Brexit roundup – short-term problems; longer-term potential?

With Parliament  still in the Easter recess, things have been a bit quieter than usual on the Brexit front. However, the well-supported fishing protests last Sunday suggest that we are going to be entering a  period in which the Government will face ever-mounting pressure to try a different approach to securing some sort of workable short-term post Brexit arrangement.

The long term is not looking promising either. Given how readily Mrs May and David Davis rolled over, what is the likelihood of their resisting demands from Michel Barnier that the UK sign a “non-regression” clause in any long-term agreement, which would force the UK not to undercut EU standards on tax, health and the environment to poach investments. He has also insisted that access for EU fishing vessels must be included in any long-term deal. The “environment” issue is a red herring as many EU environmental laws owe their existence to UK influence, but why should we not determine who fishes in our waters? Why should we be denied the freedom to cut tax? The state in the UK is horrifically bloated, as in most other Western nations.  It needs to be shrunk drastically and were this to be undertaken, taxes would inevitably undercut those in many EU member states.

Going back to the transitional arrangements, a report from the House of Commons Brexit Committee has confirmed that if a “deep and special partnership” with the EU proved unsuccessful, EEA/Efta membership was an alternative that could be implemented quickly. Although the Committee is looking at EEA/Efta as a long-term solution (which it isn’t)  it would be a better alternative than the current proposals for the short term, which poses the question as to why Mrs May and her team are pursuing such a damaging alternative. Maybe they still believe that it’s worth enduring 21 months of humiliation because  there will be a marvellous deal at the end – a hope which is unlikely to be fulfilled. Barnier’s comments make it clear that he wants to deny us as much long-term freedom as possible.

A number of Commonwealth countries have been discussing a future trade relationship with the EU. The Canadian Prime Minister Justin Trudeau has said that it would be “fairly easy” to negotiate “an improved approach on trade between Canada and the UK” after Brexit. The same article claimed that India is becoming less enthusiastic, no doubt due to  the recent statement by Theresa May that she still intended to reduce annual net UK migration to less than 100,000, meaning that India’s desire for more of its citizens to come over here as part of a new trade deal is unlikely to be fulfilled. Australia is also keen to start negotiations with the UK on trade, but pointed out that  if we stayed in the EU’s customs union after Brexit, we wold become “irrelevant”.

Meanwhile, disgruntled remoaners are still seeking to over turn Brexit by demanding a second referendum.  For all her failings in other areas of Brexit, at least Mrs May is standing firm on this. “Regardless of whether they backed Leave or Remain, most people are tired of hearing the same old divisive arguments from the referendum campaign, and just want us to get on with the task of making Brexit a success. And they’re right to think that. The people of this country voted to leave the EU and, as Prime Minister, it’s my job to make that happen.” she said in a recent speech to mark one year until Brexit day.

Mrs May is most definitely right in claiming that most people have had enough of Brexit controversy. Claims that some 44% of voters want a second referendum do not tally with real-life experience.  Given that the poll was conducted by a pro-remain group, Best for Britain,  a healthy degree of scepticism is justified. Mrs May has the support of Jeremy Corbyn in opposing a second referendum and it is doubtful whether those activists on both sides of the argument who spoke in debate after debate, criss-crossing the country and having to suspend anything resembling a normal life for three months would want to go through it again.

The clamour is coming from those who wouldn’t have to do the donkey work. The latest addition to the ranks of these good-for nothings is David Miliband, who called Brexit “the humiliation of Britain.”  Well, Mrs May does seem to be trying to do this at the moment, but a decent Brexit would be the absolute opposite – a chance to stand tall as a sovereign nation once again. there’s nothing humiliating about this.  One after another, the fears stoked up by remoaners are being debunked. The UK economy has performed well since the vote and only today, Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, stated that despite attempts to lure parts of the finance industry to Paris or Frankfurt, London would remain Europe’s financial hub after Brexit.  A mass exodus from the City was always a concern during the referendum campaign, but such fears are unfounded.

In many ways, a healthy debate on how we leave  – i.e., the relative merits of the current transitional proposal versus EEA/Efta as a holding position will take the wind out of the remoaners’ sails and would cut their media exposure in favour of more important issues. However, one cannot overstate the importance of winning this debate. Brexit must mean Brexit (to quote Mrs May). Surrendering to the EU’s demands for a transitional deal would prevent us fully achieving the separation for which we voted in June 2016. This must not happen.

The fantasy of a “frictionless” trade agreement

Mrs May and Mr Davis’ oft repeated aspiration for ‘frictionless’ trade with the European Union (EU) via a free trade agreement (FTA) and mutual recognition of standards will in reality consign the United Kingdom to being a permanent EU vassal stateBrexit will be in name only, with “stay, pay, obey without a say” being the outcome of their mishandling the Brexit negotiations.  The transition agreement, which turns the UK into an EU vassal state thanks to completely caving in to unreasonable demands by the EU, is a forerunner of even worse things to come. The transition deal (partially agreed, although a long way from being ratified) is vastly inferior to the deal which they could have obtained, but rejected out of hand as far back as Mrs May’s Lancaster House speech 17th January 2017. We could have retained our membership of the Single Market (and wider European Economic Area, EEA) through re-joining, even temporarily, The European Free Trade Association, EFTA. This alternative, also known as the ‘Norway Option’, could have delivered practically ‘frictionless’ trade and a soft border on the isle of Ireland.

At the heart of Mrs May and Mr Davis’ highly risky, far-fetched and delusional approach to Brexit is a failure to understand the nature of the EU, the European Economic Area (EEA), EFTA’s working relationship with the EEA including the EEA Agreement, mutual recognition of standards and how world trade works.  They make the most basic mistakes and repeat factually incorrect or incomplete statements to support their contradictory desire to leave the Single Market while retaining the same level of market access through an FTA.  They appear unwilling to take cognisance of readily available facts that completely disprove their fatuous mantras.

The details of what will happen after the UK leaves the EU (and the EEA) are there for anyone to see on the EU’s dedicated website  – especially in the increasing number of “Notices to Stakeholder”s under Brexit preparedness) It makes somewhat chilling reading.  There is nothing equivalent on the Department for (not) Exiting the European Union’s website. Presumably either they haven’t done this vital work or have chosen not to share it – a truth too awful to tell?

Upon leaving the EU and the EEA we would become a ‘third’ country. We would then be subject to different requirements by the EU in order,  at best, to manage the risks (to consumers and others) of doing business with us (or any other ‘third country’ outside the Single Market or EEA) and, at worst, to erect protectionist trade barriers in favour of domestic EU enterprises.  From the EU’s perspective, they will not grant concessions to ‘third’ country suppliers outside their control which are not enjoyed by EU domestic suppliers, especially when these could increase risks or create an ‘unfair’ competitive advantage.  The EU also has to treat the UK the same as any other ‘third’ country in order to comply with World Trade Organisation (WTO) agreed requirements or principles.

The EU is developing the Single Market by harmonising standards, regulations, and enforcement or surveillance within a top down centralised legalistic and bureaucratic framework under their supervision and control. It is also a long-established declared ambition that ‘third’ countries (outside the EU, or wider European Economic Area, EEA) would adopt or follow at least some EU-style measures.  The EU’s approach (to products) is outlined in principle in COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Enhancing the Implementation of the New Approach Directives and in more detail in the EU’s Guide to the implementation of directives based on the New Approach and the Global Approach .

For the EU, mutual recognition of standards (which differ from theirs) has limited application, since it is not their preferred choice where harmonised standards (in their widest context) exist.  In any case, there is the practical complexity and increased cost of demonstrating equivalence and compatibility, which can be far from straightforward and unacceptable to consumers and users.  To take a simple illustration, traffic lights using green on top for ‘stop’ and red underneath for ‘go’ certainly provides equivalent functionality but are far from compatible and acceptable.  Also test values from subtly different tests may mean a product is (theoretically) less safe rendering it unacceptable or requiring expensive (or impractical) re-design, which in turn may invalidate other test results and/or existing certification/approvals.  (See also the Fallacy of Easy Mutual Recognition of Standards).

The EFTA/EEA option is not perfect, but is far more favourable to the UK’s interests than the transitional deal on offer or indeed, to what will eventually emerge as Mrs May’s FTA and ‘deep and special relationship’. Norway participates in the EEA through membership of EFTA. Actually it only implements EU legislation necessary for functioning of the EEA, which at most constitutes around 25% of the total EU acquis or system of laws. More than 90% of these EEA related laws reportedly originate in global bodies, meaning the UK would need to implement them anyway for global trade, unless we leave the World Trade Organisation (WTO), et al. Also 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). What is more, EFTA members make their own trade agreements with other countries.

Contrary to statements by M. Barnier and Mrs May about the four indivisible freedoms, EFTA/EEA membership contains the facility to control immigration. Two members of EFTA have unilaterally invoked Article 112 (the Safeguard Measures) of the EEA Agreement to restrict free movement – Liechtenstein for people and Iceland for capital. The UK could do so too if we retain membership of the EEA by re-joining EFTA.  Ironically, Articles 112 and 113 of the EEA agreement, which Mrs May rejects, are reproduced closely by the EU in their draft Withdrawal Agreement, Article 13 (Protocols NI), allowing the EU unilaterally to restrict freedom of movement (including immigration into the EU from the UK).

Continuing membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland, thus avoiding a hard border between Northern Ireland and the rest of the UK (something Mrs May has ruled out, for the moment).  It also gives us full control of fishing in our Exclusive Economic Zone.  The EEA agreement (for EFTA members) can be adapted to suit their interests.  Thus the UK (within EFTA) could get a bespoke version.  So we could ‘imitate, adapt and improve’ on the existing EEA agreement to suit our needs rather than follow an insular and amateurish effort to ‘re-invent the FTA wheel in a few months’ that isn’t going anywhere.

From the beginning, the EU negotiators completely dominated the Brexit negotiations. It was inevitable then that negotiating concessions (or cave-ins) would be made by weak, dithering and clueless Mrs May and Mr Davis to strong, decisive and professional M. Barnier and his team. Comparing the EU’s draft Withdrawal Agreement with the text agreed by the UK shows just how much the increasingly uncompromising EU is getting its way.  Worse still, the EU is getting away with demands that are over and above those necessary for trade, with more already in the pipeline (such as fishing, defence, defence procurement, locking UK into EU budgets etc.).  If you thought the Transitional Deal was bad, wait until you see the final withdrawal agreement and the FTA.

EU Turns Up The Heat: Threatens to ‘Punish’ British Fishermen

Press release from Fishing for Leave

Fishing for Leave lambasted comments made in the Danish Media following the visit of EU Chief negotiator Michel Barnier to Denmark’s main fishing port Thyboron, saying; “You can keep your “Harshness!! – International law confers Britain full sovereignty and control over all our waters and resources!”

– EU Fishermen say; “Brexit has incredibly big impact on our company and all of Denmark’s fisheries. We rely on getting into British waters, he says, saying that 85 percent of the catch of the species of sand eel caught in Thyborøn takes place in British waters”.

Fishing for Leave spokesman Alan Hastings said; “As much as no British fishermen wishes personal ill on other fishermen, where were the EU tears when our resources robbed and communities decimated?”

“Does no one in the EU feel guilty that you built a future for the EU industry on robbing UK coastal communities of theirs?”

“Time for Michael Gove robustly to defend UK interests so we can rejuvenate our communities that were sacrificed with a detrimental deal that benefited the EU”.

Britain has the formal opportunity under international law to stop fishermen from Denmark and other EU countries fishing in British waters post-Brexit.

But fishermen in the EU, along with Michel Barnier, say such a decision could also have a negative impact on British fishing.

They say the EU would look to close EU markets to force Britain to continue current shares and access that see’s EU vessels catch EIGHT times more fish in UK waters as UK vessels do in EU waters 780,000 tons vs 90,000 tons.

“When it comes to fishing, we will talk about the topics that are directly related. Our access to British waters and their access to our market”, said the EU’s Brexit negotiator Michel Barnier aboard the fisherman Meilsø when he visited fishermen in Thyborøn today (3rd March 18).

 “Monsier Barnier made it clear that there will be a negotiation with EU fishermen’s access to fishing in British waters and allowing British fishermen to sell their products on the EU’s internal market” says DR’s correspondent Ole Ryborg.

At this point, according to Ryborg’s Prime Minister Lars Løkke Rasmussen the Danish government; “will help Barnier to be harsh in negotiations with Britain in the fishing industry”.

Fishing for Leave responded to the threat by pointing out that the EU markets dependency on UK fish exports combined with EU losing the ability to catch 60% of the fish in UK waters would only increase EU markets necessity on UK fish.

Alan Hastings from FFL said “What the EU thinks is a position of strength is actually a weakness and that is their dependency on our resources as a critical part of their food supply”.

“This is no different from the cod wars when British vessels lost access to Norwegian and Icelandic grounds but almost immediately UK processors on Humberside started to import fish direct from Norway”.

“Remainers and the EU cite tariffs but when the cost of tariffs is weighed against the £3-4bn worth of resources which we can repatriate this offsets tariffs by a huge margin as UK fishermen will be able to land more of what they are otherwise forced to discard”

Alan concluded “Michel Barnier’s comments are a shot across the bow and the battle to restore our sovereignty & governance of UK waters is very much alive!

“Will the government capitulate to EU demands or stand up for British coastal communities and not use them as an ‘expendable’ bargaining chip for 2nd time in the face of EU belligerence?

“The big question for Michel Barnier is, why should the EU get continued access? The UK provides 50% of waters but EU relative stability only gives us 25% of our fish”.

“Fishing is massively important to UK communities too and the CFP has been an economic, social & environmental disaster. Brexit also allows environmentally and economically decent UK policy where we become equal of Norway & Iceland.”

“Taking back control is an “acid test” Michael Gove for this government in coastal constituencies. Will the government hold fast or face electoral oblivion in areas like Cornwall, Kent, East Anglia, Yorkshire and the NE of Scotland?”

The EU’s potential lifeline for Mrs May’s Brexit

The European Union (EU’s) Brexit negotiators from Mr Barnier (chief negotiator) downwards must have long since realised that Mrs May, Mr Davis and the Department for (not) Exiting the European Union are incapable of serious negotiations. Meaningful progress towards leaving the EU in an orderly way including suitable agreements, arrangements and infrastructure is practically non-existent; there is a mountain of detail yet to climb. What, then, can the EU do to rescue the process and Mrs May, since Mr Barnier has previously stated on more than one occasion that he can’t negotiate with himself?

The view from Brussels must be of a weak prime minister leading a fractious, divided party and government, who has a poor grasp of detail and instead relies on spin, wishful thinking and dithering.  Even the output from the Department for (not) Exiting the European Union is poor and vague to the extent of being practically useless. Their website, where comprehensive information and practical guidance on Brexit, and hyperlinks to further sources of information should be available, is more of a case study in superficiality, grandstanding and self-aggrandisement.  There is not even a link to the European Commission’s website on Brexit preparedness.  So whose job is it to help prepare the UK for Mrs May’s decision to leave the Single Market and – by extension – the European Economic Area, EEA?

By contrast, the output from the European Commission, setting out its increasingly uncompromising position, is clear, focused and comprehensive.  Right from the beginning, the EU has been making the running.  Its dedicated website illustrates the impressive (or terrifying) detail of their ‘public’ vision of where Mrs May and Mr Davis’s Brexit is heading and the implications, which appear to look like ‘falling off a cliff edge’ to many UK businesses.  Its advice to stakeholders (available here) repeatedly spell out, in as much detail as possible, what will undoubtedly happen across a wide range of activities and policy areas when the UK becomes a ‘third’ country after leaving the EU (on 29th March 2019) and the EEA.  It is quite likely EU officials often frustratingly ponder the question, “Do our British counterparts and their political leaders understand any of this, and do they actually care what it all means?”  The problem for our team of negotiators is that they do not seem to know and understand EU laws and regulations, their rationale and implementation. This is essential if they are to develop appropriate strategies, negotiating positions and challenges to the EU’s tough, logical and systematic stance.

From the EU’s perspective they have helpfully agreed to a transition period limited to 21 months which is necessary to give Mrs May time to negotiate a free trade agreement. In reality, much longer is probably needed. However, the EU’s terms for this transition period  – which have still not been agreed – would be very unpopular in the UK and thus may never be accepted given Mrs May’s weak position in Parliament.  The EU’s terms would make the UK into a temporary or maybe even permanent EU Vassal State where Brexit means Brexit in name only.  Crashing out of the EU without transition arrangements and not having any form of mitigation of the consequences of ‘third’ country status (the “cliff edge”, in other words) is becoming increasingly likely.

The European Commission is well aware of political developments in the UK and of the consequences of no deal scenarios (given the detail on their website). Its negotiators also have to confront the contradictions in Mrs May’s position.  Frictionless trade (as required by Mrs May and Mr Davis) is not possible as a ‘third’ country outside the Single Market (and the EEA).  Time is running out for businesses both here and in the remaining 27 Member States of the EU to adjust.  Time is also impractically short to put in place new facilities and legislative frameworks needed by a ‘third’ country such as border inspection points, designated entry points and the recruitment and training of staff.  What can the EU do, if it is so disposed or there is some behind-the-scenes collusion going on, to extend Mrs May a lifeline and avoid the ‘cliff edge’?

Any EU-sponsored lifeline needs to protect their interests. It has to operate within the EU’s objectives, legal framework, and established practices. It mustn’t ‘rock their boat’ or set any potentially disadvantageous precedent. It also needs to be sellable across a wide range of opinion in the UK, addressing as far as possible rational fears and aspirations.

The only viable option for an EU-sponsored lifeline is to facilitate the UK re-joining the European Free Trade Association (EFTA) and use this as a basis for retaining membership of the EEA for at least the transition period. It appears that the European Commission may be seriously evaluating the EFTA/EEA route for transitional arrangements for the UK,  as noted by an EFTA Court judge (Mr Carl Baudenbacher) giving evidence to the Commons Committee for Exiting the EU on 7th February 2018 and reported in the Telegraph on-line.

The EFTA/EEA option is not perfect, but as a holding position while something better is negotiated, it is much better than the transitional deal currently on offer. Hard Brexiteers could be won over by the facility to control immigration through unilaterally invoking Article 112 (the Safeguard Measures) of the EEA Agreement.  Further, the EFTA route to EEA membership gives members outside the EU a say in EU legislation affecting the EEA, is largely free (although ‘voluntarily’ Norway does contribute to regional development funds) and is outside the jurisdiction of the European Court of Justice (ECJ). The EEA Acquis or body of law is about a quarter of the total EU Acquis since it only relates to successful functioning of the EEA  in other words, issues relating to trade. And EFTA members can make their own trade agreements with other countries.  Membership of the EEA solves the problem of maintaining a soft border in Ireland between the Irish Republic and Northern Ireland.  It also gives us full control of fishing in our Exclusive Economic Zone.  Those worried about the economic effects of the ‘cliff edge’ could be won over because the EFTA/EEA option prevents this allowing practically frictionless trade to continue. The EEA agreement (for EFTA members) can be adapted to suit their interests.  Thus the UK (within EFTA) could get a customised version.

We cannot know what the European Commission is covertly doing and how far its efforts, if any, have progressed to save Mrs May, the UK and the EU from her folly.  However, given the efforts it has visibly extended to help enterprises both here and in the 27 remaining Member States to understand and adapt to the implications if Mrs May does not change her decision to leave the Single Market, nobody knows better the potential disaster she is determined to inflict and how it can be avoided.

Photo by thaddselden

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.

Taking Stock

Where are we with the Brexit negotiations and where would we like them to be going?

It’s hard to find any sort of consensus about the former, let alone the latter. Are we being led deliberately towards a Brexit in name only or are we about to see our side walk away from the negotiations and rely on so-called “WTO rules” to govern all our future international trade? Was Article 50 always a trap which was going to end up locking us into the EU?

Given the multiplicity of deeply-held views, this piece could end up being just one other person’s opinion. I hope not.  In summing up where we are now, I have read a fair number of different commentators and weighed their opinions before writing this summary.

Firstly, I think it is beyond dispute that the talks have not gone brilliantly from the UK’s point of view, but at least we can be thankful they did not grind to a halt last December as some had predicted.

David Davis and his team got off to a bad start by agreeing to the EU’s sequencing – in other words, “sufficient progress” had to be made on the Irish border issue, the rights of EU citizens resident in the UK and the “divorce settlement” before we could proceed to other issues. Under Article 50 of the Lisbon Treaty, there was no requirement for him to agree to this.

Next comes the transitional arrangement. This was our side’s idea and does not reflect well on our politicians and civil servants.  Not that long ago, we were hearing from some quarters that a trade deal between the EU and the UK would be “the easiest in human history” because of our regulatory conformity. It has since dawned on at least some politicians (although possibly not even all of them, even now)  that this isn’t the case.

The mistake is a very fundamental one because it reveals a profound ignorance of the purpose of the whole European project. We have always viewed the EU as a trading bloc – after all, that was what Edward Heath sought to emphasise in the early 1970s. He did occasionally talk about the sharing of sovereignty, but he didn’t exactly bend over backwards to  explain even to Parliament what we were joining. Of course, Heath knew the truth and now our team is having to learn the hard way. The EU is primarily a political project and trade issues are only a means to an end.

It is also a very rules-bound organisation. Belatedly, our team is discovering that “flexibility” is not a popular word in Brussels. Treaties with precise wording govern every aspect of the EU project. The EU’s chief negotiator, Michel Barnier, knows its workings inside out and unfortunately, comes across as far more on the ball than David Davis.

Is Barnier an ogre? Does he want to punish the UK? Is he merely a puppet whose strings are being pulled by Berlin? A delegation of pro-Brexit businessmen met him in Brussels recently. One of them, CIB Committee member John Mills, described him as “tough and charming“. Essentially, he wants these negotiations to succeed but not at the expense of the integrity of the EU’s single market.  The European project unquestionably took a knock when we voted to leave and he as much as any senior figure in the EU is committed to damage limitation and keeping the show on the road.  The EU has other crises on its hands and Brexit is an unwelcome distraction. After all, it was our decision to leave.  Given these factors, Barnier is merely sticking to the EU rulebook which he knows so well. There is no evidence of any personal animosity towards us our our politicians.  His biggest gripe is that we don’t seem to know what we want from Brexit.

This is essentially where our request for a transitional arrangement comes in. There have been pro-withdrawal groups, including the Campaign for an Independent Britain, even before we joined the European project in 1973. We have been good at arguing the case for independence and ultimately persuaded over 17 million voters of our point of view. We have been less good at explaining how we can leave seamlessly and this has been the root of the Government’s problems.

The Transitional deal, at least if it is negotiated according to the rules laid down by the European Parliament, will be very bad news for us.  It seems to be being pursued purely because the Government knows that a full trade deal will not be ready by March 2019; in other words, it buys us more time.  Theoretically, there is a “sunset clause” – it will only last 21 months, but what if the trade deal isn’t signed by the end of this period?

The significant and surprising support for this transitional deal seems to be based entirely on the assumption that this won’t be a worry. If there’s something good to look forward to, these 21 months of being essentially controlled by Brussels is a price worth paying. This is a fallacy, however, as this piece helpfully explains.

The dilemma we face is that while there is widespread agreement about where we actually want to be after Brexit, there is no agreement on how to get there.

Apart from diehard remoaners, most people would probably agree on all or most of the following:-

i) The ECJ must have no power whatsoever to interfere in the government or legal process in the UK – including those EU citizens currently resident here. We must remove ourselves from Europol and the European Arrest Warrant – in other words, we are back to being a normal sovereign independent country as far as criminal justice is concerned.

ii) Fisheries and agriculture must be 100% under domestic control (and fishing should not be managed on a quota system)

iii) We must be separate from the EU’s military machine, including in the areas of procurement.

iv) We should not make any contribution to the EU’s funds apart from covering our costs where we wish to participate in a specific scheme such as the Erasmus student exchange.

v) we must have complete control of our borders

vi) we must have complete freedom to set our own levels of taxation, benefits and tariffs.

Agreeing our long-term goal is the easy bit. The problem is that we may never get there unless the Government can define in terms which the EU can understand what we want in the immediate post-Brexit period. The transitional arrangements might at least keep industry happy inasmuch as no new guidelines need be given for life could continue for a further 21 months more or less as it does now, but this is only kicking the can down the road. If we find ourselves bogged down in a transition arrangement along the lines already discussed and this period is then extended to (and beyond) the next General Election, we may find ourselves stuck in a sort of limbo which would please no one and would leave many voters vulnerable to the remoaners’ propaganda and thus eventually crawling back into the EU. Alternatively, if we walk away from the negotiations altogether, the net result could be a sudden and severe recession. In this instance,  once again we could be faced with a clamour to re-join.

This would be a tragedy. The key to preventing this happening is to focus on the unacceptability of the current transitional proposals. While many leave voters are strongly opposed to any further membership of the European Economic Area, as a stopgap, it is much less awful, as Nigel Moore argues here. What is more, according to Profesor George Yarrow, unless we give notice that we are quitting the EEA before 29th March of this year, we will still be in it on Brexit day by default, as leaving he EEA is totally separate from leaving the EU.

Yarrow’s thesis has not been put to the test, but then, Brexit as a whole is breaking completely new ground. It is hardly surprising that the path has not been a smooth one. All the same, progress has not been satisfactory thus far and although on balance, I think that the Government’s poor performance has been borne out of an inability to master the issues as quickly as anticipated rather than out of a devious plan to stifle Brexit, Mr Davis and his team desperately need to up their game if we are to achieve a successful Brexit in just over a year’s time.