Statesmanship, not brinkmanship, is now needed to deliver the right Brexit deal for Northern Ireland

This past week has sadly brought further damaging rhetoric in the Brexit process and some who ought to be statesmanlike have been anything but. This is surely a moment for statesmanship and for finding a way through the current impasse. We must calm things down and focus on developing a common sense solution to Brexit […]

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This past week has sadly brought further damaging rhetoric in the Brexit process and some who ought to be statesmanlike have been anything but.

This is surely a moment for statesmanship and for finding a way through the current impasse. We must calm things down and focus on developing a common sense solution to Brexit and the Irish border question in particular. In this context I welcome the visits of both the Prime Minister and the Taoiseach to Belfast and the meeting between both leaders in Dublin: this is the kind of engagement and leadership that is needed to help find a sensible way forward.

I recognise that the UK and the Irish Republic do not agree on Brexit itself and that many in Ireland feel hurt by the decision of the UK to leave the EU. Nevertheless, it is important we all respect democratic decisions of this nature, even when we don’t agree with them. Undoubtedly, the last two years have seen damage done to the three sets of relationships that formed the core of the Good Friday/Belfast Agreement.

The absence of the political institutions, including the Assembly and the North-South Ministerial Council, has been to the detriment of all of us. Just think how differently we might have handled this very difficult situation if such institutions had been in place to provide a forum within which Belfast and Dublin could engage and take a more considered view on all of this. Instead, the politics of cooperation has been replaced by the old ways of megaphone diplomacy.

However, we are where we are and leaders on both sides of the border have hitherto shown a remarkable capacity to overcome enormous challenges in the peace process to find our way to the common ground. In the remaining weeks leading up to 29th March, we must do so again. Whilst it is London and Brussels who take the lead in negotiations, I believe that Dublin and Belfast can play a constructive role in helping to find the solutions.

We can begin by recognising that we already occupy significant common ground.

We all agree that the need to protect the peace process and the political and institutional arrangements of the Good Friday, St Andrews and Stormont House Agreements is vital.

Secondly, none of us want a hard border on the island of Ireland or the creation of a new border in the Irish Sea. Both the Republic of Ireland and Northern Ireland do a substantial amount of trade with Great Britain as well as with each other. The Common Travel Area ensures the free movement of people across the islands and is accepted by the EU. Now we need to find a sensible solution to ensure a similar approach on the smooth movement of goods. We in the DUP are of the view that a pragmatic approach can deliver an outcome on customs and trade that does not fundamentally undermine the EU single market or the UK single market.

Thirdly, both countries want to avoid a ‘no-deal’ outcome if possible as we recognise this could have significant implications for the short- to medium-term economic stability and prosperity of both parts of the island. Building stability and prosperity goes hand in hand with building peace.

For us, the primary problem with the draft Withdrawal Agreement is the backstop. It is not only the DUP that has concerns about the backstop and our opposition to it has been supported by many from all parties across the House of Commons.

On two occasions now, the House of Commons has voted decisively to reject the backstop in its current form and to call for legally-binding changes to these potentially harmful proposals. Our position on the backstop is also supported by other unionists like Nobel Peace laureate Lord Trimble, who has said that the proposals have the potential to “turn the Belfast Agreement on its head and do serious damage to it.”

Lord Trimble is in the process of taking legal action to challenge the legality of the backstop and his case is supported by leading experts on the Good Friday Agreement such as Professor Lord Bew. For such key architects of the Good Friday Agreement to raise serious concerns about the damaging nature of the proposed backstop must surely encourage the Taoiseach and others to pause and consider other options which are capable of commanding a wider cross-border and cross-community consensus.

If the current impasse between the UK and EU over the backstop results in no-deal then it will further damage relationships between Northern Ireland and the Republic and undermine the prospects for restoring the political institutions. The absence of these institutions over the past two years has seen a re-polarisation of attitudes on both sides in Northern Ireland.

In my opinion, securing a deal on Brexit that is broadly acceptable can only improve the prospects for restoring the institutions. It may suit Sinn Fein to have a chaotic situation, but it surely can’t be in the interests of anyone else. Sinn Fein has tried to exploit the uncertainty over Brexit to raise the border poll issue, hoping to force a referendum in the near term. This is, of course, a party that was fiercely opposed to Ireland’s membership of the EU and sought to vote down each successive European Treaty. Clearly, Sinn Fein is self-serving, and its claim to act in the wider interests of the ‘Irish people, north and south’, is bogus.

The consequences of a no-deal outcome will undoubtedly impact on the economies on both sides of the border, with their heavy dependence on the agri-food sector. InterTrade Ireland commissioned the Economic and Social Research Institute (ESRI), an Irish think-tank, to conduct an analysis of the impact of Brexit on the Irish border. ESRI looked at several different scenarios, including one where trade between Ireland and the UK would be based on WTO rules. The resulting imposition of tariffs and non-tariff barriers in this scenario could result in Irish trade to Great Britain falling by 12%, British trade to Ireland falling by 6%, Irish trade to Northern Ireland falling by 14%, and Northern Irish trade to Ireland falling by 19% – resulting in a total reduction in cross-border trade of 16%.

Agri-food in particular is a sector that has expressed concerns about no-deal. A study of the impact of a no-deal Brexit on the EU’s agri-food industry has claimed that beef and cheese exports from Ireland to the UK could collapse by up to 90% with the loss of over 3,500 jobs. No amount of preparation by any government can nullify the significant economic implications outlined.

Additionally, a further fall in the value of sterling in a no-deal scenario would worsen the outcome for Irish exports to Great Britain and Northern Ireland. In this scenario, Irish trade to Great Britain would fall by 20%, British trade to Ireland would remain broadly similar (at +0.3 %), Irish trade to Northern Ireland would fall 21%, and Northern Irish trade to Ireland would fall 11% – so there would be a total fall in cross-border trade of 17%.

Despite these stark statistics, there are some who seem determined to impose the backstop. Yet the Withdrawal Agreement and backstop in their current form have been roundly rejected in the UK Parliament because they could lock us indefinitely into an arrangement that undermines the economic integrity of the UK. The backstop is designed to prevent a hard border but could ultimately result in no-deal and actually compel the EU to impose a hard border in Ireland.

Having been an MP for over 20 years and in frontline politics since the early 1980s, too many times have I seen politicians become wedded to an idea and intent on implementing it, even when they are aware of the dire consequences. Now is not a time for brinkmanship but for leadership.

I am convinced that there are better solutions than this. Whilst I am not going to be prescriptive in this article about what they may be, I am aware of several ideas, including the ‘Malthouse Compromise’, that are surely worthy of serious consideration. If the political will is there on both sides, I firmly believe we can find a solution.

The people of the United Kingdom voted by a majority to Leave the European Union. Despite this, the leadership of the EU and some in the UK have sought to frustrate the will of the people and to make it as difficult as possible for our country to Leave. The indefinite nature of the backstop would harm the constitutional and economic integrity of the UK.

The EU leaders have asked Parliament to state clearly what we want. That answer is now clear and the EU must address British concerns about the backstop if a no-deal outcome is to be avoided.

If the EU truly want to avoid harm to the peace process and to protect the political arrangements established under the Belfast/Good Friday Agreement, then they need to take account of unionist concerns as well as those of nationalists, otherwise, as Lord Trimble has said, they violate the core principles of the Agreement.

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There are very strong reasons why the EU ought to accept the Malthouse Compromise

The recent vote in Parliament attempting to prevent a no-deal outcome on Brexit was counter-productive and non-binding. Any attempt to hobble the Government’s negotiating hand would have been a self-inflicted wound. It was also irrelevant, since virtually no-one in the UK is advocating no deal. The preference of the European Research Group (ERG) of Conservative […]

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The recent vote in Parliament attempting to prevent a no-deal outcome on Brexit was counter-productive and non-binding. Any attempt to hobble the Government’s negotiating hand would have been a self-inflicted wound. It was also irrelevant, since virtually no-one in the UK is advocating no deal.

The preference of the European Research Group (ERG) of Conservative eurosceptic MPs has always been for what is usually called a ‘Canada-plus’ free trade agreement. Everyone also supports sensible side deals on such issues as aircraft landing rights, air and vehicle safety certification, and truckers’ licences. It may not be the Withdrawal Agreement signed off by Theresa May, but it is a perfectly coherent UK offer, especially if accompanied by undertakings on the Irish border.

It is entirely logical for Brussels to play hardball at this stage of the talks. The EU still see some prospect of Parliament reversing its rejection of the Withdrawal Agreement and are, of course, fully aware of the non-binding vote on no deal. However, the EU’s current refusal to re-open the Withdrawal Agreement is unlikely to be a guide to the endgame in March.

It would nevertheless be logical for the EU to offer Parliament a sweetener in the form of a codicil attached to the Withdrawal Agreement. This codicil could suggest that the EU will try hard to ensure that the backstop is either never used or will be used for only a short period.

However, this is unlikely to work since prominent ERG MPs have said that they will reject any formulation that does not replace the current wording of the Withdrawal Agreement with a clear get-out clause from the backstop. The likelihood is, thus, that the deal will once again be rejected if it returns to Parliament.

The Prime Minister’s first preference is clearly still to get an amended Withdrawal Agreement through Parliament. Her strategy all along has been to give Leave supporters a formal exit from the EU and control over EU migration, but to give companies an outcome very close to the customs union and single market. The recent Nissan decision not to build the new X-Trail model in the UK will have strengthened this resolve.

The voting strength of the ERG, however, means that a fall-back position is now under consideration – the ‘Malthouse Compromise’. This is close to the ERG’s long-standing preferred option, with the involvement of prominent Remainers giving the plan a far higher profile than we might otherwise have expected. These MPs find the Withdrawal Agreement unacceptable. They also share a survival instinct and wish to prevent their party from fracturing and losing the next election.

If and when the Withdrawal Agreement fails again to pass in Parliament, the plan is to have a compromise which the Malthouse group hope will command sufficient Tory and DUP support (together with up to forty Labour MPs from Leave-voting constituencies) to provide majority backing in Parliament. This can then be presented to the EU who will need to choose between this and no deal.

The Malthouse Compromise is based on a free-trade agreement with no tariffs or quotas. A commitment to avoid new infrastructure on the Irish border is supported by proposals for advanced customs and trade facilitation measures of the sort already in use on, for instance, the Swiss border. Regulatory equivalence of the type that currently exists for meat imports from New Zealand are proposed to remove the need for sanitary and phytosanitary checks for food and animal imports. Non-regression clauses of the sort common in modern free trade agreements are proposed to address EU concerns over unfair competition. Provisions on citizens’ rights and payments to the EU would be carried forward from the Withdrawal Agreement.

The Malthouse plan could involve an extended transition period agreed under Article 50 to allow time to negotiate a free trade agreement (which should not be difficult between two entities which already have free trade). Additional payments would accompany an extended period.

Alternatively, the free trade negotiation could be conducted without a formal transition period through making use of the provisions of GATT Article 24 as long as the EU agreed that formal FTA talks could begin soon after 29th March. Article 24 allows countries engaged in formal free trade negotiations to suspend the most favoured nation rule of the WTO and to continue with the existing tariff-free trade arrangements. In either case, the period would finish by December 2021 at the latest.

The EU is likely to resist consideration of this alternative for several weeks, but once the Withdrawal Agreement has sunk without trace, and both sides face no deal, there are three strong reasons why it might accept the Malthouse Compromise.

First, an agreement secures the £39 billion (or more) promised in the Withdrawal Agreement. Secondly, an agreement avoids potentially high tariffs for EU exporters into the EU. The EU currently sells £55 billion of products in high-tariff food and vehicle sectors into the UK. Exports from the UK into the EU in these sectors are lower at £21 billion.

But the most pressing reason is to secure a frictionless border in Ireland. The UK has guaranteed no new border infrastructure, deal or no deal, but without a deal there will be a problem on the Irish side to maintain the integrity of the EU Single Market.

It is obviously better for Ireland and the EU to accept some deal on the Irish border rather than no deal at all, even if that deal were inferior to the backstop in their eyes. The UK will also prefer to avoid no deal but can live with tariffs and side deals.

This is an extract from Brexit and Backstop: everything you need to know, published today by The UK in a Changing Europe.

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In numerous areas, the solutions are already there to cope with a no-deal scenario

‘No-deal’ may be coming. That’s been the view of a great many commentators since at least the publishing of the draft Withdrawal Agreement in November, and especially since the Government’s defeat on the meaningful vote last month. Last week it was the turn of Sabine Weyand, the EU’s deputy chief negotiator, to state the possibility: […]

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‘No-deal’ may be coming.

That’s been the view of a great many commentators since at least the publishing of the draft Withdrawal Agreement in November, and especially since the Government’s defeat on the meaningful vote last month.

Last week it was the turn of Sabine Weyand, the EU’s deputy chief negotiator, to state the possibility: “There is a very high risk of a crash out not by design, but by accident.”

Given that risk, what do we actually know about no-deal?

There’s been a lot of waffle on the subject. Predictions have ranged from a 1920s-style recession and civil unrest at the one end, to an equally specious vision of ‘sunlit uplands’ and painless transition under Article 24 of the GATT at the other. Fortunately, my colleagues at the IEA have looked at key claims focused on the delays at ports, aviation and the availability of medicines, as well on other issues such as the Irish Single Electricity Market and the return of mobile roaming charges. Today, they’re tackling fears around food supply.

The above briefings may not cover every aspect of Brexit, nor the broader macroeconomic picture as painted by Whitehall forecasts, but a clear pattern does emerge. Although there are genuine issues associated with ‘no-deal’, when looked at in detail, many of the issues are less intractable than they might seem.

Take the risks around ports and ‘just-in-time’ supply chains. The fear here is that delays at ports, arising from either checks on regulatory compliance or additional customs paperwork, cause sufficient delays to shut down the Dover-Calais crossing. Dover handles roughly 17% of UK goods trade, processing 10,000 vehicles a day. 99% of these originate in the EU (including the UK) and are processed in around two minutes each. Checks on lorries from outside the EU take an average of 20 minutes. The Freight Transport Association stated in 2017 that an additional 2-minute delay per lorry could cause a 17-mile queue on either side of the Channel.

However, there are several reasons to believe that this scenario need not occur. The key is that none of those with a stake in what goes on in Dover-Calais want it. The worst-case scenario is what occurs in the absence of any anticipation or mitigatory action.

But these problems have been anticipated and action is being taken.

See the multiple statements by Xavier Bertrand, the President of the Hauts-de-France region. For a 2-minute delay to occur on average, roughly 10% of lorries would need to be subject to 20 minutes of extra-EU checks. However, the UK only checks 4% of extra-EU shipments and the Republic of Ireland only 1%. Incidentally, this 1% check rate is what officials at Calais have suggested for UK traffic.

The normal riposte to these claims is that the EU still requires ‘SPS’ checks on 100% of consignments of food products for human consumption, as well as checks on animal feed and other animal produce. But these checks do not take place at the border. In the case of Calais, the inspection point is 12 km from the port and so vehicles exit the port to be checked without causing additional delays.

This scenario is illustrative of many of the risks of ‘no-deal’. Big problems like the continued availability of medicines break down into smaller problems such as agreement on conformity assessment and obtaining Marketing Authorisations. These can often be solved by unilateral action on the UK’s part (we have already committed to recognise EEA approved medication) and sensible steps by firms.

Many of these steps have already been taken. Often players on the EU side face similar incentives to make reasonable arrangements (e.g. the EU extending existing road haulage arrangements in the event of ‘no-deal’). Even the seemingly intractable ‘Irish border question’ is, in reality, a selection of smaller technical issues which on their own are far from insoluble.

Unfortunately, forecasters predicting doom and gloom are unable to accurately account for firms and officials adjusting. Their models are insufficiently ‘granular’ as they simply don’t have the necessary information. Often, neither does government. But the small firms that have to cope with these problems, those with real ‘skin in the game’, do. Make no mistake, adjusting is still costly, both for firms and ultimately consumers, but these costs are lower than the disaster headlines would suggest. Just as importantly, they can be spread out over time.

The truth is that ‘no deal’ is broad and wide ranging enough that no-one knows precisely what will happen, including us. But that doesn’t mean it has to be a disaster. If firms and local officials know what they’re facing, they can be flexible and use their ingenuity to find solutions. Politicians would be well served to trust credentialed experts less, and our economy’s real problem solvers more.

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The European Commission’s messaging about the Irish border is both illogical and contradictory

I read the news with increasing incredulity. After Michel Barnier’s spokesman told us that in the event of no deal there would have to be a hard border (How? 275 manned border posts? Expecting people to accept the blocking off of all but a few crossing points?), Barnier himself was forced to admit: “We will […]

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I read the news with increasing incredulity. After Michel Barnier’s spokesman told us that in the event of no deal there would have to be a hard border (How? 275 manned border posts? Expecting people to accept the blocking off of all but a few crossing points?), Barnier himself was forced to admit: “We will have to find an operational way of carrying out checks and controls without putting back in place a border”.

Later, speaking at an event in Brussels, Barnier’s deputy, Sabine Weyand, said that other options for the Irish border had been extensively discussed, the EU side were agreed that a time-limit to the Irish backstop defeated the purpose of having one and that “there is a very high risk of a crash-out, not by design, but by accident…”

So Barnier and Weyland have acknowledged that the EU’s insistence on including in the Withdrawal Agreement a temporary backstop – that will only be lifted by entering into a permanent trade agreement on the same terms because soft border controls will never be acceptable – will have the consequence that the Agreement will be rejected, leading to soft border controls being applied immediately.

The only possible explanation for such blatant perversion of logic is that the EU (Germany, France, the European Commission) are not interested in pragmatism, fairness or negotiation to mutual advantage but only in the exercise of power (‘winning’) – whether it be over the UK or over its own member states such as Greece, Hungary and Italy – regardless of the adverse consequences to their populace.

Weyand has kindly explained her justification for insisting on the temporary backstop (and presumably similar terms of any trade deal that will supersede it):
“We looked at every border on this earth, and every border the EU has with a third country – there’s simply no way you can do away with checks and controls,” she said (referring presumably to a hard border since checks and controls of some kind are, of course, essential).

This, then, is the EU’s irrefutable justification for saying that soft border controls are impossible: anything that has not been done before is, by definition, impossible. It is precisely this stifling, rigid, rule-driven madness and resistance to innovation that we must escape in order to be able to prosper on the world stage.

Meanwhile, we have to listen to the ludicrous predictions of Armageddon that will arise from “no deal” (i.e. leaving without the Withdrawal Agreement and transition period) Most famously recently we’ve had the Border Force’s prediction of an 87% fall in throughput through Calais (which even the Border Force described as the ‘reasonable worst case’). It’s impossible for us to know how they have arrived at that bizarre conclusion because no-one has seen their report. The story emanates from Sky News which stated that they hadn’t seen any leaked Border Force report but only “a slide from an internal government presentation marked ‘Official-Sensitive’ and titled ‘Freight Traffic Contingency Assumptions’” which purported to be “a recent internal assessment much of which was omitted from public no-deal documentation”.

It is upon that prediction, of an 87% fall in throughput through Calais, that the chief executives of Sainsbury’s, Asda, M&S, Co-Op, Lidl, McDonald’s, KFC and others have based their dire warnings of severe food shortages and higher prices; and now we have Imperial College predicting an additional 12,000 deaths in Britain caused by increases in the cost of fruit and vegetables leading to people being unable to afford to eat enough of them. Quite why the costs of such foods should increase so substantially when we move outside the trade barrier wall erected to protect French farmers isn’t mentioned, let alone explained.

UK food exports to the EU will be damaged by the imposition of the Common External Tariff that the EU imposes on all third counties. Reuters reports that France is hiring an additional 700 customs staff to be ready to deal with imports from the UK in event of a no-deal Brexit because “merchandise coming from Britain could face up to four separate customs procedures under a post-Brexit regime against only one currently. That could translate into an extra two minutes per truck going through border controls, which could potentially lead to long queues gridlock in ports,” according to French minister Gerald Darmanin. However, it’s puzzling to me as to why extra procedures will be required since all EU regulations are to be incorporated into UK law on exit, so nothing will have changed in terms of standards when we leave. And any departures from those standards (probably not imminent) will not be clandestine but by well publicised statute or statutory instrument.

Whether or not UK food exports will be hit by extra customs controls as well as tariffs, there’s an apparently obvious solution in that, if there’s a reduction in the flow of food from EU farmers supported by our CAP contributions, there’ll be more space on our shelves for us to buy and consume home produce. True, that will not be sufficient to help us as consumers because, as the British Retail Consortium tells us, “in March, the situation becomes more acute as UK produce is out of season [so] at that time of year, 90% of lettuces, 80% of tomatoes and 70% of soft fruit sold in the UK is grown in the EU”.

Of course, the potential starvation and deaths to which the food retailers and Imperial College refer relates not to the processing by Calais of imports into the EU from the UK, as discussed above, but to the processing through Calais of EU food exports to the UK and I’m puzzled as to why French customs are interested in produce leaving France and what they might need to do differently post-Brexit. In any event, it would be very surprising indeed if the EU didn’t do its utmost to ensure the continued smooth delivery of agricultural produce to its biggest customer. Where does all this nonsense come from?

But back to the Irish border, and Sabine Weyand’s description of the EU’s stance – captured on film here – is of great assistance and significance. She makes statements that, on the face of it, don’t seem to be capable of being reconciled.

On the one hand she says [at 11:44] that “there are ways out by alternative arrangements” but then a few seconds later [at 12:00] says, referring to the Brady amendment, that “they don’t exist”.

She says [at 10:15] that “technological solutions are not enough to do away with the border” but [at 12:30] opines that during the transition period they will discuss “what additional facilitative measures will be needed on the Irish border in order to do away with a hard border”.

It seems to me that all Theresa May has to do in her negotiations is to draw attention to that last statement and emphasise that that is all that we are asking for – namely that there is no need for the backstop because it is agreed that the border will be policed by soft border controls using such facilitative measures as are deemed necessary.

The Irish say the backstop is essential because they think that, without it, there will need to be a hard border. But there doesn’t need to be – as Michel Barnier has now admitted.

What are the EU afraid of? Soft border controls are in use now at the Irish border – a combination of administrative cooperation, whistle-blowing, auditing and site raids by customs, tax and regulatory enforcement officials, all supplemented by occasional random spot-checks on roads leading up to and cameras at the border.

The thoroughness of such controls is a matter of degree. No border is fool-proof as only a very small proportion of cross-border consignments is ever physically checked, even at hard borders. By the end of the transition period, the Irish border could be controlled by the system of checks by then developed and, if either party considers that more robust controls are required, the nature and timing of such further improvements could be settled by agreement or arbitration. A no-deal scenario would remove that head start, but the same evolution process would apply.

It is only the nature of the goods and produce crossing that border that can be of relevance. Other aspects of the Free Trade Agreement, such as access to fisheries, have no relevance whatsoever to agreeing appropriate controls on movements across for the Irish border.

Currently the UK is in full alignment with EU standards. Any future divergence will require monitoring. If, say, chlorine-washed chicken is permitted in the UK but not in the EU, that fact will be known to and respected by reputable suppliers. If considered necessary, regular supply chains can be monitored at the origin or destination.

Whether the backstop has been invoked is of no relevance to the ability to combat smuggling. Smuggling can be detected and deterred, as at a hard border, only by intelligence and random checks, methods that are already employed at the Irish border, for example, to inhibit VAT evasion.

Rejection of a legally binding agreement that the border will be policed by soft border controls will demonstrate beyond doubt that Parliament was right to reject Mrs May’s Withdrawal Agreement but, furthermore, that even without the backstop, we cannot proceed with negotiations in a situation where the Irish border question remains open – since it will only be closed by a long-term arrangement that replicates the backstop. The only solution is to close the issue now by presenting the EU with a fait accompli on 29th March.

The EU’s position is so ludicrously irrational that it can have only one of two explanations. The first is that they are unbelievably stupid. The alternative is that they regard it as totally impossible that the UK will leave the EU without a deal (and thus the currently offered deal) – but that is despite saying, publicly, that they now see no deal as becoming an increasing possibility.

Since this makes no sense whatsoever, I am confident that, as David Davis told the Exiting the EU Select Committee back in October 2017:

“It’s no secret that the way the union makes its decision tends to be at the 59th minute of the 11th hour of the 11th day and so on, and that is precisely what I would expect to happen… If there is a time limit on a negotiation the union stops the clock, it assumes that it’s still at 11:59 until it is concluded, sometimes over the course of 24, 36, 72 hours thereafter and that’s what I imagine it will be.”

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The Malthouse Compromise explained

After readers sought further detail of the so-called ‘Malthouse Compromise’ proposals being pushed by figures representing a broad cross-section of opinion on matters European within the ranks of the Conservative Party in Parliament, BrexitCentral has obtained a document which should answer some of the questions being raised. I understand that the summary document that follows […]

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After readers sought further detail of the so-called ‘Malthouse Compromise’ proposals being pushed by figures representing a broad cross-section of opinion on matters European within the ranks of the Conservative Party in Parliament, BrexitCentral has obtained a document which should answer some of the questions being raised.

I understand that the summary document that follows has been cleared by all six participants in its production: European Research Group stalwarts Jacob Rees-Mogg and Steve Baker; Remain-backing ministers Stephen Hammond and Robert Buckland; Treasury Committee Chair and former Cabinet Minister Nicky Morgan; and Leave-backing minister Kit Malthouse, who brokered the discussions that brought the group together…

= = = = = 

Parliament may shortly face a binary choice over leaving the European Union with an agreed Withdrawal Agreement (WA) or without one. 

Many MPs find the WA in its current form unacceptable. Indeed the Commons have rejected it by a large majority. Others find the possible economic and logistical disruption of an exit without any WA equally troubling.

For too long the Brexit debate and negotiations have been stymied by a collective gamble over this choice. Each side of a naturally binary debate – Leave/Remain – was manoeuvring around this fallback arrangement in the event of the WA’s failing, to the extent that the WA itself was being neglected and consensus could not emerge about what it should and should not contain.

Our intention therefore was to create a degree of optionality to mitigate the binary quality of that choice – and to do so in a way in which those on both sides could accept a package as a whole that sought to address their concerns. The idea is that each side will find in the package proposals that they might not consider ideal but will find acceptable.

In this way we hope a consensus will emerge across the House and that we can have an eminently reasonable set of options to present to our EU partners which could command a majority – something the EU have quite rightly been asking to see for some time.

The structure of the compromise is to offer the EU a choice of two plans: Plan A is predicated on achieving agreement on a WA that addresses the principal weakness of the current version, the perpetual character of the Irish backstop, and its consequences for the Future Relationship between the UK and the EU. Plan B assumes that agreement on a WA is not possible and that both sides accept a responsibility to act so as to minimise as far as possible the disruption that might arise to people and businesses in the EU and the UK.

Both Plan A and Plan B involve the UK’s ceasing to be a Member State of the EU according to the timetable set by Article 50 of the treaties, that is on 29th March 2019.

In order therefore – Plan A – “The Deal”:

Essentially we would offer the existing WA with two changes:

First we would extend the implementation period until no later than December 2021. This would involve more money, but also provide a longer period to agree the Future Relationship (FR), with an immovable deadline to act as an incentive for talks.

Second, to address the backstop, we recognise the legitimate concern on both sides of the border on the island of Ireland about the effects of Brexit on the settled border arrangements, and the profound commitment of all parties to the Belfast Agreement. However, it is clear that the current formulation of the backstop is not acceptable to the Commons, and some of the suggested solutions to this problem essentially mean the backstop isn’t a backstop at all. We therefore propose a different basis for the backstop that is capable of being permanent. In essence the nature of the new backstop is a basic free trade agreement and a brief is attached at Appendix 1. It is important to note that the NI border arrangement requires no new technology and relies on existing administrative processes. 

All else in the WA remains the same, including, very importantly a guarantee of EU and British citizens’ rights.

If this is not acceptable to the EU, or they require more time to consider it, we would propose our Plan B:

Plan B essentially creates a transitional standstill period, at the end of which the UK would overnight become a third country in practice but during which we would have time to avoid disruption in a number of ways:

1. We would keep Plan A on offer for as long as the EU was willing to consider it,
2. We would offer to pay our net contribution (c. £10bn p.a.) in exchange for the Implementation Period as negotiated, until no later than Dec 2021, as a standstill period,
3. We would also offer legal text to support a GATT Art XXIV “zero for zero” temporary arrangement for execution either at the start of the standstill in the event the negotiated implementation period could not be secured, or at the end of the standstill if the future relationship had not been concluded (more here),
4. Both sides would prepare for WTO terms fully.
5. We would create an opportunity to discuss our future relationship with the EU as it would apply from the end of the standstill period.

This transitional period would last until the end of December 2021, during which time we would pay our net EU budget contribution, and cover our other liabilities subject to arbitration (pensions etc), and we would “stand still” on everything else – so we would remain a member of the customs union and single market, and the various other arrangements to do with security, aviation and so on. Again very importantly we would unilaterally guarantee EU citizens’ rights.

In essence this structure throws a safety net around “No Deal” diffusing the drama and mitigating the possible damage on both sides, with plenty of time allowed to agree a future relationship, which is the desired outcome for everyone. It also allows other non-EU countries to see that the UK has proposed something eminently reasonable which protects our supply chains.

If this structure of two deals is offered to the EU, we would expect it to receive serious consideration by those concerned to achieve a resolution that works for both the UK and EU. Plan A is reasonable and workable and addresses the legitimate concerns about the Irish border. Plan B provides a transitional period in which we can settle remaining differences without unnecessary economic damage or logistical difficulties, retaining optionality for all sides. In both cases there is no prejudging of the form of the FR. Maintenance of the Common Travel Area on the island of Ireland is also an important part of both plans.

The only other option is slamming the door, which would seem irrational and unfair given that the EU have pledged to use best endeavours to agree a smooth and civilized exit. On this basis, given the widespread support for this compromise, and the demonstrated majority for it, we would welcome the opportunity to develop it further with the Prime Minister such that it could be offered to our EU allies as a profoundly reasonable solution.

Appendix 1: The New Backstop

  • A revised Withdrawal Agreement (WA) which can be negotiated with the EU, thus avoiding No Deal and honouring the referendum result, whilst protecting the national interest.
  • Our proposed new backstop would guarantee departure from the Customs Union, Single Market and all EU rule-making for the entire UK.
  • It can be negotiated because it builds on the EU’s own offer (rather than asking them to compromise the single market) and the concept has already been positively received by the EU privately (they will not publicly back it whilst a permanent customs union is on the table).
  • It retains the vast majority of the draft WA but crucially removes the four poison pills that have prevented the draft WA from finding widespread support in Parliament and the country at large.
  • One of the reasons that Parliament is hostile to the Prime Minister’s current proposal is that it would place the UK in a “single customs territory” by virtue of the backstop, giving the EU no incentive to make concessions in future trade negotiations (thereby putting UK interests such as fishing at great risk). It should be noted that any single customs territory that is not the full Customs Union will require checks and customs certificates, such as Turkey is required to use.
  • This alternative WA proposes a new Free Trade Agreement (FTA) with zero tariffs and no quantitative import restrictions, and a Customs and Trade Facilitation Chapter that will deploy advanced customs and trade facilitation measures which include specific solutions for the Irish border, so the leverage would be the same on both sides. It also addresses the non-regression clauses so as to make them two-way and of the language that would be used in any trade agreement, allowing any potential end state arrangement.
  • The new backstop does not imperil the Union as it represents a permanent solution to the Northern Ireland / Ireland border making it both a backstop and a frontstop. It does not require any differences between NI and GB beyond those that exist today.
  • The new backstop will include a Free Trade Agreement in Goods, a Customs and Trade Facilitation Chapter, as well as: commitment by all parties not to place infrastructure on the Northern Ireland border; the UK adopting EU rules of origin; regulatory recognition such as in sanitary and phytosanitary (SPS) measures; in facility and inland clearance; and level playing field provisions on areas such as labour – in other words normal practice in FTAs.
  • This reformed WA is likely to command a majority in the House of Commons – it is already supported by both leave-backing and remain-backing MPs and, crucially, the DUP.

The main changes to Withdrawal Agreement:

1. No “single customs territory” between the UK and the EU, allowing the UK to regain control over its tariffs and regulations which are required to carry out negotiations for trade agreements with other countries. This makes the UK a credible trade partner for third countries after 29th March 2019.

2. A new backstop to replace the Northern Ireland Protocol which is based on what the permanent solution to the Irish border should be. This maintains the territorial integrity of the UK and allows the UK to regain control over its tariffs and regulation. Crucially to address the concerns of the Republic of Ireland, this arrangement is capable of being permanent – a frontstop – It includes:

  • a free trade agreement in goods: zero tariffs and no quantitative restrictions, providing for tariff-free trade in goods plus UK-EU regulatory cooperation.
  • no infrastructure on the Irish border: a commitment by all parties not to place infrastructure on the border.
  • regulatory recognition based on deemed equivalence because we will be identical on day one of Brexit: on sanitary and phytosanitary (SPS) and animal health measures and mutual recognition of conformity assessment, with measures to ensure that the animal health and disease control zone on the island of Ireland can be maintained.
  • level playing field provisions: on labour, the environment, competition and state aid, consistent with normal practice in FTAs, as opposed to the highly one-sided commitments in the Withdrawal Agreement.
  • a Customs and Trade Facilitation Chapter with an Irish border protocol: an agreement to deploy advanced customs and trade facilitation measures, including specific solutions for the Irish border.

This will allow us to use a range of proven solutions for our customs procedures, while reducing the burden of formalities on traders and avoiding congestion at ports, and include the principle that any necessary formalities and inspections are carried out with the minimum of delay and, to the maximum extent possible, away from the border. This will employ:

  • Inter-agency cooperation and information sharing, and recognition of the other party’s inspections and documents for certification of conformity with country or import or export
  • Simplified procedures and data processing at departure and destination for the import, export and transit of goods
  • Expedited procedures for qualifying operators, with mutual recognition of trusted trader schemes like authorised economic operator (AEO) programmes, and making them available to as many traders as possible
  • Self-assessment for importers to declare imports periodically and account for duties payable, plus support to encourage uptake
  • Inland, in-facility checks and participating in EU systems (such as TRACES) so all SPS related goods will be registered with these systems
  • Inland, in-facility checks for small businesses (who are already filling out VAT forms)
  • Adherence to international standards of the WTO and other appropriate bodies
  • Special facilitations for specific sectors like agriculture.

3. We would propose and extension of the Implementation Period to 31 December 2021, but no further.

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The Brady Amendment and Withdrawal Agreement aren’t as incompatible as they may appear

Following the passing of the Brady Amendment demanding “alternative arrangements” to the Irish backstop on Tuesday, the Prime Minister is grappling with the issue of finding “alternative arrangements” which are compatible with the existing Withdrawal Agreement. At first sight, the odds of success are poor. The EU and its institutions have firmly entrenched themselves in […]

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Following the passing of the Brady Amendment demanding “alternative arrangements” to the Irish backstop on Tuesday, the Prime Minister is grappling with the issue of finding “alternative arrangements” which are compatible with the existing Withdrawal Agreement.

At first sight, the odds of success are poor. The EU and its institutions have firmly entrenched themselves in the current backstop framework, ostensibly to support Ireland and the maintenance of the Good Friday Agreement (a highly dubious claim), but practically as a mechanism to ensure that it has the upper hand in future trade negotiations with the UK.

As such, Parliament has rightly sent the Prime Minister back to Brussels to re-negotiate to improve our hand. She will likely follow the plan suggested by Kit Malthouse, which relies on an alternative border protocol included in A Better Deal. Realistically, while this ruse succeeded in uniting the Conservatives, I believe it stands no chance of being accepted by the EU.

However, it should not be forgotten that the Withdrawal Agreement itself does allow for the backstop to be avoided until December 2022 via an alternative arrangement, namely via an extension of the transition period to act as “front-stop”, thereby eliminating the backstop requirement.

As such, a scenario is described in the Withdrawal Agreement text, giving Theresa May a clear chance of saving her deal and improving our future negotiating position, while also respecting the deal as drafted. What is missing is an incentive for both sides to make this work.

As such, my proposal to the Prime Minister is as follows:

  1. The UK should agree a paid extension to the transition period to 2021 or 2022 as allowed under the Withdrawal Agreement. This will give ample time for border technologies and processes to be deployed and tested by both parties and of course additional time to prepare for our exit.
  2. Beyond this date, should the EU (read Ireland) declare that they are unhappy with the deployed border arrangements then the transition would continue while they are enhanced, but on the basis that no charge was levied on the UK for continuing transitional benefits. Furthermore, freedom of movement would cease. This would serve to give the UK substantial ongoing economic benefits (at the EU’s expense), should the EU seek to exploit the Irish situation for political purposes.

The resulting deal would remove the contentious backstop, guarantee no hard border in Ireland, maintain the unity of the United Kingdom and ensure fair play from both sides during the “future relationship” negotiations.

For the Irish, it grants them what they superficially seek – namely an ongoing device to solve the border issue – but one that ensures that it will not be deployed for a prolonged period, unlike the current backstop. Both President Macron and the European Parliament have slipped up by revealing that they see the backstop as the device to cement their negotiating hand. Added to this, while the trajectory of our future relationship with the EU remains uncertain, both a Canada Plus trade deal and a bespoke customs union for goods seem the most likely outcomes, and both would require unanimity from the 27 member states.

Without a financial disincentive as described above, Spain and Ireland may be tempted to blackmail the UK in the final stages of negotiation just as we saw from the Walloons and the ratification of the Canadian trade deal. The device above effectively isolates them within the EU and forces the club to act in good faith in its negotiations with the UK, hopefully avoiding a repeat of the negotiating issues we have seen in the last two years.

So where would this revised deal leave both parties?

For the EU, this proposal puts them in a difficult public position. It is “reasonable” as it provides extra cash and maintains the Withdrawal Agreement framework. It also retains a device – albeit a costly one – to ensure a trade deal is not signed until the border issue is signed off. They would receive an additional £10-20 billion from the UK depending on the length of the formal extension agreed, which would be welcomed by the Germans who are already nervous about the funding demands on them in the next budget period. Moreover, if they are seen to squeal about the arrangements post-2022, they will reveal their hand and show the world that they do not believe they can conclude a trade deal with the UK in the next four years; a message they will be reluctant to send member states and international parties.

From the British perspective, we will have secured a smooth transition and avoided the limbo of the backstop. This outcome would be well received by international investors who would likely be deterred by the curious legal arrangements described in the current backstop and which effectively put the UK in the sin-bin. Secondly, by committing money, technology and urgency to the Irish border debate now, we are sending the EU the strong message that this issue is a priority that we want to solve straight away.

To the Prime Minister’s credit, the concept of an extended transition was raised in mid-October but dismissed by Brexiteers when “no-deal” was the assumed default. Good ideas often get lost in lengthy negotiations and this is a prime example. She now needs to return with a fresh team in negotiations to bring about change. This framework allows her to do so within the construct of the Withdrawal Agreement, therefore ensuring the EU is forced to sit up and listen to her proposal.

I conclude with one final suggestion: the extended transition period payment should only be made when the trade deal is ratified. We have failed to exploit the value of the existing £39 billion bill; the same mistake must not be repeated.

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Backstop or no backstop, Theresa May’s Withdrawal Agreement remains a bad deal

Backstop or not, our MPs must unequivocally maintain their opposition to Theresa May’s Withdrawal Agreement. It is worrying that some MPs are starting to think that a concession from the EU on the Irish border issue may make them vote the Agreement through. The Irish backstop has had the effect of a dense fog descending […]

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Backstop or not, our MPs must unequivocally maintain their opposition to Theresa May’s Withdrawal Agreement. It is worrying that some MPs are starting to think that a concession from the EU on the Irish border issue may make them vote the Agreement through.

The Irish backstop has had the effect of a dense fog descending on Westminster. It has obscured the obvious truth that should be there for all to see: that the Withdrawal Agreement is a bad deal and a betrayal of the Brexit that the people of this country voted for.

Many of our MPs’ memories – nor to mention their judgements – may have become clouded by this fog as they face another momentous week.

Even with a time-limited backstop, a backstop with a guaranteed escape clause or even one with pink and purple spots, the Withdrawal Agreement still leaves us under EU control and out in name only.

Its hundreds of  pages include provision for a transition period from our ‘departure’ on 29th March until 31st December 2020, which could in fact be extended to the end of 2022 – meaning we could be locked in as a vassal state for nearly four years! Some say best to accept this as it still means we leave and that we will be able to regain control in the years (probably decades, if ever) to come. This is not Brexit.

We will have to abide by all EU rules but will have lost membership of all of its institutions along with any say about damaging new rules and directives which we will have to follow to the letter under the jurisdiction of the European Court of Justice. Rules which have done our country’s economy and SMEs so much harm in the past. How is this ‘taking back control’?

Oh, and we will need to hand over £39 billion, at least, for the privilege; with no cast iron guarantee about our future trading relationship.

Anything other than a clean Brexit will leave us unable to decide upon regulations and there will be no chance of us seeing British Standards revitalised and brought back, which our exporters will need to develop their trade on the international stage.

Succumbing to Theresa’s May Withdrawal Agreement, even without the awful backstop, will mean stumbling around for at least another couple of years as we try to pin down the EU on trade and our future relationship having already gifted away all of our bargaining power.

That means more uncertainty, more cost, more time wasted, more disastrous directives from Brussels and more division.

We’ve already suffered more than two years of dithering at the highest level, culminating in the ill-conceived Chequers Plan and the historic vote against Mrs May’s disastrous first Withdrawal Agreement.

Absolutely no-one wants to see a permanent hard border in Ireland or a return to the Troubles of the past; on that we all agree and ways can be found to avoid this.

The whole issue has been disgracefully weaponised by those behind Project Fear as leverage to sabotage Brexit in the most disingenuous way.

It is time for our MPs to quit scrambling around in the fog and start to see sense: it’s time to leave, and leave properly.

They ought to unite behind a default departure on WTO terms on 29th March as an independent nation with its destiny under its own control.

Planes won’t fall out of the sky, medicines will still be prescribed and goods will still cross the Channel.

Only with a clean Brexit can we seize the great prize that is there to be won and start striking our own free trade deals around the world – and talk to the EU about our future trading relationship from a position of strength, rather than prolonging the agony for many more years.

No Deal means a WTO deal on trade and hundreds of other deals to ensure cooperation in the interests of all. It will also be the basis for a good trade deal too.

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A ‘Managed No Deal’ WTO option using Article 24 of GATT can avoid raising tariffs or quotas

In the aftermath of Parliament’s rejection of the draft Withdrawal Agreement, there is a way forward for the Government which allows a smooth transition into a No Deal scenario after 29th March, if found necessary, and then allows the UK to negotiate its desired comprehensive Free Trade Agreement with the EU without having to impose […]

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In the aftermath of Parliament’s rejection of the draft Withdrawal Agreement, there is a way forward for the Government which allows a smooth transition into a No Deal scenario after 29th March, if found necessary, and then allows the UK to negotiate its desired comprehensive Free Trade Agreement with the EU without having to impose tariffs or quotas in the interim. There is a mechanism to ‘manage’ a No Deal scenario; one that works within existing WTO rules, and that is not widely known about.

This is essentially an alternate transition or interim period, but within WTO rules without having to levy tariffs or (arguably) pay membership fees to the EU, but requiring some customs forms levied on the 7% of UK businesses (400,000 out of 5.7 million UK private registered businesses) that actually trade with the EU. This is the deal with the EU used by China, the USA, India, Australia and New Zealand for example.

These recommendations are based on my nearly ten years of experience as a member of the European Parliament’s International Trade Committee, working on EU trade deals such as those with Canada, New Zealand, India, South Korea, Japan and Columbia/Peru, and drawing on high level discussions I have had with senior trade representatives for the EU and the World Trade Organisation (WTO).

In the event of No Deal, there is a strong case to maintain preferential tariff and quota rates at zero between the UK and the EU for a limited period – thought to be around two years. There are a number of arguments for exemptions to what are termed ‘Most Favoured Nation’ (MFN) rules, which require the same treatment in terms of tariff rates and treatment between WTO members to avoid discrimination. They are:

1) It is to the advantage of fellow WTO members to minimise disruption between our two large markets, which would reduce knock-on impacts to their imports/exports to the UK or EU markets. WTO members have to show financial harm to justify objections to practices (or tariff schedules). Civitas calculate that £13 billion of tariffs would have to be levied on EU goods entering the UK and £5 billion on UK goods entering the EU Single Market if standard tariffs are levied under No Deal. This is one justification for keeping preferential rates of tariffs for a period whilst a full trade deal is finalised.

2) There are exemptions under National Security grounds such as over the issue of Northern Ireland, which the IEA have argued as a case for an exemption, but this is less appealing given its association with US and Russian cases for exemptions, such as over US tariffs on Chinese steel.

3) Exemptions to ‘Most Favoured Nation’ (MFN) rules under Article 24 of the General Agreement on Tariffs and Trade (GATT) 1947. This appears to be the most substantive argument. WTO rules state that preferential benefits, such as tariffs and quotas for goods which are more favourable than MFN treatment, may only be extended to another country if it is part of a customs union or a free trade area. The ultimate legal authority to grant such preferences is Article 24 of GATT , incorporated into the WTO regime when that body commenced operations in 1995.

Article 24 is helpfully the ultimate basis in international law for the existence of the EU itself as a preferential trading bloc, which grants preferential treatment to its members within the Customs Union.

If the UK accepts Donald Tusk’s offer of a free trade agreement along the lines of CETA+++ or what I propose as ‘SuperCanada’, then the UK and EU will be in the process of moving towards creating a free trade area – Tusk has offered a tariff and quota free deal plus services (whilst leaving the EU Customs Union) – so qualifies under this criterion.

There are two under-appreciated aspects of Article 24 which have direct relevance to our situation, and which provide reassurance.

Firstly, Article 24, para 3 states:

The provisions of this Agreement [i.e. the requirement to extend MFN treatment equally to all] shall not be construed to prevent:

(a) Advantages accorded by any contracting party to adjacent countries in order to facilitate frontier traffic

  • This has direct relevance to the position of Northern Ireland, and our adjacent country of Ireland. Some commentators have claimed that a sensitive and appropriate management of trade which respects and upholds both the letter and the spirit of, for example, the Good Friday Agreement would be in some form an unauthorised infringement of MFN treatment. That claim is clearly untrue.
  • There is also no obligation under WTO rules to erect a so-called “hard border” on 29th March. Government may continue discussions with our counterparts in Dublin to arrive at adequate and effective technological measures for the management of trade with minimal friction. You will have noticed the encouraging signs that the Irish Government already appreciates this fact. (See, for example, “Ireland has no plans for hard border after Brexit, says Varadkar”, from The Guardian of 21st December 2018)
  • We can expect that there will be considerable international sympathy for measures which support the situation in Northern Ireland, and hence a reluctance on the part of third countries to lodge objections. Although given the sensitivities this should not be stressed too heavily, such an exemption falls into ‘National Security’ related actions.

Secondly, Article 24 not only authorises member states to operate lower/zero tariff free trade agreements, it also permits them to offer lower/zero tariffs pre-emptively during the course of negotiations. The relevant provision, Article 24 para 5, is worth quoting at length, with emphasis added to the critical wording:

Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of… a free-trade area or the adoption of an interim agreement necessary for the formation of… a free-trade area; Provided that:…

(b) with respect to a free-trade area, or an interim agreement leading to the formation of a free-trade area, the duties and other regulations of commerce maintained in each of the constituent territories and applicable at the formation of such free–trade area or the adoption of such interim agreement to the trade of contracting parties not included in such area or not parties to such agreement shall not be higher or more restrictive than the corresponding duties and other regulations of commerce existing in the same constituent territories prior to the formation of the free-trade area, or interim agreement as the case may be; and

(c) any interim agreement referred to in subparagraph… (b) shall include a plan and schedule for the formation of such… a free-trade area within a reasonable length of time.

(A WTO declaration, the Understanding on the Interpretation of Article 24, 1994, clarifies that the ‘reasonable period of time’ in para 5(c) will generally taken to be no more than 10 years.) I estimate based on EU trade deals to date, that a UK-EU comprehensive Free Trade Agreement could take around two years, especially given the unique reality that the UK is starting from a convergent position with the EU, with zero tariffs and quotas and with our laws and standards currently harmonised.

  • If, before 29 March, the UK has reached an ‘interim agreement’ with the EU to pursue negotiations towards a comprehensive free trade deal, both sides would be permitted under WTO rules to continue with the present zero tariff/zero quota trading arrangements. There would be no disruption to the man or woman on the high street. No Deal would mean No Change, as the cost of goods would not go up.
  • In the present situation the ‘interim agreement’ would not have to be an extensive document running to hundreds of pages. The schedule of items covered by the negotiations would be all goods, as already envisaged in our discussions with the EU. The plan which the document sets out would have to amount to little more than a timetable for regular meetings and an ultimate deadline, some years hence, by which point negotiations will have to be concluded.
  • An ‘interim agreement’, then, need be little more than an agreement to continue talks – while also continuing zero-tariff and zero-quota trade on both sides – plus a deadline no later than 29th March 2029. I accept that the EU has so far declined to agree any deadlines (other than 29th March) but since the absence of a final cut-off point has been a major contributing reason for Parliament’s rejection of the Draft Withdrawal Agreement, perhaps the EU will now reassess that stance.
  • Whilst legal challenges at WTO level might be expected from an unhelpful member, the reality is that any such challenge is unlikely to get to the WTO ‘court’ – its appellate body – for at least two years and possibly longer, and only if that body finds the UK non-compliant would any compensating actions be authorised such as tariffs. This is within WTO rules, and if any challenges arise a fully compliant Free Trade Agreement should already be in place by the time any appellate body were to meet. The EU is now under extreme pressure from EU27 industry and commerce who enjoy a £96 billion surplus with the UK.
  • You will recall that the draft Political Declaration indicates the EU want to reach a comprehensive Free Trade Agreement with the UK on the basis of zero tariffs and quotas (see paras 17, page 5, and para 23, page 6) and extending to services (para 29, page 7). Those provisions are fully in line with numerous public statements made since the 2016 referendum by Donald Tusk, President of the European Council, and Michel Barnier, European Chief Negotiator – offering a CETA+++, or what I term a ‘SuperCanada’ trade deal, on 7th March 2018, 30th August and 6th October 2018.

It is significant that Heiko Maas, Foreign Minister of Germany, has already indicated a willingness to continue talks (see “Germany says EU ready to talk if UK rejects Brexit deal” on Reuters, 15th January).

Conclusion

This approach would continue the pre-29th March status quo in trading arrangements and patterns without interruption, justified by an explicit provision of the WTO regime. The possible grounds on which any third country could lodge an objection to this are extremely slight (unlike for schedule changes).

An ‘interim agreement’ would therefore be an important component of a ‘Managed No Deal’ outcome from 29th March. It permits trade between us and the EU to continue without tariffs or quotas under No Deal while creating a space for negotiations to be reset and recommenced on the basis of reaching a SuperCanada or CETA+++ trade treaty.

I urge the Government to now adopt this course of action, as it will mitigate the main impacts of a ‘No Deal’ Brexit and eliminate the task of having to assess and charge tariff rates on 19,753 MFN tariffs under the EU Customs Union, thereby substantially reducing friction at borders.

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Juncker and Tusk’s letter to Theresa May changes nothing: we must vote down the draft Withdrawal Agreement

The letter sent from Jean-Claude Juncker and Donald Tusk to Theresa May in the last 24 hours shows more clearly than anything else possibly could why the draft Withdrawal Agreement is fundamentally flawed: not only the lack of substance in the letter, which adds nothing new to the sum of human knowledge, but also the […]

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The letter sent from Jean-Claude Juncker and Donald Tusk to Theresa May in the last 24 hours shows more clearly than anything else possibly could why the draft Withdrawal Agreement is fundamentally flawed: not only the lack of substance in the letter, which adds nothing new to the sum of human knowledge, but also the lack of any form of collegiate kindness or helpfulness to the Prime Minister.

When the Prime Minister addressed the 1922 Committee on 12th December, she assured colleagues that she would secure legally-binding wording to address concerns over the Northern Ireland backstop. Now we learn there will be no end date to the backstop or unilateral exit mechanism for the UK. So, yet again, the EU have let the Prime Minister down.

The lesson is clear: we need to vote down the Withdrawal Agreement by as large a majority as possible. Only then can we move on and either negotiate a new agreement (as David Davis argued at the weekend) or Leave without a deal on World Trade Organisation terms with a view to later negotiating a new relationship.

The Government and the Conservative Party must remain committed to delivering the result of the referendum, as repeated in our 2017 manifesto, which pledged to leave the Customs Union and the Single Market, accompanied by the declaration that No Deal was better than a Bad Deal. Otherwise, the credibility of our democracy will be thrown into chaos.

The draft Withdrawal Agreement does not respect the result of the referendum. The Government should be seeking to unlock the negotiations by returning to the Canada-style option offered by President Tusk, using the tried and trusted techniques and procedures so that rules of origin and customs checks are conducted away from the Northern Ireland border, to make unnecessary the hard border that everyone agrees must be avoided.

The backstop means we will be trapped under the thumb of the EU with no date to escape – and unable to strike trade deals. It means we would be trapped indefinitely as a satellite of the EU, obeying its laws without a say, unless the EU and its Member States gave permission for us to leave. The UK will be paying £39 billion – equivalent to £1,443 per household, or £60 million per constituency – and getting nothing in return. We will not take back control of our money, laws and trade. Remaining in the Customs Union is a breach of the 2017 Conservative Manifesto on which I and all my colleagues stood.

The backstop drives a regulatory barrier down the Irish Sea, severely damaging the Union and moving Great Britain and Northern Ireland further apart. This deal keeps the supremacy of the European Court over our own law and sells out the UK fishing industry, excluding them from any trade deal, and envisaging a deal where the Prime Minister trades away our fish in return for market access.

We remain effectively in the EU for an extendable ‘transition’ period, paying and accepting new laws over which we will have had no say. Unrestricted immigration of EU nationals will still be continuing for years after we leave. This commitment comes with no guarantee of a future trade agreement. Worryingly, this deal will deny the UK an independent trade policy while potentially keeping us out of existing EU trade policy. We would be cut off from the world with our trade and economy regulated from Brussels without any say.

So, let us be honest: the Withdrawal Agreement is a terrible deal – worse than Chequers, less popular than the Poll Tax and only one in five voters think it honours the referendum result. The only way to get a better deal for the UK is for Parliament to reject it and force the Government to renegotiate with the EU.

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A plea to the PM from a Leave-supporting businessperson: Stop the scare stories and embrace a Sovereign Brexit

What follows is an open letter to the Prime Minister written by a businessperson who backed Leave at the referendum but who for professional reasons is currently unable to enter the political fray. Dear Prime Minister, I have watched with a sense of appalled inevitability your recent unsuccessful visit to Brussels, characterised as it was […]

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What follows is an open letter to the Prime Minister written by a businessperson who backed Leave at the referendum but who for professional reasons is currently unable to enter the political fray.

Dear Prime Minister,

I have watched with a sense of appalled inevitability your recent unsuccessful visit to Brussels, characterised as it was by a lack of ideas, an absence of combativeness and a reckless and relentless desire to cling on to every rotten element of the vassal state deal that you and your small Remainer clique of advisers in Downing Street have concocted with the EU. Harsh words? Perhaps, but they are words that are endorsed – sometimes in more polite phrases, sometimes in less polite phrases – by the vast majority in our country and even of our Parliament.

Why are you so recklessly clinging to every suspect element of this ‘Brexit in name only’ deal? Many believe the problem all began with your still-secret promises made to Nissan, the car manufacturer in Sunderland, shortly after you took power in 2016. You have never published those promises. Many of us guess that it was partly as a result of those promises that in your talks with the EU you then gave away – whether in ignorance or because you never truly meant to leave the Customs Union – every possible negotiating element that would allow the United Kingdom to pursue its own independent economic and trade policies. Was that so? Can you not come clean with the electorate and tell us what those Nissan promises were, how much they are now constraining you and how much your desire to cling to your secret agreement with one company, Nissan, has led you to all this foolishness? Because if that is the case, then the honourable thing for you to do would be to resign and let someone else – someone not burdened by that promise – create a way forward for our country that is not shackled by that apparently all-constraining Nissan cursed promise.

If there was no such promise, then I am puzzled by your insistence that a WTO-terms deal – what is most truthfully termed a ‘Sovereign Brexit’, the thing that 17.4 million people actually voted for – must be ruled out by you. Your Remainer friends who dominate the media have managed to spin non-facts into a general belief that a Sovereign Deal would be catastrophic. Your grid in Downing Street has, month after month, delivered to a credulous press and public a remorseless stream of doom-laden statements by those rent-seeking members of the business community on whom you have chosen to rely to spin your message. Yet neither you, nor the spinners, nor your business allies, actually ever credibly articulated what the specific negatives of such a deal would be (the contemptible catastrophe forecasts by your discredited Treasury modellers, and by your apparently politically motivated Governor of the Bank of England, are no longer believed by anyone – as I am sure you must know).

What could go wrong, and what would go right, in a Sovereign Brexit? The claims of your Remain-loving enablers as to what might go wrong are economic. They relate first to exports from the EU into this country and second to exports from the United Kingdom into the EU. Once even the briefest analysis is conducted, both sets of claims are quickly seen as hogwash.

Exports from the EU into the UK – no disruption threat there

There have been the most extraordinary and juvenile claims of potential (albeit very short-term) shortages in this country after 29th March 2019. Even you, lamentably, mentioned your diabetes and your desire for being sure of your supply of insulin. Who persuaded you to say that? Did you give the slightest thought to how ridiculous that scare story was? Insulin is sold under a wonderful system we call private enterprise, from one company to another. In the UK’s case, it’s mostly a Danish company selling insulin to companies in Britain. The insulin is put on a plane or a boat and comes over to our country. What, do you assert, would prevent this from happening after a Sovereign Brexit? Come on, what? Are you saying that the EU would somehow seek to prevent insulin being placed on a ship or a boat and exported to us? You aren’t saying that, are you? Such an action would be illegal. Or, OK: let’s even say that, however unlikely, the EU indeed decided on 29th March to start acting entirely illegally (again: for a short period of time only, which is all they could possibly ever do). Then the UK would get its insulin from the US, or the Danish company would sell the insulin to Norway, or some other non-EU country, which would then export it on to the UK. Businesses successfully deal with complications of this sort all the time. All that the EU’s (highly, highly unlikely) illegality would result in is the Danish company losing money, one way or another. But you and I know that the EU wouldn’t shoot itself in the foot like that.

So, were you claiming instead that Britain would somehow put up barriers against Danish insulin coming into the country after 29th March? We wouldn’t, would we? Come on, you know that, don’t you? So why did you raise a false scare story, that would have had tens or hundreds of thousands of diabetics worried that their supply of insulin was suddenly going to dry up, when you know it’s hogwash? Isn’t that the sort of rabble-rousing nonsense that we try not to do in the Conservative Party?

Insulin is just an example of any other product that comes into the UK from the EU. We would not prevent any product from arriving; the EU would have no legal locus (or indeed any physical ability) to prevent any product from being sent; can you please just stop being silly and admit that there would be no supply shortages in the UK? (And please, can we in particular try to keep our Conservative ministers from making fools of themselves, in their eagerness to support you, by escalating the level of ludicrousness of such scare stories from a possibility of momentary disruption of a day or two, through to six-week problems, through to six-month problems? The more outlandish their claims get, the less anyone believes them – though some Remainers tactically pretend to. We will actually need to have a set of ministers who are seen as competent by the UK electorate after all this settles down, if the Conservatives wish to remain in power.)

The UK’s exports to the EU – not credible to assert any long-term or even short-term disruption

Let’s turn to the second set of scare stories running against a Sovereign Brexit. We keep being warned about “lorry parks in Kent”. The idea is that Calais will somehow impose restrictions on us, so that we won’t be able to get our goods speedily into France and through to the rest of the EU. Of course, we send just 6% of the UK’s exports through Calais, and those exports can swiftly be diverted to go through other ports, were Calais were to seek to prevent the easy flow of UK goods into Europe. But we needn’t particularly worry about anything like that happening, because every local official from Calais, and the Pas de Calais region, has said that this will not happen. It would take an edict from President Macron – an edict that would be entirely illegal, whether in EU law or in the WTO agreement – to impose such a blockade (Indeed: if you really were to believe – and I for one don’t think you do – that Macron would truly seek to impose an illegal blockade, then it would be utterly abject of you, and unworthy of the Prime Minister of our sovereign nation, to bow to a perception of a threat of this sort).

In any event, let us assume that the worst happens and that Macron does indeed seek some way of blocking British exports into the EU. The French did that once before, when they for a while diverted Japanese VCRs to Poitiers, so that EU manufacturers could win in the VCR market. They were very swiftly brought to court by the WTO and made to stop. Japanese VCRs continued to dominate the world (and the EU) market. France have never tried that trick again. And what would be the result for the French, were they to try it on us? Well, within a couple of weeks, as their just-in-time-systems were affected, thousands of French and German auto workers – possibly tens of thousands, in the unlikely event that the French were successful for more than a few days – would be thrown out of work, as French and German car manufacturing plants had to shut down. Do you really think, Prime Minister, that this would be allowed to happen? Or is your assertion, that somehow the EU would inflict such a monstrous act of self-harm upon itself, just a stance that you are pretending to believe in, so as to insist on this foolish deal that you and the EU are trying to impose upon the British people?

In either case – exports or imports – the very wildest claims are of a possible disruption that would last for, even your wildest claims allege, only a few months. Why, then, should this be the dispositive consideration, when we are talking about Britain’s future for many decades to come? Why would you shackle the country permanently to a lordly EU, in order to avoid a very temporary (and, if you read my above arguments, not going to happen anyway) disruption? Why would you abandon even the threat of a WTO terms deal – and in so abandoning it, allow us to become the hapless prey of what everyone now knows are entirely ruthless EU negotiators?

The Irish Border and the Backstop – a Hoax

On the Backstop, and its claimed urgency and importance, the trick is to look at your language, where one finds your people always using the passive mood – a classic giveaway. You say you are worried about a hard border “being imposed” (passive mood). You do not offer a noun in front of the verb, to show who it is, exactly, that is predicted to be going to do this “imposing”. That’s because, in fact, nobody wants to, nor do they intend to, impose such a border. You have said that Britain will never impose a hard border. The EU has said that it will never impose a hard border. The Irish have said that they will never impose a hard border. The Revenue of the UK has said that imposing a hard border will in all circumstances be entirely unnecessary. Talk of a hard border is nonsense, and you know it. Plan after plan has been published showing how the Irish border question can easily be dealt with, away from the border. To assert that this issue might bring back the IRA, that there will be one disaster or another if we don’t have the Backstop, is irresponsible. Which brings us back to what many aver, that the Backstop is just a cover for implementing some promise you made to the auto industry in 2016, that we would be in some form of Customs Union with the EU – precisely the thing that 17.4 million people voted against.

(And by the way, could you please get your people to stop briefing the credulous media as to how the EU don’t like the Backstop? To believe that – if indeed you do – would be a colossal, monumental piece of self-delusion. The EU love this Backstop, created as it is without an exit clause, with the EU entirely in control as to when – if ever – the backstop is removed. And Leo Varadkar is of course – and rightly – terrified of a Sovereign Brexit because the Irish economy would, unlike the UK’s economy, drastically contract as soon as we stopped buying Irish agricultural products and started buying cheaper, alternative produce from New Zealand and Argentina, were the EU to fail immediately to agree a free trade deal with the UK.)

As constituted in your proposed deal, the Backstop turns Britain into a permanent, shackled vassal state of the EU, subject to all its laws, on which we’d have no say; gradually reduced to a pathetic vestigial outcropping of the EU, with German goods and French produce increasingly defined under EU laws as the only sources that we will be allowed to accept. If the EU wishes – and why should they not? – that Backstop would be for good. Our manufacturing, already half destroyed by our membership of the EU, would continue to shrink, and our farmers and fishers would continue to be at a disadvantage – forever.

The positives of a Sovereign Brexit

So much for the specious arguments that a Sovereign Brexit would be problematic, and that your surrender deal is therefore necessary. But what about the positives for a Sovereign Brexit? I sometimes wonder what Downing Street’s grasp of numbers is like. Do you have any true feel for what £39 billion, so insouciantly promised to the EU in return for illusory favours, could do for this country were we to spend it on ourselves, as we could if we opted for a Sovereign Brexit, rather than giving it away?

For a start, were there any sector (including your much-loved auto sector), but let us say, for example, the agricultural or the fisheries sector, that indeed for some (unlikely) reason suffered during any years of further negotiations, then just a small fraction of this £39bn would be enough to keep those industries whole, for the (in the scheme of things) short period it took to get a free trade deal with the EU. We do not owe this £39bn to the EU. It’s possible that the EU could make an argument for us paying over a small fraction of that amount as one or another obligation, that we might eventually agree, but we certainly wouldn’t pay it any time soon, were the EU to keep on playing the sort of hardball with us that they have adopted so far as their negotiating posture; it would take them years, possibly decades, to establish legally that we owed the money.

Regardless, there is no way that the UK would ever have to pay anything but a small fraction of the full sum. Don’t you think, Prime Minister, that the EU are rather keen to have that money? Do you not see that by ruling out a Sovereign Brexit, and by promising to pay the money before you have agreed a trade deal with the EU, you have taken two enormous bargaining chips off the table? Wouldn’t keeping that money in a Sovereign Brexit scenario make a huge positive impact for the UK?

So, for a start, we’ll have that £39 billion (a sum that in your deal, as we pay it to the EU, will massively and worryingly increase this country’s debt – for no clear return). But a Sovereign Brexit will give us so much more than just that money; we’ll retain our ability to do free trade deals with that part of the global economy from which 90% of future global growth will be coming (you may know this as the ‘not the EU’ world. I hope you sometimes think about it?); we’ll keep our ability to unshackle our entrepreneurs from EU regulation (so that, as just one random example, we can regain the 12% of the global clinical trials industry that we used to have, until EU regulations in 2002 suddenly collapsed our share to around 2%); and above all, the clothing, food and other essentials that the people of the United Kingdom buy in the future being far cheaper as we move outside the protectionist barriers of the EU’s Customs Union and Internal Market.

You know very well, Prime Minister, how all of your allegedly neutral and objective advisers have ostentatiously ignored all of these benefits. You know they have failed to seriously review the many analyses that show that far from a Sovereign Brexit being negative for the British economy, it is likely instead to have a significant positive effect. You know that the insistence of your Treasury officials on publishing neither their models, nor the assumptions they put into those models, make an absolute nonsense of the credibility of those models and a mockery of the alleged impartiality of those officials. Please, Prime Minister: you are juggling with the future of this country. At the very least, you should be honest with the people of this country – both in acknowledging the above points, and in forcing your officials to own up to the way they have jammed their thumb onto one side of the scales of public opinion.

Prime Minister, you are offering us a deal where you propose to break up the Union and hand Northern Ireland over to the EU. You intend to hand over money ahead of any trade deal, thus assuring that whatever is agreed in that deal will be even more horrendous than what you have come up with so far – Gibraltar threatened, our fisheries destroyed, our people deprived of their chance for the benefits of free trade and subjected to semi-permanent, quite likely perpetual, enshacklement to the EU. You have gone back on every single promise you made when the Conservative Party made you their leader, when you gave your Lancaster House speech, when you said “Brexit means Brexit”.

The sorry band around you are desperate for your deal to go through because if we went for a Sovereign Brexit instead, they, and their enablers in the media and big businesses, would be exposed as the complete charlatans that they are, when a WTO terms Leave is implemented (the Leave that those 17.4 million voters expected to happen). This is why your myrmidons are fighting so hard, because all of them – your advisers, the civil servants involved, the Treasury forecasters, your small clique of Remain ministers, The Economist, the FT, the BBC, and on and on – would have no choice but permanently to disappear from public life once we implemented a Sovereign Brexit and all their egregious negative spinning and outrageous scare stories were proved as false as their original 2016 Project Fear was.

You, however, Prime Minister, have a glorious chance to escape their fate, by doing one thing: you can still, now, and energised by Juncker’s utterly disrespectful behaviour to you in this past week, turn around to the European Union and say, finally:

“Fine. I understand you don’t want to do a deal. We’re now going to go full bore for a Sovereign-terms Brexit. Let’s sort out some administrative things like us allowing you to fly your planes over the UK, but other than that, let’s see each other in Geneva at the WTO. Do come back to us if you want to discuss some kind of Canada-plus deal, but otherwise, let’s all spend our time constructively in the next three months preparing for Britain’s Sovereign Exit from the EU.”

For the sake of our country Prime Minister, please take this chance. Now.

The post A plea to the PM from a Leave-supporting businessperson: Stop the scare stories and embrace a Sovereign Brexit appeared first on BrexitCentral.