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 […]

The post A ‘Managed No Deal’ WTO option using Article 24 of GATT can avoid raising tariffs or quotas appeared first on BrexitCentral.

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.

The post A ‘Managed No Deal’ WTO option using Article 24 of GATT can avoid raising tariffs or quotas appeared first on BrexitCentral.

Brexit is a debate about sovereignty or subordination on which compromise is impossible

Remainers ask me with ever greater frequency: “Was Brexit worth it?” As naughty children, we are reminded that our infantile mischief is silly and ultimately futile. And it’s now wake-up time as Parliament’s “guerrilla warriors” are fighting to eliminate the no-deal option and foist a binary choice on the country: accept the Prime Minister’s worst-of-all-worlds […]

The post Brexit is a debate about sovereignty or subordination on which compromise is impossible appeared first on BrexitCentral.

Remainers ask me with ever greater frequency: “Was Brexit worth it?”

As naughty children, we are reminded that our infantile mischief is silly and ultimately futile. And it’s now wake-up time as Parliament’s “guerrilla warriors” are fighting to eliminate the no-deal option and foist a binary choice on the country: accept the Prime Minister’s worst-of-all-worlds deal or simply remain in the European Union.

As a signal, that is about the worst possible backdrop to any negotiations. And as a signal to voters, it’s the clearest message that the referendum was nothing more than  “one daft opinion poll”, as Kenneth Clarke put it. To sweeten it, Remainers are working to whip up momentum for a second referendum, portrayed as the ultimate act of democracy: put the question again to the people – over half of whom apparently did not understand what they voted for in 2016.

What is really happening in Parliament? The Government could not (or refused to) recognise that the EU was not negotiating a commercial deal but defending – as it knows how to – an unstable union from falling apart. The deal on offer is bad, the EU rigidly refuses to negotiate, so let’s admit defeat and stay. But this would be a terrible option.

Supposing that the EU is a friendly neighbour that stands for all the noble virtues it is portrayed to represent, we just need to negotiate a better deal. Were this the case, we wouldn’t be in the present sorry situation in the first place, as not only would the EU be willing to negotiate in a constructive manner but it would urgently have started to reconsider its policies in the wake of the euro crisis, the migrant crisis, Brexit, the Italian elections, the alienation of the V4 countries and the Yellow Vest movement. How this has no chance at all of happening is clearly demonstrated by Michel Barnier, whosrecent article recaptures the bold vision of curing the EU’s abundant economic and social ills by doing more of exactly the same: building a superstate, concentrating power in Brussels and harmonising European migrant and asylum policies. Really?

Contrarily, if the EU is not a benevolent union of the willing but an aspiring undemocratic empire, is the UK willing to give up even the notion of sovereignty to keep its short-term comfort and maintain the status quo? This option disregards completely what the EU is developing into. It prefers short-term and partial interest to the long-term national interest.

This is, of course, the easy choice if one accepts the mainstream denial of the nation, which does not really exist or, if it does, it is a lamentable, parochial thing driven by silly nostalgia: “Brexit Britain, small, boring and stupid”, as one Politico author put it.

But before we succumb to the myth that this is the natural next phase of the evolvement of a peaceful, nationless, global world based solely on “shared humanity”, it might be useful to recall that this is déjà vu.

The European empire is an old dream going back to Charlemagne that keeps coming back. There are some interesting examples in modern history. As Bernard Bruneteau, the French historian, describes in his fascinating book Les ‘Collabos’ de l’Europe nouvelle (The Collaborators of The New Europe), French and Belgian leftist intellectuals in the early 1940s greeted the advances of the Reich as the force that would unite and create “l’Europe nouvelle”, the unified Europe without nation states. They wanted a common currency and a supranational government whose unaccountability did not bother them. They pegged their fervent hopes to the Reich, in benign oblivion of the goals and nature of conquering Germany.

In colonised Central Europe under Soviet military occupation, the official line was that nation states are outmoded, a ruse of rich capitalists to set the working class against each other in the name of false national idols. That empire also believed in a superstate ruling in the name of proletarian internationalism, propagating comradeship void of national loyalties. This was the necessary ideology to keep the occupied vassal states under control and prevent other 1956 wars of independence. It was a ruthless and crude dictatorship propped up by tanks and arms. Those trying to resist were called everything – enemies of the “people”, of progress, of development, of peace. The goal justified the means.

Ironically, it is now the democratic, progressive EU building the nationless superstate, not for the proletariat, and in the name of democracy, peace and economic efficiency. “There can be no democratic choice against European treaties,” said Jean-Claude Juncker. National sovereignty is a thing of the past in this globalised  world.

The idea of the potential break-up of both the Conservative and Labour parties not along economic policy issues but Brexit pops up from time to time. Society is deeply divided along the notion of sovereignty. The vicious controversy has transcended economic, geopolitical and cultural arguments. The real fault line is about fundamental philosophy: sovereignty or subordination. It is a clash between two irreconcilable world views. Compromise may generally be useful but sometimes is impossible: this is one of those instances.

The post Brexit is a debate about sovereignty or subordination on which compromise is impossible appeared first on BrexitCentral.

How Dublin ran rings round May on Brexit and the Northern Ireland border

Tony Connelly describes in painful detail the success of Irish negotiators in aligning themselves with the EU27, while leaving the Brits to flounder.

Brexit and Ireland: The Dangers, the Opportunities, and the Inside Story of the Irish Response by Tony Connelly

Boris Johnson expressed enthusiasm for this book when interviewed the other day by ConHome, though I have just listened to the tape again, and find he must have done so after I turned it off.

We were discussing how much better prepared ministers and officials in Dublin were for Brexit than their opposite numbers in London.

Connelly, who lives in Brussels and has been reporting on Europe for RTE for the last 17 years, unfortunately provides ample evidence for this view. The Irish knew the referendum held on 23rd June 2016 could go either way and prepared accordingly.

I recall hearing a lucid and persuasive speech by Dan Mulhall, then Irish Ambassador in London, now their man in Washington, at an Irish Embassy reception, in which he outlined the devastating effects which Brexit could have not only on the Irish economy, but on relations between the Republic and the United Kingdom, including Northern Ireland.

It was plain then that there was a conservative, or Burkean, case for remaining in the EU, as an imperfect accretion of laws and customs which although impossible to defend in strict democratic theory, were in some ways well adapted to the circumstances of Irish and British politics.

At the start of Connelly’s account, the Irish Prime Minister, Enda Kenny, tries to warn David Cameron that

“referendums are different to general elections. People don’t fear the consequences of a general election. We have some experience of this kind of thing.”

Dublin had a few years before held a second referendum on the Lisbon Treaty in order to undo the rejection of it in the first. Micheal Martin, the Leader of Fianna Fail, who ran the campaign in the second referendum, says they learned a lot from their exhaustive research into what went wrong first time round, and realised the message now had to be:

“We’ve heard you, we’ve listened to you, we’ve done the changes because of your message.”

It is not clear the advocates of a second referendum on this side of the Irish Sea have realised they need a message like that. If they are not careful, they will be found to be telling the British people, “We have not listened to you, and consider you to be a lot of ignorant fools who had better now do exactly as we tell you.”

After the British voted for Brexit, Irish ministers became frustrated by jockeying in London between Boris Johnson, Liam Fox and David Davis, and the consequent inability to determine the British Government’s position:

“Worse than the jockeying was the fact that they had different messages. That was of no use to us. We were trying to establish what exactly they wanted.”

There had been no preparatory analysis in London of the problems Brexit would pose and the choices which would need to be made. Nor did Irish leaders find, when they met Theresa May, that she was communicative. “She was very, very cautious,” as an Irish official puts it.

At the outset, the Irish expected to solve some difficulties through bilateral talks with the British Government, and others by negotiating as part of the EU 27 with London. But by the end of 2016, as Connelly relates,

“The Irish government was realising that if Irish and European Commission officials were working away diligently, scoping out technical solutions, looking at ways of getting around customs checks and requirements regarding animal health, food safety and rules of origin as a way to soften the Irish border, then the main beneficiary was the UK.

“Having come to this realisation, the Irish undertook a subtle distancing from London. It began at the end of 2016 and was increasingly discernible in the first part of 2017.”

The Irish stopped trying to solve the British Government’s problems, notably over the Northern Ireland border, and instead aligned themselves completely with the EU 27. As Connelly puts it,

“There would be two steps: fully apprising the EU of the complexities of the Northern Ireland peace process, and then turning the Irish position into the European position.”

Michel Barnier already has considerable experience of the complexities of Northern Ireland politics, for as an EU Commissioner he oversaw between 1999 and 2004 “the spending of 531 million euros in EU funding for Northern Ireland under the PEACE II programme, as well as tens of millions of euros in regional and structural payments”.

The EU became a kind of imperial power (not a word used by Connelly), more trusted, or at least more accepted, because it was more remote, and seemed therefore more neutral. Barnier sees himself as a benevolent proconsul: “He spoke fondly about the 13 million euro Peace Bridge in Derry, part funded by Brussels.”

The Irish are brilliant at manipulating the imperial power, while the British, having quite recently been an imperial power themselves, are enraged by its claim of ultimate authority, and have voted to liberate themselves. How one wishes the late lamented T.E.Utley, blind seer of The Daily Telegraph, could bring his wisdom to bear on these paradoxes. Who now in the London press has any understanding of, let alone sympathy with, Ulster Unionism in its various manifestations?

In Brussels, the Irish lobbied Barnier’s Task Force intensively. As a source tells Connelly,

“The Irish had privileged access… For other stakeholders the criteria had to be that it was a pan-European association… The Irish came well prepared, and with a wish-list. They were impressively well prepared… A number of them could have worked for the Task Force straight away.”

The Irish had done their homework, and knew what they wanted. The British had not done their homework, appeared to want to have their cake and eat it, and found themselves steered towards the major problem which emerged in November 2017, when they were told that in order to avoid a hard border, Northern Ireland will have to remain de facto inside the single market and the customs union.

Connelly’s book is almost 400 pages long, first appeared in 2017 and was updated in May this year. It contains some vivid reporting about the threat posed by Brexit to the Irish beef, lamb, milk, cheese, fish, mushroom, duck and racing industries. For the general reader, it contains too much.

From September 2017, “gruelling sessions” were held in Brussels to examine how the 142 different dimensions to North-South co-operation on the island of Ireland relate, if at all, to EU law. Even to read about this stuff is quite gruelling. As a reporter, one has to get to grips with at least some of the detail, then cultivate people who are prepared to tell one what it all means, and Connelly clearly has an admirable range of Irish and Brussels sources.

For the British reader, it is painful to be reminded at such length that under May’s insultingly opaque leadership, our Government has never worked out how to operate as a team, for a long time did not get to grips with the detail, and then did not realise what it meant, or at least refused to be candid about what it meant, until very late in the day, and is in many ways not being candid now.

The trouble with not being candid with the wider world is that there is then a temptation not even to be candid with oneself.

We must intensify plans for trading on WTO terms and then negotiate a UK-EU trade deal on those sure foundations

Pulling the vote on its Withdrawal Agreement at the eleventh hour, the Government acknowledged what we already knew: the Backstop proposal is completely unacceptable and the Agreement stood no chance of winning the support of Parliament. But rather than simply seeking “reassurances” on this issue – which, though a central objective, is but one of […]

The post We must intensify plans for trading on WTO terms and then negotiate a UK-EU trade deal on those sure foundations appeared first on BrexitCentral.

Pulling the vote on its Withdrawal Agreement at the eleventh hour, the Government acknowledged what we already knew: the Backstop proposal is completely unacceptable and the Agreement stood no chance of winning the support of Parliament.

But rather than simply seeking “reassurances” on this issue – which, though a central objective, is but one of many – the Government needs to consider more boldly the possible alternative arrangements which might command Parliament’s support. The President of the European Council, Donald Tusk, offered just such an alternative in March: a wide-ranging, zero-tariff trade agreement.

That deal foundered on the question of the Northern Ireland border, but existing techniques and processes can resolve this.

This view is endorsed by the professional customs body, CLECAT. They recommend we acknowledge the present state of customs technology, using procedures based on intelligence and risk management available in current EU law. These are currently used to manage the border which already exists – for VAT, tax, currency, excise and security – and can form the foundation for continued seamless trade.

From my October meeting with Michel Barnier and senior officials, I know that a willingness exists on the EU side to explore these possibilities more fully. The meeting also confirmed that Tusk’s offer is still on the table.

Rather than cling hopelessly to the Withdrawal Agreement, the Government must return to that offer. By resolving the border question with existing techniques, we can immediately start negotiating an optimal, wide-ranging Free Trade Agreement. I have already presented the Government with a Trade Facilitation Chapter and new Border Protocol to catalyse this process.

In parallel, we must intensify our preparations for trading on WTO terms. This is no cause for alarm, and those doubting this should look to the UK’s booming exports – up by nearly £100bn since before the referendum. The latest ONS figures put exports to non-EU countries at £342bn, compared to exports to EU countries of £274bn.

Much of that boom is through expansion into new markets. Since 1998, UK goods exports to non-EU countries have grown 16 times faster than its exports to the EU.

Yet scaremongering has clouded our perception of WTO rules. We are told that just-in-time supply chains will be unable to continue across customs borders. But in reality the operation of these chains is as dependent upon non-EU goods as on those from the EU. 21% of UK automotive manufacturers’ bought-in supply chain comes from outside the EU – compared to 36% from the EU and 43% from the UK – yet the customs procedures required for that sizeable proportion do not pose an insurmountable problem.

We are told that even minor customs delays will cause unprecedented queues on the M20 and economic disaster. But Operation Stack – limiting access to the Channel Tunnel and the Port of Dover – was activated for seven months in total between 1998 and 2015, without any of the “catastrophes” now imagined.

Responding to these Project Fear claims, we must always ask: why? Why would a rules-based organisation like the EU suddenly start behaving illegally, to the detriment of its people and in defiance of international agreements? As Xavier Bertrand, President of the Hauts-de-France region, has said in dismissing fears of major disruption between Dover and Calais: “Who could believe such a thing? We have to do everything to guarantee fluidity.”

It is true that the EU has trade deals with around 70 countries, which the UK will have to novate. This process has already begun and no country has signalled an unwillingness to co-operate. But remember that many of these agreements are very small. Switzerland alone accounts for half of UK exports to these 70 countries and it, Norway, Turkey and South Korea account for over 75%. Renegotiating a small number of agreements to cover the vast majority of this trade should not be a prohibitive task.

Though not an optimal arrangement, there is thus nothing to fear from WTO rules. Its 164 members represent 98% of world trade. We must be ready to trade on those terms to smooth the transition and demonstrate that we are serious.

That way, we shall be negotiating a Free Trade Agreement with the EU on sure foundations. Realistically, of course, a full agreement will not be reached by March, but this need not pose a problem. So long as progress has been made towards an agreement by then, the EU and the UK can jointly notify the WTO as soon as possible after our exit date of our intent to negotiate an FTA. Under Article XXIV of the General Agreement on Tariffs and Trade, after notification of a sufficiently detailed FTA with an appropriate plan and schedule, we could maintain zero tariffs and no quantitative restrictions for a “reasonable length of time” (exceeding “10 years only in exceptional cases”) without violating the bar on discriminating against other nations under WTO rules.

So, rather than the Withdrawal Agreement’s choice of a transition period ending in “20XX” or a potentially permanent and definitely intolerable backstop, this proposal would provide stability and clarity for the time-limited negotiating period, delivering a zero-tariff, mutually beneficial trade agreement. That would surely command a majority in Parliament. That is the alternative. That is the way ahead.

This is an extended version of an article originally which appeared in the Daily Telegraph

The post We must intensify plans for trading on WTO terms and then negotiate a UK-EU trade deal on those sure foundations appeared first on BrexitCentral.

Interview. As May’s defeat looms, Johnson sketches a manifesto: “People want to see a bit of gumption and a bit of leadership”

He expects her plan to be voted down on Tuesday, calls for a renegotiation which she could not conceivably lead – and rules out Norway Plus.

Boris Johnson expects Theresa May to be defeated in next Tuesday’s vote and in this interview lays out what he thinks should happen next.

Although the former Foreign Secretary does not call on her to stand down if she loses, his remarks are bound to be seen as his manifesto for the leadership race which would ensue were she to do so.

And the approach he advocates to Brexit is so completely at odds with hers that it is impossible to see how she could follow it.

Even if her proposed Withdrawal Deal is rejected by only a single vote, he wants it thrown out. Johnson claims that last December he was misled by the Prime Minister and Gavin Barwell, “in total bad faith”, that no real concessions were being made on the crucial question of the Northern Ireland backstop.

He also rules out throwing his weight behind the Norway option, saying that ‘the EEA just doesn’t work for us. The problem with it is that you’re even more of a rules taker than you are under this deal”.

Instead of either it or EEA membership, he wants a “generous, optimistic, energetic” renegotiation which has “a big free trade agreement at the heart of it it” and gets rid of the backstop.

Until these objectives have been attained, British negotiators must refuse to hand over £39 billion to Brussels, and must show they are not afraid of going to World Trade Organisation rules should that prove necessary:

“I don’t want to pretend to the public there would be no disruption at all. I don’t want to pretend there would be no challenges at all. But what people I think want to see is a bit of gumption from this country and a bit of willingness to tackle those problems, and a bit of leadership. And I think people are fed up of being told their country can’t do something and we’re all incapable of sorting out these logistical problems.”

Johnson accuses May and the Treasury of exploiting the issue of the Northern Ireland border in order to remain closely tied to the EU:

“The manacles have been co-forged, if you like, by us. We have decided to collaborate in our own incarceration….

“It’s unbelievable. It’s a kind of S&M approach to Government. What perversion is it where you want to be locked up in chains?”

The interview was carried out yesterday afternoon by Paul Goodman and Andrew Gimson, who began by reminding Johnson of a curious piece of unfinished business between himself and Conservative Campaign Headquarters.

ConHome: “It’s four months since CCHQ launched an inquiry into you following your remarks about the burka. What’s going on?”

Johnson: “I have no knowledge whatever of what’s going on.”

ConHome: “Have you not heard from them?”

Johnson: “No.”

ConHome: “They’ve not said anything at all?”

Johnson: “No. There was a lot of toing and froing in the initial phases. There’s been nothing for months.”

ConHome: “They accused you of breaking their code of conduct, set up this massive inquiry, then nothing?”

Johnson: “I think my best course on this particular issue, gentlemen, is to say I want to talk about other things. In a nutshell, what needs to happen now is we need to do two things. I think we need to throw out this deal.”

ConHome: “Should Theresa May pull the vote?”

Johnson: “That’s a matter for the Prime Minister. But I think it would be pretty odd to pull the vote now. I think there’s been a negotiation, that negotiation has concluded, the 27 plus one have agreed a treaty, we want to sign up to it and to get it through Parliament.

“I think it would be very, very odd now not to give Parliament its promised say on that treaty. So I hope that it will proceed to a vote. I believe that it will and I think that it will be voted down.

“It’s then that we need to do two things – I’m assuming that it’s voted down. I don’t want to anticipate the margin.”

ConHome: “You’re not anticipating some trick of the whips’ light, whereby you don’t get to vote on this motion at all –  there’s some cunning amendment by which the Government loses by less, which allows her to come back again?”

Johnson: “People want to be able to express their views and the views of their constituents on the Withdrawal Agreement. That’s the agreement that determines our future negotiations with Brussels and indeed probably determines our future constitution for many, many years to come.

“And I think for us not now to have a vote on that, the Government and Prime Minister having agreed it, at 27 plus one, would be a very, very serious mistake, and I think people would notice it and I think they would feel cheated.

“I also think by the way that to withdraw the vote now would be an admission of defeat – an admission that it was not something that had found favour with Parliament. I think the vote will go ahead, I think it will be defeated, I can’t prophesy the margin.

“And what needs to happen then is that we need to renegotiate, and renegotiate in a generous, optimistic, energetic way that goes back to some of the principles the Prime Minister outlined at Lancaster House, reinstates the idea of putting a big free trade agreement at the heart of it, gets rid of the Northern Irish backstop, which is a peculiarity and unnecessary – it is simply not true to say that you need a backstop in order to have a treaty – and remit all discussions about the solution of the Irish border question to the two-year period or the 18-month period at least that follows leaving on 29th March 2019.

“And on the Irish border question it’s very important to stress that this is a difficult question and obviously a sensitive question, but it is not an insuperable question. No one should minimise the issues, on the other hand nor should we exaggerate them.”

ConHome: “You didn’t say anywhere that there should be a hard border, did you?”

Johnson: “No, no, no. And both Michel Barnier and the Dublin Government and London and the Prime Minister have said there is no need for a hard border. As you know Jon Thompson, head of HMRC, has said the same.

“So that issue of how to get the maximum facilitation provisions in, so as to deliver frictionless trade and yet for the whole of the UK to come out of the Customs Union and out of the Single Market – that solution is eminently deliverable, but the time to deliver it and the time to elaborate those provisions is during the IP [Implementation Period], during the period up to the end of 2020.”

ConHome: “Just on the backstop, what did you agree to last December?”

Johnson: “Well last December what the Joint Report said was that failing all other solutions Northern Ireland should remain in alignment for goods and agrifoods. But it was nothing like as predatory upon Northern Ireland as the backstop, because it certainly didn’t say, for instance, that the EU could veto the UK’s exit from that arrangement.

“Indeed that arrangement, the Joint Report of 8th December, was presented to all Government ministers by Number Ten as being a mere form of words, this is just language that we need.”

ConHome: “Do you feel you were misled about that?”

Johnson: “Yes I do, and I think colleagues would say the same.”

ConHome: “The famous Michael Gove article in The Sunday Telegraph, in which it’s claimed, briefed by Downing Street, that the backstop wouldn’t really have any force.”

Johnson: “That’s right. No we were given to understand – and I remember going over to Number Ten, because my lawyers in the Foreign Office were extremely agitated about it, because contrary to popular belief, there are plenty of people in the Foreign Office who are very excited by the idea of Brexit and having an independent foreign policy and doing things differently, and they certainly were keen to vindicate the law as they saw it and to make sure we didn’t make any mistakes.

“And that provision in the 8th December Joint Report was something they were very concerned about. And I was very concerned about it and had a lot of argument about it and a lot of toing and froing.

“I think it was the evening of the 7th, it was right at the last moment, and I was holding out and holding out, and then I was summoned across to see the Prime Minister and her Chief of Staff.

“And we sat in the little office there, and you know, I made my points. The problem with that original agreement in the Joint Report was that it seemed to me to undermine our ability to go to no deal, or to walk away from the talks, because le cas échéant  [if need be] as they say in Brussels, if you can’t do this, then you do this.”

ConHome: “Did they tell you ‘nothing is agreed until everything is agreed’?”

Johnson: “That is exactly what they said. So we were told this is entirely provisional, it’s a stop-gap, it’s a piece of lumber that is being used to prop up the building until a proper pillar could be constructed.”

ConHome: “By the way, no one thought at that point of bringing in the then Attorney General?”

Johnson: “We weren’t aware of any legal advice at all at that stage. The crucial thing to remember now is that it’s very convenient for those who are still in Government to say the real mistake was made back then.

“But actually that’s not true. Because it was perfectly open to the Government at that stage and beyond to say ‘No, no, no, we want a different approach’, and it was only on that basis that the thing could be changed.

“And I was told the priority was to go for options A and B. Option C, you’ll remember from the Joint Report, ‘No, no, no, we’ll never go for that – we’re just going to put that in so we can get on to the next phase – so the Prime Minister can get an agreement at the summit.’

“That was what it was. So that was done in total bad faith. The story of the next six months or so, in which I remained in office, is a story of trying to get things back on track.There was a great struggle going on at the centre of government between what I then called the Forces of Remain, and those that thought we really had to deliver on the verdict of the people, but also, and this is the crucial thing for Conservatives, deliver on our manifesto.

“And if you look at our manifesto in 2017, imperfect document though it is, or was, or turned out to be, insofar as it spoke of our membership of the EU and of Brexit, it was very clear that we were coming out of the Customs Union, we were coming out of the Single Market. It could not have been clearer.

“And what we were doing, and what I continue to do, by what I’m proposing, is to defend what every Tory was actually elected on.”

ConHome: “If she loses this vote, which some are saying she might well do by a very large margin…”

Johnson: “Well I wouldn’t want to exaggerate that. One would be enough.”

ConHome: “Even if it’s by one, can she really go off to Brussels as though nothing has happened, and shouldn’t she resign?”

Johnson: “No. The issue I want to focus on is what I think the Government should do irrespective of whatever she decides to do.”

ConHome: “Well it can’t exactly be irrespective of her. She’s got to agree with what the Government is doing. You’re suggesting she might resign?”

Johnson: “What she needs to do, or what the Government needs to do, is go back to Brussels and make it very clear that Parliament has not accepted the Withdrawal Agreement, and that it’s time for the backstop to come out, and time to negotiate a free trade agreement, to use the IP to do that.

“The idea of handing over £39 billion of taxpayers’ money now, in advance of the final deal, is very, very strange, and I think actually a complete mistake. And so I think what we need to do in the next phase is to say look, this cash could be available at the end of negotiations if you are supportive. Because at the moment they have not been supportive. They have been massively obstructive.

“This deal is a disaster for our country. It basically means the EU can blackmail us into any terms they like in the course of the negotiations on our future. Unless every single EU member state agrees to the terms of the new relationship, they can keep us in the backstop.

“And by being in the backstop, we are confined to the Customs Union, so we can’t do any free trade deals. It’s nonsense to say we can do free trade deals. The Government must stop saying this. You can’t set your own tariffs.

“Secondly, and perhaps even more destructively, we would be locked in regulatory alignment with the whole of the EU goods and agrifoods acquis, and environment, and social policy, unless we were willing to split up the Union, and split Northern Ireland away from Great Britain.”

ConHome: “Do you think we learned anything new from the Attorney’s legal advice on that?”

Johnson: “What it made clear is quite how pessimistic he was about our ability to leave unilaterally.

“People need to understand that there’s a reason why this backstop exists. It’s not just that it’s been invented in Brussels or by the Commission. The manacles have been co-forged, if you like, by us. We have decided to collaborate in our own incarceration. Like Charlie Chaplin in Modern Times, I don’t know if you remember, he has the chance to leave prison and he decides to stay.

“The whole Northern Ireland issue has been a very convenient device for the very large numbers of people in the Treasury and BEIS [Department for Business, Energy & Industrial Strategy] and everywhere else who basically believe we should stay in the signature EU institutions.”

ConHome: “Just a moment ago, you veered between saying what ‘she’ and ‘the Government’ needs to do next week, which suggests you think she may not be there next week.”

Johnson: “No, I’m sure she will be there next week.”

ConHome: “You’ve not sent in a letter?”

Johnson: “You can ask me until you’re blue in the face but I’m not going to comment on epistolary communications of that nature.”

ConHome: “You’re not saying you haven’t?”

Johnson: “I’m not going to comment on my private correspondence, nor would you expect me to.”

ConHome: “Will you stand if there’s a vacancy?”

Johnson: “This is a question of changing the policy, and that’s what I have been working to do since I resigned in July, and I think, though I may be wrong, we’re on the verge of success. I really, really think that after months and months and months, people are really starting to get it.

“Talk to colleagues now, very, very good and reasonable people, Mark Harper, David Evennett, good, good colleagues of mine, Hugo Swire, the centre of gravity of the Conservative Party, can see that this thing doesn’t work.”

ConHome: “Jo Johnson.”

Johnson: “Jo Johnson and many others.”

ConHome: “We have to ask you the pining for the fjords question. Because it is being put around that this is a divided country, and what is required is a healer to come forward and march us all into the EEA and solve the problem and bring everyone together. And this person can be Boris Johnson.”

Johnson: “Well I think there are two traps in that brilliant question, which I’m going to try to steer round. The first is that the EEA just doesn’t work for us. The problem with it is that you’re even more of a rules taker than you are under this deal.”

ConHome: “It’s worse, in your view.”

Johnson: “Yes. Norway plus the backstop is worse. Why would you do that? It makes no sense at all.

“You could imagine a different arrangement than the current IP [Implementation Period]. The current IP is extremely humiliating. We are just straight vassals for the two years. You could imagine that we had a limited period of EEA-style existence.”

ConHome: “This is Norway to Canada?”

Johnson: “It doesn’t really work. You’d have to negotiate your way in, and then you’d have to negotiate your way out. I don’t think it’s really a runner.”

ConHome: “People like Nick Boles have been speaking in favour.”

Johnson: “I know, but they don’t really want to go forward to the Canada solution.”

ConHome: “The standard objection to this is that this is all sound and fury from Boris, because they’re not going to give us Canada unless Northern Ireland is severed off.”

Johnson: “They’re not going to give us anything until we are treated as sovereign and equal partners in this negotiation. And so far we’ve given no indication that we are willing to do the thing that is necessary for them to take us seriously.

“The second thing without which no negotiation can be successful is to do what we’ve totally failed to do over the last two and a half years, and that is to get ready to come out on WTO terms, and genuinely to be able to offer the EU a solution that they might not like, but will make them sit up and take notice.”

ConHome: “Isn’t it the fact that the Government has sabotaged its own option in this regard. The saying used to be that no deal is better than a bad deal. But the Chancellor was in front of a committee on Wednesday saying it’s all very difficult. They’ve had two years to prepare for this.”

Johnson: “It’s unbelievable. It’s a kind of S&M approach to Government. What perversion is it where you want to be locked up in chains?”

ConHome: “We’ll look it up.”

Johnson: “There is a general desire to prove that it’s impossible to get out. Good economic news was always greeted in the Treasury with remarkable distaste.”

ConHome: “Shouldn’t there be a Chilcot-type inquiry into the Government sabotaging its own policy and spending a massive amount…”

Johnson: “Before we go to inquiries let’s get this thing right. We’ve got a chance to do much, much better. And being prepared to go to WTO is absolutely crucial.

“All the anxieties about the insulin and car parts at Dover, that is a problem that is supposed to be occasioned by what the French might do.

“But you have to ask yourself, looking at what is happening now in France, and looking at the economic state of the Pas de Calais region, and the pressures on Macron, is he really going to tell the burghers of Calais that they are going to be deprived of UK traffic in the future?

“Because I tell you what we can do. There’s absolutely no reason why we shouldn’t start diverting stuff to Zeebrugge and Ostend and the Hook of Holland and indeed other ports.

“There could be real losers if the French Government decided to be difficult. And in my experience of watching public health scares, public logistical scares, millennium bug type things, is the longer business and people have to think about the implications of something, the more super-masticated the problems become, and magically you find that when you actually reach the great deadline, where the great disaster is supposed to happen, it mysteriously fails to happen.

“I don’t want to pretend to the public there would be no disruption at all. I don’t want to pretend there would be no challenges at all. But what people I think want to see is a bit of gumption from this country and a bit of willingness to tackle those problems, and a bit of leadership. And I think people are fed up of being told their country can’t do something and we’re all incapable of sorting out these logistical problems.”

ConHome: “What’s the Johnson family Christmas going to be like, when you’re sitting round the table with Jo, and your sister, and Stanley, all these Remainers.”

Johnson: “Glutinous harmony. The feast of reason and the flow of soul.”

ConHome: “Just a last thing. Hasn’t a symptom of the problem throughout been as follows: Boris Johnson stands for the leadership – Michael Gove withdraws his support; Chequers – Michael Gove comes in on the side of the Prime Minister, it’s apparently quite decisive or influential; Michael’s winding up for the Government on Tuesday, we hear. Isn’t he somewhere near the heart of this Government’s problems?”

Johnson: “That is a question you must really direct at my friend Michael. How can I put it tactfully? I do think that Dominic Raab took the right decision.”

Brexit will put an end to the Delors phase in European history

Everyone remembers Eliot’s famous ending to The Hollow Men: “This is the way the world ends/ Not with… etc.” We should also recall the beginning: “We are the hollow men/ We are the stuffed men/ Leaning together/ Headpiece filled with straw. Alas!” The poem was written some ninety years before the Brexit negotiations. But you’d […]

The post Brexit will put an end to the Delors phase in European history appeared first on BrexitCentral.

Everyone remembers Eliot’s famous ending to The Hollow Men:

“This is the way the world ends/ Not with… etc.”

We should also recall the beginning:

“We are the hollow men/ We are the stuffed men/ Leaning together/ Headpiece filled with straw. Alas!”

The poem was written some ninety years before the Brexit negotiations. But you’d think he was an observer scribbling in the margins.

Whatever the fruit or the fate of those negotiations, it will not be the end of the world. Nor will it be, to use the notorious, triumphant phrase on the collapse of the Soviet Union, the end of history. It might, though, be the end of a phase in European history. If we use this moment strategically, we could make it the end of Brussels’ EU. If we do not, it will certainly be the end of a historic opportunity, the sort that only lands in a nation’s lap about every fifty years.

“Historic” is an over-used word, especially by lacklustre politicians who wish to divert attention from their lack of lustre. At this point it has meaning. All history goes by phases; or in Europe’s case (to use the favoured currency of Brussels) “chapters”. This one has been rather long: first Monnet, then Delors, now Barnier. All French; all socialist, centralising and protectionist both by instinct and governance. You can see it from their point of view. The institution (EEC, EC, EU), graven in their image, must be preserved. And they have won the negotiation. Britain, craven in its image, has ceded. So far.

You can also see it from the point of view of the UK civil servants. Distraught at the prospect of no more (Treaty of) Roman governance, they are like the bath attendants at Aquae Sulis seeing the disappearance of their friends and masters in 400AD. All is lost. Who now can mend the hypocaust?

Until this point, Britain has consigned itself to being on the back foot in the negotiations because of the hypnosis of compromise. No team, however brilliant, can hope to win if it throws all its resources into defence and forgets its strike capacity. There is one more “game” to be played out: the charade of a deal, that no-one favours, being put to the House of Commons. If it is approved, we remain tied to the EU; if it fails, we have policy vacuum.

Our “Brussels correspondent” continues:

Had they deceived us,
Or deceived themselves, the quiet-voiced elders,
Bequeathing us merely a receipt for deceit?
The serenity only a deliberate hebetude,
The wisdom only the knowledge of dead secrets
Useless in the darkness into which they peered
Or from which they turned their eyes. There is, it seems to us,
At best, only a limited value
In the knowledge derived from experience.
The knowledge imposes a pattern, and falsifies,
For the pattern is new in every moment
And every moment is a new and shocking
Valuation of all we have been.

There is an alternative staring us in the face. The “new and shocking Valuation” comes from the unlikeliest quarter. For centuries, Ireland has been “a problem”. Now, at last, it provides the solution. We should forget backstop and think, instead, front foot.

The sequence is as follows. The integrity of the EU requires preservation of the Single Market. That requires those outside to be subject to a tariff regime. Without a common external border, such a regime cannot be enforced. No one has the wish, let alone the capability, to re-impose a physical border across Ireland. No border then, no enforceable tariffs. No protected Single Market, no protectionism. Free trade. When M. Barnier, or some other official, is presented with this they will ask: “What exactly are you proposing?” The answer is that we are no longer proposing, as in negotiation. We are presenting, as in reality.

The only missing ingredient in the above sequence is the look on the Commission’s face when they realise that Brexit does, after all, mean Brexit.

It does not stop there. Even more important than what this does for the UK is what it does for Europe. Unable any longer to charge the more competitive and therefore more prosperous Member States for the privilege of “free” trade, unable to impose rules, without either budget or raison d’être, the Commission’s back is broken. The Delors phase in European history is over.

This does not mean that we become any less European. We and others will continue to make use of and benefit from the networks and patterns of collaboration that have been embedded and developed across the continent since the end of the 1940s: the commercial, academic, security, scientific, standards, values and human links that will still bind us together. The difference is that the terms will no longer be set by officials at once unelected and unauditable.

It is not a case of Britain removing itself from Europe; rather, removing Brussels from us – and those we will galvanise to join us in setting about, and leading, a new chapter of European history.

The post Brexit will put an end to the Delors phase in European history appeared first on BrexitCentral.

We must decouple the Irish border issue from UK/EU trading relationship

In my last BrexitCentral article, I posed the rather obvious question to the EU: “Would you rather have a no-deal-style Irish border with or without £39 billion?” That choice, which Brussels seems not to have understood, has now come into sharp focus and it seems now that the answer is likely to be presented to them […]

The post We must decouple the Irish border issue from UK/EU trading relationship appeared first on BrexitCentral.

In my last BrexitCentral article, I posed the rather obvious question to the EU: “Would you rather have a no-deal-style Irish border with or without £39 billion?” That choice, which Brussels seems not to have understood, has now come into sharp focus and it seems now that the answer is likely to be presented to them as a fait accompli.

Aside from the niceties, the fundamental objection to Theresa May’s proposed deal is the potentially perpetual lock-in to a customs union. The “joint committee” means of course that it will be for the EU to decide when or whether we can leave. It is unheard of, and utterly unacceptable, for anyone (and certainly any country) to be potentially bound in perpetuity by an arrangement that they have no ability to terminate.

In the political declaration – i.e. informally – the EU says that the Irish backstop, separating Northern Ireland from the UK by remaining in the customs union and adhering to the EU rule book, might be avoidable by either a technological solution or an appropriate trade deal. But it’s quite clear that the only trade deal that will satisfy them with respect to keeping the Irish border open is one that keeps the whole of the UK in the customs union. As a result, the UK would not be able to enter into global Free Trade Agreements (FTAs). That is precisely their desired outcome, so they are unlikely to show any enthusiasm for a MaxFac solution. At the same time, with £39 billion committed unconditionally, the UK will have absolutely no leverage.

We have no need to wait for proof of that. At the recent EU summit, Emmanuel Macron warned that if, in future talks, the UK is unwilling to make compromises over fishing, the negotiations for a wider trade deal could be slowed down, which could lead to the last-resort backstop plan coming into force.

So it follows, as night follows day, that we could be – if not forever then at least for many long years – in either a temporary or permanent customs union with the European Union. To avoid the Damocles sword of the backstop from destroying our negotiating position, we must decouple the Irish border issue from the trade negotiations. How to achieve that is by using no deal as the bridge to the arm’s length negotiation of the new relationship.

Parliament now seems very likely to reject the proposed deal. So in the absence of new legislation, therefore, we will leave on 29th March 2019 with no deal (as explained by Stewart Jackson on BrexitCentral here)So what are the implications of that?

EU short-term trade: We would have to trade with the EU on WTO terms until a free trade deal can be agreed with them. This is undesirable but not catastrophic. 39.3% of UK imports and 33.1% of exports are conducted under WTO rules with non-EU countries. Most countries in the world (111 out of 195) trade with the EU under WTO rules, including China, India, Russia, the United States and Singapore. Despite tariff and non-tariff barriers, Britain’s trade with non-EU countries is in surplus and growing, while our trade with the EU is in deficit and shrinking.

If the EU imposes a 10% tariff on our exports and we tax their imports into the UK at 10%, prices go up to the extent that not offset by significantly lower world prices than EU prices for food and commodities. 10% tariff provides a revenue boost to HMRC, to be spent to our benefit. Exports are harder but offset by a fall in sterling that boosts exports while making imports more costly – no bad thing to help rectify our appalling adverse EU balance of trade.

Meantime, domestically, the UK can think about diverging from some EU regulations. Clearly, businesses exporting to the EU will have to comply with EU product standards and trading terms but the burden of those standards need not necessarily be imposed in the 94% of businesses, representing 88% of GDP, that trade only domestically or with non-EU countries. (CETA clearly does not require Canada to impose all 100,000 pages of EU rules and regulations upon every Canadian business.)

EU long-term trade: Michel Barnier himself said, in his speech announcing the deal, that agreeing a free trade deal with the UK should be much quicker and easier than FTAs with other countries as we start from a position of complete alignment. And we have in CETA, the EU/Canada FTA, a ready-made template for the trade agreement between the EU and the UK. That is not to say that the negotiations will be easy if, for example, the EU’s demands include full access to UK fisheries, which is why it is so vital that we can back up a tough stance with a £39 billion carrot.

Friction: Queues at Dover would be bad news but friction can be minimised, for example, by trusted-trader status for regular just-in-time supply-chain consignments and number-plate recognition that opens barriers automatically on designated trusted trader lanes etc. There are four months to take steps to increase capacity (a job that should have been started two years ago), for example by establishing an inland port and protected route to the seaport.

The recent paper published by Global Britain and the European Research Group, Fact – NOT Friction: Exploding the myths of leaving the Customs Unionshows that “fears are driven by a series of myths about how customs procedures work”.

Global trade with EU partners: Much capital is made of the fact that we currently benefit from EU FTAs that allow us to trade freely with more than 40 non-EU countries. This is true but they include places like Guernsey, Guadeloupe, San Marino, Büsingen am Hochrhein, the Falklands and South Georgia. The EU has trade agreements with only three of the UK’s principal trading partners – Switzerland, South Korea and Canada. People love to proclaim the fact that “a single trade deal can take years or decades to agree” with the clear implication that that is bad news. It is not. On the contrary, for countries with whom the EU has existing FTAs, it is fantastically good news. It stands to reason that, save to the extent that the parties wish to change anything, all that is needed is to copy the current FTA between the EU and that country, change the name of the contracting party and sign it.

New global FTAs: We would be able to negotiate and enter into global FTAs at the earliest opportunity. Very many countries have expressed a desire to do so – Australia, Argentina, Brazil, Canada, Chile, China… and I’m only up to the Cs.

Global trade before new FTAs: Meanwhile we will no longer have to impose the EU Common External Tariff on imports from the rest of the world: 15.7% on animal products, 35.4% on dairy products, 10.5% on fruit, vegetables and plants, 12.8% on cereals and preparations, 23.6% on sugars and confectionery. 19.6% on beverages and tobacco.

Non-trade issues: Many non-trade issues are addressed, directly or indirectly, by the 585-page draft Withdrawal Agreement: citizens’ rights, EU access to the City, defence and international affairs, aviation, Horizon 2020 etc etc. If the EU became obstructive over many of these, it could present severe problems. As the issues have, presumably, been agreed because they are to mutual advantage, it is hard to see why the EU would consider it to be to its benefit to behave aggressively (other than to prevent the UK from leaving).

The Irish border: As Andrew Lilico pointed out on BrexitCentral, the border between Northern Ireland and the Irish Republic has some 275 crossing points. The border separates regulatory, tax and legal regimes that are very different and is controlled via a combination of administrative cooperation, whistle-blowing, auditing, site raids by customs, tax and regulatory enforcement officials. There are – currently – occasional random spot-checks on roads leading up to and at the border, as well as cameras and other physical infrastructure at the border.

Lilico also noted some UK press discussion suggesting that the EU would impose stop-and-check controls at the border, like those between the EU and Turkey. Such an attempt is certainly possible, but seems highly unlikely because of the scale of the task (275 crossing points, more than all other land crossing points into the rest of the EU from other countries); and because the Irish Government claims that the EU has given undertakings that no such controls would be introduced; and because Ireland seems unlikely to allow them to be imposed, even if the EU so desired.

There has been much talk of technological solutions that will take years to develop but the European Research Group’s paper, The Border between Northern Ireland and the Republic of Ireland post-Brexit demonstrates how each of the issues can be addressed without the need for technology not yet invented. The Irish Government and others dismissed the paper immediately as “pure fantasy”, apparently because of concerns about ability, without either a hard border or ‘new technology’ (what kind of new technology?) to prevent smuggling or the import of non-compliant goods into the EU. At present, the Republic of Ireland physically inspects only 1% of imports, so 99% of contraband and non-compliant goods are already getting through!

Some 33% of Northern Ireland’s goods exports (all sales outside the UK) went to the Republic of Ireland in 2016 and were worth around £2.7 billion (€3.1 billion). The EU’s imports from the rest of the world amount to around €172 billion and the EU’s GDP was about $17,300 billion (€15,200 billion) in 2017. In the unlikely event that 25% of all goods transported across the Irish border was undetectable contraband or non-compliant goods (pretty unlikely that), this would represent 0.5% of all imports into the EU and 0.005% of EU GDP. But it wouldn’t be 25%, would it? Who is being fantastical here?

As the ERG paper says, “no border is 100% secure against smuggling. Smuggling takes place across EU borders in Eastern Europe and the Mediterranean. Moreover, it occurs at present across the border between Northern Ireland and the Republic of Ireland. Drugs, fuel, tobacco, cigarettes and other illegal goods have been smuggled across the Irish border since the 1920s but cross-border co-operation is already used to combat criminals. The PSNI, the Garda Síochána, customs authorities and law-enforcement agencies co-operate to counter this trade. Law-enforcement agencies on both sides of the border co-operate to suppress smuggling without anyone suggesting that border posts and checks would make their efforts more effective.” And there are better ways to identify non-compliant goods than by random 1% or 3% checks at the border.

The latest ERG paper, Your Right To Know – the case against the Government’s Brexit dealextols the virtues of ‘A better alternative – a “Super Canada” Free Trade Deal’, but misses the point. Yes, Canada-plus would be a million times better than the Chequers plan and the currently proposed Withdrawal Agreement but it does not address the Irish border issue. Although Canada-plus has been offered several times by the EU, they offered it only in combination with the backstop of Northern Ireland being separated from the rest of the UK.

I would therefore say that the two things – the Irish border issue and UK/EU trade relationship – need to be decoupled. We should leave with no deal and confront the EU with the Irish border problem in March 2019.

Thereafter there will still be issues over the nature of the trade deal – whether it will be close to Canada-plus or will have to be more limiting because of the EU’s unwillingness to contemplate anything that might allow the UK to become competitive. We would need to weigh up the benefit of a UK/EU FTA based on a customs union and common rule book against the known drawbacks – EU regulations imposed on the 94% of UK businesses, representing 88% of GDP, that trade only domestically or with non-EU countries; no say in determining future regulations or trading standards; no ability to innovate; no ability to negotiate trading standards as part of FTAs; and maybe, if remaining in the customs union, no ability to enter into global FTAs at all.

By decoupling Irish border issue from UK/EU trade relationship, the Irish border will no longer be the overriding, determining factor. It will be for the UK to decide what is in its best interests, like the other 40 countries, large and small, that have entered into widely varying trade arrangements with the European Union

And £39 billion retained will, without doubt, focus the minds of those on the other side of the negotiating table – but the £20 billion or so of net contributions that they would have received during the two-year transition period will have been irrevocably lost.

We now learn that the Treasury predicts that the country will suffer £150bn in lost output over 15 years under no deal, with Theresa May’s plan costing in the region of £40bn.

This latest manifestation of Project Fear has to be the ultimate insult to the nation’s intelligence.

With or without Mrs May’s Withdrawal Agreement, we will have the ability, within 2 years or more, to conclude a free trade deal with the EU – without a shadow of doubt a far more favourable one if we are able to negotiate while holding out a £39 billion carrot and without the Damocles sword of the Northern Ireland backstop suspected over our heads. And, dependent on how closely we decide to tie ourselves to EU standards, the ability to conclude FTAs with other countries.

The only counteracting drawback of no-deal is the short-term damage (and, conceivably, any irrecoverable long-term damage) to UK/EU trade as a result of the short-term disruption arising from the loss of the transition period. But we’d start with a saving of £20 billion or more from net contributions to the EU over two or more years. And benefit from earlier freedom to deal with our fisheries and agriculture (and, and… need I go on?)

No doubt the Treasury will, as usual, refuse to disclose its ridiculously biased assumptions.

The post We must decouple the Irish border issue from UK/EU trading relationship appeared first on BrexitCentral.

If Theresa May wants to solve the ‘backstop’ crisis, she needs to talk to tech

The question of the Irish border has been causing problems for the Government and with the proposed Withdrawal Agreement causing serious concerns amongst Brexiteers, the DUP have signalled their refusal to go along with Mrs May’s plans. This so-called ‘backstop’ is one which is baffling the tech industry: a problem of the Prime Minister’s own […]

The post If Theresa May wants to solve the ‘backstop’ crisis, she needs to talk to tech appeared first on BrexitCentral.

The question of the Irish border has been causing problems for the Government and with the proposed Withdrawal Agreement causing serious concerns amongst Brexiteers, the DUP have signalled their refusal to go along with Mrs May’s plans.

This so-called ‘backstop’ is one which is baffling the tech industry: a problem of the Prime Minister’s own making for which she has not sought the advice of experts in solving.

There is no reason why the Government should accept the EU’s initial proposal on leaving the Single Market to have a border in the Irish sea, just as there is no need for the tail to wag the dog and the whole of the country stay in a Customs Union, thanks to the improvements in technology.

But it seems that technology is a dirty word in these negotiations, if it has been seriously considered at all.

In September it looked like there may be some kind of solution, with reports that the EU’s Chief Negotiator Michel Barnier was working on a new “protocol” that would use technology to minimise checks.

But a glance below the headlines showed that this development was less about 21st Century technology and more about mimicking a 1960s supermarket.

You cannot run next generation trade platforms using technology that was designed before we even put a man on the moon, but that was their suggestion.

It is astonishing to think that in this age of unparalleled technological development, our political leaders seem to think that technology from the 1950s is genuinely the answer.

But what should be more astonishing is the apparent refusal of ministers to engage with people who could help them – should they want that help.

I wrote to a number of MPs and ministers, offering information on what was available because, although I do not believe anyone has the product ready to go, I genuinely believe that technology can ensure we have as frictionless trade as possible and we can improve the processes used at other ports in the UK.

When companies meet with potential clients, they listen to their problems and work out what is needed. This has been what is missing in this scenario: what we have had is a few journalists who appear to lean towards Remain responding to initial comments, such as those from Philip Hammond at the Conservative Party conference, saying ‘that won’t work’.

How do they know? Do they have information that the rest of us in the industry, including those who have worked on solutions for ports including Rotterdam and Eindhoven, don’t have?

I believe we have the solution to the problem here in the UK. They are more likely to wear jeans and trainers than suits when they go to work in their distinctly un-corporate office space in Shoreditch or Bristol – and their sector is growing 2.6 times faster than the rest of the economy. Bright young businesses, with their knowledge of smart contracts, distributed ledger technologies and blockchain are much more likely to come up with answers than any number of committees where they still print out pages of documents and agendas instead of looking at them online.

We already have this technology embedded in luxury goods and even designer shoes: tech which will track and trace goods from source to eventual destination with the minimum need for human intervention. In short, we have shoes and bags more technologically advanced than measures being seriously considered by civil servants and negotiators.

Businesses which may wish to trade across borders won’t see the point of backdating their digital processes to be part of some archaic ‘trusted trader’ barcode system. What they would engage with is an innovative system which could improve the current procedures at Dover and Felixstowe and update the SPS protocols at the same time.

I am sure even the most traditional politician has heard of cryptocurrencies. Its security is based on blockchain, which allows us to build an immutable, hack-proof set of data. Distributed across the blockchain, the data is impossible to erase or spoof, creating a highly reliable point of ‘trust’ – a reference point which can be used with confidence and considerably cheaper than these latest ideas.

The industry is waiting for the call from No. 10: we’re here to help.

The post If Theresa May wants to solve the ‘backstop’ crisis, she needs to talk to tech appeared first on BrexitCentral.

Anthony Browne: It may take two heaves to achieve a proper Brexit. But accepting the deal – for now – is the best way to get there.

It is much preferable to pushing the country to the abyss, which will jeopardise the Conservative Party, the economy and Brexit itself.

Anthony Browne is former director of Policy Exchange and former Europe editor of the Times.

From local radio to national broadsheets, from Brexiteers to Remoaners, the critics of the withdrawal agreement have been as articulate as they have been passionate. There are many concerns, and I suspect the Prime Minister shares some. It has been described as “dead in the water”, because the chances of getting it through Parliament are so slim.

But even those wanting the hardest of Brexits should hold their nose, and support the agreement. They are far more likely that way to get what they want than by bringing it down. Their understandable fury at the prospect of becoming a “vassal state” is blinding them to the ugly political mood in the UK, how that will fundamentally change after Brexit – and that the agreement can be rewritten later.

If the deal is rejected, it brings the current political chaos to a new fever pitch. Uncertainty about what happens when we leave the EU is likely to be compounded by a bitter leadership battle that risks tearing the Conservative Party apart.

The political maelstrom is already causing almost palpable fear among the electorate, with plunging support for the Tories. Brexit will not be a thing of liberation and inspiration, but a byword for political vandalism.  The chaos is leading to declining support for Brexit, and increasing support for a second referendum. Some Remainers want the turmoil because they see it as the most likely way to stop Brexit. You can easily see how that can happen, starting with a request for an extension to Article 50. And if Brexit does happen, it might happen in the worst way – with both no deal and limited planning for no deal – making turmoil far more likely. Corbyn is reported to want this, as he is convinced it will destroy the Tories, lead to a general election and hand him the keys to Number 10.

But what if the deal – with all its drawbacks – is passed? What we do know for certain is that Brexit will actually happen on March 29th. We will have left the EU (at least in name), and then:

  • There will be limited economic turmoil, as most EU rules affecting trade will still apply. This will massively calm public nerves about Brexit. Project Fear will be finally killed off.
  • The campaign for a second referendum to stop Brexit will have to stop in its tracks because Brexit has happened. It will have to transmute into a campaign to rejoin the EU, which is a much more difficult and longer-term game, especially if Brexit isn’t associated with economic turmoil. I suspect it will largely dissipate.
  • Work on the positive aspects of Brexit – such as developing our own agricultural and fisheries policies – will shift public focus to the opportunities. Support for Brexit will rise.
  • The Tory Party can then in its own time decide who it wants to lead us into the next election. It can do so in a calm and considered fashion, rather than against the background of political crisis, and it can do so without being accused of recklessly bringing the country to the abyss
  • If the Party choses a new leader, and the new leader doesn’t like the withdrawal agreement, then they can ditch it.

This last part is the most important to understand. The UK would be unilaterally ripping up part of its treaty with the EU. International lawyers – the ones normally interviewed about this – absolutely hate such an idea. It risks damaging our reputation as a trustworthy country. It risks a backlash from the EU. But unique times can require unique actions. It is absolutely possible to tear up international treaties. Donald Trump is making a habit of it.

It would clearly be controversial, but it would have none of the passion of the current crisis. It would not be about something as emotive and existential as membership of the EU. I cannot see mass marches by people opposed to changes to the Withdrawal Agreement.

It is not unprecedented. The EU often shows great tolerance for its members being in flagrant breach of their treaty obligations. Sweden is obliged by treaty to join the Euro, but has refused to do so after it was rejected in a referendum. Sweden is permanently in breach of its EU treaty, and the EU hasn’t even protested. Many of the Eurozone countries, including France, have been in breach of their commitments to run balanced budgets.

The two main questions are: how could the UK ensure a stronger negotiating position; and what would the reaction of the EU be?

The UK could strengthen its negotiating position by announcing it will unilaterally disapply the parts of the Withdrawal Agreement it doesn’t like in one year’s time, giving a precise date, and then energetically and publicly plan for that, such as introducing new customs controls. The bits it might unilaterally disapply include the customs arrangement, and the payments to Brussels. At the same time, the UK could say it will immediately stop applying any new EU rules, and start enthusiastically negotiating trade deals with third countries.

The UK would have to make clear it is totally happy to walk away, and revert to WTO rules with no deal with the EU. In all negotiations, you have to establish what your walkaway position is, and then make clear you are comfortable with it you’re your negotiating strength it almost zero. There will not be public panic, because Brexit itself will already have actually happened. The debate over whether Brexit should happen or not will be over, and the national political mood will be much calmer. There could be widespread public support for insisting on a fairer agreement.

And how will the EU respond? There is actually surprisingly little they can do. Normally when countries breach its treaties, the EU threatens to fine them, as it recently has with Italy, but since we will not be in receipt of any money from Brussels they will not be able to. They could threaten to disapply other parts of the withdrawal agreement which we want, such as security co-operation, but that would also harm them, and it is certain when things have calmed down that such “win-win” co-operation arrangements will resume one way or another. They could threaten to impose trade sanctions on us, but given they export far more to us than we do to them, it would hurt them more.

EU politics may also be more helpful. Michel Barnier would be gone, Juncker will be heading for the exit, and there will be a new European Parliament with more populists and fewer federalists. A new generation of EU leaders could be sympathetic to the unfairness of insisting that a country has to accept regulation without representation, and cannot escape a treaty it doesn’t want to be in.

It won’t be easy, but it is doable. It may take two heaves to achieve a full Brexit. But that is much preferable to pushing the country to the abyss, which will jeopardise the Conservative Party, the economy and Brexit itself.

Shocked as I am to say it, there does appear to be an establishment conspiracy against Brexit

Some months ago during a meeting of the European Parliament’s Conference of Presidents – which I sometimes attend as a substitute for EFDD Group Leader Nigel Farage – there was a report back on Brexit talks by the Parliament’s Brexit steering group. One member hinted that keeping open routes to get the UK back into […]

The post Shocked as I am to say it, there does appear to be an establishment conspiracy against Brexit appeared first on BrexitCentral.

Some months ago during a meeting of the European Parliament’s Conference of Presidents – which I sometimes attend as a substitute for EFDD Group Leader Nigel Farage – there was a report back on Brexit talks by the Parliament’s Brexit steering group.

One member hinted that keeping open routes to get the UK back into the European Union had been made a very high priority by both the EU and UK sides in the talks. At the time (pre-Chequers), I thought this to be something of a long shot. But it lodged in my mind nonetheless.

Then I heard something similar just two weeks ago from another senior EU source. This time the wording was more explicit and the concept far more developed. The plan was to get the UK back into full EU membership in time for the European Parliamentary elections of 2024, meaning we would have only technically been outside for one term, 2019-2024.

Further comments suggested that a “purgatory backstop” would be used to persuade the UK to reapply for membership rather than languish in the equivalent of EU solitary confinement on a diet of bread and water. Far from having left the prison, we would have to beg to go back on the wing and probably only get accepted on inferior terms – no budget rebate, fewer national vetoes – and possibly an undertaking to be absorbed into the euro and Schengen in due course too.

Our fate would also serve as a perfect example to other troublesome member states – especially Italy and the smaller countries of central Europe – as to what would unfold when a country challenged the writ of Brussels.

Now, in general, I do not go a bundle on conspiracy theories. I am not one to blame unexpected political developments on Bilderberg Group meetings or the like. But when the issue at stake is as momentous as the future path of the United Kingdom within the international order and when a tightly-knit establishment is of one mind and yet a majority voted the opposite way, then means, motive and opportunity all point to the possibility of an organised and sophisticated subversion of the wishes of the people.

When someone as calm, analytical, well-connected and balanced as Michael Portillo declares, as he has, that there has been a conspiracy against Brexit then one’s mind is certainly opened up to that possibility. The constant stream of pro-EU British politicians who have been over to Brussels for unofficial private talks with EU chief negotiator Michel Barnier merely strengthens the suspicion.

And further developments in recent days have convinced me that there is now a private understanding between leading figures in the UK political and civil service establishment on the one hand and the Brussels elite on the other that a preferred pathway to the UK rejoining is now in place.

A key moment came when Barnier raised at the weekend the prospect of an extension to the so-called “transition period” during which Britain sits as a de facto EU state – subject to all the controls and policies of the EU but without political representation – until the end of December 2022. That would mean moving into the indefinite backstop, with no unilateral right to leave it, at the start of 2023.

This timing is key because it will mean the relationship between the UK and the EU will not have been settled and will dominate a British general election that must take place by the middle of 2022. In such an election, the leading pro-EU force, the Labour Party, could blame the failure to enact Brexit and the looming purgatory of the backstop fairly and squarely on the Conservatives.

What would be more natural than for it to offer a new referendum to the British people within the first year: shall we settle into the backstop as a vassal state or rejoin the EU as a full member? In such a Hobson’s Choice referendum I doubt I would vote at all. But even I could see the logic of preferring to rejoin the EU – which a country theoretically has the right to leave – rather than being stuck in the humiliating backstop with no way out.

Up until the publication of Theresa May’s withdrawal agreement, I had always thought that one secure advantage even of Brexit In Name Only would be that pro-EU forces would have to switch from being Remainers to Rejoiners – and that given only zealots would wish to reopen this can of worms anytime soon, they would find that a very hard sell.

And yet the Remainer Theresa May has managed to create an attainable path for them by making her own version of Brexit so appalling that even Brexiteers are saying being in the EU is better.

And what serviceable proposition could the Tories put in their own manifesto at the next election to compete for votes on this dominant issue? On the working assumption that May has been succeeded either by another figure who campaigned for Remain in 2016 or a lukewarm Leaver, there is every chance that the Conservatives too would support giving the public an “emergency brake” on the Brexit process in a new referendum. After all, they would be able to point out that the referendum mandate was now six years old and that a lot of water had flowed under the political bridge since then.

What the Tories will certainly not be able to do is promise to take the UK out of the backstop and out of the customs union and into a future of new dynamic trade deals with the sunrise parts of the global economy. They will have precluded that possibility via their own undertakings to the EU during the present Parliament. They will have locked our country into a legally-enforceable trap and could only promise a credible way out of it with the goodwill and support of the European Commission and other EU institutions. And the only way the EU will ever allow us out is if we rejoin.

As Sabine Weyand – Mr Barnier’s German deputy – recently told reporters, the withdrawal agreement hands the EU sufficient leverage to ensure the UK remains in permanent high alignment with it.

So as the House of Commons’ “meaningful vote” on Mrs May’s withdrawal agreement draws near, it is clearer than ever that nobody who is sincere about supporting Brexit should have anything to do with her plan.

It will inexorably lead not to taking back control, but to a further diminution of UK national sovereignty, below the eight per cent voting weight we have in the Council of Ministers or the 10 per cent in the European Parliament to zero per cent in transition and then in the backstop.

And if we rejoin instead, we will be going back to an EU that is pushing ahead fast with setting up its own army and will have abolished more national vetoes thanks to powers that Jean-Claude Juncker has referred to as unused “treasure of the Lisbon Treaty”.

That a British Prime Minister could have played a central role in locking the UK onto such a path after having stood at the general election on a down-the-line Brexit manifesto is profoundly shocking. Her culpability is complete. Remember she went behind the backs of two successive Brexit Secretaries to make far-reaching concessions to Brussels and twice tried to bounce her Cabinet into signing up to her plans in ruthlessly plotted manipulations at Chequers in the summer and 10 Downing Street last week.

The role of the Chancellor in not only blocking most preparations for a no-deal Brexit but also organising big business warnings of Armageddon should we leave without an agreement has also been crucial. But it can now be seen that the idea he was ever being “slapped down” by a Prime Minister committed to delivering on her Brexit promises was always an elaborate con.

The only chance we now have of rescuing Brexit is if MPs vote down Mrs May’s deal and the Government is forced to switch course to preparing for a WTO Brexit (by the way, in what state are those contracts with ferry companies that we were told would need to be signed by the end of last week to make such a course viable?).

Mrs May’s threat – sometimes uttered, sometimes withdrawn – that voting down her deal may lead to no Brexit at all should not put off a single Brexiteer. No Brexit at all would force into the open the establishment conspiracy against Brexit, leave us with our 8-10 per cent residual sovereignty intact in the EU, save us a bundle of money and give us every chance of seeing a genuinely pro-Brexit Prime Minister take office with a landslide majority and on a mission to right the wrong in 2022.

Certainly a no-deal Brexit at the end of next March will now be bumpier in the short-term than it need have been had it been properly planned for over an extended period. But as one wag put it over the weekend, on 4th July 1776 the United States of America crashed out of the British Empire without a deal. And it has never looked back.

Thanks to the political venality of Theresa May, the choice facing our country is between freedom and serfdom.

The post Shocked as I am to say it, there does appear to be an establishment conspiracy against Brexit appeared first on BrexitCentral.