Is the Customs Union (or Partnership) option about to be shunted into the siding?

The government has been going round in circles with its Brexit proposals and getting nowhere. We have been saying so on this website for well over a year, but a growing chorus of voices is saying the same thing. Lord Kerslake, the former head of the Civil Service, has called the Government’s plans “undeliverable” while Michel Barnier has poured scorn on Mrs May’s hopes of breaking the Deadlock in her cabinet, which has been divided into two in order to consider two equally unworkable options – the  customs partnership or the alternative “maximum facilitation” model, which relies on as yet untried computer technology. He pointed out that neither would be acceptable to Brussels.

Is it too much to hope that the idea of a customs union or customs partnership is slowly being abandoned? In this article for Cap X,  William Davison could not be clearer:- “A new customs union will not resolve the Irish border issue.” He quotes Richard North, who has provided ample evidence ot show that it does not create frictionless trade. The customs union, he correctly states, is a key building block of European integration. There really is no point in pursuing any sort of customs union or partnership if we want to leave the EU. A recent ICM poll, discussed in the Guardian, shows that the general public is more on the ball than Mrs May’s government. Leaving the customs union is the most popular Brexit option. It is encouraging that, in the current climate where most people are utterly fed up with Brexit, that there remains at least some appreciation of what Brexit must mean among the general public.

So this leaves us with two options – leaving with no deal or the EEA/EFTA route. The Davison article mentioned above does say that the Single Market is also a “building block of European Integration”, but this doesn’t mean that re-joining EFTA would be a covert back door returning us into the EU.  It is a shame that the Davison article, after debunking the Customs Union option so thoroughly, fails to to justice to the freedom which we would enjoy as an EFTA member – accessing the single market but free from the EU’s programme of ever-closer union. Dr Richard North explains very clearly in this piece that accessing the single market via the EEA Agreement is a much better option than is widely believed. He debunks an article in Brexit Central by Hjörtur J. Guðmundsson which claims that “this arrangement was originally designed by Brussels to prepare countries for becoming part of the EU”.

Not so, says Dr North. “What became the EEA originated from an initiative taken by the EFTA member states.” He then gives the reader a thorough history lesson, which is well worth reading through, as is his previous post on “EEA Myths”, where he explains that if we used the EFTA route, we wold not end up replicating Norway, Iceland or Liechtenstein but would use the flexibility within the EEA agreement to carve out our own relationship with the EU.

Whether or not this sounds appealing, few could disagree that it is vastly better than the current transitional arrangements. What is more, it looks like being the only Brexit solution which will be acceptable to Parliament. On the one side, the Lords continue to behave mischievously while on the other, a number of MPs including cabinet colleagues have lined up against any sort of customs partnership.

The only other alternative is to walk away and rely on so-called “WTO rules”. Although advocated by a number of leave-supporting MPs it would be fraught with problems. This piece offers a lengthy but readable analysis of what life would be like without any agreement:- disruption for goods crossing borders, major issues with air traffic, no nuclear safeguarding framework, mutual recognition issues and so on. Especially given the ticking clock – less than ten months remain before Brexit Day, there is no time to address these issues and make bilateral deals to avoid utter chaos.

We have been saying for some time that it will need a crisis to provoke a change of direction from Mrs May. It has yet to break, as latest reports still talk of Mrs May not only pursuing a customs union or partnership for the transitional period, but even extending if for several years. Even so, this unworkable customs union/partnership option is now being openly assailed on all fronts, so there is some hope that, amidst all the muddle, the tectonic plates are slowly shifting.

  

 

Trust you, Mrs May?

 

In an article in the Sunday Times, Prime Minister Theresa May implored voters to trust her to deliver Brexit. “I will ensure that we take back control of our borders…our money…[and] our laws.” she said.

But why should we trust her? After being office for over 18 months, there is no sign that she has come up with a trustworthy exit route that would see us make a clean break with the EU while at the same time allowing trade to continue reasonably seamlessly. Coming back to work after a week’s holiday, I signed on to my computer to find that nothing has changed; nothing has progressed. Mrs May and the Brexit negotiations are still going round in circles. An unworkable “customs partnership” is still being pursued even though no less than HMRC has described the current proposals as “unviable.” Michael Gove likewise claimed that there were “significant question marks” about them.  Mrs May has split her cabinet into two asking them both to pursue what, to any intelligent analysis, are two different but equally impractical solutions to keeping our trade flowing with the EU, including across the Irish border.

Why should we trust her when the obvious solution  – at least in the short term – to this problem is under her nose but she has so far steadfastly refused to change tack and replace her unworkable proposals with something which will get us out of the EU while giving her a longer breathing space to negotiate a longer-term arrangement? I am referring, of course, to the EEA/EFTA arrangement. Nigel Moore has written an article which sums up its strengths. Yes, it has weaknesses too – I hardly need point that out to regular readers of this blog. The weaknesses are, however, far fewer than those of the arrangements Mrs May is proposing. In particular, we can regain total control over our fishing, we can keep goods flowing across the Irish border and we will be beyond the reach of the European Court of Justice.  For more on this, please see also the “EFTA 4 UK” Facebook page.

Why should we trust her when she seems so keen to keep us shackled to the European Arrest Warrant? Her argument that other extradition routes are more costly and time consuming is a red herring. The EAW is fatally flawed and has exposed UK citizens to flawed criminal justice systems abroad on the basis of the flimsiest of evidence.

Why should we trust her when, under her watch, several agreements have been signed without Parliamentary debate (and possibly without some MPs even being aware of what is going on) which tie us to the EU’s military programme?

The Daily Express published an article today about a secret document, known as FCO30/1048, which, it claimed, was locked away under Official Secrets Act rules for almost three decades. The author’s identity is unknown, but was most likely a senior civil servant in the Foreign Office. The document, which was written before we joined the EU, suggested the Government should keep the British public in the dark about what EEC membership means predicting that it would take 30 years for voters to realise what was happening, by which time it would be too late to leave. Thankfully, the author was wrong about the last point but correctly predicted that “the increased role of Brussels in the lives of the British people would lead to a “popular feeling of alienation from Government”.

There is nothing new here. Christopher Booker mentioned this paper in a piece for the Sunday Telegraph six years ago, having discovered it as far back as 2002. However, the Express is bringing it to our attention at a very opportune moment. Mrs May has been given the chance to rebuild trust in the government and in politicians in general. She is asking for our trust and if she delivers a successful Brexit, the beginning of  that rebuilding of trust will be part of her legacy. Getting rid of her current Brexit advisor, the untrustworthy Europhile Civil Servant Ollie Robbins, whose poor advice may well be hampering her, would be a good start, but she needs to go a lot further.

As things stand, Mrs May is leading us towards a chaotic Brexit in Name Only which will only further alienate voters from the political system while possibly precipitating the worst crisis in her party since 1846. It is not too late for her to change course – after all, she did promise not to call an early General Election  and then changed her mind. That decision proved disastrous, but as far as Brexit goes, a change of direction would actually prevent, rather than precipitate a disaster, both for the Conservative party and for the country as a whole.

Photo by Tiocfaidh ár lá 1916

The EFTA/EEA Solution to the Current BREXIT Impasse

Implications of current Brexit negotiations failing

Mrs May’s government, without any practical Brexit plan, has created a mess and time is running out. Without a practical solution to the soft border in Ireland there can be no transition deal and, therefore, no withdrawal agreement.   Without one, the UK would leave the European Union (EU) on 29th March 2019 with no arrangements in place to continue trading with the Single Market (Internal Market or wider European Economic Area, EEA).  Such a situation (often called ‘falling off a cliff edge’) would be hugely disruptive to the existing highly integrated trade with the EEA and would impact the wider UK economy.

Government Proposals lead to Brexit in Name Only

However, should the government succeed in getting the EU to accept its proposed solution(s) to the Irish border and to wider trade with the EU, the outcome is likely to be Brexit in name only. Worse, the UK would become firstly a powerless temporary vassal state and then a permanent one under increasingly arduous EU imposed conditions, such as sacrificing the UK fishing industry, surrendering UK defence and defence procurement to the EU, paying substantial amounts into the EU budget, accepting a continuation of free movement (uncontrolled EU immigration, with extra rights for EU citizens), unconditional compliance with all existing and future EU laws, remaining under the EU’s European Court of Justice (ECJ).

Mrs May’s approach to Brexit is the Problem

Yet this unwanted situation is of Mrs May’s making by her seriously reckless decision, first mentioned in her Lancaster House speech, 17th January 2017, to leave the Single Market on Brexit day. Whilst leaving may be desirable in the long term, it is hardly practical now and her proposed solutions of mutual recognition of standards and a free trade agreement look increasingly unrealistic and counter-productive.  Her wishful thinking, dithering and failure to understand how the EU and EEA works, have only made matters worse.

A simple EFTA/EEA Solution to Mrs May’s Brexit Problems

Many of the problems Mrs May has created can be solved by remaining within the Single Market (even temporarily) via a different, more flexible route.  Such a route is available if we re-join The European Free Trade Association, EFTA, assuming they would have us back.  Whilst this cannot be taken for granted, it would be advantageous to the existing EFTA/EEA countries (Norway, Iceland, Liechtenstein – Switzerland is outside the EEA) giving the overall grouping greater robustness.  The EU has hinted that it could accept this as an option to achieve an orderly Brexit.

Criticisms of EFTA/EEA (aka The Norway Option) can often be resolved through research using original or reputable sources via the internet (e.g. here).  However, there will always remain the opportunity for the EFTA/EEA option or any other suggestions to be misrepresented by the unscrupulous or ignorant.

EFTA is a Trading Association without political aspirations

Originally set up by, among various countries, the UK, EFTA is not a stepping stone to EU membership or even to associate membership of the EU. EFTA existed before the creation of the Single Market. As its name suggests, it was  – and indeed is – purely a trading bloc. However, EFTA countries can participate in the Single Market on the basis of the EEA Agreement.

EEA Agreement is Flexible and Customisable

The basic EEA Agreement  is amended from time to time (through additional Annexes and Protocols) as it applies to each of the EFTA members. It is not a ‘one size fits all’ approach and is customised to fit each’s requirements.  Thus we could get a bespoke agreement by taking and amending the existing ‘off the self’ versions.

Control of EU Immigration into the UK

Article 112 (the Safeguard Measures) of the EEA Agreement provides a mechanism for the UK unilaterally to control immigration from the EU. Similar wording has already been copied by the EU into their draft Withdrawal Agreement (Article 13, Protocols relating to Northern Ireland) effectively allowing the EU unilaterally to limit immigration into the EU from the UK.

Agriculture and Fishing are outside the EEA

The EU’s Common Fisheries Policy and the Common Agricultural Policy are excluded from the EEA Agreement. We could therefore regain control of our Exclusive Economic Zone  next March without having to ask the EU.

Laws relevant to trade in the EEA

The EU acquis (or body of laws) relevant to trade comprises about 25% of the total EU acquis and in 90% of cases reportedly originates from higher (global) bodies.  We would need to comply anyway in order to trade elsewhere, unless we chose to leave organisations such as the World Trade Organisation.  The rest of the EU acquis does not apply unless we choose to adopt any which we could modify as required at a later date.

Almost  frictionless trade within the EEA

It is membership of the Single Market (or wider EEA) and not membership of a customs union that delivers nearly frictionless trade with the EU for countries like Norway. This is because each member is working to common standards and processes (harmonised) for product, production, market surveillance and conformity assessment under a centralised system of bureaucratic control by the EU.  The EU’s Guide to the implementation of directives based on the New Approach and the Global Approach explains what applies to many products.

External Border Controls protect the EEA

By contrast, accessing the EEA from outside its external borders involves complying with regulations, inspections and testing, processes and procedures, external tariffs, customs checks/clearance, VAT etc. intended for dealing with ‘third countries’.   These provisions, effectively border controls, also manage safety and other unacceptable risks to EEA members, consumers and enterprises involved with ‘imports’ and are sometimes protectionist.

There also need to be arrangements to control diseases and parasites etc. in imported livestock, products, plants, packaging etc. from ‘third’ countries.  According to EU law, products of animal origin (meat and meat products) imported into the EU must be inspected (sanitary checks) at Border Inspection Posts (BIPs). For products of plant origin (for plants and plant-derived foods) phytosanitary checks are required at Community Entry Points (CEPs, Designated Ports of Entry). It is a nightmare and this is what we would face next March if Mrs May persists in her stubbornness.

EEA Membership allows participation in critical trade related decision making

A mechanism exists for EFTA members to participate in shaping decisions by the EU, which is described here.  Unlike EU Member States, EFTA members also freely participate in global bodies helping to form standards and practices before these are passed down to the EU for implementation.

Free Trade Agreements

Both EFTA as a whole and individual EFTA countries are free to make their own trade agreements, unlike Member States of the EU or of its customs union.  EFTA countries do not operate common external tariffs.

EEA Membership is Free

For EFTA countries, EEA membership is effectively free although they do ‘voluntarily’ contribute to the specific agencies they participate in and to development grants. We could pick and choose.

Judicial Oversight of EFTA/EEA by the EFTA Court

The EFTA Court is independent of the ECJ although it can take into consideration or follow ECJ rulings. It does not take precedence over national courts enabling the UK, if we so choose, to ignore any of its judgments.  The European Commission could object but we could then ignore it too.

Quitting the EEA at any time

Article 127 of the EEA Agreement covers the process which involves giving 12 months’ notice.  Unlike leaving the EU, no payments and negotiations are required.

Further Information

The EFTA/EEA option and Brexit debate in general has often suffered from misunderstandings or errors and mischievous misrepresentation effectively inhibiting rational discussion.  The following are useful sources of research information: Brexit Reset, Eureferendum.com, various posts on Campaign for an Independent Britain and affiliates.  For consequences of a No Deal situation, see the EU’s Notices to Stakeholders under Brexit preparedness.

The Way Ahead to Independent Sovereign Nation Trading

The EFTA/EEA route could salvage the faltering Brexit process, at least as an interim measure. It would facilitate leaving the political, centralised, anti-democratic construct of the EU whilst still retaining (and expanding) almost frictionless trade.  It could also provide a springboard for a highly successful trading relationship for independent sovereign nations in Europe.

The Transitional deal and “good faith” will decimate our fishing industry

A briefing note from Fishing for Leave

The Transition deal the government is agreeing with EU has dire implications and presents an existential threat for what’s left of the British fishing industry and coastal communities.

The government hopes to ratify this transition as part of the withdrawal agreement and treaty after parliamentary approval. The terms of the transition subject the UK to re-obeying all EU law, including all new laws, after Brexit and the official termination of our current membership.

By subjecting the UK to re-obeying all EU law the transition negates the clean slate provided by Article 50, which states (as agreed by the EU) that the “treaties shall cease to apply” and with that all rights and obligations accrued under the treaties – including the disastrous, inept CFP. The transition squanders the chance to automatically repatriate our waters and resources to national control by reverting to international law (UNCLOS) and domestic legislation.

The 21month transition period means the EU will be free to enforce detrimental legislation to cull what is left of the British fleet. The EU has every incentive to do so to enable the use of international law (UNCLOS Article 62.2) to claim our resources we would no longer have the fleet to catch.

DISCARD BAN

The EU can do so in 21 months using the inept EU quota system which is wholly unsuited to our highly mixed fisheries and forces fishers to catch more than necessary and then discard to find the species their quota allows them to keep.

As of 2019 the EU discard ban is to be fully enforced, however, this ban addresses the discard symptom not the quota cause. Consequently, from 2019, when a vessel exhausts its smallest quota it must stop fishing to avoid discarding. These ‘choke species’ quotas will force vessels to tie up early in the year. Public body Seafish calculates 60% of the resources the UK is currently allocated will go uncaught and resultantly a similar proportion of what’s left of the British fleet will go bankrupt.

The EU has every incentive to fully enforce such a ban which would cull the UK fleet as under international law (UNCLOS Article 62.2) if a “state does not have the capacity to harvest the entire allowable catch it shall… give other States access to the surplus of the allowable catch”.

The above is not conjecture, the EU also stated this possibility in a previously un-noticed document; Research for PECH Committee -Common Fisheries Policy and BREXIT – June 2017 (page17). The EU is therefore quite aware of the implications and obligations of Article 62.2 and the discard ban.

SLASH UK RESOURCE SHARES

To compound this, HM government has agreed through ARTICLE 125 of the draft agreement that the UK will be subjected to the allocation of fishing resources through the CFP.

Part 4 of Article 125 states;

Without prejudice to article122(1), the relative stability keys for the allocation of fishing opportunities referred to in paragraph 1 of this Article 125 shall be maintained.

Paragraph 1 relates to Article 43(3) TFEU;

The Council, on a proposal from the Commission, shall adopt measures on fixing prices, levies, aid and quantitative limitations and on the fixing and allocation of fishing opportunities.

Therefore, contrary to government assertions, the EU Commission therefore has sole power to alter the ‘relative stability’ resource shares. These can and have been altered – as happens on a state’s accession – and the EU is free to do so to the UKs detriment. A further skewing of the already disproportionately unfair share the UK receives would exacerbate and compound the discarding and discard ban problem.

12 MILE LIMIT

The EU can also abolish – indeed it may terminate with our current membership – the 12 mile limit which gives protects our inshore and shell-fishermen along with nursery grounds. The 12mile limit was established in Article 100(1) of the UK Treaty of Accession as a 10 year derogation from Article 2 of the CFP founding Regulation 2141/70.

This derogation, although reiterated in subsequent 10 year CFP renewals, ultimately stems from the UKs Treaty of Accession. With the termination of the UKs membership under Article 50, our Accession treaty will ‘cease to apply’ and the EU will be free to abolish the 12mile before its current 10 year period expires in 2023 if this does not happen automatically upon withdrawal.

GOOD FAITH

In addition to this the governments protestation that all will be well is through the assurance that the proposed agreement will be exercised under the provision of “good faith”.

Article 4a – Good faith;

The Parties shall, in full mutual respect and good faith, assist each other in carrying out tasks which flow from this Agreement. They shall take all appropriate measures…..to ensure fulfilment of the obligations arising from this Agreement and shall refrain from any measures which could jeopardise the attainment of the objectives of this Agreement. This Article is without prejudice to the application of Union law pursuant to this Agreement, in particular the principle of sincere cooperation.

Therefore, under draft withdrawal agreement of 19 March, ‘good faith’ far from being an all will be well clause obliges HM Government to rigorously enforce all the terms of the agreement, including our re-obedience to the CFP in its entirety – it is actually a swallow the lot clause.

Consequently, ‘good faith’ means the UK has signed up to a Transition agreement which means fully re-obeying and subjecting our fleet to a fully enforced discard ban and resulting choke species.

Has agreed to follow ‘relative stability’ shares and the ability of the Commission to alter them – possibly to our detriment. The UK will have agreed to re-obey the ‘raw’ CFP of ‘equal access to the baseline’ with the possible abolition of the 12 mile limit derogation with the termination of of our current membership.

The public perceive the transition as rendering all government and MPs commitments, promises and assurances to reclaim British waters as worthless semantics

It imperative for the survival of fishing communities in a multitude of constituencies that there is a reversal on fishing being included in a transition and that all sovereignty and control over all waters and resources within the UK’s EEZ reverts to Westminster at 11pm on 29th March 2019 on this symbolic issue.

In addition to this a clear termination clause similar to Article 50 must be inserted to the transition treaty to ensure that the transition and all rights and obligations accrued under it cease to apply on the 31st December 2020 to avoid any contention.  Failure to do so would be perceived as a tangible demonstration that there is no intention of making a serious stand on fishing or Brexit nor fulfilling “taking back control of our borders” as optimised by this ‘acid test’ of Brexit.

An academic speaks out

We would like to draw your attention to the videos of our annual rally on 14th April in London, which featured  impressive contributions from  highly qualified speakers.

Dr Graham Gudgin is a rare creature – a senior academic who is not only understandable but supports Brexit and is prepared to say so publicly. More than that, he is one of the men behind Briefings for Brexit, a website set up in order to provide  “factual evidence and reasoned arguments” in support of Brexit, with the articles written by fellow-academics who are specialists in various fields.

Dr Gudgin’s speech can be heard here. He touched on some economic issues, including the contentious issue of the unsustainability of current immigration levels, in an authoritative, balanced and easily understood manner. He comprehensively debunked all the predictions by fellow-economists who predicted economic meltdown if we voted to leave, showing the fallacy of their approach. His introductory remarks about the way leave voters were dismissed as ignorant will also be very welcome to anyone feeling irritated at being caricatured by remoaners as mentally challenged.  Anyone who makes such an unfounded assertion can be referred to Dr. Gudgin and his company of fellow eminent academics.

He concluded with an upbeat assessment of our long-term economic prospects after Brexit, believing that we would achieve a trade deal with the EU and that the level of short-term disruption would be relatively minor.

EFTA might save the day if MPs will read the small print

We have pointed out regularly on this website that, for all its faults as a long-term relationship with the EU, the EEA/EFTA route – whereby the UK remains in the European Economic Area (EEA) by re-joining EFTA, the European Free Trade Association – is a much better short-term arrangement to see us out of the Brexit door than the current proposed “Vassal State” transitional arrangements, particularly as it appears that these will be based on “good faith” rather than a treaty. Since when has the EU ever respected “good faith”?

More on good faith here, but it appears that the initial talking down and misrepresentation of the EEA/EFTA route by David Cameron selectively and inaccurately  highlighting the negatives, which were duly repeated parrot-fashion by everyone from Nick Clegg to Nigel Farage for their different reasons has distorted MPs’ perception of  what in reality could be a life saver for Mrs May and her government, whilst taking the wind out of the sails of all but the most fanatical remoaners.

This option has been brought into focus once again by Iceland’s Foreign Minister Guðlaugur Thór Thórðarson. A year ago, speaking on Radio 4’s Today programme, he urged the UK to rejoin EFTA and this last week, he has intervened in the Bexit debate again, saying that Iceland’s relationship with the EU had been misrepresented in the Brexit debate and allowed more independence than many people realised. “We have the best of both worlds, we can make deals wherever we like, we usually do it through EFTA,” said Thórðarson, adding “We also have bilateral agreements, for example we were the first Western nation to sign a bilateral agreement with China,” adding, “It’s not true we take 80 to 90 percent of [EU’s] acquis, we have taken 13.4% since 1994.” Of course, Iceland is not tied to the Common Fisheries Policy, the Common Agricultural Policy nor to any of the political structures of the EU.  As an EFTA country, it is out of the direct reach of the European Court of Justice. If the terms of the EEA agreement are found to be unsatisfactory, the agreement can be ended by simply giving a year’s notice.

Given the overlap between free trade agreements signed by the EU and those signed by EFTA, following Iceland and Norway’s example would enable trade to continue to flow seamlessly between the UK and EU as well as  countries like the USA, Japan, South Korea and Mexico. It would also much reduce the Irish border problem. Some hard brexirteers applauded the suggestion by Yanis Varoufakis, the former Greek finance minister, that Britain should avoid the Article 50 procedure altogether and simply leave. But they overlooked the fact that he suggested that the UK should move instantly to the EEA/EFTA model, pending completion of final negotiations which, he foresaw, could take some years.

At the moment, Mrs May is squeezed between a rock and a hard place. Six out of the 11 members of her “Brexit war cabinet” have stated their opposition to any “customs partnership” while 60 Tory MPs have insisted that they will not support the government if it pursues a “customs partnership” as it would make meaningful trade deals “impossible” and render the Department of International Trade “obsolete”. Given that Jacob Rees-Mogg, the leader of these sixty, has stated his willingness to endure 21 months of the proposed “Vassal State” transitional arrangement, it is hard to imagine that using EFTA instead as a transition would lead to widespread revolt. On the other hand, the security offered by EFTA would deprive the hard-core remainiacs of their support on both the Tory and Labour benches. The reasons given, for instance by Dr Sarah Wollaston, for supporting the House of Lords amendment – namely that she was not prepared to “endorse economic ruin” – would no longer apply.  There would be no credible reason for MPs not supporting the EEA/EFTA route unless they were genuinely determined to wreck Brexit. Some of the Lords, according to Lord Lamont, are seeking to do just this.  The EFTA route would pull the rug from under their feet, as few MPs would like to be exposed as mere wreckers when there would be no reasonable grounds to justify their behaviour.

This option could well become more attractive given that ever more MPs are starting to speak out against any close customs partnership with the EU. But, if the EEA/EFTA route is necessary at some stage on the way to a final settlement, it looks more tolerable than anything else which is within the bounds of possibility as a transitional arrangement during the few available remaining months of opportunity before the Article 50 notice expires.