There is nothing to fear from leaving the EU and trading with them under WTO rules

 The List is a grassroots organisation of Leave voters which I founded over a year ago, to represent the voice of the electorate. We are not affiliated to any political party or organisation, but are very active as we continue to campaign for the voice of Leave voters to be heard and are advocating leaving the […]

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 The List is a grassroots organisation of Leave voters which I founded over a year ago, to represent the voice of the electorate. We are not affiliated to any political party or organisation, but are very active as we continue to campaign for the voice of Leave voters to be heard and are advocating leaving the EU under WTO rules.

Members come from different political persuasions but are united in ensuring respect for the democratic result of the 2016 referendum. We firmly believe in leaving the EU in its entirety and also believe that our sovereignty and powers were given away illegally and unconstitutionally.

The List has also found that most of our members extensively researched the issues and knew the applicable treaties, as well as WTO principles, prior to voting in the referendum – and even after all the Project Fear, we still decided to vote Leave.

In view of the current circumstances surrounding Brexit, The List believes that Brexiteers are even more motivated today compared to how they were in the referendum. In March last year, we put together a petition to Theresa May stating the reason why we believed most of the 17.4 million voted Leave, and delivered it direct to her at No. 10 with over 1.2 million signatures.

Now we have decided to write an Open Letter to Parliament which you can view here on our new website. We are asking people to sign the letter online, and to take a copy of it and send in an email to their local MP with a link to the website where they can view people’s comments. This Open Letter demands that we leave the European Union and not be tied to any trade deal. These are two separate issues and should not be combined. By not agreeing to a ‘no deal’ or
trading under WTO rules, those elected MPs are stipulating that they will not support 17.4 million people who voted Leave; the highest vote for anything in British electoral history.

The Open Letter has recently gone live and continues to receive new signatures daily. We are hoping to reach as many of the 17.4 million as possible, and are therefore asking Leave voters and those that voted Remain but support the result, to leave their name on the website and pass the link on.

So what is there to fear from trading under WTO rules, even for an interim period? The answer is, nothing.

The WTO, established in 1995, (preceded by the General Agreement on Tariffs and Trade, established in 1947) is an international organisation aiming to reduce all barriers to trade.

The combined share of international trade of WTO members now exceeds 90% of the global trade. Most countries around the world are members, including the UK and the EU.

In 2016, UK world-wide trade accounted for 52% of goods exported (48% exported to the EU, which continues to decline, and 52% to the rest of the world). As EU members, our trade with various countries outside the EU has been dictated largely by agreements with the EU, and devised to suit them. Under WTO rules, we will be free to make our own trade arrangements with those countries, tailored more to our needs.

The WTO requires member countries to apply tariffs (taxes) on goods and services to other WTO countries equally.

Unlike the EU, the WTO does not tell countries what to do other than to keep their promises. There is no ‘confrontation with WTO officials’ as one Irish Government source reportedly claimed in a newspaper report in respect of arrangements concerning the Irish border. The WTO is a member-driven organisation and there is no WTO rule requiring governments to secure their borders. There are, however, non-discrimination rules, but a ‘waiver’ could be sought for the UK/Ireland border either based on national security, or if the EU are in agreement, the UK and Ireland could act in the interests of the Good Friday Agreement and permit no hard border between the two. These are just some suggestions which Remain-backing MPs seem to refuse to discuss.

Under WTO rules, the UK will not only be able to negotiate our own trade agreements with the world, control our borders and make our own laws, but with no more annual payments to subsidise the EU and our armed forces free of the EU command structures to boot, we will be free to paint our own future on a clean canvas.

If there are problems along the way, then we will deal with them, as we have always done, with a pragmatic and flexible attitude – for you cannot put a price on freedom.

The List believes that we, the electorate who voted Leave, should have our voices heard; about what Brexit means to us and why we voted Leave. We have all heard about “the People’s Vote” so it’s time we were heard, the other side of the story, “the People’s Voice!”

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Interview. Raab on the great opportunities and imponderable risks that he sees in a No Deal Brexit

The former Brexit Secretary warns of the danger that MPs will believe the Government has not even demanded the necessary concessions from Brussels.

Dominic Raab says in this interview that anyone who claims to be able to “predict with precision exactly what will happen with a WTO Brexit is…not being humble enough about the uncertainty”.

Raab was charged with preparing for a No Deal Brexit during the period of just over four months which he served as Brexit Secretary, stretching from 9 July 2018 until his resignation on 15 November in protest at the Draft Withdrawal Agreement.

He is not surprisingly keener on talking about the opportunities presented by a No Deal Brexit than about the risks which it poses. In his view, it would offer the chance to “put rocket boosters” under the UK economy, and see it “through what will undoubtedly be a difficult moment”, by cutting business taxes and liberalising tariffs.

In this transcription, his answers are given first to some of the difficulties which could be entailed by a WTO Brexit, including its implications for trade in car parts and in food, for investment, and also for the European Arrest Warrant and immigration.

He contends that the UK’s security will be increased once we can stop suspected terrorists from travelling from Brussels to Birmingham.

At the end of the interview, he warns of the danger that MPs will reckon Britain’s negotiating team in Brussels has not even “gone in to bat” for the Malthouse Compromise, and has therefore failed to demand the concessions which it promised only last Tuesday to demand.

That is why Raab believes David Lidington should be omitted from the negotiating team. Raab wants responsibility for any failure of the talks to be seen very clearly to rest with the EU’s refusal to accept Britain’s reasonable requests.

ConHome: “You’ve recently said the path now is very clear – we’ll either get the changes necessary to pass the deal, or we leave on WTO terms. You’ve also said there will be some ‘buffeting’ if we leave on WTO terms.

“Can you enlarge on that? How much difference do you think it will actually make if we leave on WTO terms? If a firm is trading in car parts, what happens to it on 29th March?”

Raab: “Well it depends. If you look at McLaren, which is one example and it’s at the high end, but they’ve reshored some of their supply parts dependence. Others like Aston Martin, I know I’ve talked to them…”

ConHome: “Did you talk to them while you were Brexit Secretary?”

Raab: “No, more recently. And they’ve had fresh investments into the UK quite recently, and they’re still feeling very positive. They’re quite interested to see what we do with the Americans, because the rules of origin will affect them.

“The truth is we’re at an historic moment for the UK, this is a crossroads, I think anyone being able to predict with precision exactly what will happen with a WTO Brexit is I think not being humble enough about the uncertainty.

“But the range for me, I think Roberto Azevedo [director of the WTO] put it rather well, it wouldn’t be the end of the world but it wouldn’t be a walk in the park.

“So what I imagine we’d have is up to six months where we would feel some of that buffeting, where both businesses and to the extent that they’re reliant on government that partnership works out how to navigate through it.

“And I guess everything from the reassurance we’ve had from the Deputy Mayor of Calais that they won’t go slow, they’re nervous about losing that business to Rotterdam, Zeebrugge and those other Dutch and Belgian ports, I think ought to give us some sense of reassurance.

“Matt Hancock has been on the front foot in relation to medicine supply and the assurances around that.”

ConHome: “How, if we leave without a deal, do we replace the various EU regulatory agencies? So if we’re sending, say, medicines to Europe, and we say these medicines are fine, but they won’t take our word for it, what happens?”

Raab: “There’s two different bits of it. Quite a lot of the regulatory bodies have domestic counterparts here in the UK, so when we went through all the technical notices, 106 I think it was, we specified each regulatory body. So for example the Competition and Markets Authority can take over the state aid functions.

“As a third country to the EU, we will obviously need to go, where it is necessary to do business with the EU, to get regulatory approval. But we’d be pretty confident we’ll be in a good place to do that, because at least at the point of exit, our regulatory standards will be the same.

“As long as the EU aren’t trying to punish us, then applying their rules, as they apply to other third countries, should be relatively straightforward.”

ConHome: “We talk about going to WTO terms, but no country in the world actually trades purely on WTO terms. The US, Brazil, China and India all have trade agreements with their closest neighbours.

“And as it stands, the UK doesn’t trade purely on WTO terms with countries outside the EU. With the United States, for example, trade is regulated by over 100 sectoral agreements which go well beyond WTO provisions.

“If all that’s abolished on Day One, what happens?”

Raab: “Well it won’t all be abolished, because one of the things we’re doing is making sure we’ve got the successor agreements with the third countries that have those agreements with the EU.

“And those are going through the process right now. One of the reasons that I suspect the February recess has been cancelled is to have more sitting days, which is the constitutional process to get more of those treaties signed off and continuing.

“And if some aren’t available immediately afterwards, they will be shortly after 29th March. I think the most important thing on that is there’s not one of those third parties who have said they don’t want to continue those arrangements with us bilaterally.”

ConHome: “What do you think the effect of No Deal would be on investment?”

Raab: “Well I think it all depends on the signals that we as a Government, we as a nation send out. If we look like we’re nervous and tiptoeing around this, rather than taking a good long running jump at it with some confidence, then I think of course domestic businesses and international businesses will pick up on that.

“But bear in mind, we’re in a good position here. In 2018 Forbes rated us the best place in the world to do business.”

ConHome: “People are worried about food being able to get through Calais, with animal products being subjected to checks once we’re a third country and not a member of the European Union.

“Do you think the decision to impose those checks will be taken in Brussels, where they might want to make life really difficult for us, or in France, where they might want their farmers to be able to go on selling stuff to us much as they do now?”

Raab: “The stuff that comes via Calais-Dover is just ten per cent of total food supplies to the UK. Having put it in perspective, what do we think France and others will do?

“Well some of it will be up to national authorities, and indeed within a national system, local authorities. Paris may want to take a particularly tough line, but the authorities with the legal power, and you’ve listened to what the deputy mayor has said, you’ve listened to what Xavier Bertrand [President of Hauts-de-France] has said, he’s said of course we want to keep doing the business.”

ConHome: “What happens about the European Arrest Warrant if we fall out without a deal? If there’s an explosion in London and the perpetrators flee to Italy, will it become very difficult to get them back?”

Raab: “It depends on their nationality. But you would have thought, if for example they’re UK nationals, one of the things we’ve done over the last 10 or 15 years is over-rely on extradition arrangements with the EU for the return of our own nationals or for returning foreign nationals to their country.

“You can often use deportation proceedings, and if you look at our relationship with Australia and the US we often do.

“But of course the European Union has extradition arrangements pretty much based on the European Arrest Warrant with other countries like Norway, and so there’s no reason why, whether we get a deal or No Deal, we couldn’t replicate those arrangements.”

ConHome: “And what bearing would No Deal have on our immigration policy?”

Raab: “Well we would immediately have control over our laws and our borders. There are some fairly straightforward things that you can do immediately. So when we have people coming from outside the EU, we apply at test at the border, which is ‘is it conducive to the public good’.

“So if you’re worried about someone, you can refuse them entry. You can’t do that with EU nationals. They have to fulfil a much higher threshold, which is that you can only bar entry if it’s a serious, present and genuine threat to security.

“So that bar can be levelled out immediately, so there’s an immediate security gain to be had in terms of border security.

“And the reason I think it’s quite important is if you look at some of the quite recent terrorist links between Brussels and Birmingham – there was the so-called man with the white hat – I don’t know the intelligence on this, but I have a high level of suspicion that people from those groups were travelling between Brussels and Paris and Birmingham without just being refused entry [to the UK].

“Now that’s quite a good example of some of the cells that we would be able to protect UK citizens against more easily if we apply the global rules that we have for preventative checks at the border, not the EU rules.

“That’s something that can be done straight away. We’ve hardly heard anything about that from the Government.”

Raab reckons the Government has done far too little to stress the opportunities presented by Brexit: “I think the only thing that’s missing at the moment is we’ve done a lot of the risk management.

“What I don’t think we’ve done as a Government and I think the public has picked up on this is we haven’t said, ‘We’re going to do this. We’re leaving on 29th March, preferably with a deal, but if not we will leave on WTO terms.’

“That’s been the Prime Minister’s position all along politically. It’s also been the legislative position. And indeed it’s the position under international law because of the Lisbon Treaty.

“We ought to be on the front foot, for example, with a pro-active strategic approach to what are we going to do for tariffs. Obviously we’ll want to protect the particularly vulnerable and sensitive industries like farming here.

“But there’s a huge opportunity there to liberalise in a sensitive way which would be good for the consumer, not just preventing bad things from happening but actually grasping the opportunities.”

ConHome: “How quickly could we liberalise?”

Raab: “Well, when I looked at this in September, we had a three or four hour No Deal Cabinet session, at which the point was made very clearly and my proposals were passed unanimously by the Cabinet, that we needed to have a clear strategy for dealing with tariff liberalisation.

“And that’s one of the ways, in a No Deal scenario, you give consumers a shot in the arm. You could ease the cost of living on consumers.

“We’re not going to put up tariffs, and we’re not going to have the EU protectionist tariff wall applying to the rest of the world. Why would we do that? Actually we would say we’re open for business. This country wants to be global, competitive.

“But also, this is about your average, aspirational, lower-middle-class consumer who can do better than we can under the protectionist umbrella of the EU. So that’s one thing where we can take the initiative and really go into this planning and preparation on the front foot. But we haven’t really heard anything about what the strategy is.

“The second one is fiscally. We had a big discussion about a fiscal stimulus…”

ConHome: “You mean in Cabinet you had a big discussion?”

Raab: “Yeah. I’m certainly of the view that we ought to be saying to businesses, Deal or No Deal, at this moment of change we’re going to provide the fiscal stimulus to give you the confidence to double down what you’re doing in the UK and to be able to do so with confidence.”

ConHome: “Can you specify what taxes would be cut?”

Raab: “Well the obvious one is Corporation Tax.”

ConHome: “We have been cutting that, haven’t we.”

Raab: “And that’s been brilliant, because we had our second highest level of FDI into the UK in the first half of 2018, second only to China.

“But I would have thought if we’re going into a period where the global context is quite uncertain, but we’ve got Brexit, that would be another thing that we should do.

“And there are other tax cuts which sector by sector, and without infringing on state aid rules domestic or international, we could provide businesses, who are undoubtedly feeling a bit uncertain right now, with a bit of confidence.”

ConHome: “Can you give some examples of tax cuts sector by sector?”

Raab: “Well there is a strategy under way, so I don’t think there’s any point reinventing the wheel. But we haven’t heard from Government, publicly, this is what we’re going to do to give you the rocket boosters to see you through what will undoubtedly be a difficult moment.

“And so rather than just being reactive and saying Brexit is something that will happen to us, whether it’s the EU dictating terms or No Deal being upon us because we can’t accept those terms, let’s get on the front foot and give the public and businesses that reassurance.”

ConHome: “Steve Baker has said the Government is heading for a further substantial defeat if it fails to get the required changes. Do you think that’s right?”

Raab: “I think what Steve’s worried about is that we have the Malthouse Compromise and it’s not clear whether it’s even been presented in Brussels. And I suspect that’s a question that’ll be asked this week.

“I’m not sure. I take the Prime Minister at her word and the Government at its word. We were given a range of assurances. That’s how the Government won virtually all the votes and certainly the most important votes last Tuesday.

“So I think it’ll be quite important that the Government has, just for starters, been into bat with Barnier, with Juncker, on the Malthouse Compromise and with the legal changes to the Withdrawal Agreement.”

ConHome: “There are two things. One is going in to bat. The other is how many runs you make.”

Raab: “Well you can’t score any runs until you go into bat.”

ConHome: “No, but on the other hand, you can be out first ball.”

Raab: “I would hope for a slightly longer innings. I think people just need to know they’ve gone in to bat on the basis of the assurances that they gave, because that’s how they won the vote.”

ConHome: “So they must make the proper demands.”

Raab: “I think for a starter that’s what we want to see. And also, no one like to see this Prime Minister, or this Government, being beaten up by the EU.

“I think it’s very important that the Government is seen to be going in to bat, because we want to secure the Malthouse Compromise and legal changes to the Withdrawal Agreement.

“And secondly, if it’s the EU that is consistently saying No to reasonable compromises made by reasonable people, being put forward by the Government, I think we need to be outing that and be very clear on whose side responsibility lies for the failure – if this is where we get to, and I hope it isn’t – to get this deal over the line.”

ConHome: “And will public opinion then shift? Will people start to feel quite angry with Brussels?”

Raab: “I think it’s already shifted, if you look at the most recent polling on this, and particularly on the attitudes to leaving on WTO terms.

“It will be important for people to see that if the EU remain stubbornly intransigent, they are the ones courting the WTO exit. People understand that we need to leave on 29th March. Whether they voted Leave or Remain, the one thing you hear is get this thing done and dusted.”

ConHome: “So the Government isn’t selling No Deal. It’s using it as a negotiating ploy, mainly to get the Commons to rally round the deal.

“And I see you think it’s a mistake sending David Lidington as part of our negotiatiing team.”

Raab: “David Lidington has huge diplomatic expertise. He’s listened to, and he’s got great Cabinet Office expertise. I think the only point I was making is that there’d been a lot of discussion at the time of the vote last Tuesday about the negotiating team and how it was important it’s politically led and driven.

“I think we want to be careful that we don’t send a message that we’re soft-pedalling. However tough and robust David Lidington went in, I wonder whether there would be a perception back home…”

ConHome: “A perception here rather than in Brussels?”

Raab: “Possibly both. But it’s not a personal criticism of David.”

ConHome: “But who should our opening batsman be? Are you a cricketer yourself?”

Raab: “Not really. I quite enjoy watching it, but I don’t turn out for Brendan Carlin’s Sunday team.”

ConHome: “Brendan’s average is not intimidatingly high [according to Carlin, it is “just under 10 but improving”].”

Raab: “I’m not going to start naming the people who should go out there. I want to see us make a success of this and the nature of the political team that is sent out to close this deal is quite important in terms of the message Brussels gets, but also in terms of the confidence that it instils at home.”

Howard Flight: I believe the Conservative Party will hold together after Brexit

Fear of both a Corbyn government and an enraged grassroots seems to be keeping Tory MPs together in the crucial votes.

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

The behaviour of the House of Commons, and in particular of Remainers and the Speaker, has damaged the reputation of Parliament and politicians generally – at least for the time being.

But I have the perhaps naive view that the overwhelming majority of citizens understand that it is the EU which has made it so difficult to negotiate a proper exit deal, and that at Westminster the trouble has been the parliamentary chicanery of Remainers trying to delay and even prevent our departure from the EU.

The Referendum vote in favour of withdrawal from the EU was decisive and the options clear and straight forward – in or out? In the ensuing general election, the Conservative Party pledged to give effect to the will of the people in the Referendum. I, therefore, believe it has been democratically wrong for more than half the Conservative MPs, as well as virtually all the Liberal Democrat and Labour MPs, to have done their utmost to frustrate Britain departing from the EU.

But I believe the Conservative Party will hold together; partly because the alternative would be a Corbyn Government and partly because Conservative MPs have ‘seen the light’ last week.

Last Tuesday the House of Commons gave the Prime Minister a positive mandate to return to Brussels to amend the deal. Leaders of the ERG and leading Remainers had got together, in their and the country’s interests, to agree a compromise approach to Brexit.

The Malthouse compromise reflected this, and gave the Prime Minister the mandate she needed to renegotiate her own withdrawal deal and the Irish Backstop contained in it. There was agreement across Leavers and Remainers to support Sir Graham Brady’s amendment to replace the Irish Backstop.

On seven different amendments on Tuesday there were similarly significant defeats for the attempts to override Commons Standing Orders and take control of the parliamentary agenda in order to delay Brexit. The only vote in which the Government failed to get its way was a non-binding assertion rejecting the notion of leaving the EU without a deal, tabled by Dame Caroline Spelman. But this passed by a majority of only eight.

It is also clear that grass roots Conservatives – members of their local Associations – voted for Brexit overwhelmingly in the referendum, and have not taken kindly where their local MPs have endeavoured to frustrate Brexit. Such MPs are beginning to realise they could risk being deselected. Also, as and when the Conservative Party chooses its next leader, the final vote is with Party Members, which virtually ensures that the successful candidate will be a Brexiteer.

We have been here before, over 40 years ago, but the other way around. Now Remainers should learn from the behaviour of those who then opposed Britain joining the Common Market. After a decisive pro-membership referendum result, the Leavers mostly shut up. Now the country is fed up with Brexit dragging on, not to mention the behaviour of the EU and of Parliamentarian Remainers, and wants a sensible deal.

If the EU does not accommodate time limitations on the Irish backstop, we will, de facto, move to trade on a WTO basis. This may prove to be the best result.

“A nation is a human thing. Influence is, at least in part, a reflection of our own self confidence.” Fox’s speech to Policy Exchange – full text

“We have so much to offer – to ourselves and to the world around us. A confident Britain will help build a confident future for all.”

Good morning.

The arguments around Britain’s exit from the European Union have been intense and passionate.

Understandably, they have dominated the political agenda and consumed most – sometimes all – of our political bandwidth.

On Tuesday the House of Commons voted to support a deal, with changes to the backstop. And the Government will now talk to the EU about how we address Parliament’s views.

But, however we ultimately separate ourselves from the European Union, we must remember that there is a world beyond Europe and there will be a time beyond Brexit. That is what I would like to begin to focus on today.

The UK’s future role

The first question we must ask is a general one. What should Britain’s place in the world be? Where should we direct our great political, diplomatic and economic energies?

What, if you like, is our mission?

It used to be fashionable to quote Dean Acheson, US Secretary of State under Harry Truman, in saying that Britain had “lost an empire and not yet found a role”.

That may have once been true. For some, the EU seemed to provide an answer. But the UK has been always an awkward member, unsuited politically and temperamentally to the demands and destination of ever-closer union.

Our new relationship will be far better for both the UK and the EU. Now Britain is taking back ownership of our destiny. Where we share a common agenda, the EU will find a stalwart friend, and a close political and economic ally.

We are emerging into a world that is crying out for leadership, and our country is uniquely placed to meet the global challenges of the 21st century.

The 2015 Strategic Defence and Security Review sums up our position perfectly. As it says:

“We sit at the heart of the rules-based international order. The UK is the only nation to be a permanent member of the UN Security Council and in NATO… the Commonwealth, the G7 and G20, the Organization for Security and Cooperation in Europe, the OECD, the World Trade Organization, the International Monetary Fund and the World Bank.

We use our membership of these organisations as an instrument to amplify our nation’s power and prosperity. In all these organisations, we play a central role in strengthening international norms and promoting our values. We promote good governance, anti-corruption, the rule of law and open societies.

We maintain and champion free trade, and we work with growing powers around the world to build a stronger and more resilient global economy.”

It’s hard to put it better than that. As Britain takes up her role as a fully independent actor on the world stage, this is an enviable position from which to be starting.

The Department for International Trade has, since its creation, been looking to that world beyond Europe and that time beyond Brexit.

And in an era where globalisation and rapid technological advancement are fundamentally changing the face of global commerce, Britain will have a clear role in helping to identify and meet the challenges and opportunities ahead.

In Davos last week, trade ministers considered a paper from the Global Future Council on International Trade and Investment. It set out a number of scenarios for the future trading environment.

They started with the optimistic – where countries cooperate to address issues through a revitalised WTO and complementary international frameworks – then they had the less optimistic, where countries cooperate but are drawn into competing blocs, producing a Balkanisation of global trade.

And finally they had the genuinely pessimistic where there would be a rise of protectionism and where countries could not cooperate, leading to prohibitive unilateral barriers with consequent inefficiencies, high economic risks and a decline in productivity and innovation.

It is essential that Britain uses its new role to help push the global trading arguments in the right direction.

Over the coming months I will be talking about the challenges we face in more detail such as the consequences of a protracted US – China trade dispute, the potential slowing of the global economy and the unmet challenges in the global trading system.

Today I want to set out our general approach to the institutions that govern global trade and where we believe momentum is required.

Opportunities of independent WTO membership

Our first port of call has to be the WTO – the home of the rules-based international trading system that underpins our prosperity.

Now we all accept that the WTO as it stands may be imperfect. Some of its rules may be outdated. But, as Spanish-American Philosopher George Santayana said: “Those who cannot remember the past are doomed to repeat it.”

We have tried a world without multilateral institutions, where the economically powerful sought to defend their interests by erecting high tariff walls.

It didn’t work out very well. Which is why, when the world came back together there was a strong desire to develop a framework where national governments could create collective solutions to shared challenges.

Since the end of the Second World War, falling tariffs and an ever more integrated rules-based system – underpinned by the General Agreement on Tariffs and Trade and the World Trade Organisation – have brought great benefits, both to developed and developing economies, in terms of stability, predictability and openness, creating greater opportunities for exporters and lower prices for consumers.

And it is important to remember at this juncture that we are committed to multilateral solutions not for altruistic reasons but because they best serve the interests of the UK and the wider world.

The case for trade

It is also important to remember and to remind our people that free enterprise and open trade have taken more than 1 billion people out of abject poverty in the last generation or, as Francis Fukuyama put it in his latest book “Identity”, the percentage of children dying before their fifth birthday has declined from 22% in 1960 to less than 5% by 2016.

But we have never seen trade simply as an end in itself. Trade is a means by which we are able to spread prosperity. That prosperity underpins social cohesion. That social cohesion, itself in turn, underpins political stability and that political stability is the building block of our collective security.

In the interconnected and interdependent world of globalisation, we cannot disaggregate these elements without risking profoundly unwanted consequences.

Security, environmental concerns, trade, economic development, these are best tackled by countries working together. And not just two or three working together – but many, ideally all.

Economic nationalism may look like an attractive shelter from the winds of change that have come with the era of globalisation and even more from the technological revolution in which we find ourselves, but it is a mirage.

The alternative to an international rules-based system is at best a deals-based system that will suit only the strongest and at worst a free for all that will put at risk much of the progress we have made in recent decades.

The principle of working through consensus is one held dear by WTO members – and the United Kingdom and the United States were key in forming that organisation. Decisions forced on countries by a larger group will not be legitimate, will not be respected and cannot ultimately be enforced.

But consensus building can be, and indeed has been, painstaking and slow. In the WTO, as in many international arenas, finding that sweet spot has proved elusive. So many of our collective ambitions for the multilateral system remain unfulfilled.

Now the WTO has, of course, had its successes such as the Government Procurement Agreement, the Information Technology Agreement, the Trade Facilitation Agreement, among others. But the reality is that we have not yet been successful in moving the system forward from the balance we achieved at the end of the Uruguay Round.

The changing global economy

Fundamental changes in the world economy have created an entirely new trading environment.

The global economic centre of gravity is shifting, from North America in 1990 to China and the Far East in 2050. While we still expect North America and Europe to remain key trading partners for the UK, the growth in the East represents a huge opportunity for the UK to establish new, and grow existing, trading relationships.

It is predicted that the share of global GDP of the seven largest emerging economies – including China, India and Turkey – could increase from around 35% to nearly 50% by 2050, which would mean that they overtake the G7.

This is particularly relevant in the case of China, for example, which by 2050 will reach a projected $51.3 trillion at Purchasing Power Parity, from $21.4 trillion now, with India reaching $30.7 trillion by the same year.

The Chinese bond market is expected to grow from around US $3 trillion to US $32 trillion by 2030, which is not a long time away, and by 2050, Asia’s financial sector is likely to be four times the size of that in the West.

I often point out to those who are sceptical about the scale of change that China is expected to have 220 cities with a population of more than a million by 2030. The whole of Europe has just 35. This will be driven, in part, by a rapid expansion of the global middle class, which is expected to reach 5.4 billion people by 2030, up from 3 billion in 2015. Asia is expected to account for the vast majority of this growth.

But as well as a fundamental shift in who we trade with, how we trade is changing too.

The revolution in e-commerce is now a major component of world trade, from some of the world’s largest corporations, like Amazon, to the thousands of small companies who have never before been able to trade internationally.

And such an upheaval requires a fundamental shake-up of the rules which govern international trade. We live in a world where there is an increasing blurring of what constitutes a good and what constitutes a service and yet the regulatory system is a long way behind the curve.

Imagine what would have happened back in 1995 when the WTO was created if I had asked you the following question – “if I sell you code over the Internet to make something on your 3-D printer, have I sold you a good or a service?”

In 1995 you would not have understood the terms of the question because the terms would not have been invented yet. Yet these are the terms in which we trade today in the real global economy, but the system of global governance has not kept up.

Even if we ignore technological advances, patterns of international trade are still shifting rapidly.

We live in a world where complex global value chains are an ever more important part of how we do business yet our trading system still applies taxes – for let’s be very frank that “tariff” is simply a more acceptable way to describe taxes – a nice euphemism, but they are taxes – multiple times before the creation of a final product. This locks up value and increases costs to consumers.

Then we come to what we actually trade. Services are now a larger part of the world economy than ever before and Britain is the second largest services exporter in the world, behind the United States.

A recent WTO report estimates that, while services comprise two-thirds of global GDP and employment – and nearly half of world trade on a value-added basis, the barriers to trade in services are about as large as those in goods were half a century ago.

This has to change. Despite recent high-profile tensions, global tariff levels on goods have reached a historic low. But we have yet to achieve the same level of liberalisation for services.

Pursuing trade policies that promote openness and better reflect these developments in the global economy would boost productivity, raise living standards and promote competitiveness.

And these reforms will only become more vital as the interdependence of the global economy actually increases.

Benefits of multilateralism

So, recognising this, what is the correct response for governments like ours, which are committed to global solutions to global challenges?

One option is bilateral or regional agreements. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP – much easier to say in the morning – is a good example, and of specific interest to a post-Brexit UK.

Its 11 member states constitute some 13% of global GDP. As you will be aware, the United Kingdom will, potentially, seek accession to CPTPP upon our exit from the EU.

I am delighted, Dean, that you mentioned that Policy Exchange endorsed this course of action in a paper last summer.

And, as many of you will be aware, the EU-Japan Economic Partnership Agreement comes into force today.

The UK was, naturally, deeply involved in the negotiation of this agreement. And, as both our Prime Ministers have made clear, this ambitious EPA will form the basis of our new economic partnership.

Neither side intends to put up barriers where none now exist, and the UK-Japan Trade and Investment Working Group is striving to deliver this commitment.

Agreements such as these can be useful complements to the multilateral core. Which is why, given certain conditions, they are recognised as a possible deviation from the Most-Favoured Nation principle. They are easier and they are quicker to negotiate.

But they cannot tackle problems caused by widespread agricultural or industrial subsidies, they cannot adequately address unfair competitive practices, and ultimately the economic benefits unlocked by such agreements are relatively small compared to those of an agreement between all 164 WTO members.

Now, that does not mean we should not pursue them vigorously as an adjunct to wider liberalisation agreements but, equally, we need to remember that true multilateralism is, and will remain, the gold-standard of international trade agreements.

It minimises the risk of trade diversion. It lowers the costs for businesses, allowing them to take a common approach to non-tariff measures across a wide range of countries and markets.

For nations themselves, multilateral agreements provide stability and predictability, as well as guarding against ad hoc protectionism.

There is strong evidence of the trade creating effects of the GATT and WTO. In 2007 a paper was published that modelled the value of imports from 1950 to 2000. It found that world imports are higher by 120%, or $8 trillion in 2000, relative to a world without the GATT and WTO.

And that is a truly historic achievement.

Of course, it has not been without its issues. The same report highlighted that the benefits have sometimes been uneven amongst developing nations.

Crucially, there is also evidence that sectors that have been mostly excluded from multilateral negotiations have not increased trade as a result of the GATT and the WTO.

If Britain’s destiny is to be a global champion of trading freedoms, then these two challenges represent our global mission – a direction of focus and an opportunity to change the world for the better.

Liberalisation of trade in services

Our first priority must be the liberalisation of the global trade in services.

Now I’m sure that this audience is familiar with the headline figures. The UK economy is one of the most services-intensive on earth, with services comprising 79% of our GDP.

The sector employs some 26 million people in this country. Out of every five people in Britain with a job, four of them work in a service industry.

And these are remarkable figures by any measure. And they mean that the UK has a vast amount to gain by working with partners to make services markets more open, more transparent and more competitive.

And it must not be overlooked that, because so many aspects of the production of physical goods are in fact services – such as design, distribution, logistics and marketing, that liberalising services will also drive wider international trade.

Currently, it is estimated that the trade costs for services are up to three times higher than those for goods.

Between 1995 and 2005 trade costs for goods fell by around 15% – while the trade costs for services have remained, to this day, fairly constant.

Research from the Bank of England suggests that if a large sample of trade partners lowered their services trade barriers to the level of the least restrictive country, the UK’s current account deficit could fall by up to 16%.

Leaving the EU gives us the freedom to pursue an independent trade policy that reflects our unique strengths in services.

A policy that is focused on our areas of competitive advantage – such as finance, insurance and business services.

And together, these comprise 57% of our services exports.

But it also gives us the opportunity to instigate international services liberalisation through fora such as the WTO.

We will actively engage in current discussions to agree new rules in key areas such as e-commerce, and to ensure domestic regulations do not constitute unnecessary barriers.

We are of course committed to TiSA, the ambitious, but currently stalled, agreement on trade in services.

TiSA has the potential to set the international standard and deliver a significant boost to the global economy, and we will continue making the case for it. But it is not our only option.

Digital trade

I have already very briefly touched on the way that the digital economy is revolutionising trade. Digital and associated technologies are an area in which the UK is genuinely world-leading, and commands a significant competitive edge.

The ability to send data across borders is the central requirement for international digital trade. And data flows are the life-blood of today’s digitalised economies.

They are vital not only to high tech industries but also traditional sectors, good and services as well. And I believe that it is patently absurd to talk about moving goods and services but not data in a modern economy.

And that is why obstacles such as data localisation must be tackled if we are genuinely to be able to take advantage of the digital era.

And ensuring that such flows continue unimpeded is a top priority for the United Kingdom. But if we are to ensure that data is free-flowing, we must also see that cross-border data flows are governed responsibly with modern, liberal and ambitious regulations, including the safe handling and storage of people’s personal data.

UK and the Commonwealth

Now, working to liberalise the trade in services will be of vast economic benefit to the UK and our partners.

But there is a greater mission that I alluded to earlier. The United Kingdom is uniquely placed to help redress the imbalance of the multilateral system, and to bring developing nations to the fore of the international trading community.

In 2019 our work at the WTO will move forward apace.

As the world’s fifth largest economy but also as a leading commonwealth nation, we occupy an exceptional place among the world’s biggest economic players.

Not only do we have historic and cultural ties to many of the world’s developing nations, but we are also part of an existing community of nations that are eager and willing to deepen their trading ties.

Britain has enormous scope to facilitate, and enact, change.

We believe that the real story of the Commonwealth is its vast potential for trade and investment opportunities.

The 52 member states boast a combined population of over 2.2 billion people, 1 billion of whom are under the age of 25.

Their economies are wonderfully diverse, each with their own specialisations, industries and opportunities.

Most importantly, Intra-Commonwealth trade has consistently grown faster than the global average.

The Commonwealth Secretariat has calculated that bilateral trade costs for Commonwealth partners are, on average, a stunning 19% lower than between non-Commonwealth members.

To date, Commonwealth nations have registered over 600 trade liberalisation measures with the WTO.

Clearly, the potential is there, and so is the will.

WTO engagement in 2019

So 2019 will be a significant year for both the UK and the WTO.

The UK is leaving the European Union. The WTO is facing many challenges to the ruled-based multilateral trading system.

As an independent member, the UK will have greater freedom to advance our agenda – in line with the terms of the withdrawal agreement – and to take advantage of the opportunities that leaving the EU presents us with in respect of our presence and participation at the WTO.

We will need to establish the UK as a credible, influential and creative WTO member – and there are a number of steps we need to take.

Establishing our own independent GATT and GATS schedules… …accession to the GPA… … complying with our notification and other WTO obligations and participating effectively in WTO fora, such as in the 28 WTO sub-committees that cover all aspects of multilateral trade… And of course to bolster the rules-based multilateral trading system, with the WTO at its centre.

We have the Global Dialogue on Trade, in which the CBI and our branch of the International Chambers of Commerce are strongly involved.

This is assessing what needs preserving and what needs improving in the multilateral trading system, and how to equip the WTO with the tools needed to tackle new challenges and disruptions of the 21st century.

The UK has world-class ‘soft power’ and we will be using this to hold meetings with developing countries, including in the Commonwealth, and maximising opportunities to promote and develop strong relationships to defend the interests of developing countries and the UK.

And we want to partner with Commonwealth countries to engage in WTO reform discussions in the sectors of the future.

We will encourage Commonwealth trade ministers at our next meeting, which Britain will chair, to set out ambitious thinking on how we can bring our trade and development policies closer together so that we can provide mechanisms for ever more countries to trade themselves out of poverty and into sustainable prosperity.

We need to build alliances to update and enhance the WTO rulebook to tackle underlying trade tensions. These issues include industrial subsidies, state-owned enterprises, and tackling blockages in ongoing negotiations, such as over fishing subsidies. We also need to establish new regulations and norms to facilitate emerging regulatory needs – as I have mentioned, such as in digital trade and service liberalisation.

But we also need to encourage trust and transparency in the WTO, in particular, modernisation of the dispute settlement system, improving WTO member compliance with notification requirements, and take another look at special and differential treatment.

For, if we are to have an international rules-based system that inspires confidence, then it needs not only to be fair but transparent. We must know which industries genuinely belong to the private sector and which are simply a cover for state economic activity.

We must redouble our efforts against overproduction, subsidy and dumping. We must protect intellectual property and strengthen our measures against IP theft and the restrictive treatment of foreign investors that are operated through mechanisms such as forced joint-venture requirements.

It is clear that while there are enormous opportunities in the global trading environment, with both the changing global patterns of trade and the nature of what is traded itself, there will be considerable challenges to be faced.

Security, environment, migration, trade and economic development. These things are related – part of the same continuum, as I described earlier.

The WTO and other international institutions have their parts to play in producing stable conditions for progress and prosperity.

But ultimately it is the responsibility of governments, of individual members, to provide the guiding vision. That vision needs to have not only a coherent intellectual and philosophical base but also practical solutions to some of the seemingly intractable problems that we face.

Building consensus requires everyone to have a stake in the solution. It has to work for the smallest and most economically vulnerable as well as the strongest and most advanced economies. It has to provide confidence for those who face an era with an almost unprecedented rate of change, socially and technologically.

And it will involve updating our global institutions so that they reflect the realities of the 21st century – not the political, economic and social patterns of the second half of the second half of the 20th century when they were created.

I believe that together with our partners around the world, using all the advantages that I have set out, the United Kingdom can rise to this challenge as a modern, independent, free-trading nation.

We are not passengers in our own destiny. It is time for us to have a clear direction and set a firm course for our future.

A nation is a human thing. Influence is, at least in part, a reflection of our own self confidence.

We have so much to offer – to ourselves and to the world around us.

A confident Britain will help build a confident future for all.”

In every aspect of British life there are positives to leaving the EU without a deal

Now the Withdrawal Agreement and all the negotiations have been so roundly defeated, it is the moment to seize the opportunity to vigorously promote the WTO way forward. There is no signed agreement, and there is no legal obligation to abide by its costly rules. Let us now be confident in the enormous opportunity which […]

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Now the Withdrawal Agreement and all the negotiations have been so roundly defeated, it is the moment to seize the opportunity to vigorously promote the WTO way forward. There is no signed agreement, and there is no legal obligation to abide by its costly rules.

Let us now be confident in the enormous opportunity which presents itself. It has been calculated that a WTO Brexit would produce a GDP boost of 7 per cent to the UK economy over the next 15 years which would be worth about £140 billion. Furthermore countries outside of the Single Market have increased their exports faster than Britain has to the EU over the last 30 years. Even Peter Mandelson admitted the Single Market has its downsides, estimating the cost of EU regulation at 4 per cent of GDP.

The UK economy is growing, public borrowing is down and unemployment is at its lowest since 1975. Facebook, Apple and Google have planned big headquarters in Britain, London has been crowned the world’s most popular city for work and Siemens plan to create 2,000 jobs in the UK. Whilst the good economic news continues, the scare stories about border disruption have been completely torpedoed. The head of the Port of Calais, Jean-Marc Puissesseau, has said they won’t restrict UK trade at all if we leave without a deal. Please can we now end Project Fear? Nobody else sees us in the drab, declining way we sometimes see ourselves. By contrast, the rest of the world is waiting for Britain to shake off the tin-pot diktats of Brussels and emerge as a global trading giant. Australia, the United Arab Emirates, Canada, Japan, New Zealand and the US want to sign speedy trade deals. Now the Withdrawal Agreement has been voted down, Britain could lower tariffs and have the pick of the world’s markets.

Legally we’re on solid ground. The House of Lords EU financial affairs sub-committee published a report arguing that we can leave the EU without paying anything: Brussels would have no realistic chance of getting £40 billion of taxpayers’ cash. Legal expert Martin Howe QC points out that leaving the European Union without a formal deal is not a step into a legal vacuum as our international trade with the European Union will become subject to the same legal regime which currently governs the majority of our export trade to the rest of the world: the rules-based system of the World Trade Organisation.

Electorally we can offer the country an authentic and optimistic agenda that offers enterprising Britons a bright future. Outside of EU constraints we can take on the vested interests, slash costly taxes for small businesses and re-balance the economy towards wealth creators and entrepreneurs. The provisions under the doomed Withdrawal Agreement for State Aid could have been used by the EU to restrict the UK’s ability to attract foreign investors by cutting taxes. But outside of EU rules we are free to recreate the ‘big bang’ of the 1980s when Margaret Thatcher successfully managed to free the parts of the economy which create wealth to do what they do best, boosting growth across the country.

In almost every aspect of British life there are positives to leaving without a deal. For example, a WTO Brexit would be the catch of the century for Britain’s struggling fishing community. At the end of March we can regain 60% of the UK’s fisheries resources and rejuvenate a multi-billion pound industry for the nation, boosting coastal towns and regaining our sovereign waters. For consumers that means cutting tariffs on imports, reducing the cost of food, clothing, and footwear. And leaving now, with no deal, ends business uncertainty. The Chairman of JCB Anthony Bamford says opting for a WTO deal does not worry him at all.

With the euro stagnating, youth unemployment between 20 and 50 per cent in many EU countries, Germany in technical recession, Greek democracy shattered, and France steeped in riots, we should look with confidence to our own future. As aloof bureaucrats who were voted by nobody give succour to the far-right across the continent, it is clear that the failing institutions of EU integration are the wrong side of history.

With our dynamic skilled workforce, the English language, and our global opportunities under WTO rules, a rejuvenating atmosphere of freedom – both democratic and economic – means an exit without a deal is what Britain can now embrace.

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Esther McVey: Now that May’s Brexit deal has been voted down, we need to win back trust. Here’s how.

We also need to examine a ‘no deal transition period’ – i.e: a payment for a period of time to enable both the UK and the EU to adjust to the changes ahead of us.

Esther McVey is a former Work and Pensions Secretary, and is MP for Tatton.

The fallout from Parliament’s rejection of the Meaningful Vote on the Prime Minister’s Brexit deal continues, but what is clear is that something has gone very wrong in our politics.  As most of this this site’s readers know, I resigned from the Cabinet over the deal. And in my resignation letter, I wrote about the danger of trust being lost. As a political class, we have stretched public trust to the limit in recent years but, if we now fail to honour the biggest democratic vote in our history, we risk severing trust entirely.

Parliament is awash with competing views about what needs to happen next. What is most startling is how most of these views have nothing to do with implementing the will of the people, and expose just how out of touch that political class is.

For a majority of Labour MPs, in particular ,this is about overturning a result they have never accepted. They believe people were too stupid to make an informed decision about how the EU affects their lives. Amidst the metropolitan bubble, they have convinced themselves that people across the country are clamouring to listen to their betters, and do as they are told in a second referendum. This view is deluded – and if they ever managed to block Brexit it could genuinely break politics as we know it.

However, it is the Conservatives who are most in danger of severing trust with the voters and suffering the consequences. We are the party in office – the party that introduced the referendum, and the party whose members predominantly support sovereignty and exiting the EU. We should take no false comfort in whatever polls might predict the election result to be when all trust has been lost. Not even the economic destruction threatened by the Marxist alternative might be enough to save us.

The Withdrawal Agreement falls short of delivering what people voted for, but it is the compromises doing the rounds that have the potential really to pour petrol on the fire. The current deal would leave us tied to the EU and their its indefinitely. So how is an alternative such as Norway Plus or Common Market 2.0, which look even less like Brexit, a potential solution? Not to mention that delivering either could only be achieved with the collusion of Labour MPs. What is worse is that at the heart of these developments is not what is best for the country, or genuinely delivering on the votes of 17.4 million people, but rather getting politicians out of a muddle of their own creation.

After the resounding rejection of the deal, the Prime Minister now needs to go back to the EU to get a better deal – fundamentally, to ensure the removal of the backstop, and that the payment of the £39 billion gains us a future trade deal along the lines outlined by Donald Tusk back in March 2018, sometimes referred to as Canada Plus.

At the same time, so that the EU can be in no doubt of our Government’s will to deliver for the people, and for our Party to live up to our general election manifesto commitment that ‘no deal is better than a bad deal’, we need to show how we would spend that £39 billion at home if we left without a deal; reveal to the public all the no deal preparations already done by the civil service; explain what World Trade Organisations rules are, and set out the side deals we need to secure.

We also need to look at a ‘no deal transition period’ just like the kind we had for a ‘deal transition period’ –  i.e: a payment for a period of time whereby we and the EU adjust to the changes ahead of us. This would continue as already planned until Dec 2020. We are good neighbours, and seek to remain as such.

What we can’t do is shackle ourselves to a bad deal simply to get Brexit over and done with because politicians think the effort of coming out of the EU is too much hard work. Nor can we keep the public in the dark about our options post-29th March, simply because politicians don’t want change. Change is inevitable – and preparations and planning are the solution. For the idea that somehow things will move on and people will forget what they voted for in the biggest referendum of a life time is fantasy. Let me assure my colleagues that if we break the public trust on something as big as this we will not be easily forgiven.

Podcast: What should Theresa May do now?

This week  I spoke to the MP for Dover and Deal, Charlie Elphicke, to discuss what Theresa May should do now after her Withdrawal Agreement suffered a crushing defeat in the House of Commons.
 
You can subscribe to our latest podcasts on iTunes an…

This week  I spoke to the MP for Dover and Deal, Charlie Elphicke, to discuss what Theresa May should do now after her Withdrawal Agreement suffered a crushing defeat in the House of Commons.

 

You can subscribe to our latest podcasts on iTunes and Soundcloud.

 

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Owen Paterson: No Deal would put the people back in control.

Other options being floated – extending Article 50, a second referendum, or the subjugation of the Withdrawal Agreement – are designed to hold us in the EU’s orbit in the hope that we may be sucked back in

Owen Paterson is a former Environment Secretary and former Secretary of State for Northern Ireland. He is MP for Shropshire North. He is Chairman of UK2020.

The EU question has always been about sovereignty.  It is about who governs the United Kingdom and how.  Parliament deliberately put the answer to this in the hands of the British people by passing the EU Referendum Act in 2015.  In 2016, the people gave their answer.  They wished, via democratically-elected Members of Parliament, to govern themselves.

The Withdrawal Agreement categorically fails to deliver that result.  Despite repeatedly ruling out membership of the Customs Union, the Prime Minister’s proposed “single customs territory” locks the UK into it in all but name.  The UK would be tied to EU rules on critical policy issues, with the European Court of Justice retaining the right to issue “binding rulings” on the interpretation of such rules and sanction the UK for non-compliance.

The Agreement is not even compatible with the EU (Withdrawal) Act passed earlier this year.  This Act repeals the European Communities Act 1972 (ECA) entirely from March 29 of this year.  Yet under the Prime Minister’s proposed Withdrawal Agreement, a version of the ECA will remain in place throughout the lengthy transition period.

The supine nature of the Withdrawals Agreement’s negotiation is fully revealed in its treatment of Northern Ireland.  The Backstop would keep Northern Ireland in the Customs Union and Single Market, creating a new political entity called “UK(NI)”.  Northern Ireland’s elected politicians would have no say over significant areas of this new entity’s policy (ironically, unlike those in Dublin); Northern Ireland’s constitutional status would be fundamentally altered in clear breach of the Belfast Agreement’s Principle of Consent, the requirement to consult the Northern Ireland Assembly and even the Acts of Union 1800.  With no unilateral right to end the arrangement, the UK could continue indefinitely as a permanent rule-taker, with no say as to how its rules are made – while paying £39 billion for the privilege.

None of these failures arise under World Trade Organisation terms.  The WTO has already confirmed that “nothing in WTO rules . . . forces anyone to put up border posts”, so there would be no “hard border”.  The jurisdiction of the ECJ would end and we would save ourselves £39 billion. The UK would be free to make its own laws, to be interpreted in our own courts.  We would take our independent seat on the WTO to work for free trade with allies across the world.

Perhaps the real reason for the Establishment hysteria surrounding a No Deal Brexit under WTO rules is that we actually would be leaving.  The other options now being floated – extending Article 50, a second referendum, or the subjugation demanded by the Withdrawal Agreement – are designed to hold the UK in the EU’s orbit in the hope that it may be sucked back in.  These options would completely fail to honour the biggest democratic verdict ever delivered in British history.

The optimal Brexit outcome remains a wide-ranging, zero-tariff Free Trade Agreement as offered repeatedly by Donald Tusk.  Such a deal can still be negotiated, but not by the end of March.  Having wasted so much time on the Withdrawal Agreement, leaving on WTO terms is now the only way to break free fully and build a more prosperous, independent future.

This article is adapted from a new Economists for Free Trade report: ‘No Deal is the Best Deal for Britain

Sheila Lawlor: Even with an exit clause from the backstop, this deal would be unacceptable

Its freedom to prosper, to make and judge its own laws, for its people ‘to take back control’ over how or by whom they are governed – all these will be lost for ever.

Sheila Lawlor is the Director of Politeia and the author of Deal, No Deal? The Battle for Britain’s Democracy.

The confidence vote has kept Theresa May in office for now. But the Withdrawal Agreement may yet prove her nemesis.  It is that ‘deal’, the EU’s and hers, that almost did for her last week. So far, it has brought Britain’s government to a state of paralysis, prompted political turmoil, constitutional chaos and a level of uncertainty and disruption near-unprecedented for the best part of a century, as well as spooking the markets.

Unless it is put right, it will do, in the pejorative sense, not just for the Prime Minister, but for Britain too. An end date to the backstop, legally binding under international treaty, is needed, otherwise the UK may be obliged to remain indefinitely in an EU customs union and under its law, whilst Northern Ireland will be treated as a separate state, UK (NI),  with an even greater burden of EU law imposed than the rest of the UK.  So much is widely recognised – now, at least verbally, even by May herself. Few, however, recognize all the implications.

Consider, for example, state aid, on which under the backstop Brussels will rule. This, the EU claims, covers certain tax rules and fiscal choices, which mean that tax breaks would still be under the EU’s control. So if the UK wants to award tax breaks to start ups or to promote home farming or fish processing enterprises or otherwise stimulate the economy on leaving, it will probably be prevented from doing so under ‘state aid’ rules. Moreover, so long as there is the threat of an indefinitely long backstop, it is is hard to see how the UK will be able to resist the demands of EU negotiators to include many of its intrusive conditions in the future economic agreement.

But suppose for a moment that the Prime Minister in the end manages to extract from Brussels a cast iron guarantee that, if the backstop is invoked, it will end on a date written into the Withdrawal Agreement, and at that date the UK will leave the Customs Union with the EU and no longer be bound by any related corpus of EU law.

The victory would be a hollow one unless there is also there is also a fixed, end date for the Withdrawal Agreement’s other legal obligations. Without that, the UK’s constitution and its law will still, under international treaty, be subjugated to the EU in a number of areas, indefinitely, backstop or no backstop. Its freedom to prosper, to make and judge its own laws, for its people ‘to take back control’ over how or by whom they are governed – all these will be lost for ever.

Far from taking back ‘control of our laws’ or respecting ‘the integrity of the United Kingdom’, the claims made on its behalf in the Prime Minister’s initial letter to voters and since, the Agreement and its Northern Ireland Protocol fail to do either, and not just on the backstop. Were ministers to read a smattering of the 585 pages of the proposed legal text, they would see how serious the consequences of the deal will be across whole areas of national life. 

In fact, freedom from EU law is anything but guaranteed.  Article Four of the Withdrawal Agreement gives EU law supremacy over domestic law in a number of areas in respect of the entire Withdrawal Agreement and not just for citizens’ rights, as a House of Lords briefing paper and a senior MP have made clear. Article Four, which provides for direct effect and supremacy, is not limited to the transition period but will continue to apply to those provisions of the Withdrawal Agreement (and of EU law to which the Agreement refers) once the UK has left the EU at the end of the transition period. Thus the status of EU law in the UK at the end of the transition is not clear.

This is just one example of the uncertainty that awaits the UK if the Withdrawal Agreement is accepted, even with modifications to the backstop. A careful reading of its near 600 pages would discover more. Why accept it? Even the Prime Minister can find no reason better than that is the only deal, so that the other options are, she says, no Brexit or leaving without a deal. In fact, no Brexit is not an option: the people voted clearly in 2016 and Parliament has legislated for the UK to leave the EU on March 29, 2019.

But leaving without a deal simply means leaving without agreeing to the special terms that the EU wishes to impose, but following the legal agreements which the UK has made. It leaves open, not just the certainty of being able to trade, as we  already do very successfully with most of the world, on WTO rules, and the opportunity to sign free trade agreements globally and reaching a Canada Plus style trade deal with the EU. Indeed, the UK will probably be in a much better position to negotiate an ambitious long-term trade deal with the EU if it leaves cleanly, without the baggage that any sort of divorce deal will inevitably impose.