A quick look at the Brexit White Paper

The government White Paper this week charts the course the government intends to take to achieve the second leg of Brexit following the referendum result.  This should be to provide a ‘safe and beneficial exit’.

In effect, the government is not attempting to reach a withdrawal and settlement of the new relationship with the EU within two years after triggering Article 50, but is aiming to reach a settlement of the ‘framework’ within two years and thus leaving all the details for many years in the future.

It seems the government is splitting the Brexit job into two parts.

Job One:   Leaving the EU is being interpreted as negotiating a ‘framework’ within which the detailed negotiations will sit.

Job Two:   Detailed negotiations after the UK formally leaves the EU with a ‘framework’ settled.

So the question is this – can the government negotiate the details after formally leaving the EU with a framework agreement but in which framework the details are that each ‘chapter’ of the interface comes up for negotiation maybe years later?

In a way, the government is agreeing with the basic plan offered by the Leave Alliance during the referendum campaign – that the job is too big and complicated to do in two years.  The Leave Alliance solution was to remain in the EEA for some years, thus parking trade and other issues.  The government’s solution is to agree a ‘framework’ within two years and carry out the detailed negotiations later.  In this way it can argue that the UK has left the EU within two years.

Of course the first problem is then that the EU may well reject the splitting of the negotiations into ‘framework’ and ‘details’ because this is a new concept and because the ‘details’ are to some extent the ‘framework’.

Will the electorate and the Conservative Party accept that the UK will for most purposes still be in the EU after two years and the full withdrawal will take many years?

Also, by proposing to leave the EEA single market the government has added to its negotiating burden as it will have to secure trade agreements with the EFTA countries.

What happens if this course is pursued?  It depends on how the EU reacts.  It may go along with this in order to get the UK out of the formal political structure.  It might also say that the idea of separating the ‘framework’ and the ‘details’ is not realistic and put forward a more radical programme of detachment.

The Leave Alliance proposal would have been more certain, quicker, more attractive to the EU and would have more electoral support in the UK.  It would rest on off-the-shelf proven solutions.  The government’s proposals are the opposite of all these sensible proposals, are far more risky and uncertain and will involve the UK in many EU activities for years to come.

Keep outside the EEA: debunking the mythology about the ‘Norway option’

Mentioning the European Economic Area (EEA) to Eurosceptics as an alternative to the EU can generate the sort of fisticuffs that you might have expected in fourth century Alexandria on questioning the formal nature of the Holy Spirit. The subject has not been helped by having long been masked by smoke laid from the funnels of Downing Street, seeking to discredit the ‘Norway Option’ as an alternative that might offer a better arrangement than our current EU terms.

So what is the reality? Who better to ask than the residents themselves?

A new paper published by The Red Cell explores its workings from a Eurosceptic Scandinavian standpoint. The EEA: A Warning from Norway seeks to strip away some of the mythology that still lingers, despite several prudent and well-reasoned research papers in recent years from UK campaigners.

It shows that the denigrations laid against the system by Cameron’s Downing Street betray a complete absence of understanding of how international trade mechanisms function (a reality which will be familiar to many BrexitCentral readers); but it also explores a number of less well-known but fundamental problems that are associated with the deal as they have emerged through case law.

It might be summarised as follows: the EEA is better than the EU, but being out of the EEA in a free trade deal is better than being in.

Friday’s decision in the High Court appears to shut down some last ditch rear-guard activity by Banzai Remainers. The court was invited to consider whether the withdrawal clause included in the EEA deal was another item that Parliament had to vote on. It was clear that the mechanism was included for the benefit of existing non-EU members, who otherwise would have to turn to the Vienna Convention default (which kicks in if a denunciation clause is not included in a treaty text).

A moment’s consideration would also have revealed that any lost court case made it far less likely that an EEA deal might become a smudged default (a jurisprudence equivalent of ‘don’t ask, don’t tell’ on whether it could happen or not). So the petitioners have lined up a massive own goal and made their objective, transitioning to final EEA membership terms, less likely.

Might the EEA still be considered a transitional option? It is plausible. It is possible that negotiations stall in a midst of fury and frustration. It is not beyond the realms of conceptualisation that a number of technical areas are tied together by capitals, untangling them takes time, but the goodwill exists to ensure that IT networks and paper trail systems under any new model are carried across. It might be tempting in such conditions to view the EEA as a practical temporary halt. Such circumstances are not optimal, nor are they guaranteed, but they are possible.

Some Eurosceptics might go beyond this, and argue that joining the EEA allows it in time to evolve and merge with separate international institutions, generating a true free trade mechanism for our continent. I rather fear this is as fanciful and shuffling as aspiring to reform the EU from within.

Hence the need for such a paper. It explores a number of the problems faced by those seeking to maintain sovereignty within the EEA system, and where the mechanics have demonstrably been unhelpful. The paper lists a range of examples that collectively prove the location is not a good long-term resting place. It may be a tolerable place to park overnight, but given the risk of being mired it shouldn’t be top of anyone’s agenda.

I am minded of the story of Alcibiades, the great classical statesman. As Plutarch tells it, he encouraged the citizens of Patrae to mimic Athens and build walls to its port.

Thereupon some one said to the Patrensians: “Athens will swallow you up!” “Perhaps so,” said Alcibiades, “but you will go slowly, and feet first; whereas Sparta will swallow you head first, and at one gulp.”

The risk arising from the EEA may similarly be less acute than the assault on sovereignty inherent in EU membership, but still exists even if operating in much slower motion. If it did come to membership, then there is a clear lesson for us: the corollary involves proactive vigilance and setting a second, fixed, deadline for moving on.

How swiftly it will take us to transition to a free trade agreement remains, for now, a matter of conjecture since the nature and mood of the negotiations remain hidden. Perhaps technical deals will be achievable within the necessary timeframe; I suspect that they are in a strong majority of the 35 ‘de-accession Chapters’ that will be under discussion.

With the remainder, depending on their number, the question may yet in turn arise whether the EEA is a suitable halting point. We should have a care to take it as meaning that it is without long-term risk or cost. Which, one might reasonably assume, also happens to be a key motive behind bringing the case to court in the first place.

(This article first appeared on the Brexit Central Website and is used by permission. See also this piece by Helle Hagenau n the same subject)

New paper: could we stay in the single market without re-joining EFTA?

LAst July, Professor George Yarrow of Oxford has added to the debate about future UK access to the single market with this paper, which claims that withdrawal from the EU does not automatically imply withdrawal from the European Economic Area (EEA).

This goes very much against the widely-held assumption that the EEA (or single market) is an agreement between the EU and the European Free Trade Area (EFTA) and every participant must bne a member of one or other. At the core of his argument is his assertion that the default position for a newly-independent UK is that, having been part of the EEA agreement as an EU member state, it  will remain within the Single Market and thus, we would not need to rejoin EFTA to maintain access to it.

Not everyone is convinced by his arguments, but the paper is nonetheless an interesting addition to the debate about the single market. Last week, we announced the publication of a Leave Alliance monograph which explains in detail what the single market actually is. Almost five months after the Brexit vote, there is still much confusion.  Being in the single market is not the same as being a member of the EU nor is the single market the same as the EU’s Customs Union. Turkey is a member of the Customs Union but not of the EEA while Norway is a member of the EEA but not of the EU’s customs union. This diagram is particularly helpful in explaining the complex relationships of the European nations. Quite which of these various overlapping circles an independent UK will find itself in.

It is very clear that in the medium-to-long term, the desire of virtually all leave campaigners is to be outside as many as possible. There are no disagreements here. The big issue – and one which is ultimately up to Mrs May’s government to decvide – is to come up with a seamless strategy which will see us through the EU’s exit door within the two-year timescale allowed by Article 50 while ensuring trade will continue to flow smoothly. In other words, it’s the more divisive issue of a short-term strategy which is the critical topic at the moment and Professor Yarrow’s paper is of particular relevance here.

Trading with Canada – the EFTA angle

Mrs May is keeping her cards close to her chest regarding the sort of post-Brexit relationship she is seeking with the EU. Of course, there has been much intense and often ill-informed speculation in the media, which (in our opinion) is better ignored.

Occasionally, however, she or one of her team lets slip the occasional clue. It looks highly likely that the “WTO option” alias “Hard Brexit” is a non-starter.  In an exchange between the Prime Minister and Jeremy Corbyn at Prime Minister’s Question Time last week, Mrs May said, “We’re going to deliver the best possible deal for trade in goods and services with and operation within the European Union, and we’re going to deliver an end to free movement.” A couple of days later, Greg Clark, the Business Secertary, told Andrew Marr that “our objective would be to ensure continued access to the markets in Europe and vice versa, without tariffs and without bureaucratic impediments.”

The obvious assumption is that some form of continuing membership of the European Economic Area is envisaged, either by re-joining EFTA, the European Free Trade Association, or by a one-off arrangment whereby the UK, as a current participant in the Single Market, will be allowed to continue to be a member of it after we leave the EU. Either way, once outside the EU, like Liechtenstein, we can avail ourselves of Article 112 of the EEA agreement and restrict freedom of movement by EU nationals into the UK.

This seems to be the direction in which Mrs May intends to take us. The decision of Nissan to produce two new models at its Sunderland plant points strongly towards some form of continued membersip of the EEA. The complexities of the supply chain, to which Greg Clark referred during his interview with Andrew Marr, are such that, without a guarantee that there would be no disruption, Toyota would have not made this commitment. As state aid – in the shape of compensation for loss of single market access – is ruled out by WTO  rules,  this once again points to some sort of continued access to the single market being Mrs May’s objective.

This, of course, has been a divisive issue among Brexit supporters. Ironically, if the government formally announces that this is the plan, it will bring our side closer together for no leave supporter views access to the single market, whether or not via EFTA membership, as anything other than a short-term holding position – to get us through the Brexit door without  disruption to trade. We all want a looser arrangement in the longer term.

However, EFTA membership would raise a number of interesting points. Firstly, EFTA already has a trade deal with Canada,  It is a much less contentious arrangement that the CETA deal between Canada and the EU. While all relevant parties have now signed the CETA deal, it is not yet in force and by the time it is fully implemented, we may well be on the way out. Signficantly, there has been objections from a few EU leaders to the idea of the UK automatically being able to “piggyback” onto trade deals to which it signed up as an EU member state.

As far as CETA is concerned, re-joining EFTA would not only cirumvent this problem, but would be a much better outsome, as the EFTA-Canada deal has a much simpler disputes system. Each party will nominate one person who is impartial, then they agree on a third person who will be the President of the tribunal, and the case is then heard. If this doesn’t work, the WTO arbitration process kicks in. All in all, this deal is much less likely to see our elected government sued by predatory multinationals. Anti-CETA campaigners should read more about the EFTA-Canada deal. Unfortunately, those who have e-mailed me about the subject do not seem to have EFTA on their radars at all. 

Of course, EFTA has suffered from a low profile for many years. Apart from Liechtenstein, which joined in 1991, no other country has become an EFTA member since 1970. The organisation has lost member after member to the EU and has had to accept underdog status in its dealings with the EU. It now has only 4 members as opposed to the 28 member states of the EU. Iceland, which currently holds the EFTA presidency, has expressed its support for the UK rejoining. “The EFTA countries might make an agreement with the UK,” said Iceland’s Foreign Minister Lilja Alfredsdottir. “We are chairing the EFTA right now and I put it as a priority to analyse the possibilities that EFTA had on this front.

Of course, the UK’s re-accession to EFTA would tip the balance slightly. It would still be much smaller than the EU, but the additional presence of a heavyweight European nation would certainly give he organisation some extra clout. More importantly, it would put EFTA back in the spotlight, which could be something of a worry to the EU. Would applicant countries like Serbia, Montenegro or even Turkey start to weigh the two options of EFTA or EU membership and decide that, even if they would not be bribed with further EU funds,  preserving their political freedom by joining an organisation that is committed to trade and not political integration might be a better bet? What about Sweden and Denmark, who may be tempted to follow us out of the Brexit door?

Back in the 1980s, Jacques Delors envisioned the EU and EFTA states as working in cooperation as partners in a “European village”, which in due course became the European Economic Area (EEA) alis the Single Market. However, following the collapse of the Soviet Union, there were fears that if joint decision making between the EU and EFTA was to be implemented,  the newly-independent nations of Central and Eastern Europe may plump for EFTA rather than the EU, which the EU hierarchy was none too keen on. The EU therefore had to be the lead partner and EFTA subordinate in the EEA. With EFTA still draining members to the EU in the 1990s, it had little choice in the matter. 

Now, however, Brexit has dealt a hammer blow to the credibility of the entire EU project at what was already a difficult time.  It has also put the final nail in the coffin as far as any hopes that existing EFTA members might leave it and join the EU. Making the EU more attractive than EFTA may have been a simple job in the early 1990s; the UK rejoining EFTA after Brexit in a couple of years’ time would lead to a very different perception of the situation.

Of course, to repeat, the EEA or indeed EFTA is not a long-term arrangement for the UK. Ideally, what is needed is a continent-wide free trade agreement – one without the baggage of CETA or TTIP – which would replace the EEA, probably EFTA too and would only include free movement of capital, goods and services like any normal free trade agreement. This is a long-term goal around which all Brexit supporters could unite.  In the short term however, EFTA, while far from perfect, may prove a valuable tool for tipping the balance of influence in Europe away from Brussels, which would be no bad thing.

(with thanks to Hugo van Randwyck for details about the EFTA/Canada FTA)

Remainiacs have moved their goalposts!

While the official Leave campaign faced much flak – both during and after the campaign – for giving misleading information, the Remain campaign was no better.

This scathing article exposes their hypocrisy. The author compares current statements from hard-core remainers with the things they were saying during the campaign.  The cusp of the author’s argument is that  Open Britain, which is what the failed Britain Stronger in Europe has now become, is arguing that leaving the Single Market would be a disaster. A few months ago, on the other hand, they were saying that leaving the EU would be a disaster. In other words, adopting the exit strategy they are now throwing their weight behind, would mean there need not be any economic damage from withdrawal. This isn’t what they were saying in the run up to June 23rd.  To quote:-

For top Remainers the EU referendum was never about economics. It was about their craven desire to live in an amorphous internationalist blob where the nation state is fatally undermined and the strongest level of government and identity reforms at the European level. That’s what they wanted but couldn’t say in public. And so instead they falsely equated the EU with the single market in an attempt to scare low information voters and assorted unthinking lefties that voting for Brexit inherently meant economic doom.”

We must be thankful that most remainers, including Labour MPs, have accepted the result of June’s vote but it would be very good news if they were prepared to admit that they were at the time deliberately diverting attention away from the EEA/EFTA option which they are now ardently embracing. From David Cameron downwards, they all knew that this exit route would take us out of the political union, preserve our trade links and – most importantly – be a far more popular option than continued EU membership.

Furthermore, this implicit admission shoots dead any idea of a second referendum. If erstwhile hard-core remainers are admitting that the EEA/EFTA  exit route really isn’t too bad, they would be laughed out of town if they tried to crank up Project Fear again. Thankfully, the goalposts have moved; the debate is no longer about in or out, but rather about the best route out. For this, we must be thankful.

Photo by grassrootsgroundswell

Yet more media muddle

As we reported yesterday, Mrs May is not giving much of her Brexit strategy away at the moment. For anyone wishing to find out more, great care needs to be taken as some reports in the press are, shall we say, somewhat less than helpful.

Writing in the Independent, John Rentoul informs us that “Finally, we know what Brexit actually means – Theresa May intends ot take us out of the single market.” Has  Mr Rentoul spotted something that the rest of us have missed? He noticed that Mrs May made it clear that “‘we are not leaving only to return to the jurisdiction of the European Court of Justice.”  He therefore concludes that, “given that the ECJ is the court that enforces the rules of the EU single market, this was confirmation that she intends to take us out of it.”

QED – except that it isn’t true. Whatever the role of the ECJ in enforcing the single market regulations among EU member states, it has no power over Norway, Iceland and Liechtenstein, the non-EU countries who are part of EFTA and access the single market via the EEA Agreement.  Robert Oulds’ book Everything you wanted to know about the EU explains the difference clearly (p189) :-

Whereas the European Commission and the European Court of Justice regulate the EU’s compliance with the terms of the EEA agreement, EFTA’s side is managed by its own institutions.”

In other words, Mr Rentoul is jumping to conclusions. Mrs May has said that “it is not going to be a Norway model”, but she said nothing to preclude the Liechtenstein model – in other words,. re-joining EFTA and accessing the single market via the EEA agreement but invoking Article 112 of that agreement to reduce migration from the EU.

Another piece to take with a very hefty pinch of salt is this piece in the Irish Times by Professor Vernon Bogdanor, David Cameron’s former tutor.  Entitled Why Brexit will be Margaret Thatcher’s revenge, the piece claims that “those most likely to have voted for Brexit will suffer most after Article 50 is triggered.” It goes on to say that “Contrary to popular perceptions, article 50 inaugurates a withdrawal process, not a trade agreement.” I would like to know how many people Professor Bogdanor has met who really think that invoking Article 50 was anything to do with a trade agreement. I certainly haven’t met any!

Getting off on a bad note, he then parades even more ingorance than Mr Rentoul about the EEA. “Matters would be easier, of course, were Britain to emulate Norway and join the European Economic Area, ” he writes. Excuse me! As a mamber of the EU, the UK is ALREADY a member of the EEA. What I presume he means is that we should remain a participant in the EEA by re-joining EFTA, but it isn’t what he said. He then goes on to claim that “The EEA obliges member states to incorporate not only current EU laws, but also future legislation, into domestic law, and to accept the principle of free movement.” Wrong again. The EFTA countries who are part of the EEA are only required to transpose legislation specifically marked “EEA relevant” into domestic law.  Last October, Dr Richard North calculated that only 4,947 out of 23,076 pieces of legislation – in other words, about 21% of the total Acquis – had been incorporated onto Norway’s statute books, much of it technical in nature and much of it also originating with international bodies like the WTO, with the EU merely acting as a conduit.  As for free movement, there is some freedom to restrict it using Article 112 of the EEA, as we have aready noted.

Neither Messrs Rentoul nor Bogdanor seem aware of the Norwegian veto of the Third Postal Directive in 2012, which insisted on deregulating postal services across the EEA. This proves the point that non-EU countries cannot be touched by the ECJ and thus have far greater latitude in dealing with EU legislation, even when marked “EEA relevant.”

Next comes another myth:- “Per head, Norway currently pays around 83 per cent of the British contribution.” In 2015,  Norway paid £1.66 per head of population to access the EEA. We paid about £150. Either the great Professor inadvertantly included Norway’s voluntary contribution to various EU schemes or his calculator seems to be suffering from a chronic malfunction.

He then rounds up his dismissal of any EEA-type relationship by repeating the “regulation without representation” nonsense. Dear Professor Bogdanor, please get your facts right. Norway is represented on the Committess which create EEA-relevant law, even though the country does not have a vote. Read these words of Anne Tvinnereim, a Norwegian politician, who knows what she is talking about. “We do get to influence the position,” she said. “Most of the politics is done long before it {a new law} gets to the voting stage.”

Professor Bogdanor then rejects the Swiss option, which virtually everyone else has already done, but this leaves him with only the WTO option as a possible route, something which Mrs May, by proposing the nationalisation of EU law (in other words, giving laws passed by the EU their authority from our Parliament rather than the EU via the 1972 Accession Treaty) seems to have ruled out.

He is right to conclude that newly-independent UK will be more global. “The irony is that…..leaving the EU will expose Britain to more globalisation, not less.  Brexit, therefore, will be Margaret Thatcher’s revenge. It will suit the vision of the Tory right which hopes that, outside the EU, Britain could become like Hong Kong or Singapore, a global trading hub.” However, he then falls into the common trap of saying that this is exactly what Brexit voters don’t want. Vernon, old chap, I was accused by my opponent in one debate of selling a vision of an independent UK which was just that – “Singapore on steroids” to quote his words.

There are many of us who are excited by the global trading opportunities which Brexit will provide. A recent Fabian Society report linked the Brexit vote with economic deprivation and the lack of government spending on areas populated by the white working classes, but a look at the Brexit vote map shows that this is only part of the story. Many prosperous areas in the South East also voted for Brexit. In rural East Sussex where I live, plenty of large houses, presumably inhabited by people who are not at all economically deprived, displayed large “Vote Leave” boards in their gardens and outside their gates.

On one point I would agree with Professor Bogdanor:-  “Britain….has a deep-seated skills problem…. The priority, if May’s socially responsible capitalism is to be become a reality, must be a radical skills policy. That means more resources devoted to further education colleges, currently the Cinderellas of the education service, and to university technical colleges, for those whose skills are technical and vocational rather than academic.” Yes indeed, to make the most of Brexit, our education system needs to be signficantly re-vamped from top to bottom. Last year, we published Generations Betrayed, a booklet by Chris McGovern, which shows how much the history syllabus needs to be reformed. This, however, is only one of many features about the UK education system which is unsatisfactory.

In conclusion, however, after having ploughed through these confusing articles, the abiding thoughts they leave is a fervent hope that the people who are advising Mrs May about the best Brexit route are considerably more clued-up than Messrs Rentoul and Bogdanor and actually know what they are talking about.

Photo by NS Newsflash