Filling in the blanks

This past week has seen a flurry of activity on the Brexit front, but it is debatable whether we are any further forward in the process of achieving an exit from the EU which is both reasonably seamless and a genuine parting of the ways.

The first shots were fired by the European Commission  in the shape of a draft withdrawal agreement, which appeared on  Wednesday 28th February. Barely had the text been made public when Mrs May responded, saying that “no UK Prime Minister could ever agree to it.” The biggest bone of contention was the proposal that,  in the event of the two sides failing to agree on a solution to the Irish border problem,  Northern Ireland to remain in the EU’s customs union with a border between the province and the rest of the U.K.  Arlene Foster, the leader of the Democratic Unionist Party was equally forthright, stating in a tweet that “EU draft text is constitutionally unacceptable & would be economically catastrophic for Northern Ireland.”

Responding these swift rejections of the Commision’s proposal, Donald Tusk, who visited Mrs May in London, stated that the document was built on last December’s draft agreement on “Phase 1” of the divorce talks, with the blanks filled in, not out of any desire to provoke but merely because the UK has so far not come up with any proposals for dealing with the Irish border issue. “you fill in the blanks if you don’t like our suggestions” was the gist of his remarks. Michel Barnier added that the EU document has addressed the Irish border issue “in a practical, pragmatic legal fashion.”

So with there being no meeting of minds on Wednesday, would Mrs May shed any more light on how her government was going to fill in the blanks? She gave another speech on Brexit on Friday March 2nd and regrettably, it did little to clarify matters.   She still does not seem to have any idea of the extreme unlikelihood of the  EU agreeing to a system of  mutual product recognition, completely outside its present arrangements of assuring the standards of goods arriving from outside the EU. She acknowledged that leaving the single market and customs union would mean  “our access to each other’s markets will be less than it is now. How could the EU’s structure of rights and obligations be sustained, if the UK – or any country – were allowed to enjoy all the benefits without all of the obligations?” Fair enough, but anyone hoping for detail on what alternative arrangement she wanted to make  was going to be disappointed.

It is astonishing how badly advised Mrs May seems to be. In dismissing “the Norway model”, she said “we would stay in the single market, {which} would mean having to implement new EU legislation automatically and in its entirety – and would also mean continued free movement.”

This website alone has pointed out on umpteen occasions that Norway, Iceland and Liechtenstein only have to implement about one quarter of EU legislation and much of this relates to the technicalities of trade. What is more, Norway, if it so desired, could join Liechtenstein and unilaterally restrict freedom of movement from the EU using articles 112 and 113 of the EEA agreement. As an interim agreement, it reduces the burden of EU law by some 75% , compared with the EU’s proposals.

The only step forward, as Dr Richard North has pointed out, is that Mrs May acknowledged that many of these regulatory standards “are themselves underpinned by international standards set by non-EU bodies of which we will remain a member”. In particular, she noted that the UN Economic Commission for Europe (UNECE) “sets vehicle safety standards. Countries around the world.”

This speech, says Dr North, is “the first time in recorded history” that “we have a prime minister recognising that the EU is not the fount of all regulation and that “many” regulatory standards originate from “non-EU bodies”.

Much of the rest of the speech, sadly, was taken up with wishful thinking – good on mood music but totally lacking in any practical suggestions of how to move Brexit forward.

The biggest disappointments were that she did not announce the rejection of the EU’s proposals for a transitional arrangement- accepting every single part of EU law and any new ones they dream up for a period which may well extend beyond the projected 21 months.  Until this happens, there can be no real progress towards a deal which will be acceptable to her own MPs. Secondly, her comments on fisheries were a cause for concern:-“The UK will regain control over our domestic fisheries management rules and access to our waters.” That’s fine and if she had stopped there, everyone would be happy.

Unfortunately, she then continued “But as part of our economic partnership we will want to continue to work together to manage shared stocks in a sustainable way and to agree reciprocal access to waters and a fairer allocation of fishing opportunities for the UK fishing industry.”  These words do not suggest that she has yet been won over to Fishing For Leave’s exciting proposals to rejuvenate our fishing industry and coastal communities, which would make us once again a world leader. (see Fishing for Leave’s comments on her speech here)

Essentially, this week has just been an extension of the Brexit stalemate, even though some strong words have been said on both sides. How much longer can this last? In is now March 2018. In a year’s time, we will hopefully be leaving the EU. For all Mrs May’s talk of  “a bold new positive role for ourselves in the world”, we are none the wiser as to how she intends to achieve this.

Corbyn – misled and misleading

This letter from our Chairman appeared in the Derby Telegraph on Friday 2nd March

Sir,

MR CORBYN IS MISLED & MISLEADING

EU documents are rarely an easy read, so very few people bother to read them. Even politicians tend to rely on commentators or journalists, who also don’t read them, but who will tell people what they want to hear. Mr. Corbyn appears to be amongst the non-readers. Like many MPs, he seems to believe that the EU Customs Union facilitates swift movement of goods through border controls. It has very little to do with that and is mainly concerned with harmonising tariffs.

Turkey has an agreement with the EU Customs Union yet the crossing point to Bulgaria at Kapikule is notorious for delays. Lorries can be stuck there for days at a time. As studying EU documents is so boring for readers as well as for Mr Corbyn, I refer to another part of his recent speech.

“A Mini will cross the channel three times in a 2000 mile journey before the finished car rolls off the production line. Starting in Oxford, it will be shipped to France to be fitted for key components before being brought back to BMW’s Ham’s Hall plant in Warwickshire where it is drilled and milled into shape. Once this process is complete, the Mini will be shipped to Munich to be fitted with its engine before ending its journey in the Mini plant in Oxford for its final assembly…”

This statement is pure fantasy. Assembly is carried out at the BMW plant in Oxford. The Swindon plant produces body pressings and sub assemblies and the Ham’s Hall plant near Birmingham has made the engines since 2006.

Most of BMW’s aluminium block and head castings are made at Landshut near Munich and some of the machining is done at Steyr in Austria where other components for the Mini are also made. Since 2013 most of the machining and main assembly of the Mini’s engines is done at Ham’s Hall. The complete engines are mated with front suspension and steering units which are fitted to the cars as sub assemblies in the Oxford plant.

Mr Corbyn’s ignorance of the process of motor manufacture with its supply chain of components brought together and cars assembled in one plant is perhaps excusable in a man who has no industrial experience. But where did he get his strange ideas from? The answer is the media. This part of his speech may have been lifted from an Evening Standard article from July 2017 which, in its turn, may have been lifted from a Guardian article of March 2017.

Given his reputation for getting back to the roots of the Labour party, Mr. Corbyn could have consulted an engineer trade unionist who would have put him straight and stopped him making such an ass of himself. Yet the listening media took him seriously and did not realise it was being fed rubbish. So perhaps it doesn’t matter. People may draw their own conclusions about the reliability of the rest of his speech.

Yours faithfully,

Edward Spalton

Photo by Chatham House, London

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

Post-Brexit, the UK economy could flourish if it is innovation-led

Recent economic predictions from the Treasury are probably grossly underestimating the potential positive benefits of Brexit, if only our government can seize the initiative.  After all, economists, especially those within the Civil Service don’t usually have extensive, if any, ‘hands on’ business experience. So how do they know the degree to which European Union (EU) legislation and regulation  – along with our government’s gold-plating and inertia – have held back many businesses, especially small and innovative enterprises?  However, loosening the bureaucratic chains is not that easy, especially when we are talking about people who are largely ignorant of their undesirable consequences, or not interested in doing anything.

Access to domestic and export markets for trading purposes are not enough in a highly competitive world.  UK Limited needs to provide goods and services that customers want to buy at prices they can afford in more attractive ‘packages’ than available from elsewhere.   To be able to pay high wages UK Limited needs to produce high value-added goods and services efficiently and continue to stay ahead even as competitors try to catch up. So how well are we, as a nation, doing?

The United Kingdom is a middle size economy with a poor record of productivity improvement. Whilst good at creating new jobs, these are overwhelmingly low wage, low productivity ones.  Major problems are poor labour force skills, under-investment and a ready supply (or over-supply) of low wage labour.  In effect then the UK is losing the ability to create high value-adding productive jobs; the world’s first ‘third world’ country in a cold climate.

The government could kick-start a change with Brexit. Controlling poorly skilled immigration would create an imperative for higher productivity and enable higher wages to be paid; it would stimulate innovation, training and investment.  Tax incentives, grants and risk sharing could also help. Encouraging home-grown start-ups and high value-adding foreign investment would also lead to better paid jobs. Public sector procurement could be a facilitator of wide ranging innovation. Yet the real key to success is the creation of an innovation-led economy for high value-added goods and services; develop, improve, become competitive, become world-leading, export and grow, repeat. However, this needs an understanding both of the nature of successful innovation, particularly low-cost innovation, and of mandatory regulations, including their objectives and implementation, in order to facilitate the former by manipulating the latter.

There is a common misconception that because we have been traditionally good at invention, we must be naturally good at innovation – doing existing things noticeably better. Not so. Many inventions and high or advanced technology products have failed commercially here for a variety of practical reasons including the lack of a viable market, pushing out the bounds of technology too far without sufficient development and politically driven lack of support.  Eric von Hippel in his book Democratizing Innovation identifies users as an important source of innovation; they identify a need and a commercially viable innovative product (for themselves and others) which subsequently moves back along the supply chain to suppliers and producers.

Any form of legally sanctioned regulation, with few exceptions, tends to create and then maintain a mandatory status quo, which may be far from evolving ‘best practice’.  It is difficult and slow, if not impossible to introduce changes, which obviously frustrates innovation.  It has been reported by the European Free Trade Association (EFTA) (reported originally here and recently here) that “more than 90 percent” of the EU’s Single Market rules (and by extension, those of  the European Economic Area, EEA) come from the UN and other global bodies, such as the World Trade Organisation (WTO), OECD, the Food and Agriculture Organisation and the United Nations Economic Commission for Europe (UNECE), all of which have been faithfully transcribed into EU law. The EU also tends to expand the basic requirements into mandatory bureaucratic processes, procedures, approvals, European Court of Justice rulings etc., and then our government, frequently gold-plates the rigidity, often leading to situations more favourable to larger (less innovative) businesses.

After Brexit, as a direct member of global bodies, the UK will be able to exert its influence directly to champion principles and practices in our innovation-led economy’s interests. Current EU membership prevents this. Temporary or permanent EU vassal status, (aka the Transitional deal on offer from the EU) would also prevent this.  The potential is also there, after Brexit, to adapt measures (or the way they are implemented) that don’t suit our interests, or to opt out to some extent.  We can become somewhat more flexible than total EU control-freak rigidity, although exporting does impose conformity with the regulatory framework applicable in the overseas market, which may well follow EU or EEA practices.

Public sector procurement could illustrate what is possible after Brexit.  The public sector (definitions vary) makes up somewhere between 40-50% of the economy and has considerable purchasing power. Procurement is governed in the main by the Public Contracts Regulations, which implement EU Procurement Directive 2014/24/EU, itself an implementation of the Agreement on Government Procurement (GPA) under the auspices of the WTO.  Yet although the preamble to the EU directive pays ‘lip-service’ to the need to encourage small and medium size enterprises (SMEs) and innovation, its implementation in this country often achieves the opposite result, as originally outlined here.

Outside the EU, it is perfectly feasible to rework and streamline the Public Contracts Regulations, to facilitate user-led innovation, and to support local entrepreneurial SMEs, social enterprises and start-ups, whilst maintaining the WTO GPA core. The time-consuming complexity of the procurement process and legislation incorporating ECJ judgments is a real problem at the moment, leading to the awarding mainly of large contracts and a fear of facing a legal challenge by an unsuccessful tenderer. Also the process is poor at managing risk (for example, Carillion) or in including local socio-economic factors. Collaborations between user and supplier (to facilitate innovation) are also discouraged in mainstream procurement. Such reworking of these regulations naturally needs strong governmental commitment and understanding of the ways in which they lead to discrimination. Unfortunately it is likely that Mrs May will retain the EU directive indefinitely, although it is not mandatory outside EU Member States.

Economic forecasts that largely ignore the effects on the economy of innovation are obviously suspect in the real world.  However, they do provide an indictment of government performance and its inability to seize the opportunities to facilitate an innovation-led economy.  If the government understood how innovation could be facilitated by Brexit and its policies adapted accordingly, then the future prosperity of everyone in this country would be considerably greater.

A transition will void all international agreements

Press Release from Fishing for Leave, 20th February 2018

The implications of the transition should be of grave concern. What is proposed is not only an existential threat that could see our fishing industry culled, but a diplomatic and constitutional suicide pill the result of which would be an anathema not only to “taking back control” but to the point of a transition itself.

A transition is not part of leaving the EU under Article 50 – it is part of a new ‘transition’ treaty as both David Davis and Steve Baker have candidly admitted.  This is significant as it means we will not be party to current agreements, but the transition is a new treaty that stands alone.

The EU terms are the UK must adhere to all EU law but as we will no longer be an EU member should have no say. This is the EU sensibly safeguarding its interests – our government is doing the opposite.

The implications of Clause 14 and 15 of the transition terms have a severe impact on all international agreements the UK is party to through the EU.

They defeat the whole raison-d’etre of HM Governments for a transition – trade.  For the fishing industry it means the “transition” could void UK participation in all international fisheries agreements that we were party to as a member of the EU.

TRADE

Clause 14. During the transition period the United Kingdom will remain bound by the obligations stemming from the agreements concluded by the Union…while the United Kingdom should however no longer participate in any bodies set up by those agreements.

The intention is that the UK will still have obligations to the EU to adhere to the consequences of agreements concluded with non-EU countries in respect of the EU vs UK transitional relationship. In doing so this maintains the integrity of the EUs dominions and also appears to placate the UK position of everything continuing as is.

However, since the withdrawal agreement cannot bind non-EU countries, they will no longer have obligations to the UK as we will no longer be an official member of the EU but merely maintaining regulatory alignment in an EU vs UK deal.

The UK would only be able to be recognised within such agreements if other non-EU countries agree to continuing existing obligations in force through another agreement with the UK.

The negotiation of such an agreement between the UK and non-EU ‘third countries’ is the subject of the next transition Clause 15 which seemingly makes that an impossible contradiction.

Clause 15. Any transitional arrangements require the United Kingdom’s continued participation in the Customs Union and the Single Market (with all four freedoms) during the transition. During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.

The UK will be unable to negotiate and sign treaties within the transitional period, even if those treaties only come into force afterward – we will only be able to begin to negotiate treaties AFTER the transition period.

This means that other non-EU nations will have no obligations to recognise the UK being party to agreements signed by the EU as the UK will no longer be an official member but also a ‘third country’ when the ‘treaties shall cease to apply’ under Article 50 and our membership terminates on the 29th March 2019.

However, the catch 22 paradox is that to obey the transition the UK will not be able to enter into any agreements with other non-EU countries to seek recognition that the UK is party to EU arrangements with those countries even if they wanted to.

THIS MEANS WE WILL BE ON WTO TERMS FOR 65% OF OUR TRADE AND UNABLE TO SIGN NEW DEALS…………………..WHICH IS THE WHOLE REASON LOCKING OURSELVES INTO THE EU WAS MEANT TO AVOID! 

In respect of fisheries this could mean any agreements the EU has signed with other coastal states would no longer be binding for the UK as we wouldn’t be officially a member only a vassal state which has agreed to maintain regulatory alignment with the CFP.

This catch 22 between Clause 14 and 15 means the UK could lose agreements on access to Norwegian and Faroese waters for our pelagic and largest whitefish vessels.

The EU can’t be any clearer that this is the case;

As part of the EU Commission document ‘Internal EU27 preparatory discussions on the framework for the future relationship: “International Agreements” 6th February 2018’ the EU makes explicit the consequences regarding international agreements concluded by the EU:

Point 13: “Following the withdrawal, the United Kingdom will no longer be covered by agreements concluded by the Union or by Member States acting on its behalf or by the Union and its Member States acting jointly”.

The EU then continues;

In principle, as a non-Member State, the UK would be able to negotiate international agreements But

  1. the bona fide application of the Withdrawal Agreement prohibits conflicting obligations
  2. duty of sincere cooperation

iii. explicit provisions in the Withdrawal Agreement: “During the transition period, the UK may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.”

The Withdrawal Agreement can oblige the UK to respect “the obligations stemming from the agreements” However, the Withdrawal Agreement cannot guarantee the extension of the benefits from those international agreements to the UK!

IT CANNOT BE ANY CLEARER! How will the UK be party to continuing EU deals?

How will the UK be able to seek and agree recognition with other non-EU third countries?

It would be interesting to hear a proper government and DexEU response to how the UK can conclude a future “deep and special” trade deal with the EU under the transition as David Davis professes is required if Clause 15 bars us from concluding agreements… the Government tried (and miserably failed) to do so in;

HM GOVERNMENT – TECHNICAL NOTE: INTERNATIONAL AGREEMENTS DURING THE IMPLEMENTATION PERIOD – 8th February

In this document the Government asserts that

  1. …the implementation (transition) period would be based on the existing structure of EU rules and regulations. In its negotiating directives, the EU has adopted the same position. It has stated that “the Union acquis should apply to and in the United Kingdom [during the implementation period] as if it were a Member State”. This is echoed in the Commission’s paper on Transitional Arrangements in the Withdrawal Agreement, which states that EU law “shall be binding upon and applicable in the United Kingdom” during the implementation period.

EU law and agreements are binding on the UK as agreed in a transition treaty between the UK and EU. Such a treaty cannot bind the other non-EU ‘third country’ nations who the EU has an agreement with.

  1. This would be achieved by agreement of the parties to interpret relevant terms in these international agreements, such as “European Union” or “EU Member State”, to include the UK.
  2. Such an approach could be used both to ensure the UK’s continued participation in mixed EU third country agreements… At present the UK as an EU Member State is bound by obligations, and benefits from the rights… It is proposed, with the agreement of relevant third countries, that those rights and obligations continue to apply to the UK on the EU side of the agreements for the duration of the implementation period.

The UK can’t sign agreements with other parties as Clause 15 of the Transition terms forbid the UK from entering any agreements, deals or treaties with other non-EU ‘third countries’. In addition to this the words ‘proposed’, ‘could’…… would…. should….. mean that the position the government is digging itself into relies on the EU and other countries benevolently recognising the UK to be party to EU agreements.

Rather than leaving cleanly and being free to operate as an independent sovereign nation the transition (by the governments own admission) digs this country into a subservient position with no guarantee of being party to any international agreements through the EU.

The position the government is digging itself into relies on the EU and other countries benevolently recognising the UK to be party to EU agreements.

Rather than leaving cleanly and being free to operate as an independent sovereign nation the transition (by the governments own admission) digs this country into a subservient position with no guarantee of being party to any international agreements through the EU.

WHAT THIS MEANS FOR THE FISHING INDUSTRY

In respect of fisheries all the Clauses above means that although the UK will follow the CFP as a vassal state (through the terms of a transition treaty between the EU and UK) countries such as Norway, Faroe and Iceland have no obligation to recognise the UK being party to EU arrangements and even if they wanted to Clause 15 means the UK can’t sign any deal as an EU satellite.

Yet because the UK will have submitted to an EU vs UK “transition” agreement we will have agreed to re-obey the CFP where we re-agree to give the EU our fishing waters and resources to divide out as the EU see’s fit through relative stability and agreements it reaches internationally.

This would mean the UK would still have the EU catching 60% of the resources from our waters and the EU would be able to use UK whitefish and pelagic quota as negotiating capital but we would be unable to take back control and then use our position of strength as a new independent coastal state to make our own mutually beneficial agreements with our Nordic neighbours.

The UK would continue to lose out in the CFP but also lose access to Norwegian and Faroese waters for the most powerful catchers in the UK fleet. We would lose twice rather than gain twice by walking away. We would be hit 4 times over in a transition where we loose international agreements but are still in the CFP;

We would see some of the most powerful catchers in the UK Whitefish fleet displaced from Faroese and Norwegian sector waters.

 These vessels would be back into an already stretched UK sector with the EU still pocketing half of our whitefish resources.

It would see our pelagic fleet lose access to Norwegian waters for mackerel and atlanto-scandiv herring

The EU can further exploit UK quota (especially pelagic) to make deals to benefit the EU27 fleet due to our compliance with the CFP.

To stick the final nail in the coffin a continuation of the quota system where fishermen have to discard in order to find the species their quota allows them to keep conjoined with a fully enforced discard ban can be used by the EU to finish the UK fleet.

Under the discard ban rather than address the cause of the discard problem, that a quota system does not work in mixed fisheries, the symptom of discards is banned. Under the discard ban a vessel must stop fishing when it exhausts its smallest quota allocation – these “choke species” will bankrupt 60% of the UK fleet as detailed by the governments own figures through Seafish.

This would destroy our catching capacity and allowing the EU to claim the “surplus” of our resources we would no longer be able to catch under terms of UNCLOS Article 62.2 due to such a culling of our fleet.

Signing up to a transition on will see the ruination of what is left of the UK fishing industry when Brexit should be its salvation. Another 2 years of the CFP and a continuation of the quota system will see our fishing industry become yet another British industry consigned to museum and memory.

CONCLUSION

Under the auspices of this proposed transition “deal” (more an edict to obey) the UK will be on WTO with the rest of the world, unable to conclude deals with the rest of the world until after the transition and will be locked into maintaining regulatory alignment whilst obeying the entire Acquis (with continued freedom of movement).

The UK will be trapped in the CFP where our fishing industry will be culled to make way for the EU fleet whilst also losing any access to Faroe and Norway which will diminish fishing opportunities further.

It is nearly unbelievable that the political establishment could contemplate locking the 5th most powerful nation in the world into such a subservient position especially against the expressed wish of the British people to leave the EU in its entirety as voted for in the biggest vote in British history.

A TRANSITION MEANS BRITISH FISHERMEN ARE STARING DOWN THE BARREL OF A GUN!

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