Varadkar gets a caning from Lord Stoddart over Brexit comments

THE PRESS OFFICE OF

The Lord Stoddart of Swindon (independent Labour)

News Release

8th August 2017

 

Comments from leader of “EU minnow country” go down badly with Brexit peer Lord Stoddart of Swindon

The independent Labour Peer, Lord Stoddart of Swindon has taken the new Prime Minister of the Irish Republic, Leo Varadkar to task about his contribution to the ongoing debate over Brexit and advised the “stripling leader of a mini-state” to “learn his trade” before presuming to lecture the United Kingdom.

Lord Stoddart said: “The British people must be getting fed up with EU minnow countries telling them either to stay in the EU or agree to conditions like remaining in the Single Market and the Customs Union, which would effectively keep our country in the EU.  The latest culprit is the Prime Minister of the Irish Republic (population 4.7million) Leo Varadkar.  He should be reminded that the United Kingdom is the Republic’s good friend and a substantial trading partner –indeed, such a good friend and partner that that it gave Ireland a loan of £3billion to save it from bankruptcy caused by its membership of the single currency, during the last recession (I wonder if they have paid it back yet?).

“This stripling leader of a mini-state should learn his trade before presuming to lecture substantial and successful countries like the United Kingdom on how to proceed on Brexit, particularly after its people have voted in a democratic and free referendum to leave the European Union.”

The great trade muddle

“We are leaving the European Union… We are leaving the Single Market… We are leaving the Customs Union.” Theresa May has repeated these phrases on numerous occasions since her Lancaster House speech in January.  Only last week, Steve Baker, the new Brexit minister, insisted that there would be no watering down of the Brexit strategy. “It’s like putting blood in the water to even talk about the EEA,” he said. “We don’t want to be a rule taker, for all the reasons that David Cameron gave during the referendum. We mustn’t take up some of those ideas.”

The Customs Union is a red herring. It never came up during the referendum debate last year and, one suspects, it has only re-surfaced recently because some people may well not know the difference between it and the Single Market.

The Single Market is another matter. It is not true, as suggested by a number of senior EU figures  including Michel Barnier, the chief negotiator, that the four “freedoms of movement”  – goods, services, capital and people – are indivisible.  They may be for EU member states, but not for the non-EU countries in EFTA. Iceland imposed restrictions on the movement of capital when its banks collapsed and Liechtenstein still imposes restrictions on immigration from the EU. Furthermore, no Brexit campaigner suggested that the “Norway Option” or even the “Liechtenstein Solution” should be anything other than an interim arrangement to get us safely through the EU’s exit door within the Article 50 timescale.

It is certainly not an ideal arrangement, and some leave campaigners, including CIB Committee member Ian Kealey, have offered a number of reasons why it should be avoided even as a temporary solution.  Carolyn Fairbairn, the Director General of the Confederation of British Industry, which represents large employers,  has nonetheless been pushing hard for us to adopt this approach. Some leavers are naturally suspicious of an organisation which campaigned for us to stay in the EU, arguing that the real motive of the CBI is to stop us leaving the EU at all. For all the objections to re-joining EFTA and accessing the Single Market via the EEA agreement, the fact is, countries which use this model are most definitely outside the EU as this helpful comparison by CIB Committee member Anthony Scholefield illustrates

Mrs May, however, has not shown any enthusiasm for this route, although she mentioned the possibility of an interim arrangement as far back as November of last year, without going into any details. Her  recent pronouncements have been very much about the long term, stating her desire to sign a “bold and ambitious” trade deal with the EU by March 2019 and only yesterday, at the G20 summit in Hamburg, she said she wanted a “deep and special partnership with the EU, a comprehensive free trade agreement with the EU, so that we can continue to trade with the European Union. That’s not just in our interests in the interest of the other 27 member states as well.”

Fair enough, but only two days ago, Michel Barnier said that “There will be no business as usual.” To underscore the point, he later continued, “I have heard some people in the UK argue that one can leave the single market and keep all of its benefits – that is not possible.”

It has been argued that many other countries trade with the Single Market without being members of it. This is true, but they do not get 100% access nor of the benefits. There will inevitably be obstacles. Most people who have looked at this complex subject accept that being outside the Single Market will involve some loss of trade access to the EU. The big question is whether or not they can be minimalised.  The Bruges Group has come up with an alternative which, its authors claim, can be implemented in eighteen months and which would address the main concerns of business, including non-tariff barriers. However, it does not deny the presence of significant obstacles.

We do not know whether or not this report is being digested by the Civil Servants of David Davis’ department. What we can say is that there has been precious little comment from the government on its  proposals regarding this important subject. To date, the Bruges Group proposal is the most detailed study of a non-EEA  solution to the trade conundrum which would avoid the need for any interim arrangement.  If it isn’t going to be adopted but something better has been produced, it clearly hasn’t reached the ears of the CBI or some other concerned politicians who advocate our remaining in the EEA.

What is worrying is the lack of a detailed response to these concerns. Could it be that even a year on from the referendum, the Government still doesn’t have any idea of what its Brexit trade strategy should be? When we joined the EEC (as it was) over forty years ago, businesses were given increasingly detailed guidance, starting over a year before entry. If the transition to independence is to be seamless, businesses need adequate notice to comply with whatever the new arrangements will be. Regulation has become a lot more complex since 1973 and the process of informing them of what needs to be done will surely need to start no later than March next year.

With some economists suggesting that the UK economy is slowing, some leave campaigners have expressed a concern that Brexit may not actually happen given the additional challenges which lie ahead. We do not believe this to be the case as any backtracking on Brexit would be suicidal for the government and the Conservative Party. Nonetheless, the Article 50 clock is ticking away and if the government is still in a muddle about trade, we may end up going down the EEA/EFTA route as an “off the peg” solution which, due to time constraints, could end up by default as the only way of preventing a “cliff edge” scenario in March 2019.

And they’re off!

Today, our formal negotiations to leave the EU begin in Brussels. David Davis is meeting with Michel Barnier, the EU’s chief negotiator. Mr Davis said he is beginning his task “in a positive frame of mind“.

So there is finally something concrete to report after a ten days of confusion and speculation since the inconclusive General Election result. This. however, is where the certainty ends. It is almost a year since the Brexit vote and we do not know the shape of the planned Brexit deal. Of course, it is quite possible that this is a deliberate strategy to “keep our power dry”. Daniel Hannan, writing in the Daily Mail, claims that the Civil Servants have “had a year to prepare for these talks, and have put it to good effect.

We must hope so, but detail is thin on the ground. Although Philip Hammond, the Chancellor. has been widely reported as supporting ongoing membership of the Customs Union, he recently insisted that this was not the case. Speaking on the Andrew Marr Show, he said, “And by the way, we’ll be leaving the customs union. The question is not whether we’re leaving the customs union, the question is what do we put in its place.” The subject of the customs union was barely mentioned in the referendum campaign last year. It has always been a red herring. For all the otherwise mixed messages of last year’s assorted leave campaigns, virtually everyone was agreed that freedom to determine our trading arrangements would be one of the principal benefits of Brexit and that remaining in the Customs Union would place unacceptable restrictions on any such future arrangements.

The Single Market is another matter, however. Mr Hammond also insisted that we would be leaving this too. Fair enough, but it would be good to know what sort of relationship exactly he and the Civil Servants have agreed to seek if they are to avoid what he called “those cliff edges.”

He also hinted that some transitional arrangement would be sought. “We will need some kind of transitional structures and the European Union needs to understand that as well. This is not a British ask or a British demand, it’s a statement of common sense, that if we’re going to radically change the way we work together we need to get there via a slope, not via a cliff edge. That’s good for business on both sides of the English Channel.” He appeared to rule out remaining in the customs union, even as part of a transitional arrangement, but was vaguer about the Single Market – deliberately so? We will no doubt know more in due course.

This does pose the question about how much influence say he, or even Mrs May, will have. The loss of the Tories’ overall majority leaves the government more beholden to Parliament  – including Tory backbenchers – than before. Some have gone on record – anonymously – that any backpedalling on, or dilution of Brexit by the Prime Minister will result in a leadership challenge.

Mrs May will therefore have her work cut out to appease some more hard line Brexiteers, but on the other hand, she will need to keep on board those MPs are less enthusiastic about leaving the EU, who will doubtless seek to exploit any features of the end deal which would negatively affect the economy in general and jobs in particular.

Labour, however, says it will not seek to derail Brexit. During the election campaign, Jeremy Corbyn was campaigning for a different sort of Brexit but never offered any hint that he would try to undermine it.  There are two issues at play here. First, personally, Mr Corbyn has never been a supporter of the EU project. As we have pointed out, his contribution to the remain campaign was at best lukewarm and in reality, a negative one.  More to the point, outside the big cities, support for Brexit was strong in Labour-voting constituencies and Corbyn and his team rightly realised that unless he emphasised his commitment to Brexit, votes – and potentially seats – could be lost in the constituencies which historically have been Labour’s heartland. This tactic succeeded and consequentially, those Labour MPs who dislike both Corbyn and Brexit must realise that their room for manoevre is rather limited given that their party did much better than was widely predicted two months ago.

Emmanuel Macron, the seemingly all conquering French President, insisted that “the door remains open” to the UK abandoning Brexit and remaining in the EU. Dan Hannan strongly rebutted this offer. “The idea that Britain might crawl back to Brussels, apologising for its mistake, shows an extraordinary misreading of our character, our history – and public opinion,” he wrote.

It’s not just our history and character. One does not often find oneself in agreement with John Major, but during a recent interview on BBC’s Radio 4, he made the point  that the EU has never really been a big priority for most UK voters. Ask any veteran UKIP candidate or even the Lib Dems, whose pitch to the supposed “48%” in the recent General Election campaign fell rather flat, and they would concur 100%. A vocal minority notwithstanding, most people, whichever way they voted in June last year, just want the government to get on with it.

And this is what it is finally doing. We can but hope that everyone will be satisfied with the result.

 

Photo by rogerblake2

Fishing the first Brexit bright spot as confusion reigns

Fishing photo

Are we going to leave the Single Market or not? And what about the EU’s customs union? – a subject that never cropped up in the referendum debate last year. Do some politicians even know the difference between the two?

At the moment, we are seeing a great deal of confusion about the future direction of Brexit and for those of us outside Mrs May’s new cabinet, what we are reading in the media is leaving us none the wiser. the quality of press reporting has reached an all-time low, with uninformed speculation given free rein and undue weight placed on off-the-cuff comments.

Take, for instance, headline statements that Emmanuel Macron, France’s new President claimed that “Brexit could be reversed.” What he actually said was “Of course the door remains open, always open until talks come to the end. But it was a sovereign decision taken by the people to come out of the EU.” In other words, there remains a theoretical possibility that the UK government might change its mind, but no more than that.  Given the shock of last week’s General Election result, it is hard to see the any rowing back on Brexit given that the consequences for the Conservatives would be the worst crisis since 1846.

The terms “hard” and “soft” Brexit have been bandied about with very few people knowing what they actually mean.  By and large, the terms relate to a future trading arrangement with “hard” meaning leaving the Single Market (or perhaps the Customs Union, or maybe both??) and “soft” means remaining in one or both. But what about criminal justice or foreign policy? There are “hard and “soft” issues here, which few in the media are picking up.

In all this muddle, one thing is clear. From what we could discern of Mrs May’s Brexit agenda, it contained some worrying and unsatisfactory features, including too close a link with the EU’s military plans and an ongoing commitment to remain party to the European Arrest Warrant. The loss of her majority means that she cannot force through her plans for Brexit if they are widely seen as flawed. Indeed, it is possible that we could end up with a better Brexit deal, given that pressure groups and their supporters on the Tory back benches will have a lot more leverage than if we had ended up with a thumping Conservative majority.

In one particular policy area, fishing, we are already seeing evidence of this. Scotland was the one piece of good news for the Conservatives in an otherwise dismal result and several of the seats they won from the SNP include fishing communities. Ruth Davidson, the Scottish Conservative leader, campaigned strongly on the fisheries issue and has apparently spoken to Theresa May, insisting that the UK must leave the Common Fisheries Policy and manage its own waters right up to the 200 Nautical Mile/Median Point limit.

Given that Michael Gove, who has recently been appointed Secretary of State for Environment, Food and Rural Affairs , is the son of a man who worked in the fishing industry, there is every reason for being hopeful that the sensible post-Brexit fishing policy proposed by Fishing for Leave has a greater chance of being implemented.

So, amidst the current confusion, we are perhaps seeing the first bright light. As the dust settles, hopefully others will follow

 

Customs Union: from Zollverein to irrelevance

By Ian Milne

Preamble

Orwell’s Nineteen Eight Four came out in 1948, less than a decade before the official birth of the European Community.  In Orwell’s vision, three totalitarian super-states, Oceania, Eurasia and Eastasia, were perpetually at war.

The European Community was – is – merely the latest version of the chimera of a single European state that had been pursued in the nineteenth century by writers such as Victor Hugo, by Continental tyrants such as Napoleon, and, in the twentieth century, by German governments led in 1914 by Bethmann-Hollweg  and from 1933 to 1945 by Hitler.

Consciously or not, the European Union was built on similar assumptions: that the post-war world would consist of huge “blocs”, competing for resources & markets, and that European states were destined to amalgamate into a single state. In the Eurocrats’ weltanschauung – world-view – North America constituted one bloc, Europe another, while to the East, (the Soviet Union, its first candidate, having failed) China would exercise hegemony over the Asian land-mass.

The EU Customs Union

Since its accession to the “Common Market”,  “British Trade Policy is not to have a British Trade Policy”. The UK hasn’t been in control of its own trade policy since 1973. What the UK has had since 1973 is being trapped – for the first time in its history – inside a customs union – the EU Customs Union.

The EU Customs Union, the only one in the developed world,  is a relic from the “Fifties” –  the 1850s. This is how it came about.

In  German & French “received wisdom”, customs unions are (still !) a peculiar obsession. The 19th century German customs union – “Zollverein” –  was the mechanism associated in the German collective consciousness with the Bismarckian creation of Prussia & then the German Empire.

On 4th September 1914, a few weeks after the  outbreak of the First World War,  Chancellor Bethmann-Hollweg issued his letter setting out German war aims. War aim number four1 was to “create a central European economic association through common customs treaties…….”. (A Figaro journalist, Eric Zemmour, describes this as a plan for the “vassalisation économique” of France through the mechanism of a customs union2.)

Two years later, in 1916, when the war wasn’t going too well for Germany, Berlin offered a separate peace to the Belgian Government (then in exile in Le Havre3), involving the evacuation of German occupying forces from Belgium & the signing of a bi-lateral Belgian-German customs union4.   This was turned down by the Allies.

In early 1917, when a compromise peace with Britain, France and Russia might just have been possible, German aims were for a “German peace” with a customs union led by Germany and with the involvement of Austro-Hungary and Romania, thereby solidifying Germany’s hold over its supposed allies and converting them to a de facto part of the peacetime German economy, no different from Alsace-Lorraine and a large slice of Belgium which Germany also proposed to retain.

In the next war, in 1942, when Germany still believed it would win, the Reichsbank organised a conference5 in Berlin to plan how Germany would run the European economy afterwards.  This involved a European Customs Union – Zollverein – very similar to the one we have today.  (It also involved a single currency with – believe it or not – an opt-out for the UK).

 Almost two centuries on, in 2016, with average customs duties worldwide (including in the UK) down to a little over one per cent6, customs unions have lost whatever economic raison d’etre they ever had.

The EU is likely to experience a significant decline as an important trading partner in the future due to demographic issues. These two Global Britain briefing notes (here and here) list the projections for population growth and decline within and outside the EU. It is particularly interesting to see the very different projections for France and Germany.

Ian Milne

1          The full text (translated) is: “We must create a central European economic association through common customs treaties, to include France, Belgium, Holland, Denmark, Austria-Hungary, Poland “sic”, and perhaps Italy, Sweden, and Norway.”
2          Eric Zemmour, Figaro, 29.9.16 
3          The building which housed the Belgian government in exile between 1914 & 1918 survived the 1944 bombing & still stands in Saint-Adresse, a suburb of Le Havre.
4          Georges-Henri Soutou, La Grande Illusion, 1914-1920, pp 75.
5         The title of the 1942 conference was “Europäische Wirtshaftsgemeinschaft”
6          In 2013, 82 % by value of all UK imports of goods from outside the EU bore zero customs duties. The remaining 18% of such imports bore an average rate of EU-mandated customs duties of 8%. That 8% average is likely to be lower now.

 

Photo by Polybert49

The big EU-UK question

Does the BREXIT negotiating strategy being adopted by our Government stand much chance of success?

The government is exuding a great deal of confidence about the future outcome of its negotiations to leave the European Union (EU). It would be nice to think we can believe its claims, but we need to ask whether they are realistic or whether we should instead be adopting a different, less ambitious, less complex, novel and consequently less risky, approach.

Whilst predicting the future is always guesswork, we should at least attempt to identify the major ‘showstoppers’ and risks to a successful outcome. To put it another way, we must consider some really important underlying assumptions which will need to be right or we could face a potential disaster. We can but hope that this has already been done by the government already as a preliminary to setting negotiating goals and working out our Prime Minister’s winning strategy.

This list is not necessarily exhaustive but includes some significant underlying assumptions upon which is predicated the success or failure of our BREXIT negotiations:-

  1. That pragmatic enlightened flexible mutual self-interest will prevail in the EU hierarchy;
  2. That rational economic considerations override EU political priorities or malice;
  3. That UK’s loss through failure to reach a trading agreement is EU’s loss as well;
  4. That Mrs May can set the EU’s negotiation strategy;
  5. That The World Trade Organisation (WTO) option for trading with the EU is viable;
  6. That negotiating team and administrative arrangements can be adequately resourced.

Let us consider these assumptions in order:-

(1) – The EU hierarchy does not have a great history of actions based on pragmatic enlightened flexible mutual self-interest, but rather the opposite. It has its ideological goals (e.g. increasing Superstate centralisation) which are unremittingly pursued whatever the undesirable consequences. It has inflexible, slow bureaucratic processes and procedures; it is somewhat dominated by the German – French duopoly.  The final deal will be further complicated by the Byzantine high level process involving the vote of the (presently somewhat posturing and hostile) European Parliament and unanimous agreement of all the 27 remaining Member States (presumably pursuing their own self-interests, such as Spain over sovereignty of Gibraltar).

(2) – The EU’s political priorities and ideology have traditionally overridden economic considerations.  Consequently, for example, the relentless economic hardship imposed on the southern European member states, Greece in particular, by the Euro. It is claimed that the austerity imposed on Portugal was a signal to larger economies like Italy that they must tow the German line.  Usually the EU takes years to negotiate free trade agreements (FTAs) largely because their scope extends far beyond purely trade considerations to include ideological and political features.

(3) – The EU could actually profit at the UK’s expense from a failure to agree a free trade agreement. Over the years, the EU has encouraged the transfer of economic activity from the more advanced Member States to the less developed, often through financial inducements. The EU’s Customs Union is also inherently protectionist, erecting barriers to imports from third countries.  Whilst there are likely to be some business losers, overall EU economic activity could remain the same, and there would be some winners, even in the UK, such as firms able profitably to expand in their protected EU home market.

(4) – There is limited scope to influence the EU’s negotiation strategy or priorities in favour of the UK’s interests. Commonly in contractual arrangements, money and concessions flow from the weakest – or more desperate – party to the strongest or more indifferent. Over the years the UK has not had that much influence in the corridors of EU power to protect its interests.  Leaving must inevitably reduce influence rather than strengthen it especially where any malevolence, greedy envy or dishonesty towards the UK is to be found.

(5) – Trading with the EU under WTO rules is more problematic than closely integrated trading as part of the Single Market – and in some instances, impractical or uncompetitive. The EU’s Customs Union operates tariffs and effectively non-tariff barriers (rules, regulations, inspections, approvals, standards, etc.) to outside imports from third countries, which the UK would become.  WTO rules do not change this situation, and even a free trade agreement may not help much where EU-imposed conditions are impractical to follow.

(6) – The resources needed to negotiate  – and in particular to protect our interests and not be ‘taken for an EU ride’ – have to be built up quickly and without in-fighting. Also, after leaving the EU, its Customs Union and the Single Market, the additional administrative arrangements here and in the EU, such as customs clearance or inspections, have to be in place and running smoothly. Unfortunately, over the years the UK has lost much expertise and knowledge of administrative systems thanks to the transfer of competences to the EU or the operation of the Single Market, whilst the world of intra-EU Member State trade has moved on with increasing volume and complexity.  Additionally, the UK Government has a poor record with large, complex projects – especially relating to information technology.

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In summary, consideration of these assumptions gives some indication of how risky Mrs May’s planned BREXIT strategy is if we are to take it at face value. There exists a significant likelihood of it being ‘derailed’, or at least not turning out as expected.  These six points are obvious areas for concern. Assumptions, if incorrect, cannot be changed, but we can however change our response before and hopefully well before, the worst happens.

There is more than one path for leaving the EU, whilst retaining a satisfactory trading relationship; perhaps our prime minister has something up her sleeve.  It is not impossible that as an interim solution, she may be considering temporary membership of the European Free Trade Association (EFTA) which would give us continued access to the European Economic Area (EEA) while still allowing us to leave the political clutches of the EU. This route would allow the UK to control levels of EU migration through unilaterally enacting the Safeguard Provisions in Article 112 of the EEA Agreement.  Remaining within the EEA (UK is currently a member through being in the EU) would retain trading continuity with the EU with the least disruption. Given a choice negotiating with future friendly EFTA partners is more attractive than negotiating with somewhat disgruntled soon to be ex-EU partners.