A storm is coming

In the fishing industry, we expect winter storms – they are part and parcel of the job, Is our government, however, aware of the looming storm of its own making?

The best news of 2017 was our Government’s success in moving the Brexit negotiations from phase one to phase two, although in reality we are only moving on to to phase one and a half, because the transition/implementation period was not on the original agenda and this is what will create the storm.

Storms expose weaknesses, and for the Government it will be its entire Brexit strategy, focussed on this supposed “deep and special relationship.” Just to remind ourselves, Mrs May first used this phrase in herLancaster House speech.”The United Kingdom would seek to secure a new, deep and special partnership with the European Union”.

But there has been nothing of any substance to give us any idea of the foundations upon which this new relationship/partnership is to be based. Is it,

  1. like the present  – in other words, almost as good a deal as if we were still a full EU member? or
  2. starting with a clean sheet of paper?

It is fair to say that, given all the hype over this phrase, that the electorate thinks it is going to be the first of these options whereas the truth is that it is more like the second. When the penny drops, there will be immense disappointment and indeed, anger.

So the storm clouds are building over continental Europe, ready to lash the British Isles. We can expect them to arrive around the end of this month – January 2018. At the eye of the storm is the harsh reality that the unity and solidarity of the 27 EU member States comes first. In order that this will not be compromised, the EU’s proposal for a 21 month transition period will see us totally subservient to our continental cousins. No wonder Barnier was delighted when the UK asked for a transitional period. It suits the EU very nicely.

The EU will spare no effort in its battle to save “Le project” which, it must be emphasized, is primarily a political not an economic project. We have been told that as far as access to the Single Market is concerned, there is to be no cherry picking by the UK, yet this is exactly what the EU itself is doing in areas such as defense and security.

The recommendations being issued by the EU institutions for the operation of this proposed 21 month transition are horrific. We will have no representation in the EU institutions, but will have to accept the full EU acquis during this period. We will be back under the Common Fisheries Policy for another 21 months and charged a hefty bill for these “privileges”. Furthermore, who can guarantee that a new trading arrangement will be signed and sealed by the end of the 21 months? The EU has indicated that it is willing to consider an extension to the transitional period in which case, we may never leave in reality, only in name.

It is easy to be cynical about this transitional period. After all, why did we vote to leave? Brexit is about control coming back to our elected representatives, not further subservience to the EU.

Some Westminster MP’s are beginning to grasp that we could end up wasting 21 months under these arrangements and on 1st. January 2021 we could be no further forward – in fact, we would be heavily weakened as these 21 months would give EU companies time to find alternative suppliers within the 27. Other MPs are hiding behind this phrase “deep and special relationship” – as if Brexit is nothing to do with them, The bottom line, however, is that responsibility rests with every MP. There is no mandate to give our country away again, even under the guise of a “transitional arrangement”. Thankfully the plans will be put to the vote, so we will know where each MP stands and how many of them are truly committed to honouring the Prime Minister’s pledge that “Brexit must mean Brexit”.

Short changing the British people over Brexit

It is becoming an increasing concern that the British people are being short-changed over Brexit  – by Mrs May, the Department for (not) Exiting the European Union (EU), the government generally, and Parliament. The final Brexit settlement with the EU should correspond in large part to addressing the significant wishes, hopes and fears of the electorate as expressed in the Referendum vote. Are there important pieces of pieces of information which we not being told that we really should know?  What will be the political consequences if and when we find out the hard way that our leaders are misleading and cheating us?

The vote to leave the EU was a cry for a change of direction. In particular, it was an expression of the desire to leave the EU, which is evolving into a centralised homogeneous superstate. It was certainly not for “politics as usual”  – the status quo whereby an out of touch ruling establishment in Westminster and Brussels would continue to conceal the truth, using fear to manipulate people and doing what it wanted to whilst ignoring the wishes of the Electorate.  Ultimately, the Brexit vote was about ‘the sovereignty of the People’ and their right to governed by consent – in other words, government of the people, by the people, for the people.  Brexit, therefore, needs to be a complete change of political direction, not leaving us stuck in the political EU (aka Greater Germany) under a different name, all the time aided and abetted by a deceptive Westminster clique.

If we had voted to remain in the EU, whatever the reasoning of individual voters, we would have been forced to accept not only the current status quo but also of the EU’s direction of travel.   Remain voters were effectively putting their trust in the ruling establishment in both Westminster and Brussels. Any Brexit settlement outside remain voters’ ‘comfort zone’ of EU membership therefore needs to provide something like the same measure of reassurance and must address, wherever practicable, their real concerns.

Whilst it would appear the objectives of Leave and Remain voters are completely different, that doesn’t necessarily mean that they cannot, or should not, be reconciled in the resulting Brexit settlement.  To ignore the minority who voted Remain is tantamount to  a dictatorship of the majority and very un-British.  It is also quite likely that the economic fears of Remain voters are also shared to some extent by Leave voters, whilst many Remain voters share the Leave voters’ disillusionment with, and distrust of, the ruling élite and share their concerns about uncontrolled immigration and open borders. Political independence from the EU whilst maintaining close trading arrangements (such as through the Single Market) and co-operation should be achievable if Mrs May and Mr Davis understood how the EU thinks and works, following the example set by other prosperous European nations which are not in the EU.

The political establishment and main stream media are not presenting us with anything like the full picture on leaving the EU. In turn, the resulting distortion is creating misconceptions about what can and cannot be achieved.  Firstly, if we re-join EFTA (the European Free Trade Association) we can remain in the Single Market (more accurately the European Economic Area, EEA) under different, much more flexible or bespoke conditions including allowing us to control immigration (by unilaterally invoking Article 112, the Safeguard Measures) in the EEA Agreement and leave the jurisdiction of the European Court of Justice.  Secondly, the acquis (or body of law) of the EEA is about a quarter of the total EU acquis and is relevant to the facilitation of seamless trade, rather than the furtherance of a political project.  Thirdly, about 80% of the EEA acquis originates outside the EU, to facilitate more global trade, so we would (probably) need to comply with it anyway.  Fourthly, ‘all singing, all dancing’ Free Trade agreements (FTAs) take several years to negotiate and don’t provide seamless trade.  Fifthly, the EU is unlikely to agree to an advantageous FTA because it is not in the interests of their centralising control-freak political agenda. Sixthly, outside the EEA we will be a ‘third country’ subject to vastly increased difficulties while trading with the protectionist EU through tariffs and non-tariff barriers including regulation, approvals and surveillance.

Mrs May and Mr Davis’s Transitional Deal and overall handling of Brexit so far has the potential to lead to widespread dissatisfaction and disillusionment on both the Leave and Remain sides.  For the leaver, there is dissatisfaction that Brexit under the current plan will not be a clean break on 29th March 2019, but will begin a period of costly servitude to the EU, effectively a vassal state, which will last for at least 21 months and quite possibly even longer. In other words, it will be an indefinite Brexit in name only. For the concerned remainer who is not an ideological europhile but motivated primarily by worries over the economy, the limited duration of the proposed transitional period may result in either an unsatisfactory Free Trade agreement or else an extension of the transitional deal with the resulting uncertainty this would cause. Businesses share these concerns and at the moment have not been given any clear idea of the potential barriers to seamless trade with the EU that will occur whether or not there is an FTA.

Since the Referendum, the disillusionment with the ruling establishment has continued. It is not a problem peculiar to the UK or engendered by Brexit as there have been similar trends within the EU and in the United States.  Often decried as ‘populism’, it is a visible rejection of mainstream parties, the political status quo and its direction of travel. Our electoral system does not make it easy for new parties to make a breakthrough, but it cannot ultimately prevent radical change if dissatisfaction grows sufficiently. Given the trend amongst the ruling class to respond to their obvious unpopularity by becoming more insular and arrogant, we could see even greater political instability.

The Brexit dividend, which offered an opportunity for our country to reinvigorate freedom, enterprise, democracy and our world-leading traditional strengths for the benefit of all is being wasted. A period of unpredictability on the political front is looking increasingly likely given that it will not be long before the British people conclude en masse that the main problem, which is making their lives and those of their children potentially worse, is the ruling class.

Customs: What the Government position paper told us

Today, the Government published its first Brexit position paper, which covers future customs arrangements. It is a short document, only 16 pages long and intended to be a precursor to a White Paper on trade which is scheduled to appear in the autumn.

What does it tell us? Firstly, the Government has been talking to businesses concerned about a “cliff edge” situation on 29th March 2019 and is seeking to ensure that we will end up with  “the freest and most frictionless trade possible in goods between the UK and the EU, and allows us to forge new trade relationships with our partners in Europe and around the world.”

The paper expresses enthusiasm for striking trade deals with “old friends and new allies” – in other words, the Commonwealth nations and the rapidly growing economies of Asia. We can only do this from outside the EU and particularly, outside the Customs Union. It was announced very early after Mrs May took office that we will be leaving the EU’s customs union – in many ways, this was a bit of a non-issue as it was hardly mentioned during the referendum campaign.

The paper recognises  the challenges of establishing a new relationship with the EU. As a short-term transitional measure, what is proposed is in effect a shadow customs union where by the EU will treat the UK as thought it was a member of the customs union. David Davis, interviewed on Radio 4 today, was adamant that the transitional period would end before the next General election – probably no more than two years – to be replaced by a “deep and special partnership” with the EU. This, the paper admits, will be an innovative but untested approach. It suggests two options:-

  • A highly streamlined customs arrangement between the UK and the EU, streamlining and simplifying requirements, leaving as few additional requirements on UK-EU trade as possible. This would aim to: continue some of the existing agreements between the UK and the EU; put in place new negotiated and unilateral facilitations to reduce and remove barriers to trade; and implement technology-based solutions to make it easier to comply with customs procedures.
  • A new customs partnership with the EU, aligning our approach to the customs border in a way that removes the need for a UK-EU customs border. One potential approach would involve the UK mirroring the EU’s requirements for imports from the rest of the world where their final destination is the EU.

There is, in theory, a third option – failure to reach an agreement (see Paragraph 53), but the paper insists that “this is not the Government’s preferred outcome to the negotiations, but it is essential that the UK is prepared for all possible outcomes of customs arrangements.” As for the first option – a high-tech solution, there are some doubts as to whether it really will create frictionless borders, especially as soon as March 2019. As one analyst has said, ” making sure there are no traffic jams in Dover will be more about the arts of management, politics and the law than technology.

The obvious concern on reading the paper through is that this paper is very much a UK wish list. The EU is under no obligation to say yes. What is a particular cause for concern is that its treaty-based structure may not allow it to treat us as an honorary member of its Customs Union.  It is likely that we will be able to devise a system allowing  goods from the EU a reasonably smooth passage through UK customs by March 2019, especially as the if the new customs declaration service using state-of-the-art technology is up and running by then. What is far from certain is that our exports to the EU will enjoy anything like a seamless passage through their customs.  The EU will have to change its customs procedures to adapt to the different  status of the UK on Brexit. Are they prepared to do this?

We will have to wait a while for a formal response. So far, the main comment from Michel Barnier, the EU’s chief negotiator, is that no discussions on customs can proceed until sufficient progress is made on the UK’s exit bill, the Irish border and the rights of EU citizens living in the UK after Brexit. Guy Verhofstadt, representing the EU Parliament, was  very sceptical, dismissing talk of a shadow customs union and invisible borders as “fantasy”.

One also would like to know if the author(s) of this paper are sufficiently aware of the differences between a customs union and a customs clearance agreement.  The latter is essential, the former almost certainly not, even as an interim arrangement.

The CBI has nonetheless described the proposal as “encouraging”.  David Davis’ interview made it clear that his Department still has a few cards up his sleeve and that for tactical reasons, he was not prepared to give anything further away. What has been put into the public domain has shown that the Government is aware of the issues UK businesses will face but offers little detail on how they will be resolved.