Transition to a permanent EU vassal state?

Unless the proposed transitional deal is blown out of the water, the United Kingdom appears to be moving inexorably towards being a permanent European Union  Vassal State. Recent speeches and other statements by Mrs May and Mr Davis point strongly to this being the most likely outcome from their handling of the Brexit (or Article 50) negotiations.  All looks good on the surface, but they do not understand how the EU works and some worrying facts emerge when you analyse what they did and did not say. .

Mr Davis, reiterating Mrs May’s decision to leave the Single Market, in his Teesport Speech of the 26th January 2018  said:

“While the aim of the implementation period is to provide certainty and continuity, we must keep sight of the fact that this is a bridge to a new future partnership.

Where, crucially, the United Kingdom is outside of the single market, and outside of the customs union.”

He then went on to say:

“We want a good Brexit for business and a good Brexit for the British people and we will deliver that on a frictionless access to the Single Market and a freedom political and an economic freedom for the future.”

Clearly there is a contradiction here – it is not possible to have frictionless access whilst being outside the Single Market (or the European Economic Area, EEA) and being a ‘third country’. Michel Barnier, the EU’s chief negotiator, has pointed this out on several occasions. For example, he said:

“A trade relationship with a country that does not belong to the European Union obviously involves frictions.”

Frictionless trade between members of the Single Market (and European Economic Area, EEA) occurs because of a common set of rules, regulations, processes or procedures, enforcement and overall EU surveillance. Accessing the EEA from outside its external borders involves complying with regulations, inspections and testing, processes and procedures, external tariffs, customs checks/clearance, VAT etc. intended for dealing with ‘third countries’.   These measures manage risks involved with ‘imports’ and sometimes are protectionist in nature.

The transition period (aka implementation period) clearly places this country into the status of a powerless EU Vassal State for 21 months after 29th March 2019 as explained here. However, if agreement on frictionless trade cannot be agreed during this period – which seems a certainty given Mr Barnier’s often repeated comments and how the EU normally treats ‘third countries’ – it will need to be extended potentially indefinitely.

Mrs May’s Davos speech on 25th January 2018 to the World Economic Forum provided the perfect audience to sell the opportunities presented by Brexit.  She could have outlined her vision, complete with objectives, timetable, planning and progress, in order to encourage her audience to invest here.  She could have addressed the principal concerns of business, for example, about market size and frictionless access to the EEA. She could have described (with specific detail) her vision for a ‘new, deep and special partnership’ with the EU which would have clarified and developed her Florence speech of 22nd September 2017.  Instead of which she focussed on artificial intelligence and making the Internet safer –  presumably her highest priorities.  Any business or political leader present, listening to and reflecting on the content could be forgiven for concluding that the UK government has nothing to offer, having already ceded control of Brexit negotiations to the EU and thus, any meaningful Brexit is not going to occur.

Artificial intelligence then is a very poor substitute for Brexit failure and even here Mrs May cannot easily offer unique government-supported opportunities for funding research and development nor can she use public sector procurement to facilitate innovation.  She can’t even protect the public sector from future Carillion fiascos. EU directives (laws) and gold-plating by her civil servants will interfere.

The transition proposals so far on offer from the EU (as explained here) are far worse than the alternative of remaining within the EEA through re-joining The European Free Trade Association (EFTA).   It is likely that the eventual transition deal (if it actually happens given  it is dependent upon Mrs May s accepting the EU’s outstanding Phase 1 conditions), will be even more onerous upon this country than already proposed.  The EU’s stance on transitional arrangements, manifested recently by the Annex to the Council Decision of 22nd May 2017 and published 29th January 2018, appears to be getting more uncompromising.  If accepted, Mrs May is likely to be forced into making further large payments into the EU’s budget, accepting continued freedom of movement of persons, taking on additional financial liabilities, remaining subject to the EU’s European Court of Justice (ECJ) and to the Common Fisheries Policy, transferring further responsibilities to the European Commission (typically defence and defence procurement, along with regulation of financial services), following the complete EU Acquis or body of existing and future law, and giving extra rights to EU citizens living here, etc..  Meanwhile, the UK will be prevented from negotiating free trade agreements around the world whilst being excluded from existing ones negotiated by the EU.

It was Mrs May’s decision to reject the EFTA/EEA option, even as a temporary measure. She first made this clear in her Lancaster House speech in January 2017.  The EFTA/EEA option allows for control of immigration through unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  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, the EEA component of the Acquis is only about trade and not political integration. Furthermore, 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.  The EFTA/EEA option was claimed to be the best choice for a Brexit economy in a recently leaked overly pessimistic draft government report EU Exit Analysis – Cross Whitehall Briefing.

Unfortunately it appears that both Mrs May and Mr Davis are well and truly out of their depth.  The Department for (not) Exiting the European Union also seem to be lacking in essential competence, and is in line to face the blame for failings in getting a successful Brexit. At best, everyone is following a political Brexit whilst ignoring practicalities.  At some stage the number of Conservative MPs who will realise that the dire situation this country is facing is of their own government’s making will reach a critical mass.  At this point, there will either be an almighty rumpus following which some quite senior heads are likely to roll or else if the government persists on its stubborn course, the electorate will punish the Conservative Party severely in the next General Election in 2022 for short-changing the British people over Brexit through their acquiescence in turning this country into a permanent EU Vassal State.

Brexit still on course – a statement from Anthony Coughlan (Dublin)

BREXIT STILL ON THE WAY AS THE EU/UK NEGOTIATION MOVES FROM PHASE 1 TO PHASE 2

Genuine democrats and EU-critics everywhere will welcome the news that Brexit is still on the way following the decision of the European Council of Prime Ministers and Presidents to move to the next stage of the EU/UK negotiation, i.e. on the two-year withdrawal period and the post-withdrawal trade agreement between the UK and the EU.

If there had been a failure to move the negotiation to Phase 2, ultra-Europhiles and Eurofanatics everywhere would have been delighted.

The European Council decision of the other day means that the hopes of such people that they can stop Brexit are significantly diminished, although they will continue to hope on and still do all they can to  attempt to derail the process.

The less EU-besotted amongst Irish policy-makers and media commentators will now have to start thinking for the first time whether it is really a good idea for this State to attempt to remain in an increasingly federalizing EU when 1.8 million of our fellow-countrymen and women  in Northern Ireland will be leaving it.

They will need to ask themselves do they want to be responsible for a new Partition of Ireland!

If the EU/UK negotiation leads to a meaningful Brexit, which means that the UK as a whole will leave the EU single market and customs union at the end of the UK Government’s proposed two-year transition/implementation period, as now looks probable, ONE CAN BE CONFIDENT THAT THE REPUBLIC WILL FOLLOW THE UK OUT OF THE EU IN TIME  because the drawbacks of the Irish State seeking to stay in the EU when the UK leaves will become so obvious and be so painful that the Irish public will come to demand nothing less.

However, wishful thinking is still likely to prevail widely in the Republic for some tine and among those “Remain” supporters everywhere who seek to overthrow last year’s democratic UK referendum result  –  in particular the hope that Brexit can still be frustrated in the Westminster Parliament or by a change of UK Government during the negotiations; or that at the end of the day the softest of “soft” Brexits will mean that the UK will effectively remain under EU supranational  jurisdiction.

Genuine democrats everywhere will  now wish UK Prime Minister Theresa May and her Government every success as they move to implement a meaningful Brexit that gives citizens of the UK democratic control of their own law-making once again and removes them from the EU single market and customs union.

The border which nobody wants

Ar first glance, it seems utterly bizarre. We don’t want to build a hard border fence between Northern Ireland and the Irish Republic and neither do the Irish or the EU. No one wants it but it may nonetheless have to be erected.

The reasons lie with the UK’s change in status. If it leaves not only the EU but also the European Economic Area, it becomes a Third Country. The EU does not permit goods to be transferred across its borders without the necessary customs clearance and the fact that we are going to maintain regulatory convergence with the EU up to Brexit day makes not one iota of difference.

But couldn’t we just agree to treat Ireland differently? In this instance, the rules of the World Trade Organisation wouldn’t allow it. Discrimination in trading arrangements that favour one country over another without any formal trade deal is not permitted – and we can’t strike a bilateral trade deal with the Irish Republic as it has no freedom to negotiate such deals, being a member of the EU. After all, this desire to regain control of trade policy was one of the reasons why we voted to leave.

So it is no surprise that Mrs May came away empty handed from her meeting with Jean-Claude Juncker yesterday. It is hard to read between the lines and fathom out what really went on. Did she really consider a deal which would have seen Northern Ireland end up with separate trading arrangements from the rest of the UK?  Such an arrangement would compromise the constitutional integrity of the UK and thus was never going to be acceptable to the Unionist community in the Province. “Northern Ireland must leave the European Union on the same terms as the rest of the United Kingdom,” insisted Arlene Foster, leader of the Democratic Unionist Party.

On the other hand, the Dublin government insists that EU regulations on issues such as food safety and animal welfare must be maintained in Northern Ireland, to avoid damaging cross-border trade once Britain leaves the EU’s single market and customs union.  However, to repeat, mutual recognition of standards cannot be agreed without a formal trade arrangement and that isn’t going to be on the table any time soon.

Parliament’s Exiting the European Union Committee published a report which  was decidedly pessimistic about the  prospects of a deal given Mrs May’s insistence that we will be leaving the Single Market. “The Committee does not see how it will be possible to reconcile there being no border between Northern Ireland and the Republic of Ireland with the Government’s policy of leaving the Single Market and the Customs Union.”

Quite why the Customs Union has to be dragged into this debate is anyone’s guess. There are seamless borders between non-EU Norway and EU member states Sweden and Finland. This is everything to do with the Single Market but nothing at all to do with the Customs Union, of which Norway is not part.

There can be no doubt about the concern felt in the Irish Republic about the prospect of “no deal”. Comparing the UK to EU-27 as a whole, our country could well end up facing the greater problems in the short term. Some individual countries would not suffer that badly either. Germany, for example, would soon shrug off any decline in trade with one of its major export markets and find others. For the Irish Republic, however, the effect of “no deal” would be devastating. We are the second largest importer of Irish goods and services after the USA, receiving 13% of total Irish exports. We are also the biggest exporter to Ireland, with a 24% share of Irish imports.

Given these figures, you would expect the Irish government to be among the most dovish of EU27. Unfortunately, according to Anthony Coughlan, this is far from being the case. In an e-mail to Edward Spalton, our Chairman, he wrote:

The members of the political Establishment in the Republic of Ireland, dominated as they are by career Euro-federalists, hope fervently that the whole Brexit project can be aborted or made effectively meaningless by doing everything they can to obstruct the EU/UK negotiations and by interacting privately with those cross-party interests that are seeking to test Brexit to destruction in Parliament. Irish policy-makers are doing everything they can these days to encourage this end, egged on by the Brussels people –  while not saying so publicly of course.”

He went on to claim that there was some collusion between Irish Euro-federalists and UK remainiacs: “I have not the least doubt that  key Irish/EU grandees such as Peter Sutherland, John Bruton, Pat Cox  and Alan Dukes are interacting at present with the likes of  Peter Mandelson, Keir Starmer, Tom Tugendhat et al to do all they can to frustrate Brexit in Parliament and that they are being encouraged by Messrs Barnier, Juncker and the Brussels people to do this, with the full support of the Irish Government and Opposition behind the scenes.”

Some eagle-eyed readers will remember that Peter Sutherland, a former European Commissioner, was the person who told the House of Lords that the EU should do its best to undermine the ethnic homogeneity of individual nations by increasing mass immigration. Anyone in this country who is formally associated with this contemptible individual is truly beyond the pale.

Given these serious allegations of troublemaking by Irish politicians, it is unsurprising that Mrs May has been sent a letter signed by a number of Tory MPs, economists and business leaders urging her to take a tough line with the EU, insist on a trade deal and walk away if the EU will not play ball. Add into this potent brew the firm and perfectly understandable stance of the DUP that every part of the UK must leave the EU on the same terms and it is unsurprising that David Davis has found himself having to work hard to find a solution to the impasse. His latest suggestion is that that the whole of the UK, and not just Northern Ireland, should retain regulatory “alignment” – not “convergence”  -with the EU.

Even before any discussion has taken place on what this actually means, however, an un-named EU official has effectively torpedoed the whole idea:-  “The UK will not have any say on the decisions taken in Brussels and will basically implement them without having any influence over them… it makes the UK kind of a regulatory ‘protectorate” of Brussels.‘” Any suggestion that such an abject surrender would be acceptable to the signatories of the letter to Mrs May – or the DUP for that matter – is plainly ridiculous.

It isn’t easy to separate the wood from the trees in the current flurry of activity, but it is looking highly unlikely that the Brexit negotiations will be moving on to the next stage (i.e., trade talks) after the critical European Council meeting later this month. The deadlock over the Irish border issue is raising the stakes higher by the day and it would be a brave man who would place any money on what the eventual outcome is likely to be.

Photo by Michael 1952

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.