU27 – fisheries policy, for example. We may point out that we are maintaining regulatory convergence but the laws are not compatible from the EU prospective because in March 2019, we will no longer be an EU member state.

At the bottom of the majority of EU regulations it states: This Regulation shall be binding in its entirety and directly applicable in all Member States. As we will be no longer a member the regulation is neither binding nor applicable on the UK.

So while the two highlighted statements sound convincing at first glance, they are not and the fact that our negotiating team keeps repeating them shows that in reality, they are very vulnerable.

The Transitional deal

The above comments apply equally to the proposed two year transitional period. Because of the time which has already been lost, many in the establishment are hailing this as an important step forward but in reality, they have failed to appreciate how catastrophic the terms of such a deal are likely to be.

Fishing for Leave believes that only when the negotiations reach the point when a transitional arrangement can be discussed – which David Davis expects us to have reached by end of March 2018 – will it become apparent just how severe the conditions that will be imposed on the UK actually are.

The European Parliament has made its position clear in this document.  There will be no UK representation in any EU institution during that period, but we will have to accept the full rigours of EU institutions, and who is to say it will only last two years? We could well find ourselves no further forward in March 2021. Far from being Brexit, these two years (or perhaps longer) could well be the worst two years of our involvement with the EU project.

Let us consider some of the evidence for this:-

Firstly, from the House of Commons Department for Exiting the EU Committee 25th October 2017 (Our comments in Italics)

Q67            Joanna Cherry: Can I go back to the transitional period or the implementation period?  What is your understanding of the legal basis for a transitional deal or an implementation period?

Mr Davis: The presumption we have been working on is that it comes under the Article 50 proposal.  It was raised with us by the Commission.  The European Parliament sees it in those terms.  I am assuming the Commission legal service does.  But in many ways it is a question almost for the Commission rather than me.

If you are to negotiate, you have to know the legal basis under which you are working and not leave it to the other side.

Q68            Joanna Cherry: Do you have any legal advice of your own as to the basis of a transitional deal or implementation period?

Mr Davis: I am not going to share the legal advice for the reason I gave earlier: that is the convention.  But our belief is that it fits under Article 50.

Q69            Joanna Cherry: Legal advice exists, and it is your belief that it is under Article 50.

Mr Davis: I am not going to be drawn any further on that.  I said I believe it is going to be under Article 50.

As Article 50 comes from the Lisbon Treaty – TEU, it will cease to apply on 30th March 2019, so the transition period can be negotiated under article 50, but the implementation of the transition period will have to be under another EU legal basis.

Q70            Joanna Cherry: Article 50 does not actually say anything about transitional deals or implementation periods.

Mr Davis: Article 50 does not say very much about anything, if you read it.  It is the blandest and unhelpful phrase you are ever likely to come across, but there we are: that is that.

Article 50 is clearly laid out, and does not make reference to a transitional period.

Q71            Joanna Cherry: What it does make clear is that, during any period of deferred withdrawal, the treaties would continue to apply, so if we went into a period of deferred withdrawal under Article 50 we would still be in the single market; we would still be in the customs union; and we would still be under the jurisdiction of the European Court of Justice.  That is correct, isn’t it?

Mr Davis: My response to that is the same as my response to Mr Bone: we are not looking for deferred withdrawal; we are looking for an implementation period.

 If that is the case, whether you call it a transition deal or an implementation period, the bottom line is that it will not be covered by Article 50 because, along with the rest of the EU treaties, it will cease to apply on 29th March 2019

Q72            Joanna Cherry: But if it is the case that, as a matter of law, all you could have under Article 50 was a deferred withdrawal, we would not be leaving on 29th March 2019, would we?

Mr Davis: That is not what we have been negotiating for.  The phrase “deferred withdrawal” has never been used to me by the Commission.  The phrase they use is “transition period”.  Our term of art is “implementation period”.

(FfL believes Joanna Cherry is correct)

Then we move onto who will actually be running the country during the transitional period

Q58            Mr Rees-Mogg: To follow on from Mr Bone’s question, the worry is when we get to 29th March 2019 we stay under the auspices of the European Court; we are still in the customs union; we accept new rules as they come through; and we keep on paying money with the promise of a trade deal on the never‑never.

We are still therefore within the European Union for a further two years.  All that has happened is the endpoint has been delayed and the uncertainty in 2021, which the aim is to avoid, is just as great—but we have stayed in the European Union for two years longer and not achieved what we are aiming for.

Mr Davis: There are ways around that, but, if you forgive me, I am not going to detail them here today.

Q89            Mr Djanogly: During that period, will the UK have to accept new EU laws made during that period?

Mr Davis: One of the practical points of this, which anybody who has dealt with the European Union knows—as you will have done, I guess—is that it takes two to five years from inception to outcome for laws to make it through the process.

Anything that would have impact during those two years we are talking about will already have been agreed with us in advance.  Anything that happens during it will be something for subsequent discussion as to whether we propose to follow it or not.

This is another area where FfL believes Davis is wrong. As far as we understand things,  it is the acquis which has passed onto the UK statute books on or before 29th March 2019 that will be covered by the European Union (Withdrawal) Bill, not work in progress, that is moved across to domestic legislation, and as cherry picking is supposedly not on, Davis’s answer is unusual, and Rees-Mogg and Djanogly were in order to ask those questions.

Michel Barnier’s comments to House of Lords Committee 12th July 2017

  1. Barnier made it quite clear that the transition period would see us under the thumb of the ECJ:-

“You talked about the risk of divergence. It is a risk, not a certainty. The repeal Bill is meant to bring EU legislation into British laws, and that is very good and important, but what will happen D plus 10 or D plus 20? How will your law and your standards develop? ……

That period will be set in a framework, a transition period, and then there will be a new relationship. I cannot give you a time more precisely than that. I cannot even tell you the nature of it. All that I can say—and I can say this in the name of the EU—is that during that period we will maintain, in relation to the internal market, the regulatory architecture and supervision of the Court of Justice.”

The European Parliament said exactly the same thing three months earlier:-

From European Parliament resolution of 5th April 2017

Transitional arrangements

  1. Believes that transitional arrangements ensuring legal certainty and continuity can only be agreed between the European Union and the United Kingdom if they contain the right balance of rights and obligations for both parties and preserve the integrity of the European Union’s legal order, with the Court of Justice of the European Union responsible for settling any legal challenges; believes, moreover, that any such arrangements must also be strictly limited both in time – not exceeding three years – and in scope, as they can never be a substitute for European Union membership;

Michel Barnier raised further complications about the transitional deal:-

  • We will be able to apply absolutely no pressure on the EU during this time.

Speech by Michel Barnier at the press conference following the third round of Article 50 negotiations with the United Kingdom

Brussels, 31st August 2017

“…but it also wants to have these standards recognised automatically in the EU. That is what UK papers ask for. This is simply impossible.”

  • Even a transitional deal would require a treaty

Speech by Michel Barnier in front of the Committees of Foreign Affairs and the Committees of European Affairs of the Italian Parliament

Rome, 21st September 2017

The dialogue we are having here today – as in all national parliaments – is essential because our future partnership with the United Kingdom, and its legal text in the form of a treaty, will have to be ratified by you, when the time comes.  Once again, the future of the Union is our priority, not Brexit

Finally, the implication for fisheries

FfL believes the Government is heading into uncharted waters; creating problems for which they and not the EU are responsible.

1) Article 50 takes us cleanly out of the EU and the CFP, with no legal repercussions.

2) The European Union (Withdrawal) Bill takes us back in all but name if we include the fisheries regulations of the acquis. What we have just left, our own UK Parliament intends fully to take us back into again.

3) The proposed two year transitional/implementation period will require a treaty and during that time, we will be subject to the CFP.

Furthermore, FfL believe that it wouldn’t just be fisheries which would be affected by this “out and in” process, which could cause us to fall foul of the Vienna Convention on the Law of Treaties, a notoriously grey area, which could bog down the system with lengthy and complex legal cases.

While it is the intention of HMG to produce a Fisheries Bill, we don’t know what will be in the Bill. Can it be made watertight? This could be difficult in view of the EU stating there can be  no cherry picking in any transitional arrangement. We can be sure that the EU would  not allow the present fishery arrangements to be exempted from such a deal and worse still, EU control of our fisheries could become permanent if the Government does not change course and exempt the EU fisheries regulation from the European Union (Withdrawal) Bill.

The Brexit vote – how we got there

This interesting speech about David Cameron was given by Sir Ivan Rogers, the former UK permanent Representative to the EU. at Hertford College, Oxford, on 25th November.

It is a long article, some 18 pages long, and even though the author is anything but an ardent Brexiteer, it is written in a dispassionate style. He claims that David Cameron believed that the best place for the UK was within an EU that would cement our “exceptionalism” into law and describes the trials and tribulations which the then Prime Minister faced in his renegotiations and the events leading up to them.

The speech brings back memories of those fascinating days leading up to the moment when the starting gun on the referendum vote was fired in February last year. It explains the steps that led to Camoern’s momentous decision and is well worth a read.

Ireland’s bluff called – a letter from our Chairman

This letter was sent by our Chairman, Edward Spalton, to the Scottish Daily Record in response to an article which appeared in the paper on 27th November.

Sir,

( I was visiting, so chanced to read your article “Dublin Down” p4, Monday 27 November).

For an EU document, Article 50 of the Treaty on European Union is unusually short and easy to understand.

It is quite clear that the arrangements for a country to leave the EU are to be agreed by the European Council under the Qualified Majority procedure. The Council’s decision is then subject to approval by the EU parliament.

Neither the Irish government nor any single member state has a power of veto. I am no longer surprised at the ignorance of our politicians which allows the threat of a veto by the Irish Prime Minister to go unchallenged.  But I live in hopes of better informed newspaper correspondents!

Unwillingness to consult original EU documents is widespread in high places. At a recent private meeting of top business leaders in London, nobody put up their hand when asked if they had even skim-read an EU Free Trade Agreement. Former civil servants who were present said this was true of ministers they had served.

Of course, most such documents  are long and crashingly boring but this is not true of Article 50.

Yours faithfully

Edward Spalton

Fishing:- Template letter to MPs

A number of our members and supporters have been in touch after signing the petition to stop the Common Fisheries Policy being adopted into UK law post-Brexit.

They have received a reply from the government e-petitions site which includes the following:-

A group of MPs called the Environment, Food and Rural Affairs Committee are investigating how possible changes to the fisheries and seafood trading arrangements between the UK and the EU will affect fishers, seafood processors, consumers, coastal communities and the environment.

To help them with their investigation, they’d like to hear from you.

The Committee are particularly interested in these questions:

1. What are the most important things that the Government need to look at when thinking about UK fisheries?

2. What are the challenges and opportunities that UK fisheries will face after the UK leaves the European Union, Common Fisheries Policy and London Fisheries Convention?

3. What stock management objectives should the Government establish in order to achieve the right balance between the interests of seafood consumers, fishers, seafood processors and the environment?

4. What trade policy objectives should the Government establish in order to achieve the right balance between the interests of consumers, fishers, seafood processors, and the environment?

5. How effective are the Government’s arrangements for representing the interests of the UK’s constituent nations within the UK’s negotiations for fisheries?

Please see this attachment which we believe provides a suitable template for your reply. In our opinion, these five questions raised above do not get to the core of one important issue – that UK authorities alone must determine who fish in our waters. This letter does make that point and strongly endorses the “Faeroe-Islands-Plus-Plus” model advocated by Fishing for Leave.

We would strongly recommend not sending it verbatim as politicians are more likely to ignore large numbers of identically-worded e-mails or letters, but on the other hand, we also suggest that you largely stick to the subjects covered in the template, as much of the content originates with Fishing for Leave, which includes the most experienced fisheries campaigners in the country.

 

As a post script, if you would prefer to stick more closely to the five questions, John Ashworth of Fishing for Leave has provided the following suggestions:-

1) What are the most important things that the Government need to look at when thinking about UK fisheries?

  • That the UK becomes a world leader in fisheries management
  • Do not copy the Common Fisheries Policy
  • Re-establish our coastal communities
  • Address the issue of discarding of dead fish
  • The Nation’s resource must not end up in the hands of a few

2) What are the challenges and opportunities that UK fisheries will face after the UK leaves the European Union, Common Fisheries Policy and London Fisheries Convention?

  • Establish the UK as a maritime nation again
  • Create a multi billion pound industry, plus ancillary, including recreation and tourism
  • Get rid of the quota system
  • Abide by international law
  • Work with nature, not against
  • Create a policy that unites fishermen, fishery officers, and scientists

3) What stock management objectives should the Government establish in order to achieve the right balance between the interests of seafood consumers, fishers, seafood processors and the environment?

  • Use sea-time limit, not quota allocation, as that causes dumping
  • Maintain a balance between small, medium and large vessels
  • All marine resource caught in the UK’s EEZ must be landed in UK, unless individual permission is given by the UK government

4) What trade policy objectives should the Government establish in order to achieve the right balance between the interests of consumers, fishers, seafood processors, and the environment?

  • Trade deals should not be linked to access to UK fishing waters. Keep trade/access seperate
  • What marine resource the EU buys from UK cannot be readily obtained from elsewhere.
  • Must abide by internatonal law
  • You have to catch marine resource before you can process or sell it

5) How effective are the Government’s arrangements for representing the interests of the UK’s constituent nations within the UK’s negotiations for fisheries?

  • We don’t know as to date we have heard very little. I suspect the department would prefer the UK territorial waters out to 12 nautical.miles to continue to be devolved but the EEZ of 12 to 200n. Mile/median line as one unit.
  • Four separate EEZs would be a nightmare as international reciprocal arrangements have to be agreed.