The myth of frictionless trade: there is little difference between handling EU-bound freight and that heading elsewhere

The company I founded exports to over 120 countries – including every country in the European Union. You may therefore have expected me to be agitating to scupper Brexit. However, when one runs a family business, one’s vision tends to be long-term rather than short-term. I strongly back Brexit because it is in the best […]

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The company I founded exports to over 120 countries – including every country in the European Union. You may therefore have expected me to be agitating to scupper Brexit. However, when one runs a family business, one’s vision tends to be long-term rather than short-term.

I strongly back Brexit because it is in the best long-term interests of my country, my company, my employees and myself that we disengage from the structures of the EU. As I said throughout the referendum campaign, there will be bumps in the road – but the fundamental fact is that the EU continues to travel in a direction that is contrary to our best interests and that has only been magnified over the last two and a half years.

Having now studied the Prime Minister’s Withdrawal Agreement, I am extremely disappointed by its complete lack of ambition and the naivety of the approach taken by the her and UK negotiators. It gives far too many hostages to fortune and while ministers interpret it and give assurances this way and that, the passage of time and pressures on future ministers will mean that those assurances stand for naught. The Political Declaration too, lacking any legal force, is not worth the paper it is written on.

The lack of ambition has meant that what could have been a mutually successful agreement building on some of what has been developed over the last 40-odd years has been lost. There have also been a number of fundamental misunderstandings, perhaps deliberate, by the Prime Minister and others at the top of the Government.

The first of those is that we voted Leave just to control immigration, as they seek to tell us. We did not: we voted Leave to take back control of our country and from that control of immigration, fishing, trade etc.

The second is the fixation with frictionless trade – an unattainable fiction. Trade within the EU is not frictionless at the moment, though the points of friction are more regulatory than tariff. The perception amongst politicians is that all trade with countries outside the EU is full of points of friction and that anything other than being in the EU Single Market will lead to long queues of trucks and delays with airfreight etc.

As someone who has spent the last thirty years trading goods with the world, I can say that for an exporter there is little difference in the way we handle freight going to the EU compared to the rest of the world. The United States is our biggest market and we compete directly against US companies in their own market, in part, because we deliver next day to anywhere in the United States by 1pm their time, customs cleared. That, to me, is frictionless trade and it is at a cost that is not dissimilar to the same service to customers in the EU. It is frictionless because the industry has made it so and the same can be done for future trade with the EU, requiring no complex customs unions or being in the Single Market.

Great attention is rightly given to the value of trade to the UK economy but it is vital to remember than only 8 per cent of UK businesses actually trade with the EU – accounting for only 13% of UK GDP. That means that 92% of businesses are having to obey all the Single Market regulations and yet aren’t gaining any benefit from it. The very fact that regulation can be tailored to UK requirements when we Leave the Single Market ought to give a massive boost to the productivity of the 92%. The 8% will still have to meet the regulations pursuant to doing business in the EU in the same way as we have to meet US, Russian or other countries’ regulations when doing business overseas.

Whilst an amicable Withdrawal Agreement would have been my preference, we are where we are. The Prime Minister said many times that no deal – again a misnomer as it would be a WTO deal – would be better than a bad deal. Her deal is a very bad deal and the prospect of a clean Brexit on 29th March 2019 with no hostages to fortune, bringing an end to all the hand wringing and rerunning of the referendum has become a very tantalising prospect.

What is the big deal about No Deal? It gives certainty to business, ends division and brings real purpose to the country. There will be some disruption, but I am sure that within a few weeks – if not days – we would wonder, like with the brouhaha over the Millennium Bug, what all the fuss had been about. Within months the Chancellor’s dour predictions would, like after the referendum, prove to have been pure scaremongering.

Come on, it’s time to roll up our sleeves and go for it.

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How can we stop this chronicle of weakness from ending in vassalage?

We was robbed. That’s the outcome of Theresa’s cunning plan to put Britain on parole – tagged, dependent on the whim of EU magistrates and under an ASBO enforced by the EU court to ban association with undesirables outside. The former colonial power will have accepted colonial rule from Brussels. How did this come to […]

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We was robbed. That’s the outcome of Theresa’s cunning plan to put Britain on parole – tagged, dependent on the whim of EU magistrates and under an ASBO enforced by the EU court to ban association with undesirables outside. The former colonial power will have accepted colonial rule from Brussels.

How did this come to pass when Theresa set out announcing that Brexit means Brexit, not subjection? She meant it, oh how she meant it at the time, but as she showed by her authoritarian rule at the Home Office, she is very dependent on trusted advisers. When Nick Timothy was one, she meant to leave; but as she came to rely on Olly Robbins, voice of a Civil Service loath to leave, and listened to our scared business community, she got nervous. With Boris emerging as a threat, she changed her position and began to lay the plot for this trap.

It was achieved in stages. First trigger Article 50 before we had made preparations or plans. Then get pushed into the EU’s cage by agreeing the money and Northern Ireland before negotiations on trade. Finally, accept a non-binding agreement allowing them to exact more concessions by keeping us in the Single Market as long as they want. The first nation to accept taxation without representation since the Danegeld.

So the big question is how to stop this chronicle of weakness ending in vassalage? The Cabinet has accepted it because its members want to keep their jobs. The Tory Party will mostly accept too because loyalty and power are the Tory instincts and they fear Jeremy Corbyn more than humiliation. Even strong Remainers like Ken Clarke and Nicky Morgan are pulled by these imperatives.

With the Tory Party anaesthetised, the big problem becomes getting the abdication deal through the Commons. Labour will oppose it, some because they hope for an election (though that’s ruled out by five-year terms), others because they want a People’s Vote which appeals strongly to those stronger in the heart than the head, but is really intended to kill Brexit. In fact, a referendum isn’t possible in the four months before we Leave.

So the problem is whether a sufficiently large number will see it as the nearest thing to Remain they’re likely to get and support the Government, to cancel out Tory dissidents defecting the other way. This is a similar situation to 1972 when sufficient Labour MPs voted with the Tories to produce a narrow majority for joining. The same could happen now and the Parliamentary Labour Party is much more euro-enthusiastic than it was then.

Thus everything depends on a totally unpredictable vote. If the Government wins, it’s a vote for subjection which the EU will be happy to enforce to squeeze further concessions. If it loses, it’s necessary – as Theresa says – to go back to square one and negotiate more effectively, with or without her. An extension of the two years would be difficult for the EU to refuse. Their claims that this unequal deal is final are merely a negotiating tactic which means nothing if Britain can’t ratify it.

Whether they refuse an extension is a matter for abnormal psychology, though they are as unprepared for a real break as we are and couldn’t justify any attempt to ruin and isolate a member they claim to love so much. Even if it demonstrates that an uneasy coalition of 27 nations can only say “no”, extension allows more time to prepare for the no deal, which is better than subjection. The Government will be nervous, business hysteria will become hysterical, fear creation will go into overdrive, but it’s the only way out if the EU remains as obdurate and unyielding as it’s been up to now.

They can’t set out to destroy us. Trade will continue at WTO tariffs on which we trade with the rest of the world more successfully than we do with the EU’s protectionist bloc. Alternative ports will expand to combat any French choke up at Calais. The pound will fall to stimulate exports, tax imports and leap any tariff barriers, but that’s got to happen anyway with such a huge deficit. Capitalism, even as feeble as ours, has enormous regenerative power. It can develop new suppliers and ride out difficulties, particularly if the state helps with aid and a Keynesian boost. Having our cake and eating it won’t be too difficult if we pay the EU’s low external tariffs on the cake.

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Howard Flight: No Deal is better than this Bad Deal

This Withdrawal Agreement would leave us half in and half out of the EU as a ‘vassal state’. It is a denial of the votes of 17.4 million people to leave the EU.

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

It is extraordinary that the Prime Minister does not appear to pay heed to the advice of legal experts like Martin Howe, or members of her own Cabinet and leading Conservative Party activists. The only rationalisation is that she fears a no deal on WTO terms and has allowed herself to be influenced by the misleading propaganda here. Most of the world trades perfectly happily and effectively on WTO terms. But she has also concluded that she cannot get a better deal from the EU than the one she now has. She has thus ended up with the opposite of what she promised – a bad deal which is worse than no deal.

Under the terms of the Withdrawal Agreement, we would hand over £39 billion with nothing guaranteed in return. We would remain a rule taker over large areas of EU law, such as social, environmental and employment policies. We would be obliged to obey EU laws, but with no further influence on how they are drafted. Potentially worst of all, we would have no exit from a customs union.

A joint committee would be charged with overseeing the UK’s ability to proceed to a further trade relationship. If an agreement cannot be reached the UK, would enter a backstop-enabled customs union with the EU, despite manifesto and public assurance commitments to the contrary. We could only leave it with the agreement of the EU and, whilst remaining in it, we could not negotiate our own trade deals without EU permission. Having witnessed the EU’s behaviour in the negotiations to date, it is clearly not to be trusted to behave decently in future negotiations under May’s Chequers agreement.

Domestically, the agreement creates internal borders within the UK. Northern Ireland would become a rule taker. This is completely unacceptable to us, and to the Democratic Unionist Party.

The European Court of Justice would remain in control of the agreement and of major areas of EU law, effective in the UK. This Withdrawal Agreement would leave us half in and half out of the EU as a ‘vassal state’, bound by many laws over which we have no influence. Such a deal is a denial of the votes of 17.4 million people to leave the EU.

“We have had some tough choices to make.” Fox’s speech at Royal Portbury Dock. Full text.

“The divisions of the referendum need to be consigned to the past. Now is the time to…lead our country to a future of freedom, success, and prosperity.”

Liam Fox, Secretary of State for International Trade, gave the following speech today at the Royal Portbury Dock.

It’s a pleasure to be here this morning at the Royal Portbury Dock.

As MP for North Somerset, as well as Secretary of State for International Trade, it’s fair to say I have a significant interest in the success of a venture that supports more than 500 jobs in my constituency.

And I can’t help but notice that business is booming.

At the time of the referendum, we were told that just voting to leave the EU would cause such an economic shock that we’d lose half a million jobs, our investors would desert us, and we would require an emergency budget to deal with the ensuing fiscal imbalance.

What’s happened since? We’ve added over 700,000 jobs to the economy, with more people finding work than at any time in the past 40 years.

This upward trajectory shows no signs of slowing. Indeed, the OBR has calculated that we can add another 800,000 jobs without creating inflationary pressure, because there’s still slack in the economy.

In 2017 we saw total UK exports rise by 10.9% compared with 2016.

And what did we sell? We sold almost £50 billion worth of mechanical machinery, £41 billion worth of motor vehicles, £16 billion worth of aircraft and £14 billion worth of medical equipment.

And, as I have to mention on St Andrew’s Day, some £4.3 billion of Scotch Whisky.

So much for Britain not making anything anymore. And that’s before we even consider our world-leading services sector.

Clearly, the vote to leave the European Union has not had the catastrophic effect on our economy that was predicted. Quite the reverse.

Now is the time to raise our sights, and acknowledge that there is a world beyond Europe, and a time Beyond Brexit.

My Department for International Trade exists to look to this world, and plan for that time. Perhaps more than any other part of government, we are mandated to look beyond the process of leaving the EU and to prepare for the open, global future that lies ahead.

The referendum settled the question of our departure from the European Union and our manifesto made clear that we will leave the Customs Union and the Single Market as we do so.

The IMF has predicted that 90% of global growth in the next 5 years will originate outside the EU. So the question is, where do we, as a nation, position ourselves to take advantage of the opportunities that this growth will produce.

Future relationship with the EU

The government has made clear that we want to take a balanced approach to the question of our future trading prospects. We need to maximise our access to the EU market but without damaging our potential to benefit from emerging trade opportunities in other parts of the world.

The 27 nations of the European Union constitute some of our largest trading partners. As a whole, some 44% of this country’s exports of goods and services still go to the EU, although that proportion has been declining over the past decade or so.

The withdrawal agreement, and the political declaration on the future relationship, have put us on the verge of securing a deal with the European Union.

It is a deal that delivers on the result of the referendum, ending vast payments to Brussels, and giving the UK control over our own borders for the first time in a generation.

Of course, the end of free movement does not mean the end of immigration. The UK is always open to those who want to work hard and build a life here. But now, we can offer a level playing field, ensuring that we can admit the people we need to meet business demand, wherever they come from – so it won’t matter if you were born in Marseilles, Memphis or Mumbai. The key difference is that we will set the rules according to what we believe is best for our own country.

Above all else, the withdrawal agreement and the political declaration provide the stability and certainty that businesses crave, as well as a firm foundation on which to continue to operate across the EU.

The political declaration proposes the creation of a free trade area for goods, combining deep regulatory and customs co-operation with no tariffs, no fees, charges or quantitative restrictions across all goods sectors.

This would be the first such agreement between an advanced economy and the EU, a recognition of the unique position of the UK and our economy to those of our European partners.

Ambitious arrangements have been made in the political declaration for services and investment, arrangements that go well beyond WTO commitments and build on recent EU FTAs.

And an arrangement on financial services, grounded in the economic partnership, provides greater cooperation and consultation than is possible under existing third country frameworks.

But we have also been clear that our future relationship with the EU would recognise the development of an independent UK trade policy and not tie our hands when it comes to global opportunities.

We have set out an approach which means the UK would be able to set its own trade policy with the rest of the world, including setting our own tariffs, implementing our own trade remedies, and taking up our independent seat at the World Trade Organization.

FTA Consultations

Perhaps most importantly, during the implementation period, my department will have the freedom to negotiate, sign and ratify new trade agreements. . The Withdrawal Agreement means that, from the 29th of March next year, we can begun to build closer commercial relationships with our closest allies, such as the US, New Zealand and Australia, as well as laying the groundwork for improved market access for UK companies to key global growth economies.

As some of you may know, we recently carried out extensive public consultations on our future FTAs with those three nations, as well as on the UK’s potential accession to the Trans-Pacific Partnership – known as CPTPP.

Leaders across these nations have been clear in their endorsement of future trade agreements with the UK.

As Prime Minister Shinzo Abe of Japan put it, we would “be welcomed with open arms”. Far from being isolated, Britain will be an ‘in-demand’ trading partner.

Over 14 weeks, we asked businesses, organisations and individuals to tell us what they needed from these FTAs, and how the Department for International Trade can help them to thrive internationally.

The response rate was phenomenal, far exceeding all expectations.

Above all, the exercise demonstrated the interest that exists in the shape of the UK’s future trade policy, right across the country.

How do we take advantage of this groundswell of interest and engagement from businesses and individuals?

The answer is to harness that enthusiasm to boost exports and attract investment to this country. Clearly, businesses the length and breadth of Britain are eager to move into new markets overseas.

If we want Britain to become a global exporting superpower, all we have to do is unlock that potential.

Even before we get to new trade opportunities afforded by new trade agreements there are still considerable export opportunities for British businesses to exploit in existing markets. We still have ground to make up on our international competitors in many of these countries.

Export Strategy

Our new Export Strategy, published in August, is an important first step to doing just that.

I won’t exhaust you with the detail. But suffice to say that the Export Strategy represents one of the most comprehensive export packages offered to businesses anywhere in the world, designed to inform, connect, encourage and finance exporting opportunities for businesses of all sizes.

There are currently over 24,000 live export and investment opportunities on our website. Put simply, the world wants what Britain is selling. Businesses large and small can find these real-time opportunities at great.gov.uk.

Royal Portbury Dock

And the Royal Portbury Dock where we now stand is a perfect example of the dynamic, global outlook that hundreds of thousands of British businesses have already embraced.

In 1991 the dock was owned and managed by Bristol Council, and it was regarded as a ‘white elephant’.

Since the port was privatised almost 30 years ago and reborn as the Bristol Port Company, over £500 million has been invested to turn this into one of the most capable and advanced ports in the United Kingdom.

Each year, the Bristol Port Company handles some 750,000 motor vehicles, 27% of UK aviation fuel imports, 10% of coal imports, and more than 6 million tons of bulk dry goods.

In all, the work done here at Portbury, and at Avonmouth, contributes over £1 billion to the British economy. Now that is something to be proud of.

Integrated imports and exports

This port, and dozens like it across the UK, shows that the UK’s global commercial footprint is not just about what we sell overseas, but also what we import into this country.

It is crucial in ensuring that competition provides consumers with greater choice and at affordable prices.

But in a highly integrated economy it would also be wrong to ignore the huge and necessary role that imports play in the production of goods and services for export – some 23% of all UK exports have some added value or component that originated as an import.

Less than half of this value added originates in EU countries. And it shows how the United Kingdom is already closely linked to global value chains, that extend far beyond the boundaries of Europe.

In the long-term, a global future for an economy as large, diverse and interconnected as ours was inevitable. Our departure from the EU, combining an open, comprehensive trade relationship there, with the possibility of creating new trading relationships elsewhere is the next phase of that journey.

WTO/The changing world of trade

Internationally, of course, a wholesale revolution in the patterns of trade has already arrived. The tectonic plates of global commerce are shifting under our feet. Our future FTAs are hugely important – not least because they are strategic as well as economic tools – but in the long run, it is not what we do unilaterally, or even bilaterally, that will make the biggest difference.

Instead, it is working to update and improve the rules-based international system that governs global trade.

How the multilateral trading environment develops will almost certainly be the most crucial determinant of the degree of trade liberalisation that will occur and consequently the scale of future opportunities.

This is an area in which the UK will play a pivotal role. The world’s fifth-largest economy taking its seat at the WTO, as a powerful and unabashed defender of free trade, will be a key moment for the United Kingdom. It is one of the most important, if seldom mentioned, aspects of Brexit.

With 164 full members, the WTO is the home of the rules-based international system, and the crucible of free and fair global trade.

Yet even they will admit that their current rules are in need of updating.

The fundamental framework of the WTO’s rules has not changed substantially since 1995. A time before the widespread use of business email. A time before internet banking. A time before data became a valuable traded commodity, like cars and steel.

Consider this: back in 1995, if I asked you whether the digital code that I have sold you on the internet to make something on your 3D printer counts as a good or a service, you wouldn’t even begin to understand the question, let alone be able to answer it!

This is an example of how the real economy has moved and outgrown the rules and regulations that still attempt to govern it.

It’s not just the architecture of the WTO itself that needs reform, but also the regulatory framework, which must be flexible enough to move with the new realities of the global economy, updating itself in real time.

The Prime Minister acknowledged this recently in a speech at the Guildhall when she observed that goods as a proportion of UK and global commerce are declining.

This will be a priority as she attends the G20 in Argentina, where she will hold trade talks with world leaders including Argentinian President Macri. The leaders are expected to agree the first ever UK Trade Envoy for the country.

And as the proportion of trade in goods declines, the digital and knowledge economy are racing ahead, as new products and services emerge from the disruption that technology has left in its wake.

The future of world trade has already arrived, and the United Kingdom is ideally prepared to realise all the opportunities of the digital age and embrace the possibilities of communications technology as a commercial tool.

To take just one example, a higher proportion of retail spending takes place online in the UK than anywhere else on earth. More than China or the USA. More than South Korea. More than Japan.

Recent research by PayPal found that in the 12 months to July, 1 in 7 online shoppers globally had bought goods from the UK – more than any other European country.

In fact., overall, they found that the UK was the third most popular country in the world from which to buy goods online, behind only the US and China.

There are few countries that are as prepared for the coming digital economic revolution as the United Kingdom.

The world’s investors already know this – last year, the UK tech sector attracted more venture capital investment than Sweden, France and Germany combined.

The simple fact is that this country is already a genuine world-leader in fields from artificial intelligence, to digital and data trade, to e-commerce and FinTech.

In the knowledge economy, Britain’s shelves are already stacked with what the world wants to buy.

This is not to say that we are falling behind in goods. On the contrary, those same factors that have made us a global powerhouse of the digital economy have enabled us to retain the cutting-edge of advanced manufacturing.

For example, 17% of all the aerospace products sold in the entire world come from the United Kingdom.

Nearly half of the world’s planes are flying on wings that have been designed, engineered or assembled within just a few miles of where we are today, either in Filton or across the water in Wales.

And how do these wings reach their customers in every corner of the world? They are shipped on specialised ferries from right here in the Royal Portbury Dock.

The world beyond Europe, and the future beyond Brexit, starts right here.

And if you want to know if the world has confidence in this new Global Britain, then look at our investment record and see where global investors are choosing to put their money.

According to UNCTAD, in the first 6 months of 2018 the UK was second only to China in terms of FDI, ahead of the United States and data published by Ernst and Young showed that all parts of the UK and all England regions are benefiting with around 50,000 jobs created as a result.

In the 19th Century, Britain became the world’s first free-trading nation. In the 20th century, we helped to design and create the architecture of global trade.

And in the 21st, we will help reshape the rules-based international system through our independent trade policy.

Today I can announce that in April, when we become an independent trading nation once more, I will push for three key things:

Firstly, the UK will aim to revolutionise the rulebook on digital trade. The existing framework of international trade is vitally important to the functioning of the global economy. Yet, as we have seen, all too often its rules are outdated and unfit for purpose, acting as a brake on the digital economy.

There are too many innovative, rapidly growing companies who find it too difficult to operate overseas because of ridiculous barriers like unjustified server localisation requirements.

Our ambition is to negotiate agreements that go further on digital trade than ever before.

To join those agreements, such as the CPTPP, which take digital seriously.

And to work in coalition with other like-minded countries to drive reform on digital services at the WTO.

Secondly, we will put services at the heart of our trade policy.

The mass liberalisation that has reduced barriers on global goods trade, has never been mirrored for services. Yet the UK is an 80% services economy and has huge comparative advantage across the service sectors, from accountancy and legal, to science, research and development.

Services are a huge part of our present, and will be a larger part of our future, and we must play to our strengths, creating partnerships with countries around the world who want what we have to offer.

This is our commitment to the British SMEs of today, so that they can become the digital giants of the future.

And thirdly, we will continue to fight trade protectionism and improve international economic co-operation.

This is not something that Britain will be doing alone. As the political declaration with the EU says, our unique relationship with the EU 27 will ensure that we can work together to improve global trade, while continuing to develop and operate our own independent trade policy.

But our steadfast commitment to the philosophy and practice of free trade is an irreducible element of what we believe and who we are.

The withdrawal agreement and the political declaration will not please everyone, and we have had some tough choices to make. Choices which many in Parliament, on both sides of the House, are yet to face up to.

But the deal we’ve reached will give us a firm and stable base on which to leave the EU and build this country’s global future, a future that still encompasses Europe, of course, but also the wide fast-growing markets beyond, with all the opportunity that entails.

We will maximise our post-Brexit opportunities by helping British businesses take advantage of the considerable untapped potential of existing markets.

We will use our independent trade policy to negotiate new trade agreements and we will use our ability to act independently at the WTO to shape the global trade environment of the future, defending the open, free and fair trade that is crucial to the elimination of poverty, the nurturing of stability and the building block of our collective security.

We are well prepared for the future of world trade. We are embracing all the possibilities of the digital economy.

No other country has the same combination of fundamental strengths that will allow us to thrive in an age where knowledge and expertise are the instigators of success. Our recent export and investment performance show that sceptics have been wrong. Britain is flourishing.

The divisions of the referendum need to be consigned to the past. Now is the time to set aside our differences, and lead our country to a future of freedom, success, and prosperity.

In politics we cannot always have the luxury of doing what we want for ourselves, but we have an abiding duty to do what is right for our country.

Was the Withdrawal Agreement drafted by civil servants seeking to make remaining in the EU look attractive?

The Withdrawal Agreement has been drafted by a small number of Remain-inclined civil servants under the direction of a Prime Minister who campaigned for Remain. It will pay £39bn in reparations without any agreement on a future economic relationship with the EU. It isolates Northern Ireland as a colony in preparation for its future absorption […]

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The Withdrawal Agreement has been drafted by a small number of Remain-inclined civil servants under the direction of a Prime Minister who campaigned for Remain.

It will pay £39bn in reparations without any agreement on a future economic relationship with the EU. It isolates Northern Ireland as a colony in preparation for its future absorption into the EU. Martin Selmayr, the European Commission’s secretary-general, known as the “Monster of Brussels”, admits that this will be the “price” that the UK must pay for Brexit.

It locks the UK into a “single customs territory”, where the UK is subject to the laws of a foreign power without having any influence on how those laws are determined and without any unilateral right to leave – thereby protecting the EU’s trade surplus in goods with us of £95bn. This foreign power would determine the regulations for goods sold in Northern Ireland and for the UK-wide labour markets and would also set common rules for the environment, social standards and state aid “with the aim of ensuring the proper functioning of the single customs territory”.

During the transition period – which could be extended indefinitely – there would still be free movement, we would not regain control of our fisheries, the EU would still send us bills, and it can veto our foreign policy. Parliament would be required to pass laws to ensure public authorities and judges follow EU rules during the transition. The European Court of Justice (ECJ) would have supremacy over not only UK judges, but over the UK government transposing its EU obligations, and would also be the final arbiter of the Withdrawal Agreement.

And it gets worse: the EU can inhibit us competing against it, while it remains free to compete against us. Take financial services, one of our most important industries. For every £1 of financial services we buy from the EU, we sell £6 to the EU.  It will now seek to force significant parts of our financial services industry to move to the EU. Further, it has refused to agree a guaranteed enhanced equivalence declaration, so we will have to negotiate that in the transition period, while it continues to poach our business. Indeed, the agreement covering services – where we currently have a trade surplus with the EU of £28bn – will have to be negotiated during the transition period.

In terms of defence, the UK would be required to collaborate on future projects of the European Defence Agency, under conditions of EU law, with a European Army as the ultimate objective. Indeed, it is much more serious than this. The Prime Minister has secretly given away control of significant aspects of UK defence policy to the EU in a way that undermines NATO and our Five Eyes intelligence and security alliance with the US, Canada, Australia, and New Zealand. The clear intention by the EU is to destroy the UK’s relationship with the US and the Commonwealth.

And to top it all, the “single customs territory” will form the basis of our future trading relationship with the EU, thereby blocking any of the trade agreements that Liam Fox’s International Trade Department has been negotiating from ever coming into force. The “backstop” is permanent, thereby locking the UK into certain EU laws indefinitely.

And if we dared to defy the EU on any of this, it has threatened to block our planes flying into and out of our country and stop Eurostar trains from running.

All this amounts to little more than unconditional surrender. Yet the Prime Minister believes with “every fibre of my being” that the Brexit deal is the “right one for the country” – a country with the sixth biggest economy in the world, where only 8 per cent of companies trade with the EU, and where we buy £67bn more in goods and services from the EU than it buys from us.

The Withdrawal Agreement is so full of absurdities that neither Leavers nor Remainers could possibly accept it. It is not just a bad deal, it is the worst possible deal. The clear purpose of the British civil servants who drafted it is for people to think that, if this is what Brexit means, we’d be better off remaining in the EU.

In short, the Withdrawal Agreement is not intended to be the final stage of a transition to a “softer Brexit”, but rather the next stage in the establishment’s campaign – which began the day after the referendum – to reverse Brexit. Confirmation for this comes from comments made by senior EU officials heard by Patrick O’Flynn, the UKIP MEP for the East of England.  The plan – fully endorsed by British officials – is to get the UK back into the EU in time for the European Parliamentary elections in 2024, as he recently explained on BrexitCentral:

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

This clearly has a ring of truth – and it means that the entire British negotiation has been an elaborate charade. Yet this deliberate deception is dangerous and delusional because of the way that the EU is heading.

The EU is an increasingly protectionist trading bloc with big business lobbying Brussels for more regulations to make it more difficult for small companies to enter the market and compete, and a Customs Union which imposes more than 13,000 tariffs on imported goods. As a result, EU consumers are paying an average of 17 per cent above world prices on food.

The EU is a political project that is fundamentally anti-democratic, as a whole range of European leaders have made abundantly clear. Jean Monnet said:

“Europe’s nations should be guided towards the super-state without their people understanding what is happening. This can be accomplished by successive steps, each disguised as having an economic purpose, but which will eventually and irreversibly lead to federation.”

The “purposive” nature of EU law allows the ECJ to interpret and reinterpret the wording of EU laws in line with the European Commission’s (often changing) intentions. 

The euro currency is a disaster – and has led to unsustainable trade and capital flow imbalances between the southern and northern states, as well as wrecking the economies of the former. Most of the EU’s big banks are in very serious financial difficulty. There is increasing euroscepticism in the EU – dismissed as “populism” by europhiles – demonstrated by the East/West split over the immigration and internal security crises.

And to top it all, there is massive corruption in the EU, with the EU’s accounts not having been approved for the last 20 years by the EU’s chief auditor in respect of around €100bn of expenditures.

The EU, far from uniting Europe in an ‘ever closer union’, is slowly destroying Europe.

It is now quite obvious that the Prime Minister’s deal would not mean a meaningful Brexit, despite the clarity of her Lancaster House speech and the promise that “Brexit means Brexit”. Indeed, the deal shows complete contempt for the clearly expressed wishes of the British people in the referendum.

And what does a meaningful Brexit look like? Given the fact that the EU is not willing to cooperate in delivering a deal that is in the best interests of all the citizens of Europe, then the only solution is a non-cooperative one based on World Trade Organisation (WTO) rules. This is not “no deal”. It is precisely how we conduct around half of our international trade with the rest of the world. And it works.

According to the IMF’s Direction of Trade Statistics, 15 of the 22 largest exporters to the EU trade under WTO rules and increased their EU exports by 135 per cent between 1993 and 2015. The other seven had bilateral trade agreements and increased their exports by 107 per cent. The 12 original EU members increased their intra-EU trade by 70 per cent, while the UK increased its trade with the EU by just 25 per cent. UK goods exports to the 111 countries with which it trades under WTO rules have grown at 3 per cent pa, three times faster than UK trade with the EU.

In due course, a “Canada plus plus plus” deal might be agreed which involves services, and especially financial services, as well as goods. But none of this can be done under the terms of Theresa May’s Withdrawal Agreement.

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Don’t be taken in by the Rampant Remainers’ campaign of fear

It’s tempting for an ex-MP like me to claim that things wouldn’t be in such a mess if I was still there. Sadly it’s also daft. Though I might have been in the Shadow Cabinet for at least a week, for backbenchers impotence is a way of life. So like those other pundits, our new […]

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It’s tempting for an ex-MP like me to claim that things wouldn’t be in such a mess if I was still there. Sadly it’s also daft. Though I might have been in the Shadow Cabinet for at least a week, for backbenchers impotence is a way of life. So like those other pundits, our new ruling elite of little Sir (and Lady) echoes who see Brexit as a peasants’ revolt against their superior wisdom, I have the right to treat prejudice as eternal truth. So here’s mine.

It’s pretty daft to change horses in midstream by getting rid of Theresa. Yet it is sensible to reject the half-baked deal she’s cooked up on the advice of her posse of Sir Humphreys. That would send us naked into the conference chamber to become a permanent Brer Rabbit to the EU tar baby.

Rejection means there’s no soft option of a People’s vote against the People’s decision because there’s no treaty to vote on. It sends Britain back into negotiation with or without Theresa, puts some lead in our pencil, allows us to withhold the £39 billion Euro-geld as a negotiating counter and forces the EU to extend the two year deadline.

If they treat us as if they’ve got us over a self-built barrel and refuse to extend, then we face an exit with no deal. That’s is why the rampant Remainers have embarked on a massive campaign of fear about the horrors of departure.

For them it’s “jumping off a cliff”, suicide, an end to pills and prescriptions, an open door for terrorism and bubonic plague, economic Armageddon, death for the car industry, disaster for those ailing regions which were stupid enough to vote for Brexit, and for all the babies who can’t get EU nannies. It’s an unimaginable horror. Worse than George Osborne.

It’s all designed to produce national panic. It’s also nonsense. It’s inconceivable that an EU which loves us so much, will suddenly seek to destroy us. It’s silly to assume that our capitalism is so feeble it has no regenerative energy, or that other EU ports won’t welcome British business if the French block Calais.

Most of all it’s insane to argue that we can’t trade on WTO terms. The rest of the world does. We do so in markets outside the EU where we still trade with a surplus, unlike our horrendous deficit with the EU. Those markets are growing while the EU stagnates. We’d have cheaper food instead having to protect France’s expensive agriculture. Even the car industry, which would face 10% duties, can overcome them. The pound will fall in value (as it must anyway with our deficit) boosting exports, taxing imports.

What’s to fear from all that? There would be transient problems of adjustment but capitalism has strong regenerative power, particularly if it’s helped to develop domestic supply chains by state aid, an industrial policy and the boost of Keynesian spending, instead of being held back by austerity.

Most appealing for a Yorkshire man, WTO tariffs on EU goods would produce over £10 billion for the Exchequer and avoid the folly of handing over £39 billion for nowt.

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The processes exist for life outside the EU’s Customs Union – we just need to prepare for them

I was pleased to attend the publication of Lord Lilley’s Fact – NOT Friction in London this week; an excellent, informative paper published jointly by the European Research Group and Global Britain explaining how there are widespread misconceptions about the costs and implications of not being in a customs union with the EU. I agree with him: […]

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I was pleased to attend the publication of Lord Lilley’s Fact – NOT Friction in London this week; an excellent, informative paper published jointly by the European Research Group and Global Britain explaining how there are widespread misconceptions about the costs and implications of not being in a customs union with the EU. I agree with him: these misconceptions have led the Government into the wrong negotiating strategy for Brexit.

In Rotterdam the week before last, I saw how transit documents procured in advance and lodged electronically allow veterinary goods from third countries all over the world outside the EU to move predictably and rapidly into the EU, and be cleared by their import declaration and any other checks necessary in commercial premises 40km behind the border. 

The three essential documents to make this run are the export declaration; the transit document to get the goods through and behind the frontier; and the import declaration that can then clear the goods once inland.

Non-veterinary goods go deep into Europe under such documents and are cleared when the import declarations are made on arrival at customer warehouses or kept in bond for future clearance.

The cost of this whole customs process is around €25 per document or between 0.1 to 0.4 per cent of value for the average consignment value of €25k depending on whether a company gets a customs broker to procure some or all of the documents, (plus up to another 1 per cent for the veterinary inspections on veterinary goods, around a third of which could be subsidised by our government if it chose to do so, being the government vet fee).

The export declaration is fairly easy for companies to do themselves, but the transit document and import declarations take a bit more customs expertise. Specific border inspections for veterinary goods can take place in authorised commercial premises well away from the frontier itself, and from the perspective of their authorisation they just need access to adequate space and facilities, government vet availability, and reasonable off-site access to professional sample testing facilities.

These processes do not require the exporting country’s domestic regulations to be aligned with the EU. EU standards need to be met for imports in the same way that goods exported to the US need to meet US standards.

What they do require for borders to remain efficient is for the documents to be prepared in advance so that lorries do not need to be stopped before leaving because they can’t be guaranteed to get through the other side.

The costs involved were corroborated by a major Japanese car company operating in the UK which told us in our International Trade Committee a few weeks ago that they can run these documentary procedures in-house for about £30 per shipment of equivalent salary cost. Multinational firms such as these are already well used to the data and documentary requirements for sourcing components globally.

I also met roll-on roll-off ferry operators in Rotterdam who have Nissan’s UK operation as a major client, who are expanding capacity to meet demand for regular just-in-time shipments and are most focused on getting their customers, who are often the freight forwarders, geared up to ensure all arriving trailers have the right pre-cleared documents. They need them an hour in advance to be able to match up their port traffic management systems with the documents of the lorries they expect to arrive.

There is no reason why similar processes could not also be effected behind the border at Calais to keep the frontier flowing freely and shipments being cleared with predictable timing as in Rotterdam, and if the authorities there want to keep their business that is what they will end up doing. 

We need to get our exporters and our exporting ports and service providers geared up to have their export and import declarations and the transit documents ready in the same wayThat way just-in-time supply chains are not threatened.

Businesses need to be ready with processes for generating the data to lodge electronically. Dover, Folkestone and Calais need to adjust their port inventory management so as to reconcile their traffic bookings and manifests with the documents matching the shippers’ documents. At first this might have to be somewhat rudimentary because the authorities have left preparation so late, perhaps being done by hand and needing more advance notice; however more efficient modern systems could be introduced fairly quickly.

Investing in these logistics processes will be equally useful for trade, whether, as is my preferred option, we end up with a regular free trade agreement as offered by the EU in March (and the processes can be adapted to ensure no hard border in the island of Ireland too); whether we leave the EU at the end of next March without agreeing a Withdrawal Agreement; or whether we have an “orderly no deal” with side agreements in key areas like transport and licensing which can help the logistics industry, as the “no-deal” preparation the EU has set out suggests they want. The basic requirements for borders are the same, and are what businesses all around the world manage successfully with standard processes every day. 

If we prepare in this way, we will be prepared, whether we are able to arrange zero tariff and zero quantitative restriction trade with the EU before or after the end of March next year.

It is worth considering the costs of these processes in the context of the rest of the transport supply chain. They are a very minor part of the cost of the overall shipping cost, which is often many hundreds of pounds for each of the inland transport legs, from premise to port, port to premise, and the ferry or rail crossing carrier cost.

At 0.3 to 1.4 per cent of average shipment value they are also only a tiny fraction of the 12 to 24 per cent non-tariff barrier costs that were assumed in the “Cross-Whitehall Briefing” leaked in February, which were the major factor in the Government’s negative economic forecasting of World Trade and FTA scenarios for our trade with the EU

The Government has ill-advisedly been using these hugely over-negative estimates as the reason for its negotiating strategy of high regulatory alignment and “frictionless” trade with the EU, and this has landed it in its current mess. Ironically the outcome of that mess is the idea of the customs union “backstop”, which when you read the small print contains the more costly and completely antiquated requirement for physical paper forms inspected and stamped by customs officers, for every commercial shipment between the EU and Great Britain, and every shipment across the Irish Sea.

While there may be a few teething troubles with the above processes being implemented from the second quarter of next year, with the right application by authorities and businesses costs of such high scale shouldn’t eventuate, and in any event won’t persist for 15 years as Government assumes. 

In particular the car industry should be able to adapt relatively easily, and rather than prejudice our independence by worrying about overestimated costs, we should focus on getting small- and medium-sized businesses ready, and improving general business conditions. Whatever the size of business, most just want certainty as to what they need to do, and that is of far more value right now than indefinite transition, more political argument and risk.

The perfectly normal customs processes I saw, available now, without new technology and under current EU law, should be the focus. Preparing them is a far better strategy than tilting at the windmills of a never-to-be practical “Facilitated Customs Arrangement”, suffering under the illusion that economic Armageddon is the alternative, and waking up to the reality of the EU being in control of our destiny.

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David Davis: There has long been an alternative to this discredited draft deal. It’s the Canada-style plan that Tusk and Barnier offered us.

If we need to leave with no deal and negotiate a free trade agreement during the transition period, so be it.

David Davis is MP for Haltemprice and Howden, and is a former Secretary of State for Exiting the European Union.

The Spice Girls had it right when they said: ‘stop right now thank you very much’.

Yes, last week was another frenzied one in British politics. The Prime Minister’s proposed agreement with the EU has gone down like a lead balloon. I’m afraid it is a failure of nerve by the establishment. Their antics have led to the resignation of two Brexit Secretaries – myself and now Dominic Raab.

MPs, Party members and the British public are rightly dismayed. The consequence is that now there is speculation about the leadership of the Conservative Party.

This is not the Brexit they voted for. This proposal would keep the UK permanently trapped in EU institutions and under EU domination. This is not taking back control of borders, laws and money, which 17.4 million people voted for. It breaks our commitment to leave the Customs Union in the 2017 Conservative Manifesto. This proposed deal will never get through the Commons.

It really is time to stop right now, and say thank you very much.

So that’s where we are. But this is a time for calm heads. The crucial point is there is still time to save Brexit, still time to take control and still time to offer the British people a brighter future. This is the moment of truth. We can reject the proposed agreement and move on. We still have time because the key date in the calendar is 21st January, 2019. Only then does the Government need to make a statement within five days on what the United Kingdom plans to do, according to the European Union (Withdrawal) Act of 2018.

So, we can use the time until then productively. We know from past experience that the EU always leaves agreement to the final moment possible at the eleventh hour. Everybody in the UK wants the hope of a better deal – and trust me, we can do this. I spent countless hours negotiating with EU counterparts, and I know the great prize of a Canada-style free trade agreement is still possible. Indeed, it is very much still on. Both Michel Barnier and Donald Tusk have confirmed this.

Justin Trudeau said of his country’s free trade deal that it has created “good, well-paying jobs”, putting “food on the table for families”, helping to “grow and strengthen our communities” and ensuring that each generation is “better off” and has a “higher standard of living, than the one that preceded it.”

The question is how do we get there? It does not have to be like this. What we need now is leadership and the courage and confidence to deliver for the UK. We can deliver an honest and clean Brexit, leaving all the possibilities such as global free trade deals open for bright future. If we need to leave with no deal and negotiate a free trade agreement during the transition period, so be it. Let’s be clear and honest and tell the EU that’s what we are prepared to do.

As we leave the EU, our geography remains fixed. We remain an island maritime nation, outward-facing and trading across the globe. British goods and services are recognised as the best in the world, and are sought after by global customers. This cannot and will not change.

We can go back to the EU and say, if necessary, we are prepared to leave on world trade terms without a deal, but we would rather agree a positive way forward for all sides. We only need to be ready to trade under World Trade Organisation rules: international laws that regulate the trading relationships of 164 member states and around 98 per cent of global trade.

It in all our interests – the UK’s, the EU member states’ and most importantly the British people’s – that we start again and sort this our properly. Let us become, once again, a self-governing, free-trading nation. This is the best approach to unite the Conservative Party and address the huge concerns of MPs, members and activists.

Then we can stop being ‘always on the run’, look beyond Brexit – and provide the ‘human touch’ by focussing on issues like housing, education, health and crime that matter so much in the lives of families up and down our country.

May’s Deal 3) Alex Morton – If the Commons rejects it, here are three alternatives

Perhaps the Prime Minister will secure Parliament’s approval. But if she does not, the Conservative Party must choose a direction quickly.

Alex Morton is Director of Policy at the Centre for Policy Studies, and was a member of David Cameron’s Downing Street Policy Unit.

As you read this, MPs at Westminster will be ploughing through the 500-page text negotiated by Britain and Brussels, and deciding whether or not it is something they can sign up to. There is still a reasonable chance that the deal gets through. But if Parliament or the Conservative Party decide that they cannot live with it, something else will have to replace it.

The first thing to say may sound like a statement of the obvious: the only options that aren’t on the table for the Conservative Party are a second referendum, or simply giving up and deciding to Remain. The 2015 manifesto promised to honour the referendum result, and the 2017 edition promised a hardish Brexit. Just one in five Conservatives think the decision to leave the EU was wrong. To go from a Leave referendum result to overturning it and remaining in the EU would split the party, as the Corn Laws did. It is also disingenuous to claim you are really concerned with EU control in areas such as goods regulation under May’s deal…and should instead return to being one of 28 countries making decisions, and also sign up to ending the financial rebate, open borders, Eurozone membership etc.

This leaves us with three real options, each of which have their own positive and negatives:

  • Co-operative WTO exit.
  • Hostile WTO exit.
  • EEA membership or similar.

Co-operative WTO exit

A co-operative WTO exit would see the EU and UK co-operating to sign various side agreements to keep trade flowing and limit economic disruption on everything from planes to imports in key areas like foods and medicines. In effect, it would be a bit like Canada Plus, in that it would seek to rapidly nail down what was necessary and then over time flesh out the rest. EU nations have various reasons to go along with this rather than see a hostile WTO exit:

  • A major EU/UK falling out would have major implications for the EU economy, and for global trade. Donald Trump is hostile to the WTO, refusing to appoint judges (which is slowly causing chaos in the organisation) and bending the rules. If the EU tried to pursue a hostile WTO exit, this would embolden Trump and destabilise multilateral trade.
  • A EU/UK fallout would also have a strong knock-on impact on NATO. If the EU was genuinely attempting to slow or stop exports/imports to the UK, the UK would almost certainly feel obliged to take retaliatory action, such as removing troops from the East and North of Europe.
  • If there is a Eurozone crisis in the next few years, with the City of London destabilised and alternative centres not yet having emerged, it would be a disaster for the Eurozone’s economy (something that everyone bar France realises).
  • UK support for countries in the Mediterranean on everything from Syrian refugees to Royal Navy helping with the migrant crisis or in Libya would have to end.
  • Potential turmoil in Northern Ireland. While the majority of the blame would fall on the British, it is unlikely that Ireland would welcome having to enforce a hard border.

Most of all, if the EU acts as aggressively as possible it may destabilise the EU itself. Member states are still angry or upset that we voted to leave, but many of them also distrust the European Commission. They will grasp that if it bullies the UK today, it may turn on them tomorrow.

Apart from the impact that even a co-operative WTO exit would have on UK businesses in terms of supply chains etc, an obvious drawback is many of our liabilities seem likely to fall payable regardless. In a Co-operative WTO scenario, we would probably end up paying a large amount to buy goodwill, as well as whatever it takes to help smooth over any costs associated with trade friction in Northern Ireland, in return for fewer checks on small-scale movement of goods and people.

Even with a co-operative EU, there would still be a short-term shock to our economy, even if this, in the long run, is balanced by other gains.

Hostile WTO exit

Despite the points above, the EU may not be able to reach sufficient consensus around a co-operative WTO exit, in which case we face a hostile one.

A hostile WTO deal is not an easy prospect, even if it is not as hard as some ‘stop Brexit’ groups claim. The sloppy claim that ‘the UK is Mauritania’ is incorrectly arrived at by going through the WTO database and seeing which countries have zero additional trade deals on top of WTO rules.

But if country A only has one trade deal with country B, it still trades on WTO rules with the other 190-odd nations of the world. Further, many countries have only limited side deals but manage to trade quite widely with one another under WTO rules around this. There are also general global trade provisions around non-discrimination, and since our framework would be based on the EU’s on day one, we could argue that interpreting the WTO treaty in a way that imposes additional burdens where our rules align is illegal and a hostile act.

That said, we’d have to accept that this scenario is very complicated, hire the best possible (expensive) people, and prepare for a fairly sizeable shock to the economy. A hostile WTO exit also risks spiralling out of control, with both sides reacting to the other’s moves in a chain reaction.

All this is before you even get to practical issues, such as capacity at Dover. The much smaller Dutch economy hired a thousand extra customs staff months ago to cope with the potential consequences of Brexit. We need to press ahead with similar measures, co-ordinate essential supplies like food and medicine, and ensure that, however uncooperative the EU is, the most important goods and services will keep flowing. And time is short.

This is not an ideal situation. It would have grave drawbacks for the EU, but would also cost the UK substantially.

The EEA and a temporary, partial customs union

The third option is the EEA – either formal membership or, more likely, just replicating the relationship. This also probably entails at least a partial temporary customs union membership.

Those such as Nick Boles argue for an EEA option by claiming that it would take us out of the growing political project while maintaining economic ties. No Eurozone. No European army. No common refugee policy. No fisheries and farming. Above all else, an end to ‘ever closer Union’.

EEA and a parallel reduction in non-EU migration could have been enough for many Leave voters in 2016. In addition, some argue that this option could be a stopgap while we consider others. Yet for some Leave voters, it might not be enough to feel the vote in 2016 has been honoured, and it might not entirely resolve the Brexit issue for some Conservatives either.

For the EU, this option would have the benefit of removing a troublemaker without the UK gaining total freedom. The UK would be mostly out rather than mostly in, but it would be hard to see it as a total victory for Leave. Immigration could be restricted (EEA is focused on workers’ movement, not all citizens), but not for most workers. Nor would we have control over areas covered by EU goods and services regulation – as long as we were part of the regime we would be a rule-taker in some areas rather than a rule-maker, with restricted freedom to operate an independent trade policy.

So where will we end up?

None of these options are perfect – and it may well be that the Prime Minister’s deal gets through and attention turns back to domestic politics.

But fairly soon, those opposing the deal need to nail their colours to the mast rather than just continuing to claim we can have the best of all worlds without May’s deal. They need to choose a direction – even if, as the joke goes, they wouldn’t start from here. And they need to be confident they can hold a Government together until March 29th, and persuade the Conservative Party and the wider country to back their proposal. We wait to see if enough MPs believe that to be the case.