The fantasy of a “frictionless” trade agreement

Mrs May and Mr Davis’ oft repeated aspiration for ‘frictionless’ trade with the European Union (EU) via a free trade agreement (FTA) and mutual recognition of standards will in reality consign the United Kingdom to being a permanent EU vassal stateBrexit will be in name only, with “stay, pay, obey without a say” being the outcome of their mishandling the Brexit negotiations.  The transition agreement, which turns the UK into an EU vassal state thanks to completely caving in to unreasonable demands by the EU, is a forerunner of even worse things to come. The transition deal (partially agreed, although a long way from being ratified) is vastly inferior to the deal which they could have obtained, but rejected out of hand as far back as Mrs May’s Lancaster House speech 17th January 2017. We could have retained our membership of the Single Market (and wider European Economic Area, EEA) through re-joining, even temporarily, The European Free Trade Association, EFTA. This alternative, also known as the ‘Norway Option’, could have delivered practically ‘frictionless’ trade and a soft border on the isle of Ireland.

At the heart of Mrs May and Mr Davis’ highly risky, far-fetched and delusional approach to Brexit is a failure to understand the nature of the EU, the European Economic Area (EEA), EFTA’s working relationship with the EEA including the EEA Agreement, mutual recognition of standards and how world trade works.  They make the most basic mistakes and repeat factually incorrect or incomplete statements to support their contradictory desire to leave the Single Market while retaining the same level of market access through an FTA.  They appear unwilling to take cognisance of readily available facts that completely disprove their fatuous mantras.

The details of what will happen after the UK leaves the EU (and the EEA) are there for anyone to see on the EU’s dedicated website  – especially in the increasing number of “Notices to Stakeholder”s under Brexit preparedness) It makes somewhat chilling reading.  There is nothing equivalent on the Department for (not) Exiting the European Union’s website. Presumably either they haven’t done this vital work or have chosen not to share it – a truth too awful to tell?

Upon leaving the EU and the EEA we would become a ‘third’ country. We would then be subject to different requirements by the EU in order,  at best, to manage the risks (to consumers and others) of doing business with us (or any other ‘third country’ outside the Single Market or EEA) and, at worst, to erect protectionist trade barriers in favour of domestic EU enterprises.  From the EU’s perspective, they will not grant concessions to ‘third’ country suppliers outside their control which are not enjoyed by EU domestic suppliers, especially when these could increase risks or create an ‘unfair’ competitive advantage.  The EU also has to treat the UK the same as any other ‘third’ country in order to comply with World Trade Organisation (WTO) agreed requirements or principles.

The EU is developing the Single Market by harmonising standards, regulations, and enforcement or surveillance within a top down centralised legalistic and bureaucratic framework under their supervision and control. It is also a long-established declared ambition that ‘third’ countries (outside the EU, or wider European Economic Area, EEA) would adopt or follow at least some EU-style measures.  The EU’s approach (to products) is outlined in principle in COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Enhancing the Implementation of the New Approach Directives and in more detail in the EU’s Guide to the implementation of directives based on the New Approach and the Global Approach .

For the EU, mutual recognition of standards (which differ from theirs) has limited application, since it is not their preferred choice where harmonised standards (in their widest context) exist.  In any case, there is the practical complexity and increased cost of demonstrating equivalence and compatibility, which can be far from straightforward and unacceptable to consumers and users.  To take a simple illustration, traffic lights using green on top for ‘stop’ and red underneath for ‘go’ certainly provides equivalent functionality but are far from compatible and acceptable.  Also test values from subtly different tests may mean a product is (theoretically) less safe rendering it unacceptable or requiring expensive (or impractical) re-design, which in turn may invalidate other test results and/or existing certification/approvals.  (See also the Fallacy of Easy Mutual Recognition of Standards).

The EFTA/EEA option is not perfect, but is far more favourable to the UK’s interests than the transitional deal on offer or indeed, to what will eventually emerge as Mrs May’s FTA and ‘deep and special relationship’. Norway participates in the EEA through membership of EFTA. Actually it only implements EU legislation necessary for functioning of the EEA, which at most constitutes around 25% of the total EU acquis or system of laws. More than 90% of these EEA related laws reportedly originate in global bodies, meaning the UK would need to implement them anyway for global trade, unless we leave the World Trade Organisation (WTO), et al. Also the EFTA route to EEA membership gives members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). What is more, EFTA members make their own trade agreements with other countries.

Contrary to statements by M. Barnier and Mrs May about the four indivisible freedoms, EFTA/EEA membership contains the facility to control immigration. Two members of EFTA have unilaterally invoked Article 112 (the Safeguard Measures) of the EEA Agreement to restrict free movement – Liechtenstein for people and Iceland for capital. The UK could do so too if we retain membership of the EEA by re-joining EFTA.  Ironically, Articles 112 and 113 of the EEA agreement, which Mrs May rejects, are reproduced closely by the EU in their draft Withdrawal Agreement, Article 13 (Protocols NI), allowing the EU unilaterally to restrict freedom of movement (including immigration into the EU from the UK).

Continuing membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland, thus avoiding a hard border between Northern Ireland and the rest of the UK (something Mrs May has ruled out, for the moment).  It also gives us full control of fishing in our Exclusive Economic Zone.  The EEA agreement (for EFTA members) can be adapted to suit their interests.  Thus the UK (within EFTA) could get a bespoke version.  So we could ‘imitate, adapt and improve’ on the existing EEA agreement to suit our needs rather than follow an insular and amateurish effort to ‘re-invent the FTA wheel in a few months’ that isn’t going anywhere.

From the beginning, the EU negotiators completely dominated the Brexit negotiations. It was inevitable then that negotiating concessions (or cave-ins) would be made by weak, dithering and clueless Mrs May and Mr Davis to strong, decisive and professional M. Barnier and his team. Comparing the EU’s draft Withdrawal Agreement with the text agreed by the UK shows just how much the increasingly uncompromising EU is getting its way.  Worse still, the EU is getting away with demands that are over and above those necessary for trade, with more already in the pipeline (such as fishing, defence, defence procurement, locking UK into EU budgets etc.).  If you thought the Transitional Deal was bad, wait until you see the final withdrawal agreement and the FTA.

Mrs May and David Davis misunderstand the EU and the EEA

Knowledge is power, so it is very worrying when  our senior politicians repeatedly display – through obvious errors and factually incorrect statements – a lack of understanding of the European Union (EU) and how it functions. These errors must inevitably undermine any chance of negotiating a satisfactory outcome for the United Kingdom and time is running out.

For example, Mrs May in her Our Future Partnership speech at the Mansion House on 2nd March 2018 said:

For example, the Norway model, where we would stay in the single market, would mean having to implement new EU legislation automatically and in its entirety – and would also mean continued free movement.

Norway participates in the European Economic Area (EEA) through membership of the European Free Trade Association (EFTA). Actually it only implements EU legislation necessary for functioning of the EEA, which at most constitutes around 25% of the total EU acquis (or system of laws). More than 90% of these EEA related laws reportedly originate in global bodies anyway, meaning that even if we left the single market, the UK would still need to abide by them for global trade unless we decided to leave the World Trade Organisation (WTO) as well.  Various members of EFTA  have unilaterally invoked Article 112 (the Safeguard Measures) of the EEA Agreement to restrict free movement. In the case of Liechtenstein, it was free movement of people  whereas for Iceland it was free movement of capital. The UK could do the same if retains membership of the EEA by re-joining EFTA. The “four freedoms” are NOT indivisble for non-EU countries, whatever  M. Barnier may say.  Ironically Articles 112 and 113, which Mrs May fails to understand and rejects, are reproduced closely by the EU in their draft Withdrawal Agreement, Article 13, allowing the EU unilaterally to restrict freedom of movement including immigration into the EU from the UK.

Mr Davis’ understanding of the EU’s modus operandi is no better, For example, Mr Davis, in his Foundations of the Future Economic Partnership Speech in Vienna 20th February 2018 said:

The European Union itself has a number of mutual recognition agreements with a variety of countries from Switzerland to Canada to South Korea. These cover a huge array of products — toys, automotives, electronics, medical devices — and many many more. A crucial part of any such agreement is the ability for both sides to trust each other’s regulations and the institutions that enforce them. With a robust and independent arbitration mechanism. Such mutual recognition will naturally require close, even-handed cooperation between these authorities and a common set of principles to guide them.

He appears unaware of the EU’s overall longstanding approach for the said huge array of products and didn’t quote any examples of regulations, institutions and authorities where his ideas are actually working.  So there is a bit of guesswork here as to what he intended and how well this fits in with the EU’s position, what is enshrined in EU law, and consequently how likely his (and Mrs May’s) new panacea for ‘frictionless’ trade (mutual recognition of standards) is to be realised.

The EU’s direction of travel (for the Single Market), by contrast with Mrs May’s and Mr Davis’s speeches, is towards harmonised standards, regulations, and enforcement or surveillance through a top-down centralised legalistic and bureaucratic framework. It is also a long established, publicly stated ambition that ‘third’ countries (outside the EU, or wider European Economic Area, EEA) should adopt or follow at least some EU-style measures.  The EU’s approach (to products) is outlined in principle in COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Enhancing the Implementation of the New Approach Directives, in more detail in the EU’s Guide to the implementation of directives based on the New Approach and the Global Approach and encapsulated in EU law in REGULATION (EC) No 765/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93. The EU has also recently spelt out its position, which is consistent with its New Approach Directives, in Notice to stakeholders withdrawal of the United Kingdom and EU rules in the field of industrial products.  The adverse effect of Mrs May’s Brexit on a frequently essential part of this product jigsaw (the work of Notified Bodies for conformity assessment of products) is explained here.

The EU would seem to prefer an orderly Brexit, judging by its website, although it appears to have realised that even a smooth Brexit will be highly disorderly for many organisations with the UK reverting to “third country” status. A seamless Brexit is looking increasingly unlikely as our government’s failure to grasp the rigidity of the EU’s position has left it  in denial of the consequences for trade.  After many years of ceding powers to Brussels, we have ended up with a Prime Minister and chief negotiator who are completely out of their depth, while the Department for (not) Exiting the European Union lacks essential competence.  It is instructive to look at what serious items are missing from Mrs May and Mr Davis’s speeches rather than what is said which is often largely a collection of wishful thinking, anecdotes, regurgitated vacuous clichés and irrelevant boiler-plating.

The serious items that should feature include: an outline of how the EU is understood to manage trade (useful background); full specifics on what exactly ‘frictionless’ trade means quoting specific examples – named products, commercial activities and enterprises; the barriers that will exist (taking cognisance of EU requirements, such as here); how in practice these will addressed in ways acceptable to existing EU ways of working (in other words, how, when necessary, will we still be compliant with EU laws, regulatory practices and organisational frameworks); cost breakdowns; how payment for extra costs incurred will be addressed; a planned timetable; risk analyses and management arrangements; outlines of work to date including feasibility studies and assumptions; measures for functional integration across interfaces; signposts to further work and information.  Interfaces tend to cause problems and successful integration between, for example, different countries, standards, organisations, market surveillance practices, etc. would need particular practical attention.

If we are to see a seamless departure from the EU – and indeed, until we have the necessary expertise, it is logical to seek a stopgap, time-limited arrangement which will retain near ‘frictionless’ access for trade whilst ensuring that we truly exit the political structures of the EU on 29th March 2019 and largely cease to contribute to its politically motivated budget.  Remaining within the EEA via re-joining EFTA is the only viable option. To date we have not received an explanation from Mrs May why she rejected this route nor why she has shown no interest in using the flexibility in the EEA agreement to get a bespoke deal.  Her incorrect statement in her speech (quoted above) is nowhere near an explanation.

In contrast to a practical and relatively straightforward temporary solution to buy time, we hear instead a great deal of waffle about a long-term Free Trade Agreement (FTA) like no other.  Mrs May, Mr Davis et al are set on maintaining ‘frictionless’ trade by pressurising the EU to bend its existing rules (primarily incorporated into EU Laws and European Court of Justice, ECJ judgments), alter its longstanding direction of travel and at the same time pay all the extra costs (to the EU) of such a deal.  This arrangement is one which the EU can, and most likely will, refuse.

Photo by aronbaker2

Customs Union confusion – yet again

Jeremy Corbyn gave a speech about Brexit in Coventry today. He was 100% correct in his observations about the Government’s progress (or lack of it) :- “They can’t agree amongst themselves about what their priorities are or what future they want for Britain after Brexit….. The truth is we really don’t know much more about where they’re actually heading in these talks.

On the other hand, he has fallen into the trap into which a number of other politicians have fallen – he fails to understand what a customs union actually is.  He said, “During the transition period, Labour would seek to remain in a customs union with the EU and within the single market. That means we would abide by the existing rules of both.”

Why? if he wants us to stay within the single market, remaining in the customs union is superfluous. His reasoning is that “when 44 per cent of our exports are to EU countries and 50 per cent of our imports come from the EU, then it is in both our interests for that trade to remain tariff-free.”  That is fair enough, but Norway, which is not in the Customs union, manages virtual tariff-free trade with the EU. EFTA and EEA membership is sufficient.

Corbyn’s confusion is laid bare when he says that “Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland. ” How can the EU be part of a customs union with the UK while being a customs union in and of itself?

He then went on to say “But we are also clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals. A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest.” If the UK was able to make its own trading arrangements, then it could not be in a customs union with the EU. The whole point of a customs union is that it includes a common external tariff. If we negotiated a trade deal with, for example, Australia while the EU did not have one, what would be the point if we were forced to charge the same tariff as the EU on Australian goods?

Perhaps Mr Corbyn and other advocates of either remaining in the EU’s Customs Union or somehow creating a new one with the EU should see what goes on at Kapikule on the border between EU Bulgaria and non-EU Turkey. Turkey is linked to the EU’s customs union, so you would expect reasonably seamless movement across the border. According  to this report, however, this is far from being the case, with delays for lorries sometimes lasting for several days.  A customs union may be a good idea for micro-states like Monaco or San Marino, but not for a country like the UK, where each year, over 2 million lorries pass through the port of Dover alone.

What we desperately need is a customs clearance agreement with the EU, or else we could face “Operation stack on steroids” on the M20 after Brexit Day.  Unfortunately, if so many of our senior politicians cannot distinguish between customs clearance and a customs union, there are good reasons to fear that Kent may become gridlocked with lorries in a mere 396 days’ time.  Yes, it really is getting that close and on the basis of today’s speech, it seems that the leader of Her Majesty’s Opposition has no more idea of how to save us from such a disaster by delivering a sensible, workable Brexit than our Government.

Photo by Peanut99

The EU’s potential lifeline for Mrs May’s Brexit

The European Union (EU’s) Brexit negotiators from Mr Barnier (chief negotiator) downwards must have long since realised that Mrs May, Mr Davis and the Department for (not) Exiting the European Union are incapable of serious negotiations. Meaningful progress towards leaving the EU in an orderly way including suitable agreements, arrangements and infrastructure is practically non-existent; there is a mountain of detail yet to climb. What, then, can the EU do to rescue the process and Mrs May, since Mr Barnier has previously stated on more than one occasion that he can’t negotiate with himself?

The view from Brussels must be of a weak prime minister leading a fractious, divided party and government, who has a poor grasp of detail and instead relies on spin, wishful thinking and dithering.  Even the output from the Department for (not) Exiting the European Union is poor and vague to the extent of being practically useless. Their website, where comprehensive information and practical guidance on Brexit, and hyperlinks to further sources of information should be available, is more of a case study in superficiality, grandstanding and self-aggrandisement.  There is not even a link to the European Commission’s website on Brexit preparedness.  So whose job is it to help prepare the UK for Mrs May’s decision to leave the Single Market and – by extension – the European Economic Area, EEA?

By contrast, the output from the European Commission, setting out its increasingly uncompromising position, is clear, focused and comprehensive.  Right from the beginning, the EU has been making the running.  Its dedicated website illustrates the impressive (or terrifying) detail of their ‘public’ vision of where Mrs May and Mr Davis’s Brexit is heading and the implications, which appear to look like ‘falling off a cliff edge’ to many UK businesses.  Its advice to stakeholders (available here) repeatedly spell out, in as much detail as possible, what will undoubtedly happen across a wide range of activities and policy areas when the UK becomes a ‘third’ country after leaving the EU (on 29th March 2019) and the EEA.  It is quite likely EU officials often frustratingly ponder the question, “Do our British counterparts and their political leaders understand any of this, and do they actually care what it all means?”  The problem for our team of negotiators is that they do not seem to know and understand EU laws and regulations, their rationale and implementation. This is essential if they are to develop appropriate strategies, negotiating positions and challenges to the EU’s tough, logical and systematic stance.

From the EU’s perspective they have helpfully agreed to a transition period limited to 21 months which is necessary to give Mrs May time to negotiate a free trade agreement. In reality, much longer is probably needed. However, the EU’s terms for this transition period  – which have still not been agreed – would be very unpopular in the UK and thus may never be accepted given Mrs May’s weak position in Parliament.  The EU’s terms would make the UK into a temporary or maybe even permanent EU Vassal State where Brexit means Brexit in name only.  Crashing out of the EU without transition arrangements and not having any form of mitigation of the consequences of ‘third’ country status (the “cliff edge”, in other words) is becoming increasingly likely.

The European Commission is well aware of political developments in the UK and of the consequences of no deal scenarios (given the detail on their website). Its negotiators also have to confront the contradictions in Mrs May’s position.  Frictionless trade (as required by Mrs May and Mr Davis) is not possible as a ‘third’ country outside the Single Market (and the EEA).  Time is running out for businesses both here and in the remaining 27 Member States of the EU to adjust.  Time is also impractically short to put in place new facilities and legislative frameworks needed by a ‘third’ country such as border inspection points, designated entry points and the recruitment and training of staff.  What can the EU do, if it is so disposed or there is some behind-the-scenes collusion going on, to extend Mrs May a lifeline and avoid the ‘cliff edge’?

Any EU-sponsored lifeline needs to protect their interests. It has to operate within the EU’s objectives, legal framework, and established practices. It mustn’t ‘rock their boat’ or set any potentially disadvantageous precedent. It also needs to be sellable across a wide range of opinion in the UK, addressing as far as possible rational fears and aspirations.

The only viable option for an EU-sponsored lifeline is to facilitate the UK re-joining the European Free Trade Association (EFTA) and use this as a basis for retaining membership of the EEA for at least the transition period. It appears that the European Commission may be seriously evaluating the EFTA/EEA route for transitional arrangements for the UK,  as noted by an EFTA Court judge (Mr Carl Baudenbacher) giving evidence to the Commons Committee for Exiting the EU on 7th February 2018 and reported in the Telegraph on-line.

The EFTA/EEA option is not perfect, but as a holding position while something better is negotiated, it is much better than the transitional deal currently on offer. Hard Brexiteers could be won over by the facility to control immigration through unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  Further, the EFTA route to EEA membership gives members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). The EEA Acquis or body of law is about a quarter of the total EU Acquis since it only relates to successful functioning of the EEA  in other words, issues relating to trade. And EFTA members can make their own trade agreements with other countries.  Membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland.  It also gives us full control of fishing in our Exclusive Economic Zone.  Those worried about the economic effects of the ‘cliff edge’ could be won over because the EFTA/EEA option prevents this allowing practically frictionless trade to continue. The EEA agreement (for EFTA members) can be adapted to suit their interests.  Thus the UK (within EFTA) could get a customised version.

We cannot know what the European Commission is covertly doing and how far its efforts, if any, have progressed to save Mrs May, the UK and the EU from her folly.  However, given the efforts it has visibly extended to help enterprises both here and in the 27 remaining Member States to understand and adapt to the implications if Mrs May does not change her decision to leave the Single Market, nobody knows better the potential disaster she is determined to inflict and how it can be avoided.

Photo by thaddselden

Brexit means Brexit (in name only)

Politicians, civil servants and Eurocrats, economical with the truth as ever, if not actually disingenuous, are doing their best to create a Brexit in name only.  Mrs May, Mr Davis and the Department for (not) Exiting the European Union (EU) are carrying on regardless. They appear oblivious to the contradictions in what they are saying and doing, and the obvious warning signs from Brussels.  The following merely illustrates the tip of a delusional, ill-informed myopia.

Mrs May in an interview broadcast on 2nd February 2018 on Channel Four said:

“ …..we have until March 2019, that is when we are leaving the European Union. 

… What we are going to be negotiating with the European Union is a free trade agreement with them that will be about a tariff free, a frictionless trading as possible. …..That’s the sort of deal I’m going to be negotiating……What we will have in future and that is what the next few months negotiating is about is a bespoke free trade agreement.”

The EU sees things somewhat differently and has remained consistent in its approach, although as time passes it appears to be getting increasingly uncompromising and demanding.  Its top priorities are the preservation of its own interests and obedience to its rules rather than accommodating the wayward United Kingdom. This is very apparent in recent report and their published text and slides on the EU’s view of the transitional period.

Mr Barnier (the EU’s chief negotiator) on his recent trip to London, repeating previous comments (for example), said:

“The only thing I can say – without the customs union, outside the single market – barriers to trade and goods and services are unavoidable.”

An all-singing, all-dancing free trade agreement is not likely to be the long term solution even if it can be negotiated. Furthermore, negotiations on such a deal can only start after the UK has formally left the EU, that is, after 29th March 2019 or later, as confirmed the EU’s Trade Commissioner back in 2016. The EU’s perspective on a free trade agreement with the UK is roughly on the lines of  ‘OK if it is a win for us and a lose for you’.  The Irish Times has recently been reporting on what the EU is up to, such as hamstringing our businesses and government, and retaining the right through the Common Fisheries Policy to plunder our Exclusive Economic Zone (i.e., the waters up to 200 nautical miles from the shoreline. or the median point where the sea is less than 400 nautical miles wide).  The EU’s demands go far beyond what is strictly necessary for trade.

Unbelievably Mrs May is likely to agree to this and much more. Time is not on her side. Also the unbreakable law of negotiations is against her as well – in other words, ‘money and concessions flow from the weakest (or more desperate) to the strongest party’.  The transition cave-in (aka agreement to avoid a ‘cliff-edge’ of barriers to trade) effectively turns the UK into a powerless EU vassal state as explained here and here (where vassal status becomes permanent without a free trade agreement).  It looks like this could actually be less awful than the terms eventually on offer for an unfree trade agreement from an omnipotent EU to a subservient Mrs May-led UK.  Germany, in the form of Mrs Merkel, is already making disparaging jokes in semi-private about Mrs May.

That a domestically weak Mrs Merkel can lampoon our supposed ‘negotiating dreadnought’ points to an uncompromising EU/German-centric position.  And what Germany wants from the EU, Germany gets.  After all, the EU is a political construct which was designed to tame German nationalism, whilst facilitating its industrial, commercial and demographic clout, and at the same time giving France delusions of grandeur. Economic objectives are subordinate, not dominant to political objectives.  In considering a free trade agreement there should be no underestimating the EU’s continuing priorities of control-freak centralisation (under German hegemony), homogeneity and undermining national identities.  It is unlikely Mrs Merkel (or her eventual successors) will treat the UK kindly as this could encourage other Member States to rebel.

Yet the prospect of the UK becoming a permanent, powerless EU vassal state by indefinitely extending the transitional arrangement or by signing a one-sided free trade agreement is basically thanks to Mrs May’s dithering.  Although presumably Mr Davis and the Department for (not) Exiting the European Union had some input. Mrs May, for reasons never explained, decided that we must leave the Single Market (and by extension the European Economic Area, EEA). Remaining in the EEA by rejoining EFTA, the European Free Trade Association, is a much better proposition as a temporary or transitional measure. It would allow fairly frictionless trade and a breathing space in which to negotiate a suitable long-term trading relationship without being under duress.

The EFTA/EEA option allows for control of immigration through unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  The EFTA route to EEA membership gives members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). The EEA Acquis or body of law is about a quarter of the total EU Acquis since it only relates to successful functioning of the EEA. And EFTA members make their own trade agreements with other countries.  Membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland. It also gives us full control of fishing.

When Mrs May first rejected remaining in the Single Market, in her Lancaster House speech in January 2017 she appears to have been unaware of the EFTA/EEA route and its possibilities. Unfortunately, she does appear both then and in her later Florence speech of 22nd September 2017, to have swallowed ‘hook, line and sinker’ the disingenuous line repeatedly peddled by the EU leaders about the four freedoms (of movement of goods, capital, services and people) being inviolable – they certainly are if you are a Member State of the EU but not for EFTA countries who can unilaterally invoke Article 112 of the EEA Agreement.

EU leaders and Mr Barnier in particular appear to have been both unhelpful and economical with the truth about the EFTA/EEA route. However, recently it appears the European Commission may be seriously evaluating the EFTA/EEA route for transitional arrangements for the UK as noted by an EFTA Court judge (Mr Carl Baudenbacher) giving evidence to the Commons Committee for Exiting the EU on 7th February 2018 and reported in the Telegraph on-line. It would be very ironic if it was the EU which finally pushed Mrs May into signing up even temporarily to a better proposition – i.e., EFTA/EEA membership –  than the one she is currently minded to pursue.

We can but hope that common sense will prevail for if not, no amount of spin will be able to conceal the truth about Mrs May’s submissive transition to an unfree trade agreement. There will obviously be a heavy political price to be paid in the next General Election in 2022 for short- changing the British people over Brexit through turning this country into a permanent EU Vassal State.

Transition to a permanent EU vassal state?

Unless the proposed transitional deal is blown out of the water, the United Kingdom appears to be moving inexorably towards being a permanent European Union  Vassal State. Recent speeches and other statements by Mrs May and Mr Davis point strongly to this being the most likely outcome from their handling of the Brexit (or Article 50) negotiations.  All looks good on the surface, but they do not understand how the EU works and some worrying facts emerge when you analyse what they did and did not say. .

Mr Davis, reiterating Mrs May’s decision to leave the Single Market, in his Teesport Speech of the 26th January 2018  said:

“While the aim of the implementation period is to provide certainty and continuity, we must keep sight of the fact that this is a bridge to a new future partnership.

Where, crucially, the United Kingdom is outside of the single market, and outside of the customs union.”

He then went on to say:

“We want a good Brexit for business and a good Brexit for the British people and we will deliver that on a frictionless access to the Single Market and a freedom political and an economic freedom for the future.”

Clearly there is a contradiction here – it is not possible to have frictionless access whilst being outside the Single Market (or the European Economic Area, EEA) and being a ‘third country’. Michel Barnier, the EU’s chief negotiator, has pointed this out on several occasions. For example, he said:

“A trade relationship with a country that does not belong to the European Union obviously involves frictions.”

Frictionless trade between members of the Single Market (and European Economic Area, EEA) occurs because of a common set of rules, regulations, processes or procedures, enforcement and overall EU surveillance. 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 measures manage risks involved with ‘imports’ and sometimes are protectionist in nature.

The transition period (aka implementation period) clearly places this country into the status of a powerless EU Vassal State for 21 months after 29th March 2019 as explained here. However, if agreement on frictionless trade cannot be agreed during this period – which seems a certainty given Mr Barnier’s often repeated comments and how the EU normally treats ‘third countries’ – it will need to be extended potentially indefinitely.

Mrs May’s Davos speech on 25th January 2018 to the World Economic Forum provided the perfect audience to sell the opportunities presented by Brexit.  She could have outlined her vision, complete with objectives, timetable, planning and progress, in order to encourage her audience to invest here.  She could have addressed the principal concerns of business, for example, about market size and frictionless access to the EEA. She could have described (with specific detail) her vision for a ‘new, deep and special partnership’ with the EU which would have clarified and developed her Florence speech of 22nd September 2017.  Instead of which she focussed on artificial intelligence and making the Internet safer –  presumably her highest priorities.  Any business or political leader present, listening to and reflecting on the content could be forgiven for concluding that the UK government has nothing to offer, having already ceded control of Brexit negotiations to the EU and thus, any meaningful Brexit is not going to occur.

Artificial intelligence then is a very poor substitute for Brexit failure and even here Mrs May cannot easily offer unique government-supported opportunities for funding research and development nor can she use public sector procurement to facilitate innovation.  She can’t even protect the public sector from future Carillion fiascos. EU directives (laws) and gold-plating by her civil servants will interfere.

The transition proposals so far on offer from the EU (as explained here) are far worse than the alternative of remaining within the EEA through re-joining The European Free Trade Association (EFTA).   It is likely that the eventual transition deal (if it actually happens given  it is dependent upon Mrs May s accepting the EU’s outstanding Phase 1 conditions), will be even more onerous upon this country than already proposed.  The EU’s stance on transitional arrangements, manifested recently by the Annex to the Council Decision of 22nd May 2017 and published 29th January 2018, appears to be getting more uncompromising.  If accepted, Mrs May is likely to be forced into making further large payments into the EU’s budget, accepting continued freedom of movement of persons, taking on additional financial liabilities, remaining subject to the EU’s European Court of Justice (ECJ) and to the Common Fisheries Policy, transferring further responsibilities to the European Commission (typically defence and defence procurement, along with regulation of financial services), following the complete EU Acquis or body of existing and future law, and giving extra rights to EU citizens living here, etc..  Meanwhile, the UK will be prevented from negotiating free trade agreements around the world whilst being excluded from existing ones negotiated by the EU.

It was Mrs May’s decision to reject the EFTA/EEA option, even as a temporary measure. She first made this clear in her Lancaster House speech in January 2017.  The EFTA/EEA option allows for control of immigration through unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  The EFTA route to EEA membership gives members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). The EEA Acquis or body of law is about a quarter of the total EU Acquis since it only relates to successful functioning of the EEA. In other words, the EEA component of the Acquis is only about trade and not political integration. Furthermore, EFTA members make their own trade agreements with other countries.  Membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland.  The EFTA/EEA option was claimed to be the best choice for a Brexit economy in a recently leaked overly pessimistic draft government report EU Exit Analysis – Cross Whitehall Briefing.

Unfortunately it appears that both Mrs May and Mr Davis are well and truly out of their depth.  The Department for (not) Exiting the European Union also seem to be lacking in essential competence, and is in line to face the blame for failings in getting a successful Brexit. At best, everyone is following a political Brexit whilst ignoring practicalities.  At some stage the number of Conservative MPs who will realise that the dire situation this country is facing is of their own government’s making will reach a critical mass.  At this point, there will either be an almighty rumpus following which some quite senior heads are likely to roll or else if the government persists on its stubborn course, the electorate will punish the Conservative Party severely in the next General Election in 2022 for short-changing the British people over Brexit through their acquiescence in turning this country into a permanent EU Vassal State.