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.

Our closest friends would like to see an historic wrong righted

Now we are leaving the EU, Brexit provides an opportunity to put right an historic wrong which goes back many years.

Australians, Canadians, New Zealanders and other ‘subjects of the Queen’ are still treated as foreigners when they visit the UK. Whereas our membership of the EU has required us to submit to the EU’s principle of free movement of people, Australians and Canadians, among others, have to apply for a visa.

The Australian Monarchist League has urged Theresa May to address this historic wrong. “Mrs May forgets that many citizens of the Queen’s Realms are domiciled in the UK and have a vote as do many people with relatives and friends in these former British nations”, said a spokesman for the organisation. “It is about time Britain undertook to resolve this situation now.”

The Australian Monarchist League is considering an advertising campaign to make this an issue in the forthcoming election. Philip Benwell MBE, the national chairman, is already in London for meetings with British and European MPs and others to urge that there be established a special entry gate for those countries, such as Australia, who have the Queen as their head of state. He is not suggesting special visa allowances but merely arguing that those from the Queen’s Realms be treated with dignity and not as aliens.

The biggest obstacle Mr Benwell and others have faced in their 20-year campaign has been the negativity of supporters of EU membership in this country. With our country now about to begin the great divorce from the EU, the time is surely right to address this issue.

Mr Benwell will be one of the speakers at the Campaign for an Independent Britain’s annual rally in London on 29th April.

Photo by Tamsin Slater

Will she? Won’t she?

Sections of the press have spent huge amounts of time trying to second-guess Mrs May’s Brexit plan. At last, it seems, instead of speculation we will finally have some detail. The Prime Minister will be making a speech tomorrow which will put some flesh on her oft-repeated phrase that “Brexit means Brexit”.

Has she been dropping any hints? The consensus among the pundits is that she intends to take us out of the Single Market.  However, In an interview with Sophy Ridge on Sky TV, she merely said that we would leave the European Union – big difference! She also denied claims by Sir Ivan Rogers about “muddled thinking” and “lack of a plan”. Indeed, the interview saw her reiterate the point that with David Cameron having undertaken no Brexit planning, she and her team have needed time to study the issue in detail before triggering Article 50.

To suggest these few hints imply leaving the Single Market – alias a “hard” Brexit – is hardly an accurate interpretation. After all, her words were “What I’m saying is that we want the best possible deal, the phrase I’ve used is the best possible deal for trading with and operating within the single European market.”  Perhaps part of the confusion lies in her comment that “We will outside the European Union be able to have control of immigration and be able to set our rules for people coming to the UK from members states of the European Union.” It’s the old have-your-cake-and eat-it conundrum.

Pursuing the Liechtenstein Option would enable us to stay within the Single Market while considerably restricting immigration. Regular readers of this website will know that this is a possibility (Whether they support it or not) and no doubt Mrs May and her advisors also know this is a possibility, given her reputation for detail.  It seems that very few members of the Press are up to speed on this issue.

We are now reading speculation about the EU Customs Union, which is an irrelevancy.  The Customs Union, very different from the Single Market, was a non-issue in the referendum debate. Do some people not realise that it isn’t the same as the Single Market? One wonders. There has certainly been sufficient confusion in the City further to depress the value of sterling in the last week, meaning that consumers and motorists are suffering essentially because of potentially unreliable guesswork – and nothing more.

On the subject if free movement of people, however, Lodewijk Asscher, the Dutch Deputy Prime Minister, recently claimed that support for this cherished principle was eroding in other member states, mainly because of claims that cheap labour from Eastern Europe is enabling companies to reduce wages for native-born workers.  This claim was made in the UK’s referendum campaign and is an indication that the fallout from the Brexit vote  has by no means been dissipated.

But what will be the long-term effects on the EU remains to be seen. We are again in speculation mode and there is all too much of this at the moment.  Tomorrow in one area at least, some clarity will dawn.

Another headache for the EU

Concerns about the EU’s cherished principle of free movement of people is not only confined to the UK. Non-EU Switzerland voted to restrict migration from the EU in a referendum in 2014.

The EU was not happy with the result and has threatened to rescind the bilateral treaties which govern its relationship with Switzerland. but the Swiss have not backed down.   The deadline for an agreement is February next year. The treaties, which cover everything from agriculture to civil aviation and the free movement of people, contain a “guillotine” clause that would nullify all if one is struck down.

Talks are continuing to avoid this impasse.  EU diplomats reacted positively to a proposal to give Swiss job seekers an advantage over foreigners, but many obstacles still stand in the way of an agreement.

Switzerland has less flexibility in restricting migration than the non-EU members of the EEA. Liechtenstein has exercised its freedom to restrict migration. Switzerland will find it a lot harder to obtain concessions form the EU, as free movement of people is a cornerstone of the EU-Switzerland deal, as Swissinfo explains.

With the 27 other EU member states meeting for something of a crisis meeting in Bratislava, Slovakia, the scale of the EU’s problems is being laid bare.  Even within the EU, the Dutch are calling for an “emergency brake” on immigration. The former Soviet bloc countries are not so keen. Another idea being floated around is a distinction between free movement of workers and free movement of people, but some senior figures within the EU are none too happy about this idea. Come what may, however, it is apparent that both within and without the EU, the thorny issue of immigration is not going to vanish frm the headlines any time soon.

BBC muddying the waters

Anyone listening to the BBC news last week would have heard a misleading headline that Germany’s  finance minister Wolfgang Schäuble said that we would not be allowed to stay in the Single market

However, if you listened to the article in full, what he actually said was that if we were to stay in the Single Market, we would have to abide by the rules, including accepting the “four freedoms”. In other words, a bespoke deal isn’t on offer.

This is no great shakes. Whatever the wishes of many “leave” supporters, it will be the government which negotiates our exit strategy and we know that senior civil servants have been downloading Flexcit, an exit strategy document co-authored by, among others, Dr Richard North and CIB Committee member Robert Oulds of the Bruges Group. This advocates remaining in the Single Market by re-joinng EFTA and ths accessing it via the EEA agreement.

Herr  Schäuble’s words on which the BBC based their headline were given in response to the assertion that “Britain could continue to enjoy the benefits of the single market without being an EU member, in the same way that Switzerland and Norway do.” He replied, “That won’t work. It would require the country to abide by the rules of a club from which it currently wants to withdraw. If the majority in Britain opts for Brexit, that would be a decision against the single market. In is in. Out is out. One has to respect the sovereignty of the British people.”

As Dr North pointed out,  “The man thinks the EFTA/EEA (interim) option wouldn’t work. And that is on the basis of his interpretation that a vote for Brexit by the British people necessarily means a rejection of participation in the Single Market….What we have therefore, is an opinion based on an assumption, and nothing more than that – from a politician who is not a head of government, and who may not even be in office by the time Article 50 negotiations start in earnest……The finance minister is just another noisemaker in a debate polluted by noise.

While it is true that the degree of extra control over immigration which the EEA/EFTA route will allow us is not the same as that which may Brexit supporters desire, a recent poll conducted by Opinium, for the Bruges Group,  yielded the following results:

33% = Remain EU and Remain in the Single Market
13% =  Leave EU, join  EFTA, Remain in Single Market
39% = Leave EU, and have a Free Trade Agreement
16% = Don’t Know
Taking out the Don’t Knows, gives:
61% =Options to Leave EU (FTA + EFTA)
39% = Options to remain in the EU

(See here for a more detailed analysis of the result)
The poll shows that so strong is the desire of many to leave the EU that they are not taking much notice of the economic arguments. The “leave” side, however, needs to clean up its act. Recent polls are encouraging, but it would be a shame to lose a winnable referendum when the finishing post is in sight  because we are unable to reassure floating voters concerned about their economic wellbeing that the sky won’t fall in on  June 24th.  EEA/EFTA provides precisely such reassurance.