Brexit: a question of trust

Wednesday 3 July 2019  



Our most viewed article, and perhaps our main contribution to the debate, entitled "What's wrong with the WTO Option", originally published in 2016, continues to circulate on Twitter. We said "One can say, unequivocally, that the UK could not survive as a trading nation by relying on the WTO Option. It would be an unmitigated disaster, and no responsible government should allow it. The option should be rejected".

For us as a political campaign, that was pretty much a suicide note. Though there is no official voice of Brexit, the campaign organisations associated with Vote Leave (BrexitCentral etc) have control over the narrative and we fell foul of the Brexit orthodoxy. There has been a sustained campaign on the part of the Brexit blob in London to redefine the WTO Option as the One True Brexit and by the looks of it, it worked a treat. Consequently The Leave Alliance fails the purity test ensuring we have to fight through the noise to be heard at all.

Though there is no majority in the country for a no deal Brexit, leaving without a deal seems to be the one thing the leave camp can agree on. The propaganda is etched in and they will learn the hard way why we cannot trade normally on WTO terms. 

Here there is a strong tribal dynamic. With a subject as complex as Brexit, much of what is believed is taken on trust from those who are considered kosher sources. That trust has been abused. The Brexit blob has its own cabal of wise men who wilfully misrepresent the issues. They dream up all manner of nostrums to get them over the line, from claiming the WTO agreement on Technical Barriers to Trade overcomes EU third country controls, through to the absurd suggestion that GATT Article 24 can be invoked to ensure the continuity of tariff free trade.

Though this dynamic is unhealthy for any democracy, it's worth asking how we got here. The rank and file Brexiters may believe anything served up to them by the Brexit blob, but more crucially, they simply do not believe anything said by anyone else. With good reason.

There is a peculiar dynamic in British politics where political parties are eurosceptic in opposition, but europhile in government. The Tories have always paid lip service to euroscepticism but have never been trustworthy. Then there's the wider media, not least the BBC which has a well documented pro-EU bias spanning decades, where eurosceptics have been the but of every joke in its comedy output, belittling and ridiculing genuine worry about the direction of the EU project.

Our own politicians of all stripes have never been honest about the nature of the project with some even to this day insisting that the EU is but a mere "trade bloc", often conflating the EU with "Europe". Leavers are also used to betrayal. We were denied a referendum on Lisbon which was smuggled in by the back door, and freedom of movement was introduced on the quiet so by the time anyone noticed anything was up, the ink would already be dry. Our establishment does not ask for consent because they know they won't get it. 

Even now, parliament has shown itself to be wholly duplicitous. Though they voted to allow Theresa May to send the Article 50 notification, every parliamentary initiative since has been with a view to stopping Brexit despite campaigning on a leave ticket, and being on record saying that the vote must be respected. That didn't last long. Preventing no deal has become a euphemism for stopping Brexit and now both sides are playing double or quits to the point where we will leave without a deal mainly because we've run out of road.

Had parliament humbly accepted the verdict of 2016 and worked constructively toward delivering Brexit then we might not be at this unhappy crossroads - but for all that was said, MPs were merely biding their time, waiting for the right moment - and having gambled it all by voting down the withdrawal agreement, they also killed the one guarantee against leaving without a deal.

Brexit has now moved beyond the mechanics of striking a new deal with the EU. It has become an all out war, where the accumulation of deceit and betrayal over the decades has toxified the issue and clouded our better judgement. Consequently, facts have ceased to matter. Knowledge and expertise take a back seat while the ideologues slug it out, leaving the rest of us to pick up the pieces.

If Britain is to claw its way back to political stability, then it is for parliament to rebuild trust. Unless and until we leave the EU there is no possibility of that. Parliament has squandered every opportunity to secure an amicable departure and failed to properly understand what the 2016 vote meant to those who have waited so long for any kind of say. They assumed the vote was something that could be casually disposed of. That miscalculation wiped out any possibility of trust. Now we will all pay the price.  


03/07/2019 link

Take the win we have

Monday 14 January 2019  



Tomorrow MPs vote on Theresa May's withdrawal agreement. Some estimate a resounding defeat for the government of a magnitude not seen for a generation. It is likely, though, that there will be some unexpected late converts who will soften the blow. The scale of the defeat will be the decider on whether it gets a second lease of life.  


In the face of defeat, Mrs May has few options. The EU is adamant that there will be no renegotiation and the most we can expect is an exchange of letters clarifying the nature of what has been agreed. The received wisdom is that she'll jump on an aeroplane to Brussels and come back with a piece of paper in her hand, calling for another vote. That ploy, though, is so transparent and anticipated that it has probably been discounted. She'll need to ask for extra time to let the thing settle down.


She is undoubtedly trying to marginalise the ERG, making it a "my way of no way" contest. If the ERG sees Brexit at risk, the theory is that they will back May's deal. The ERG Tories, however, are such a dishonest bunch that they will have convinced themselves that no-deal is the only way, and they won't listen to May. The whole thing is a bloody mess that's impossible to call.


After much deliberation, the The Leave Alliance has resigned itself to backing the deal. We initially believed that if the deal were to be voted down there would be one last window for a plan B, but for that to happen there would need to be an indeterminate extension and the EU would only entertain starting over were there a new government. Despite the speculation of a coup, this is highly unlikely. The EU has its own timetable and is not minded  to allow any more messing about from the UK.


For all the pitfalls of the deal, it is still a deal, and though there is a bitter pill to swallow, Britain simply is not prepared for a no deal Brexit, and if nothing else, needs the deal in order for there to be a transition.


There is plenty about the deal to complain about, but in the end leavers must accept responsibility. Leave MPs have marginalised themselves throughout, ever clear on what they will not accept, but never forthcoming with a deliverable alternative grounded in realism. At every turn all the big decisions have been decided by circumstance. While the UK devoted all its runtime to negotiating with itself, the EU was writing the script. Had there been a plan before triggering Article 50 things may have been different. That there wasn't is solely the fault of the Brexiteers who had every opportunity along the way to deliver.


A plan would have allowed the Brexiteers to call the shots but instead the ERG united around the unthinkable WTO option, using all of their influence to promote that agenda. Being that there are such enormous costs and risks, rightly they have faced a wave of opposition. Never once have they sought any kind of consensus and have attempted to weave the narrative that any deal is a betrayal of the vote. 


The party faithful may well have fallen in line and grassroots Brexiters are deeply suspicious of theresa May, but the leave vote in 2016 was not a mandate to sever all formal relations with the EU. Were that agenda made clear during the referendum it is doubtful leave would have won. Even the risk of leaving without a deal was enough to convince some to vote remain.


The Leave Alliance warned that a plan would be necessary and that without one we would but the referendum victory in danger. That now seems to be the case where there is a renewed risk of remaining if the deal fails to pass. In effect the ERG tories are gambling with our victory for a game of double or quits. Should we lose the prize, Tory Brexiters will have had a hand in that outcome.


In the end we must be mindful that the nature of international relations is complex. It is inconceivable that two developed western allies have no formal trade relations. Any relationship is going to have binding compromises, some we will not like - but are ultimately necessary. This is the world as we find it. Should we leave without a deal then we are in the position of having to rebuild our relationship from scratch - from a much weaker position and as we restore cooperation it will likely be on the EU's terms.


No deal ultimately risks the UK's ability to recover and also risks us becoming a vassal state further into the future. It may also see us attempting to rejoin in the future. At least with Theresa May's deal we are still in the game. There is another window in which to avoid the implementation of the backstop if we can present a real world alternative in the subsequent negotiations. We must be pragmatic.


Our relationship with the EU is one that will evolve from Brexit. Trade is more than agreements on tariffs. The modern discipline turns on a number of pivotal areas of cooperation from air services to border controls and customs cooperation. What is decided now is sure to be revisited, not least because customs technology is always progressing and the EU will eventually adopt Single Window and other emerging frameworks. Eventually we may find the backstop as it now stands is redundant and once the air is cleared from Brexit, the mood will eventually soften. 


Much of the headlong charge for a no deal Brexit is wholly irrational. It may free us from EU obligations but in a world interconnected rules, nobody is a free agent. Not even the EU. Much of the regulatory measures we receive via the EU are the product of international conventions, not least those on state aid and those regarding the environment. Brexit was never in any form going to be a free for all. We have obligations. 


For those who say May's deal is not leaving, it should be noted that we are leaving the single market and the trade component will be a bilateral agreement much like the EU-Canada FTA, because that's all the EU in the framework of WTO rules can do for us. We dispense with freedom of movement and the regulation that goes with the single market. Of itself that is a seismic change that will bring both costs and opportunities. We have enough to be getting on with.


There are good reasons to oppose the deal but ultimately we have squandered every window to avert it. The Leave Alliance is especially displeased with the customs union aspect and our trade policy will have to be creative to avoid the traps it may create. But we have more to offer than agreements on tariffs which are increasingly of diminishing importance in trade.


The one merit May's deal has is that it gets us out intact and so we live to fight another day. It is the first step on a long road. It was always unrealistic to believe that forty years of political, technical and social integration could be undone at the stroke of a pen. As a beginning, the deal is sufficient. We will in a real sense have left the EU. More work is needed but we have always said that Brexit of itself is not a cure for what ails us. It marks the beginning of a new chapter - and there is much more work to be done. 



14/01/2019 link

Nick Boles is sabotaging the EEA option

Wednesday 28 November 2018  


It is with some irritation we see that Nick Boles MP has again utterly failed to invest the time in understanding the EEA system. Now that Theresa May's plan is on the rocks, Boles yet again comes forward with a supposedly "evolved" plan after his humiliating slap down from Norwegian premier, Erna Solberg. We were quite clear his "Norway then Canada" plan would be rejected and we were not remotely surprised to see that it was.

Now, though, Boles is pushing a confected version of the EEA option to facilitate a wholly unnecessary customs union. Being that Efta has its own array of trade accords, Efta membership is fundamentally incompatible with a customs union so again we are looking at mangling an otherwise elegant solution to solve what is essentially a non-problem. 

Routinely we are told that Efta EEA does not solved the Northern Ireland border problem. We vehemently disagree. The EEA Agreement embeds tariff-free arrangements, and customs cooperation (and Rules of Origin), while adopting the EU's tariff schedule unilaterally gives us the effect of a common external tariff from which we can diverge where appropriate. The Irish need the Single Market, not a Customs Union.

The EEA is a primarily a configurable system, designed to work with member specific protocols. After joining the EEA system we would look to incorporate a number of added tools and components in much the same way Norway has. The UK would adopt the Union Customs Code.

Here the debate is behind the times with many repeating half understood mantras recycled from the referendum - when there have been a number of new developments since. All goods moved within the EU have a customs status of either Union or non-Union goods. Union transit (UT) is a customs procedure used to help the movement of non-Union status goods between two points in the customs territory of the EU. As of last year, Common transit extends UT to include the European Free Trade Association (EFTA) countries of Switzerland (and Liechtenstein), Norway and Iceland.

Between that and a number of political and legal obligations within the EEA agreement to simplify customs formalities, there is enough there to form the basis of a UK customs protocol attached to the EEA. For what it actually solves, a customs union would be absolute overkill and contrary to the aims of Brexit. 

We know from the backstop in the withdrawal agreement that if the UK opts for a customs union then it will come with all the added obligations of full alignment with the Common Commercial Policy which is precisely where we don't want to be. With a properly configured EEA membership there are no outstanding issues that could possibly justify such an enormous surrender of sovereignty.

We would even go as far as saying that Boles's plan is not even the EEA Efta option. The implications of what he is saying suggests that we would be a quarantined member of Efta but still half in the EU, bound to the EU's trade policy which, when combined with the EEA acquis, starts to look very much like Brexit in name only. We could justifiably conclude that Bole's plan is a cynical version of remain in disguise, masquerading as the Norway option - which is an otherwise tolerable Brexit outcome. 

That said, it is wise never to put down to conspiracy that which is better explained by typical Tory arrogance. Boles has a track record of ignoring better informed sources, and states on his own blog that he has no real interest in the details - even though the political viability of the EEA option absolutely turns on the detail. This is classic Westminster bubble stuff - going off half-cocked on the basis of received wisdom having utterly failed grasp the basics. 

But then, of course, Boles has covered his back by saying a "customs arrangement" would also suffice. These are weasel words from a man who, when challenged, will not be able to adequately flesh out what that would entail, which may lead others to conclude that he doesn't have any answers and the customs union default is still required.

The net effect of these wholly avoidable errors is to further discredit the option and weaken its standing in the public eye. Moreover the addition of a customs union is guaranteed to steer Brexiters away from the option and we don't blame them either. We could really do without the clueless meddling of Boles.


28/11/2018 link

Norway then... get on with it!

Thursday 1 November 2018  



The divorce analogy has been used quite a bit throughout the course of Brexit where we are breaking up with a partner of some 40 years. So expanding that to start a new relationship, the Norway then Canada approach is essentially finding a nice new girl and asking her if you can use her pad for a bit and then swan off when you find something better. Charming.

Some sofa surfing blokes can get away with that sort of thing but generally if you're starting a new relationship it helps to tell her she's the sweetest gal in the world and you'll be awesome together. But then EEA advocates in parliament are a pretty miserable bunch.

Were we joining the EU today they'd have a Westminster bridge firework display with all the pomp and ceremony. Yet with Efta we're talking about it like a second best we're reluctantly forced to join after the proles have thrown a spanner in the EU works. Again using the divorce analogy, it's like settling for a girl you don't really like but are just afraid to be alone.

To argue the case of why we join Efta you really have to sell it as superior. Which it is. It's a liberal, democratic alliance of North Atlantic countries and Switzerland - regarded as a world centre of banking. It's a natural alliance of nations who don't fit in the EU. We'd be in better company, particularly Iceland and Switzerland who both have a lot to teach us about improving and enhancing our democracy.

Efta isn't a supranational quasi-superstate bloc, it's not intruding on our values and it's not telling us what to do, and it's mainly about trade - which is what we Eurosceptics always said we wanted. EEA and Efta means preserving the bits of the EU worth having while finding a natural home with like-minded allies.

The UK is is particular about fish as are Iceland and Norway. Our combined weight in global fishing affairs is considerable - not least because of the expertise we bring to the table. the same can be said of gas and oil exploration at sea. Teaming up with Switzerland also gives us a major voice in international banking. Efta with the UK is a power in its own right and certainly would be no passive "rule taker".

To join Efta we have to want it and we have to show that not only do we want it, there is also a future for Efta states, and in the process, we can enhance the EEA which could potentially solve a problem for both the EU and Switzerland who have long been seeking to normalise their relations to no avail.

There are any number of geostrategic benefits for the UK being in Efta which would be considerably more agile than the EU, but being that Efta is not a customs union it gives us trade options and the best of both worlds. This to me is an upgrade, not a booby prize.

We have discussed at length how EEA Efta resolves most of the immediate Brexit problems but we should not be looking at this solely from the perspective of  solving a Rubik's Cube. We have to see this in terms of not only how we can leverage the best deal for the UK but also how we can turn Brexit into a positive for all. For the EU it means far less exposure to the costs of Brexit but also rids it of one of its less cooperative members without souring European relations.

If we are going to be minting new coins then why not mint one in honour of Efta and and make a decent show of it to prove to our allies that we are committed to a long term mutually productive relationship where we can have the best possible relations with the EU and still work collaboratively in trade affairs without petty spats and needless acrimony.

What is totally lacking is any sense of vision. The Tories have their "fwee twade" agenda - which is taken seriously by no-one who knows about trade. Here though we have an avenue available to us that is not only pragmatic, it is also deliverable, realistic but also highly desirable if we do so in the spirit of building something and giving it new energy. The dismal hostility from Brexiters is hardly attractive to a new partner nor especially is the grudging negativity of remainers.

What the MPs need to so if they want Efta is to not only get to grips with the issues, but also project a markedly improved attitude and show a bit of initiative in terms of presenting a viable vision. They need to be out waving the Efta flag as enthusiastically as they once waved the ring of stars.

The notion of docking to Efta part time is very much the bureaucrat's solution devoid of any human energy or ambition. It is as though we are resigned to becoming a second rate power on an EU leash, somehow forgetting that Britain is a country of considerable economic, intellectual, academic and scientific resource with plenty to offer.

Norway may play hard to get but she needs to know we are serious and we're not going to take her for a ride and use her. She isn't interested in a rebound relationship and on recent from is not impressed at our reckless and selfish behaviour. Who would take that on?

The short of it is that the tide is going out on Tory trade fantasies and the latest enthusiasm for TPP is utterly ridiculous. Trade gravity is one of the few absolute rules in economics. We may not belong in a supranational federalising project such as the EU, but we are still every bit Europeans and we still belong in the European family of nations. Efta best represents our circumstances and by every possible measure including healing the nation, it is a no-brainer. What are we waiting for?


01/11/2018 link

A failure to plan was a plan for failure.

Friday 12 October 2018  



If speculation is to be believed, Theresa May is mulling a whole UK customs union to avoid a customs border between the mainland Britain and Northern Ireland. Naturally this sets alarm bells ringing with leavers, particularly Tories for whom "free trade" has become an article of faith and a sine qua non.  


This would seem to be at odds with much of what Theresa May has previously said as we have noted, along with the EU Commission, a customs union of itself does not actually achieve very much. Here we have a government grasping for any and all solutions having allowed itself to be bullied by the ultras into closing down entirely viable options such as the EEA. Now Mrs May finds her options are limited. 


It was always the case that the UK would have to make compromises to one extent or other where it would have to decide on its political priorities for now and the future. The Leave Alliance anticipated this long in advance which is why we thought it necessary to publish a plan before the referendum. 


Now that we are at this critical juncture it would appear that the so-called Norway option, our preferred means of exit, is gaining in popularity as it presents itself as the most obvious solution to the various trade realities. 


Doubtlessly this has all of the hardcore Brexiters crawling out of the woodwork to trot out the usual anti-EEA mantras but these are the same people who have written off Chequers and every other proposal on the table bar an ill-defined Canada style FTA which still sees the UK facing standard third country controls and likely would involve adopting the EU's food safety and product regulations in full with direct ECJ influence eventually.


The cynical ploy on their part is pretending that a Canada style FTA can be adapted for frictonless trade despite there being no precedent for this and plenty of messages from the EU apparatus saying that this categorically isn't possible. It is also wholly inadequate for our services sector.  


It is our view that EEA critics are not engaging in reality. Many of the criticisms of the EEA are valid (though often overstated) but if maintaining frictionless trade is an objective of the Brexit process then there simply isn't any other option. Furthermore, the persistent antagonism against the Norway option is not only at odds with many of the claims made by key leavers during the referendum, it also ensures that of the solutions remaining, they are worse for the UK in terms of both sovereignty and market access.


Though there are repeated attempts to kill off the EEA as an option, the UK could pick up the threads at any time and there is every reason to expect a collaborate attitude from the EU in doing so. The EU would prefer not to add yet another strand to its external relations and the EEA is designed to those ends. 


If anything has made Brexit more costly and difficult than it ever needed to be it is the obstinacy and intransigence of the Brexiter ultras who have squandered a genuine opportunity to to reshape Europe in favour of free trade delusions and a stunted idea of sovereignty. Worse still we will pay for it through the course of a long vassal state transition that could have been avoided. It's almost like a Brexit plan was a good idea. 



12/10/2018 link

Doubling down on madness

Saturday 22 September 2018  



Theresa May has doubled down on her Chequers insanity in what is probably the most breathtaking speech thus far. She has dismissed any EU version of a Northern Ireland backstop while once again closing down the EEA avenue. "Here, the EU is still only offering us two options". said May.

"The first option would involve the UK staying in the European Economic Area and a customs union with the EU. In plain English, this would mean we’d still have to abide by all the EU rules, uncontrolled immigration from the EU would continue and we couldn’t do the trade deals we want with other countries.

That would make a mockery of the referendum we had two years ago. The second option would be a basic free trade agreement for Great Britain that would introduce checks at the Great Britain/EU border. But even worse, Northern Ireland would effectively remain in the Customs Union and parts of the Single Market, permanently separated economically from the rest of the UK by a border down the Irish Sea.

Hitherto now May has been content to trot our mealy mouthed rejections of the EEA but this week has gone all out to smear the option and has joined the ranks of her ultras in lying about it in totality. It is, therefore, a dead option under this prime minister. The second remark eliminates all known legal solutions for a backstop which takes us further away from concluding a deal. 


The core dishonesty here though is knocking the ball back into the EU's court. It was always for the UK to present a workable proposal and despite having been warned on a number of occasions that the single market is indivisible May has time and ignored what she is told. She is washing her hands of any responsibility. 


In one spectacularly ill-judged statement Theresa May has destroyed anything we might consider progress and the goodwill that goes with it. If we were nowhere yesterday then we really are nowhere today. Barring a miracle fudge in the final hour it now looks less likely than ever that we will leave with a deal. Theresa May is going down in history as the PM who wrecked Britain.  



22/09/2018 link

Norway then Canada cannot work

Thursday 6 September 2018  


The "Norway option" is often described as an off the shelf solution. It is only off the shelf insofar as it already exists but it is only the framework of a solution and one will will need to be configured for the UK's unique needs.

The EEA agreement can be tailored to meet our needs. It is an adaptive framework with country specific protocols and the UK will need several to cover fisheries, agriculture customs cooperation and most likely a distinct protocol for Northern Ireland. All of this will take almost as long to negotiate and implement as an FTA.

Consequently, the notion that we can use the EEA as a short term interim measure, as suggested by Nick Boles MP, is one not in touch with reality. He proposes that we pick up the EEA as a short term transition while we negotiate a Canada style FTA.

This would effectively double the workload where we spend considerable technical and diplomatic resource in configuring the EEA only to have to start the process all over again. We would ask, for starters, what the actual point is? A tailored EEA solution would be entirely adequate for our needs and one that addresses most of the technical dilemmas thrown up by Brexit. It would safeguard our EU trade in ways that an FTA wouldn't.

Put simply, if we leave the EEA we are treated as a third country and subject to full third country controls which even an unprecedented FTA cannot address. There is no economic utility in doing so. Were we to embark on such a process it would be with a view to full divergence in the hopes of serving larger markets elsewhere which is highly improbable.

Diverging on standards would create considerable customs problems for our EU trade, which of itself is troubling, but it is also fruitless since a number of countries already have harmonisation commitments with the EU centring on global standards - which are increasingly forming the backbone of EU regulation.

If the aim is a looser relationship than the EEA then it makes more sense to work with other Efta member to improve the EEA agreement over time and make better use of the system of veto. Moreover the UK would be welcomed as a fully committed member. In this it is difficult to see why EEA states would welcome the disruption to the EEA system for the sole benefit of the UK if we intend to leave it.

Superficially, "Norway then Canada" seems like a sensible approach but it ignores the level of work involved and assumes the EEA is immediately operable as though it were a software patch. It isn't. There is no possible way we can leave the EU without at least transitional provisions for fishing and agriculture and if we wish to retain participation in integrated markets, any new protocol would have to be permanent.

Though the UK has global ambitions the reality of trade points to the fact that we must continue to participate fully in European markets and Efta is the obvious vehicle for doing so. Should we take the EEA avenue then we must do so as a fully engaged member rather than using it as a cop out. It is difficult to see why the EU would entertain a transient use of it or deviate from the existing exit schedule if the end point is a Canada FTA. It will not seek to prolong Brexit or add another layer of complexity that would require coordination with EEA states.

We would urge Nick Boles and "Better Brexit" to rethink their proposal. It is impractical, unworkable and naive. The EEA is only going to work as a long term venture and should we commit to it there is every chance we can shape it into something better with the cooperation of the EU, perhaps even expanding it to Switzerland, thus consolidating the EU's neighbourhood relationships. Brexit is then a win-win for Europe and nobody feels used by it.

Longer term, as the UK establishes its own external trade relations it may be possible to phase out aspects of the single market where appropriate thus contributing to the overall wealth of Europe. The EU says that we cannot cherrypick from the single market, but there are ways to configure it from within and the UK is more likely to get what it wants by coordinating divergence with the EU rather than opening up retaliatory spats.

The short of it is that Britain needs a deep and comprehensive partnership that goes well beyond the scope of an FTA and the most intelligent means of doing so is to join a multilateral system such as the EEA. We can then go further as the EEA is not subject to the same WTO MFN clauses we find in FTAs. It then provides a framework for continuous and managed exit rather that attempting it all in one go. It has been our view from the beginning that Brexit is a process, not an event - and that much has not changed.


06/09/2018 link

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