The price May is paying for survival is powerlessness

She yesterday achieved the outcome most likely to prop her up – at least for the time being. But Cooper, Letwin and Bercow are waiting in the wings.

Theresa May succeeded yesterday in achieving her aim.  Of the three Brexit outcomes that could have emerged from the EU summit, she has gained the one most likely to meet her core objective – survival as Prime Minister, at least for the moment.  There is not enough time to hold a leadership election before April 12, the deadline now agreed if her deal hasn’t passed the Commons by then.  And there is no sure alternative means of finding a replacement.  A short extension best suits her abiding preoccupation: to hang on.

Of the other two possible outcomes, a long extension would have opened up the time and space for a leadership challenge.  No Deal might have kept her in office for the time being, since the response from her Ministers and Conservative could have been: all hands to the pumps.  But it might not have done – since it would also have created that space and time.  Furthermore, it could have sparked Ministerial resignations, defections to the Independent Group, and a perilous confidence vote.

In a strange kind of way, one can’t help admiring May’s ducking and diving, her evasions, her twists and turns, her deflections, her gnomic silences – the sheer inventiveness and tenacity with which she hangs on. Sometimes, she has threatened no Brexit.  At other times, such as earlier this week, she has threatened No Deal.  On Wednesday, she hurled a bucketful of verbal paraffin over just about every other MP in the House – including her own Parliamentary Party.  Late yesterday, she sought to sponge the oil from their hair and enraged faces, offering words as close to an apology as she is probably capable of speaking.

She has promised that Britain would leave the EU on March 29 over a hundred times.  She has led Tory MPs into the lobbies to vote in principle not to do so.  She has U-turned on a general election in 2017, transition migration, transition extension, putting her deal to the Commons in December, a regulatory border in the Irish Sea: we cannot bear to replicate the list in full.  Her latest about-turn, characteristically implied rather than asserted, is that we may now participate in this spring’s European elections, after all.

So evasive have been her dealings, so profuse her positions, that she was bound sooner or later to stumble across one that would work.  So it proved yesterday.  Like the majority of Conservative MPs, like the National Convention, and like the local Associations which have lined up behind the last, we have always argued that one has to be prepared to walk away from a negotiation to get a result.  The threat of No Deal should always remain on the table.

We believe that May was bluffing when she hinted earlier this week that she was prepared to countenance Britain leaving the EU with No Deal on the date still written into law.  In her elliptical way, she has pushed the idea at pro-Brexit Ministers.  She did the same to EU27 leaders yesterday.  Some of them may not have believed her.  But she seems to have sowed enough doubt to get them collectively to back off.  Emmanuel Macron didn’t veto extension.  (Neither, please note, did Viktor Orban or Matteo Salvini.)

How much more would have been achieved had she played that card at the right time and place – in other words, right at the start of the negotiation!  If Philip Hammond had been moved in the botched 2018 shuffle, as we urged just before it took place.  If a Minister for No Deal had been appointed then (ditto).  If preparations had been ramped up.  That lost chance is a tragedy with a double edge.  For May has not only threatened No Deal late in the day, but is unlikely to be able to do so again.

This is because her tactical win is wrapped in a strategic defeat.  As we write, an extension motion will presumably pass the Commons, perhaps with predominate Labour support.  But her deal is in no position to do so at a third attempt, assuming that the Speaker allows it to be put in the first place.  If it can’t win next week, it won’t be put: that surely is the logic of setting a new deadline, if it doesn’t pass, to April 12.  On paper, the option of No Deal will still exist then.  In practice, it is likely soon to be suffocated.

For with little likelihood of the deal passing; with infuriated Remainers, distrustful Leavers, an alienated Whips Office, and a Chairman of the 1922 Committe who has reportedly told May to go, she is Prime Minister In Name Only.  Yvette Cooper and Oliver Letwin are ready for a third bite of the cherry.  Their bid to take over the negotiation, in effect, failed in January by 23 votes.  A revived push at it from Hilary Benn fell last week by only two. It is very hard to believe that it will not be successful in some form a third time. The motion to revive it is already tabled.

The Speaker will ensure that it gets a fair wind. (His latest commitment to precedent is to revolutionise S024 motions – or so it appears.) The Second Referendum lobby is dropping its pretence of wanting a further vote, and is gradually revealing what has been its real aim all along: revocation.  Letwin/Cooper are more likely to steer MPs towards Customs Union membership and perhaps Single Market membership, too.  The House may not have settled on either by April 12.  But the Commons would then surely vote for another extension.

On second and final thoughts, we apologise for offering certainties, or seeming to.  Anything could happen yet.  Pro-Remain Ministers could quit.  So could Leave Ministers.  The ERG could go on strike, and refuse to vote.  The Whips’ Office could give up any attempt to stop them. Leadership candidates are raising money, announcing teams.  No Deal could somehow slip through the cracks.  But the drift is unmistakable.  May endures.  But the price she is paying for survival is powerlessness.

Iain Dale: Zombie May and her Zombie Cabinet

Leadsom seems to be the only one with lead in her pencil. All she needs now is to grow big fat hairy balls.

Iain Dale presents the evening show on LBC Radio and is a commentator for CNN.

Another astonishing week in Brexitland. But I suspect we’ve seen nothing compared to what is to come over the next seven days.

Sadly, we have a political leadership which is wholly unfit to be described that way. We have a Prime Minister who deludes herself that she is showing leadership when in fact she is doing the opposite.

She chairs a Cabinet, but refuses to give it any idea of what she believes, or where she wants to take the country. And we have a Cabinet that is so devoid of bollocks that it allows her to do what she likes without fear of consequence. And she lets them do it. It’s a Zombie Cabinet, led by a Zombie Prime Minister.

Her speech in Number Ten on Wednesday evening was one of the most embarrassing of her premiership, and there have been a fair few to rival it for that particular accolade. It achieved the exact opposite of what she presumably wanted. At times, she even channelled Donald Trump, which was never going to end well.

By trying to pitch the people against Parliament, she did something very dangerous – something I cannot remember any other prime minister doing. The fact that she had already done it that day in Prime Minister’s Questions, and then repeated it seven hours later, made it even worse.

She also achieved something else unique. She alienated many of the MPs she needs to win over to get her third “meaningful vote” through Parliament next week. These include Labour MPs and members of the ERG. It takes a lot to bind those two groups together, but Theresa May achieved it.

I do not understand how that speech ever came to be made. Did none of her advisers raise a hand, and point out the dangers of taking the approach she did?

But in the end, the buck stops with the Prime Minister – she is after all responsible for what comes out of her mouth – but speeches like that go through multiple drafts, and are run past a whole raft of people. Yet no one seemed alert to the downsides and dangers of what she was about to say. Quite incredible.

– – – – – – – – – –

I’ve copped quite lot of criticism for saying that I think May’s leadership has run its course, but I’ve got broad shoulders and people are free to say what they like. Margaret Thatcher inspired me to join the Conservative Party when I was 16. I devoted a large part of my life to promoting the Conservative cause in one form or another. It was my dream to be a Conservative MP, and although I never achieved that aim, I still continued to be an activist for the party until I joined LBC, when it became inappropriate to continue with party political activities.

I believed May was the right choice to succeed David Cameron, to take us to Brexit and conduct negotiations with the EU. I was wrong on both counts. As I said on Any Questions last Friday, this is the most calamitous British government since Lord North lost America. Hyperbole maybe – but not much of an exaggeration, surely.

Brexit means Brexit, and we’re going to make a success of it, she said. Ad nauseum. We will leave on March 29th, she said. Ad nauseum. We’ll be leaving the Single Market and the Customs Union, she said. Ad nauseum.

Well, Theresa May’s form of Brexit does not mean Brexit. At the time of writing, we won’t be leaving on March 29th. If her deal goes through we won’t be fully leaving the Single Market or the Customs Union. It’s all going terribly well, isn’t it?

– – – – – – – – – –

Up until now, I have always thought that were there to be a general election, the Conservatives would win a majority. No longer.

The prospect of a Corbyn government is nearer now than at any time during the last three and a half years. It won’t be that he gets many more votes than he did last time. It will be because Conservative voters stay at home and sit on their hands.

It will be interesting to see what happens in the local elections. Labour’s polling apparently shows that they are not going to do well because people now see them now as the party that backs Remain, and Labour Brexiteers are deserting. We’ll see.

– – – – – – – – – –

Back to the Cabinet. Last week, I wrote in my diary about its supine nature. They’ve been at it again.

On Tuesday, the Cabinet met to discuss what to do about extending Article 50. The Prime Minister asked each of her ministers to give their views on whether we should request a short or a long extension. I’m told that once they have all finished, she said: “Thanks for your comments,” and moved the discussion on to something else.

Not a single one of them apparently raised a hand, and said: “Excuse me, Prime Minister, we’ve given our view, what’s yours?” It was then briefed out that she would be writing to Donald Tusk asking for both a short extension which could be turned into a long one if necessary. The next morning, her entire cabinet was taken by surprise when it emerged she was only asking for a short extension.

This is not Cabinet Government in any meaningful sense. But, given the Prime Minister’s weak political position, it is truly astonishing that the Cabinet continues to allow her to get away with it. Andrea Leadsom seems to be the only one of them with any lead in her pencil at the moment (don’t let that image pollute your mind). Perhaps she will be the one with the big fat hairy balls to tell the Prime Minister, “Enough, and no more”.

A reminder of why Theresa May’s deal is so unacceptable

We ask about any bad event – cock-up or conspiracy? With the Government’s Brexit negotiations, you get both. Theresa May’s Withdrawal Agreement is no such thing; it is a Remainer Agreement, a legally-binding international treaty that can only be changed by the unanimous consent of the 27 EU member states. This proposed international treaty breaches […]

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We ask about any bad event – cock-up or conspiracy? With the Government’s Brexit negotiations, you get both. Theresa May’s Withdrawal Agreement is no such thing; it is a Remainer Agreement, a legally-binding international treaty that can only be changed by the unanimous consent of the 27 EU member states.

This proposed international treaty breaches the referendum result in spirit and fact; it breaches the clear manifesto pledge of the Conservative Party during the 2017 election; it potentially results in Northern Ireland permanently remaining in the Single Market – creating a border between it and the rest of the UK; and it hands over a minimum of £39 billion of UK wealth for an Agreement worse than the status quo.

The EU/May Political Declaration commits us to ‘an ambitious, broad, deep and flexible partnership across trade and economic cooperation, law enforcement and criminal justice, foreign policy, security and defence and wider areas of cooperation’, which would be membership in all but name.

It obliges us to ‘create a free trade area’, a ‘single customs territory’, ‘provisions to enable free movement of capital’, ‘a liberalisation in trade in services well beyond the Parties’ World Trade Organisation commitments and building on recent Union Free Trade Agreement’, and ‘a level playing field for open and fair competition’.

The Declaration proposes an ‘overarching institutional framework’ which ‘could take the form of an Association Agreement’. Association means Associate membership, which effectively means staying in the EU.

Paragraph 89 of the Declaration obliges the police to arrest people deemed to have committed ‘political offences’ – s kind of crime not known in our law. Remember, the EU’s Attorney-General has said that “Criticism of the EU is akin to blasphemy.”

Oddly, the Declaration proposes ‘developing alternative arrangements for ensuring the absence of a hard border on the island of Ireland’, so they accept that we can avoid a hard border in Ireland with no need whatsoever for a backstop or a customs union.

The Agreement gives the EU a veto on UK withdrawal. If the current Withdrawal Agreement is passed into law, the UK cannot unilaterally withdraw from the Agreement. The EU can keep us in forever by refusing to revise the Agreement. It is a sham negotiation by both sides: the EU has got exactly the Agreement it wants. Why would they it change now?

It makes us a rule-taker in almost all areas of EU competence. Should it be agreed, Parliament would effectively be forced to accept, apply and obey whatever regulations the EU proposed and be bound by all rulings by the European Court of Justice. Contrary to the Prime Minister’s Lancaster House speech and manifesto pledge, the European Court of Justice retains de facto primacy over the UK, remaining the final arbiter of the Agreement and of the EU laws that affect us. Thus, the Agreement is remaining in the EU in all but name, but no longer having a say, thus breaking the spirit of the referendum result and the election manifesto promises.

The Agreement requires us to keep in regulatory alignment with the EU on matters such as agriculture subsidies and tax policy. This would effectively give the EU control over the UK’s economic policy. The UK would not be able to lower taxes and increase subsidies where necessary to vital parts of our economy.

We would be listed as a ‘participating state’ within the EU’s Civil Protection Mechanism, paving the way for us to having to contribute money to any Eurozone bailout. (The EU Civil Protection Mechanism was how we were forced into giving the Eurozone money after the 2008 economic crash.)

The Agreement stipulates the ECJ and the European Commission would be able to set the legal levels of our financial contributions to fund EU bodies which the Agreement commits us to be part of. In effect we would be handing the EU a blank cheque

It aims to retain some preferential treatment towards EU citizens from the other 27 Member States – specifically in areas of education and work. Why should EU citizens get preferred over those from the rest of the world?

The Agreement commits us to contribute towards funding and supplying our troops for any future EU military operations and commits us to sharing sensitive intelligence data with the EU after Brexit.

It commits us to sharing the sensitive data of our citizens with European databases.

We would hand over a minimum of £39 billion (and possibly as much as £60 billion) of taxpayers’ money to the EU without agreeing any future deal on trade, other than being tied to the current acquis communautaire in its near entirely. This is like paying for a house before you have seen the title deeds.

The Agreement includes future negotiations on the Common Fisheries Policy (at the last minute and against all promises to the contrary) in the transition period the May government has guaranteed that access to UK fishing grounds will become a bargaining chip to be traded away, as President Macron confirmed immediately after the Withdrawal Agreement was signed.

By treating Northern Ireland differently to the rest of the UK, the Agreement raises the question of introducing a different deal for Scotland.

Article 18 of the Protocol says, “If the application of this Protocol leads to serious economic, societal or environmental difficulties liable to persist, or to diversion of trade, the Union or the United Kingdom may unilaterally take appropriate measures.” So, in the event of any disturbance, of any kind, the EU has the right to act unilaterally in any way it sees fit.

Annexes 2 and 3 set out the core rules governing the single customs territory. The UK commits to align with the EU’s Common External Tariff, and with the Common Commercial Policy on trade in goods with third countries to the extent necessary give effect to these provisions. The text provides for the UK to remain within the EU’s trade defence regime for the duration of this Single Customs Territory regime.

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EU summit: Live blog

Brexit, China and fake news among the big-ticket items on the agenda.

Theresa May is in Brussels Thursday to ask for more time on Brexit as EU leaders gather for a two-day summit, with China, trade and disinformation also on the agenda.

The British prime minister wants the EU27 to agree to delay the U.K.’s departure deadline until June 30, but European Council President Donald Tusk has already said there won’t be a Brexit extension unless the House of Commons passes the deal May reached with Brussels.

EU leaders are also expected to yield to pressure from Berlin and Paris and “endorse” a law that will restrict the access of Chinese companies to the EU’s €2.4 trillion-per-year public procurement market.

Draft conclusions for the European Council also back the European Commission’s aim of beginning trade talks with the U.S. soon, and leaders will discuss fighting fake news ahead of May’s European election.

Scroll down to follow POLITICO’s live coverage throughout the summit.

**A message from the Romanian EU Council Presidency: “A borderless and transformative digital Europe”: That is one of the Romanian Presidency’s mottos. This year’s Startup Europe Summit will look at how Europe can best support its startup community. The summit will take place in Cluj-Napoca, Romania — home of a vibrant startup community. More here**

Extension. Never mind the quality, feel the length.

The Prime Minister knows that a short extension is most likely to keep her in Downing Street. Which is why she always likely ultimately to back one.

In the now unlikely event of No Deal, the Prime Minister’s position should be secure, at least for a while.  It would be all hands to the pump, and “no time for a novice”.  If her deal passes through Parliament, Conservative MPs may then experience what one senior player calls a “sugar rush” – a brief sense of relief, well-being and confidence.  In such circumstances, May would have a window to try to dig in.  In the event of a short extension, the Conservative Parliamentary Party will have little motive to remove her, since a leadership election would be impracticable if the negotiation is up against a new spring deadline.

Only a long extension of, say, nine months or longer offers Tory MPs the chance to oust her quickly, through a combination of pressure from the 1922 Committee, the Cabinet and the voluntary party.  Although she cannot be challenged in a confidence ballot until the autumn, there are other ways of expressing no confidence in a party leader, or threatening to.  Some of these fall short of the nuclear option of voting with Labour in a no confidence motion, or at least abstaining.  For example, Conservative MPs could declare that they would table or support a motion to cut the Prime Minister’s salary in half.  This site has heard the option floated.

This background helps to explain why May was never likely to back a long extension.  Downing Street’s warning that it might, issued over the weekend to panic Tory holdouts into supporting her deal, always looked like an empty threat.  As we write, it can apparently be added to her long list of U-turns.  Here is part of that list again: holding a general election in 2017; controlling migration during transition; extending transition; putting her deal to the Commons in December; opposing a regulatory border in the Irish Sea. (Check out her “Road to Brexit”  video where she warned that this would keep Northern Ireland in “…parts of the Single Market. That would would break up the UK economically, and creating new barriers to our own internal market”.)  We can now add the 108 times she said that Brexit will take place on March 29.

At any rate, Number Ten is briefing this morning that “the Prime Minister won’t be asking for a long extension”.  There is a more urgent reason for her to clamber down off the fence she perched on yesterday, when her fellow Cabinet members were left unsure what length of extension she favours.  With the Soft Brexiteers (and Remainers) in favour of a long extension and her harder ones backing a short one, she kept her cards clasped to her chest.  Now she has been forced to move.  A majority of Conservative MPs voted against any extension at all last week.  May is due to address the 1922 Committee meeting this evening.  Things were about to get very ugly indeed.

We suspect that May’s real hope, with tomorrow’s EU council looming, was for an ambigious outcome – a short extension with the possibility of a longer one at the end.  Such an outcome would probably have come closest both to keeping her in place while not risking Cabinet resignations from either group of her divided ministers.  The EU does not seem to favour such an extension, assuming it grants one at all.  Some member states prefer a long extension; others, a short one.  Readers will remember that Olly Robbins forecast the former while drinking in a Brussels bar.  Very soon, we will know if he was right.

Anthony Speaight: Six reasons why we are now less likely to be trapped in the backstop

Whilst it remains the case that the Protocol could conceivably remain in force indefinitely, that scenario has become more theoretical than it was previously.

Anthony Speaight QC is Chairman of Research for the Society of Conservative Lawyers.

To some UK eyes, what was so unattractive about the Northern Ireland Protocol, as originally agreed, was that it could appear to envisage that, whatever the future trading relationship between the EU and Britain, the permanent future of Northern Ireland was in both a single market and customs union with the EU.

The status of the UK was dealt with separately from that of Northern Ireland in Articles 6(1) and 6(2) respectively. Article 1(3) stated that the arrangements of the Protocol were “necessary”, rather than merely desirable, and that such necessity related not only to the avoidance of a hard border, but also inter alia to the conditions for North-South cooperation and the protection of the Belfast Agreement “in all its dimensions”.

Bearing in mind that the EU had not been a party to the Belfast Agreement, and that that Agreement contains no prohibition of customs posts or the like at the border, this created the impression in some that the UK was now agreeing to the EU undertaking a new role almost as guarantor of Ireland’s interests. It was such features, as much as the absence of a unilateral right of withdrawal or end date, which contributed to the concern that the EU or Ireland or both had no real interest in seeking technological or other solutions to avoid a hard border, and that the UK was acquiescing in the consequence of Northern Ireland being permanently in a seamless trading relationship with Ireland.

The joint drafts issued on 11 March went a long way to remove those concerns by six features:-

  • The recital to the Joint Instrument identifies only the absence of a hard border as the required characteristic of the arrangements which would replace the backstop. This weakens the impact of the vague aims of Article 1(3), and, therefore, the scope for the EU or Ireland at a future date to assert that the Protocol is about anything wider than the avoidance of a hard border.
  • Paragraph 5 of the Joint Instrument strengthens the impression of temporariness of the Protocol by introducing a new date, namely a year from the date of UK’s withdrawal, for the conclusion of negotiations of a replacement. If the Withdrawal Agreement is now ratified, that will be considerably earlier than the date mentioned in the Protocol, namely 31 December 2020.
  • Not only is the target date for the conclusions of replacement negotiations thus advanced, but it ceases to coincide with the end date of the implementation period. This emphasises that the agreement of the replacement need not be contingent on the agreement of the future trading relationship. That is significant, and must seriously diminish the scope for the EU or Ireland to claim at a future date that the Protocol envisaged Northern Ireland permanently remaining in a single market and customs union with the EU.
  • The Joint Instrument makes specific mention of study of technological measures for avoiding a hard border. Paragraph 7 commits the parties to the study of inter alia technologies. This is the approach which the UK has been advocating all along. The EU’s response to date has created the concern that it would never look seriously at technologies. There had been no mention of border technologies in the original Withdrawal Agreement or Protocol and it will now be impossible for the EU to escape from detailed study of such.
  • A further feature of reassurance to the UK is that such study of technologies is stated in paragraph 6 of the Joint Political Statement to cover not only existing but also “emerging” technologies meaning the EU will no longer be able to bat back this topic with the refrain that no adequate technology is yet in use anywhere in the world.
  • The Joint Instrument in paragraph 10 explicitly recognises that a replacement arrangement will not be “required to replicate its provisions in any respect”. That must finally knock on the head the scope for the EU or Ireland in future to claim that the Protocol always envisaged Northern Ireland permanently remaining in a single market and customs union with the EU.

Therefore, whilst it remains the case that the Protocol could conceivably remain in force indefinitely, that scenario has become more theoretical than it was previously. In practice, that scenario will arise only if intensive work with a genuine focus on the possibilities of every kind of technology, including those which are not yet in force anywhere in the world, fails to demonstrate a way to avoid a hard border.

Although the EU may be regarded as adept at finding legal technicalities of assistance to its political objectives, it remains a mature and responsible player in the realm of international agreements. The EU would be unlikely to countenance the reputational damage of being seen to resile from its commitments in the six features identified above.

Robert Halfon: If you don’t like the backstop and you want a Brexit deal done quickly, there’s only one answer: Common Market 2.0

I voted for the Prime Minister’s deal today. But the Commons didn’t – and we now all need a positive alternative.

Robert Halfon is MP for Harlow, a former Conservative Party Deputy Chairman, Chair of the Education Select Committee and President of Conservative Workers and Trade Unionists.

Today, encouraged by the legal reassurances secured by the Prime Minister and the Brexit Secretary, I voted for Theresa May’s deal. Although I had not felt able to support it in January, it seemed to me that the risk of the UK getting stuck in the backstop had reduced, and the greater risk was that Brexit would be delayed or, worse, frustrated altogether, if MPs rejected the deal for a second time.

I wish more Conservative colleagues had followed the lead of such long-standing Brexiters as David Davis, Graham Brady, Mike Penning, Bob Blackman, Phillip Davies and Robert Syms. But we are where we are. After a second major defeat, it is clear that the deal negotiated by the Prime Minister is never going to get through the Commons. So now we must move on.

The good news is that there is a Brexit compromise that Leavers and Remainers should feel able to support.  I call it Common Market 2.0. It involves staying in the economic club of the European Economic Area (EEA) but leaving all of the political paraphernalia of the European Union. I’ve lost count of the number of times that people in Harlow have said to me, “I liked it when we were in the Common Market. I just can’t stand all the political stuff.” (Most of them use a rather punchier word than stuff, if truth be told.)

Common Market 2.0 would secure the jobs of British workers and the prosperity of the small businesses which are the backbone of the British economy. How? By keeping us in the Single Market and a customs arrangement which would maintain frictionless trading links with Europe.  But it would take us out of the EU’s common policies on agriculture, fish, justice and foreign affairs. We would escape the clutches of the European Court of Justice, and Parliament’s control of the laws that apply to us would be restored.

On freedom of movement, we would have new powers to restrict European migration in certain circumstances if our government deems it necessary, because the European Economic Area (EEA) agreement gives members the right to unilaterally suspend the freedom of movement if it can show that it is having “serious economic, societal or environmental difficulties”.  If a large new country joined the EU and immigration reached extraordinary levels, like it did in the early 2000s, we would be able to trigger an emergency brake to limit the flow. That’s a power that’s not available to us in the EU.

In addition,  we would be able to tell those who, after three months, haven’t found work or got enough money to support themselves to return home.

For Conservatives, Common Market 2.0 has two powerful advantages: because it mostly involves us joining existing structures like the EEA and the European Free Trade Association (Efta), we should be able to implement it well before December 2020. This would mean that the dreaded backstop would never need to be activated, and there would be no risk of different rules applying to Northern Ireland than apply in all other parts of the UK.

The other advantage is this: all we need to do turn the Prime Minister’s deal into Common Market 2.0 is to renegotiate the Political Declaration.  We know that the EU won’t make problems, because they have already told us that they would be happy to agree to a future relationship that would keep us in the Single Market. Going for Common Market 2.0 would minimise the delay in delivering Brexit. It is the only Brexit compromise that really can be agreed and ratified in under 3 months.

The people I represent in Harlow, and working people across the country, want MPs to deliver Brexit without damaging businesses or destroying jobs.  Common Market 2.0 offers us a Brexit that respects the result of the referendum, secures our economy and avoids the backstop. If we get a move on, we can have it done and dusted by the early summer.  Let’s get on with it.

In two decades, EU Customs Union membership has not delivered clear benefits for any major UK sector

There’s a difference between what the Customs Union was supposed to achieve in theory and what it’s actually achieved in practice. Thanks to historical trade data published by the UK Office for National Statistics (ONS) in September 2018, we now know the difference is huge. By making multiple comparisons in UK, EU and non-EU trade […]

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There’s a difference between what the Customs Union was supposed to achieve in theory and what it’s actually achieved in practice. Thanks to historical trade data published by the UK Office for National Statistics (ONS) in September 2018, we now know the difference is huge. By making multiple comparisons in UK, EU and non-EU trade since 1998, it’s possible to judge the UK’s record inside the Customs Union over the past 20 years, and assess the value of seamless, tariff-free trade with the EU in terms of what it’s actually achieved.

All my data is sourced from ONS September 2018 release unless otherwise stated and compiled in two spreadsheets: UK’s Top Ten Sectors, which analyses each principal UK traded sector in turn, from motor vehicles to beverages; and UK Trade in Goods & Services which directly compares UK’s trade in goods and services. Both cover the period 1998 to 2017 and I would encourage readers to download are inspect them.

Export Growth: 1998 to 2017

For a first-pass assessment of UK’s trade record in the Customs Union, divide all UK exports into four, roughly equal parts: exports of goods to the EU (worth £164 billion in 2017); exports of services to the EU (£117 billion); exports of goods to non-EU countries (£175 billion); and exports of services to non-EU countries (£162 billion). Now, using the historical trade data published by the ONS in September 2018, calculate the average yearly growth rate for each of these four categories from 1998 (or 1999 for the services data) to 2017 (the method used is to take a three-year average at the start and end of the time period, and then adjust for inflation using the ONS’ own import/export deflator).

The results are perverse. The UK’s slowest-growing export trade since 1998 is goods exports to the EU, which have grown by just 0.2% per year since 1998, or 3.7% over 20 years. Yet this is precisely the sector that is supposed to benefit from tariff-free trade within the Customs Union. And even 0.2% is misleading. Most growth occurred pre-2007; adjusting for inflation, average annual exports in 2008‒2017 were actually lower than 1998‒2007 (See Tab 3 in UK Trade in Goods & Services, Section 2, line 77. £144.7 bn as opposed to £145.6 bn in 2015 prices).

Conversely, the UK’s fastest growing exports are services exports outside the EU, unimpacted by either the Customs Union or Single Market regulation. At 5.6% per year over 20 years, these exports have grown so fast in the last 20 years, they are now worth almost as much as UK’s entire goods exports inside the Customs Union.

Next fastest is UK’s services exports to the EU, growing an impressive 5.2% per year. This sector is marginally impacted by the Single Market. A portion of financial services are impacted by EU regulation, although financial services exports contribute just under one-third, or 31% of UK services exports to EU. (Overall, just 11% of UK services exports are financial services exports to the EU – for a breakdown of UK’s services trade see Tab 2, UK Trade in Goods & Services).

Meanwhile UK’s goods exports to countries outside the EU countries – and outside the Customs Union – have grown at a crisp 3.3% per year since 1998. This sector is heavily influenced by the Single Market, whose rules apply to most goods made in UK, but they are conducted outside the Customs Union. And thanks to the trade-database research of Michael Burrage, It’s Quite OK to Walk Away, we can approximately calculate the proportion of UK’s non-EU exports that has been conducted on World Trade Organisation (WTO) terms.

Taking the year 2015, Burrage estimates that 6% of UK’s exports went countries with whom UK enjoys an EU-negotiated free trade agreement (FTA). Another 8% went to European Free Trade Agreement markets. This means, approximately 73% of UK’s exports to non-EU countries was conducted on WTO terms. Much of the rest (principally Switzerland) is with countries that impose near-negligible tariffs on non-food imports.

Consequently, the 3.3% per year growth rate achieved by UK’s non-EU goods exports is a strong and accurate reflection of UK companies’ ability to trade on WTO terms. Since 1998, UK businesses have proved more adept at growing markets outside the Customs Union than in it, despite the tariff and customs barriers they confront in most non-EU trade. Meanwhile, UK businesses have failed to grow markets inside the Customs Union, despite the fact that this trade with the EU is tariff free.

What’s to blame for this discrepancy – or more accurately, what’s not to blame – will be analysed in Part 3 of this analysis, when UK’s export growth is compared to Euro-area growth, intra-EU trade, UK productivity, and EU–US trade over the same period. But in a straightforward assessment of the value of the Customs Union to UK, the data are unforgiving: that part of UK exports that is governed by the Customs Union is easily UK’s worst performing.

The Customs Union: Qui Bono?

Not so with EU imports, however. Back in 1998, UK’s EU goods trade was roughly in balance, -£5.6 bn in current prices). But since then, imports from the EU have grown at a strapping 3.4% per year. The import sectors displaying the fastest growth are motor vehicles, (with imports growing 3.6% p.a., to reach £47.7 bn in 2017), food products (5.3% p.a., to £23.2 bn) and pharmaceuticals (7.3%p.a., to £22 bn), with this last import category showing especially rapid growth since 2011.

So, since 1998, the track record of the Customs Union has been to take a trade relationship that was trim and balanced and turn it into a £95 billion deficit, which is larger – per head – than the US trade deficit with China.

Here again, the ONS November-release trade data helps because we can see to what extent UK’s services trade with the EU will ever balance this equation out. And the answer is: it won’t.

Services exports to EU may be growing nicely (5.2% p.a., as opposed to services imports growth of 3.0% p.a.) but the £36 bn surplus it generates pays for just one-third of UK’s deficit in trade in goods. And since the difference between UK’s goods export‒import growth rate (3%) is wider than the difference in the UK’s services export‒import growth rate (2.2%) it never will – so long as UK maintains its current terms of trade with the EU.

The perverseness of UK’s EU-trade outcomes extends to the deficits UK incurs on those individual trade sectors most impacted by the Customs Union (See Tabs 2-11 of UK’s Top Ten Sectors. Data for each sector is presented in turn, in order of the total value of UK exports. Together, these top ten sectors contribute 80.9% of UK manufacturing exports, or 71.1% of UK goods exports). The UK’s two biggest two-way trade sectors with EU are motor vehicles (worth a combined £67.3 in 2017) and food & agriculture (£39.8 bn). These are also the two sectors where the EU’s common external tariff (CET) exerts the biggest impact on UK trade, and theoretically provides the greatest ‘protection’. Yet these are simultaneously the sectors where UK incurs its biggest deficits (See Tab 1, UK’s Top Ten Sectors. ‘Manufacturing’).

Both of these deficits have increased dramatically since 1998: by £19.2 bn (current prices) for motor vehicles, and £14.1 bn for food & agriculture. These deficits reflect a surge in imports from fellow Customs Union member states, for which no commensurate reciprocal gain or trade-off can be found in any other sector of UK’s goods trade. In other words, there is no trade-off within the Customs Union.

At this point in the analysis, it’s worth stepping through the 20-year trajectories of each of UK’s top ten goods-trade sectors to try to map supposed tariff-free advantage with actual outcome. What you find is either a sizeable and growing deficit: food products (-£14.4bn ); and beverages (-£2bn ); or stagnant growth plus a sizeable deficit: motor vehicles (0.4% p.a., -£28.bn); machinery (-0.1% p.a., -£7.2bn); chemicals (0.7% p.a., -£3.5 bn); computers and electronics (-5.8% p.a., -£11.3 bn); basic metals ( 1.% p.a., -£3.4 bn ); and electrical goods (-0.9% p.a., -£4.4 bn). Since we have now compassed 72% of UK’s goods exports, the obvious verdict is hard to swerve.

Damningly, the only two of UK’s top-ten EU traded sectors that have performed strongly since 1998 derive next-to-zero commercial advantage from the Customs Union. The UK’s second biggest export sector – transport equipment, which is 92% aerospace related (and therefore trades tariff-free) – has climbed a decent 2.7% per year. And UK’s pharmaceuticals exports (up 6.3% p.a. to EU, since 1998) gain minimal competitive advantage because major developed economies abolished tariffs on end-user pharmaceuticals during the Uruguay Round, which concluded in 1993.

So, on the basis of the UK’s own 20-year trade data, there is not one, single major sector of trade in which the Customs Union has delivered clear, demonstrable benefit to UK since 1998. Shown in aggregate, across all UK trade, the failure is stark. What’s troubling – for UK consumers, at least – is that the Customs Union appears to be turning the UK into a series of tightly controlled captive markets for EU producers. To see how, I shall in due course take a detailed look at the 20-year history of UK’s two biggest EU traded sectors — motor vehicles and food.

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Brexit will allow us to focus our trading energy on emerging global economic powerhouses

Brexit gives us a chance to become a modern, outward-looking, free-trading nation once again. 17.4 million people asked the political class to take back control over our trade policy so that we could trade freely with other countries, determine our own trade policy and develop our industries and ports so that we can open our […]

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Brexit gives us a chance to become a modern, outward-looking, free-trading nation once again.

17.4 million people asked the political class to take back control over our trade policy so that we could trade freely with other countries, determine our own trade policy and develop our industries and ports so that we can open our country to the world.

Whilst we must do everything we can to move seamlessly to a new trading relationship with our friends and allies in Europe after we leave, we should recognise that we have been guilty in the past of placing far too much emphasis on our relationship with the EU’s Single Market.

The report released yesterday by Global Britain – How the EU is a drag on UK prosperity economy – makes bleak reading and shows that the Single Market has never been central to UK prosperity.

The EU institutions are so focused on their political vanity projects, such as the euro, that they’ve forgotten why they were created in the first place: to look after the needs of the citizens and businesses of Europe.

The EU is failing the countries of Europe. Before the Single Market was formed in the early 1990s, the US and Eurozone each accounted for around a quarter of the global economy. Today, America’s proportion has largely remained untouched but the EU’s share of the world economy has almost halved. Had the Eurozone continued to grow at the same rate as the US the UK could have expected to have sold £82bn more in exports due to greater economic demand.

Unemployment is rife in the EU as well. Levels of unemployment are five times higher than ours in Greece, almost four times higher in Spain, more than double in France and over 17 per cent in much of the south of Italy. More than one in every three young Italians and Spaniards find themselves without a job and youth unemployment stands at a devastating 44 per cent in Greece.

Countries outside the EU will account for 90 per cent of global economic growth in the years ahead and Brexit will give us control over our trade policy so that we can adapt quickly, engage with the emerging global economic powerhouses and prioritise the interests of British consumers and businesses.

We will, at last, be able to look beyond the shores of the EU: to forge a free trade deal with countries like the US and to take up Japan’s invitation to join the Trans-Pacific Partnership. The Trans-Pacific Partnership would link us to our Commonwealth partners and we would be the only non-Pacific country with preferential access to this huge market.

This doesn’t mean that we will be turning our backs on our close trading partners in Europe. We will continue to trade with, protect and work closely with our friends in Europe – but we shall do this as a sovereign nation, championing free trade around the world.

By unshackling ourselves from an organisation that is more concerned about super-state status than economic competence, there are no limits to what our country is capable of. And we can re-focus on raising the living standards and future opportunities of many generations to come.

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Howard Flight: The Brexit deal. I suspect we will end up being presented with a last-minute fudge.

Whichever way the Prime Minister eventually goes, she will also continue to run the risk of splitting the Conservative Party.

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

I am shocked that the Remain interest has been so successful in wrongly frightening people about the problems of the UK functioning under WTO if there is no EU deal. The EU accounts for a diminishing part of the world economy and of our trade. Its markets are slow-growing, and its population is ageing. Its share of world output has halved since 1980 and will continue to reduce. The growth markets of the future are outside the EU. The GDP of the Commonwealth is now some 30 per cent more than that of the EU (including the UK).

We are also clear that we do not want to be tied to accepting instructions from the EU and ECJ, unable to establish our own trade agreements; and that it is also undesirable to remain tied to the EU economically with its antiquated and protectionist Customs Union, protectionist Single Market, and its overweight regulation model. Membership of the EU has been a drag on the UK economy for a long time. What we need is a post-Brexit competitiveness boost, which to be effective requires a clean break. Post-Brexit, we also need to be able to decide our own regulatory regimes.

My preference for some time has been a Canada-style managed “Free Trade Plus” Agreement, but the Prime Minister’s negotiations have opted for keeping the UK tied to the EU, in several ways and for a long time. I would, therefore, now prefer the option of a managed, No Deal Brexit, trading under WTO rules. The WTO option is not about falling off a cliff or crashing out. Rather it would provide us with the economic freedoms we need in order to make the best of Brexit. It was this which the citizens of this country voted for in the referendum. Around a half of our international trade (55 per cent) is already conducted under WTO rules, and with non-EU, WTO members.

The WTO has made huge advances in facilitating trade across customs borders: under the Landmark Trade Facilitation Agreement (TFA) developed countries with adequate resources are expected to install state of the art, border systems to avoid impeding trade. Streamlined, computerised borders are now the norm. The WTO’s rule-based trading regime is comprehensive, tried and tested and respected by the world’s trading nations.

Over the last decade Britain’s exports have grown by over 60 per cent. Exports to the EU grew by only 40 per cent,  but to non-EU economies by 80 per cent. It is clear where the growing markets are. Trade and the UK can thrive under WTO rules. Trade is driven by commercial realities, irrespective of the Single Market – to which we would still have access under WTO rules, as a third country. From an EU perspective, the possibility of free trade with the UK should be extremely attractive. The EU has a trade surplus with the UK of approximately £100 billion a year. For Germany, the UK is the second biggest market for its cars.

The WTO fear campaign has hugely exaggerated the potential risks of temporary and short-term crisis in moving our EU trade to WTO rules. Given the preparation that has gone on, I believe there would be very few glitches in practice. For the longer term, just as we conduct our trade successfully with the US under WTO rules, so too we can conduct our trade successfully with the EU under WTO rules.

How are the last-minute negotiations are likely to break? Theresa May is on clear record as saying that “no deal would be better than a bad deal”. But she does not want No Deal, as it would run the political risk of breaking up the Conservative Party. She has now delayed the “meaningful vote” in the Commons until March 12th at the latest, when the Prime Minister’s deal will be the only option. It is also clear that there is no parliamentary majority for even a managed No Deal.

The EU would also like to achieve a deal, in part to secure the £39 billion UK contribution to the EU; and, longer term, to support EU trade and the EU £100 billion, UK trade surplus. The EU does not, however, wish to make departure from the EU ‘too easy’, and wants to discourage others from seeking to depart. This could end up causing the UK to withdraw to WTO, unilaterally, but this now looks unlikely. The key territory is the Northern Ireland backstop terms. An acceptable deal for the UK could be achieved with modern technology. But in the backstop agreement that the Prime Minister has negotiated so far, the UK is left being required to accept ECJ law and rulings, without any appeal. The main reason for the referendum result was a strong objection to being told what to do by EU organisations.

I suspect both the UK and the EU will, ‘at the last minute’, manage to agree an unsatisfactory compromise, which sounds just about acceptable to both; although I fear it would be a bad deal for the UK, and could be a sell-out on the crucial issue of having to accept ECJ law.

Whichever way the Prime Minister eventually goes, she will also continue to run the risk of splitting the Conservative Party. For what it is worth, my advice to her would be to stick to principle (which is always defendable) rather than opt for fudge. I anticipate, however, that we will end up with a standard EU, last minute, ‘fudge’ Deal.