Alexander Stubb’s virtual job pitch

Former Finnish prime minister auditions to be EU’s next digital czar.

Technically, Alexander Stubb isn’t running for anything at the moment, but he’s still got a stump speech.

It’s all about how the lightning-speed pace of technological advancement will change life as human beings know it — indeed even change the human life form. It’s also about how EU politicians and policymakers need to race to catch up.

A former Finnish prime minister, Ironman triathlete and recent aspirant for European Commission president, Stubb is a leading prospect for a senior EU post when virtually all of the bloc’s top jobs become vacant later this year.

How convenient, then, that he sees a need for a European commissioner for artificial intelligence — possibly at first vice president level — functioning as a “digital czar” in an EU civil service fully reoriented to make technology and its implications a top priority.

For now, Stubb is back at his day job as vice president of the European Investment Bank. But his short-lived bid to become the center-right European People’s Party’s candidate for Commission president may turn out to have been an audition for something more digitally focused. His campaign speeches often sounded like TED talks focused more on technology than traditional European political issues.

“It’ll change and is changing science and the future of mankind” — Alexander Stubb

In an interview with POLITICO this week, Stubb reverted immediately to his main talking points from the campaign trail and his view that digitization is driving virtually everything.

“For me, the big picture is that artificial intelligence and robotization is going to change three things fundamentally,” he began, sipping water at a small table at the EIB offices on Schuman Circle in Brussels. “No. 1 is the economy and the way in which we work. It’s doing it already: platforms, the face of modern work changing daily, whether it’s blue-collar or white-collar.

“Secondly, it’ll change politics and media as we know it,” he continued. “It’s already done it. Social media. Fake news. You know, election-meddling being the example on the media side. And on the politics side, we thought that we were going towards digital democracies, but in many places around the world we have ended up with digital dictatorships.”

“Thirdly,” he concluded, “it’ll change and is changing science and the future of mankind.”

Blue-collar workers are feeling the pinch from the rise of AI | Sean Gallup/Getty Images

Policymakers looking to promote innovation, he continued, are facing another three-pronged fork in the policy highway: “We have the Chinese way, the American way and the European way.”

“The Chinese way is a single-party system, authoritarian and controlled, and the philosophy is different,” he said. “It’s Confucian. It says it’s quite OK to share you privacy and information and have social rankings, and so on.”

“Then there’s the American way, which right now you could argue is the ‘Art of the Deal.’ It’s very polarized, but it tries to get things done. And then there’s the European way, which is the art of the compromise.”

“If you really simplify things, the Chinese model is full control, the American model is no control and the European model is somewhere between the two,” he said. “What I am trying to say is it’s much better having the good guys doing the algorithms than the bad guys.

“Someone needs to regulate those algorithms so they don’t go haywire,” he said. “And I think Europe is quite good at that.”

So what are the EU’s most urgent imperatives?

Stubb is likely to be in line for a top job at the European Commission | Ben Pruchnie/Getty Images

On economy and work, Stubb said the bloc must work to protect citizens from disruption and upheaval.

“How do we make sure that the European middle class, if you will, stays on board and is still willing to defend a social market economy, globalization and liberal democracy?” he said. “Probably the reason that we are seeing so many populist movements at the moment is that we haven’t been very good at dealing with socio-economic issues on a European level … I am an advocate of the Nordic welfare model and I wish we could somehow juxtapose or bring that model to Europe as well.”

Going forward, Stubb said he would urge the EU to focus its efforts in the areas where it has most leverage: trade policy, competition policy and encouraging public and private investment.

It should also continue to make use of its considerable regulatory powers to both encourage technological innovation and stop powerful forces — whether big corporations or autocratic governments — from taking exploitative advantage of the rapid changes in the economy.

“If I were to have a chance to influence the agenda of the next European Commission, I would even have a commissioner for artificial intelligence” — Alexander Stubb

“The EU is a regulatory superpower, and regulation does count in all the three fields that I mentioned: economy and work, politics and media, and science and the future of mankind,” he said.

While he lost the Commission president nomination to Manfred Weber, the German leader of the EPP group in the European Parliament, Stubb was widely applauded within the party for conducting a positive campaign that avoided any damaging in-fighting, virtually assuring that he will be offered a prominent portfolio.

Exactly what job, or even in which EU institution, remains to be seen. Developments in Finnish politics, especially the results of a national election on April 14, will also be a factor.

“If I were to have a chance to influence the agenda of the next European Commission, I would even have a commissioner for artificial intelligence,” he said. “For some it might sound a little bit sort of science fiction, but you know you have some rather sophisticated countries that are already doing that.”


Read this next: Mark Rutte likens Theresa May to Monty Python’s limbless knight

Martin Howe: It is far better to risk extending Article 50 than to accept May’s bad deal

Extension would be a breach of promise, but it offers advantages which the Prime Minister’s vassal arrangement does not.

Martin Howe QC is a barrister specialising in EU law, mainly Intellectual Property and the free movement of goods and services. He is Chairman of Lawyers for Britain, and a former Conservative Parliamentary candidate.

Key points:

  • A short Article 50 extension of under 3 months would make no practical difference and fear of one is not a reason for backing the deal.
  • A long extension of 21 months would have the same practical result as the “implementation” period in the deal, except the UK would be much better off than under the deal because we would still have a vote and representation in EU institutions and the European Parliament.
  • Unlike the deal, we would be free to leave on 1st January 2021 without being trapped in the “backstop” Protocol.
  • Our financial liabilities during the 21 month extension would be the same as under the deal, but unlike the deal, we would have no obligations afterwards.
  • Unlike under the deal, we would not be subject to indefinite ECJ jurisdiction after 2020.
  • We would not be subject to EU state aid controls after 2020, nor to Commission and ECJ “long tail” powers after that date.
  • We could line up international trade deals to come into force from 1st January 2021. Under the deal, we could not do this because the backstop Protocol and the commitments on tariffs we have made in the Political Declaration mean we could not assure negotiating partners that we would be in a position to implement deals with them.
  • We would have more time to prepare for a “no deal” Brexit, enhancing our negotiating power with the EU, and also more time to develop and deploy alternative customs control methods on goods crossing the Irish border.
  • An Article 50 extension is obviously being used as a ‘Trojan horse’ by Remainers and referendum-deniers who want to reverse Brexit. But Brexit supporters should not be swayed by that into supporting Theresa May’s deal which would poison Brexit and create a situation so bad that calls to re-enter the EU would grow in order at least to have a vote on all the areas where we will be rule-takers from Brussels.

The growing calls for an Article 50 extension

The Prime Minister’s statement to the House of Commons on 26th February 2019 opened the door to a “short, limited extension to Article 50 not beyond the end of June” if the House again rejects her deal on 12th March. She thereby abandoned her commitment, repeated in the Commons more than 100 times, that the UK will leave the European Union on 29th March 2019.

Without any apparent consciousness of the irony, she told the House that she would stick by her commitment to hold a vote on extending Article 50 “as I have [stuck by my] previous commitments”.

But in the background, there is a threat of a much longer extension. On 11th February 2019, Olly Robbins, the Prime Minister’s chief Brexit “negotiator” was overheard by an ITN reporter in a Brussels hotel bar, saying that he expected MPs in March to be presented with the choice of backing a reworked Brexit deal or a potentially significant delay to Brexit.

Opinions differ on whether making comments of this kind in a public bar was an accidental gross indiscretion on the part of a highly placed civil servant, or whether it was said in a Machiavellian bid to send a coded message to MPs without implicating the Prime Minister personally in saying something so contrary to her public stance.

Whatever is the right interpretation on this point, the idea of a long Article 50 extension is emerging from other sources. On 24th February 2019, The Guardian reported:

‘Brexit could be delayed until 2021, EU sources reveal… But sources said the EU was determined to avoid a series of three-month extension requests by the UK, which would cause damaging uncertainty, leaving Brussels unable to plan for the future. The emergence of the idea of a 21-month delay to Brexit will be seen by some as an attempt to push Brexiter MPs into backing May’s deal. The EU’s chief negotiator, Michel Barner, had advised ambassadors last week that the threat of a lengthy extension could be used by May as leverage in talks with her Brexiter MPs as she seeks to nudge the deal through parliament.’

How should opponents of the deal react to the threat of an Article 50 extension?

Despite her protestations about not wanting an Article 50 extension, it is clear that May is now seeking to use the threat of one as a lever to exert pressure on MPs opposed to her deal. But how should they react to such a threat?

First, an Article 50 extension to late June is no threat at all. A three-month extension provides at most three more weeks of negotiating time, as I (and others) have previously pointed out. This is because the European Parliament will dissolve on 18th April prior to its elections. If a deal is not agreed by then it will no longer be possible for it to be approved by the European Parliament. Such approval is legally required under Article 50 before the EU can formally conclude the deal.

So an extension to late June merely provides three weeks for further procrastination and delay. If a deal is not concluded and approved by the European Parliament before 18th April, the UK will then automatically leave the EU without a deal at the end of June. So, unless the deal is radically altered in order to make it acceptable through removal of, or major surgery on, the backstop, the reasons for voting it down will be just as strong as when the House rejected it by a majority of 230 votes in January.

What of a longer extension?

Let’s suppose that there is a threat of a much longer extension, say of 21 months to the end of 2020.

It seems to be assumed by those who utter such threats in Brussels bars and elsewhere that opponents of Brexit ought to quake at such a prospect, and then vote for May’s deal to “get Brexit over the line”.

But let us calmly compare the actual consequences of such a 21-month extension with the alternative of May’s deal. In objective terms, a 21-month Article 50 extension is miles and miles better from a Leave perspective than May’s appalling deal.

Let us look at the key points in turn.

Transition period: A 21-month Article 50 extension would lock the UK into having to obey EU laws across the board until 31st December 2020. But that is exactly what May’s transition period would do – the one she insists on calling an “implementation period” even though there will be no concluded trade deal to implement, just more turmoil-filled negotiations taking us up to another mythological “cliff edge” at the end of the transition period.

The big difference would be that under an Article 50 extension, the UK would continue to be represented in EU institutions, and continue to exercise a vote and veto (where unanimity is required) over new EU rules. Further, we would elect a new phalanx of MEPs, large numbers of whom would be Brexit supporters who would be robust in defending Britain’s interests and in disrupting the EU’s centralising plans.

No backstop: The next huge point is that under the Article 50 extension the UK would not be bound by the backstop Protocol, which under May’s deal would kick in on 1st January 2021. Instead, on 1st January 2021 we would just leave unencumbered. We would be able to negotiate for a trade deal with the EU with a strong hand, and our negotiating position would not be crippled by being prospectively or actually locked into the backstop as it would be under May’s deal.

Financial claims: Under an Article 50 extension, we would automatically be liable to contribute as a Member State to the EU budget up to the end of 2020. But that is exactly what we are obliged to do under May’s deal, up to the end of the transition period which will last at least to the end of 2020 but might be extended for up to two years more. The big difference is that under May’s deal, we would be liable for huge additional ongoing financial liabilities after that date. These will be adjudicated on by the ECJ and not by a neutral independent body.

ECJ Jurisdiction: Under the extension, we would continue to be subject to the ECJ’s jurisdiction across the board until the end of 2020. But so will we under May’s deal, the difference being that under her deal we will no longer have a British Judge and Advocate-General as members of the court. But the really big difference comes after the end of 2020: at the end of the extension, we shall be free of the ECJ. Under her deal, we shall be subject to its continuing jurisdiction over wide areas for the indefinite future.

State aid controls and “level playing field”: Under an Article 50 extension, we would be subject to EU state aid control as a Member State but at least we would still have political influence and representation on the Commission. These controls would then cease to apply to the UK after we leave at the end of 2020. By contrast under the May deal, we would have no political influence over the way these controls are exercised during the transition period, and these controls would continue to apply both to Northern Ireland and Great Britain under the backstop. In addition beyond that, she has given a commitment in the Political Declaration that the UK will continue to submit to these controls permanently.

International trade policy: Under an Article 50 extension, we could not operate our own tariffs or implement our own free trade agreements until the end of 2020. However, we could negotiate and line up deals to come into force on 1st January 2021. (Note that there is no validity in the argument that the EU treaties prevent us from negotiating and concluding trade agreements while we are members which come into force after we leave: see Negotiating International Trade Treaties Before Exit).

By contrast, May’s deal would oblige us to apply EU external tariffs up to the end of 2020 in the same way as if were still members, except of course we would have no vote. But in addition her deal would prevent us from negotiating any deals with third countries because we would not be able to guarantee to trade partners that the backstop would not kick in and lock us into an indefinite customs union with the EU. The Political Declaration’s paragraph 23 on tariffs requires us to negotiate a long term arrangement with the EU which “builds and improves on the single the customs territory” in the backstop, and is completely incompatible with having a conventional Canada-style free trade agreement with the EU. This and other highly damaging parts of the Political Declaration (such as sharing of fishing waters) cannot simply be ignored as having no legal force, since the Withdrawal Agreement legally commits both the EU and the UK to use their best endeavours to negotiate a long term deal in accordance with the Political Declaration.

More time to prepare for No Deal: The Article 50 extension would give us more time to do what May’s government should have been doing all along during the two and a half years since the referendum. That is to prepare overtly, steadily and determinedly for a No Deal exit, as a twin-track alongside negotiating with the EU. This would strengthen our negotiating position, and with May’s deal in the bin we could actually press for a deal which genuinely protects our ability to forge an independent trade policy and also deals with the Northern Ireland border issue by alternative means.

An Article 50 extension is also compatible with the Malthouse Compromise, since the extended Article 50 period would substitute for the transition period up to the end of 2020. But, as explained above, we would be much better off than in the transition arrangement, since we would retain our vote and voice within the EU institutions.

So what’s the threat in an Article 50 extension?

When you want to get someone to do something by threatening them, the normal protocol is that you threaten them with something which is worse than the thing you want them to do. However, in this case, it is the other way round. The ‘threat’ is manifestly more advantageous in every way than the thing the threatener wants the threatened to do (vote for the May deal).

Of course it can be argued that the practical consequences as set out above of the Article 50 extension are not the only thing to think about, and one must also think about the danger of the extended period being used by unreconstructed Remainers and referendum-deniers to reverse Brexit altogether.

To those who are worried by this issue, I would make two points, one negative and one positive.

The problem with May’s deal is that it poisons Brexit by closing off the freedom of action which is the whole point of Brexit, and drains away its advantages. Those who blithely talk about busting out of the backstop Protocol in the future by breaching treaty commitments gravely underestimate the difficulties of pursuing such a course of action and the damage to the UK’s standing and international interests if it were to be attempted.

If Brexit supporters are complicit in miring the UK for a decade or a generation in such a terrible vassal arrangement with the EU, inevitably calls will grow for us to re-join the EU in order at least to get back a vote on the rules which we have to follow.

On a positive note, even if the Remainers were to get the long extension which they crave, it does not mean that the support will be there either in Parliament or still less in the country to hold a second referendum or to reverse Brexit. The Labour party in particular would find it very difficult if it alienates its Leave-supporting voters in the many marginal seats where they are plentiful.

And there are severe difficulties in the way of getting such an extension in the first place. The EU is wary of the problems which would be created by holding the European Parliament elections in the UK. The Conservative Party should be not simply wary, but alarmed across the board, at such a prospect, since a decimation of the Conservative vote in the face of Nigel Farage’s reinvigorated Brexit Party cannot be ruled out. And if the Brexit party establishes itself with a big vote in the European Parliament elections, it will not go away and will be a real vote-splitting problem for the Conservatives in by-elections and at the next general election – an even greater problem than UKIP was in the past.

The EU may well not be willing to agree to an extension. It only takes one member state to veto it. As I point out above, a long Article 50 extension would materially strengthen the UK’s bargaining position and the EU might not wish to facilitate that on top of the European Parliament elections problem. And would a long Article 50 extension actually get through the House of Commons, after the backlash against those who support it from betrayed leave voters is taken into account?

So, if the deal is bad and stays bad, there is no reason for MPs who oppose it to panic and change their position, and every reason why they should stand firm in the face of these Article 50 threats.

May walks a red tape tightrope on workers’ rights and regulations

In trying to find a way across, and to secure the votes she needs from Labour MPs, the Prime Minister risks unintended consequences.

For obvious reasons, discussion of the Prime Minister’s statement earlier this week focused on her decision to give Parliament votes on No Deal and potentially delaying Brexit.

But there were other elements of her speech that merit attention – particularly the part about “ensuring that leaving the EU will not lead to any lowering of standards in relation to workers’ rights, environmental protections or health and safety.”

This is a sticky area, with political pressure in three directions.

The Government is sensitive to charges by the Opposition that it intends to erode just such legislative standards – Labour mutter darkly about a “Tory Brexit” meaning exactly that. Vote Leave countered that very allegation during the referendum itself. This article in The Times, by Gisela Stuart and Andrea Leadsom, is a good example of the campaign’s clear answer:

‘Again and again Britain has gone further and faster than the rest of the EU in pushing for workplace rights, racial and gender equality and crackdowns on hate speech.

All of the EU legislation we have accepted since Tony Blair took us into the social chapter has been incorporated into UK law and will remain in place if we vote to leave. Any decision to simplify or change any of those laws would need voters’ consent. Our public holidays will also be protected and maternity and paternity leave will stay.’

At the same time, the EU is concerned – revealingly – that a newly-regained right to control our own laws might see the UK become more competitive than the bloc, either by abandoning existing rules or, more gradually, by refusing to adopt new ones. Brussels therefore seeks a way to somehow forbid regulatory variation in perpetuity – a hope which Eurosceptics suspect underlies the open-ended nature of the backstop.

And of course among Leavers, including many on the Government’s own backbenches, there is strong opposition to the idea of taking back control only to promise never to actually use it. The prospect of copying and pasting EU law into British law for all eternity is obviously unappealing – indeed it is a form of relationship with the EU that even the Remain campaign attacked back in 2016. Those seeking a more competitive UK through Brexit warn against promising to give up control of some of the levers by which it might be achieved.

By virtue of her nature as well as the Parliamentary arithmetic, the Prime Minister has sought to navigate a path between those three competing pressures. The 2017 manifesto, Nick Timothy-driven as it was, promised further legal protection over and above keeping existing EU-derived rights:

‘We will not only guarantee but enhance workers’ rights and protections… Workers’ rights conferred on British citizens from our membership of the EU will remain.’

The first element of that pledge was embodied by the Great Repeal Bill – which became the European Union (Withdrawal) Act. The legislation copied and pasted EU law into the UK statute book – a step near-universally accepted as necessary for basic legal continuity when Brexit occurs, thereby ensuring an independent UK would begin with the same workers’ rights and protections as it had during its EU membership.

That ought to have assuaged some of the more extreme conspiracy theories about a mass deletion of legal rights on Brexit Day itself. But the issue which Theresa May now seeks to address is the question of that ongoing “guarantee”. How can she ensure she is believed about preserving existing rights – particularly by Labour MPs whose votes she might yet need to pass a deal – while not alienating a mass of Leavers and free marketeers on her own benches by surrendering to the Brussels’ demands for permanent obedience to EU law (an ongoing common rulebook, to raise the ghosts of Chequers)?

Tuesday saw her attempt:

‘Taking back control cannot mean giving up our control of these standards, especially when UK governments of all parties have proudly pursued policies that exceed the minimums set by the EU – from Labour giving British workers more annual leave to the Conservatives and Liberal Democrats giving all employees the right to request flexible working.

Not only would giving up control go against the spirit of the referendum result, it would also mean accepting new EU laws automatically, even if they were to reduce workers’ rights or change them in a way that was not right for us.

Instead, and in the interests of building support across the House, we are prepared to commit to giving Parliament a vote on whether it wishes to follow suit whenever the EU standards in areas such as workers’ rights and health and safety are judged to have been strengthened.

The Government will consult with businesses and trade Unions as it looks at new EU legislation and decides how the UK should respond.

We will legislate to give our commitments on both non-regression and future developments force in UK law.

And following further cross-party talks, we will shortly be bringing forward detailed proposals to ensure that as we leave the EU, we not only protect workers’ rights, but continue to enhance them.’

In short, the Prime Minister is walking a tightrope made of red tape. \

She is right to reject “giving up our control of these standards” by “accepting new EU laws automatically”. That she framed the prospect as a risk that the EU might “reduce workers’ rights” shows that she knows her target audience is red, not blue. So there would be no ‘fax democracy’, or permanent obedience to new EU law.

However, in a classically Mayish way, she went on to tout a new way to square the circle – “giving Parliament a vote on whether it wishes to follow suit whenever the EU standards in areas such as workers’ rights and health and safety are judged to have been strengthened”.

That could be a much bigger change to how our country works than it at first appears.

For a start, have ministers considered how often the EU legislates, and therefore potentially how often such votes might need to take place? It seems the decision on what counts as a ‘strengthening’ of EU law would fall to a joint committee of unions and business groups. At least one such body currently exists in BEIS to advise on red tape, but this would be a major increase in the importance of what is currently a backroom talking shop.

It could also in effect give the EU a pseudo-executive role in British legislation. The power to introduce EU law would simultaneously become a power to propose that law in the UK Parliament, at least for a vote on the principle. That might be time-consuming, or dull, but equally it isn’t impossible to imagine it might be used to help or hinder one side of British politics or another if the powers that be in Brussels and Strasbourg so desired. A Government’s agenda could be repeatedly disrupted, by accident or design, by the need for debates and votes on endless or awkwardly-timed proposals that don’t even originate in the Commons, still less from the executive.

The idea of guaranteeing all existing EU workplace regulations in perpetuity – by legislation, no less – is controversial in itself. It sacrifices flexibility in the economy, and therefore limits opportunities to grow, to respond to crises or adapt to new circumstances.

Introducing what is in effect a whole new constitutional innovation with little thought is even more short-sighted than that. The Prime Minister might need to sway some votes in the next few weeks, but afterwards we will all have to live with the rules she proposes, and their consequences. The Fixed-term Parliaments Act, an under-scrutinised but major change to our constitution, waved through for temporary political expedience, ought to serve as a cautionary tale.

Poll: Majority of Brits want tech companies to remove harmful content

Respondents to a POLITICO-Hanbury poll strongly prioritized this over protecting free speech online.

A majority of people in the U.K. back regulation to force tech companies to remove harmful content online while a minority considers protecting free speech to be a priority, according to a POLITICO-Hanbury poll.

Asked what government should prioritize when regulating companies such as Twitter, Facebook and Google, 56 percent answered “forcing companies to remove harmful content” while 24 percent said “preserving free speech online.” A fifth of respondents said answered “don’t know.”

The exclusive snapshot of U.K. public opinion, which was conducted between 22 and 25 February, comes as Jeremy Wright, the digital and culture secretary, is putting the finishing touches to proposals for new online harms legislation. That is now expected to be published in mid-to-late March, according to an official close to discussions.

Ministers had been hoping to publish a white paper of proposals before the end of February, but they have not yet been signed off across the U.K. government.

Wright and his deputy, the Digital Minister Margot James, travelled to California last week, where they met Facebook chief executive Mark Zuckerberg to share the government’s current thinking on new regulations.  While Wright has made clear in recent weeks that the “era of self regulation [for technology companies] is coming to an end” he has not yet set out concrete proposals for how he will force companies to remove harmful content from their platforms. Wright has said he is considering creating an online regulator.

Secretary of State for Digital, Culture, Media and Sport Jeremy Wright | Christopher Furlong via Getty Images

The poll, which sampled the opinion of 2006 people, found a higher proportion of men than women prioritized free speech, with 28 percent stating it would be their preference when regulating tech companies, compared to 20 percent of women. The proportion of men and women who said they prioritized forcing companies to remove harmful content was similar — at 57 percent and 55 percent respectively.

Londoners were also most committed to preserving free speech, with 38 percent stating it should be the priority. Other regions of the U.K. had equivalent figures ranging from 18 percent in the Midlands to 24 percent in the North of England.

Conservative supporters were the strongest backers of forcing companies to remove harmful content, with 70 percent stating it should be a priority over preserving free speech (21 percent.)

The cross-party digital, culture, media and sport select committee, led by Tory MP Damian Collins, published a damning report last week calling for a raft of regulatory action against technology companies, including for their legal liability for content identified as harmful to be tightened.

Facebook said in its response to the committee report that it would be open to “meaningful regulation.”

The digital secretary and other ministers have publicly called for regulation on the issue of harmful content, following the death of teenager Molly Russell, whose father accused Facebook-owned Instagram of facilitating her death, by failing to remove images of self-harm.

Big Tobacco’s push for Big Vape

Citizens’ initiative calls for vaping to be treated differently from traditional smoking — and is backed by industry associations.

Big Tobacco has a new lobbying tactic in Brussels — people power.

A petition calling for vaping products to be treated differently from tobacco was this month registered with the European Commission, using a process that’s designed to give the public a say in decision-making.

However, the campaign received a €10,000 contribution from U.K.-based Imperial Brands, one of the world’s largest tobacco companies, and the individuals listed on the application include Imperial’s head of EU corporate affairs and representatives from national vaping industry lobbies.

As EU rules put the squeeze on cigarette sales, tobacco companies are expanding into vaping products and the industry is making huge efforts to ensure they avoid the regulatory fate of traditional smoking.

The petition, which calls for looser controls on vaping products by having them treated separately from tobacco products, is part of that drive. Under the rules of the European Citizens’ Initiative process, the petition’s organizers have a year to collect 1 million signatures from at least seven EU countries. If that happens, the Commission must consider their request (although it can reject it).

The involvement of individuals with direct ties to the tobacco and vaping industries “reduces the [citizens’ initiative] tool to absurdity” — Olivier Hoedeman, researcher

The Commission declined to name those behind the initiative — called “Let’s demand smarter vaping regulation” — when it was announced on February 12.

But the subsequent registration listed Dustin Dahlmann and Mosè Giacomello, representatives of the German and Italian vaping industry associations, and Valerio Forconi, head of EU corporate affairs and a registered lobbyist for Imperial Brands.

Forconi said Imperial is supporting grassroots activism by funding the campaign, and the individuals that registered the initiative said they are acting in a personal capacity.

However, a corporate watchdog group called the petition an “abuse” of the system.

Tobacco companies are taking a different approach toward regulators with e-cigarettes than they did with traditional cigarettes | Fabrice Coffrini/AFP via Getty Images

The involvement of individuals with direct ties to the tobacco and vaping industries “reduces the [citizens’ initiative] tool to absurdity,” Olivier Hoedeman, a researcher at Corporate Europe Observatory, said in an emailed statement.

“Imperial Brands has vested commercial interests in getting vaping products excluded from the Tobacco Products Directive and is abusing a democratic tool for citizen participation,” he said.

Imperial Brands (which used to be Imperial Tobacco Group and sells Gauloises cigarettes and Montecristo cigars) expanded into vaping through its subsidiary Fontem Ventures, which makes the brand Blu. The U.S. and U.K. are its two biggest markets, and the company has also introduced the products in France, Germany and Italy.

“This is a real broad-based, grassroots effort and it makes complete sense for us to support it, and hopefully achieve success by shining a light on the irrationality of the current regulatory framework,” Imperial’s Forconi said of the citizens’ initiative in an emailed statement.

The petition argues the Commission needs to come up with a vaping policy that ensures “access to tobacco-free less harmful alternatives,” through “bespoke, evidence-based legislation” that takes vaping products away from the shadow of Big Tobacco.

A Commission spokesperson said that while companies cannot launch citizens’ initiatives, there is nothing in the rules to prohibit employees doing so in a personal capacity.

Organizations “can promote or support initiatives provided that they do so with full transparency,” the Commission said.

Flipping the playbook

From the 1950s onward, tobacco companies worked to emphasize scientific uncertainty and downplay links between smoking and lung cancer, and nicotine and addiction.

With vaping they are flipping the playbook.

All major tobacco companies are moving into vaping, including Altria (parent company of Philip Morris), British American Tobacco and Japan International Tobacco. In tandem with vaping industry associations, tobacco companies are relying on public health arguments to make the case that electronic cigarettes are “less harmful” than traditional ones.

“What [tobacco companies] were doing in the past was saying that there was no real evidence. In fact, it’s almost … turning on its head at the minute,” said Martin McKee, a professor of European public health at the London School of Hygiene and Tropical Medicine.

“We want to reduce the health impact of tobacco by encouraging smokers to switch to products with lower health risks like vaping ones” — Valerio Forconi, head of EU corporate affairs at Imperial Brands

Vaping devices contain nicotine but not tobacco, heating a tank of liquid containing the addictive chemical to create a vapor that can be inhaled. The EU cracked down on both tobacco and nicotine products as part of the 2014 Tobacco Products Directive, which limited the size and strength of e-cigarette tanks, restricted advertising and set rules on packaging.

The Commission is scheduled to review the directive before May 2021.

One of the aims of the citizens’ initiative is to repeal Article 20 of the Tobacco Products Directive, which outlines the regulations on vaping products, and have them dealt with under separate rules.

“We want to reduce the health impact of tobacco by encouraging smokers to switch to products with lower health risks like vaping ones. We support proportionate evidence-based regulation that encourages smokers to use alternative products that have the potential for reduced harm,” Forconi said.

Several scientific studies have found vaping to be less harmful than traditional smoking.

While England’s public health body has strongly endorsed e-cigarettes to reduce health harm, other researchers and officials, including European Health Commissioner Vytenis Andriukaitis, are urging caution.

European Commissioner for Health Vytenis Andriukaitis | John Thys/AFP via Getty Images

The industry bolsters its argument by citing a 2015 review by Public Health England that found e-cigarettes are “around 95 percent safer” than traditional cigarettes.

“That figure has no credibility whatsoever,” said McKee, who co-authored a commentary in medical journal The BMJ challenging the methodology of the national health body’s review. “England is completely out of line with the rest of the world,” he said.

Australia and Singapore have banned e-cigarettes and the U.S. is cracking down on flavored products, saying they appeal to kids.

Vaping may not bring the same risk of lung cancer as smoking “but there are serious questions about cardiovascular disease and there are enough questions there that I think the precautionary principle should be adopted,” McKee said. 

An alternative, McKee said, would be to regulate e-cigarettes as a medicine, if there is evidence to show they could get people off nicotine completely.

“I see no justification for rolling them out as consumer goods, that’s a completely different ballpark,” McKee said.

Industry opposes this route, since it would mean much stricter regulatory scrutiny. The petition states that vaping should be considered separately from pharmaceutical products.

‘Time is money’

Imperial’s €10,000 has gone toward building a website on which people can add their signature to the petition, and which is expected to launch in a few weeks, according to Brandon Mitchener, a managing partner for consultancy Instinctif Partners, based in Brussels.

The tobacco company contracted the consultancy to provide “monitoring and strategic advice on a number of issues but mainly related to vaping,” according to Imperial’s Forconi.

That contract was worth between €50,000 and €99,000 in 2018, according to an entry in the EU’s transparency register. The value was earlier this month listed in the range of €100,000 to €199,999 but was revised downward “to reflect actual 2018 figures,” Mitchener said in an email.

Imperial spent more than £700 million investing in next generation products through 2018, according to a company report.

“Time is money and everyone is contributing a significant amount of time to ensure the success of this initiative” — Dustin Dahlmann and Mosè Giacomello, vaping association representatives

Forconi said it is “hard to predict” how much money Imperial would spend promoting the petition, adding the campaign “will mainly run through social media instead of using the traditional communication touchpoints.”

Giacomello and Dahlmann, who represent national vaping industry associations in Italy and Germany, said they expect their associations and others from Ireland, the United Kingdom, Czech Republic and France “will contribute to the campaign according to [their] individual means.” 

“Time is money and everyone is contributing a significant amount of time to ensure the success of this initiative,” Giacomello and Dahlmann said in a joint statement, adding that their associations’ investments would likely be more than €10,000, and would meet the EU’s transparency requirements. 

Andriukaitis’ office declined to comment on the petition or the involvement of the tobacco and vaping industries. The health commissioner has previously said e-cigarettes should be included in smoke-free legislation, and branded the argument that e-cigarettes should be freed from regulation because they help people quit smoking as “ridiculous.”

“We are monitoring the situation and waiting to see if 1 million statements of support are gathered,” his spokesperson Anca Paduraru wrote in an email.

UK food supply under threat from no-deal Brexit

Farmers and food suppliers say they need more guidance about what to do in case of no agreement.

Britain’s farmers and food suppliers are begging the government for Brexit answers.

With just five weeks to go until Britain leaves the EU, businesses across the food supply chain say they remain in the dark about how they should operate in the event of no deal.

Nobody knows yet what tariffs will be applied on goods both leaving and entering the U.K. — though an announcement on that could come as early as Friday.

In Calais and Dover, no new infrastructure has been built to prepare for customs checks should controls be required. London has yet to provide exporters and importers any clarity around its proposed trading regime with countries outside the EU. And companies from supermarket chains to big food processors such as Nestlé say they have no idea what labeling requirements will be in place should no deal be reached.

“Obviously as importers of food, it’s really important that we know if there will be tariffs applied and if so what that is going to look like,” said Andrew Opie, director of food and sustainability at the British Retail Consortium, which represents supermarkets in the U.K. “There are a number of countries such as Iceland, Norway and Mexico — important for imports of food — where we are still uncertain what the trading arrangements will be on day one of a no-deal Brexit.”

A lack of trading schedule means that supermarkets such as Tesco, Asda and Sainsbury’s still have no idea where they should buy from if there is no Brexit deal.

Nearly one-third of the food eaten in the U.K. comes from the EU.

This concern is particularly acute as Britain produces very little fresh fruit and vegetables in the months of March and April. At this time of the year, 90 percent of lettuces, 80 percent of tomatoes and 70 percent of soft fruit is sourced from the EU. Environment Secretary Michael Gove told attendees at the annual National Farmers Union conference this week that an announcement on the U.K.’s tariff schedule in the event of a no-deal could come out as early as this week.

Moreover, Opie said that the level of uncertainty means there is no guarantee retailers and food processors could send products into Ireland, as meat plants exporting into the EU have still not been registered. In addition, meat labeling to assure health and safety standards has still not been designed.

Last month, the chief executives of 12 retailers, including Marks & Spencer, Waitrose and Lidl wrote to lawmakers in the House of Commons to remind them that nearly one-third of the food eaten in the U.K. comes from the EU. They said the level of uncertainty has led to a considerable amount of stockpiling. But now, “all frozen and chilled storage is already being used and there is very little general warehousing space available in the UK,” they wrote.

Uncertainty is also acute for sheep farmers. Lambs entering British abattoirs for slaughter now will arrive at their destination in the EU after Brexit, meaning farmers aren’t sure their product will even reach its final destination should labels fail to be recognized.

Farmer Pip Simpson, and his son Ted, aged 2, prepare to present his store lambs to buyers in northern England | Oli Scarff/AFP via Getty Images

“What meat stamps will be recognized in the EU?” asked Phil Stocker, chief executive of the National Sheep Association. “One or two traders I’ve spoken with have said trade is already being dampened … People here and at the end destination don’t know if they will be caught out.”

Around 40 percent of the 300,000 tons of lamb produced in Britain annually is exported, of which 96 percent enters the EU — mainly France, Belgium, Germany, Spain and Italy.

“It’s a real muddle. There is a lot of work going on … But there is still no decision made and industry has been given no guidance on what to do. There has been a total lack of understanding,” Stocker said, adding that the government has also failed to clarify how it plans to attract seasonal contractors to work in the country’s abattoirs in the event of a no-deal. A huge proportion of abattoir staff currently come from Eastern Europe.

On Thursday, U.K. Farm Minister George Eustice said the government is exploring slashing tariffs on goods coming into the U.K. as a way of sheltering consumers from price hikes in the event of a no-deal Brexit.

But the Cabinet is divided on the tariffs issue, with Environment Secretary Michael Gove pushing for higher tariffs to protect British farmers, while Chancellor Philip Hammond and International Trade Secretary Liam Fox want lower duties to protect consumers from higher prices in the shops.

If there is no deal, the EU is likely to levy full external tariffs on food coming in from the U.K., meaning an increase of at least 40 percent on sheep meat and beef — with 100 percent tariffs on specific cuts. With the threat of EU tariffs imminent, Minette Batters, president of Britain’s National Farmers’ Union, this week gave Secretary Gove a public dressing down at the NFU’s annual conference — speaking of her dismay at the “insanity” of politicians.

A no-deal Brexit would require the government to put tariffs on sheep meat, beef, poultry, milk, cheese and pig meat in order to safeguard domestic production.

“Britain was … assured that a trade deal would be the easiest deal in history, that Britain holds all the cards in the negotiations. Well, conference, in a few weeks’ time if there isn’t a deal with the EU, high export tariffs could effectively mean we have no market for four and a half million lambs,” she told delegates as Gove looked on. “With 900 hours to go, it’s unacceptable for government to leave British businesses having to take this gamble.”

Gove conceded in his speech that a no-deal Brexit would require the government to put tariffs on sheep meat, beef, poultry, milk, cheese and pig meat in order to safeguard domestic production. He also underlined that all animal products entering the EU would face health and safety checks, resulting in delays in loading ferries in Calais.

U.K. exporters will also need to comply with new customs paperwork and a new labeling scheme will be required for products of animal origin exported to the EU. “I emphatically do not want to run the risks that leaving without a deal would involve,” Gove said.

But if no deal cannot be avoided, his department’s preparedness will come under intense scrutiny, Batters said.

“It’s often said that the first responsibility of government is to defend its people and that the second responsibility is to feed its people,” she said “On March 29, you [Gove] will be the first secretary of state in over 40 years with the responsibility, the duty of ensuring Britain is fed.”

Iain Mansfield: We have nothing to fear from No Deal

It would bring with it many compensations, including regulatory freedom, tariff income and £39 billion of cold, hard cash.

Iain Mansfield is a former senior civil servant, winner of the Institute of Economic Affairs Brexit prize and a Conservative councillor candidate. He writes in a personal capacity.

One constant on our journey to leave the EU is that the predictions of Project Fear have repeatedly failed to come true. Despite the predictions of the Treasury, there was no immediate recession, “immediate and profound economic shock”, ten per cent drop in house prices or ‘’Punishment Budget’ as a consequence of the vote to Leave. Instead we’ve seen a growing economy, the highest ever level of employment, growing wages, falling inflation and an £11.8bn increase in exports in 2018.

The new bogeyman is No Deal. The summer of 2018 saw repeated stories of planes being grounded in the event of No Deal, only for, entirely predictably, the EU to make provision in December for flights to continue for twelve months to allow alternative measures to be put in place. More recently, claims that our trade to other countries would grind to a halt are being refuted by the regular drumbeat of mutual recognition agreements signed by the Department of International Trade, including one last week with our largest non-EU trade partner, the USA. I do not say that there will be no short-term impact in the event of No Deal, but it will be vastly less than is being suggested.

In my 2014 prize-winning paper for the Institute of Economic Affairs, I explicitly considered the possibility of No Deal. No Deal was not the preferred outcome – I would have preferred a Free Trade Agreement, outside both the Single Market and Customs Union, similar to the position set out by Vote Leave in June 2016. It was, however, always a potential outcome, and it was important to consider how to put in place policies to make a success of it. In this article, I set out a high-level set of policies for making a success of No Deal, drawing on that paper and ongoing developments in the four years since.

Making a success of a Managed No Deal

Citizen’s RightsThe welfare of both UK and EU citizens is of the highest priority. As the Prime Minister has already announced, all EU citizens living in the UK should continue to be able to do so, regardless of the outcome of the negotiations. Many EU countries have already put in place equivalent arrangements for UK citizens and similar commitments should be sought from those that have yet to do so.

Visas and Migration: The UK should put in place visa-free arrangements for short-term tourist and business travel, covering up to 90 days in any 180 day period, mirroring the scheme already announced by the EU. Immigration rules for EU nationals should be brought in to line with those for non-EU nationals, ending the current discriminatory arrangements. There should be no cap on the number of EU students, but students arriving after March 2019 should not receive government-funded loans and should pay fees at international rates.

‘Divorce bill’: In the event of No Deal, it is self-evident that no money should be paid to the EU.

Trade and tariffsThe UK should abide by WTO rules and impose the same tariffs on EU importe that are currently faced by imports from outside the EU. Notwithstanding the theoretical positive economic case for unilaterally removing tariff barriers, it is important that shutting the UK out of EU markets is not a cost-free decision for continental business, in order to build the environment for a future deal once the political climate has altered.

Due to the UK’s trade deficit with the EU, estimates suggest we stand to collect up to an extra £13 billion a year from tariffs, while the EU would gain only £5 billion. Some of these funds should be used to help industries most impacted by EU trade barriers adjust and find new markets, in a strictly time-limited and tapering way to prevent them fostering inefficiency and rent-seeking behaviour. The rest should be reinvested into infrastructure and other competitiveness-enhancing investments.

Within six months of leaving, the UK should draw up a list of goods on which the EU has imposed unnecessarily high tariffs. This should prioritise consumer goods that the UK produces little of itself – from oranges to textiles – to directly reduce the cost of living without harming jobs.

Industrial StrategyIn contrast to Project Fear’s claims, EY’s 2018 UK Attractiveness Survey – an annual examination of the performance and perceptions of the UK as an investment destination – confirmed that the UK remains the number one destination for inward investment in Europe, with the number of investment projects up six per cent from the year before. Though Brexit has had an impact, it is small: 79 per cent of businesses say that they’ve increased or not changed their plans to invest since the Brexit vote, with only eight per cent saying they are likely to relocate assets within the next three years.

The UK should capitalise on this investor confidence. With full freedom to set our own regulatory affairs, the UK should rapidly seek to reform business regulation in areas where the EU has imposed unnecessary bureaucracy, particularly in sectors where this has directly targeted UK competitiveness. Existing labour rights and environmental standards should be maintained.

Broader measures to promote business investment should also be brought forward. A step-wise lowering of corporation tax to 15 per cent by 2022, an enhancement of R&D tax credits, the creation of special export zones and increased transport infrastructure, particularly in the Midlands and North, are all ideas that should be considered for fast-track implementation.            

UK-Ireland land border: No physical barriers should be erected on the Irish border. Importers bringing goods across the border should be required to register and pay tariffs on any imports using an online portal, with compliance enforced via spot-checks on industrial and commercial facilities and an enhancement of the existing cross-border arrangements used to combat smuggling. The success of this system should be reviewed 12 months after exit, ideally in partnership with the Republic of Ireland, and limited border checks introduced only if both parties agree it is necessary.

Individuals should be allowed to move freely across the island of Ireland, with eligibility for work, residency and benefits checked only when a person applied for such. A generous allowance for transport of goods for personal consumption should be put in place.

Existing controls would remain in place at airports and ports to monitor travel between the island of Ireland and Great Britain.

If the Republic of Ireland chooses to erect physical barriers on the border, that would be its decision, not the UK’s.

Future EU Relations: The UK should not seek to immediately negotiate a trade deal with the  EU. After the acrimony of the current negotiations, this would be unlikely to lead to a positive outcome. Instead, the UK should increase business certainty by clearly pursuing an economic path that lies outside the EU.

The year immediately following exit should be used to regularise agreements in essential areas, such as air travel, which will initially be covered by emergency arrangements. These should largely be technical affairs modelled on the EU’s and UK’s arrangements with third parties. It may also be possible to negotiate entry into stand-alone, uncontroversial, programmes such as those on scientific cooperation.

It is likely that in three to five years’ time the political situation may have calmed sufficiently to seek to negotiate a stand-alone trade agreement. This should be modelled on the Canada Free Trade Agreement and would take as its status quo the No Deal arrangements, in order to avoid unreasonable expectations on either side.

We have nothing to fear from No Deal

I am not a No Deal fanatic. Last year on this site I advocated support for Chequers, and I still believe that, if the backstop is removed from the Withdrawal Agreement, the deal would be worth signing. We must not, however, accept a deal at any cost. To succeed in any negotiation, one must be prepared to walk away – and the actions of MPs who have effectively announced that they will take any deal, however bad, have undoubtedly hamstrung our negotiations.

The Conservative Manifesto set it out clearly: No Deal is better than a bad deal. I continue to hope that a compromise will be found, and that the EU will agree to remove or place a time-limit on the backstop. However, rather than accept a deal which yokes us indefinitely to the EU, we should embrace a future outside. No Deal would bring with it many compensations, including regulatory freedom, tariff income and £39 billion of cold, hard cash. Britain’s fundamental economic strengths, competitiveness and international relationships, supported by an appropriate set of domestic policies, mean it is abundantly clear that we can have a positive economic future in this scenario.

How the Treasury, Bank of England and Civil Service have let us down over Brexit

Soon after graduate school I joined the Treasury as an economic adviser and worked alongside economists from the Bank of England and the rest of the Civil Service. We were proud to be bringing economics into the public service. Many years later in 1992 I served on the Treasury’s Panel of Outside Forecasters (‘The 6 […]

The post How the Treasury, Bank of England and Civil Service have let us down over Brexit appeared first on BrexitCentral.

Soon after graduate school I joined the Treasury as an economic adviser and worked alongside economists from the Bank of England and the rest of the Civil Service. We were proud to be bringing economics into the public service. Many years later in 1992 I served on the Treasury’s Panel of Outside Forecasters (‘The 6 Wise Men’) to help guide monetary policy in the aftermath of ‘Black Wednesday’ when we were driven out of the EU Exchange Rate Mechanism. The Treasury chief economist then was Alan, now Sir Alan, Budd, and the Bank’s was Mervyn, now Lord, King.

I am appalled that our equivalents today in the government have spent their time issuing antiBrexit propaganda – still hoping to reverse the referendum decision – instead of dutifully planning post-Brexit policy, so necessary with Brexit only weeks away.

THE WHITEHALL PROPAGANDA WAR AGAINST BREXIT

A few weeks ago, we had the latest Treasury and ‘Cross-Whitehall’ report, arguing that any Brexit at all, including the government’s proposed deal, would be worse than Remaining. Then the Bank weighed in with a ‘Brexit crisis scenario’, an implied forecast of how bad No Deal would be, concealed as a ‘stress test’ of whether the economy could survive it – it could! Latterly, the Bank has reiterated its forecast that No Deal would be bad, causing a likely recession, and using it as an excuse for delaying raising interest rates.

These interventions are designed to undermine our efforts to persuade the EU to modify the Government’s proposed deal by strengthening popular and MP concerns over No Deal. They aim also to persuade Parliament to back amendments delaying Article 50 and seeking another referendum. The sought-for prize in both cases is the status quo, ultimately Remain. It should be unthinkable for our Civil Service to play politics and conspire against the people’s 2016 decision so nakedly, as demonstrated in Brussels last week by the Civil Service’s chief negotiator.

This deceitfulness is bad enough but worse is that their propaganda efforts would lead to terrible economics. My message to Brits is: unlike these self-styled experts, you got this issue right. Yes, you were right to ask for your democracy back, and yes, this is also good for the British economy, contrary to all that Project Fear.

Let us remind ourselves about what Brexit means for economic policy:

  • Free trade with the non-EU world, bringing down prices, boosting competition, and increasing productivity
  • Setting our own regulations across the economy, to ensure the best approach to new technology, energy, and financial services – all areas central to our future growth prospects. This is in contrast to the EU’s highly interventionist, bureaucratic, protectionist approach
  • Ensuring that unskilled immigration is no longer subsidised by the taxpayer at great cost to lower-income communities (£3,500 per annum for each unskilled worker) and that it stops depressing wages to the detriment of UK unskilled workers, whom businesses then have no incentive to train
  • Ending paying large amounts into the EU budget

Taken together, we calculate these policies will add about 0.5% a year to our growth rate over the next decade and a half, cumulatively adding 7% to GDP by 2035.

As part of the EU, we have been unable to adopt these policies because we have lost democratic control. Reasserting it through Brexit means we can move into a post-Brexit world of better policies that will promote UK prosperity.

THE TREASURY’s ABSURD ANTI-BREXIT ASSUMPTIONS

How has the Treasury managed to argue precisely the opposite; that post-Brexit our economy will decline by 7% or more of GDP? Answer: by making absurd assumptions.

No Gains from Free Trade with the Non-EU World

First, the Treasury alleges that free trade with non-EU countries brings in trivial gains because we would reduce our own trade barriers by only a little and other countries similarly would do little to reduce theirs.

Aside from this refuting the most widely agreed principle in economics, we have practical evidence from Australia to disprove this claim. Australia too had high protection against the rest of the world but thirty years ago they did remove it and did strike free trade deals with all and sundry. Their government now estimates that free trade boosted Australian GDP by over 5%. If Australia can do it, so can we.

In fact, if we assume we get rid of the current EU protection of about 20% on both food and manufactures, the gain to UK GDP is 4%. – calculated by using the same World Trade Model now used by the Treasury. Moreover, we have further calculated that virtually all this gain could be obtained by agreeing just one key free trade agreement – i.e. with the US. This is because the huge US economy can supply virtually all of our current imports and almost all at the lowest world price.

‘War at the Border’ with the EU

Second, the Treasury assumes that we would become engaged in a sort of ‘border war’ with the EU. The Treasury alleges the EU would increase inspections and slow traffic down, that they would query whether our exports comply with their standards. And, vice versa, we would do the same to them. The Treasury assumes that such actions would be the equivalent of imposing 25% tariffs each way.

This is fantasy. Besides being against our own and their own interests, these actions are illegal under WTO Rules. This does not just mean that there could be legal action in WTO Appellate Bodies. More to the point, injured businesses in the thousands would take the offending port authorities to EU and UK courts that enforce acceptable and legal commercial practice – as defined by WTO law.

Practically speaking, such actions would represent economic suicide to European port operators. Not surprisingly these authorities, including Calais, have declared roundly they will not take any such illegal actions and inspection regimes will remain the same as they are today. And HMRC has declared a policy of prioritising flow over checks – i.e. waving through imports and worrying about any customs aspects subsequently.

No Gains from Post-Brexit Tariffs

Under No Deal initially there probably would be tariffs both ways. Until a free trade deal is agreed, each side would be forced by WTO rules either to impose tariffs on all countries, or to abolish them entirely for all. For political reasons, the UK is not likely to abolish tariffs universally in the short term.

Importantly, the Treasury has failed to acknowledge that tariffs would favour the UK – we would receive £13 billion in tariff revenue from EU exporters versus the EU Commission receiving £5 billion from EU importers (thus, a net loss to the EU).

As soon as we have agreed trade deals with non-EU countries – especially soon with the US – our home market would be dominated by lower world prices. EU exporters would not be able to ‘pass on’ the increased costs of any UK import tariffs because UK consumers would not pay the higher EU price. Similarly, EU importers could not ‘pass back’ to our exporters the EU tariffs they are paying, as UK producers would switch to selling at home. In practice, our export sales to the EU would not suffer because EU prices are raised by EU protection to the same levels as UK export prices plus these tariffs.

This means that, under No Deal, we gain at the EU’s expense. This should encourage the EU to do a free trade deal with us after Brexit – which we of course would welcome.

So in short the Treasury has it all wrong on trade.

No Gains from UK-Based Regulations

The Treasury attributes virtually no gains to us retrieving control of our economic regulations, contrary to all the evidence of damage from EU regulations. How ridiculous is that? Our own UK government saying it could not do a better job of regulation than a foreign power with an expressed aim of reducing our competitiveness!

A Mad Immigration Policy, Keeping Out Skilled Workers

To cap it all, the Treasury assumes we will pursue a self-harming immigration policy of stopping skilled immigration, which all agree we need. Again, a bad own goal.

To sum up, our own Treasury and civil service see no benefits from free trade with the rest of the world while lamenting the loss of free trade with the EU, imagines standard trade procedures as practiced all over the world will be impossible with our EU neighbours, believes we are incapable of implementing better home regulation, and thinks we will adopt an irrational immigration policy. If this is truly what they believe, we will need another civil service post-Brexit.

THE BANK’s TALK OF RECESSION FROM NO DEAL

Turn now from these crazy long term Treasury estimates to the short term threats of recession made by the Bank, backed by regular remarks from the Chancellor Philip Hammond.

As we saw during the referendum campaign, the Bank has form in predicting ‘Brexarmageddon’. Then, the short term forecast was that the uncertainty triggered by only a Leave vote would destroy consumer and investor confidence and so kill off spending, creating a recession.

Instead we have seen the UK economy continue growing fairly steadily, reaching extreme lows in unemployment and record employment. Wages are now growing faster than prices. Also the economy has absorbed a large devaluation that has had a tonic effect in improving our balance of payments. It did this with a minimal effect on inflation. Nothing here to worry about at all.

For their latest scary Brexit No Deal scenario, the Bank has again invoked a crisis based on uncertainty and plunging confidence – heavily focused on what happens with the Dover-Calais ferry route.

But No Deal – as we have explained – will not disturb the border, as that would be illegal and there are alternative ferry routes available. As for shortages of vital foods, medicines, or vital components, they depend on the same story, now discredited by the EU port authorities who are worried about losing market share to competing ports.

With border procedures changing, there will be some short run hiccups, as some firms may fail to adapt quickly. But firms will soon learn, and will get extra support and credit to tide them over.

Has investment been hit? I show below the chart of UK total business investment up to the most recent available figures.

What the chart shows – following the Financial Crisis – is the usual irregular behaviour of most economic series around a rather smoothly moving upward trend. It is true that the latest data points to a weak and declining growth of investment as shown below in more detail from the latest ONS release. This is not surprising, given the long deferral of positive Brexit prospects due to the Government’s failure to provide a clear route to Brexit and to explain its benefits.

Therefore, it is likely that some investment is being delayed until Brexit has happened; but it then will be implemented. This is the essential point about investment; that it is delayed, not lost.

One can see from these two charts that, although investment growth is weak, its contribution to the economy is fluctuating around a stable trend. Meanwhile we can see that the economy is fully employed so that demand growth overall is continuing to create jobs; growth is fluctuating as the latest GDP figures show, but this is quite normal. The fourth quarter was slower after an unusually strong third quarter – and subsequent revisions often are higher. So from the point of view of demand, the weak investment is not preventing full employment, with an economy well at the limits of productive capacity.

Of course, EU countries would love to have our results – Germany’s just announced Q4 GDP growth is half of ours, while Italy has been in recession for six months.

NEGATIVE FORECASTS REFLECT POOR UNDERSTANDING OF BREXIT ECONOMICS AND PEOPLE’S EXPECTATIONS

The truth is that ‘uncertainty’ as a factor is much overdone by commentators. Change is a continuous feature of any economy. The ‘uncertainty’ argument depends on a belief that rational market participants will somehow not be able to cope with future change thereby freezing their activities.

In reality, businesses need to make money quickly as markets are constantly changing; households need to pay bills over the foreseeable future, and having a job is the best guarantee of being able to do so. So the ‘here and now’ situation, especially with employment, dominates their actions. As for future shocks, there are many; and predicting them a fool’s game. Of course, we can insure the obvious things.

So it is the UK’s flexible labour market that has kept the economy fully employed, full of short term confidence therefore, and growing steadily – Brexit has made little difference. It is a good lesson in the importance of market flexibility.

Whatever the short-run effects of Brexit uncertainty, they soon will give way to post-Brexit reality. It is here that official forecasts fail most seriously because they do not factor in the gains explained above. The economy, particularly investment, will respond to the prospects of these gains. That is how rational expectations of the future stimulate entrepreneurs to take advantage of unfolding new opportunities. Officials do not understand this process and, consequently, do not include such effects in their forecasts. Add in some uncertainty nonsense and out pop their doom and gloom forecasts – particularly if such forecasts support a biased perspective.

What we need now is for Brexit to occur and usher in the new opportunities from free trade and better regulation.

CONCLUSION

We see here an astonishing catalogue of bad economics coming from a determination to reverse the people’s referendum decision. This from our own Ministers and Civil Service who are supposed to support policies the people have voted for. Our civil servants must now get behind Brexit and reflect its opportunities in their forecasts. 

It is time that the Bank and the Treasury stopped making arbitrary assumptions that our flexible firms and households will suddenly behave like headless chickens. Instead they should assume rational expectations, by now a widely supported assumption in economic forecasting.

My advice to the British people is: make it known to MPs that you will not stand for their bad economics, stick to your previous thinking, ignore the ongoing Project Fear as you got it right and these ‘servants’ of yours got it all wrong.

The post How the Treasury, Bank of England and Civil Service have let us down over Brexit appeared first on BrexitCentral.

Nus Ghani: Our new measures will make taxis and minicabs safer for passengers

Whilst most drivers are pillars of the community, recent events have shown how regulation and protections can be tightened.

Nus Ghani is a Transport minister and Member of Parliament for Wealden.

Taxi and minicab drivers do a vital public service – whether that’s helping the elderly to visit the supermarket, transporting children to school, or ensuring a safe journey home after an evening out.

But it’s crucial that everyone, including the most vulnerable, know that when they take a taxi ride they will be safe.

Sadly the recent child sexual exploitation scandals in Rotherham, Rochdale, Oxford, and Newcastle, in which some rogue drivers used their vehicles to facilitate assaults on young girls, have highlighted that this is not always the case.

Since I became a Minister at the Department for Transport last year I have made it my goal to ensure that everyone can use a taxi or minicab safely. I know first-hand how entirely women and girls in particular must place their trust in their driver.

Of course there are already many rules in place to ensure drivers are fit to carry out their jobs. In the vast majority of cases these regulations work well. However the Jay and Casey reports into the circumstances surrounding the Rotherham child sexual exploitation scandal, along with work by the Times, Daily Mail, and other newspapers, have highlighted how these rules could be strengthened and tightened.

For instance, while under current system taxi and minicab drivers must apply for a licence from a local authority, the standards they must meet to obtain one varies across the country. It means that drivers can get a licence in areas where the rules are applied less stringently – but they can then offer their services in places where they may have been refused a permit.

Last year an independent review commissioned by my Department laid out a series of recommendations as to how the current system might be improved. We have given the findings of the review, carried out by Professor Mohammed Abdel-Haq of the University of Bolton, great consideration, and today I am unveiling a package of comprehensive and tough measures – including new laws – that will ensure taxis and minicabs are safe for all.

These reforms will also ensure that reputations of honest drivers, who are overwhelmingly in the majority, are left untarnished by the criminal few. We plan to:

  • Introduce legislation that will set out minimum standards all drivers must meet before they can be issued with a licence;
  • Create a national database of all operators, vehicles and drivers, including those who have lost or been refused licences because of safety issues;
  • Bring in new powers which will enable authorities to take action against drivers found flouting regulations, regardless of where they are licensed;
  • Consider laws to prevent drivers from working anywhere in the country without restriction.

As part of new national minimum standards, the department will consider whether vehicles should be fitted with CCTV, using encrypted systems that mean footage can only be accessed if there is a crime reported.

In addition we are consulting on tough new guidance to licensing authorities that will improve safety of passengers. This includes; increasing the regularity of criminal record and background checks for drivers and new checks for taxi firm staff; tests to ensure drivers are proficient in English; and improved handling of customer complaints about rogue drivers.

I’m of course very aware that the vast majority of taxi and minicab drivers are pillars of the community who would never dream of harming to a passenger or exploiting the rules. So we have taken great care to ensure that these measures do not make honest drivers’ vital and challenging work any harder.

Nor will these reforms will not stifle consumer choice or stunt the innovation in this sector – something the Government is keen to support through its ‘Future of Mobility Grand Challenge’, which aims to make Britain world leaders in the movement of goods, services and people. Already firms are creating some great developments, such as Citymapper’s Smartride system that harnesses technology to enable people to share rides.

So it’s clear: the future is exciting one for both passengers and drivers, and the measures I am outlining today will play a vital part in creating a world where taxis and minicabs are safe for all.

Effective web regulation will not be easy, and ministers must take the time to get it right

They must eschew the fire-and-forget approach which gave us the Electoral Commission.

This week’s press has been thick with bullish noises from the Tories about cracking down on social media. Ministers are expected to decide within weeks whether or not they will introduce a “single regulator for internet companies”.

Jeremy Wright, the Digital Secretary, has already announced that social media companies will face deadlines to delete content, and penned an op-ed announcing an end to the internet’s “era of self-regulation”.

Other suggestions include: social media bosses being “arrested and held personally liable” if harmful content isn’t taken down from their sites; another minister decrying tech giants as “above a law”; the Prime Minister has been urged to back a ‘crackdown’; and both the Health and Education Secretaries have got in on the game too.

And that’s just the Government: Labour are calling for a regulator with the power to “break up monopolies” and levy multi-million pound fines, whilst the Information Commissioner’s Office has called for a halt to Facebook political ads until new rules are agreed.

But does all this sound and fury signify anything? Between the idea and the reality falls the shadow, and there’s a long road from strong talk about the need to rein in the wild web and setting up an effective regulatory regime – especially for a Government whose bandwidth looks set to be consumed by Brexit for the foreseeable future.

For starters, ‘web regulation’ covers several quite distinct areas. Designing up-to-date rules for political campaigning, such as those Cheryl Gillan called for on this site yesterday, is a distinct challenge to combating fake news, which is different again from protecting children and vulnerable people from harmful content on social media.

Whilst it may garner easy headlines, “set up a regulator” can only be the bare bones of a solution to any one of them. Consider all the unintended consequences which have stemmed from the decision to set up the Electoral Commission, and its flailing attempts to uphold even the electoral law we already have. If a new regulator or regulators are to be introduced, its vital that the Government takes a pro-active approach to monitoring their efficacy and remit.

Even the more straightforward-seeming policies have their drawbacks. Take the prospect of steep penalties for social media giants floated above. A similar approach has proven very popular with the public when it was introduced in Germany, but attracted fierce criticism from human rights advocates for turning risk-averse private companies into over-zealous, un-accountable censors.

As we wrote last year, conservatives in particular ought to be mindful of the fact that when it comes to massive media platforms such as Facebook, their power to stop people seeing things is as important as their power to put things in front of us. Britain, where existing law is already sending the police after bloggers and tweeters, ought to take seriously the risk of doing inadvertent damage to free speech.

If they really mean to take these issues on – and they are worth taking on – ministers face a balancing act. They need to create policies tailored to meet the various different and specific challenges which might be caught up under the heading ‘web regulation’, whilst at the same time maintaining a big-picture view of how new laws or enforcers in one area might have unintended consequences for the others. It might be possible, but it can’t be rushed.