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

Filling in the blanks

This past week has seen a flurry of activity on the Brexit front, but it is debatable whether we are any further forward in the process of achieving an exit from the EU which is both reasonably seamless and a genuine parting of the ways.

The first shots were fired by the European Commission  in the shape of a draft withdrawal agreement, which appeared on  Wednesday 28th February. Barely had the text been made public when Mrs May responded, saying that “no UK Prime Minister could ever agree to it.” The biggest bone of contention was the proposal that,  in the event of the two sides failing to agree on a solution to the Irish border problem,  Northern Ireland to remain in the EU’s customs union with a border between the province and the rest of the U.K.  Arlene Foster, the leader of the Democratic Unionist Party was equally forthright, stating in a tweet that “EU draft text is constitutionally unacceptable & would be economically catastrophic for Northern Ireland.”

Responding these swift rejections of the Commision’s proposal, Donald Tusk, who visited Mrs May in London, stated that the document was built on last December’s draft agreement on “Phase 1” of the divorce talks, with the blanks filled in, not out of any desire to provoke but merely because the UK has so far not come up with any proposals for dealing with the Irish border issue. “you fill in the blanks if you don’t like our suggestions” was the gist of his remarks. Michel Barnier added that the EU document has addressed the Irish border issue “in a practical, pragmatic legal fashion.”

So with there being no meeting of minds on Wednesday, would Mrs May shed any more light on how her government was going to fill in the blanks? She gave another speech on Brexit on Friday March 2nd and regrettably, it did little to clarify matters.   She still does not seem to have any idea of the extreme unlikelihood of the  EU agreeing to a system of  mutual product recognition, completely outside its present arrangements of assuring the standards of goods arriving from outside the EU. She acknowledged that leaving the single market and customs union would mean  “our access to each other’s markets will be less than it is now. How could the EU’s structure of rights and obligations be sustained, if the UK – or any country – were allowed to enjoy all the benefits without all of the obligations?” Fair enough, but anyone hoping for detail on what alternative arrangement she wanted to make  was going to be disappointed.

It is astonishing how badly advised Mrs May seems to be. In dismissing “the Norway model”, she said “we would stay in the single market, {which} would mean having to implement new EU legislation automatically and in its entirety – and would also mean continued free movement.”

This website alone has pointed out on umpteen occasions that Norway, Iceland and Liechtenstein only have to implement about one quarter of EU legislation and much of this relates to the technicalities of trade. What is more, Norway, if it so desired, could join Liechtenstein and unilaterally restrict freedom of movement from the EU using articles 112 and 113 of the EEA agreement. As an interim agreement, it reduces the burden of EU law by some 75% , compared with the EU’s proposals.

The only step forward, as Dr Richard North has pointed out, is that Mrs May acknowledged that many of these regulatory standards “are themselves underpinned by international standards set by non-EU bodies of which we will remain a member”. In particular, she noted that the UN Economic Commission for Europe (UNECE) “sets vehicle safety standards. Countries around the world.”

This speech, says Dr North, is “the first time in recorded history” that “we have a prime minister recognising that the EU is not the fount of all regulation and that “many” regulatory standards originate from “non-EU bodies”.

Much of the rest of the speech, sadly, was taken up with wishful thinking – good on mood music but totally lacking in any practical suggestions of how to move Brexit forward.

The biggest disappointments were that she did not announce the rejection of the EU’s proposals for a transitional arrangement- accepting every single part of EU law and any new ones they dream up for a period which may well extend beyond the projected 21 months.  Until this happens, there can be no real progress towards a deal which will be acceptable to her own MPs. Secondly, her comments on fisheries were a cause for concern:-“The UK will regain control over our domestic fisheries management rules and access to our waters.” That’s fine and if she had stopped there, everyone would be happy.

Unfortunately, she then continued “But as part of our economic partnership we will want to continue to work together to manage shared stocks in a sustainable way and to agree reciprocal access to waters and a fairer allocation of fishing opportunities for the UK fishing industry.”  These words do not suggest that she has yet been won over to Fishing For Leave’s exciting proposals to rejuvenate our fishing industry and coastal communities, which would make us once again a world leader. (see Fishing for Leave’s comments on her speech here)

Essentially, this week has just been an extension of the Brexit stalemate, even though some strong words have been said on both sides. How much longer can this last? In is now March 2018. In a year’s time, we will hopefully be leaving the EU. For all Mrs May’s talk of  “a bold new positive role for ourselves in the world”, we are none the wiser as to how she intends to achieve this.

A transition will void all international agreements

Press Release from Fishing for Leave, 20th February 2018

The implications of the transition should be of grave concern. What is proposed is not only an existential threat that could see our fishing industry culled, but a diplomatic and constitutional suicide pill the result of which would be an anathema not only to “taking back control” but to the point of a transition itself.

A transition is not part of leaving the EU under Article 50 – it is part of a new ‘transition’ treaty as both David Davis and Steve Baker have candidly admitted.  This is significant as it means we will not be party to current agreements, but the transition is a new treaty that stands alone.

The EU terms are the UK must adhere to all EU law but as we will no longer be an EU member should have no say. This is the EU sensibly safeguarding its interests – our government is doing the opposite.

The implications of Clause 14 and 15 of the transition terms have a severe impact on all international agreements the UK is party to through the EU.

They defeat the whole raison-d’etre of HM Governments for a transition – trade.  For the fishing industry it means the “transition” could void UK participation in all international fisheries agreements that we were party to as a member of the EU.

TRADE

Clause 14. During the transition period the United Kingdom will remain bound by the obligations stemming from the agreements concluded by the Union…while the United Kingdom should however no longer participate in any bodies set up by those agreements.

The intention is that the UK will still have obligations to the EU to adhere to the consequences of agreements concluded with non-EU countries in respect of the EU vs UK transitional relationship. In doing so this maintains the integrity of the EUs dominions and also appears to placate the UK position of everything continuing as is.

However, since the withdrawal agreement cannot bind non-EU countries, they will no longer have obligations to the UK as we will no longer be an official member of the EU but merely maintaining regulatory alignment in an EU vs UK deal.

The UK would only be able to be recognised within such agreements if other non-EU countries agree to continuing existing obligations in force through another agreement with the UK.

The negotiation of such an agreement between the UK and non-EU ‘third countries’ is the subject of the next transition Clause 15 which seemingly makes that an impossible contradiction.

Clause 15. Any transitional arrangements require the United Kingdom’s continued participation in the Customs Union and the Single Market (with all four freedoms) during the transition. During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.

The UK will be unable to negotiate and sign treaties within the transitional period, even if those treaties only come into force afterward – we will only be able to begin to negotiate treaties AFTER the transition period.

This means that other non-EU nations will have no obligations to recognise the UK being party to agreements signed by the EU as the UK will no longer be an official member but also a ‘third country’ when the ‘treaties shall cease to apply’ under Article 50 and our membership terminates on the 29th March 2019.

However, the catch 22 paradox is that to obey the transition the UK will not be able to enter into any agreements with other non-EU countries to seek recognition that the UK is party to EU arrangements with those countries even if they wanted to.

THIS MEANS WE WILL BE ON WTO TERMS FOR 65% OF OUR TRADE AND UNABLE TO SIGN NEW DEALS…………………..WHICH IS THE WHOLE REASON LOCKING OURSELVES INTO THE EU WAS MEANT TO AVOID! 

In respect of fisheries this could mean any agreements the EU has signed with other coastal states would no longer be binding for the UK as we wouldn’t be officially a member only a vassal state which has agreed to maintain regulatory alignment with the CFP.

This catch 22 between Clause 14 and 15 means the UK could lose agreements on access to Norwegian and Faroese waters for our pelagic and largest whitefish vessels.

The EU can’t be any clearer that this is the case;

As part of the EU Commission document ‘Internal EU27 preparatory discussions on the framework for the future relationship: “International Agreements” 6th February 2018’ the EU makes explicit the consequences regarding international agreements concluded by the EU:

Point 13: “Following the withdrawal, the United Kingdom will no longer be covered by agreements concluded by the Union or by Member States acting on its behalf or by the Union and its Member States acting jointly”.

The EU then continues;

In principle, as a non-Member State, the UK would be able to negotiate international agreements But

  1. the bona fide application of the Withdrawal Agreement prohibits conflicting obligations
  2. duty of sincere cooperation

iii. explicit provisions in the Withdrawal Agreement: “During the transition period, the UK may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.”

The Withdrawal Agreement can oblige the UK to respect “the obligations stemming from the agreements” However, the Withdrawal Agreement cannot guarantee the extension of the benefits from those international agreements to the UK!

IT CANNOT BE ANY CLEARER! How will the UK be party to continuing EU deals?

How will the UK be able to seek and agree recognition with other non-EU third countries?

It would be interesting to hear a proper government and DexEU response to how the UK can conclude a future “deep and special” trade deal with the EU under the transition as David Davis professes is required if Clause 15 bars us from concluding agreements… the Government tried (and miserably failed) to do so in;

HM GOVERNMENT – TECHNICAL NOTE: INTERNATIONAL AGREEMENTS DURING THE IMPLEMENTATION PERIOD – 8th February

In this document the Government asserts that

  1. …the implementation (transition) period would be based on the existing structure of EU rules and regulations. In its negotiating directives, the EU has adopted the same position. It has stated that “the Union acquis should apply to and in the United Kingdom [during the implementation period] as if it were a Member State”. This is echoed in the Commission’s paper on Transitional Arrangements in the Withdrawal Agreement, which states that EU law “shall be binding upon and applicable in the United Kingdom” during the implementation period.

EU law and agreements are binding on the UK as agreed in a transition treaty between the UK and EU. Such a treaty cannot bind the other non-EU ‘third country’ nations who the EU has an agreement with.

  1. This would be achieved by agreement of the parties to interpret relevant terms in these international agreements, such as “European Union” or “EU Member State”, to include the UK.
  2. Such an approach could be used both to ensure the UK’s continued participation in mixed EU third country agreements… At present the UK as an EU Member State is bound by obligations, and benefits from the rights… It is proposed, with the agreement of relevant third countries, that those rights and obligations continue to apply to the UK on the EU side of the agreements for the duration of the implementation period.

The UK can’t sign agreements with other parties as Clause 15 of the Transition terms forbid the UK from entering any agreements, deals or treaties with other non-EU ‘third countries’. In addition to this the words ‘proposed’, ‘could’…… would…. should….. mean that the position the government is digging itself into relies on the EU and other countries benevolently recognising the UK to be party to EU agreements.

Rather than leaving cleanly and being free to operate as an independent sovereign nation the transition (by the governments own admission) digs this country into a subservient position with no guarantee of being party to any international agreements through the EU.

The position the government is digging itself into relies on the EU and other countries benevolently recognising the UK to be party to EU agreements.

Rather than leaving cleanly and being free to operate as an independent sovereign nation the transition (by the governments own admission) digs this country into a subservient position with no guarantee of being party to any international agreements through the EU.

WHAT THIS MEANS FOR THE FISHING INDUSTRY

In respect of fisheries all the Clauses above means that although the UK will follow the CFP as a vassal state (through the terms of a transition treaty between the EU and UK) countries such as Norway, Faroe and Iceland have no obligation to recognise the UK being party to EU arrangements and even if they wanted to Clause 15 means the UK can’t sign any deal as an EU satellite.

Yet because the UK will have submitted to an EU vs UK “transition” agreement we will have agreed to re-obey the CFP where we re-agree to give the EU our fishing waters and resources to divide out as the EU see’s fit through relative stability and agreements it reaches internationally.

This would mean the UK would still have the EU catching 60% of the resources from our waters and the EU would be able to use UK whitefish and pelagic quota as negotiating capital but we would be unable to take back control and then use our position of strength as a new independent coastal state to make our own mutually beneficial agreements with our Nordic neighbours.

The UK would continue to lose out in the CFP but also lose access to Norwegian and Faroese waters for the most powerful catchers in the UK fleet. We would lose twice rather than gain twice by walking away. We would be hit 4 times over in a transition where we loose international agreements but are still in the CFP;

We would see some of the most powerful catchers in the UK Whitefish fleet displaced from Faroese and Norwegian sector waters.

 These vessels would be back into an already stretched UK sector with the EU still pocketing half of our whitefish resources.

It would see our pelagic fleet lose access to Norwegian waters for mackerel and atlanto-scandiv herring

The EU can further exploit UK quota (especially pelagic) to make deals to benefit the EU27 fleet due to our compliance with the CFP.

To stick the final nail in the coffin a continuation of the quota system where fishermen have to discard in order to find the species their quota allows them to keep conjoined with a fully enforced discard ban can be used by the EU to finish the UK fleet.

Under the discard ban rather than address the cause of the discard problem, that a quota system does not work in mixed fisheries, the symptom of discards is banned. Under the discard ban a vessel must stop fishing when it exhausts its smallest quota allocation – these “choke species” will bankrupt 60% of the UK fleet as detailed by the governments own figures through Seafish.

This would destroy our catching capacity and allowing the EU to claim the “surplus” of our resources we would no longer be able to catch under terms of UNCLOS Article 62.2 due to such a culling of our fleet.

Signing up to a transition on will see the ruination of what is left of the UK fishing industry when Brexit should be its salvation. Another 2 years of the CFP and a continuation of the quota system will see our fishing industry become yet another British industry consigned to museum and memory.

CONCLUSION

Under the auspices of this proposed transition “deal” (more an edict to obey) the UK will be on WTO with the rest of the world, unable to conclude deals with the rest of the world until after the transition and will be locked into maintaining regulatory alignment whilst obeying the entire Acquis (with continued freedom of movement).

The UK will be trapped in the CFP where our fishing industry will be culled to make way for the EU fleet whilst also losing any access to Faroe and Norway which will diminish fishing opportunities further.

It is nearly unbelievable that the political establishment could contemplate locking the 5th most powerful nation in the world into such a subservient position especially against the expressed wish of the British people to leave the EU in its entirety as voted for in the biggest vote in British history.

A TRANSITION MEANS BRITISH FISHERMEN ARE STARING DOWN THE BARREL OF A GUN!

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

Project Fear Mark 2??

The Buzz Feed website has obtained a leaked copy of the leaked Government analysis of different Brexit scenarios which claims that over the next 15 years, the UK would be poorer by 8% under “WTO rules”, 5% poorer under a Comprehensive trade deal with the EU and 2% poorer if we re-joined EFTA, which would allow us reasonably frictionless access to the EU’s single market.

However, this is hardly Project Fear Part 2.  Labour may be pushing for the Government to publish the findings, but they are wasting their time. The report matters not one iota.  Forecasting likely economic developments as far ahead as 2034 is an utter waste of taxpayers’ money.

I can say this with some confidence without having seen the report because government bodies and indeed many distinguished economists – especially if they carry the label “Keynesian” – have terrific form when it comes to making economic predictions which turn out to be utterly and completely wrong – even over a much shorter timescale than 15 years.

We recently pointed out that David Cameron had been caught on camera admitting that the first 18 months since the Brexit vote had not been anything like the disaster he had anticipated.  You don’t need long memories to recall Gordon Brown’s claim that there would be no more boom and bust – only a few years before the Great Recession erupted during his premiership. Going back to 1981, no fewer than 364 economists wrote a letter to the Times stating that Sir Geoffrey Howe, the then Chancellor of the Exchequer,  would cause mayhem if he raised taxes in the middle of a recession. It turned out that the controversial 1981 budget, far from exacerbating the recession, laid the foundation of the UK’s economic recovery under Margaret Thatcher.

What is more, it is asking the moon to expect civil servants to come up with a study showing Brexit to be beneficial. Steve Baker MP found himself in trouble for claiming that Treasury officials are conspiring against the government on Brexit, but like it or not, the Treasury has been reported on good authority as being keen to keep us in the Customs union, even though Civil servants are meant to implement, not decide policy.

John Mills is therefore correct in sharing our scepticism when commenting on the claim in the new report that “Officials believe the methodology for the new assessment is better than that used for similar analyses before the referendum.” He says  “The whole piece rests on the above assertion. There is no description of the previous methodology or of the changes that make this analysis better. Is the methodology different from the one used previously to “prove” that the UK economy would tank if it did not join the Euro?”

Let us apply a bit of common sense to the UK’s economic prospects instead of listening to the so-called “experts”. In the shorter term, a slight dip in economic growth is likely in the post-Brexit period as things settle down, even if a satisfactory exit solution is agreed with the EU. Fisheries and agricultural  products are not covered by Single Market legislation and trade with the EU may be reduced here (although the fishing industry can begin its revival as soon as we leave, assuming Fishing for Leave’s proposals are eventually accepted by the government.) The delay in providing any guidelines about what deal the Government is expecting is causing firms to hold back on investment decisions and some firms in the City are already contemplating relocating staff to other locations. The City of London may see a slowdown in growth given the EU is none too keen to strike a trade deal involving financial services.

There is also the question of trade with those countries with whom the EU has negotiated trade deals. The EU is most reluctant to let the UK continue to participate in these deals post-Brexit and if new deals are not negotiated in time (or the countries in question do not agree to continuing to trade with the UK on the same basis), the economy may suffer here. As it happens, most of the UK’s most important trade partners outside the EU, including the USA, China and Japan have not negotiated a full-blown trade deal with the EU, although the EU has made more limited mutual recognition agreements with these countries, which we may need to replicate quickly.

All these factors do suggest that even the smoothest of Brexits could well see a slowdown in growth in early 2019, although this is a long way from saying a recession will occur. The UK economy has proved far more resilient than the promoters of “Project Fear” expected. Of course, if we crashed out of the EU, the consequences could be far more serious.

In the longer term, however, there is every reason to expect the UK to perform at least as well outside the EU as if we had remained a member state – if not better.  It will be far easier to reorientate our trade away from the sclerotic EU to the up-and-coming economies of Asia from outside the EU.  The massive deregulation advocated by some Brexiteers in the run-up to the referendum vote is not realistic, given how many  regulations originate from global bodies such as the WTO or the ILO, of which we will still be members. Some regulations could be scrapped or re-written if they originate from Brussels and are not in our national interest. We would also have the option to cut taxes to boost the economy in a way which would not be possible as an EU member state. VAT could be scrapped, for example.

Then thee is the issue of freedom. A strong correlation exists between freedom and prosperity. Freedom is a relative term, but being able to make our own laws, being able to remove those people holding real power via the ballot box if we don’t like them and our common law legal system will put us higher up the freedom index once we leave the EU. How tyrannical the EU is likely to become remains to be seen. Vladimir Bukovsky, the former Soviet dissident, said of the European Union, “I have lived in your future and it didn’t work.”  We are, of course, a long way from the gulags, the persecution of Christians and the extreme censorship of the former USSR, but a number of EU officials have made clear their disdain for real democracy. To quote one example, when the European Constitution was rejected in two referendums in France and the Netherlands,  Valéry Giscard d’Estaing, the former French Prime Minister, said “Let’s be clear about this. The rejection of the constitution was a mistake that will have to be corrected.”

Given that we will be free from all this, it is inevitable that Brexit will have a positive effect our prosperity. It is ironic that the young people, who were the strongest supporters of remaining in the EU, are likely to be the biggest beneficiaries of our leaving it. Mrs May has insisted that, in spite of these government studies, we will indeed leave the EU.  Mind you,  it would be a serious cause for concern if she had been influenced by it for, as one government minister said “It also contains a significant number of caveats and is hugely dependent on a wide range of assumptions which demonstrate that significantly more work needs to be carried out to make use of this analysis and draw out conclusions.”

In other words, it isn’t worth the paper it was printed on.

 

Fishing for Leave’s comments on the proposed transitional arrangements

Below is the EUs recommendations for the transition. Those with the particular detrimental implications for the United Kingdoms trade are Clause 14 and 15 as amended by the Council. Indeed, the implications defeat the whole point of HM Governments raison-d’etre for a transition.

TRADE

14. During the transition period, and in line with the European Council guidelines of 29 April 2017, the United Kingdom will remain bound by the obligations stemming from the agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly; while the United Kingdom should however no longer participate in any bodies set up by those agreements.

The Council replaced the words ‘will no longer benefit from’ with ‘will remain bound by the obligations stemming from’. It also deleted the words Where it is in the interest of the Union, the Union may consider whether and how arrangements can be agreed that would maintain the effects of the agreements as regards the United Kingdom during the transition period’.

The intention seems to be that the UK will still have obligations to the EU to apply agreements concluded with non-EU countries by the EU (or the EU jointly with its Member States).

However, since the withdrawal agreement cannot bind non-EU countries, those non-EU countries will no longer have obligations to the UK as the UK will no longer be an official member of the EU but merely maintaining regulatory alignment.

The UK would only be able to be recognised within such agreements if other non-Eu countries agree to continuing existing obligations in force.

The negotiation of treaties between the UK and non-EU countries is the subject of the next paragraph which seemingly makes that an impossible contradiction. 

15. In line with the European Council guidelines of 15 December 2017, any transitional arrangements require the United Kingdom’s continued participation in the Customs Union and the Single Market (with all four freedoms) during the transition. The United Kingdom should take all necessary measures to preserve the integrity of the Single Market and of the Customs Union. (full regulatory alignment is the only way to do so and this complies with Clause 49 of Phase 1 regards UK vs EU border on island of Ireland)

The United Kingdom should continue to comply with the Union trade policy. It should also in particular ensure that its customs authorities continue to act in accordance with the mission of EU customs authorities including by collecting Common Customs Tariff duties and by performing all checks required under Union law at the border vis-à-vis other third countries. During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.  

The final sentence added by the Council. This paragraph ensures no change in the application of the single market or the customs union to the UK during the transitional period.

This limits the UK’s power to enter into treaties and subjects the UK to more constraints than it would have as a Member State.

The UK will not be free to negotiate and sign treaties within the transitional period, even if those treaties only come into force afterward – we will only be able to begin to negotiate treaties AFTER the transition period.

How will this allow the UK to sign a trade deal with the EU for post-transition as David Davis claims the transition is necessary to facilitate?

One has to ask how under the terms of Clause 15 the UK will be able to respond to Clause 14 where the UK (as a non-EU member) would have to seek recognition by other non-EU counties for the UK being party to agreements they have concluded with the EU.

One struggles to see how we can enable a continuation of any agreements the EU has concluded with the rest of the world as per Clause 14 yet still comply with Clause 15?

This revised text means they have amended Clause 14 to appear a lifeline that doesn’t actually attach to anything.

We take this contradiction to mean we are locked into the single market and customs union but if other non-Eu nations fail to recognize the UK being party to the agreements they concluded with the EU (as we’re no longer a member – merely maintaining regulatory alignment) and we are unable to pursue our own agreement with such other non-EU nation then we are on WTO with the rest of the world which defeats the point of a transition in the first place.

It would be interesting to hear the government and DexEUs response to how Britain can conclude a future “deep and special” trade deal with the EU under the transition as David Davis professes is required if Clause 15 bars us from concluding agreements…?!?

 

FISHING INDUSTRY

Clause 20 obliges the UK to “consult” on fishing opportunities in full respect of the Acquis – i.e. obey the entire CFP!

20. Specific consultations should also be foreseen with regard to for the (interesting change/use of language..?)  fixing of fishing opportunities during the transition period, in full respect of the Union acquis.

Therefore, the UK delegation would possible be allowed to sit in the room yet the UK will still be bound by the ENTIRE ACQUIS and therefore the entire CFP – Equal Access, Relative Stability Shares and Quota system.

A continuation of the quota system where fishermen have to discard in order to find the species their quota allows them to keep conjoined with a fully enforced discard ban will finish the UK fleet.

Under the discard ban rather than address the cause of the discard problem, that a quota system does not work in mixed fisheries, the symptom of discards is banned. Under the discard ban a vessel must stop fishing when it exhausts its smallest quota allocation – these “choke species” will bankrupt 60% of the UK fleet as detailed by the governments own figures through Seafish.

This would destroy our catching capacity and allowing the EU to claim the “surplus” of our resources we would no longer be able to catch under terms of UNCLOS Article 62.2 due to such a culling of our fleet.

Signing up to a transition on will see the ruination of what is left of the UK fishing industry when Brexit should be its salvation. Another 2 years of the CFP and a continuation of the quota system will see our fishing industry become yet another British industry consigned to museum and memory.

CONCLUSION

Under the auspices of this proposed “deal” (more a dictation) the UK will be on WTO with the rest of the world, unable to conclude deals with the rest of the world until after the transition and will be locked into maintaining regulatory alignment whilst obeying the entire Acquis (with continued freedom of movement) and trapped in the CFP where our fishing industry will be culled to make way for the EU fleet. All whilst being subject to the ECJ and ruled by the Commission and Council as some sort of vassal state.

It is nearly unbelievable that the political establishment could contemplate locking the 5th most powerful nation in the world into such a subservient position especially against the expressed wish of the British people to leave the EU in its entirety as voted for in the biggest vote in British history.