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.

Macron and Marr muddy the waters as Brexiteers speak out against the ECJ

The headlines in Open Europe’s daily e-mail sounded very promising:-  “UK could have a bespoke arrangement between full single market access and a free trade deal, says Emmanuel Macron.” Isn’t that what everyone has wanted? Could it even be “having cake and eating it”?

Not if one reads the small print. Macron’s comments were made during an interview for the Andrew Marr Show. Nicola Shawson of the Guardian listened to the full interview and pointed out that Macron insisted that there would be no cherry-picking:-

Pressed on whether there would be a bespoke special solution for the UK, Macron said: “Sure, but … this special way should be consistent with the preservation of the single market and our collective interests… and you should understand that you cannot, by definition, have the full access to the single market if you don’t tick the box.”

So nothing new here. We will get a deal giving us some degree of access to the single market, but not full access. It will be worse than the access we enjoy as a full member. Fine. We already knew that.

Another person who listened to Macron’s interview with Andreew Marr was Richard North, who pointed out that Macron contradicted himself:-

By definition, he said, the relationship will be “less deep than today”. The deepest possible relationship is being a member of the European Union. But he then adds: “As you decided to leave you cannot be part of the single market”.

Now this is confusing because he goes on to say that “you can have some deeper relations and some others”. For instance, he says, “we have a deeper relation with Norway than the – the one we have with Canada”. So it depends on the outcome of the Brexit negotiation but, unless you change your mind, you will not be part of the single market because you will not be part of the European Union.

Addressed to someone like Andrew Marr, who already has a slender grasp of the basics – to say nothing of the body politic in general – this sort of confusion, where he elides membership of the EU and the Single Market, can be fatal.

Certainly, the French President seems to contradict what he was saying last week in the aftermath of the Anglo-French summit at Sandhurst.

It’s therefore not only our side which is getting into a muddle over Brexit.

Macron and Marr were discussing a longer-term EU-UK relationship, Turning to the transitional arrangements, it is encouraging to note that opposition is mounting among Conservative MPs to any role for the ECJ and to free movement of people after 29th March 2019 – Brexit day.  Jacob Rees-Mogg didn’t mince his words about free movement nor the cost of the Brexit settlement, while ex-ministers Iain Duncan-Smith, John Redwood, Owen Paterson and Lord Lawson also made clear their opposition to any involvement of the ECJ once we are formally out of the EU.

Of course, it is one thing to point out the bad features of a proposed deal and quite another to come up with a suitable alternative, particularly one which will satisfy the business community, which is desperate for some guidelines in time to plan for life outside the EU. Some compromises will have to be made as it is impossible to find even a short-term deal which will tick everyone’s boxes. A total surrender to the EU, however, turning us into a colony of Brussels for 21 months, is definitely not the answer and it is good that voices in Parliament are beginning to be raised which will hopefully force a re-think – and soon.

 

PS: Since this article was published, a further article which provides an indication of the scale of opposition to free movement of people and any role for the ECJ after Brexit has appeared in the Independent. Mrs May is going ot have a very tough time trying to get an agreement for the transitional deal as it stands, although a leadership challenge, as suggested by the author of the article, does look very unlikely.

Photo by LeWeb14

Mrs May’s EU Vassal State

How much humiliation are Mrs May and Mr Davis prepared take at the hands of our European Union (EU) overlords? When will the pain they are going through reach such a level that they finally grasp the reality of the EU’s superior machinations?  It is now so obvious that the United Kingdom is to be made the latest example of what happens when the power of the EU’s rigid, self-interested bureaucratic and political machine is defied; it cannot be bargained with or changed – just obeyed.  And worse, Mrs May through her mistakes and Mr Davis through his slothful ignorance, has not just allowed it to happen, but made the EU’s worst excesses unavoidable. The first (So-called transitional) phase of  Mrs May’s ‘deep and special relationship with our EU partners’ after 29th March 2019 amounts to being a vassal state to the EU Empire just as around 2000 years ago Judea under King Herod the Great was a vassal of the Roman Empire. They eventually took over completely. The EU is threatening to do the same. What has gone so disastrously wrong?

In January this year Mrs May in her Lancaster House speech ruled out continuing membership of the Single Market (and European Economic Area, EEA aka Internal Market). Continuing membership is possible through membership of EFTA (The European Free Trade Association).  All the UK has to do is join – or rather re-join – assuming the existing EFTA members would have us back, which seems far from improbable. This route offers the ability to limit immigration from the day we leave by unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  The EFTA route to EEA membership does give members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). The EEA Acquis or body of law is about a quarter of the total EU Acquis since it only relates to successful functioning of the EEA. And EFTA members make their own trade agreements with other countries.  Membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland.  It is EEA membership that allows seamless trade since regulatory measures are the same for each side, whereas being a ‘third country’ outside the EEA brings a hard (often protectionist) border with the EU of controls, tariffs, inspections etc.

Mrs May rejected even temporary EFTA/EEA membership (for reasons that have never been stated) and now, in order to get a transitional agreement (to buy time to negotiate a free trade agreement), she is being faced with having to agree a far worse arrangement with the EU (see European Council (Art. 50) meeting (15th December 2017) – Guidelines). For two or more years (subject to EU agreement) we will continue to be subject to the full EU acquis, pay into the EU budget, accept freedom of movement, be unable to make our own trade agreements with other countries,and accept the overall jurisdiction of the ECJ. It gets worse. During this transitional time (after 29th March 2019) the UK would have to accept unconditionally any new additional or amended laws and costs the EU wants to impose. All whilst actually being excluded from any decision making – all pay with no say.

Even an agreement from the EU to this transitional agreement is not a foregone conclusion, in spite of Mrs May being forced to fall into line just to get this far.  She has had to agree to the EU’s methodology for working out outstanding financial liabilities, She has had to accept the ECJ creating a different (potentially privileged) legal status for EU citizens here and the Irish border being effectively an internal EEA border; (though she may not yet realise that is the only workable solution for a soft border). We would be stuck with the Common Fisheries Policy and there is nothing to stop the EU imposing further demands for accepting a transitional agreement or during implementation whilst we remain a vassal state, for example, participation in the emerging EU Army and its common procurement (concealed under the initials PESCO), implementing centrally imposed migrant quotas and paying EU imposed fines.

Mrs May’s recent Brussels ‘triumph’ is more likely a poisoned chalice where there is little incentive for the EU to be accommodating or to hurry up with a free trade agreement.  Such discussions are very much on the EU back burner until after we become a vassal state (aka “leave the EU in name only” on 29th March 2019). Mr Davis talks about having a FTA agreed before we leave the EU and Mrs May talks about its implementation period, but this isn’t going to happen, as explained above. Indeed, it was spelt out by the EU’s Trade Commissioner back in 2016.  Even if they believe what they are saying, these are no more than wishful thinking and no matter how often they repeat them, it won’t make their hopes come true.

Looking at the bigger picture, progress so far by Mrs May, our EU negotiators and the Department for (Not) Exiting the European Union in managing Brexit has been lamentable and cavalier towards managing risk. The recent Joint (progress) Report, (and EU Commission Communication), containing contradictions, fudge and weasel words to appease all interested parties, amounts to 15 pages. Although not legally binding, it is likely to become politically binding upon Mrs May, contradictions and all.  Then there are the 58 non-existent sector-by-sector impact assessments which Mr Davis once claimed existed, but has since denied. How can the best route out of the EU be chosen when those doing the choosing haven’t a clue what could go wrong or even how anything works?  By contrast, here are impressively informative sector-by-sector assessments by Eureferendum.com.

Predicting the future is fraught with imponderables and the potential exists for unforeseen events completely to change outcomes.  So in the end, it is possible that things could be fine. However, judging by experience to date, this looks increasingly unlikely. We can but hope that Mrs May will abandon her single-minded rejection of the EEA/EFTA option, as the options she seems to be pursuing contain impossible contradictions. Perhaps she doesn’t know enough yet to understand all the practicalities. Meanwhile, how long can Mr Davis will keep on talking up imaginary progress towards a free trade agreement whilst getting nowhere and at the same time, making regular, very public gaffes that undermine the credibility of Brexit negotiations?

Another question remains unanswered, perhaps because nobody has asked it yet:– why put all your efforts, concessions and kowtowing into negotiating a complex transitional agreement, which could end up lasting a long time, when a far better (or less damaging) simple solution exists (of EFTA/EEA membership) at least for a transitional arrangement?  You rejected it once, now you are leading us into a worse mess all round until who knows when, why?

Brexit: what we want and what we might get

The last week has seen the publication of a number of positions papers by the Department for Exiting the European Union, covering issues ranging from trade and the jurisdiction of the European Court of Justice through to the Irish border. You will find articles which review each position paper on the website.

Of course, what the UK government wants and what the EU will agree to may not be the same thing. Indeed,  at least one commentator is claiming that the position papers do not yet reflect a final government position but are but one side of “an internal debate within the Conservative Party.”

But what do UK voters want from Brexit? A survey by the London School of Economics and Oxford University asked more than 3,000 people for their thoughts – including both leave and remain voters.

The most interesting finding is the unity between remain and leave voters on a number of issues. Barely one third of those surveyed are keen on single market membership, ongoing EU payments, free movement and the jurisdiction of the ECJ once we leave. Significantly, this majority includes a number of remain voters.

Although there is widespread support for a free trade agreement with the EU (88%), 69% want customs checks introduced at the borders – some what contradictory stances!

What is more significant is that this survey offers little support for hard-core remoaners and remainiacs  who wish to stall Brexit. The referendum is now behind us; the majority of the population has accepted the result and wants to see the government make the most of the opportunity leaving the EU provides.

What sort of deal we will get, of course, is another issue. Analysis of the position papers published so far  do not give us any sort of detail about how deals on many areas are going to be concluded. We have seen what amounts to a UK wish list which the EU may well decide to refuse.

Still, amidst all the concerns about the lack of progress by the Department for Exiting the European Union, one good piece of news appeared today. Net migration (immigrants minus emigrants) has fallen by 81,000 from 327,000 to 246,000 in the year to March.  The number of EU nationals coming to the UK fell while over 33,000 more additional EU nationals left the country, including an extra 17,000 from the so-called EU8, the former Soviet bloc countries who joined the EU in 2004. 246,000 immigrants still equates to a city the size of Hull or Plymouth and is well above the Conservatives’ net migration target of under 100,000. This drop is nonetheless welcome. Many individual factors no doubt contributed to it, but Brexit would indisputably have been one of the reasons. Given that one  of the reason for the Brexit vote was a desire to end free movement and thus bring immigration down, it is encouraging to see that it has already had a benign effect – and without the Government even doing anything!

Photo by dullhunk

Brexit – the Irish angle

Nigel Dodds, the Deputy  leader of the Democratic Unionist Party who leads the party’s MPs in Westminster, responded  to the recent Queen’s Speech by saying, “Let me make it very clear – I believe when people voted in the European Union referendum to leave the European Union that they voted to leave the single market and customs union. And I believe that Northern Ireland must, along with the rest of the United Kingdom, do likewise.” He added, “We must not get into a situation where we have borders erected between the island of Ireland and the rest of the United Kingdom.”

The status of the border between Northern Ireland and the Irish Republic – the only land border between a newly-independent UK and the EU – is  one of three issues which the EU wants to settle before trade talks can begin. Professor Anthony Coughlan, the veteran Irish Anti-EU campaigner, has proposed that the best way of resolving this problem is Irexit – in other words, the Republic of Ireland should leave the EU as well. He argues that is is logically the best thing to do, even though it is “unpalatable” for many in the Republic.  “If one quarter of the Irish people and one fifth of Ireland’s land area are going to leave the EU because they are part of the UK, has the rest of the country any real alternative but to follow, however reluctantly?” he asks.

It is the Republic, not the UK, which will be the big loser from Brexit if it stays in the EU, he argues. “Dublin and London want to maintain the common Anglo-Irish free travel and trade area. But if the Republic opts to stay in the EU when Northern Ireland and Britain leave it, it is the Republic of Ireland, not Britain, that will be putting the common area at risk. London has Dublin over the proverbial barrel on this.  It can bend Dublin to its will if it so wishes.  There is no international law or moral right to a free-movement facility like this between two different sovereign States.”

He also highlights the problems caused by the EU’s desire for closer military integration, a subject which Donald Tusk, the President of the European Council, highlighted as a priority three days ago.  “If the Republic remains in the EU when the UK leaves, it means that it will become part of an EU military bloc under German hegemony.  That can hardly be in the security interests of the UK.

As an aside, it is interesting that Professor Coughlan, looking at our current situation from across the Irish Sea, takes a far more measured approach than some of the ridiculous headlines we have seen in the press recently. “The fundamental point to grasp about the post-UK-general-election situation is that Brexit is going to happen, whether under Theresa May, Jeremy Corbyn or someone else. The UK is going to cease being an EU Member State.  The only issue still open is how long this will take.” Absolutely. What is more, a recent communication from the European Council on the subject of relocating the EU agencies currently based in the UK (the European Medicines Agency (EMA) and the European Banking Authority (EBA)) says the same thing:- “As the United Kingdom has notified the European Council under Article 50 of the Treaty on European Union of its intention to leave the Union, it is necessary to move the two United Kingdom-based Agencies to other locations within the Union’s territory.” Whatever the rhetoric, the EU is gearing up for Brexit.

Yes, we are going to leave, even if the timescale and route of our exit are still uncertain. As far as the impact of Brexit on the Irish Republic is concerned, the next few years will be very interesting. The country has recovered from the Great Recession better than the other so-called “PIIGS” (Portugal, Italy, Ireland, Greece and Spain). Unemployment stood at 6.4% and youth unemployment at 12% in April, compared with more than 20% and 45% respectively for Greece. Furthermore, the Irish housing market, which took a battering in the Recession, has recovered. Nonetheless, the country is one of few in the Eurozone which may return to deflation. Given that the €uro has been the  culprit for all of Ireland’s recent economic woes, the chance to escape its straitjacket may become more appealing as Brexit draws nearer.

 

 

Deal or no Deal?

Britain faces some challenging Brexit negotiations. However viewed through the lens of best practice identified in a commercial negotiating manual, there is evidence that Britain will secure a deal with the EU.

Pre-election rhetoric suggests that the tone of the negotiation might be ‘competitive’ (i.e. hostile). Much of it will actually be about co-operation on matters of common interest like trade, travel, security, etc.

Power is more balanced than some would say. We might buy more from the EU than vice-versa, but proportionately have more to lose on trade. However needlessly damaging a major customer will harm supply chains, EU exporters, EU nationals working in the UK and sending money home…

Over 50% of UK shares are now owned by international investors. EU holdings in the UK are worth £496bn.  At the G20 meeting in September, Japanese business and government demanded Single Market-type access be maintained by both sides.

Policy on both sides is for free trade. This is obviously not absolute –  the EU won’t suddenly complete the single market or open up sensitive defence procurement. But it is committed to various international agreements that commit towards trade liberalisation, stability and not raising barriers.

The EU is a keen supporter of the World Trade Organization (WTO) whose rules allow regional unions (such as the EU) as a means of easing trade between members, but not to raise barriers to trade. In fact, they must avoid creating adverse effects upon other WTO members

There is plenty of incentive for both sides to reach an agreement – if just because they will have to live together as neighbours. The UK could be a major ally in defence and security, so long as its economy is not crashed. It could also be a substantial makeweight in future joint trade deals?

The global economy is so interlinked that failure to reach a viable deal will affect wider economic confidence and stock markets. In the EU, exposed economies like the Irish Republic and Spain would take a hit, with likely local backlash against EU interests – just before the 2019 European Parliament elections.

A botched deal could see the Euro and Sterling hit, with safe haven currencies like the Yen suddenly soaring, hitting wider currency and export stability.

Another factor is the view of the EU’s ‘social partners’.

ETUC represents EU-wide trade unions. Employers’ bodies include Business Europe (‘a CBI’), UEAPME (representing SMEs) and CEEP (representing public service providers). Seen as influential stakeholders, they wish to avoid austerity and damage to Europe’s workers and companies.

Although the EU and UK will start negotiations with some diverging and conflicting positions, remember that this is quite normal for negotiations. Demands tend to be padded so that compromises are seen to be made. Spain has already gone back on the EU ‘demand’ over Gibraltar. In practice, there will be a lot of common ground (e.g. on expat rights). Expect positions to converge.

Despite pre-election rhetoric to appear ‘tough’, it has long been seen that May will play safe and trim to a position that can be pushed through Parliament under tight timescales. This indicates arrangements very similar to being in the Single Market (EEA) as a fallback while the ideal of moving to a bespoke Comprehensive Free Trade Agreement (CFTA) is worked on as arrangements stabilise.

In March, Michel Barnier, the EU’s chief negotiator, appeared to be leading the UK in the direction of EEA membership as the Brexit option with the least disruption.

Threatening to walk-away was part of that rhetoric. Neither side wants ‘Mutually Assured Destruction’ that ‘no deal’ would give. You can bet there will be a deal, even if it’s part agreement, part provisionally keeping respective ships afloat while talks continue.

Negotiations are often about saving face, getting a deal that can be sold to key audiences. The UK might, for example, get better trade terms in exchange for saving the EU a budget shortfall before 2021. Except it won’t be billed as a cave-in, at least in the UK. It might be portrayed as a goodwill gesture to have a joint ‘Brexit adjustment fund’?

Other areas of ‘compromise’ short term might be over accepting EU standards and judgments (which the UK might do anyway in ‘nationalising’ EU laws), or free movement of people. Theresa May has refused to guarantee less EU immigration, consistent with keeping EU citizens’ ‘acquired rights’.

Attitudes to paying the EU vary from ‘they’re getting nothing’ (apart from for joining in specific programmes) to ‘£60bn is nothing to pay for winning back our priceless democracy’. The EU is already preparing for economies after 2021 in its budget, which might reveal the real expectation. However with Germany’s election coming, Angela Merkel and the EU will not want to be seen as saddling Germany with extra contributions. We can expect a harder line short-term.

As an alternative to direct payments, the UK might gesture on recycling saved payments into projects of common interest like defence or tackling irregular migration?

A successful negotiation is one where both sides can claim some success at the end, even if some concessions leave bruises!  Experienced negotiators will recognise that the other party will need to maintain its image too, and they will not seek to humiliate.

Earlier perceptions that the EU might want to ‘punish’ the UK to deter it or others from leaving have been overplayed. Its luminaries might have been exorcising tensions immediately after the referendum shock, and the line taken since has typically been more conciliatory as heads cool. In practice, there is little evidence that any other member state currently wants to follow the UK out of the EU.

European Council President Donald Tusk has quipped that Brexit is ‘punishment enough’ as the UK copes with some upheaval.

There are already outline solutions to some identified problems. The EU can give legal exceptions (derogations) on border measures which might ease the Irish situation. The WTO ‘waiver’ might allow provisional preferential trade agreements to run for a couple of years should there be difficulties (e.g. time-wise) in finalising what is necessarily a complex deal.

The Lisbon Treaty focuses the EU towards the vision of ‘an area of prosperity’ marked by cooperation with neighbouring countries.

Lord (Paddy) Ashdown sees the UK getting a tailored Norway-like deal with a work permit system. He’s not just a Lib Dem peer; he’s President of the European Movement federalists in the UK.

http://www.newalliance.org.uk/ref617.htm has references used for this article.