Saturday, 18 November 2017

Brexit: filling the void

One of the most intriguing aspects of Brexit discourse is the newfound importance placed upon Free Trade Agreements, or specifically how they have taken centre stage as the be-all and end-all of trade relations. There is a common misconception that, since the EU does not have FTAs with major economies, bar Canada, it does not have trade agreements with them. This is completely spurious. 

Whilst it is true that most EU FTAs are with small economies, this is merely an uninteresting inevitability. With a huge gulf in size between two economies in a negotiation, there is (by default) much narrower scope and necessity for compromise. Negotiations will be focused on the extent of accommodating one into the other, rather than overcoming regulatory divergence, as smaller economies are less able to develop a distinct or protectionist regulatory framework. This is because they tend to lack resources and thus the same kind of clout across sectors. 

It therefore follows that, by and large, FTAs between large economies are rare by comparison and take a very long time to be concluded. The EU's FTA negotiations with India were launched a decade ago and have yet to be concluded. CETA took well over seven years, and no FTAs yet exist between the EU and China, Japan, Australia and the United States. But herein lies the all-important misconception: the lack of FTAs between the EU and large economies does not render their trading relations a product of mere WTO rules.  

There are many different types of trade agreement. We see not just FTAs but partnership frameworks, sector-specific agreements (like SIOFA, a multilateral fisheries agreement), good-specific agreements (such as in wine with Australia), Exchanges of Letters, Mutual Recognition Agreements (MRAs) and Customs Cooperation Agreements. These types of trade agreement are different to FTAs but are extremely important in terms of facilitating trade. 

The latter two in particular are of profound importance. I will return to them in a moment. Even the BBC, in their latest reality check on Britain's global trading relationships, missed them. It is disappointing because in furthering the myth that no FTA means trade ties are conducted on the basis of WTO frameworks, support for a no deal will increase. Journalists must bear some responsibility here. Increasingly we are seeing public figures claim WTO rules suffice between major powers without their comments receiving appropriate scrutiny. 

David Bannerman made this error on Sky yesterday. William Dartmouth, well rebuked by EFTA4UK, has also implied this over at Brexit Central. This morning, Wetherspoons boss Tim Martins was on the Today programme. Apparently his business, of which I am a fairly regular customer, is at the centre of the trading universe, and thus he must be consulted on as many Brexit issues as possible. At 53:40, Mr Martins informs the presenter, John Humphreys, and the show's listeners that 'the EU hasn't done any trade deals' with any of the top 10 economies. He was not halted over this point and continued rambling incoherently. This is a man who is ignorant to the point of malevolence, and Humphreys ought to have flagged him up. 

The truth, as ever (when you're asking a pub landlord about international trading relationships), is more than a little different. The EU has a whole host of trade agreements with major economies, all of which can be found and read at the EU's online treaty database. I tend to advise people that it is preferable to search by country, especially since it is those major economies which seem to be attracting the attention of the Brexit ultras. Australia, China, India, Japan and the United States are worth looking at in more detail. 

Please note here that not every treaty listed under each of the above countries is trade-relevant. About a third of those with the United States are, and about half of those with China are. Common sense will largely be sufficient in working out which ones are and which ones are not. I mentioned above the significance of MRAs and agreements on customs cooperation. These agreements facilitate enormous amounts of trade in a whole variety of ways, and as an alternative to FTAs work more or less satisfactorily. 

Mutual Recognition Agreements (MRAs) are agreements between countries which establish recognition of one another's conformity assessments. The purpose of these agreements is to minimise costly delays caused by customs checks. They require evidence to be supplied in the form of paperwork confirming that the necessary activity has been undertaken in order to assure conformity to standards. Such agreements also cover things like licences and professional qualifications, allowing architects or doctors to work in both territories and thus facilitating trade in services. The EU has MRAs on conformity assessment with most of its largest trading partners, including Australia, Canada, Japan, New ZealandSwitzerland and the USA

Beyond MRAs, though, we are also to look at Customs Cooperation Agreements. Here we are talking about deals that establish joint bodies, called Joint Customs Cooperation Committees (JCCCs), which consist of representatives from each party's customs authority and who are responsible for overseeing the practical application of these agreements. The work carried out to achieve this relates heavily to intelligence, risk profiling and the maintenance of computer systems and databases. 

Customs is intelligence-led and a balancing act between facilitating trade and cracking down on abuse. Importers 'risk profiling' exporters off the back of track record and trust. Exchange of information regarding specific goods, potential criminal activity, expected and unexpected consignments and volume of trade all help to aid contracting parties in deciding where checks are necessary and where they are not. Without this information and collaborative work, risk profiling is much more difficult, so checks increase as a precaution. Agreements on customs cooperation are therefore crucial in terms of preventing customs logjams, which have the potential to devastate supply chains. 

As readers will by now expect, the EU has agreements of this nature with countries such as ChileChina, CanadaIndia, JapanKorea, and the United States. Notice again the prominence they enjoy amongst major trading partners. They are not Free Trade Agreements, but they arguably facilitate trade to a far greater extent and, importantly, do not include highly protectionist elements. More importantly, the existence of these, very important agreements immediately disproves continued claims that we have solely WTO-based arrangements with large economies. Instead, the phrase 'beyond WTO' can be used to better describe these relations. 

Brexit discourse has centered heavily on Free Trade Agreements. The extent to which this has happened has polluted understanding of bases for trade relationships. The opposite to FTAs is not a void, but popular understanding simply does not reflect this. It might well be the case that after forty years of trade competence residing in Brussels, we simply do not know how to conduct appropriate trade discussion. Re-communicating these issues to the public, therefore, will be a long and difficult process. Not one aided in any way by the continued booking of third rate interviewees acting as knowledge vacuums. 

Tuesday, 14 November 2017

Brexit: a balancing act

In recent years, Britain's constitutional discussions have largely revolved around Scotland and its lack of a voice in Westminster. To some degree I have been sympathetic, given that I live within the bubbled protection of the M25 and therefore enjoy a disproportionate amount of media focus. But if we think Scotland have had it badly, we may also want to look to Northern Ireland, whose marginalisation from discourse and consensus has been captured exquisitely by the Brexit issue. 

Slowly, and with enormous difficulty, our media are beginning to delve into the mechanics of the Northern Ireland problem. At the weekend I wrote fairly plainly about the Irish border question, explaining - without too much detail - why the situation needs agreement within the Article 50 window. If blogging has taught me anything, it is that it is always best to leave an issue alone if I know very little about it. This is why I have not tackled the Northern Ireland question as extensively as perhaps I ought to have done. 

The situation is uniquely complex because we are having to find solutions not only to technical questions, but also to deep-rooted political ones which concern the maturation of the ongoing peace process. There is also the looming problem of acquiring what's called third country status, which necessitates a change in enforcement and surveillance strategy, meaning checks on goods no longer take place at the point of production, but rather take place at the border. 

Which is exactly where the issue of special status comes in. Whichever way we cut this, special status of some kind will characterise the eventual relationship between Northern Ireland, the EU and the rest of the UK. We have discussed already the need to settle the border problem during the window of the Article 50 period. The British government itself acknowledges the importance of doing so, having agreed at the beginning of talks to the sequencing which has ensued. 

The balancing act before us is really a question of how much of this 'special status' is politically acceptable to the DUP, and indeed to British unionists in Northern Ireland. The desire for as soft a border as possible provides each side with a strong prerequisite for facilitating this special status, which will need apply not only to Northern Ireland, but to the island of Ireland more widely. It is entirely possible that there may come a point at which the DUP feels Northern Ireland is too politically detached from Britain for a deal to be considered reasonable. 

The crux of the issue is that in order to maintain a soft Irish border, which is possible (though we will not achieve perfection by any means), Northern Ireland will need to replicate a selection of facets of EU membership. This will include, most crucially, retention of status as an EEA country, and thus remaining in the framework of the Single Market. This will be necessary because countries participating within the Single Market adopt a harmonised enforcement and surveillance strategy - the mechanisms of which become apparent at the point of production. 

On March 29th 2019 (we presume), Britain becomes a third country to the European Union. On this date, if we leave without any agreement over the Irish border, Northern Ireland borders a Customs Union, the EU and the EEA. These political walls exist by virtue of our leaving, not out of predatory action or spite commandeered in Brussels. We leave and so step outside of these walls, and by 'walls' I am referring to non-tariff barriers; hoops which are thrown against countries to enable the EU to ensure standards are being met. 

Acquiring third country status means a huge shift in enforcement and surveillance regimes, meaning in essence: inspections take place at the border, not during production. This is so because the EU does not have legal jurisdiction in a third country and so cannot organise internal checks. This stands in contradiction to what we are trying to achieve, which of course is a part of the UK preserving similar levels of openness and access with its southern neighbour. 

The EEA and EU are not the same thing. The Single Market is an extension of the EU's Internal Market, whereby add-on states enjoy a very healthy trading relationship and centralised enforcement in return for a variety of obligations, including financial commitments and, with some configuration and caveats, an honouring of the four major freedoms. Northern Ireland being in need of the EEA is unequivocal. What is less certain is whether such an arrangement would come in the form of a bolt-on to the EEA Agreement itself, or whether it would be agreed upon less formally and exclusively as part of the divorce settlement. 

Northern Ireland will cease to be an EU member in 2019, but will need to duplicate the referenced inspections procedures in order to work productively towards the maintenance of a soft border. Keeping those checks away from the border is a difficult task, but will be vital both for business activity and the protection of integrated supply chains. It is here worth remembering that quite a number of businesses, such as those involved in dairy produce, see their goods cross back and forth multiple times as part of ordinary processing procedure. 

If the UK were, as it ought to be, pursuant to an EFTA Brexit, this particular issue would simply disappear. Our problem with the border would ease, leaving us to worry about VAT, the effects of leaving the Union Customs Code (and subsequent assistance governing customs cooperation and mutual border inspection programmes) and the Common Agricultural Policy. These things are not relevant to the EEA acquis and must be dealt with separately. But the way I see it, three important issues are less bothersome than three important issues and a fourth, much bigger one. 

We have decided instead to make things much more difficult for ourselves. The theory behind adopting special status as an EEA country is sound, but what I am slightly less certain about is how permissible it will be to the DUP, who are keen on reaching the closest possible ties with Britain and who, quite ironically, currently provide our government with numerical backing and policy support. 

Ultimately the DUP will need to back down over any potential complaints they may have here. Special status doesn't end with the Single Market. It will be a recurring theme as negotiations progress, covering things like agricultural tariffs and rules of origin. The easier they make the process now, the easier it will be to work towards practical solutions come phase two. 

Sunday, 12 November 2017

Brexit: why Northern Ireland comes first

Belatedly, and with some understandable difficulty, we are starting to talk about the mechanics of the Irish border question. The technicalities are, as ever, complicated - particularly those surrounding VAT. If I am to do what I set out to do, and inform the informers, a breakdown of the components involved in this facet of Brexit is preferable. This post will focus on the bigger picture: why the border question comes as part of the divorce settlement and thus before general talks about trade. Later posts will deal with the added challenges. 

Comprehension of the border issue is not all about detail. We must also get to grips with broad concepts, such as the implications of acquiring third country status and the use the Single Market (EEA) has to us in terms of eradicating non-tariff barriers to trade and maintaining an efficient enforcement and surveillance strategy. We must also establish firstly that the British government has agreed to the Article 50 sequencing process, and secondly that the Irish border question framing part of the divorce settlement is in the interests of all sides. 

The United Kingdom, Ireland and the rest of the European Union all favour a soft border. This is in part to protect the maturation of the peace process and in part to maintain frictionless trade. There is no desire for punishment here on any side and no political will for a hard border. The question therefore becomes: how do we go about preventing such an outcome? 

The answer is to sort it out before leaving. On March 29th 2019, the UK becomes a third country to the European Union and Northern Ireland shares a border with the EU, a Customs Union and the Single Market. Without an island-specific arrangement embedded within the framework of the divorce settlement, Northern Ireland will simply be regarded as a third country on Brexit day. This comes with a huge shift in enforcement strategy, whereby checks and inspections move from the point of production to the border. Hence, a hard border.

Again, this is not done out of spite or predatory action commandeered in Brussels. The EU has no legal jurisdiction in the internal affairs of a third country and so must assess conformity to standards at the border. Leaving the EU before agreeing on a specific deal for Northern Ireland (which will probably have to involve special status as an EEA member and a possible replication of the Common External Tariff) will give us an Irish border bogged down by checks. This is unavoidable and will not be especially conducive for the preservation of the ongoing peace process. 

The volume of transportation at the Irish border and the intricacy of certain supply chains cannot be overstated. The Irish border is six times busier than the Norwegian-Swedish border and we also have to take what are called 'X-crossings' into account, where products cross back and forth as part of their respective supply line. Milk is as good an example as any of this, and a useful case study to use because it is a widely consumed good and as such will easily capture the public's interest. There is a milk cooperative, set up by Gabriel D'Arcy, called LacPatrick. It has processing facilities situated on either side of a border rendered non-existent by the Good Friday Agreement in 1998. 

Here we can paint a picture of the difficulties to some pockets of trade caused by a failure to come to a pre-Brexit arrangement and a subsequent hard border. Rigorous checks at this border, which are likely unless we prevent them beforehand, will cost producers hundreds of thousands every year. Delays and storage costs can provide business with quite punitive overheads, and this will compound any political friction induced by a hard border. It is imperative, therefore, for agreement to be reached during the Article 50 period. 

The island of Ireland will need specific protocols related particularly to the origin of goods, VAT and enforcement procedures. Keeping those checks and inspections at the point of production will require a stay in the EEA, whether this is done officially and bolted onto the EEA Agreement or by stealth: unofficially but with agreements to keep Northern Ireland within the jurisdiction of the EU's network of market surveillance agencies, will be up to negotiators. But either way, it must be agreed soon. 

Saturday, 11 November 2017

Brexit: a new battleground

Democracy is of intrinsic merit. It doesn't need to be defended any more than freedom does. Societies which are democratic honour the value and contributions of citizens. Democracy restrains power systems with checks and balances and provides individuals with the necessary mechanisms to pursue justice, equality and their own creative participation within policy domains. 

It sits at the core of my politics, which I admit have become increasingly difficult to define, given that I now assess the political landscape almost exclusively through the prism of Brexit. I have written very narrowly in the past about the value I place upon democratising the information burden. This, I rather think, has been the major success of the blogosphere, despite its ongoing uphill battle with media giants for audience and authority. A belief in democratising efforts like this are of huge comfort and importance to me. 

I thank 'MagicAldo' for leaving the following comment underneath yesterday's post. He sheds light on what could possibly be the updated intellectual battleground in the Brexit debate. His retort is very interesting and worth exploring in more detail.

Those who are observant will notice how stark the change in tone of this debate has been. Negotiations have not been successful, there is no sign that adequate scoping (assessing of our options) took place prior to the invoking of Article 50 and even less evidence that David Davis and his department understand to any great length what becoming a third country to the European Union means in practice. We now find ourselves staring down the barrel of a no deal. I now see no better reason to take seriously the EFTA option, making sure we use Article 112 (explainer here) in order to leverage a better deal on free movement, and take valuable steps towards separating the EEA acquis from the EU. 

One gets a sense that Britain's attempts to re-learn self-governance are rather like that of a newborn deer's attempts to stand up on all fours. I think this is analogous of our current struggles and coincides with the theme struck by the above comment. This is now the battleground on which Brexit debate is currently being fought. As a country we are asking ourselves a very important question: are we actually capable of reviving our democratic integrity and ability to govern ourselves? Can we rise to the challenge of self-determination? 

Yesterday I had quite an illuminating discussion with Roland Smith, who has also made his name advocating a softer Brexit position. He appears to be thinking along the same lines. Assessing our capacity for self-governance is, at this early stage, mere speculation. We will struggle, but ultimately that baby deer needs to learn how to walk. Without doing so, he will not survive.  

My vote in last year's referendum was, I now realise, an expression of my belief in the country's ability to meet this task head on. Re-learning how to govern at home is an opportunity, but will be a huge challenge. We will need to re-organise our civil service at departmental level, reintegrating expertise and facilitating modern approaches to administration and bureaucratisation. Some ministerial departments, such as those of trade and international development, may need to be merged together. We will need to re-coordinate links between universities and industry, ensuring that research and policy guidance is aimed at domestic sectors, rather than outsourcing technical assistance and advice to Brussels. 

This blog has made several references to the democratising core of the eurosceptic argument without going into more specific detail. Increasingly I sense a certain confusion on the part of Remainers who do not feel they have had the purpose of Brexit properly explained to them. Whether they agree to it, of course, is a whole other matter. My fingers and keyboard are not used as tools to convert others. Since the referendum, my mindset has been: 'we have our mandate, now let's focus on issues of withdrawal'. But it doesn't do anybody any harm to pause for a few moments and reflect upon the goals we are reaching for. 

Here we turn away from the world of economics and the neoliberal obsession with growth, and focus on the state of our domestic democracy. We could easily have ignored the issue for another forty years, but at what cost? Trade must always come second and democracy must always come first. An increase in non-tariff barriers is a small, though undoubtedly troublesome, price to pay for the rejuvenation of the democratic process. Our reluctance to take part in ever closer union and our lack of care for eurofederalism to me highlights just how inappropriate a supranationalist model of governance is for Britain. 

Brexit must be a means to an end rather than an end. I fear the government is treating our withdrawal (with electability and public opinion in mind) as if it is purely the latter. Brexit cannot be done for its own sake; it must be a part of something much wider and more profound. Even the pursuit of self-determination, or as great a measure of it as we can recover, which is intertwined with democracy, needs some kind of purpose. There is value in bringing policy closer to people, but it must be met with efforts to innovate, to be creative and to instill confidence in consumers, banks and foreign markets that we can hold our own. 

The United Kingdom has been crying out for stronger degrees of localism. All politics is local and people care more about issues which touch them, not grandiosity and ideology. Instead of a top-down structure of government, whereby local councils lack any tangible flexibility or independence, we ought to be looking at devolving powers which do not necessarily need to reside with the European Commission or Palace of Westminster. At some point, sovereignty must find its home with the people it concerns, not just regalia and suits. 

Brexit is the first, brave step towards this process. We need substantive reclamation of competencies which have been handed to Brussels, largely behind the public's back, for centralised administering. This, remember, has also not been done for the sake of it. Supranationalism has been the necessary prerequisite to the formation of a United States of Europe. And in this we have seen immense power seep from our increasingly hesitant island. If we are to take the meaning of 'democracy' literally (and by this we mean rule by the people), we need to begin by relocating powers, such as those governing energy and the environment, agriculture and rural development, fisheries and employment law, to jurisdictions which can be influenced by the citizens they have effect on. 

Three years ago I asked myself a very simple question. How do I, an EU citizen, influence EU policy? I came quite quickly to the conclusion that I couldn't, and I have not veered from this analysis. This realisation initiated a whole trail of thought, from which I am yet to emerge. Brexit has evacuated British politics of any semblance of normality, but luckily, I have managed to retain strong faith in nation state democracy. In some ways I feel like a religious man. It has been a testing process which for others would have been great cause for retreat. But I am above all else comforted by a belief that we are doing the right thing. 

Friday, 10 November 2017

Brexit: reversal is a false trail

A lot of Remainers read this blog and I consider that a compliment. This is not because I agree with them, but rather because it tends to suggest a level of objectivity on my part. Maybe some of them do it purely to extract information out of me for use against both me and other Brexiteers. I am renowned for being pessimistic and can't bring myself to blindly defend either liars on my own side or the handling of every step in the withdrawal process. 

Some, I am glad to say, take genuine interest in my thoughts and this is always nice. It is good to have a mixed readership because otherwise I would be left with what amounts to not much more than an echo chamber. In this respect I am lucky to have built up a Twitter following which is surprisingly diversified and mixed in terms of political beliefs. This can be extremely difficult to achieve, as any active user will know. 

Many of those who favour EU membership will no doubt feel a sense of spirited encouragement when they hear high profile figures such as Lord Kerr recounting the ability of the British government to legally reverse Brexit. I have always admitted that we are able to backtrack on leaving the EU, though would in any event fight back against it. What most surprises me is the way this is seen as some kind of shocking admission. 

Speaking on BBC Radio 4 this morning, he said: 

"At any stage we can change our minds if we want to, and if we did we know that our partners would actually be very pleased indeed. The Brexiters create the impression that is because of the way article 50 is written that having sent in a letter on 29 March 2017 we must leave automatically on 29 March 2019 at the latest. That is not true. It is misleading to suggest that a decision that we are taking autonomously in this country about the timing of our departure, we are required to take by a provision of EU treaty law.”

Then, in a speech to an Open Britain event earlier on this morning, he added: “One should bear in mind that it is always possible at a later stage to decide that we want to do something different.”

He has said nothing especially significant or anything most did not know already, so the media buzz around his comments is more than a little underwhelming. The question of whether we can reverse the process of leaving is more one of political will and mandate than ever it is legal scope. I don't think there will ever be that political will, in part because not enough Remainers are enthusiastic enough about mobilising to stop Brexit, and in part because it simply isn't clear that the 52-48 divide has in any profound way changed since the referendum. We have all seen and heard from conversions on both sides of the debate. 

Lord Kerr is today being painted as the man behind Article 50 but a far more important influence, naturally unobserved, is Altiero Spinelli, who perhaps stands as the main reason why Article 50 was not drafted in any reasonable or constructive manner. I have expanded upon this elsewhere for any who are interested in the details. Both Kerr and his comments are far less important than advertised, and what is more, his views have been reported on by the BBC before, such as here, back in June. This issue of political will is very important. It is undoubtedly true that a democracy, if it is truly a democracy, should be able to change its mind. But there is no objective evidence of the country having done this. 

Another referendum on the final deal is a possibility, but I suspect many simply would not have the appetite or energy for such a vote. I don't suppose turnout would crawl past 65%. If Brexit were to be reversed in absence of a clear demonstration of political will, faith and trust in our democratic institutions, from parliament to our media, would be left in total disarray. We are talking about a scar left on a country by an establishment too weak and incompetent to follow orders. Divisions of unparalleled anger and hatred would solidify into pretexts of all kinds of political action. This is not something which is characteristic of a functioning democracy, and is therefore a question to which Brexit reversal has no answer.

Furthermore, the hidden element to all of this appears to me to be that Brexit was always inevitable. How much integration would have been intolerable, given that the coalition government legislated for a referendum on any further European constitution? In this context, a reversal looks rather like kicking the can a little further down the street. It might well look good for the strength of the pound, but I doubt it would achieve anything longstanding. I think in some respects we confronted leaving earlier than we were perhaps prepared for, but then again, how does one prepare for something the magnitude of Brexit? 

The next major treaty would have been a major stumbling block for our electorate, who have grown increasingly wary of the lengths to which ever closer union will travel. I noticed back in my campaigning days quite a large number of Remainers were critical of it. The democratic case against the European Union, which forms essentially the bedrock of euroscepticism, has always been a very powerful core argument for us. With it we can build from an intellectual base which is both progressive and thoughtful. 

A Brexit reversal sees a return to a 'status quo' as being the tonic for an unhealthy democracy. But this is a false trail and does not address any fundamental questions about the future of our democracy. It is the political equivalent of putting our fingers in our ears and pretending all will be steady and dandy if we give up on that which is difficult. The Stop Brexit circles can be heard loud and clear in concentric Twitter bubbles, but ultimately they cannot yet, or ever, demonstrate adequate reflection of public opinion. This I see as worth remembering as Lord Kerr does his rounds in the media. 

Wednesday, 8 November 2017

Brexit: configured yet configurable

I wrote yesterday about the EFTA position and the simultaneously configured and configurable nature of the Single Market. I drew attention to the country-specific protocols which have been bolted onto the EEA Agreement and explained how an EFTA Brexit allows the UK, in effect, to leave the European Union without becoming a third country. 

Inevitably, when I write about the Norway option, I am met with criticism by many on the Leave side who feel there is nothing that can be done about the free movement of people (which I feel obliged to remind them is in reciprocal fashion their freedom to move also). This is an interesting topic which I feel has not been explored sufficiently by mainstream media channels who prefer to paint immigration as a simplistic issue, as if it is void of any complexity. 

Reality, though, tells us this isn't true. Immigration is not just about points and numbers. It is also about international laws governing asylum policy and human rights, the accommodation of relatives of established migrants and mechanisms for tackling illegal immigration without allowing the state to become too overbearing on the individual. The right to 'family reunion' is a particularly prominent driver of immigration to Britain. 

We need to find ways of distinguishing between EU and EEA regimes on immigration: the Single Market does not offer uniform standards on free movement rules which apply symmetrically to both EU and EFTA member states. Then there is the problem of extricating certain groups of people from figures, such as students and asylum seekers. For obvious reasons, there needs to be some perspective here. Migration figures (which are collected dubiously, through the use of passenger surveys no less) are easily blown out of proportion, so communicating these issues in a way that is coherent is vital. 

On immigration, I take the precursory view that if Tony Blair had exercised the use of available transitional measures, in accordance with Article 8 of the 2003 Treaty of Accession, when formulating British policy towards the inclusion of the eight former communist countries into the European Community, there would not have been a referendum on membership of the EU in 2016. This point was not raised enough during the referendum by the Remain side and indeed was largely overlooked by Leave voters too. 

This is quite a powerful statement and I stand by that belief. In this regard, committed eurosceptics like myself owe him quite a lot for his lack of foresight. The last Labour government did not fully consider the impact that this policy would have on changes to public opinion. Regardless of your opinion on the issue of immigration, it was a domestic decision for the A8 controls to be waivered and Brussels cannot be blamed directly. And since then, all subsequent figures and trends have been distorted inappropriately. 

I am not saying that reshaping immigration policy is not an argument for Brexit. I explicitly said that it was at this blog only the other day. But it depends on how we go about doing this. No country has complete control of its borders and presenting Brexit as a means to achieve this is irresponsible and misleading. We can't monitor everybody and we will need to abide by international commitments on migration and asylum if we want to steady our rocky diplomatic standing. Image is very important at global forums. 

My ideal immigration policy would steer away from the idea of points and quotas. I think such systems are slightly discriminatory and relatively inflexible. I prefer the sound of an immigration policy which is fundamentally rule-based, but without the rigidity of arbitrary caps, points or quotas. They are also intellectually flawed in that we would end up viewing a certain number of immigrants as being acceptable but a few more not so. Missed targets may also add fuel to the fires of xenophobic pockets of the country, stoking anger and frustration when reported on. 

The world we live in is complex and we must work with what we have at our disposal. I can't conjure up my utopian vision of what British immigration policy ought to be because I simply wouldn't be able to account for every caveat and legal requirement. So the argument being offered against the Norway option, being that we cannot provide full control of our borders, is slightly suspicious from the get-go. But that does not mean we have nothing of use to us. 

Inside EFTA, the regime on free movement shifts slightly. Importantly, what we find embedded within the EEA Agreement are 'safeguard measures'. These are described in Article 112 and expanded upon in Article 113. I would advise readers to read the following excerpt. 

Article 112 allows, upon short notice, unilateral suspension of any of the four freedoms given formal and reasonable justification and followed by a period of consultation with the EEA Joint Committee. What form the suspension takes, including how long and what policies emanate from it, are up for discussion. The point here is that upon invoking this article, a political process is underway. We can from here look towards leveraging a deal on reform, or making changes to existing EEA regulations, which are already enshrined within UK law. 

EU membership requires unanimity in this context. All members of the Community must agree to a member state's ability to invoke the article, which given the size of the club appears more than unlikely. EFTA, being merely the trading bloc the EU once pretended to be, demands no such supranational requirement. Here we have a prime example of what I described in my opening paragraph: configured yet configurable is the EEA, taking into account the interests of the countries which are added to it. 

In an interview with Business Insider, I admitted that Liechtenstein's use of Article 112, which permitted them a quota-based system of immigration, is unlikely to be replicated by the UK. We are a much larger country and economy, with a different geographical character and different labour needs. Stephen Kinnock and Keir Starmer have made the argument that we can have the same, but I think they are naive in this respect. If we do manage it, which I don't rule out, then great. We'll have our cake and we'll be eating it. If not, it's not the end of the world and there are other things we can do. 

Often when the issue of invoking Article 112 is raised, critics claim that it is for emergency use only. This is not true and Article 113 (3) clearly shows that there are emergency safeguards within the safeguard measures, rendering this argument completely and utterly redundant. Have a look at page 34 of this European Council statement. Senior EU leaders already believe we are justified in using it, which may put some minds at rest. 

In treaty terms, safeguards and so-called 'waivers' are crucial. They provide a degree of flexibility where real life challenges threaten the integrity of general provisions. Article 112 can, I believe, be used as a valve of pressure relief. It needn't be permanent and I think the general turbulence caused by Brexit will see migration decline regardless. We may arrive at a situation where, simply by leaving, the numbers begin to dry up. On this issue, the devil is in the detail. We aren't looking at simplicity and leaving the EEA will not accomplish everything we expect it to. 

Tuesday, 7 November 2017

Brexit: taking the hint

Brexit observers will notice that in recent days, the European negotiating team have been dropping several not-so-subtle hints about the EFTA/EEA position. Such examples can be found here and here. These have been accompanied by yesterday evening's insightful debate in the House of Commons on membership of the Single Market (EEA), led by Stephen Kinnock, whom I have come to respect as a serious politician and effective mobiliser. He put forward the motion:

"That this House believes that for the UK to withdraw from the European Economic Area (EEA) it will have to trigger Article 127 of the EEA Agreement; calls on the Government to provide time for a debate and decision on a substantive motion on the UK's continued membership of the EEA; and further calls on the Government to undertake to abide by the outcome of that decision."

Do quickly note that here we have further evidence that leaving the EU does not necessarily - and in principle - mean leaving the EEA. The EEA Agreement has always been a separate treaty, and one to which the UK retains suis generis membership. Ahead of yesterday's debate, a few individuals, such as Adrian Yalland of the Single Market Justice campaign, contacted me to ask if I would contribute to Mr Kinnock's parliamentary briefing, which did flatter me somewhat, but timing was poor as I have been bogged down by essays at university. I would love to have helped compile the briefing but ultimately I need to prioritise my time and workload. The positive, though, is that Labour higher-ups appear energised by the EFTA option. This has my attention as we edge closer to the next General Election. 

Some weeks ago at this blog I decided that it simply wasn't worth my time writing about the merits of the Norway option, though I did at one point assure readers that an EFTA Brexit would never really leave the table, even if the government eventually decided against it. I simply passively accepted that a departure from the EEA was inevitable. To some extent my claim that the option would continue to recur in debate has been substantiated. The EU has a way of keeping neighbouring countries nestled closely to its remit, and Michel Barnier has repeatedly made clear that a Norway-style deal can be arranged. Last week, the European Union released an internal impact assessment of the different Brexit models. On the EFTA/EEA option, the document noted that "in economic terms this would be close, but not identical, to the status quo for a full member state." To my mind, this means stability. 

We should now look to taking these hints. As regards the scale of Brexit, we could do ourselves much heavier damage, and sliding into a ready-made package will be useful for preserving business confidence and avoiding a jungle of non-tariff barriers which would otherwise await us as a third country. The EEA Agreement is interesting in that it is simultaneously configured and configurable. It contains bolt-on agreements which take into account the needs of the add-on states. In the case of Liechtenstein we see unique quota arrangement on freedom of movement (which I don't argue we will be able to perfectly replicate) and in the case of Norway we see several protocols which commit all sides to cooperating on matters of customs clearance and the establishing of Mutual Border Inspection programmes. 

The EFTA/EEA position will accommodate Britain with respect to honouring both the integrity of the Single Market and the uniqueness of its non-EU members. It will simplify the Northern Ireland problem hugely, though there will still be issues around VAT and leaving the Union Customs Code (UCC) to deal with, which will not be especially easy. No longer will we have to worry about giving Northern Ireland special status within the EEA or establishing mechanisms for controlling any regulatory divergence. It will continue, almost completely, the current regime of centralising the enforcement and surveillance strategy, meaning that for any trade relevant to the EEA acquis, checks will not be necessary at the border. The beauty of the Single Market, after all, is that goods remain unimpeded by bureaucracy. This makes us all richer and has immeasurable benefits for trade facilitation. 

In essence, what we are talking about here is the ability to leave the EU without becoming a third country. We will avoid the sticky web of non-tariff barriers adjoining third country status whilst simultaneously recovering large pockets of domestic sovereignty. Many competencies will return, including very complicated policy areas like fisheries and agriculture, which will each require a few years to fully construct a distinct national setup. The less we have on our plate during withdrawal, the more room we'll have left over for the cake, if I can use the metaphor just briefly. 

EFTA/EEA is not perfect by any means. There are problems with the framework in which it operates and I accept these flaws. But the flaws which are reasonable to identify tend to be missed by commentators who prefer to churn out the kind of lazy, conventional wisdom that doesn't stand up to fact or any particularly thorough scrutiny. These people rely on misleading slogans like 'pay no say', whilst ignoring the general direction in which standard-setting and regulation have been headed since well before the twenty first century: upwards to global forums. Locked within the aegis of the Common Commercial Policy (CCP), Britain has played a limited role in the standard-setting arena, having been unable to exercise any right of initiative at trade-related agencies and any first mover advantage in policy areas where we retain huge political capital. Common Union positions have led to a dilution of our regulatory potential. 

But, given the logjam we now see in the Article 50 procedure, the EFTA position looks more like an olive branch than ever before. Perhaps this is the reason why so many committed eurosceptics have favoured this route out of the European Union for the last few decades. Try to leave everything in one go and see where you end up. What the country needs now is a period of calm. If we don't opt for EFTA/EEA then I would argue we are in immediate need for an extension to the Article 50 window, perhaps a doubling of the prescribed two years, which officials (prior to the signing of the Lisbon Treaty) at the constitutional conventions, as I have written elsewhere, did not bother to scrutinise adequately. 

As I see it, options are severely limited. The Commission will be open to one or the other because nobody but the insane on either side wants to arrive at a no deal scenario. There are too many documents, licenses and policy areas which require mutual recognition or cooperation immediately following Brexit. The best thing for us to do now is to commence negotiations in principle with EFTA, in accordance with Article 56 of the convention. Barnier and his team are beginning to make clear which way they think we should head, and in doing so refute any claims of a desire for punishment. We should take the hint before it's too late. 

Friday, 3 November 2017

Brexit: back to simpler times

I could not have anticipated, back in my campaigning days, the sheer level of incompetence and number of political hurdles that the Article 50 period alone would throw up. Often I wish I could go back to the winter of 2015 and spring of 2016. It was a much simpler time. My weekends were spent travelling to different parts of the country, usually by coach as I had invested in a National Express coach card, taking part in localised events with fellow Leave campaigners. I preferred to horseshoe round the south, east and west coast, with occasional trips to Oxford and Cambridge. Bristol, Great Yarmouth and Southampton were particular favourites. Events in these towns mostly took the form of public meetings, street stalls and standard canvassing action days. Now that I reflect I realise how much I miss it. 

Of course, back then (aged 19-turned 20) I knew very little at all. I had the principle in my mind: I knew that EU membership conflicted with the maintenance of nation state democracy and I knew I was against that. That point was never particularly hard to communicate; even ardent Remainers acknowledge it. What always frustrated me were repeated claims that we would reform the European Union in order to make it compatible with democracy and accountability. Ordinarily I am not somebody who argues that Britain has limited influence within the Union and thus cannot spearhead reform - the reverse has always been true. The point about democracy, though, is that the supranationalist character of the European Union prohibits substantive democratic reform. 

Talking to members of the public in organised settings, in spite of very limited knowledge, about why we should leave the EU was a real joy to me. It was my first experience of political activism since becoming interested in pursuing politics in the summer of 2015 (previously I had wanted to be a football reporter). The average person on the Bournemouth seafront or in Norwich town centre did also know next to nothing about the European Union. Many I spoke to had not yet made up their minds about which way they would vote. It is true that ignorance is bliss and I was just happy to be a part of it all. I think at some stage we all were. Here I talk only about myself and do not attempt to belittle other campaigners. 

Luckily over time the principle has hardened. I have added tremendously well, I think, to my knowledge base and, reassuringly, my euroscepticism hasn't wavered. Naturally I reflect and re-think, as any human being does. I don't want my mind to close and I appreciate the views of others, particularly those with whom I do not agree. Learning Brexit has been slow and extremely frustrating - I thank in particular both Norths, Samuel Lowe, Marta Bengoa and Steve Peers, whose work and guidance has proved especially useful. But there is still a long way to go. I told myself back in the summer that more figures on the Leave side would need to make concerted efforts to address complexity, tackling it head on. I am doing what I can with fluctuating effectiveness. 

I like to think about simpler times because I resent how forcefully I have been stripped of my optimism. This can be put down almost entirely to poor government, ever weakened by scandal after embarrassing scandal. I wish it were not the case. A part of me now thinks that Brexit progress now relies upon the establishing of a new government, which sends my mind into a tailspin of sorts seeing as I have repeatedly criticised the decision to hold June's election. Not only were we left with a result that immensely weakened Theresa May's hand, we are governed by a party which relies upon the DUP for numerical and policy support - making the Northern Ireland border issue even more difficult to solve. What is politically achievable to the situation may not be politically acceptable to the party effectively holding the Tories to ransom in the Commons. 

I am as appalled by the sexual harassment scandal as anybody and I wish it had been raised much earlier. It would certainly have saved the government a lot of panic and needless harm during the Article 50 period, exactly where it is most damaging. I say this with respect to victims. Theresa May and her cabinet now appear to be more brittle than they have ever been, and I can't help thinking that at any moment something will topple them all and we'll have ourselves another General Election. It isn't ideal, of course. I would much rather we made speedy progress on phase one issues and had instead decided to conduct appropriate planning prior to the invoking of Article 50. But it may well be the case that yet another restart is necessary in order for Brexit to be choked back into life. 

With no sense of immediacy we are intent on not seeking to extend the two-year period. I believe we should seek unanimous agreement for an extension and do not imagine the EU27 would be unnecessarily obstinate in response to such a request. I understand that doing so would spark the usual moans of kicking the can down the street, but pragmatism has to have a place in politics - even the tumultuous and turbulent politics we are currently locked into. Darker clouds have gathered, casting a depressing haze over sweeter and warmer memories campaigning along the sunny Kent coastline. 

Wednesday, 1 November 2017

Brexit: the time for flippancy is over

There is only so much I can take of John Redwood. I don't know what it is about him I dislike more: his flippant disregard for complexity, his unwillingness to even try to grasp difficult concepts or his incessant and regular lying. I took him to pieces a couple of weeks ago in what eventually turned into a viral and quite well-received Twitter thread. I don't have an issue with him for being a Tory. I'm not ultra-partisan on the question of party identification, and if he were a Labour backbencher spewing his nonsense I would have an equal measure of contempt for him. With Redwood, the problem is either profound ignorance or a determination to soldier on in a futile battle with reality. 

As I have written before, there oughtn't be any shame in simultaneously supporting Brexit and admitting to difficulty. In fact, this should be encouraged. It doesn't undermine the Leave cause because the referendum is over and challenges have to be met head on. We cannot bury our heads in the sand and pretend that reality will just pass us by to no damaging effect. That is the mentality of a frivolous lunatic. Mr Redwood's passing comment today about queuing lorries at Dover has given me exactly this impression of him. He is doing everything he can to avoid seriousness when he said in the House of Commons today [on the potential for long queues of lorries at the port of Dover]:

"Then there is another one that they are constantly telling us about, which is that there will be lorries queuing all the way back from Dover. I am not quite sure how that would work because it would mean that they were queuing in the sea. But of course, given modern, electronic frontiers, there is absolutely no reason why there should be huge queues." 

I will return to the point he makes about the electronic nature of customs cooperation in a later blog post. This is a separate beast in and of itself, with the implication being made that with modernised computer systems we will be able to slash delays as a third country and retain seamless borders. This is a misguided notion which ignores important detail about Britain's place on databases and software referred to by electronic devices. 

I do, though, want to respond to the glib attitude he fronts when discussing the (extremely important) issue of queuing lorries. If it appears funny now, I promise Mr Redwood that it will not be so come April 2019. He won't be laughing when he is hurried in front of television cameras and asked about the lies he told about queues in the autumn of 2017. It is better that he examines why he is wrong now, instead of leaving it until it is too late. 

Long queues at Dover are a serious and inevitable problem of becoming a third country to the European Union and leaving the Single Market. This we do to ourselves, simply by virtue of leaving, but there is scope for confusion here. When I was learning about enforcement strategy (inspection of goods), I was not entirely sure whether third country status was meant in relation to EU membership or membership of the EEA (Single Market). I will simply outline the facts as a way of helping others to overcome this problem. 

EU membership entails Commission oversight of a member's internal legal affairs. In the context of enforcing trading standards, checks and inspections take place at the point of production in order to maximise efficiency. These checks are carried out by a widespread market surveillance program, comprising of a large network of agencies. Manufacturers are also required to carry out their checks independently, following a step-by-step procedure. The enforcement strategy is upheld by Brussels and aimed at production so as to remove unnecessary barriers between member states at borders. So far, so good. Initially I did not realise that this precedent also applies to Norway, Liechtenstein and Iceland, who replicate the same enforcement strategy - almost completely - and so do not encounter heavy resistance at borders. Goods entering and leaving these countries are largely unimpeded by bureaucracy. 

For a third country things are very different. The European Union has no legal jurisdiction in the internal affairs of a third country and so cannot command the competence of carrying out checks at the point of production within that country. So the enforcement strategy changes. Checks move from the aegis of production to the border, where goods enter the European Union. This is a reality that has thus far escaped John Redwood, and the ignorance here is emphasised by a failure to understand that regulatory harmonisation does not mean goods do not encounter checks at the border. Shout this to the skies because it needs to be heard. 

A third country must comply with EU standards but must also prove it at the border. This is because, as I have outlined, the EU has not carried out inspections at the point of production and so must confirm conformity assessment later on. If goods coming from third countries were not checked at the border, and Brussels simply believed they met standards, this would spark a wave of organised crime and, as human beings or businesses cut corners and occasionally bend rules, sub-standard products would enter the EU and Single Market. Principles must therefore be established in order to determine the level of trust a third country enjoys. A 'risk profile' for exporters is constructed. Trust and track record go a long way in international trade. They help to determine the volume of inspection at borders. 

Since the UK has not been a third country to the EU before, it has no track record. There exist no presumptions about our behaviour and the rigidity with which we stick to European product standards, so checks are likely to be quite punitive - certainly initially. Some consignments may face inspection rates of up to 50%, though this is a worst case scenario and will not be a uniform policy. I cannot proclaim to know what percentage of consignments will face rigorous inspection, but there will be checks. Of this there is no question. And checks mean delays, and delays mean overheads. Traffic as we know is non-discriminatory, everything on the roads and at the ports is likely to be affected. Trucks carrying perishable or fragile goods will be especially worried about the value of cargo being transported. If goods need to be stored in facilities to be checked more thoroughly, they will face storage costs - which can be extortionate. 

Serious delays, which are likely, could mean an end to some supply chains, with European importers of our goods giving up on the waiting and limited supply (some goods may be rejected outright at the French border) and may decide to source alternatives from other countries. If we lose supply chains, recovering them will be extremely difficult. For some idea of scale here, let's cast our minds back to July 2016, when temporary measures introduced by the French to check passports at the height of their woes with terrorism caused a 10-mile backlog this side of Dover. Picture that, but on a much larger scale. Remember: these problems dissipate if we remain within the Single Market. This is because, as I said earlier, the EFTA/EEA countries adopt the same strategies for enforcement. 

It is here where warnings about job losses and hits to growth are most appropriate. I am painting a bleak picture, but I believe it is at least an honest and realistic one. John Redwood, himself a man with an agenda, does not care for intellectual honesty. This is why he bats off concerns about trade flow as if they are baseless and do not require serious attention. If I am wrong, then I am wrong. I know John Redwood is wrong and I know there is always the possibility that I am wrong. But what if I'm right?