The case for the interim solution

Whatever your thoughts on how best to exit the EU, this helpful paper is well worth reading. Although published by the Adam Smith Institute, it is a collaborative effort, also involving Dr Kristian Niemitz, poverty reserach fellow at the Institute for Economic Affairs, the country’s oldest free-market think tank, and Roland Smith, who is a widely-read blogger as well as a fellow at the ASI.

The principal argument of the paper can be summarised as follows:-

  • Re-joining EFTA to access the EEA is only a short-term compromise
  • It does, however, allow us to make a quicker departure from the EU than a bespoke arrangement
  • We would immediately be outside the political EU project, with a relationship based on trade only
  • We would not be required to join the Schengen area (a myth which I had to counter a couple of times in referendum debates)
  • It would keep business happy – some of whom voted to stay in the EU because they wanted access to the Single Market but who may not have supported the political aspects of the EU project
  • We would have power to reduce migration from the EU
  • Parliament would regain power over, among other things, agriculture, fisheries, foreign policy, law & order and VAT
  • We could conclude our own trade deals with non-EU countries
  • We would regain our seat on those global bodies which increasingly determine the rules for world trade
  • We could choose to participate in EU projects which may be of benefit, such as the Erasmus student exchange system, but not in those which were not in our interest
  • We could move on and leave the EEA at any future point of our own choosing

Above all, as the authors point out, it would help heal the wounds  caused by the Brexit vote. It won’t satisfy everyone but would help the country move forward together.

The slow road to Brexit

It will be several months before the UK government invokes Article 50. Open Europe‘s daily briefing stated today that Theresa May has confirmed to her Danish and Dutch counterparts that the UK will not invoke Article 50 until 2017 to allow all member states time to prepare for the negotiations.

The exit route remains equally unclear. An article in today’s Guardian features an interview with Elisabeth Vik Aspaker, Norway’s European Affairs Minister, who seemed to cast doubt on whether the UK would be welcome back into EFTA. Her concerns centre around the changes to the dynamics of EFTA that would inevitably take place if the UK re-joined, which would make it by far the largest of a group of five countries, overshadowing Norway.

However, the Guardian‘s piece, taken from the Norwegian newspaper Aftenposten, is not the whole story.  A group of senior Norwegian Ministers are due to meet with David Davis, the Brexit minister  in the next few weeks and it is inconceivable that the EEA/EFTA subject will not be mentioned. A perceptive piece by Dr Richard North says that so far, there have been no formal indications from the UK that it wishes to re-join EFTA. However, in spite of positive noises coming from Iceland, all four countries have a veto, so there is no guarantee that we wold be allowed to re-join.

A Norwegian veto may be pretty unlikely, however, as Dr North points out, because there are many politicians in that country, particularly on the political left, who want something better than the current EEA arrangement and would support the extra clout that a large country like the UK would provide for the non-EU countries of Western Europe in future negotiations with the EU.  The negative take by the Guardian is therefore far from the full story.

For those many activists who put so much effort into achieving the historic result on June 23rd, this lack of progress is frustrating, but behind the scenes, things are definitely happening.  Specialist staff are being recruited by the Civil Service to handle the Brexit negotiations; your scribe met one person only last Sunday who applied for one position.

We do at lest have the consolation of knowing that, in spite of the publicity given in the aftermath of the referendum to a handful of leave voters who regretted their choice, the electorate has accepted the result. Polling by You Gov gave 52% support for Brexit – the same percentage as voted to leave on 23rd June. A majority of voters still see leaving the EU as the right thing to do.

One interesting twist in the Brexit story emerged a couple of weeks ago. The former Italian Prime Minister  Giuliano Amati, claims that he wrote the wording of Article 50 in the Lisbon Treaty, but only intended it to be “a classic safety valve that was there, but never used.”

Signor Amati belongs to the “Make Britain suffer” school, who believe that we should be made an example to stop other countries following us out of the door. Thankfully, present political leaders, including Germany’s Angela Merkel, have so far sounded much more pragmatic, recognising that a smooth divorce is in the best interests of business on both sides of the Channel.

Furthermore, there is a flaw in the thinking of people like Amati. If the EU is such a good thing, should we not be pited rather than punished for voting to leave?  Why should the EU institutions be scared about other countries following us out of the exit door if this project is so wonderful? His statements underline the harsh reality that there are few successors to the EU visionaries of 40-60 years ago who truly enthused about the project.

Certainly, in the UK, there was no one of the stature of Heath or Jenkins  to swing the vote as they did in 1975. Remainers were more concerned about not rocking the boat rather than looking forward excitedly to yet more power being handed over to Brussels. It is not just over here that enthusiasm for creating an United States of Europe is waning. The harsh truth is that the EU project is becalmed. It is becoming, in the words of Andrew Duff, a former Lib Dem MEP a “Never-closer Union”. A Yugoslavia-style disintegration would be a most unpleasant affair, but Amati and other European politicians who called Brexit a “disaster” need to face up to the fact that a gradual piecemeal dismemberment may be the best future for this failing attempt to create an unnatural federal superstate.

The benefits of Brexit via the EFTA Route

A fast track two-step Brexit, starting with EFTA Single Market + Opt Outs and then negotiation a Free Trade Agreement could accelerate the UK economy and living standards within 12 months. The European Free Trade Association (www.efta.int) , including Norway, Switzerland, Iceland and Liechtenstein enjoy standards of living almost 40% higher than the UK, and also have an economic arrangement with the EU. The Single Market countries have an opportunity to use article 112 and 113 to control immigration, for example:

  • New Eastern European immigrants only get a 1 year working visa, no children, and a points skills system for staying longer ( so reducing downward pressure on wages)
  • Any other Single Market country, has free movement, unless their unemployment rate is 7% or more, in which case, new immigrants only get a 1 year working visa, no children, and a points skills system for staying longer ( so reducing downward pressure on wages)
  • Anyone with a non-UK passport wishing to buy a residential property needs to have lived in the UK for over 5 years ( so reducing rent and house price rises)

Increasing prosperity for the many by:

Ensuring wages rise faster than rents and house prices, so increasing disposable income and spending in the economy

This could be implemented now.

Q: What are other hidden benefits from upgrading to democracy, from our current EU membership?

A: The hidden costs of EU membership can be reduced and realized with self-government, including:

Business – better business cash-flow, since with economies controlled by large cartels, who can pay suppliers late and cash flow problems, then with easier entry into markets, smaller companies can also gain profits in the supply chain, enabling more investment and more even spread of pay, so reducing government benefit spending and so lower taxes

– The EU poor role model will be eliminated, of endless meetings, duplication (e.g. another Parliament in Strasbourg), poor communication, interfering without expertise (e.g. landlocked countries having influence in fishing industry countries), long decision making time, only top down ideas instead of listening to ideas at all levels, wasting public money on big projects that cost more than benefit, groupthink with censorship of other ideas and other problems

– decentralizing of power, could help to also have less large cartel companies – maybe demergers – and more smaller/medium size companies, so helping innovation and productivity increases, and so pay

– incomes rising faster than rents and house prices – so more disposable income, including lowest paid people, instead of current policy of rents and house prices rising faster than pay

Helping low income countries – low income countries could benefit as EU the is protectionist, for example only allowing raw coffee beans into the EU from Africa, to protect EU coffee roasters, so preventing African countries moving up the value chain by adding value and raising standards of living

– easier ability for Eastern European countries economies to grow as controlling new immigration will help keep skills in their countries, including management skills, engineering, legal, building, scientists, health, entrepreneurs, businesspeople

– shift world centre of gravity to democracy and people’s vote makes a difference, in making, amending and repealing any laws

– less interference and distortion in elections in countries, since with less aid money, those politicians in power can get credit at elections for money that came from outside, so deluding people into thinking policies are working, so less aid can help with better policies and less corruption

– better human rights, since respecting boundaries leads to better human rights, for example after the end of communism, people found that those countries that did not respect private property rights (Communism) had a loss of life in the 10 millions, while those that did respect private property rights (military dictatorships) had a loss of life in the 10,000s – all terrible losses – a significant difference

Better government – less corruption in government, with lack of accountability with some EU spending, thus being a poor role model in countries, where public prefer honest government, and no corruption

– better value for taxpayers money, with more competition, as the EU public procurement directive results in lots of new paperwork that small companies cannot afford, so don’t bid anymore

– better global regulations, as individual countries can lobby for regulations which make sense for the UK economic sectors

– higher morale in public sector organisations with regulations that suit the service being provided and less people are promoted with political connections –like the EU system – and more with merit

-less government debt and lower taxes, as less money is used for big projects that are wasteful experiments

– public can look up to their leaders, instead of now, where people look down on leaders – as the EU Parliament is more important than national Parliaments, so restoring self-government could alos help with better people going into politics

– simpler regulations, since the regulations made are only relevant to each country, and not a one-size-fits-all

– maybe help with children’s attention in schools, as countries have noticed a fall in education standards and respect for teachers and adults, since joining the EU. EFTA countries haven’t had many such problems

– less vote buying by politicians, since the EU has signs saying ‘funded by the EU’ when in fact, the money either comes from the country itself or from another country, who does not currently get recognition for aid

– new ideas looked at, since the ‘one party state’ thinking is gone and the ‘EU mind guards’ are gone, so simple questions like ‘what did we change?, what did we used to do?, what do other countries do?, what off-the-shelf alternatives are there? How are we evaluating the positives and negatives of any changes? Who benefits from the previous changes, who loses?’ can be asked.

– with the top-down thinking from the EU gone, people could feel free to suggest ideas again to managers and team members – instead of thinking it would be  a waste of time – so helping improve service, quality, productivity and morale

– better chance of politicians listening to people’s opinions including the majority opinion, since the EU role model is poor with, for example, the UK only having 10% of seats, so 90% have other interests – so with self-government, 100% of politicians make the laws, and avoid special interest groups/cartels overruling majority opinions

– ability to have direct democracy, petition/referendum, since the results cannot be overruled by the EU

– each country is a unique ecosystem, with unique history, culture written and unwritten rules, evolving in its own way

As we can see from government actions, that spending on ‘white elephants’ to give contracts to cartels is still happening even after

In short, liberty is something that cartels of power, economic size and wealth do not easily release, so taking the initiative with promoting an alternative, EFTA, and a step-by-step approach to local MPs and media, can help the Brexit process speed up and realise benefits soon for all income groups, and the people who voted Brexit.

Brexit: the good and the not-so-good

As Harold Wilson reputedly said, one week is a long time in politics. Certainly last week, during which your regular scribe has been on holiday, has been particularly eventful.

The country has a acquired new Prime Minister without the need for any vote by Conservative Party members. Andrea Leadsom’s decision to drop out of the race  to succeed David Cameron cleared the way for Theresa May to take over and to appoint a new government.

From the Brexit point of view, three leading Tories who campaigned on the leave side have been given prominent posts  – Boris Johnson is the Foreign Secretary,  David Davis heads up the new Brexit department and  Liam Fox is the new International Trade secretary.

What is perhaps more remarkable is the way in which tne new Prime Minister has managed to unite seemingly all but a few hard-liners in her party. “Brexit means Brexit” she insisted.  There will be no rush to invoke Article 50 and she has already visited Scotland to try to win Nicola Sturgeon over, but there will be no second referendum, she affirmed.

The petition for a second referendum easily hit the threshold for it to be “considered for a debate” by Parliament. In fact, over 4 million people signed it.  However, the official response from the Foreign & Commonwealth Office was quite unequivocal:- “This was a once in a generation vote and, as the Prime Minister has said, the decision must be respected.” Recently, a survey by ComRes for the Independent and Sunday Mirror showed clearly that the four million signatories to the petition were out of step with popular opinion – only 29% of those surveyed wanted a second referendum as opposed to 57% who did not.

Of course, there is still the proposed legal challenge by Mishcon de Reya, which claims that the Government must pass an Act of Parliament before triggering Article 50. There is good reason to believe this challege will fail and the Lawyers for Britain group has produced an analysis of the issues involved, concluding that “The legal power to invoke Article 50 of the Treaty on European Union is in law a prerogative power vested in the Crown, which may be exercised by government ministers without the need for authorisation or consent from Parliament. There is no credible legal argument supporting the legal challenge being advertised by law firm Mishcon de Reya.”

This piece also challenged the widely-held assertion that the referendum  was merely advisory, saying that “The referendum result not merely authorises but positively mandates the government to exercise its legal power to give notice under Article 50.”

This subject will be hammered out in the law courts in the coming months and the Government will need to ensure it engages some top-quality lawyers to defeat the challenge from Mishcon de Reya, but on balance, it seems that if it does so, there is no reason for the Brexit process to be derailed in a court of law.

What is a more serious concern is the possibility that if we do end up using Liechtenstein as our model – in other words, re-joining EFTA in order to access the Single Market via the EEA agreement, but availing ourselves of  the restrictions on free movement available under Articles 112 and 113 of the EEA agreement – we could find ourselves sucked back into the EU at a later date through the back door.

Dr Richard North has undertaken a considerable amount of analysis on exactly what freedom of movement restrictions are available to us under the EEA/EFTA scenario and his observations are well worth reading, as he concludes that “there is nothing absolute, in principle, about freedom of movement. Therefore, there is no legal bar to variations being negotiated, given the political will. Furthermore, it is the case that the Union has been prepared both to negotiate and compromise on this issue.”  In other words,  statements by both Donald Tusk and Angela Merkel that access to the single market would require us to accept free movement of people are mere posturing and nothing more.

So the EEA/EFTA option might seem to have a lot more going for it than some people realised and it is the route which the EU itself would be happiest to see us take, but its advocates, including Dr North, have always stated that it must only be an interim solution. The big danger is the plan for a two-tier EU, the so-called “Five Presidents’ Report” which, if adopted, could find us in the EU’s “outer layer” – part of the EU political project but nowhere near the core decision-making body. This would possibly be triggered by the abolition of the EEA,  which is permissble under Article 127of the EEA agreement.

Of course, Iceland, Liechtenstein and Norway will not want to have the rug pulled from under their feet and would be very reluctant to find themselves drawn against their will into a project they have chosen not to join.

It therefore behoves those of us who campaigned for leave in the referendum to remain vigilant and to maintain our links with the “stay out” campaigns in these countries. Theresa May seems to have got off to a better start than some were anticipating, but there is a long way to go before we are finally and securely out of the EU. Groups like CIB are still very much needed to ensure that she and her ministers are held to account and Brexit will indeed mean Brexit.

A suggested framework for the exit negotiations

Some thoughts on how to upgrade from current EU membership to a Self-Governing Democracy with option of EFTA/Single Market + Opt Outs

There could be an easy and fast track way of switching from EU membership to a win-win agreement with EU countries, perhaps using the EFTA + Opt Outs approach? This would keep our access ot the single market and could help business confidence and also ease the strain on public services.

There could be 3 tracks for the negotiations:

  • Carrying out the negotiations
  • Using article 112 and 113 of the Single Market (EEA + European Economic Area) agreement to take ‘unilateral measures’ while negotiations are ongoing.
  • And simplifying the regulations in the UK

Firstly, having an idea of what the win-win agreement looks like is essential.  This could include membership of EFTA (European Free Trade Association www.efta.int) and keeping free access to the Single Market with goods, services and capital – with all the rest with UK control, including movement of people.

– EFTA already exists, and EFTA member Liechtenstein has ‘special provisions’ for controlling immigration

– So, arranging a meeting with EU countries and say that the is UK looking for a win-win economic agreement, not a lose-win political/economic agreement, in order of preference EFTA/Single Market + Opt Outs (Norway, Liechtenstein), or EFTA/Bi-lateral (Switzerland), then FTA (South Korea), then WTO (China). Indeed, the former is the only seamless route through the Brexit door

– Apply to EFTA countries for membership, using article 56, of EFTA Convention

– UK apply for membership of world organisations for speaking and voting, e.g. WTO

– Approach existing countries with Free Trade Agreements with EFTA-e.g. Canada – for implementing Free Trade Agreements

Secondly, using article 112 and 113 of the EEA agreement, for unilateral actions, for a win-win approach, i.e. that UK citizens could get in other countries, including standard of living, while carrying out negotiations with the EU.

This could be used in a number of areas, to get immediate benefits for the economy

  • All new Eastern European immigrants get only a 1 year working visa, no children, no access to benefits, and a points skills system for staying longer
  • All other new EU immigrants have free movement, unless their unemployment is 7% or more, then they only get a 1 year working visa, no children, no access to benefits, and a points system for staying longer. Things that may help reduce their unemployment rate, could include restoring their original currencies.
  • If the UK unemployment rate is 7% or more, then all new EU immigrants only get a 1 year working visa, no children, no access to benefits, points skills system for staying longer.
  • Any new immigrant with an EU passport, from any EU country, who was not born in an EU country to EU parents does not get any free movement or automatic working visa, and needs to apply, using a point system, no children, no access to benefits. I.e. people who have bought their passport sin other EU countries, do not get automatic entry to work and live in the UK.
  • Optional: anyone who has already arrived in the last 5 years from Eastern Europe, is not entitled to benefits, including access to council housing. Anyone who has arrived from other EU countries, with unemployment rate 7% or over, in the last 5 years, does is not entitled to benefits
  • Any EU citizen with a previous serious crime criminal record – crime against property, financial crime, crimes against the person across any age group – is deported. Any EU citizen convicted in the UK for a crime – property, financial or person – is deported and serves sentence in EU country of origin.
  • Anyone from an EU country wishing to buy a residential property, can only buy after living 5 years in the UK and paying tax – similar to Denmark.

 Thirdly, simplifying regulations.

Setting up an online system for easily accessing, searching, sorting and finding regulations, their source and use, for all areas in the UK, including national, county and local government, so working groups can review all existing regulations and simplify. For example:

UK law

  • UK law number, relevant Ministry, topic
  • text of law, any paperwork used for implementation
  • who affects, numbers of people and businesses, cost/benefits, usage

EEA/Single Market law

  • EEA law number
  • UK law number, relevant Ministry, topic
  • text of law and listing of any UK additions, any paperwork used for implementation
  • who affects, numbers of people and businesses, cost/benefits, usage

EU law

  • EU law number
  • UK law number, relevant Ministry, topic
  • text of law and listing of any UK additions, any paperwork used for implementation
  • who affects, numbers of people and businesses, cost/benefits, usage

World laws

  • World body law number
  • UK law number, relevant Ministry, topic
  • text of law and listing of any UK additions, any paperwork used for implementation
  • who affects, numbers of people and businesses, cost/benefits, usage

Process: Select Committee, consulting all relevant parties, for ideas and any ‘quick wins’

  • -Ask for advice from expertise in existing EFTA countries, for simplifying
  • Ask for advice from expertise in other successful countries

Listing of all articles and regulations from current treaty that are to be run by Parliament, including:

  • Movement of people
  • Environment
  • Social chapter
  • European Convention of Human Rights

For setting up  cross party groups, to look at:

  • What works for the UK
  • what has had unintended side affects
  • incorporating ‘net benefit’ articles and regulations, in whole or part into UK law
  • repealing ‘net cost’ articles and regulations

In addition, for fast track simplifying:

  • Ask industry groups – small, medium and large – for listing of regulations and laws that hinder job creation and productivity, including ’gold-plating’ that add costs that prevent small businesses competing with larger businesses
  • Include a listing of which regulations make it difficult for small businesses to tender for public sector contracts and also compete with larger companies in the wider economy, e.g. excessive paperwork
  • Ask union groups for listing, as above, and also areas where health and safety is an issue
  • Listing also from charities and public sector of regulations unnecessary, since they do not export to the EU
  • e. since only 9% of the economy is involved with EU trade, eliminating unnecessary regulations for the other 91% of the economy
  • Listing of adverse rulings from the European Convention of Human Rights, that reward criminals, overrule other laws passed by Parliament, lead to loss of public faith in the legal system, are no benefit and merely create jobs in the legal profession. Listing also good rulings from the ECHR. Then look to simplify the ECHR, to be aligned with values of UK legal system and evolution.
  • Use the 80/20 rule for prioritizing, i.e. which 20% of suggestions, would give 80% of the benefits listed

Use article 112 and 113 for implementing the above and evaluate ongoing. It is also possible to start with trails in certain parts of the country, if this makes sense, before going for a nationwide implementation of unnecessary regulations

This is an easier way to accelerate the benefits for implementing prosperity, keeping it transparent, for the public to have faith, and not have big cartels, special interest groups and vote buying politicians, decide the outcomes. So restoring government of the people, by the people, for the people, prosperity for the many and also making it easier for other countries in the EU, to see benefits of voting leaving the EU and upgrading to democracy.

Hugo van Randwyck

Our Chairman’s letter to the Derby Telegraph in the aftermath of the referendum

Sir,

I am astonished at the downbeat response from many industries about the decision to leave the EU.

They appear to have been deliberately misinformed by the government – and to have swallowed it!

Around three quarters of EU legislation is geared to nudging us ever nearer to the Single European State – a country called Europe. That is the main purpose of the EU – “Ever Closer Union”.

The remaining 25% relates to trade regulation of the European Single Market, the only part of the EU project in which industry is interested. Arrangements already exist for non EU member countries to be in the Single Market without being in the EU political project. It is called the EEA – European Economic Area – the “Common Market” part of the project.

You can Google the detailed plan for continued participation in the Single Market. It is called “ FLEXCIT” . There are two versions – a forty eight page pamphlet and the full policy which extends to some 420 pages.

One objection to this policy is that the EEA involves the acceptance of the principle free movement of people. But, under Article 112 of the agreement, EEA member states can unilaterally impose restrictions when they experience excessive immigration. They do not have to ask anybody’s permission.

Another development which the government failed to mention is that most new business regulation is now global and comes from bodies like UNECE (United Nations Economic Commission for Europe) which, for instance, sets the standards for motor vehicles. Whilst there is an EU Directive about this, it was not made in Brussels but merely transcribed from what UNECE agreed in Geneva.

As an EU member Britain has no voice at the real “top table” in Geneva. As an independent country, it will be able to influence matters there.

So there is every reason to look forward to a period of greater British influence in the way world trade is regulated.

Yours faithfully

Edward Spalton