The Fisheries white paper – Where the Government has got it wrong.

The Fisheries White Paper was better than I was expecting and certainly a lot of thought has gone into the wording, but – and there is always a but – the whole paper has been written on the assumption that there will be an implementation/transitional period, which is far from guaranteed.

I was also surprised to see in the Executive Summary the following two statements:

1) We do not yet know the outcome of the UK’s negotiations to withdraw from the EU or on a future economic partnership.

2) Access to markets for fisheries products will be agreed as part of our future economic partnership, just as with other goods and food products. This is separate to the question of fishing opportunities and access to waters, which consequently will be addressed separately, founded on the UK’s legal status as an independent coastal state.

Those two statements by DEFRA are an honest assessment firstly because the withdrawal agreement which includes the implementation period, is not complete, so whatever the White Paper proposes, there is no guarantee that will happen, especially given we are a long way from securing any sort of trade deal. Secondly, we know full well that the EU will demand present levels of access into UK waters as part of a trade deal. Having sacrificed fishing during the Implementation period –  and those 21 months could be crucial for the survival of the UK’s fishing industry – will the same happen for a trade deal whereby the EU refuses to separate access to market and access to UK waters?. No one knows until that crunch point arrives.

The White paper, in my opinion, places too much emphasis on flawed the quota system. In this, it copies Norway and New Zealand. Neither of their fisheries management systems would rejuvenate our coastal communities. However it is admitted other management systems are available and HMG would be prepared to trial such systems, which I passionately believe would dramatically increase our scientific data, as every fishing vessel should­ become a scientific data point.

Throughout Brexit the UK has made the serious mistake of not understanding the functioning of the EU, and has therefore put forward proposals that were inevitably going to be rejected. It will be interesting to see what today’s White paper states, and if it in turn is expecting policy that the EU can’t provide.

Report from Glasgow

Having travelled up to visit relatives who were not well, it was a surprise to find that the ORANGE WALK had been routed past our hotel, so we heard many, many flute and accordion bands, from Scotland, England and Northern Ireland – drums under the window – the rattle of the drums and the deep booming thud of the bass drums against the shrill flutes – on their way to Bellahouston Park where their leaders were to demand that the SNP Scottish government should STOP TRYING TO OVERTURN THE REFERENDUM which  resulted in a vote for Scotland to remain part of the UK.

 “The best-laid schemes of mice and men gang aft agley” – Robert Burns

I reflected how the Labour planners of devolution had congratulated themselves that their scheme was ingeniously clever. It gave so much power to the Scottish Parliament that it would surely take the wind from the nationalist sails and the electoral system was such that no single party would ever be able to command a majority. They were wrong on both counts!

Flute bands are a bit samey and I lost count of them. We had been told to expect twenty six but press reports said there were over sixty. Tunes varied from “When the Saints Go Marching In” and “Onward Christian Soldiers” to the more traditional Irish tunes, including the oft-repeated strains of “The Sash” with which I had become familiar on other occasions-

“Sure it’s old but it is beautiful and its colours they are fine.

It was worn at Derry, Aughrim, Enniskillen and the Boyne.

My father wore it when a youth in bygone days of yore,

And on the Twelfth I’ll always wear the sash my father wore”.

Many of the Scottish and English bands would be with their Northern Ireland brethren on that day. Brethren and sisters too. Ladies were playing in many of the bands. Lodges were often headed not just by a drum major but by a young person carrying an open bible, ahead of the lodge banner and other colours – a symbol of the sole claimed source of authority, freely available to all without the intervention of a church hierarchy.

It was a sweltering day. We decided to seek a quieter quarter of the town. If there was going to be any trouble, it would be when the lodges returned from their meeting in the park, having drunk deep. I believe there were four arrests that day which, considering the thousands of marchers and spectators, was insignificant.

So we adjourned to a quiet bar parlour where the television was showing the England v Sweden football match. Not being a sporting enthusiast, I had not watched a match from start to finish before. I found the skill quite gripping. The crowd in the pub was certainly not anti-English, cheering the English goals scored and getting equally excited when Sweden came close.

It’s never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine” – P.G. Wodehouse

As a (small u) unionist I sometimes get fed up with the incessant aggressive whingeing tone of Scottish and other nationalists but find this site to be frequently businesslike and objective. The distance between the author, James Kelly, and his subject, Theresa May has lent an accurate perspective and sharp focus to the author’s view. His latest post is reproduced in full.

The Brexit Delusion over who calls the shots

I don’t know about anyone else but I’ve been rubbing my eyes in disbelief over the last few hours. If you’ve been listening to the mainstream media’s verdict about what was agreed a Chequers, you’d be forgiven for thinking that the fabled Brexit deal that Theresa May has been tasked with striking needed only to be a deal with the rest of her own cabinet, and not with the European Union. By that rather lower standard, what has just happened might be seen as a stunning personal triumph for the Prime Minister and a guarantee of a (somewhat) softer Brexit, exactly as Stormfront Life is claiming tonight. The agreement will only be subject to a few modifications if Brussels raises any objections, reveals The Guardian, which apparently believes that the EU has only a limited consultative role in the whole process.. It’s the old imperial delusion – decisions are things that happen in London. The same commentators who complacently tell us that an indyref is a non-starter because Theresa May will say “no” also apparently believe that it’s a mere point of trivia that the EU have already ruled out many elements of May’s Brexit proposal. Back in the real world, without the EU’s assent there is no deal at all, and that would mean the hardest of hard Brexits.

A rare injection of realism was provided by Sam Coates of The Times, who acknowledged that the EU may well still insist on a straight choice between a looser Canada-type deal and the Norway model that would entail the retention of the single market. But he argued that the Chequers proposal was about 80% of the way towards the Norway model, thus making it that much easier for the Prime Minister to jump towards Norway if forced to choose. What he didn’t expand on is the consequence of such a decision. It’s highly debatable whether the government really are now 80% of the way towards Norway, but even assuming for the sake of argument that they are, the reason they haven’t travelled the remaining 20% of the distance is that doing so would completely breach the red lines on formally leaving the single market and ending freedom of movement. Some may say that a Soft Brexit is inevitable because there is a natural parliamentary majority for it – but that majority is cross-party in nature and neither the government nor the Prime Minister are sustained in office on a cross-party basis. I find it in conceivable that a Tory government led by Theresa May could keep Britain in the European Economic Area or retain freedom of movement, even if they wanted to.

And if that proves correct, there are really only four alternatives –

  1. The EU backs down and accepts British cherry-picking of the most desirable aspects of the single market and customs union. This is almost unimaginable because it would create a precedent that Eurosceptics in other countries would try to follow, thus risking the unravelling of the EU.
  2. A Canada-type deal is negotiated after all. This is possible but it would require turning the super-tanker around, because it’s clearly not close to what Theresa May has in mind at the moment. It would mean a very hard Brexit in any case.
  3. There is no deal at all
  4. The Prime Minister’s failure to strike a deal (or a deal that is consistent with her red lines) triggers a political crisis that results in a change of leadership and/or a general election.

I can recall at least two previous occasions when we’ve been told that the PM has made a decisive move towards a soft Brexit, only for us to realise weeks later that there had been no change of any real significance. I fully expect the same to prove true on this occasion. “

(My emphasis because I remember exactly the same thing – Edward)

The Customs Union – stupidity or sabotage?

Regular readers of this blog will know without a shadow of doubt that there is nothing to be gained by remaining in the EU’s Customs Union. Well, dear readers, you can pat yourselves on the back for you are clearly much wiser than 348 members of the Upper Chamber of our Parliament.

Lord Kerr of Kinlochard, speaking in the debate preceding the vote, said “I do not recall at the time of the referendum any debate about a customs union.” He was perfectly correct in saying this. Staying in the customs union is such a daft idea that no one felt the need to bring the subject up.  As Dr Richard North points out,  “A customs union does not in any way eliminate a border, as we see with the borders between Turkey and EU Member States.” it is therefore no help in solving the Irish border question. 

He also makes the point that, as usual, the Press are all over the place in their reporting of yesterday’s vote. It was not a “big defeat” for the government as the amendment supported by 348 peers only forced “the government to explain what it has done to pursue remaining in a customs union”. In other words, suppose that some degree of light finally dawned and the government realised that there was no point in remaining in a customs union, all this “big defeat” would require them to do would be to say to their Lordships “not much”. Hardly the sabotaging of Brexit which the headlines seem to suggest.

For people looking for a way to keep the flow of trade moving in the immediate post-Brexit period, both across the Irish border and through the Channel Tunnel, it makes for more sense to visit the invisible border between Sweden and Norway rather than Turkey’s version of “Operation Stack” at Kapikule on its border with EU member state Bulgaria. Norway is not in the customs union; Turkey is.  Need one say any more?

The Government should finally lay to rest all this nonsense about a customs union. It should also abandon the current plans for a transitional deal. Further evidence of its inadequacies emerged yesterday  when Cecilia Malmström, the EU’s trade commissioner, said that the UK would no longer be part of trade agreements negotiated by the EU with third countries  once we leave. Re-joining EFTA  as an interim arrangement would not only solve the Irish border issue but would address the issue of our trade with countries like South Korea and Mexico as EFTA has negotiated free trade agreements with virtually all the countries with which the EU has FTAs.

It remains a mystery to many observers why this sensible option isn’t being pursued. For all its well-known faults as a long-term relationship, as a stopgap arrangement it is far better than the arrangement currently being discussed with the EU. Adopting it would put to bed a number of issues which should have been dealt with well before now and thus enable the Brexit debate to move on after being stuck in the same groove for far too long

 

 

Mrs May and David Davis misunderstand the EU and the EEA

Knowledge is power, so it is very worrying when  our senior politicians repeatedly display – through obvious errors and factually incorrect statements – a lack of understanding of the European Union (EU) and how it functions. These errors must inevitably undermine any chance of negotiating a satisfactory outcome for the United Kingdom and time is running out.

For example, Mrs May in her Our Future Partnership speech at the Mansion House on 2nd March 2018 said:

For example, the Norway model, where we would stay in the single market, would mean having to implement new EU legislation automatically and in its entirety – and would also mean continued free movement.

Norway participates in the European Economic Area (EEA) through membership of the European Free Trade Association (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 anyway, meaning that even if we left the single market, the UK would still need to abide by them for global trade unless we decided to leave the World Trade Organisation (WTO) as well.  Various members of EFTA  have unilaterally invoked Article 112 (the Safeguard Measures) of the EEA Agreement to restrict free movement. In the case of Liechtenstein, it was free movement of people  whereas for Iceland it was free movement of capital. The UK could do the same if retains membership of the EEA by re-joining EFTA. The “four freedoms” are NOT indivisble for non-EU countries, whatever  M. Barnier may say.  Ironically Articles 112 and 113, which Mrs May fails to understand and rejects, are reproduced closely by the EU in their draft Withdrawal Agreement, Article 13, allowing the EU unilaterally to restrict freedom of movement including immigration into the EU from the UK.

Mr Davis’ understanding of the EU’s modus operandi is no better, For example, Mr Davis, in his Foundations of the Future Economic Partnership Speech in Vienna 20th February 2018 said:

The European Union itself has a number of mutual recognition agreements with a variety of countries from Switzerland to Canada to South Korea. These cover a huge array of products — toys, automotives, electronics, medical devices — and many many more. A crucial part of any such agreement is the ability for both sides to trust each other’s regulations and the institutions that enforce them. With a robust and independent arbitration mechanism. Such mutual recognition will naturally require close, even-handed cooperation between these authorities and a common set of principles to guide them.

He appears unaware of the EU’s overall longstanding approach for the said huge array of products and didn’t quote any examples of regulations, institutions and authorities where his ideas are actually working.  So there is a bit of guesswork here as to what he intended and how well this fits in with the EU’s position, what is enshrined in EU law, and consequently how likely his (and Mrs May’s) new panacea for ‘frictionless’ trade (mutual recognition of standards) is to be realised.

The EU’s direction of travel (for the Single Market), by contrast with Mrs May’s and Mr Davis’s speeches, is towards harmonised standards, regulations, and enforcement or surveillance through a top-down centralised legalistic and bureaucratic framework. It is also a long established, publicly stated ambition that ‘third’ countries (outside the EU, or wider European Economic Area, EEA) should 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, in more detail in the EU’s Guide to the implementation of directives based on the New Approach and the Global Approach and encapsulated in EU law in REGULATION (EC) No 765/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93. The EU has also recently spelt out its position, which is consistent with its New Approach Directives, in Notice to stakeholders withdrawal of the United Kingdom and EU rules in the field of industrial products.  The adverse effect of Mrs May’s Brexit on a frequently essential part of this product jigsaw (the work of Notified Bodies for conformity assessment of products) is explained here.

The EU would seem to prefer an orderly Brexit, judging by its website, although it appears to have realised that even a smooth Brexit will be highly disorderly for many organisations with the UK reverting to “third country” status. A seamless Brexit is looking increasingly unlikely as our government’s failure to grasp the rigidity of the EU’s position has left it  in denial of the consequences for trade.  After many years of ceding powers to Brussels, we have ended up with a Prime Minister and chief negotiator who are completely out of their depth, while the Department for (not) Exiting the European Union lacks essential competence.  It is instructive to look at what serious items are missing from Mrs May and Mr Davis’s speeches rather than what is said which is often largely a collection of wishful thinking, anecdotes, regurgitated vacuous clichés and irrelevant boiler-plating.

The serious items that should feature include: an outline of how the EU is understood to manage trade (useful background); full specifics on what exactly ‘frictionless’ trade means quoting specific examples – named products, commercial activities and enterprises; the barriers that will exist (taking cognisance of EU requirements, such as here); how in practice these will addressed in ways acceptable to existing EU ways of working (in other words, how, when necessary, will we still be compliant with EU laws, regulatory practices and organisational frameworks); cost breakdowns; how payment for extra costs incurred will be addressed; a planned timetable; risk analyses and management arrangements; outlines of work to date including feasibility studies and assumptions; measures for functional integration across interfaces; signposts to further work and information.  Interfaces tend to cause problems and successful integration between, for example, different countries, standards, organisations, market surveillance practices, etc. would need particular practical attention.

If we are to see a seamless departure from the EU – and indeed, until we have the necessary expertise, it is logical to seek a stopgap, time-limited arrangement which will retain near ‘frictionless’ access for trade whilst ensuring that we truly exit the political structures of the EU on 29th March 2019 and largely cease to contribute to its politically motivated budget.  Remaining within the EEA via re-joining EFTA is the only viable option. To date we have not received an explanation from Mrs May why she rejected this route nor why she has shown no interest in using the flexibility in the EEA agreement to get a bespoke deal.  Her incorrect statement in her speech (quoted above) is nowhere near an explanation.

In contrast to a practical and relatively straightforward temporary solution to buy time, we hear instead a great deal of waffle about a long-term Free Trade Agreement (FTA) like no other.  Mrs May, Mr Davis et al are set on maintaining ‘frictionless’ trade by pressurising the EU to bend its existing rules (primarily incorporated into EU Laws and European Court of Justice, ECJ judgments), alter its longstanding direction of travel and at the same time pay all the extra costs (to the EU) of such a deal.  This arrangement is one which the EU can, and most likely will, refuse.

Photo by aronbaker2

The financial settlement – it will be a long-term gain

THE FINANCIAL SETTLEMENT

The Prime Minister has stated that the financial settlement and any payment thereof would depend on a satisfactory overall agreement which meets the objectives of the Florence Speech, including a trade arrangement.

THE PRESENT POSITION

When going into negotiations with the EU for a ‘single financial settlement’ it is necessary to consider the current established financial relationships between the UK and the EU.

These come in two parts:

The UK’s EU budget contribution (after rebate) amounts to around £13.5 billion per annum.  That is about 20% of the total net savings of the UK economy.  It is also a legal obligation of EU membership and exists in perpetuity.  Any sum spent by the EU in the UK is not an obligation but is a matter of EU policy.  Since 1973 the total net UK contribution to the EU budget at 2017 prices is about £500 billion and, at present, the perpetual obligation adds to this every year.  (The last time it was fully worked out was for the period 1973-2010 when it amounted to £379 billion at 2010 values.)

The second part of the current relationship is that there is UK exposure to the liabilities of the EU and its entities such as the ECB (European Central Bank), EIB (European Investment Bank), etc.  There is no corresponding EU exposure to UK liabilities such as those of the Bank of England.  The UK also has ‘joint and several’ liability for all EU debts.

In comparison with the UK situation, non-EU EEA countries, such as Norway, have no exposure to EU liabilities nor do they contribute to the EU general budget (contrary to what is often asserted).

It should be noted that this study addresses only financial and fiscal matters.  There are other costly economic effects of the UK-EU relationship, such as food costs, migration costs, etc. which are not referred to here.  There are also some benefits in the internal market relationship.

The present financial situation is described more precisely in a pre-referendum study:

UK Membership of the EU – The Threat to the Balance Sheet.

THE UK’S NECESSARY FINANCIAL ASPIRATION

It is, therefore, prudent and a financial necessity that the UK ceases to hand over 20% of its net savings to the EU in perpetuity with virtually no influence of how these savings are spent (only a tiny fraction is spent on investment in the UK).

It is also urgent for the UK to extract itself from the partly one-sided exposure to the liabilities and contingent liabilities of the EU as soon as possible.  Adopting the position of the EFTA/EEA states which have no responsibility for EU liabilities would be prudent finance.

THE ‘FINANCIAL SETTLEMENT’ AS AT DECEMBER 2017

The fundamental two aims of stopping EU budget contributions with the consequent erosion of UK savings/investment and extracting the UK from EU liabilities are on the table and in the Joint Report of 8th December 2017.

These are the two core financial benefits of departure.

It is important to understand that the EU referendum was about the long-term future and not about the details of departure, not all of which are favourable.  Further, if the referendum had been won by Remain, both the half-a-trillion pound hit to UK savings would have increased every year by some 2 or 3%, and the UK would still have been responsible for its share of EU liabilities.

These will cease over the next five years, although in a somewhat unsatisfactory and messy settlement.

THE FINANCIAL SETTLEMENT – THE QUANTUM

Michel Barnier is quoted in The Guardian (19/12/2017): “He [Barnier] would not confirm British estimates that the final Brexit bill – the UK’s outstanding obligations to the EU – would be no more than Euro 45 billion (£39 billion).”

This was hardly unreasonable of Barnier because at least two of the principal subjects of financial discussion, the UK’s stake in the EIB and EU pensions seem to have been left as ongoing yearly matters and, therefore, it is difficult to form capitalized totals thereof in any meaningful way.  Pensions will be paid when this amount falls due.  This means the UK could still be paying pensions up to 2100 although the amounts will be insignificant by then.

It has also been agreed that the UK will continue its normal financial relationship with the EU until the end of 2020, that is, making budget contributions and collecting the rebate.

Some questions arise over the following (the references are to the Joint UK EU Report of 8/12/17):

  • It is not stated that the UK will receive its rebate for the year 2020 (it is normally repaid one year in arrear).
  • Item 61, “The UK will contribute its share of the financing of the budgetary commitments outstanding at 31st December 2020 (RAL).” The ‘rebate’ is not mentioned but even if the UK agrees to pay its share of RAL then this should be subject to the rebate (paying a share of the RAL is a political concession by the UK).  The whole point of the RAL is that money has been spent or authorized above the EU budget although Item 67(b) appears to negate the rebate in RAL matters.
  • Then there is ambiguous phraseology over the balance sheet. “The UK will contribute (para 62) its share of the financing of the Union’s liabilities incurred before December 2020 except for liabilities with corresponding assets and assets and liabilities which are related to the operation of the budget and the Own Resources division.”  The English is poor and obscurantist.  The clear fair method is for the UK to establish its share of the EU balance sheet (assets and liabilities) and pay its share of the net amount if there is an excess of liabilities over assets.  This is the method recommended by the Institute of Chartered Accountants. (some of the net may be subject to the rebate).
  • The European Investment Bank (EIB): The UK has agreed (item 74 onwards) that it will not receive any profit from the activities of the EIB but will participate in a share of any losses entailing Extra Capital calls.  This is a poor negotiating decision.

Government must scrap its compromises over EU military schemes

By David Banks. This post originally appeared on the Bruges Group website and is reproduced with permission

Since the Brexit vote, the UK has given a green light to the juggernaut of EU military schemes on the understanding we would be outside of them.

However, government position papers incredibly propose STAYING IN joint EU schemes on military finance, research and assets.

The schemes, which have never been voted on by MPs, would mean the UK staying in EU Common Defence Policy, the European Defence Agency and even EU defence procurement directives. Norway is the only non-EU country in the schemes and was obliged to accept these rules.

The PM has rightly declared the UK’s unconditional commitment to Europe’s defence via NATO.

However, we fear that MPs and ministers are not aware of the full implications of a Norway-style military union agreement. Many civil servants are aware of these implications and are pushing for UK entry relentlessly.

At the same time as these new EU military finance and structure schemes are being agreed, the EU is growing the remit of its Common Security and Defence Policy in a way that consolidates its control over EU Council-agreed military responses. The EU’s new military HQ, the MPCC, which UK diplomats tried in vain to change, is just a small part of this.

The EU is also tightening defence asset production rules to make an EU defence market in which member state governments will find it impossible to protect domestic defence jobs and industry eg Scottish shipyards in the UK’s case.

Sadly, the Government’s National Shipbuilding Strategy of September 2017 fully adheres to the latest EU rules in cross-border defence tendering – clearly anticipating a future where the UK would need to comply.

It is essential that at the Conservative Party Conference in Manchester delegates are made aware of the risk to Scottish shipyards, particularly Ruth Davidson and her Scottish Conservatives team. The UK is heading towards a scenario where it is dictated by these EU procurement rules which will only become more assertive when the UK is fully committed to them.