MPs’ vote on Brexit deal – is it a climbdown?

Yesterday, David Davis announced that MPs would get a binding vote on the final Brexit deal agreed with the EU. Although Labour called this decision a “climbdown”, in reality, it does not concede very much and does not put Brexit in doubt.

Essentially, MPs will be asked to take it or leave it. The choices will either be to accept the deal or to crash out of the EU without a deal.

Unsurprisingly, the Tory incorrigibles, led by Dominic Grieve and Anna Soubry were none too happy with Davis’ concession, calling it unacceptable.

It may well be, however, that the wrangling turns out to be academic. There has to be an agreement upon which to vote and there is no sign of the two sides moving any closer. One informed commentator, indeed, has suggested that within a few weeks, the  chances of a deal will drop to zero.

There is no question that the “transitional deal” about which there has been much talk faces huge obstacles. Such outlines as have been provided would be unacceptable to many Tory Brexiteers and would still need a huge amount of negotiation with the EU within a short timescale to be signed off by Brexit day.

Is there a via media between this pipe dream (or better, pipe nightmare) and the worrying prospect of having to fall back on the so-called WTO option?  The EEA/EFTA route has been ruled out, a “deep and comprehensive” trade deal on the lines of the EU/Ukraine agreement would take too long and any bespoke deal would take too long to conclude.

And this remains the biggest concerns for those of us desiring to see a successful Brexit. There is no doubt that the remainiacs are still causing trouble, but outside the political bubble, very few people are taking any notice of them. The real worry is that the talks may fail and we will drift aimlessly towards March 29th 2019 with the resulting chaos leaving us battling calls to re-join the EU forthwith.

Brexit:- Politics versus Practicalities

Politicians do politics whilst other people – and businesses in particular – are usually forced by circumstances to do practicalities. When the two diverge or conflict over a particular subject, politics wins for the politician and practicalities of necessity takes priority for people and businesses. For completeness, we must add that bureaucrats do bureaucracy (it’s their raison d’être), the more rules, the more gold-plating of rules and the more enforcement of rules (procedures and processes) the better.

Hence from the moment Mrs May, a consummate politician, said “Brexit means Brexit” we were inevitably going to be landed with a political Brexit, not a practical Brexit if we have any kind of Brexit at all.  It suits the exigencies of the Conservative Party and the ambitions – indeed, the survival in power  – of Mrs May.  Politics is all about gaining and keeping power. This involves creating ‘favourable’ appearances and impressions in the eyes of the electorate, scoring points against others, concealing the whole truth and in some cases, outright deceit. Public ‘U’ turns and admitting mistakes must be avoided at all costs.

From the European Union’s  perspective there is a political dimension to Brexit as far as the European Council is concerned but elsewhere in Brussels it is mainly a bureaucratic process with severe constraints imposed by the EU’s complex and rigid system of rules. Anyone with experience of the EU’s workings will probably be able to recall those frustrating anecdotes illustrating just how inflexible and rule-bound the EU can be when trying to get anything done. It does not like to deviate from the letter of the law.  This same bureaucratic approach will govern the EU’s approach to Brexit, where a tangle of complex inflexible regulations must be followed, without deviation and exception.  Dr Richard North’s excellent blog Eureferendum.com provides a valuable (and comprehensive) source of well researched information about the ensuing problems it is creating for our team.

Making a practical success of Brexit is something that will involve extracting ourselves from the political institutions of the EU, thus restoring the sovereignty of UK institutions while at the same time ensuring existing trading relationships can be maintained. It will be a successful combination of reconciling a politically-inspired British Brexit with the bureaucratic procedures of the EU.  Can it be done? – or is ‘walking away’ from negotiations without a deal a viable alternative?

When the worlds of the British politician and the Eurocrat meet, as they have done in the Brexit negotiations, the net result is mutual incomprehension and therefore little or no progress. Let us not assume this is a result of ulterior motives or hidden agendas.  It is very difficult, if not impossible, for each side to enter the mind-set of the other. To add to the difficulty, the ‘devil is in the detail’ and our negotiators have not historically been keen on detail and it will thus require a great deal of time to familiarise themselves with the subtleties, implications and ‘stupidities’ of the EU’s regulations.

As time marches on, we are slipping further away from any possibility of achieving a practical Brexit.  The idea that trade with the EU can be conducted within World Trade Organisation ‘rules’ (if all else fails) is a practical non-starter. These are not rules, but ‘principles’ to facilitate trading agreements between different countries or trading blocs.  “No deal” therefore creates a legal and administrative void which would crash into the brick wall of the EU’s many inflexible regulations – not to mention its lack of preparedness for the huge increase in paperwork which would result. After all, the EU was not expecting us to vote to leave and is having to start from scratch as well! Mrs May’s so-called ‘deep and special relationship’ between the UK and EU would also face these self-same hurdles in obtaining seamless access to the Single Market (or European Economic Area, EEA); after Brexit the UK becomes a ‘third country’ to be treated the same way as any other country not a member of the EEA.  So is a ‘U’ turn or betrayal of Brexit ‘on the cards’?

If Mrs May doesn’t deliver a genuine Brexit, the result will be calamitous for her and her party.   The Conservative Party might even split along Brexiteer and Europhile lines. However, she stood for leadership on a platform of leaving the EU. She has since stated her desire to leave the EU on 29th March 2019 with a trade agreement in place but a bespoke trade deal isn’t achievable by then and  the walk away option is also an impractical non-starter. So where does she go to next?

Sooner or later, the lack of any practical option will dawn on some members of her party, who will realise the electoral price the Tories will pay in 2022 if a successful Brexit hasn’t been delivered.  Spin, playing a blame game with the EU and ignorant indifference by the media can only go so far in concealing the truth from the mass of an increasingly worried electorate.  It seems that the only way of delivering a practical Brexit within confines of the EU’s bureaucratic Brexit is to reconsider a way of retaining full access to the EEA from outside the EU. Membership of the European Free Trade Association, EFTA, would provide different more flexible terms for membership of the EEA and at much lower cost than through membership of the EU. Yes, it will mean that Mrs May or her successor will need to make a ‘U’ turn over EEA membership (in spin terms ‘an exciting refocusing of efforts, with our European partners, to achieve a deep and special relationship’ et al) but the alternative is electoral oblivion for her party.

So come on Mrs May, there is no time like the present to set a new direction to a practical Brexit on 29th March 2019.

The complexities of Brexit

Having been opposed to to our EEC/EU membership since the early Seventies when Mr. John Selwyn Gummer (as he then was – now Lord Deben) addressed our grain trade conference and told us that the Commonwealth countries wanted nothing more to do with us, I have picked up one or two things along the way.  Our family firm bought milk powder from New Zealand and we knew that our friends there were not at all pleased to be losing one of their best customers.

From late 1971  the government consulted our trade association and gave  very full, detailed information about what our firm would have to do when we joined the EEC on January 1 1973.

Without that information, we would have been in a total mess. Please see my account in Articles 2 and 3 of “The Miller’s Tale”.

We are due to be out of the  EU by the end of March 2019, so the government will have to start giving full, detailed information to all trades quite early in 2018, if businesses  are to have any chance of being ready.  Government departments such as Customs and Excise will have to be fully informed and equipped  too. There appears to be very small chance of this because of the lackadaisical way the government has approached the negotiations, handing the initiative to M. Barnier.  It always was unrealistic to expect to complete a wholly new style of comprehensive trade agreement within two years but they appear not even to be able to agree in cabinet what they actually want.

We already have three ministers involved – David Davis, Boris Johnson and Liam Fox plus the new unit which has been set up in the cabinet office, in part by transferring staff from David Davis’s department DExEU .

Robert Peston, who  is reckoned to be a very well-informed reporter, wrote in a Facebook post that

 “(Mrs May’s) fatal weakness is that she lacks the authority to settle this argument such that the EU  would have a clear understanding of who actually represents the UK and what we want from Brexit.

In the words of a senior member of the cabinet, it is a scandal that there has never been a cabinet discussion about what kind of access we want to the EU’s market…., what kind of regulatory and supervisory regime should then be in place  to ensure a level playing field for EU and UK businesses….”

As far as I know, no significant country trades with the EU on World Trade Organisation rules alone. They all have additional agreements on things like customs co-operation, approval of manufacturers and their quality standards  etc. All our present arrangements simply cease to exist if we “just walk away”.

To give just one example – British farmers presently export 40% of their lamb to the EU. As an independent country outside the single market without an additional agreement  that would be subject to a “sheep meat” tariff of £2,689 per tonne. The price to British farmers would collapse. But the lamb would not even get as far as customs until it had satisfied the “sanitary and phytosanitary” health controls which apply to all food products. The shippers would also have to appoint official importers on the other side – firms or individuals resident in the EU – to be responsible to the authorities for conformity to EU standards and, of course, the payment of inspection charges and tariff.  This is not the EU “punishing” us but the simple effect of the rules, if there is no other agreement.

With regard to EEA/EFTA, you may recall that Mr. Cameron went on his “hug a husky” trip and gave out quite a bit of unfavourable information which was misleading and not entirely correct but still avidly accepted by many  from UKIP  to extreme Europhiles.

Very few have since taken the trouble to check it. We in CIB have been supporting our fishermen and insisting on the need to assert control over all our fisheries – including the 200 mile Exclusive Economic Zone.  Norway and Iceland reserve all their territorial waters and EEZ for their own boats under article 112 of the EEA agreement. Our government is not guaranteeing that to our own fishermen. Iceland was able to impose capital restrictions during the financial crisis and Liechtenstein imposes strict limits on immigration – all under this arrangement.

Mrs. May is proposing a  transition/implementation period which involves continued subjection to the European Court of Justice (ECJ). The EEA agreement is preferable, being subject to the EFTA court which can only rule on on “EEA-relevant”  matters and has no formal powers of enforcement. If the arrangement does not suit us, we can be out of it by simply giving a year’s notice. Under the ECJ we would be subject not just to the 20% or so of EU legislation affecting trade but to the other 80% which enforces the political project, including things like the European Arrest Warrant..

Given the weakness of the government’s performance, I cannot see it negotiating anything better than the EEA agreement as a basis.  As an interim, it has the advantage of being a known quantity and could be subject to agreed amendments  (off the peg with alterations rather than “bespoke”). It is a least worst option. I have not heard of anything equally practicable and achievable in the limited time available.

Funnily enough, when we started discussing this possibility some  years ago it was fiercely attacked by a man who said it would be enough simply to repeal the European Communities Act 1972. It turned out he was a keen Europhile! I wonder why he was so against it?  Perhaps this article Europhiles for a sovereign Parliament may give us a clue.

When Mrs. May announced the government’s approach to Brexit in her Lancaster House speech in January, I felt that she was biting off much more than she could chew. A free trade agreement of the scope and complexity which she proposed seemed just too much to cram into a maximum negotiating period of two years.

But, on reflection, there was not even two years available. Basing things on my experience in a firm approaching entry into the EEC in 1972, it was obvious that both government departments and businesses would need a substantial lead time to get ready for the changeover to the new system. Farming and other industries with long production cycles would need at least a year’s notice, in full detail, of what the government intended. Businesses contemplating investment projects would need to know too.

In our CIB newsletter of 29 March 2017, (when Article 50 was triggered), I wrote about our chemicals industry which is a very important part of our exports. I had listened to the proceedings of the Environmental Audit Committee of 7 March.

“GREAT REPEAL BILL MAY SECURE BRITISH EXPORT SUCCESS – OR NOT

The chemicals industry is a key British exporter. For years now it has been working to comply with the EU REACH Regulation (Registration, Evaluation and Authorisation of Chemicals). On 7 March DEFRA told MPs that the Great Repeal Bill (Now the European Union (Withdrawal) Bill) would create an identical British version to be called BREACH so that British-manufactured chemicals could continue to circulate freely in the EU market.

REACH requires companies which produce the same chemical to submit joint dossiers on their product with safety data to the European Chemicals Agency. Many such registrations have been filed at very considerable expense.

Next year will be the deadline for registering specialised low-volume chemicals which will affect thousands of companies. This is creating problems. For instance, should a British manufacturer which only sells in the UK go to the expense of registering with REACH when it might have to do the same a year later with BREACH?

The officials appear to be in a muddle and not to know. DEFRA has promised that the UK “will have a functioning scheme from Day One” but this is not good enough. The UK Chemical Industries Association says there is “no clarity at all” and doubts that such a scheme can be put in place within the two year negotiating period. According to a survey of the industry, one fifth of the UK chemical manufacturers are already planning to establish themselves in another EU country as insurance against the muddle. Whether they stay or go depends on their confidence in the British government.

The government has realised that the British chemical industry must be helped over this non tariff barrier, if it is to continue its success as our second largest single exporter. The highest levels of political and official will are needed to secure the confidence of the industry. The Devil, as always, is in the detail and will not be exorcised by vain repetition of mantras about “WTO Rules”. At least it is clear, they know that much!”

Yet now, seven months later the muddle persists. Private Eye reports a setback, even from this unsatisfactory position.-

“MORE on the consequences of Brexit nobody seems to have thought of until now. The European Chemicals Agency has quietly confirmed that more than 6,000 substance registrations filed by UK-based chemical s companies will be “regarded as non-existent” after Brexit.

These registrations are a condition of access to the European Union market, but in the bloc’s overarching REACH chemicals law, there is no legal basis for registrations from countries outside the single market, which the British government is determined to leave.

This puts UK chemicals companies in a bind. As 60 per cent of UK chemicals exports go to the EU, companies will need to switch their registrations to associated companies or agents inside the single market. This will involve new contracts and costs, including payments to the European Chemicals Agency which charges about 1,600 euros to change the identity of a registrant and between 9,000 to 34,000 euros paid for the original registration.

A final deadline for registration of chemicals under REACH falls on 31 May 2018, nine months before Brexit. The deadline applies to low-volume and specialised chemicals. Should UK- based companies bother? Those that sell sufficient volumes into the EU market will need to ensure their registrations continue, but what about UK companies that sell only in the UK or to non EU countries?

In fact, they have no choice. The UK will still be a member of the EU in mid -2018 and companies have a legal obligation to register their substances. Moreover, the British government has said that it will continue after Brexit with a facsimile of REACH, including its registration provisions. So, if UK companies selling only in the UK don’t file their EU registrations, when Brexit comes round they would be on the UK market illegally.

The government says it is “working to ensure a smooth transition for the chemical industry as we leave the EU”. But time is short and there is still little clarity on the many practical details.”

So the authorities have marked time for seven months. I hope that CIB members and supporters – especially those with experience of the industry or living in areas of substantial chemical manufacture – will contact their MPs to pressure DEFRA to get a move on. There are thousands of similar things which will need to be sorted out quite early in the New Year, if affected firms are to have a chance of making a living and paying their workers after Brexit.

As a post script, readers may be interested in an e-mail exchange in which I was involved:-

From: [email protected]

To [email protected]

Sent: 24/10/2017 11:19:06 GMT Summer Time

 Subj: RE: The complexities of Brexit – Campaign for an Independent Britain

THERE  NEED  NOT  BE  ANY  COMPLEXITIES  WHATSOEVER !!!!!!  We have a very good balance of trade and payments surplus with that Mighty Economic Colossus, The  United States of America, the largest economy in the World. Nor do we have a trading agreement!!!  This endless babble with the EU, by the UK Government is just a load   of procrastinating tripe created by a weak leadership who are quaking in their Knickers and Underpants. We also have good trading, and profitable relationships with a good number of other countries around the World.

The  fact the people who would be quaking in their underwear if we simply walked away; would be the likes of Merkel, Macron, Barnier and Juncker. Particularly Merkel who is     already in the cart following the German elections, having caused an election result that has resulted in the Neo NAZIs getting into the Bundestag for the first time since 1945. As we all know this is the direct result of her insane immigration policies. She would also be very worried about the German car industries employees because of the huge number of cars that are currently imported into the UK. 1.3 million German car industry employees rely on exports to the UK, in order to keep their jobs.

As we are seeing with other national elections, the four of the above EU and national leaders, plus a number of others, are between them destroying the EU from within. The USSR was destroyed from within, and in that there is a lesson for Juncker and Barnier; POWER!, without accountability, destroys that which it represents.   Ken.

Dear Sonya and Ken,

I just remembered this article from PRIVATE EYE which includes BREXIT problems with regard to farming, trade with the USA under EU/US trade agreements and the time needed to adjust to any new arrangements.

“BREXIT is less than 18 months way and yet still no post-Brexit transitional arrangements or EU-UK trade deal is even under discussion, let alone agreed. Given that farming is a long-term business and its viability is currently governed by the EU’s international trade arrangements, will UK farmers continue to commit to the financial risks of food production faced with such uncertainty?

A good example of the difficulties ahead concerns the threat to the UK organic cheese Kingdom Cheddar, which is currently exported to the US .

Kingdom is made from organic milk produced by the 265 UK dairy farmers in the Organic Milk Suppliers Co-operative (OMSCo). In 2015, under US-EU trade arrangements, OMSCo qualified to export its premium organic cheese to the US. It took OMSCo eight years to develop the Kingdom brand, its dairy farmer members having substantially altered their farming practices to meet US standards (including using fewer antibiotics and improving animal welfare).

The arrangement that allows Kingdom to be sold in the US however is between the EU and the US. OMSCo points out that unless an “equivalence” agreement on organic farming standards is signed between the UK and the US “in the next three months”, it will stop production of Kingdom at the end of December. OMSCo chairman, Nicholas Saphir says “We cannot take the risk of producing a niche market product that, given its 18 month production(cycle) may not be able to be sold after Brexit”.

OMSCo is unique in the UK in exporting high volume premium organis cheese to the US; but given agriculture’s long production cycle, all UK food exports face the same risk of disruption, as th clock ticks down”.

The article goes on to make the same point about lamb production which I made in “The Complexities of Brexit”, pointing out that farmers will have to decide this Autumn whether to retain millions of ewe lambs for for breeding or send them for slaughter as fat lambs because their progeny will not be brn until Spring 2019, just as Britain leaves the EU which currently takes 40% of British lamb.

I am afraid that neither government nor Brexit campaigners appear to be taking this sort of thing into consideration.  All industries with long lead times will have similar problems.

Regards

Edward

 

No deal is looking increasingly likely

There was something of a storm in a teacup in the House of Commons on Monday. The Conservative backbencher Jacob Rees-Mogg asked the Prime Minister for an assurance that the European Court of Justice’s writ will not run in the UK after March 29th 2019. Mrs May didn’t oblige. She replied that “That may mean that we will start off with the ECJ governing the rules that we are part of.” This admission that we will “fall under ECJ rules” was all over the papers, but this media frenzy was based on the assumption that the transition period proposed by Mrs May, among others, is a realistic option. In reality, it isn’t.

What seems to be the core of the transition proposals is that we continue for a couple of years as a shadow member state. Having repatriated the acquis into domestic legislation, we would voluntarily apply the rules of the single market and customs union while in exchange, the EU would treat us like a member state for trade purposes and neither impose any tariffs nor apply the usual rules of inspection for a “third country” at the main ports of entry for UK exports, such as Calais due to our regulatory convergence with the EU.

The flaw in the proposal is that it makes the assumption that the EU will bend its own rules for the sake of an ex-member whose vote to leave dealt it a huge political blow. There is every indication that Mrs May’s transitional plan, which so upset Jacob Rees-Mogg, is a non-starter. EU bigwigs have been very courteous but the message has been quite unequivocal – No way to this transitional arrangement, no matter how many times the Prime Minister calls on the EU to show “leadership” and “flexibility.”

So what are we left with? In her speech yesterday, Mrs May raised the possibility of there not being a deal in place – transitional or otherwise – by March 2019. “While I believe it is profoundly in all our interests for the negotiations to succeed, it is also our responsibility as a Government to prepare for every eventuality, so that is exactly what we are doing. These white papers also support that work, including setting out steps to minimise disruption for businesses and travellers”, she said. (The white papers to which she refers cover trade and customs.)

Naturally, the Prime Minister stated that this was not what she wanted, going on to say “We are negotiating a deal. We will not have negotiated that deal until, I suspect, close to the end of that period that’s been set aside for it.” In other words, we will keep on talking and hope for some sort of deal eventually, even if the talks go to the wire.

This is not helpful for businesses, who will not have any guidelines to help them prepare for Brexit and will not even know whether a deal is going to happen until the last minute.  If they were to take the advice of some commentators, it would be to prepare for no deal being struck. For all Mrs May’s calls for flexibility, that word isn’t to be found in the EU’s vocabulary, as David Davis and his team are beginning to discover. We agreed to the EU’s negotiating timetable – in other words, that an agreement (or at least, reasonable progress towards an agreement) – on  the Irish border question, the divorce bill and the rights of EU citizens resident in the UK must come before any talk about trade. We needn’t have done this, but we have and so who can blame the EU for sticking to its guns when there has been very little progress in these three areas?

The repeated rejection of ongoing membership of the European Economic Area, for instance, by re-joining EFTA, has closed off another option and one which has two advantages over the bespoke transitional arrangement which Mrs May is suggesting. Firstly, it is rooted in reality. We would be signing up to an agreement which the EU has already signed. Secondly, there would be no need to accept the supervision of the ECJ or to be part of the EU’s customs union. We would thus be free to strike our own trade deals.

There is also one other intriguing possibility, first raised by George Yarrow of the Regulatory Policy Institute. In his paper,  Brexit and the Single Market, he claims that on Brexit, the UK would remain a member of the EEA by default  He points out that joining the EU does not automatically mean joining the EEA; a separate accession process is required. Likewise, when Austria, Sweden and Finland left EFTA to join the EU in 1995 (by which time the EEA agreement between the EU and EFTA was in place), they did not have to re-apply to join the EEA. They were already members through having been in EFTA. The default position for the UK on departure, therefore, is that it too would remain an EEA member.

Yarrow’s thesis has attracted little attention from either our negotiators or the EU’s team. It raises a number of questions but it might possibly offer some answers. While the EU has no interest in exploring it, it would make life a lot easier for David Davis. We would not be under the power of the ECJ but of the EFTA court (which is limited to “EEA-relevant” matters) and could follow Liechtenstein and apply the same restriction on free movement of people, using Articles 112 and 113 of the EEA agreement. At a stroke, we would be in a better transitional position than under Mrs May’s proposals – to which the EU is not going to agree anyway.

On the other hand, if Yarrow is wrong and leaving the EU means leaving the EEA, it does mean that time is very short – probably already too short – for any satisfactory arrangement  to be in place by March 2019. German manufacturers are being told to prepare for a “very hard Brexit” while the Irish equivalent of HMRC has already reached the conclusion that customs posts will need to be erected between the Republic and Northern Ireland, even though no one on either side wants to see the return of any sort of visible border.

Yarrow’s thesis or an immediate application to re-join EFTA  are thus the only two escape routes from the looming cliff edge which no one wants either. The first option is untried and may not stand up legally while the second has been repeatedly rejected in favour of a chimera – namely Mrs May’s illusory “transitional arrangement”. We are not yet in Private Fraser territory where “we’re all doomed”, but Mrs May and her party could well be unless they engage in some lateral thinking – and quickly.

 

Paved with good intentions?

If Mrs May hoped that her speech in Florence would unblock the Brexit talks, she must be feeling somewhat disappointed. Yesterday, Donald Tusk, the President of the EU Council politely welcomed its “constructive and more realistic tone” but then went on to say, “As you know, we will discuss our future relations with the United Kingdom once there is so-called ‘sufficient progress’. The two sides are working hard at it. But if you asked me and if today Member States asked me, I would say there is no ‘sufficient progress’ yet.”

Mrs May’s speech, as we mentioned recently, was  optimistic in tone and stated very clearly that the EU had never really worked for us. It “never felt to us like an integral part of our national story” although she stressed her enthusiasm to work closely with it once we leave.

But what exactly would this new partnership look like? “The question is then how we get there: how we build a bridge from where we are now to where we want to be,” said the Prime Minister. Unfortunately, she failed to answer her own question, apart from stating that a transitional period would be needed and ruling out ongoing membership of the European Economic Area, even in the short term.

The speech encapsulated the problem with which the Government is struggling. Like Boris Johnson, Mrs May sounded very hopeful about the UK’s prospects post-Brexit. She is right to do so. We potentially have a great future as an independent nation. The problem is reaching this point with our economy intact. Daniel Hannan has recently joined in the trade debate. enthusing about the prospects for free trade once we’re out of the EU, but we keep coming back to the same question:- how are we going to leave?

It isn’t helping that our team, led by David Davis, accepted the EU’s preconditions that discussions on a wider future relationship, including trade, cannot begin until “sufficient progress” has been made on the Irish border issue,  the “divorce bill” and the rights of EU citizens currently living in the UK. Mrs May stressed that the EU needed to “be creative” in working out its future relationship with the EU, while David Davis insisted that there should be  “no excuses for standing in the way of progress”.

But even if the outstanding issues are resolved, and there is little sign of any meaningful agreement as yet, what sort of agreement exactly does the UK want? Michel Barnier, the EU’s chief negotiator, has called  for  “a moment of clarity” from the UK’s side. He is quite right to ask this question as there are plenty of us this side of the Channel who can’t wait to see the UK safely out of the EU but at the same time are in a quandary regarding how the Government proposes to  get us there. The hints in Mrs May’s speech about the sort of transitional arrangement she would like suggest somehow more or less staying in the EU but somehow not being subject to the European Court of Justice – in other words, still in “having cake and eating it ” territory and thus unacceptable to the EU.

Scan through our website and read the comments on earlier articles and you will find a few people doubting if Brexit will ever happen and fearful that Mrs May is going to betray us and call the whole thing off.  While fully appreciating the anxiety of such people, I do not believe this to be remotely possible. The slightest hint of back-pedalling on Brexit and Mrs May would immediately face a leadership challenge. What is more, the Tories garnered much of the leave vote in last June’s  General Election because they promised to deliver on Brexit. Following the better-than-expected showing by Labour under Jeremy Corbyn, a botched or half-baked Brexit means electoral meltdown for the Tories and they know it.

Mrs May and her team are therefore under great pressure. There is no turning back, whatever some sections of the press may say – or indeed, secretly wish for. One possible scenario is that Mrs May and David Davis may pull out of the talks, blaming EU intransigence and falling back on the “no deal is better than a bad deal” position – in other words, the so-called WTO option. Iain Duncan Smith, among others, has been urging the government to prepare for no deal.

It probably won’t come to this, but we can expect a rocky road ahead in the next few weeks, especially as much of the business world does not share the optimism of Mr Duncan Smith or Professor Patrick Minford that the WTO option, coupled with a more or less total elimination of tariffs, is going to be beneficial. In the long term it may be, but the shock it would deliver to UK businesses in the immediate post-Brexit period would be immense with, among other things,  the likelihood of a massive stack of lorries on the M20 building up the moment we leave, unable to clear French customs due to a lack of the necessary paperwork.

So the Brexit clock keeps ticking and M. Barnier keeps reminding us that we will become a “Third Country” in just over 18 months time. Given it’s now more than 15 months since the Brexit vote, we are only six weeks or so away from the halfway point between the referendum and the result we sought. We can but hope that some sort of clarification or change of tack will take place soon or the dream for which so many of us campaigned for so long may turn out, in the short term at least, to be more of a nightmare. The road to Hell, they say, is paved with good intentions. The road to Brexit may turn out to be very similar.

 

Plenty of mood music but little of substance

Prime Minister Theresa May delivered her long-awaited Brexit speech in Florence last Friday. By now, many of our readers will have had ample opportunity to read both the text of the speech itself and the verdict of all and sundry.

In summary, Mrs May gave a speech which attempted to reassert her leadership of the Brexit process. In the recent negotiations, David Davis has received far more coverage than the Prime Minister, while Boris Johnson’s article in the Sunday Telegraph a week ago was interpreted by some as a leadership bid and an attempt to upstage her. Reports of splits within the Cabinet over the shape of Brexit also made it imperative for the PM to stamp her authority and show to the world that she was not a lame duck presiding over a fractious, chaotic government.

So what did she say? That dreadful phrase “deep and special” which regrettably permeates so many government position papers, appeared twice. Was the speech written by the same person who devised the equally awful “strong and stable” mantra which  proved so unconvincing to the UK electorate last June?  Of course, particularly in a speech like this, a certain amount of diplomacy is necessary, but we are going through a divorce with the EU and the idea that divorcees are likely to want a “deep and special” relationship after ending an uncomfortable relationship stretching back more than forty years  is, quite frankly, ludicrous.

This irritating phrase apart, the mood music was pretty good. Although Mrs May campaigned for the remain side, albeit with little enthusiasm, she articulated the reasons why we voted to leave very clearly and succinctly. “The strength of feeling that the British people have about this need for control and the direct accountability of their politicians is one reason why, throughout its membership, the United Kingdom has never totally felt at home being in the European Union.

And perhaps because of our history and geography, the European Union never felt to us like an integral part of our national story in the way it does to so many elsewhere in Europe…..So the British electorate made a choice. They chose the power of domestic democratic control over pooling that control, strengthening the role of the UK Parliament and the devolved Scottish Parliament, Welsh and Northern Ireland Assemblies in deciding our laws. That is our choice.

Absolutely. All the same, even those – including some within Mrs May’s own Parliamentary party – whose loathing for the EU goes so deep that they hope it will collapse, cannot escape the fact that we cannot and should not cut ourselves off from our neighbours on the continent. “But what we do want – and what we hope that you, our European friends, want too – is to stay as partners who carry on working together for our mutual benefit.

All well and good, but when it came to the details of how this partnership is to work, detail was very sketchy. Mrs May acknowledged the need for a two-year transition period, but didn’t say what sort of transitional arrangement she was seeking, except to rule out EEA membership:- “European Economic Area membership would mean the UK having to adopt at home – automatically and in their entirety – new EU rules. Rules over which, in future, we will have little influence and no vote. Such a loss of democratic control could not work for the British people.”

Not that accurate although at least consistent with earlier statements. This does pose the question as to what Mrs May is proposing instead. Richard North is quite correct to point out that whether you are talking about an interim deal or a permanent arrangement, there are only three options:- the “no agreement” (or WTO) route, EEA membership or a bespoke bilateral trade deal. The last appears to be the preferred choice for a long-term arrangement, even if Mrs May has ruled out using the EU-Canada deal as a model, but if it can’t be concluded before March 2019, it doesn’t leave us with many options for the transitional deal. The only insight we have gained form this speech is that Mrs May seems to have recognised that any free trade agreement with the EU would require some sort of umpire or mutually acceptable superior authority – rather like the EFTA court.

The time factor is crucial in all this, especially as our team has agreed to the EU’s negotiating schedule, which insists that satisfactory progress must be made on the rights of EU citizens in the UK, the Irish border issue and the “Divorce bill” before trading arrangements can be discussed. Mrs May had hinted earlier in the week that an offer of at least €20 billion was likely to be on the table.  In her speech on Friday, she emphasized her commitment to securing a deal which will allow EU citizens currently residing in the UK to remain and added that as far as the Irish border issue was concerned,  “We and the EU have committed to protecting the Belfast Agreement and the Common Travel Area and, looking ahead, we have both stated explicitly that we will not accept any physical infrastructure at the border. We owe it to the people of Northern Ireland – and indeed to everyone on the island of Ireland – to see through these commitments.”

The conciliatory tone of the speech elicited some positive comment from senior EU figures, with Michel Barnier describing it as “a step forward” but highlighted the lack of detail. France’s President Macron welcomed the UK’s willingness to move forward, but he and other European figures joined Barnier in bemoaning the absence of clarity. Leo Varadkar, the Irish Taoiseach, sounded more positive after threatening to block the next stage of the Brexit talks a few days earlier.

Reaction from the UK has been varied. “Leave will effectively mean stay” said an unenthusiastic Dr Peter Mullen. Richard North  called the speech “Empty rhetoric” and poured scorn on her claim that “we can do better than this” following references to the EU/Canada deal and the EEA agreement. Richard Tice of Leave.eu said “I fear Theresa May has now given the EU no incentive to agree to anything”. Brian Monteith of Global Britain was somewhat more positive, insisting that “it is not the sellout that so many of her critics who are rushing to judge allege.”

The most telling comment,  though, comes from Michel Barnier in a speech which anticipated Mrs May’s. Just one short sentence:- “At midnight on 29 March 2019, the United Kingdom will leave the European Union and will become a third country.” That’s the rules. No special treatment. The treaties cease to apply and a new relationship of some kind or other will replace our membership of the EU. He went on to say “I would like to be very clear: if we are to extend for a limited period the acquis of the EU, with all its benefits, then logically “this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply” as recalled in the mandate I received from the European Council, under the authority of President Donald Tusk.” In other words, the only sort of transition he could imagine taking Mrs May’s words at face value would, in effect, be a postponement of Brexit, which would clearly be unacceptable to many MPs in Mrs May’s own party, let alone the wider Brexit-supporting community.

In conclusion, while Mrs May’s speech was peppered with good intentions, its most disturbing feature is that it could easily have been made a year ago. What has been going on behind the scenes in the last few months? As M. Barnier has pointed out, the clock is ticking and Brexit day draws ever closer. There is a great deal of detail to clarify and precious little time in which to do it. We must not stay in, we cannot crash out and all the obvious alternatives have been rejected. What exactly, then, is the route which Mrs May, David Davis and their colleagues suggest we take in order to arrive safely on Brexit day still able fully to function as a country?  We would all love to know.