David Gauke: Is Britain really set to become a low tax, less regulated, free trading, buccaneering country?

13 Mar

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the recent general election.

Conversations about tax policy can take unexpected turns. It was during one such conversation in the late 2000s – I was the shadow tax minister at the time and developing our plans for corporation tax – that a senior tax lawyer at a city firm recommended a series of books on naval battles.

Peter Padfield’s Maritime Trilogy is, in truth, somewhat broader than that. Padfield alternates accounts of the most important maritime confrontations since the Spanish Armada with a broader account of the social, economic and constitutional development of the great powers.

His central argument is that there is a distinction to be drawn between maritime nations – with linked strengths of sea-fighting, trade, financial innovation and constitutional constraints – and land-based empires. The later relied on closed domestic markets, rigid hierarchies and centralisation, the former distinguished by liberty, flexibility and enterprise.

It is an analysis that many British Conservatives would share and, the argument goes, makes the UK well suited to the era of globalisation. We are historically and culturally accustomed to trade and with that comes a recognition that trading partners have other options. Our prosperity is dependent upon those partners wishing to continue to trade with us. Political stability; the rule of law; paying our debts; limited government; competitive and predictable taxes – all qualities that are necessary to succeed as a maritime nation and in the era of globalisation.

It was in this spirit that the Prime Minister’s first big speech following our departure from the EU was at the Old Naval College in Greenwich where – in extolling the virtues of free trade – he talked of recapturing “the spirit of those seafaring ancestors immortalised above us whose exploits brought not just riches but something even more important than that – and that was a global perspective”.

So how are we doing? Are we on course to be the open, outward-looking nation of which the Prime Minister spoke? Are we becoming a more flexible, enterprising, maritime nation?

My last column assumed that corporation tax rates would increase and argued that this would be a mistake. When I heard Government ministers defend the rise by saying that our corporation tax rates remained the lowest in the G7, I was reminded of my conversation with the tax lawyer.

The lawyer’s argument (which I found persuasive) was that we became economically successful from the 1690s onwards because our model was more like that of a small country dependent upon foreigners choosing to trade with and invest in us, taking inspiration from the Dutch rather than the French. Our modern tax system should seek to emulate this, he argued, encouraging international businesses to locate activities and investment in the UK. Our rates may be lower than other G7 economies but, if we see ourselves as nimble and competitive, our ambitions should be greater than that. A better corporate tax regime than France is not a proud boast.

How about freeports? The name could not be more evocative of our trading and maritime traditions. But the evidence suggests that they will achieve little other than displacing activity from one part of the country to another. And if we were really ambitious about a deregulated, low tax, low customs solution to our economic woes, why give these advantages to some places, why not everyone?

The emphasis on freeports reveals an approach to the levelling up agenda that I worry is more about creating grateful localities in exchange for pots of spending rather than a clear sighted vision for improving productivity. The suspicion must be that the preference for ad hoc ministerial decisions over a more defined industrial strategy will lead to a less economically rigorous approach. The suspicion will linger that party political considerations will be to the fore.

There is one surprising, if qualified, bright spot. We are becoming more open to talent. It was already the case that the requirements to get a work visa were much less restrictive than previously, and the Chancellor’s announcement on the skills visas is worthwhile. The qualification, of course, is that it is still much more bureaucratic for EU citizens to work here than it was – which brings me to Brexit.

Our history as a maritime nation is one often identified by supporters of Brexit – like the Prime Minister in his Greenwich speech. Even the word ‘Brexiteer’ evokes the naval escapades of buccaneers (although the Oxford English Dictionary also defines ‘buccaneer’ as ‘a person who acts in a recklessly adventurous and often unscrupulous way’). Liz Truss tops the ConHome Ministerial popularity charts largely on the basis of her energetic advocacy of Global Britain and for free trade as a benefit of Brexit.

The reality is that Brexit involves the erection of trade barriers with our largest market, as January’s appalling trade numbers suggest (although, to be fair, a clearer picture will only emerge over time). Given the Prime Minister was willing to agree to the Northern Ireland Protocol, it even involves trade barriers within the UK.

While good progress has been made by the Department of International Trade in completing free trade agreements with third countries, these have primarily rolled over existing agreements that we had as members of the EU. There was a flurry of excitement last week when the US dropped punitive tariffs on UK products that were in place because of a longstanding dispute with the EU over Airbus and Boeing. Brexit supporters rushed to declare it a triumph due to our new status, the Trade Secretary wrote a self-congratulatory piece in The Daily Telegraph. A day later, the US announced that it was dropping the punitive tariffs against the EU, too. The search for a trade benefit from Brexit continues.

What about regulatory flexibility? It is nearly five years since we voted to leave the EU, but there are still no bold plans to regulate in a different way. Plans to review workers’ rights have been dropped on the basis that this would be politically unpopular.

If the hard Brexit delivered by the Government has made trade with the EU much harder, the combative manner of our dealing with the EU has not only reduced trust but even undermined a key attribute for a trading nation – the rule of law. Having threatened to breach international law for three months over the autumn, Lord Frost has now decided to extend the grace period before internal checks come into place – unilaterally changing the terms of our agreement with the EU. A second breach of an international treaty only recently agreed begins to look like a habit. It does nothing for our reputation for trustworthiness.

The attributes of an outward-looking, open, trading nation are ones to which we should aspire. But in terms of our openness to trade, competitiveness on tax and adherence to the rule of law we are going backwards. In terms of the State telling businesses what they should do and where they should do it, we are becoming more centralised and more arbitrary.

For years, many in the UK have characterised the EU as centralised, interventionist, uncompetitive and protectionist. It would be a sad irony if our departure from it makes us more like the type of inward-looking, land-based power that we once used to disparage.

Henry Hill: Frost’s appointment shows the Government is not resigned to the Northern Ireland Protocol

4 Mar

Throughout the Brexit negotiations, the European Union always insisted that its approach to Northern Ireland was governed by the pre-eminent importance it placed on the Belfast (‘Good Friday’) Agreement. Events may be about to test this thesis.

Today the Loyalist Communities Council, “an umbrella group that represents the views of the UVF, UDA and Red Hand Commando” in the Guardian’s words, wrote to Boris Johnson to announce that the major paramilitary groups were withdrawing their support for the Agreement.

Whilst they insist for now that unionist opposition to the Northern Ireland Protocol remain ‘peaceful and democratic’, the move has been made against a background of mounting concern about a resurgence of loyalist violence, most likely targeting the infrastructure and personnel enforcing the new Irish Sea border between Ulster and the mainland.

All this is important context to the announcement that Lord Frost, the new Brexit Minister, is going to unilaterally extend the grace periods exempting supermarkets from checks on goods being shipped from Great Britain to Northern Ireland, as well as a moratorium on customs declarations for parcels being sent to the Province. The move has sparked outrage from Brussels, which has accused the Government of engaging in a second UKIM-style breach of international law.

But according to sources familiar with the thinking behind the move, this is quite another sort of manoeuvre. The threat of “specific and limited” breaches to international law deployed during the debate on the UK Internal Market Bill were a short-term negotiating tactic – and one which worked, in as much as it helped Michael Gove to secure concessions from the EU on the Protocol.

However, the Chancellor of the Duchy of Lancaster was at best negotiating with one hand tied behind his back. Whilst the Prime Minister and his team had apparently come to office fully aware of the danger posed by the Backstop – see this letter from Johnson to Tusk from August 2019 – the passage of the ‘Benn Act’ severely restricted their ability to push back against Brussels’ demands before the Withdrawal Agreement had to be concluded.

Thinking within government has since divided into two camps. The first, represented by Gove, is essentially facilitative. They don’t like the Protocol, but they recognise the extreme difficulty of resiling from it. This would certainly be in keeping with his more conciliatory approach to the parallel row over devolution.

Frost apparently takes a different view. His camp believes that with the best will in the world, the Protocol is simply not sustainable. Even if its first few weeks had not already witnessed several emergency summits, the triggering of Article 16, and the above loyalist declaration, there are deeper structural problems that mean it cannot be a stable foundation for a lasting settlement.  Specifically, the fact that the whole thing is rooted in EU law means that it is a ‘living document’, whose implications and scope will continually expand in line with EU regulation and rulings from the European Court of Justice. Its operation will therefore drag Northern Ireland farther and farther away from the economic orbit of Great Britain by default.

If you take this view, then it follows that the Protocol needs to be replaced, and sooner rather than later – just as the UKIM Act partially redressed Theresa May’s capitulation to the devocrats over post-Brexit powers. This is where Frost’s unilateral extension of the grace periods comes in.

Those privy to the thinking behind the move believe that it is much more defensible internationally than the UKIM gambit was. Especially in light of the dangerous situation with the loyalists and the role of empty shelves as a focus for unionist anger, the Government can defend a temporary measure intended to buy more time to find lasting solutions.

But as we saw when we looked at Gove’s negotiations, such solutions may not exist in the current framework. He notably refused to reassure Democratic Unionist MPs that the original grace periods were intended to buy time to make GB-NI supply lines work, rather than give Northern Irish businesses time to find new, EU suppliers. Which on the face of it makes another round of temporary fixes just another tactical get-out-of-jail (for now) card.

Unless, that is, the ambition is to have secured material changes to the Protocol by the time those extra six months are up.

This won’t be easy. Contra the somewhat complacent assumptions of some ERG members, it would be very difficult for the UK to simply resile from the Protocol. A short, sharp, UKIM-style threat is one thing. Standing indefinitely in the bad graces of the international law community quite another.

So there are two possible paths forwards. The first, assuming that Brussels absolutely refuses to play ball, is that Britain manages to argue that the EU is operating in bad faith and uses that to justify walking away from the agreement. The second is more attritional, and involves persuading the EU that reworking the Protocol is in the interests of both sides.

This might seem optimistic. But in the event of an actual return to violence, not to mention an endless succession of crisis talks, Brussels will be forced to choose between its hard-nosed defence of the Single Market and its homilies about the peace. British strategists apparently think that the EU places such a high value on its being seen as a moral (indeed, the most moral) actor that it is unlikely to stick to its current purist position in such conditions.

In the event of fresh negotiations, London would be aiming for a new arrangement which overturned two axions which May unwisely signed up to: that there be no change whatsoever to the border between the United Kingdom and the Republic of Ireland (which is often dressed up as a Belfast Agreement obligation, but isn’t); and that the EU should not have to adapt its legislative arrangements. Greater cooperation in other areas – maybe defence? – could be offered in exchange.

This is a bold strategy. To have any chance of working it will take months of sustained diplomatic and governmental effort. If the Prime Minister really has elevated Frost with such a mandate, it is vital that he be left in post long enough and be sufficiently empowered to pursue it. To let one half of your Union strategy collapse into chaos might be regarded as carelessness; to let both looks like negligence.

Britain’s music industry, the EU, the UK – and an early entry for Frost’s inbox

2 Mar

Some post-Brexit barriers to business between the UK and the EU are a consequence of both parties failing to clinch an agreement that one or the other or both already have with third parties – in which the loser is the industry concerned, on both sides of the channel.

Others are a product of our own bureaucracy: of government being ponderous when it might be nimble in offering advice and support.

And others still are simply a product of Brexit as we agreed it, which brings with it friction in trade with the EU, which in turn can be minimised but not eliminated.

The continuing row over the access of British musicians to the EU and EU musicians to Britain offers examples of all three.

In the first category, we have visas.  Some EU states will allow our musicians to visit without a visa for up to 90 days and other won’t.  That isn’t a problem for other third party states, such as St Lucia, Tonga or those which make up the United Arab Emirates, because they have a bileteral deal with the EU that waives the requirement.

In the second, there is VAT. UK exporters of physically recorded music and merchandise must go from paying no VAT to negotiating 27 different EU VAT systems to dealing with a single EU VAT system during this current year.  This is a classic instance of the businesses concerned needing more advice from the government as it seeks to navigate two systems within twelve months.

Finally, there will be more bureaucracy, admin and paperwork – even if the UK and the EU can sort that visa issue, and others that could reasonably be settled (such as carnets, for which there may already be an exemption for portable musical instruments taken into the EU for professional purposes).

That last category is integral to leaving the Single Market and Customs Union – which is outweighed, to some Brexiteers, by the regaining of national independence and, to others, by the gains that come from being outside the EU system and willing to act on it.  Our vaccine success alone could be worth “more than the most pessimistic assumptions about the economic damage of Brexit,” according to Jethro Elsden of the Centre for Policy Studies.

(Northern Ireland, of course, remains in the Single Market for goods and, in key respects, in the Customs Union too for practical purposes.)

Why the difficulty over negotiating a deal on visa waivers or work permits?  Because musicians are caught up in a wider issue of which their story is part: freedom of movement.

To cut a long story short, the EU made a public offer on the issue, which had wider implications for free movement, and the UK made a private one, that did not.

The former would have applied not only to musicians but to other workers and travellers, as Free Movement confirms.  But, for many people who backed Brexit, ending it was integral to the exercise.

Our proprietor’s EU referendum day poll of over 12,000 people found that a third of those who voted Leave said the main reason was that leaving “offered the best chance for the UK to regain control over immigration and its own borders.”

Meanwhile, Oliver Dowden says that “the reason why we rejected the offer from the European Union was that it wasn’t binding, it didn’t cover touring, it didn’t cover technical support staff, and crucially, it didn’t cover work permits.”

This continuing impasse is an early bidder for entry near the top of David Frost’s inbox as he begins only his second day as a member of the Cabinet – though if the free movement obstacle remains immovable, there will be little he can wring out of the EU.

However, Frost knows the ropes, having led the negotiation on the trade deal himself, and is so is well-placed to knock on the doors of individual member states, into whose hands most of these matters fall in the absence of an EU-wide agreement.

UK Music argues that “fishing is of course an important British industry, contributing £446 million to the UK economy in 2019 and employing 12,000 fishers”.

“But it pales in comparison with the UK music industry, which in the same year contributed £5.8 billion to the economy and supported 200,000 jobs.”

It is strange to think that there is more money in Peter Grimes, figuratively speaking, than there is in real fishing – even if because there is less than there might be because of the dispute.

There will be a £23 million fund for fisheries, and Music UK proposes, by way of parallel, a music exports office to help the sector cope with the increased bureaucracy.

Perhaps Rishi Sunak will make an offer tomorrow – after all, today’s papers are full of pre-briefing, as is way with modern Budgets, of £400 million more for theatres, museums, galleries and live music venues.

Iain Dale: Forget the theories around Frost’s appointment. What does it mean for Gove?

19 Feb

Iain Dale presents the evening show on LBC Radio and the For the Many podcast with Jacqui Smith.

There are so many theories about Lord Frost’s appointment to the Cabinet that it’s almost worth dismissing them all.

It’s a real “what did Boris mean by that” moment, one which Metternich might have been scratching his head at.

Having replaced Frost as National Security Adviser, a job he had precious few qualifications for, Johnson certainly owed him one.

And given the number of post-Brexit deal bumps in the road there have been, there’s certainly a need to up our game in unpicking some of the more outrageous consequences of what we signed up to.

For instance, one paper reported that it’s now impossible to export trees from Great Britain to Northern Ireland if they have soil on their roots. Yet it’s perfectly OK for Northern Ireland to take trees from Spain or Sicily. Work that one out if you can.

This is but one example of UK industries which have had to take a hit as a consequence of loose drafting or things which the UK side in the talks clearly didn’t understand.

Michael Gove has been trying to unpick this sort of thing with his European Commission counterpart, but now Frost will be taking over.

So what does this mean for Gove?

People are reading this two ways. Some see it as a humiliation for the Minister for the Cabinet Office and that he’s sliding down the greasy pole to be summarily despatched at the next reshuffle. For many that is wishful thinking.

I suspect the opposite is true and that the Cabinet’s only real transformational minister is heading back to run a department, and bring his powers of reform and regeneration to either the Department of Health or the Home Office.

However, any reshuffle isn’t likely to take place before the late Spring, or even late Autumn. So the jockeying for position will continue for a good few months yet.

– – – – – – – – –

On Sunday I read that Suzanne Heywood’s biography of her husband Jeremy had entered The Sunday Times top ten non-fiction bestsellers.

Jeremy Heywood was at the centre of UK government for 30 years, and was a fascinating character, rising through the ranks to become Cabinet Secretary under David Cameron and Theresa May. He very sadly died of cancer in November 2018.

I started reading the book on Saturday afternoon, as I was due to interview Suzanne on Monday morning.

I had little expectation of being able to finish it by then, as it is a massive 540 pages in length. However, I couldn’t put it down.

Far from being a dry civil service style memoir, it’s a real page turner. I eventually got to the last page at 2.15am on Monday morning, and then experienced that slight feeling of grief I always get when I finish a book I didn’t want to end.

I can’t imagine a single reader of this column not enjoying it. I highly recommend it.

My interview with Suzanne will be on my Book Club podcast next Friday.

– – – – – – – – –

It comes to something when a government agency stands accused of “misleading” a parliamentary committee, but this is just what HMRC is facing this week.

It’s over evidence it gave on the controversial loan charge, which has affected thousands of innocent independent contractors.

HMRC was more interested in saving its own reputation than telling the truth, the All Party Parliamentary Committee on the Loan Charge told The Guardian this week.

It has emerged that HMRC is using the very same contractors that it is attempting to penalise. Hypocrisy of the highest order.

The committee concluded that HMRC had “put management of their reputation and public relations ahead of telling the truth, including to the point of providing statements designed to give a misleading impression and withholding the truth when they discovered it. This is simply not acceptable for any governmental body and may… represent a breach of the civil service code”.

In addition to this the Government is implementing its IR35 legislation in April, which will further penalise independent contractors by ruining their cashflow and forcing them to be paid as employees but with none of the benefits of being employees.

Philip Hammond is entirely to blame for this attack on entrepreneurial people, most of whom are natural Conservative voters.

It is a scandal that a Conservative government should use Corbynista type anti-business prejudice in this way. Were I a Conservative party member I would have resigned over it long ago.

If Rishi Sunak wishes to ingratiate himself with small business people he would get a lot more than three cheers if he stood up on March 3 and announced in his budget that he was scrapping both the loan charge and IR35.

It’s what any proper Conservative chancellor would do.

Ranil Jayawardena: The trade deals keep coming. And today, as the new EU agreement takes effect, we look forward to more.

1 Jan

Ranil Jayawardena is Minister for International Trade, and is MP for North East Hampshire.

In 2019, I voted against Theresa May’s deal three times. Not because I wanted to leave the EU with No Deal, but because I believed we deserved better. This was the view of the British people too and, as Boris Johnson, David Frost and their team have proven, a better deal was possible. It is this deal – in force from today – that unleashes Britain’s potential, at home and around the world.

We are no longer restricted by the EU and can demonstrate our true potential on the world stage. In the last few weeks, I am delighted that we have secured trade deals with our good friends in Kenya, Vietnam, Singapore, and many more. Just this week, we signed a trade agreement with Turkey, a major win for British automotive, manufacturing and steel industries. These deals are only the tip of the iceberg in our mission to establish a truly Global Britain, leading from the front and championing free and fair trade.

In just two years, the United Kingdom has agreed trade deals with 63 countries outside the EU, from Japan and South Korea to Moldova and Mexico. This in itself is an unprecedented achievement, as no other country has ever negotiated so many trade deals simultaneously.

We’ve secured preferential trading terms for some £217 billion in non-EU bilateral trade, including the deal we signed with Japan – negotiated in record time and virtually – which guarantees better provisions for our world-leading services, digital and data sectors.

Britain is – once again – an independent trading nation, free to look beyond the horizon and seize the opportunities out there. It is through trade that she can build ever stronger partnerships around the world that not only generate economic value but, importantly, support our values – protecting our natural environment, defending democracy, and helping to transform the lives of people less fortunate around the world for the better.

We have now secured 97 per cent of the trade value that we set out to reach agreements for first, beyond the EU. And there’s more to come. Trade talks – as will now be apparent to all – often go down to the wire.

Laying the foundations for ambitious new trade deals

These agreements provide a strong foundation for our future trading relationships as we look to strengthen further trade ties globally through negotiating new and ambitious free trade agreements. By working together with forward-looking, like-minded nations, we will secure ambitious trade deals that benefit great British businesses, keep consumers in mind, and drive economic growth globally.

Our United Kingdom-Canada continuity trade deal signed this month slays the foundations – and secured commitment – to begin negotiating a bespoke British deal this year.

And our United Kingdom-Mexico deal enshrines our commitment to start negotiating a new trade deal with our Mexican friends too, which will secure even more benefits for British industry, and go further in areas of mutual interest such as data, digital trade, services and intellectual property.

That’s in addition to our ongoing negotiations with United States, Australia and New Zealand.

And our deal with Kenya, delivers long-term certainty, and preferential conditions, for businesses in both countries, benefitting consumers and investors, and supporting economic development. The deal has been constructed in such a way that other countries in East Africa will be able to join it and benefit their own people whenever they are ready.

Many of these deals and negotiations are significant steps towards Britain’s accession to the Trans-Pacific Partnership (CPTPP) too, to which we aim to apply for formal accession in early 2021.

Joining the CPTPP would put Britain at the heart of an increasingly influential trade network of 11 dynamic economies in the Asia-Pacific region that already accounts for 13 per cent of global GDP and would rise to 16 per cent with our accession. This is a trade network that doesn’t tell countries how to govern themselves nor how they can trade with their friends – but it does help remove tariffs on 95 per cent of goods.

All of this is ultimately good news for great British manufacturers, producers and exporters, supporting jobs in every corner of the United Kingdom. But it is not just our businesses that will benefit. British consumers will be able to continue to enjoy cheaper household goods on supermarket shelves from Chilean Wine to Kenyan Tea.

We have secured all this against the odds and facing unprecedented challenges.

The deals we’ve done are just the beginning, but they do set out clearly our ambition as a free trading nation to champion British interests and push for ambitious and forward-thinking trade partnerships. And that’s why I have been getting into the detail with our friends in India and the subcontinent, the Gulf Cooperation Council, and Mercosur.

Our future trading relationships, over the next few years, will be based on strong relationships and will be all about the detail.

Global Britain in the years ahead

Having served as the Conservative Party’s Deputy Chairman – and Vice-Chairman previously, with responsibility for policy – I enjoyed meeting Party members, listening to Parliamentarians, and working with the Cabinet and advisers in devising our manifesto ahead of the General Election, then campaigning on it on the doorsteps of constituencies across the country.

One of its clear promises was to secure free trade deals with countries that cover 80 per cent of our trade within three years – and it is good news that we are well on our way. All the folks at the Department for International Trade have been working flat out to strike the trade deals we have.

But it is clear that, now more than ever, we must also look to new markets, to help diversify our trade routes and supply chains in regions like Latin America, the Middle East, and the Indo-Pacific.

As Britain lifts her eyes for the first time in almost 50 years, our guiding principle over the next few years will remain the same; we will negotiate new trade deals that champion the interests of British businesses and the British people.

Global Britain is here, and is ready to show the world her true potential once again.

A Brexit trade deal that takes back control

30 Dec

Brexit is indeed a film, a developing tale over time, not a photo – a state of affairs that will be the same in year ten as it was on day one.  So a question that arises about the trade deal which the UK and EU have agreed is whether that story is set to be what the 52 per cent voted for and the 48 per cent can live with.

Once in that referendum, a second time during the Conservative leadership election, and a third time in last year’s general election, Boris Johnson grasped that Brexit would happen in name only if Britain did not take back control – thus satisfying neither constituency.  The film would show no real change and the crowd would want its money back.

Or, as the Conservative Manifesto put it, echoing the Vote Leave slogan: “the future relationship will be one that allows us to take back control of our laws”.  It is not yet a week since the 1246-page agreement, plus five supporting documents, was published.  And MPs will have less than a day to consider the Bill that proposes to put the treaty arising from the agreement into domestic law.

So we are cautious about delivering a final verdict.  But it does seem that Boris Johnson, David Frost, Michael Gove, Oliver Lewis and the Government’s team truly have ensured that this deal indeed takes back control, because “the meanings of the provisions are autonomous under international law and do not reference EU law or jurisprudence of the European Court of Justice”.

“Nor does the Agreement provide a role for the ECJ (except for EU programmes which the UK chooses to opt into) and the EU approach of provisions having direct effect is excluded”.  Such is the verdict of the European Research Group’s Legal Advisory Committee.  This is the heart of the matter and also the heart of Brexit.

This site believes that our nation’s prosperity is not determined by tariff and non-tariff barriers elsewhere, but by the quality of our workforce, the condition of our schools, the competitiveness of our tax system, the quality of business, the state of our infrastructure and, above all, by a culture whose features include strong families, the rule of law, a sense of fairness and a flourishing civil society.

The economic case for Brexit has always been that it potentially allows for “levelling up” – that’s to say, an rebalanced economy based less on the greater South-East, finance, high immigration, an over-valued currency, and parts of the rest of country in near-permanent recession.  Leaving the EU excludes none of the factors that we list above, and which are indispensable to such a programme.

Nonetheless, this Agreement really does seem to recognise the primacy of politics above economics, both for the UK and the EU.  For the UK, that means escaping the ECJ, because without doing so we cannot take back control; for the EU, it means preserving the integrity of its Internal Market, which is part of its wider political framework.

As our columnist Stephen Booth put it on this site yesterday, there is a price to pay for both parties.  For the EU, it is losing one of its biggest contributors, and an important part of its whole.  For the UK, it is less easy access to the markets of EU member states.  The reason why we believed that a deal was on balance likely is that it seemed that this trade-off could be acceptable to both parties.

If a Soft Brexit is EEA membership, and a Hard Brexit is No Deal, this Agreement leans towards the latter end of the scale, whereas Theresa May’s Chequers plan was nearer the former.  As irony would have it, it was May, not Johnson, who in this case wanted to have her cake and eat it – in other words, both to leave the EU and stay close to the Internal Market.

But for all the new non-tariff barriers, there will be no tariff ones – at least, if the two parties can’t settle any future differences through the arbitration mechanisms.  That suits the UK well and the EU better, given its trade surplus in manufactures.  Remainer diehards will go on to say that we are an economic loser under this deal; leaver ones that we are not always political gainers – pointing to the fishing element.

However, those who declare Britain an economic loser are not necessarily right in the long-term, or always in the short.  For example, while the downside of not having a services deal as part of the Agreement will be more complicated access, the upside is not outsourcing regulation of those services to the EU – which that former Remainer, Mark Carney, warned against earlier this year.

Those who say that the fishing settlement will disappoint much of the fishing industry have a point.  Nonetheless, the adjustment period ends after five and a half years, and Britain is now an independent coastal state.  If voters really want a better deal on fish traded off for a worse one on, say, cars, they can always vote for parties who commit themselves to such a programme.

The deal covers co-operation as well as trade but, rather than probe all its strengths and weaknesses, we want instead to make a point not so much about this Agreement as the one that preceded it – the Prime Minister’s “oven-ready deal”: the Withdrawal Agreement.  The political problems with the Brexit settlement overall lie not as far as we can see with this trade deal but its predecessor.

For it was the Withdrawal Agreement which continued the journey which the Anglo-Irish Agreement began – that’s to say, putting a greater distance between Northern Ireland and the rest of the United Kingdom.  In a nutshell, Johnson’s version was better for Great Britain than May’s, but worse for Northern Ireland, and so problematic for the Union as a whole.

So while this Trade Agreement takes back control, the Withdrawal Agreement did not entirely do so, and there is the threat of leakage from ECJ jurisdiction in Northern Ireland to the rest of the United Kingdom.  But that is done and dusted, for better or worse.  The Withdrawal Agreement was the foundation of the Conservative Manifesto.  An election was won on it.  Tory MPs including the ERG voted for it.

The arrangements for Parliamentary scrutiny are so inadequate – the Commons will have only this morning to consider the Bill – that we can’t encourage anyone to vote for it: there may be gremlins in the text of the Treaty that have evaded even Bill Cash and his colleagues.  But the big picture really does appear to be one of a deal that does what it claims.

A slice of that 48 per cent will fight on for a cause that has lost.  But more of it has moved on.  And most of the 52 will be content, if not profoundly satisfied.  Part Two of Brexit is done and the film is rolling.  The odds seemed to be against Boris Johnson getting a Withdrawal Agreement settled, but he got one.  They were against him gaining a general election.  He did it, and won huge.

Once again, he has pulled it off.  Whatever you think of this new Agreement, that’s a personal coup.  He has managed the politics of the EU issue where Theresa May, David Cameron, John Major and even Margaret Thatcher failed.  Churchill walked with destiny.  Today, the Prime Minister, in his serio-comic way, is winking at it.

Jacob Rees-Mogg: Now we will have what the British people really wanted – tariff and quota-free trade with the EU

30 Dec

Jacob Rees-Mogg is Leader of the House of Commons, and is MP for North East Somerset.

The real surprise and significance of the Free Trade Agreement with the European Union is its normality. It is not in itself the reclamation of sovereignty, which happened in January but the expression of that reclamation.  That is why Parliament is being recalled, for although the agreement is satisfactorily comprehensive, it is the type of deal this country could do with other sovereign nations or trading partnerships.

This has been achieved because of the negotiating panache of David Frost and Oliver Lewis, who matched Michel Barnier for capability. Many eurosceptics have a striking admiration for Barnier, who epitomises Gallic sophistication, and who had successfully outfoxed previous British negotiators. Regardless of their abilities, they could not have achieved the right outcome without the backbone of the Prime Minister, making it clear throughout that he would walk away from a bad deal.

The United Kingdom Internal Market Act emphasised this point. The British were reclaiming their sovereignty, and were not interested in the typical type of international fudge that could have potentially overturned the voters’ decision. For in truth that is where the real strength and courage lay, in 2015 by voting for a referendum, in 2016 by voting to leave, in 2017 by trusting the vacuous promises of both parties that Brexit meant Brexit, and by the resounding result in 2019, the electorate ignored all the doom-mongering to demand, request and require its right. As of Churchill, so perhaps of Johnson: “it was the nation …that had the lion’s heart …I had the luck to be called upon to give the roar.”

Thus, this Agreement reflects what the British people repeatedly voted for” a zero tariff, zero quota, free trading agreement with the EU, outside its legal control, unbound from the EU’s treaties and courts. The Prime Minister always said a Canada-style agreement best reflected his ambitions, and this is what he has achieved.

The normality of this deal should not overshadow its landmark status. It is the largest free trade agreement that either the UK or the EU have agreed, and the first ever zero-tariff, zero-quota trade deal that the EU has signed. As with mercy, free trade “blesseth him that give it and him that takes.” For all the talk about punishment, ratchet clauses and defensive interests, this truth guided the Prime Minister and it is embedded in this agreement.

Just like any other free trade agreement, this deal is made up of a number of reciprocal agreements, overseen independently, as a piece of international, rather than European, law. Provisions such as non-regression clauses exist in such agreements across the world. It would be irregular for such a deal where each party did not agree to act in good faith in this way. Far from leaving us in a state of vassalage, this agreement is a great opportunity for regulatory competition, from which Britons and Europeans will benefit.

This is the relationship that the United Kingdom always wanted with Europe. One of understanding and close cooperation, but one in which the United Kingdom is free to follow its own path. The last few decades showed that it was impossible to do so from within the confines of the EU. Now there is a treaty that the British people welcome: not an unaccountable and opaque European Directive, but a foundational agreement that is accountable to Parliament.

From 1st January, the nation’s laws will be made here, in Parliament and interpreted by British courts. They will be free from the oversight of the European Court of Justice, which will have no role to play in either British affairs, nor relationships with the EU and its member states. At the beginning of the year, the EU insisted that European law and the ECJ would apply to our future relationship. This was intolerable. It would have tied the United Kingdom into the EU’s orbit in perpetuity, Le Goulet on steroids.

It restores the opportunity to embrace the opportunities of the open seas, and it is a national responsibility to ensure these opportunities are realised by future generations. With the newly-established Turing Scheme, British students will be able to be in the vanguard of a renewed economic and cultural exploration of the world.

This Agreement opens a great potential future for Britain. It is now in our own hands to forge our own destiny, free to pursue British interests and prosperity in our own way and to build a lasting entente-cordiale with our European friends. This will be far more beneficial for Britain and Europe alike than our increasingly tetchy relationship within the Union.

Along with this opportunity comes accountability; there are no European Directives to hide behind anymore. This is a process which will change Britain for the better, but our responsibilities to the public are greater than ever before. It is up to Parliament and the Government to ensure the fruits of sovereignty are prosperity and liberty to the British people.

Craig Mackinlay & Andrea Jenkyns: This is the first step in a new, improved relationship with our continental neighbours – and with the wider world

30 Dec

Craig Mackinlay is an executive committee member of the European Research Group, and is MP for South Thanet. Andrea Jenkyns is Deputy Chairman of the ERG, and is MP for Morley & Outwood.

Oh well, it’s only been 1,652 days since referendum – longer than the entire duration of World War One. Whether that inordinate amount of time is properly due to the complications of unwinding a 46-year relationship with an ever-changing entity that moved from trading club to a fully-fledged supra-national state in being, or has been a reflection of the failure of statecraft and of obstructive behaviour by those who couldn’t accept a democratic result, we’ll leave to readers to decide.

The Prime Minister gave the powerful rallying cry to the electorate of the UK a little over a year ago to ‘Get Brexit Done’. That was endorsed by the voters, providing him with a historic 80 seat majority and we duly left the EU, as promised, on 31st January of this year. No prevarication, no extensions, no missed promises.

Since March, UK and EU negotiators had been locked in discussions over the terms of the new trading relationship that will apply after the end of the transitional period on 31st December, this coming Friday.  Protracted deadlock ensued – caused by the EU’s refusal to discuss anything other than their own “red lines”, which amounted to keeping the UK within its permanent regulatory orbit.

This was finally broken when the Prime Minister announced his intention to withdraw from the talks, and remove any possibility of further timetable delay or transition extension. That clearly concentrated minds in Brussels; negotiations accelerated, and the outcome was the Christmas Eve Deal before us.

The instructions given to David Frost and the rest of the British negotiating team were clear: any agreement should ensure that the sovereignty of the United Kingdom was not compromised in any respect. No other outcome could be compatible with the result of the 2016 referendum.

The EU-UK Trade and Cooperation Agreement, to give the deal its full title, does indeed respect the United Kingdom’s hard-won sovereignty. That is a thread that runs throughout the agreement, but is most particularly evident in two respects.

First, the Agreement declares that neither party shall be subject to the courts of the other, thereby excluding the jurisdiction in the UK of the Court of Justice of the European Union, the entity in which EU sovereignty resides. Not to be bound by the rulings of a foreign court has to be the singularly most powerful statement of sovereignty and independence.

Second, it provides that either party may terminate the agreement on one year’s notice. There is therefore not the assumptive permanency in the arrangement – unlike the position under EU membership, despite Article 50 of the Lisbon Treaty.

The Agreement, therefore, is a broad and comprehensive free trade agreement, and little more. It is, indeed, the most comprehensive trade deal ever done by the European Union. It provides for zero-tariff, zero-quota trade in goods, effectively giving the UK what many commentators said was impossible: access to the EU Single Market but also let us not forget, access by EU countries to ours but without EU membership, annual fee or supremacy of EU law.

In the short term, this provides reassurance to UK businesses that they can continue to sell into the EU market and they to ours without financial barriers and gives us the domestic freedom to move away from the ratcheting Acquis Communautaire as the EU moves on to whatever it wants to be.

It is in the longer term, however, that the most exciting opportunities will present themselves. Outside the constraints of the Customs Union, the UK can seek out new and lucrative markets. Already, free trade deals have been done with over 60 countries around the world, with more undoubtedly to come. For the first time in 46 years, the UK can become a new champion of international free trade with our seat resumed at the WTO.

The Agreement, in short, is a remarkable achievement. It is not without its flaws – full control over our fishing resources are delayed and there remain unanswered questions as to how the new arrangements will apply in practical terms to Northern Ireland under the unaltered Withdrawal Agreement. A strong and resolute government willing to exercise the country’s new freedoms will be able to resolve these issues.

This international treaty may be the final act in the UK’s tortuous departure from the European Union but is also the first step in a new, improved relationship with our continental neighbours, and with the wider world.

Simon Richards: Almost 15 years ago, I helped to set up Better Off Out. This deal isn’t perfect – but it delivers what we campaigned for.

28 Dec

Simon Richards was CEO of The Freedom Association until June 2020, and a co-founder of the Better Off Out campaign in 2006. He is now working on plans to help promote the record and reputation of Margaret Thatcher.

Three o’clock in the afternoon still has a resonance for the millions who follow football more than I do – not least on a Boxing Day Bank Holiday. For me, it is a sacred time on just two days of the year: Christmas Eve and Christmas Day.

So I was incandescent when, following a ridiculously lengthy delay even by his own standards, Boris Johnson’s press conference clashed with that immovable highlight of Christmas Eve, the Festival of Nine Lessons and Carols from King’s College, Cambridge.

It could have been even worse: had he held it at the same time the following day, he might have found himself even lower down the Queen’s Christmas card list than Tony Blair. To add insult to injury, the Prime Minister apologised, not for clashing with the world’s best-loved carol service, but for ‘disturbing Cars Three’, an American computer-animated film which, it transpired, he had not actually interrupted at all.

A far more substantial objection to Johnson’s deal is that its timing allows Parliament just a single day to debate it. How convenient for the Government! So the truth is that, whatever you or I might think of it, this deal is, if you will pardon my French, a fait accompli – an accomplished fact; a done deal.

Call it what you will, nothing is going to stop it now. Even were there adequate time to discuss this massive document, Her Majesty’s Most Loyal Opposition, true to form, would provide no opposition at all. That, as usual, is left to those Conservative Party backbenchers who, from the fight over the Maastricht Treaty onwards, have served as an awkward squad, carrying out, without official recognition or pay, the work that the Labour Party has long neglected even to attempt to do.

Are important aspects of this deal unsatisfactory for the United Kingdom? Of course they are! There is no doubt that the UK made considerable concessions on fishing, but the key issue, of sovereignty over British waters, was upheld. Given the immense damage that the EU and its Common Fisheries Policy have done to the British fishing industry, it will be years before our fishermen are in a position to take full advantage of regaining control over our waters, so it was a sensible move by Lord Frost and the Government to give ground (or should that be water?) in that area.

After all, in any negotiation there have to be areas where concessions must be made. The important question is “will our fishing industry be in a better position than before?” and the answer to that can only be “yes” – granted that it would be difficult to worsen its current state.

If the Labour Party’s ‘thin deal’ criticisms of the deal are feeble, then the SNP’s attack on the fishing deal elevates political dishonesty to a new level even by its own standards. It has never stood up for Scotland’s fishing industry and its policy of independence, accompanied by an application to join the EU, could only be achieved by sacrificing that industry once again.

The truth is that the Prime Minister’s deal has shot Sturgeon’s fox, or, as one ought perhaps to say around Boxing Day, clubbed it to death. Nothing that Johnson came back with from Brussels was ever going to meet with the approval of Ian Blackford, Scotland’s very own Mr Potato Head himself. His cry of, ‘the potato-seed industry, the potato-seed industry, my kingdom for the potato-seed industry’ is hardly likely to match William Wallace as a call to battle.

There isn’t room here to go into all the arrangements covered in this vast set of agreements. Others such as Bill Cash, Martin Howe and Lee Rotherham are better able to do that than I am – and I trust their judgement. Not only can no deal be perfect, but we should not seek such perfection. For a deal of this nature to be successful – and to stick – it needs broadly to satisfy both sides. If it only satisfies one, it will be unacceptable to the other.

Bismarck was wise enough to realise that he had been wrong to agree to Prussia grabbing Alsace and Lorraine from France in the Treaty of Frankfurt in 1871. It ensured that France was consumed by a desire for revenge, which led inexorably to two world wars. A deafening cacophony of claims from the EU side that it had got the better of the Brits was only to be expected, but, save for the inevitable French Government minister or two with an eye to bolstering Emmanuel Macron’s popularity, such claims have been conspicuous by their absence.

Similarly, on this side of the Channel, screams of betrayal from Brexiteers have been more like squeaks. Back in 2006, along with Mark Wallace of this parish and others, I helped set up the Better Off Out campaign, to promote the case that the UK would indeed be Better Off Out of the EU.

Had you asked me then whether I would have regarded the terms of this Christmas Eve Agreement as acceptable, I would have replied, in the style of the last British Prime Minister successfully to defend British interests in Europe, ‘Yes! Yes! Yes!’ It was good to hear the Prime Minister cite Margaret Thatcher’s famous Bruges speech as an inspiration and a turning point. She set out an updated version of De Gaulle’s ‘Europe of Nations’. The EU would have been well advised to have taken heed of her advice, but chose to plough on regardless with its project of a United States of Europe.

Later, forcing through the Maastricht Treaty, John Major, who has been uncharacteristically quiet in recent days, took to the mantra that Britain was ‘at the heart of Europe’. Only somebody ignorant of both geography and history could have insisted on such an obvious falsehood.

The agreement that Johnson has obtained rights the wrongs inflicted by Major and a succession of Europhile Prime Ministers. It restores to the United Kingdom the freedom and independence that made it great, retaining its close and friendly links with its friends and neighbours on the continent whilst re-establishing its worldwide vision. I started by mentioning football.

To conclude, were this a football match it would have been 3-0 to the EU at half-time, with three own goals scored by Theresa May and her hapless team. David Frost has been Britain’s champion, achieving a great result for his country against all the odds, with a good deal of British pluck. Now it only remains for one injustice to be put to right: Boris, please give Nigel Farage the knighthood that he deserves.

Stephen Booth: Agreeing to disagree on the trickiest parts of the UK-EU deal may be the best way forward. For now.

26 Nov

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

A UK-EU trade deal is said to be 95 per cent there. However, it seems that every passing week has promised to be the “crunch” point that will mark the breakthrough.

An agreement is probably more likely than not, but the last five per cent is always the trickiest bit. Ursula von der Leyen, President of the European Commission, confirmed yesterday that it is the three familiar issues of fishing, governance and the level playing field that remain unresolved.

Risks remain. Perhaps one of the biggest is that the EU, and Emmanuel Macron in particular, misjudges the UK mood and refuses to yield on fishing. It may be macro-economically insignificant to the wider UK economy, but it is particularly important for communities in Scotland and therefore the politics of the Union. The Prime Minister must be able to claim a victory on the issue.

The two sides are reportedly discussing whether review clauses and transitional arrangements can ease the path to an agreement. One suggestion is that the EU could retain part of its current fishing quota for several years, after which the arrangements would be reviewed.

In practice, this would not necessarily present a major concession from the UK, since it does not currently have a big enough fleet to catch all the quota in its waters. According to the latest available statistics, EU vessels landed an annual average of 790,000 tonnes of fish in UK waters, while UK boats landed 546,000 tonnes in domestic waters and a further 94,000 tonnes in EU waters. Therefore, a transition period could make sense, providing the UK with additional quota immediately and time to increase the capabilities of its domestic fleet.

The question is what happens at the end of any transitional period. The UK would want to move to annual negotiations. The EU negotiating team is apparently willing to consider the concept of a transitional period, but only if a review clause was linked to the broader UK-EU economic relationship.

Another idea is that a review mechanism might establish the possibility of imposing tariffs on trade in goods if Britain no longer wanted to abide by the agreement’s terms on level playing field areas such as state aid. The obvious risk is that these issues simply return to destabilise the wider trade relationship in the years to come. It would be better to settle these issues now, but agreeing to disagree may be the only way through at this point.

At this late stage, negotiators have no doubt mapped out a multiple of technical fixes that could be employed. This is now about political decisions and choreography.

With difficult compromises required, it has suited both sides to run down the clock in the hope the other would give ground. And compromises will inevitably leave some constituencies on both sides unhappy. Reducing the time available for any grievances to fester is not necessarily unhelpful to politicians’ efforts to ensure a deal sticks at home.

Both sides had previously insisted that a deal had to be reached in October in order to allow for the process of ratification and, just as importantly, to provide traders with details of the new rules and processes they will need to operate under next year. However, deal-making within and by the EU is often done at the last minute and, all along, the only genuine deadline has been the December 31, when the transition period is due to end.

Nevertheless, with little over a month to go until the new year, time is actually running out. If a political deal is done in the next week or so, there are procedural challenges to ensuring it is in force by the January 1.

On the EU side, time is needed for so-called “legal scrubbing” and translation of the text. The agreement is likely to be defined as a “mixed agreement”, which means that it covers powers conferred exclusively to the EU institutions and those reserved by the member states. This means that a deal must be ratified by EU leaders, the European Parliament and every national, and in some cases regional, parliament.

EU leaders can defer national ratification until next year by agreeing to “provisionally apply” any deal. However, the European Parliament must consent by year end and is planning an emergency session on December 28. MEPs might complain about the timetable but would not be expected to scupper a deal.

On the UK side, we don’t yet know exactly what the parliamentary process will look like. David Frost previously told the House of Lords EU Select Committee that the Government’s assumption is that “there will have to be primary legislation for at least some elements” of the agreement. Civil servants are reportedly drawing up a “future relationship bill”, which will need parliamentary approval at breakneck speed before the end of the year.

It is noteworthy that there is apparently a debate within the Shadow Cabinet on whether to back a deal or abstain. However, this is more about internal Labour Party politics, since abstentions would not hinder the passage of a deal. Implementing primary legislation would be amendable but it is unlikely that the Labour Party would have the votes required to do so.

It has been suggested by some that the economic difference between the likely “thin” trade deal on offer and no deal is not that significant, so in the end no deal might be the more politically palatable option for the Government. Only time will tell.

However, this Government explicitly sought a “Canada-style” deal from the outset of the negotiations, accepting that some friction on UK-EU trade was worth exchanging for greater independence over UK regulatory and trade policy.

The economic benefit of a so-called “thin” deal – provided that the compromises on fishing and governance are acceptable – is that it would provide for tariff-free trade, which remains important for certain sectors, such as automotive, chemicals and agriculture.

Equally, while there is unlikely to be a formal implementation period for a deal, if both sides are invested in the agreement, a pragmatic approach can be taken to border checks and greater priority given to the free flow of trade. This goodwill would also help to resolve the disputes over the implementation of the Northern Ireland Protocol.

A deal might provide a platform for greater engagement and cooperation in the future. Or it might need to be revisited in the event of future disputes. However, a no deal would likely result in further immediate and bitter negotiations on the fallout. It would probably suit the UK and the EU to draw a line and move on, for now.