Thursday, 25 August 2016
Modernity simply does not function without regulations. And there is no point in regulation unless you have inspection. And if you have inspection then you have paperwork. Everybody hates it but everyone would complain if it didn't exist.
In the modern age systems for trading in goods and services are built on a collaborative basis based on science and expertise. Very little is done unilaterally now and very little gets done quickly or cheaply. There are multiple overlaps where industry management has considerable impact on trade. They are uniquely intertwined.
In fishing, for example, the aim is to ensure you can sustain stocks and ensure your methods do not damage habitats and that the externalities of that activity are not unduly negative. So we have quota systems and means of punishing overfishing. All of these have to be negotiated and codified into law and contracts.
Before you know it you have a complex system and as it gets older there are more and more legacy issues where contractual obligations can stand in the way of reform. So if you have a regional resource like the North Sea it stands to reason that you will need an inspectorate and an arbitrations system along with policy units which can monitor the effects of policy-making and feed back findings to legislators.
Just in terms of ensuring we do not threaten various species of fish we need to ensure certain net sizes are not used in sensitive areas. We also want to ensure that the industry is not unnecessarily polluting habitats. And of course the coastline is valuable to the economy in terms of leisure and tourism so the activities of maritime industry must not threaten natural assets. This is when you get policy overlaps with competing agendas and incompatible policy objectives which can lead to inter-agency rivalry, jurisdictional issues and managerial incompetence.
Then introduce European politics into the mix. Now you see the problem. Taking back control means doing a full systems analysis from top to bottom. We might decide that we want to do something a little bit differently but that would possibly impact on foreign boats who have contracts written under the previous agreements. They have acquired rights. So you either have to buy them out or schedule your modifications. That means you need a centrally administered database of all fishing contracts and the types of agreements made.
It has to be staffed. It needs contract lawyers, ecologists, inspectors, customs officials, accountants and administrators. The entire industry is worth a billion to the UK alone every year. That's before you factor in secondary services and marine engineering.
So in this the last thing you would do is ditch forty years of established policy. To unilaterally take back control without consultation or forewarning is to shaft a lot of our trading partners and break international law. So when people tell you that we can leave the EU by hammering out a trade deal they are not being at all honest with you.
If you were coming at it from scratch, having never been a member of the EU then you might be able to approach it with a degree of blue sky thinking - but in reality we have let a common fisheries policy build up over decades with a number of mixed agreements therein which cannot be unspun at the stroke of a pen.
Some people think it's just a matter of swapping over regulations to ones we like that will reduce costs - but every single regulation has been hammered out on a multilateral basis and in its own way is a binding contract between parties.
And then we have to think where we want to go with our fishing policy. We can take back our waters but we don't have enough boats to fish them and we don't have the ports anymore. The ones that are not now city urban marinas are simply not equipped to cope with modern large scale industrial trawlers. There has been thirty years of development since we scrapped the North Sea fleet. And so though we will be in control of administration and we can change for the privilege of fishing in UK waters we won't be banning Spanish trawlers as some assume.
And then if we are landing fish then they must be frozen and packed and prepared according to a common set of rules, not least hygiene rules otherwise we cannot expect to export to developed countries.
So we are now in an era of massive interdependency whether or not you have a supranational authority or not and there is no such thing as absolute sovereignty and barely any unilateralism without extensive consultation and negotiation. Acting unilaterally in a way that could affect the trade of others can result in lawsuits and complains to the WTO. This really does expose the emptiness of the "take back control" mantra.
All of this is often dismissed as technocracy, but without it we would be in a very real mess. In this there is an inherent desire among Brexiteers to simplify that which cannot be simplified. You can make it more transparent, you can bring administration closer to home and you can maybe make marginal reforms but there is no silver bullet that makes the inherently complex more easily understood - nor is there the scope for ruthless slash and burn deregulation that some believe there is. It is a rich tapestry of law where pulling at threads is discouraged.
The idea that leaving the EU means turning our backs on technocracy is a bogus one - one that has been popularised by those who believe red tape is solely an EU invention and that Eurocrats dream it up just to pass the time of day. For sure there is corruption and commercial interest at play with undue influence from lobbyists but none of that goes away just by repatriating management of our waters. Technocracy is here to stay.
It is going to take a small army of experts and bureaucrats to design a replacement for the CAP and it is going to take them years to design and years to implement. If they have the outline of a policy inside six years then that would be an amazing feat of project management. Policy does not come easy - especially when it makes demands of the democratic machinery which has other competing agendas. And then there is implementation and the costs associated with transitioning. Another clue as to why we won't be saving £350m a week.
Leaving the EU is not a factory reset on regulation and trade law. All it means is that decisions will be taken a little closer to home with UK interests more closely guarded. Fishing is a worldwide industry where fish might be caught in the North Sea, frozen, shipped to Japan for processing and flown back to Heathrow. We must have laws that govern the supply chain so we have a chain of accountability - we must have food safety laws, customs laws - and health & safety at sea is more prominent a concern than ever.
So too are workers rights. The fisheries industry is not what it was. These days a trawler won't waste time going back to port. They will offload their catch to a fleet services vessel where some processing is done in the hold by illegal foreign labour on sub minimum wages. So we are going to want to safeguard our international reputation by having fisheries patrols ans air surveillance. Food fraud and black market fish is a huge part of fish trade.
This is what we have tasked our government with. Politicians who have for many years been used to debating taxes on carrier bags and whether a lady can wear a bikini on a billboard or whether the trains should be owned by the government. We are about to cross into another realm of politics leaden with complexity and dry detail that our politicians are simply not equipped to cope with.
And so yes we are going to delegate a lot to civil servants and scientists and yes we are going to entrust much of it to evidence based policy and no there is not time in the political calendar to give it the attention it deserves. So we work on an international treaty basis whereby we enlist the International Maritime Organisation, Codex and UNECE. We exchange Brussels for Geneva.
And now that you have a glimmer of what is involved in fishing now think the same for agriculture, airline safety, space policy, medicines, Europol, banking, customs and intellectual property - to name just a few. Now remind me. What was that you were saying about wrapping up Brexit with a free trade deal inside two years? Good luck with that.
Brexit means Brexit. And what that means is that the government has to leave behind those things the public sees as synonymous with the EU. That means ending EU budget contributions, ending EU regulations (or rather EU legal supremacy) and controlling immigration. It really means leaving the single market. And I'm all up for that. The question is how?
Obviously a hard Brexit would be unnecessarily damaging to the UK and would sour our relations with the EU. Nobody but for a few hard-line Tories actually wants that. In or out of the EU we do not exist in a vacuum and we will have to do business with the EU. So as much as anything the Brexit process is a question of designing a new relationship with the EU.
First and foremost, to ensure good relations are maintained we must abide by the law and honour our commitments and contracts under international law. There is no bonfire of red tape nor can we tear up treaties.
Then we must take into account that we have put policy making into autopilot for four decades. We are in many respects not equipped to "take back control". We have lost our institutional memory in fisheries governance. We will need time and breathing space to transition into full control. Then we must consider access to the single market. We want to maximise our access while at the same time reducing our exposure to EU rules.
Had we never been a member of the EU this would be fairly straightforward. As an advance European economy we would already meet international standards that would easily qualify as equivalent to the EU and there wouldn't be any major difficulty in obtaining a mutual recognition agreement. The problem is that we have been a member and working out which of our rules are EU rules and which are gold plated international regulations and standards. We will need a long process to discern which is which where we will more than likely find a large body of law is fit for purpose and we wouldn't change it.
But given the complexity of this task there is no change a bespoke relationship can be created in two years. This is why opinion is converging around an EEA solution with a number of add-ons. This though does not really satisfy the "Brexit means Brexit" criteria. In the first instance trade is the only thing we gain any meaningful control over.
Certainly many remainers would see this as a viable compromise and I suppose even I could live with it as trade is reason enough to leave the EU and I don't really care about immigration as an issue. I think that technological advances and the end of the war in Syria will have more of a mid term impact on immigration than any change in policy.
But really if we are going to go to the trouble of leaving the EU we should go all the way. There will be some areas where we will retain a high degree of EU cooperation and I envisage that we will always pay something into the EU budget for those functions and services we use but this will be by choice rather than obligation. It saves us replicating domestic governance for no real gain.
The fact is that in many respects the EU single market is as complete as it is ever going to be without a common language and and considerably more cultural convergence - which for the time being seems implausible. Free movement of goods is easily achieved and you don't have to be in a customs union to achieve that. A lot of that is facilitated by established physical infrastructure where erecting barriers we add cost but no value. The holy grail of harmonisation is now trade in services which is a lot more difficult to measure and regulate.
But we need to look beyond the confines of the European debate to see the rationale for leaving the single market. As a nation freed of EU control on matters of trade the UK will be seeking trade with the developing world. These are economies in need of regularisation and conformity assistance in order to participate in the global rules based trading system. Britain will be investing heavily in aid in order to facilitate that trade - promoting good governance in the process.
In this we do ourselves three major favours. By opening up new export potential for Africa we create a source of cheaper goods - in agriculture especially. That reduces domestic cost of living. The very act of doing so puts us first in the queue to sell our business and financial services - along with our innovations. We are a knowledge based economy. Latterly, by improving the economies and increasing wealth of African states we reduce the push factor of war and famine.
But if we are going to do this then there must be common standards and rules. and that is central to the whole debate. We are often told that by simply remaining in the EEA we would adopt EU rules and regulations but have no say in them. Remainers casually rattle off this mantra as though it were gospel from god. But what we're actually getting is a bundle of international codes, conventions and regulations rubber stamped by the EU.
Previously it has been the case that the commission signs up to rules and regulations on our behlaf and then instructs us to implement them with no real blocking mechanisms at our disposal. This more than anything is the rationale for leaving the EU. As much as it is a profoundly undemocratic way of doing things the EU has had a tendency to gold plate international rules as a means of protectionism.
Now though, with increasing pressure not to deviate from the global standards the EU is limited in what it can do to the the rules and even MEPs find their own amendments stripped out by the Commission. So if we are increasingly a passive recipient of top table laws it really then begs the question what on earth do we need the EU for?
By leaving the EU we retake our own independent vote an all the key global regulatory bodies and in so doing we have a system of opt outs and reservations which mean that we can keep protections in pace if we decide that the balance of trade-offs is worth it. That adds both flexibility and democracy to the system from the get go.
But some point out that there is little value in having a free vote on such bodies when they are routinely dominated by the EU and the EU has the deciding vote in nearly all instances. This is where we have to look at the long game and this is why there is no immediate rush to leave the EU single market.
Effectively our foreign policy should be to act as a recruiting sergeant the world over to the various regulatory conventions that bring about global harmonisation of trade - assisting in conformity to ensure that existing members and new accessions maximise their own clout within them. Gradually we build up a resistance to the EU's dominance in regulatory affairs. Coalescing around our already cordial relations with Commonwealth states there are major opportunities to put pressure on the EU to reduce its own protectionist rules and to reform its anticompetitive behaviours. We can bash our way through the EU iron curtain.
This happens by way of building trade alliances on a sector by sector basis. And in this it isn't market size that gives you clout. It's the resources and the leadership you bring to the table. Britain's strategy should not be to leave the single market per se - but to expand it and break it out of EU control where participation becomes entirely voluntary - and then we build up momentum for a global initiative on mutual recognition and inspection - much like Port State Control. In this, our leadership may be the deciding vote among trade coalitions.
This still means responsibility for conformity and enforcement rests with the EU for EU member states but the rest of the world falls on the WTO for dispute arbitration rather than imposing the law with an iron fist. Central to this would the UNECE as the key forum for regulatory cooperation and administration. Effectively we would be using the mechanisms and doctrines that already exist in order to bring about a global single market where the EU is no longer calling the shots. UNECE is the regional arm of the United Nations. The idea is that UNECE is replicated in the other regions, then to join together.
All of this is going to take time and could well take twenty years to bring about. But that's just as well since it will take us nearly twenty years to sort out the entangled mess we find ourselves in. It will be fifteen years or more before we have fully taken back control over fishing and agriculture and a lot of EU labour law will be with us for decades to come.
We must use that time to lay the foundations for something bigger in scope and far more imaginative, preparing the ground so that when we do formally leave the single market, there is no real noticeable effect except that we enjoy similarly open trade with a lot more countries. By this time we will have evolved regulatory systems of service for application the world over where the EU is operating to the same rules as everyone else and completing the European single market means cooperating at the global level. In that we can be both ally and friend to the EU when they're right and blocker when they're wrong.
Critics of this approach think it a fantasy and is overly ambitious. But key to this approach is that it utilises many agreements that already exists, frameworks which are already established and methods we are already practising albeit on a smaller scale. While we have been on autopilot largely disengaged from the world inside the EU there have been giant leaps in progress around the world where there have been seismic developments in global regulatory harmonisation. We would simply be following the global trend - but we would be champions of it.
As to the criticism that it is overly ambitious, I take the view that if we are going to make a success of Brexit then we cannot afford not to be massively ambitious. It's not worth our while if we're not and it would be a wasted opportunity. We have to stop seeing the Brexit process as a timid exercise in damage control and look at it for what it is: an opportunity to kick start global trade and to reform the EU from the outside in ways we never could as a member.
The fact is that the EU is not going to reform or change its ways if we acquiesce. Through a process of considered international diplomacy we can bring pressure down upon the EU to get its act together and change both its attitudes and behaviours in trade.
There are those who are never going to be satisfied with our Brexit outcome. Some will forever be wedded to the obsolete ideas of the last century, be they disciples of EU supranationalism or free trade dogmatists opposed to the very existence of regulation, but for the rest of us we will be going forward with the best of what the EU pioneered while ditching the baggage that comes with trying to build a European superstate against the will of the people.
Brexit presents us with a world of new opportunities and as much as it is an opportunity to reboot domestic governance it is a chance to move the world into a new era of trade seeking out commonalities and opportunities to liberalise our trade relations the world over. It means that we can have a targeted immigration policy that works in conjunction with our foreign policy aims and lending advantage to our natural allies rather than those imposed on us by the EU.
In order to make the best of it we have to make full use of the new found freedoms we have and start celebrating the potential of it. To simply resign ourselves to being stuck in a siding of the EU is insufficient. If academic cooperation and research collaboration is indisputably good, why should that be a bartering chip of the EU and why should it be exclusive to members of the club? Why should we not extend the invite the world over? Who says the EU gets to call the shots?
They said we would be isolated if we left the EU but it's not going to be that way. We could be isolated if that is what we choose but Britain as an island nation is instinctively outward-looking which is why EU membership is incompatible. We've never been at ease with abdicating our global participation to the EU and relationships have suffered because of it. Brexit is a chance to undo the damage and work toward the relationship we should have had with Europe all along.
Wednesday, 24 August 2016
In this the media is not much more advanced. There are glimmers of understand here and there but there is an over reliance on received wisdom whereby bogus assertions gradually establish themselves as irrefutable articles of fact - thus the entire debate is distorted.
There are a few who have attempted to look beyond the run of the mill talking points like David Allen Green, Ian Dunt, Allie Renison and Janan Ganesh but they display their knowledge in the same way that a teenage girl shows off a new frock. You can tell it doesn't quite fit, you can see it's new to them and they have not yet found a comfortable way to wear it without looking goofy.
They are also blinded in a similar fashion to the Tory ideologues. Their quest for knowledge extends only as far as a quest for more problems. I'm not seeing very many efforts to find solutions and in fact these people go out of their way to deny the existence of solutions or casually dismiss them. The aim seems to be to create a smokescreen of confusion in the hope that Brexit can somehow be stopped in its tracks. Consequently there is more heat than light.
As Ian Dunt put its it "This is nothing less than an opportunity to reshape a country, and only the right-wing of the Tory party seem to recognise it". That to him is a reason enough to do everything to possible to stop Brexit - as a safeguard to democracy no less.
But this would actually be an affront to democracy. By all means we need a consensus on a way forward where all voices are heard - and there is every reason to believe the Tory right will be put in their place if parliament does its job - but killing Brexit would be to ignore the central message of the referendum.
In spite of dire warnings from prestigious institutes and prognostications of gloom from economists Britain still voted to leave. This really is "an opportunity to reshape a country" and that is exactly what the public wants. As Dunt has it, "basically, the entirety of British law over the last few decades is up for grabs, in a bonfire of legislation". Bring it on!
The medical profession has never been truly at ease with the working time directive - and as a contractor I detest the very idea that flexible work is being attacked from all sides. Britain more than ever needs vitality and fluidity back in its labour market. If that opens up the potential for exploitation then that is an opportunity to reignite union activism.
Agriculture has suffered for decades from a stagnant policy where even marginal reforms to regulation have proven near impossible. We now have a blank slate on how we approach rural policy and in that there are numerous opportunities to change the way we think about the countryside. I would like nothing more than to see the devolution of agriculture and rural affairs to the local level.
In energy I would like nothing more than to see us ditch vanity carbon targets in favour of a pro-growth agenda. Nobody thinks our approach to energy is adequate and nobody thinks it is cost effective. Again, there is no reason why energy policy could not in part be devolved to the regions. There is a huge opportunity for remunicipalisation and we can do it through energy collectives.
More to the point the government is taking back control of trade for the first time in decades. For the first time in my lifetime there is public debate about it and again we discover the politicians have absolutely no idea how it works. And this to me underscores why we should leave. Our political class has complete abandoned key policy-making to the point where they are wholly ignorant of it.
Our knowledge of agricultural governance has withered on the vine, our politicians don't know how the EU works and have even less idea how trade functions and so how can they be in the least bit capable of holding the EU to account? Being in the EU means putting policy on autopilot. And what do we have for scrutiny of the EU? A ragbag of intellectually subnormal MEPs you wouldn't trust with the TV remote.
Britain has demanded a change of government. They turned out in record numbers in the most significant public ballots for decades to send a message. We want change. And Brexit very much is that change. In this we have a world of opportunities open to us. Politicians of all stripes should be salivating. But what do we have instead? Snivelling tyrants who don't trust the process enough to even have these debates. All we get from them is a torrent of petty problematising.
I am a firm believer that there is a solution to every problem. In politics it is merely a matter of political will. Some walls mean you have to change direction. Others you just have to smash through. We know that there are complications in the Brexit process. We know that there are a number of paradoxes to be resolved. But they are resolvable. With a lawmaking machine like the EU there is always a mechanism to make things possible - not least single market access and control of freedom of movement. It can be done. It has been done. The losers just prefer to see problems.
More than anything Brexit is an opportunity to do what Cameron failed to do. We can completely reshape our relationship with the European Union. We can have the close cooperation we seek but maintain the controls we need. I just don't see a downside.
For the time being there will be a period of uncertainty. The biggest political battles are still in front of us. We are going to pay a price for leaving the EU and it will dent the economy. That doesn't change my mind that we should never have put policy making on autopilot and if it costs us to get it back under our control then the fault lies with those who took us into such an arrangement without consultation or consent - not those who voted to leave.
Some would have it that Brexit irrecoverably damaged our standing in the world and permanently damages the economy. It's all so final to these miserablists. The truth however is there is no limit to the opportunities that await globally. The worlds population is increasing all the time and agriculture will have to grow with it. We have the technology to turn scrubland into prime crops. We have the knowhow and we have the talent. If we turn our attention the UN sphere of international development and invest in the trade facilitation agenda, using all of the global forums, then we can be more agile, more decisive and more inventive than the EU.
This however, is going to require a change of attitude. Impossible is a world we hear far too much from remainers. The fact is, the EU is not the only game in town and there are entirely new, hitherto unexplored modes of trade that have yet to permeate the Brexit debate. When we finally have that conversation - and open up the debate about the globalisation of trade and regulation then we will view the EU in its proper context as an inhibitor to trade rather than a facilitator of it.
In fact that is a debate we should already be having but that of course busts wide open the debate about the viability of the EEA option - something the dishonest remainer bunch really don't want to talk about. These are people who would rather be proved right than contribute anything to the debate.
We hear a constant drone of grumbling and complaining that Brexit will tie up government for the next decade but that is something we should be celebrating. We will be putting every area of policy under the microscope and redesigning policy for a completely new relationship with the EU and the world. We will also be forging a new relationship with the electorate - healing the rifts that brought about the Brexit vote in the first place. The boil has been lanced.
Meanwhile it now looks like Scottish independence is less like than ever - the SNP have run out of political capital and even the Tories are gaining popularity north of the border. Regressive socialist ideas are being rejected by the electorate - as are the poisonous paternalistic ideas of the Blairite left and within a few years we might well see Ireland quitting the EU. Rather than fragmentation, it looks like the British Isles will be restored to the culturally compatible union of friends that it is.
I'm not one who believes that Britain is looking ant an imminent renaissance of power, influence and free trade. I am no Hannanist. We will have to make some hard choices and trade-offs to undo the damage of EU membership. We will have to redouble our diplomatic and trade efforts and we'll be fighting to compete outside the EU - but for once we will be in control of our own destiny with vibrant debate about how we achieve it. How well we do is entirely up to us. That's why I'm sick to the back teeth of dishonest miserablist losers like Ian Dunt and those who think as he does.
Brexit is the factory reset button on a political settlement that has become stale and is completely bereft of ideas. It is not delivering and not even the remainers think the EU is the solution. They're just petrified of change. They can't adapt to the modern era of globalised trade and globalised governance. Remainers are the dinosaurs who can't adapt to the new paradigm. They can't even acknowledge it exists and would do anything (up to and including subverting the largest democratic exercise since the war) in order to cling on to the past.
I don't know about you but I am thoroughly sick of these saddos and morons. Brexit is the best thing that has happened to Britain for ages. I can't wait to get stuck into what will be a challenging and deeply interesting process.
That says quite a lot about how customs systems and standards compliance have evolved - and we are now inspecting at a whole new level of detail. There very much is an iron curtain - a firewall of red tape and compliance - and this is why the developing world finds EU trade frustrating. The relationship is wholly asymmetrical where the EU is wholly at liberty to export - but there is no reciprocality. On those grounds the EU, when it comes to movement of goods, is probably worse than the USSR was.
The USA is the same. Trucks entering from Mexico without the proper compliance documentation are subject to intense screening. There's actually a good example demonstrated in episode 8, season 2 of Better Call Saul at the beginning. It causes delays - it costs money.
This kind of border inspection has the potential to spoil goods, especially fresh produce. This is why the UNECE TIR convention is being adopted by a number of new countries and it forms the basis of a new African free trade area so that lorries may pass through countries without inspections. That way the only pinch points are the ports.
In order to remove the necessity for port inspections the EU has a customs union but the same effect can be achieved with a mutual recognition agreement on conformity assessment. Both parties agree that the standards and means of inspections (along with the qualifications of the inspectors) are equivalent. Such is subject to random audits.
And while this is not a free trade agreement it very much is a trade agreement and if we broke away from the EU unilaterally as the Tories propose then very soon we would be in a real mess.
As it happens the EU has a number of these agreements not just with third countries but other blocs where the EU is satisfied there is sufficient conformity. At this point it should be pointed out that a mutual recognition agreement is not necessarily a standard agreement. They are all specific to the partner country or bloc. There are some provisional agreements with African nations but they do not cover all sectors. Specific authorities have their own agreements. For instance the EU's medicines agency is working toward an MRA with the US FDA (Food and Drug Administration).
The process of trade now is to seek out new areas of regulatory harmonisation and customs cooperation. This is why my eyes roll when toryboys talk about tariffs. It's just one tiny element of trade. They seem determined to ignore the significance of regulation. To them it's just a matter of "cutting red tape". Nobody wants to be sullied by this level of detail - especially when in their imaginations we are going to have a bonfire of regulation and let the markets decide.
While you could get carried away with such radicalism, it overlooks the need for phytosanitary measures and disease control among both humans and livestock. It's also matter of quality control. You buy goods with confidence specifically because we do spot checks of formaldehyde on plastic produce. It's why we don't import cheap electronics that electrocute people.
There comes a point though, when all of this amounts to a hefty regulatory burden that slows down trade. Technical barriers to trade are increasing. The ideologue would simply take an axe to all of the technocracy - but these would be the first people to complain when Waitrose is no longer stocked full of pristine quality checked goods. So then the process of removing red tape becomes a matter of making better regulations informed by science. It becomes a matter of systems integration and harmonisation. Trade then becomes a delicate process of agreeing common standards and common data structures. And when we have world trade, it helps if there are global standards.
This of course means making multiple compromises and making broad brush agreements at a level where there is nothing even approaching democracy or accountability. The EU is one such example. The toy parliament is neither here nor there. MEPs do not get to tinker with standards and regulations. It is literally above their paygrade and ability.
So then in come the finer philosophical questions as to who decides these things and under what circumstances can they be opposed or ignored. The EU approach has been to demand uniformity throughout and demands universal conformity. And there is a lot of sense in doing it that way. But there are losers as well as winners and it raises the bar to market participation. As much as you must have expertise on how to make your product you must also make it conform to the standards and meet the shipping regulations.
Libertarians argue that this means adding extra costs that freeze out the little guys and stifles innovation and competition. They are absolutely right. But then there are positive and negative liberties. Is the "little guy" perfectly at liberty to make ramshackle electronic goods that may electrocute the user? Of course not. The market (or rather the people) demand a degree of conformity and testing. Moreover, it reduces negative externalities.
You might have notice in recent years the Fire Brigades Union opposing attempts to merge the Fire Brigade with the ambulance services - creating a uniform rescue service. But it will happen simply because incidences of house fires have collapsed by more than fifty percent in the last twenty years. We don't have coal fires, we have safe gas systems which are heavily regulated and we have electronics testing so that electrical fires are now rare. This means we don't need an extensive fire service and household insurance is now cheaper than ever.
So if the complaint is that our iron curtain prevents the rest of the world trading with us then it becomes a question of bringing the rest of the world up to global standards. This is known as trade facilitation. It is the only game in town when it comes to boosting trade. But it costs money and takes time. And even if we can secure mutual recognition agreements these systems have to mature and trade is then only as good as the physical infrastructure - the ports and the roads. This is where the major investment opportunities are and that is where we can boost our exports in services.
Underpinning all of this is a myriad of bewildering agreements of different types. There are more than ten categories of trade agreements each with their own methodologies for achieving harmonisation. Then there are comprehensive agreements like TTIP which span nearly all of them.
The truth is that the world is no simpler for leaving the EU and there are no silver bullets for getting round the technocratic burdens. It is a process of negotiation and constant evolution where the process is dry, opaque and remote. Part of the opposition to TTIP is because it is shrouded in a fog of complexity that leaves electorates suspicious of what their government is doing in their name. At the stroke of a pen industries can be wiped out in the name of the common good. One day your business is compliant. The next day it isn't.
That's actually why Brexit is ultimately necessary. Trade is becoming more complex where the bigger and more ambitious deals can do as much harm as good. The EU does not allow for exemptions and waivers. The EU is too wedded to the idea of a single uniform marketplace where nobody has a commercial advantage. They call this a level playing field - when in fact it's just a brake parachute that ensures nobody gets ahead. That is why European trade is stagnating and the EU is becoming less competitive.
In trade terms we need to be thinking more along the lines of little and often rather than looking for trade bazookas like TTIP. It really is a hare and tortoise game. Politicians like the idea of big solutions to complex questions but in reality it is a patchwork of incremental policies that bring about the biggest gains. This is why the global approach is better. Multilateral forums with no central authority as such.
The WTO approach does not insist on conformity. It allows the world to evolve at its own pace. Instead it has a system of arbitration where complaints can be brought to it if a nation can demonstrate that an action in contravention of an agreement harms their own trade. This approach allows nation states maximum sovereignty in a world where absolute sovereignty no longer exists. It formalises informality but in a less restrictive way.
The EU approach is the search for a non existent ultimate harmony - a utopian order to trade that becomes more elusive the harder you strive for it. World trade will always be chaotic. Billions of people making trillions of transactions daily with new innovations surpassing our ability to regulate and control. So what we want is systems that facilitate trade while reducing harm - which maximise profits and supply chain efficiency while protecting the customer. At the same time we must safeguard that which makes us distinctive and the system must be fair.
That is why trade regulation has no endgame. It is a continuum where the system is never complete - where every nation must speak to every other nation. Having a rogue entity like the EU commission making agreements on behalf of all of Europe means making decisions for half a billion people when it cannot possibly know who the winners and losers will be. We need to recognise that there is no perfect system and no endgame and build transparent institutions that allow nations to get the best for themselves according to their own talents and resources. We must stop looking for easy answers.
Ultimately a dogmatic and ideological approach to trade means trampling on the rights of nations - making demands for sacrifices they have had no real say in. That can never be democratic nor can it maximise trade. It can only ever enforce mediocrity. Brexit is an opportunity to change the way we do things and play the game by a different set of rules. We won't be having a bonfire of regulations but we can at least make sure that our voice is heard and that we retain the right to say no. Without that, we make ourselves slaves to a machine where the greatest crime of all is to be different. That is not a world I want to live in.
Tuesday, 23 August 2016
Ok remainers, we get it. You REALLY don't want to leave the EU. The problem is, the majority of the country doesn't agree with you and there is scant evidence to suggest they have changed their minds. And if you're objective and fair minded you know full well it is nothing to do with bigotry or xenophobia. It's about something more profound.
I know what genuine xenophobia looks like. I am pleased and proud to say that it is rare. Some may express politically dubious views but most people are decent and when challenged they will capitulate to good sense. The notion that the UK is suddenly a hotbed of racism is completely bogus.
There's a real message in the final verdict. Remainers are aghast that regions which receive the most in EU funding turned out in high numbers to reject the EU. What does that tell you? If you take that to mean working class people are thick and voted against their own interests and that media bias meant that the message of economists didn't get through then actually it's you who's a bit thick.
Let's take Sunderland. Sixty one per cent voted to leave. Yet the North East is swimming with EU cash. We can say the same of Sheffield. Regions formerly associated with the UK's productive heavy industry. What they would call rust belt in the USA. Don't worry. I'm not going to bore you with all the clichés about globalisation. These are regions with proud traditions and a history of making things - but automation and globalisation have made these towns redundant. We know all this. It bores me even to type it.
What we are told though is that we are stronger, more prosperous and more influential in the EU. Londoners evidently believe that because rich cities based on global services only get richer. Meanwhile Liverpool is turning into our own version of Detroit. For sure it has a first class container port but modern trade is all about automation and reducing headcounts in shifting produce around the world. We have made our great cities redundant along with their inhabitants.
But this isn't new. Our core industries have been gone since the eighties and early nineties. The EU has had twenty years to deliver. It hasn't. We've seen cosmetic regeneration but whatever prosperity we have enjoyed has been fuelled by cheap money and a mountain of debt. Now that party is over the fundamentals are unsound. We can't borrow and spend. We have to find ways to compete in the global economy and increase our productivity. And that is something the EU cannot deliver.
The EU is presently negotiating TTIP. They have been negotiating it for years and is nowhere near a conclusion and its future is uncertain. It's not even popular. It might not even pass. Years of trade liberalisation go up in smoke. For what? We were told that being in the EU meant that we get more bang for our bucks by way of increasing our clout. But there is scant evidence of that if you live in the North East or Liverpool or Stoke on Trent. Meanwhile we continue to import poverty.
The fact of the matter is the current economic model, underpinned by EU administration of trade, is not working. It has not delivered. If there is EU development money coming in then it is subsistence. And it's not going into the pockets of those who need it. And it is after all our money. We have seen the quangoisation of regional economic development policy and much of the money goes on corporate fat cat salaries on regeneration projects that do not deliver. Bonuses for all - unless you're one of the little people.
So enough is enough. The EU has had all the time in the world to demonstrate its sincerity. The UK has been in the no man's land of post-globalisation economics for two decades and it doesn't look like anything is going to change. We need to pull up our socks and get in the race. We need to start competing in a global marketplace. That is not going to happen from inside the EU iron curtain. We are euro-centric, complacent and overindulged, locking out the rest of the world under the misapprehension that the world owes Europe a living. Not so. The rest of the world is catching up and we need some new thinking and we need to get mobilised.
Brexit will do that. For the first time in my lifetime there is a deep and thorough debate about trade dynamics, trade politics and the mechanisms by which we can expand our trade. We have popularised trade as an issue by voting to leave. Trade and development - and how we relate to the rest of the world will dominate politics for the next decade. And that's how it should be. The debate will bring about new innovations and new ideas and new approaches and it will refocus our politicians on the matters that matter - rather than their myopic fixations like telling us what to eat.
I don't disagree that Brexit is time consuming and difficult. It may well mean taking a step back before we can go forward. It may well mean the systems of support that have maintained a subsistence existence take a hit. The fact is we are willing to take a gamble. We are willing to give it a shot.
Brexit is our chance to redefine our uneasy relationship with the EU and it will allow the EU to become what it needs to become while allowing us to think about our place in the world and how we relate to it. This is a revolution in domestic and European governance. there will be winners and losers - but all change presents opportunities. Now is the time to be thinking big. Now is the time to think beyond the confines of the EU and look at the developments in global trade while we have been in this state of economic slumber. For four whole decades Britain has retreated from the world and abdicated matters of trade and industry to the EU. Now we are playing catch up and we will realise there is a party going on with an open invite.
This blog has spoken much of the potential in Trade Facilitation - and this is something the national debate has yet to get to grips with - but as a services economy this really does open up a world of opportunity. We have to stop catastrophising Brexit and look upon it as an opportunity. It is an opportunity to bring about the relationship with the EU that we could not secure as a member. It is an opportunity to reassert our distinctiveness. And it is an opportunity to harness entirely new modes of trade and commerce in ways we never imagined.
When the EU was envisaged there was no such thing as containerisation, the Internet and smart-phones. The world is very different today. Global markets need global rules, not regional ones. That is where Britain needs to be acting as a voice in its own right. The world has moved beyond the quaint old EU. Now is the time to rethink everything we do. Brexit forces our politicians to have that debate - and it's the only thing that was ever going to. Brexit isn't a disaster. It's just a change of tack because the status quo doesn't work. There is nothing to fear. Brexit will only be a failure if remainers persist in their desire to make failure a reality.
These are men of no knowledge. They pretend the single market is easier to leave than it is and believe that we do not need to use Article 50. They believe that we do not need a preferential agreement with the EU and can trade using only WTO rules. Right now they are drafting in just about any crank they can find to confirm this world view - and there is a small army of supporters who believe it because they want to believe it.
You can point out that you would at the very least need a mutual recognition agreement on standards and conformity assessments along with a number of other bridging agreements in order to transition out. They then call this WTO+. Except that WTO+ is actually its own concept at the WTO and is nothing to do with Brexit. More to the point, a string bag of bilateral agreements with the EU is then by definition not the WTO option. The WTO option is the baseline where no agreements exist. If you then introduce agreements with the EU then you are in fact talking about the Swiss option where you have over a hundred such agreements that took many years to hammer out.
But then if you are not intending on using Article 50 and intend to unilaterally break off from the EU then there is no legal compulsion on the EU to even enter negotiations. And having done so, we would have voided all of our existing agreements having conceded already on things we could have fought to retain. But then if we were to use Article 50 then there is only two years in which to construct this ill defined concept of bilateral agreements.
These Tories take no account of decentralised agencies and peripheral agreements or any of the binding contracts we have within them. As far as they are concerned we can just rip contracts in two without any consequence. They then tell us that the rest of the world would be keen to enter new agreements with us. They are not on this planet.
Moreover their concept of a free trade agreement is an agreement on tariffs which you all know by now is neither here nor there in terms of global trade. They claim that if the EU maintains its common external tariff then we can reciprocate. We can't. As a third country with no preferential status we are ironically bound by WTO rules that say we cannot discriminate. If we put up tariffs for the EU then they must apply to everyone. So in fact the EU very much can have tariffs - but we can't.
While I am no fan of consensus politics it is the near universal view of trade economists and political analysts that the WTO option is a non starter - something I had concluded long before they'd ever given it a nanosecond's thought. The only people who think it will fly are fools. But there's really nothing you can tell these people. They have constructed their own reality and keep it tightly sealed so that critics may not intrude.
Worse still, David Davies, the minister in charge of Brexit, along with Liam Fox also believe in these fictional scenarios and are using time we cannot afford to waste trying to construct a justification for something that categorically will not work and will probably result in the EU taking us to court while absolutely destroying our credit rating.
And to those who say it's really not that big a deal, it really is. To those people I ask on day one of walking away from the EU what happens when a lorry rolls off the ferry at Calais? They never have an answer. I can tell you want the answer isn't. The lorry does not go on its merry way through to its destination. It is sent to a compound for goods inspection. The driver must then supply proof of conformity to EU standards. And since we don't have a mutual recognition agreement on conformity of standards assessment, the paperwork supplied is simply not recognised. In short, road freight to the continent grinds to a halt literally overnight. That's what happens when you don't negotiate an agreement.
Almost certainly we could then secure an emergency agreement to get goods rolling again but this would be as a favour to the UK and we would have no leverage in securing any preferential terms or exemptions. But this is all complicated you see. And nobody wants to hear that things they think are simple are complicated. Especially Toryboys imbued with Randain ideological dogma. You can't tell such people anything at all.
I don't know how this is going to play out in parliament. It will result in a political stand-off. There is certainly no way we can invoke Article 50 until this matter is resolved and both parties will take it to the brink. In the end I believe the Tory right will blink first but they will go down fighting and force a completely pointless concession from the government than means our terms of exit will be worse. It may even result in Davis and Fox being sacked or forced to resign. What it will mean is that those spearheading the Brexit efforts will be utterly discredited and politically defeated.
Parliament at this point could well put the brakes on the process. And I wouldn't blame them. That is when Brexit will be held in question and we will see renewed calls by parliament for a second vote. The only thing on the table by that point will be an EEA style agreement whereby we pay in the same, maintain the same rules and to a large extent maintain freedom of movement. I actually have no problem with the EEA agreement in that it gives us a great deal more influence over the rules - though the media will ignore those points because it is incapable of comprehending the globalisation aspect.
By this point you can expect multiple bitter rows inside the Conservative party and a great deal of cross party conflict. It is at that point where the real uncertainties start to bite and that's when we will see market jitters. There is the possibility that such an intractable conflict could seriously distort Brexit talks. I can't predict the future but I know this mother of all rows has got to be resolved sooner or later. We have been fighting these Tories for two years now and they are quite determined that cats can bark and fish can walk. They will take their delusions right up to the wire. It was never going to be any other way.
Monday, 22 August 2016
Above is a short clip of a Brexit protest earlier this year. It is instructive of how remainers think. Underlying the remain message is that democratic decisions should be deferred to experts. Creepy as that is, there are some haunting statements in it. One that has been ringing round my head all day is "We need experts to speak, And I have watched experts - people with PhD's in European law".
Indeed we do need experts to speak. The assumption here is that experts have not spoken and that they have not been heard. Professor Michael Dougan is one of those experts with PhD's in European law. His Youtube video has over half a million views. Similarly the LSE is broadcasting the opinions of Gavin Barrett, Jean Monnet Professor of European Constitutional and Economic Law in UCD Sutherland School of Law. I don't know if he has a PhD or not but we can say he has both qualification and prestige. I do not agree with either of them.
So who am I, a nonentity from Bradford with only a mediocre set of GCSE's to question such titans? I don't call myself a journalist. I am a blogger. One who has a particular tool which nobody else seems to have. You may not know this but the internet has websites called "search engines" and when you "search" for things you find a diversity of different views on a number of topics - which is quite useful when you consider the EU governs everything from fishing to human rights law. And in this I'm going to hazard a guess that the learned fellows named above couldn't tell an inshore trawler from a crab boat.
It turns out that the bodies representing the fishing industry remained largely neutral as there is broad disagreement in the industry as to whether the EU is beneficial. And thanks to Facebook I have the privilege of knowing one or two legal minds who are fundamentally at odds with eachother on the subject of human rights law. Just as an inner city Londoner may have different attitudes to immigration from someone who lives in Sheffield or Sunderland. And though they may be no economists, they are experts in their own life experiences.
In a subject as broad as a supreme government for Europe anybody is qualified to voice an opinion. Given that there is no fair or accurate means of weighting the validity of such opinions we have a little thing called democracy, where everybody gets a say. And a vast majority who had a vote used it. And a clear majority decided that the EU on balance is not in the UK's best interests.
In this we had a year long debate about it. Everybody knew there was a referendum coming. That's quite a long time to deliberate on the issues. Some had already made up their minds. We are told that those who voted to leave tended to be the older generation. But these might well be people who made up their minds more than twenty years ago. It's just taken this long to have a say.
And in this, the losers cannot say that voters were not given enough information. See, it turns out that that "search engine" thing I use is available to everybody who has the internet. Who knew?
We had all of the major corporates telling us that Brexit would be bad. We had a procession of global and national economic institutions telling us that Brexit is universally bad. The entire edifice of academia piled in to tell us Brexit would be a catastrophe. Their message was heard. Even the government got in on the act and sent its own prognostications to every household under the guise of public information.
The problem is that much of what they said was demonstrably false. Much of what they said was based on projections built on flawed models. Some of what they said was exaggeration. Some of what they said was pure fiction. In fact, thanks to that "google" website, many of us were able to conclude that even our academia was indeed lying to us. So it then became a question of which side deserved to win. An adversary of mine always said that the vote would come down to which side was despised the least.
In the end it was the remain side who crossed that finish line first. Everybody knows the Leave campaign was fraudulent. The fact is the in depth issues that form the basis of our objections to the EU can not so easily be communicated in sound-byte form and so a degree of simplification was necessary. We could not rely on empty platitudes. We had to argue our case in the chatrooms, forums and social media. And people of their own volition did precisely that and contributed to what has been one of the most comprehensive national debates in my whole lifetime.
By the time the vote was over, anybody who wanted to engage in a conversation about the issues had the opportunity. And nearly everyone I know made the effort. The ultimate truth is that the remain side lost the argument.
The public may not be experts in EU constitutional law - and in truth the majority of people have a very shallow understanding of what the EU is and how it works. But they are capable of deciding whether or not they consent to it. We are all very well aware that the EU has legal supremacy and the UK government is not the final word. So it became an far broader question as to whether the British thought they were getting a good deal. Wealthy London thought so. Everywhere else disagreed. Even Scotland's determination to remain in the EU represents a lack of faith in London's governing ability.
And so this was not a message to Brussels. Rather it was a message to Westminster. It was a notification to cease with the present trajectory and change tack. The fact we turned out in such numbers shows that this issue has even greater significance to the public than even a general election The public realised that this could well produce real change where a change of government would not. And so the baseline verdict is that the majority of the public want change - and they are willing to pay a price to get it.
Consequently, those seeking to subvert the verdict must explain why the largest exercise in democracy for a generation should be disregarded. Moreover, they must explain why clinging on to the status quo is better than change. After all growth as only limped along and the majority don't feel any better off for keeping things the way they are.
In the end though, it comes back to those original words. "We need experts to speak". Well, we are all experts on our own political views. And we know that we do not what to be governed by a supreme government for Europe that has not delivered prosperity or security. The experts have spoken. Now it is time for those experts to be obeyed.
Sunday, 21 August 2016
In global trade your influence is not directly proportionate to your market size. It's what you bring to the table. In that regard Britain has plenty to offer in terms of what it can do and what it can facilitate. That much is not going to change after Brexit. The question is how we enhance that influence after we leave the EU.
Many say that we have influence over the EU therefore we have influence globally. This is a misconception. Many underestimate the powers of the commission which acts almost as a rogue entity where the opinions of leading member states are often advisory. Worse still is that we don't seek to influence the EU when we really should. That's half the problem.
There have been times when we have attempted marginal reforms to CAP and CFP but have failed because of a lack of momentum and political will from the British government. It is deferred to ministers with no real political weight put behind it.
The dynamic behind that is the fact that our government prefers not to be distracted with grubby things like policy and prefers to indulge in politics. That is why key areas of policy have been neglected for so long. It is also why we must leave. We don't use our influence to our advantage and we never will. Only by leaving do we come up against the various obstacles to reform and only then will we make any serious moves to remove them.
One of the biggest frustrations of EU membership is not so much the EU as domestic attitudes to it. Successive governments have been happy with the arrangement of off-shoring key areas of policy ans once they have done so take very little interest in the development of these policies and domestic policy is geared around coping with the fallout rather than steering policy objectives. That may be sufficient for the political class, not so much for industry. Fishing and agriculture especially. Both feel neglected and undervalued - with some justification. We have become passive victims of policy-making rather than drivers of it.
By voting to leave the EU the message we are sending is not a message to Brussels. It is a message to our own government that we want them to govern rather than shirking their responsibilities. We want policy made in our name in the direct national interest.
We are told that pooling sovereignty is in the greater good and there are winners and losers but it does seem to be mostly losers as small industries are wiped out at the stroke of a pen. It is difficult to see why the UK should be religiously compliant when nobody else seems to take their EU commitments as seriously as the UK. Brexit is really about putting UK concerns ahead of EU defensive interests like manufacturing.
While Britain is a serious high tech manufacturing economy we are also a major services exporter and we lose out on trade advantages because of EU protectionism. Trade has stalled globally and we need to kick start it.
As Britain begins to reassert itself in trade terms our political machine will be seeking any advantage it can to offset Brexit. In this they will be searching for bilateral agreements but will find that most of the easy hits have already been ticked off the list. Our approach must change from the big bang deals in search of incremental opportunities. That is the way global trade has shifted.
In order to put Britain in the limelight we need to harness new approaches in ways that are alien to the EU. This starts with trade facilitation. Rather than bilateral agreements we need to be enhancing and expanding the global frameworks for trade. That starts with the WTO Trade Facilitation Agreement. Hundreds of billions of dollars can be added to world wide trade by removing regulatory barriers - which are now far more pressing than mere tariffs. What we are seeing now is domestic commitments to adhere to global rules and standards.
The immediate problem is that for lesser developed nations compliance is problematic. Their supply chains are old fashioned, infrastructure is outdated and they are prone to corruption. This is where Britain can enhance its own interests and influence by being an ambassador of the global rules based trading system. This is something we are good at. We have all the sciences at our disposal to help bring African nations up to the global standard, and we are experts in good governance. As we bring on stream sources of cheaper food produce, allowing African nations to export we create opportunities for UK agribusiness and banking. The UK is a leader in microfinancing and agricultural engineering. These are all services we can provide.
In this we need to be less concerned with the European single market in services and look to build one globally focussing on those opportunities where UK services and expertise will be in demand. The problem for Europe is that most of the big gains have already been made in the region and further progress will prove glacial - right about the time where geographic proximity has never mattered less.
Many have expressed doubts about the power of trade facilitation, but there are advances in agricultural techniques that mean we can turn scrubland into prime agriculture. Add a port, a road and an airport and you have a whole new supply chain to bring on stream. This is why India is investing heavily in port modernisation and liberalising port services. The key is investment. You get out what you put in. And if Britain is the champion of trade facilitation then the rest will follow.
Some are fixated on the possibility of a deal with the US but as the global rules based trading system evolves it will become less important. The USA has an executive order to adopt global rules, regulations and standards and so all that is required is a general mutual recognition agreement rather than intricate trade deals. We could try and get the US to open its borders to more people but we all know that isn't going to happen so we should focus on what we can achieve with the tools we have and one seriously potent tool is the WTO's Trade Facilitation Agreement. We have already seen the TIR convention take on new ratifications and even Russia is using it. This is the future of trade.
What it requires of us is that through active diplomacy we seek our new friends and new opportunities to use our aid policy to implement regulatory harmonsiation and compliance measures, paving the way for UK companies to exploit the opportunities. We can pioneer it. In the modern era regulatory systems are the means by which we kickstart trade and we are masters of it. Nobody does rules and regulations quite like the British.
As we have noted though, the system does not work if it is inflexible. Regulatory systems in their infancy need waivers and exemptions. We may need to secure our own and we may which to grant them. This cannot happen while trade is an exclusive competence of the EU. Moreover, since horse trading with standards and regulations is the real business of trade now, the exclusivity the EU enjoys on matters of trade means it can extend its reach into virtually any area of regulation it chooses with no means of appeal or veto. We cannot operate this way nor can we tolerate such arbitrary lawmaking without proper scrutiny.
We were told that the reason we should join the EEC originally was so that we had a say in the rules and regulations. If that logic was sound in 1975 then it is sound now. The fact is that regulation is decided at the global level and we need our own voice in it. Having the EU commission act on our behalf without supervision or unilateral blocking powers is neither influence nor democracy.
Now that Britain is leaving the EU we not only become a WTO member in our own right, we have a free voice as well as the right of initiative in trade and regulatory concerns. We do not have to seek a common position nor do we have to ask permission from Brussels. Those powers we take almost immediately. Suddenly we find ourselves with tools of real influence.
Whether it turns out to be the silver bullet is entirely contingent on how soon we drop our fixation with dinosaur deals and turn our attention to the new games in play. Trade deals are dead. Unilateral declarations of conformity are now the way it gets done and all of this is happening under the radar. What we need to do is bring it out into the open and start exploiting the open invitations that are already there. Britain can be the midwife to a global single market in goods and services. First though, we have to look beyond trade deals and realise there is something of greater significance than the EU and there's a party going on without us. When the penny drops, the pounds will roll in.
The main function of Sunday papers is to do news round ups so that those who only really bother with news can catch up on the week's events. That is why Sunday papers are a wholly different beast. They specialise in telling us what we already know in a tone that assumes we know nothing. In the internet age this is increasingly valueless journalism, made worse by the fact that journalists are the laziest creatures anywhere. Sunday Times hacks make three toed sloths look like Mo Farrah.
This morning they take a measure of where we stand with Brexit. That means they have to dream up creative ways of telling us that nothing has happened and dream up yet more idle speculation on what might happen when there have been no events which could radically alter the narrative.
Some are imbued with the idea that Brexit may yet be kicked into the long grass even though there is no evidence to support this. The EU is gearing up for it and the civil service has been hiring key people all through the summer. Only when it is equipped to start work will it start to explore the options. Until then we can expect no affirmative signals.
Some have it that Brexit has not caused the recession many predicted and some point out that the worst is yet to come. My own view has not changed. There will be a slowdown and it probably will cause a recession. It will however be one of those recessions where there are no real tangible effects and things plod on as normal but with a few decisions deferred. As far as most people are concerned, it makes no real difference either way. Also, nobody can claim with any certainty that it wasn't coming anyway.
What we can say is that there won't be any spectacular disruption to anyone's life as a result of Brexit. I have outlined the hazards and the worst case scenarios but the risks are slight. I only spell out the risks because it is important to know what the possibilities are and to give people an idea of just how extensive EU governance is. Most people vastly underestimate just how pervasive the EU is.
In the real world though, nobody us looking to disrupt supply chains. Even if we leave the single market we will have a mutual recognition agreement on conformity assessment and we will maintain the present set of rules for a decade at the very least. Only if talks fail completely will be see any tangible disruption but as we are going about this carefully and deferring Article 50, we now have some breathing room to plan our approach.
What that means is that the main threats to the economy are the peripherals like financial services passporting. We do not know what the final agreement will look like but we do know there will be some provisions for these areas. In this we might take a big hit. One way or another we will pay a price for leaving the EU and deferred investment will have an effect on growth. And I still don't care. I still want to leave the EU.
Everything we are discussing here is short to mid term stuff. Something will get sorted out and we could never expect for things to seamlessly slot into place when undertaking such a profound and far reaching step in our development. Brexit is about breaking out of the existing economic paradigm and designing a new one.
In order to do that we need to acquire institutional knowledge of how the system works. This is something we have let slide over the years and it will take time to understand it all. Only once we have a complete picture will we be able to break off the most pressing concerns and address them. In all likelihood we will have continuity agreements so we can pick off areas for divergence one at a time. In this we will likely look at agriculture and rural affairs concurrently with fishing while a whole new working group is set up to look at financial services.
Much of what we can do depends entirely on whether we stay in the single market or not. Having developed my thinking I am now of the view that it does not matter in that because we are leaving the EU we will need transitional arrangements for legacy commitments, goods will move freely as they did before and even if we end freedom of movement we will have a generous quota system that won't be that hard to navigate. By the time you add in the peripherals such as decentralised agencies and non-treaty agreements like Erasmus the whole package starts to look very much like the single market even if we are not actually part of it on paper.
The reason I still push for an EEA agreement is that we might as well use an existing framework as developing something else to achieve the same thing, covering more or less the same areas is a waste of time. It's also safer. It removes many of the points of failure which could see tangible disruption to supply chains. We would have to be spectacularly incompetent to bring about the doom predicted by the remain camp. Admittedly our run of the mill incompetence comes close but we would have to be trying to screw it up to make it that bad.
The short of it is that nothing is going to be that different for at least a decade. The recession will only last as long as Article 50 talks and when business realises the status quo has a shelf life of another ten years or more they can continue according to their plans and projections. Smarter investors have already concluded that weathering the storm is tolerable and it's only short term speculators who have a need to warehouse their money elsewhere til the dust settles. Everything between now and then is just politics and space filler to be kicked around by idle hacks.
What really interests us is how we will reform trade and agriculture in the coming years. This is where I see real opportunities for change whereby those things that have been set in stone for decades can be challenged and entirely new ideas can be tested and trialled. It is also likely that we will have a good deal more control over labour laws and a savvy conservative government could very easily kick start hiring by making the labour market more competitive. The sooner the Agency Workers Directive goes in the bin the better.
Trade wise, the government will soon realise that bilateral deals yield little for Britain as we are already fairly open. Once the grubby think tank consultants are swept aside in favour of real expertise we will see the government looking for more creative means of enhancing trade where we will see a revival of our diplomatic corps. We will need to be aggressively seeking out new opportunities for trade and international development will become key to that. If you look outside the claustrophobic EU trade debate, trade facilitation is the next big thing. It will take time for the government to wake up - but it will wake up. It doesn't have a choice.
Ten years after Brexit things are going to look very different. The national conversation will have changed. Trade and agriculture will be central to politics. Real foreign policy will be a subject of debate once more. The substance free tinkering around the edges will have to give way to grown up concerns. Things will change because they will have to. And in so doing it will present many long buried opportunities. We will then be kicking ourselves that we didn't do it sooner.
I am under no illusions that there is a price to pay for leaving the EU and I don't for a minute think that the process will be cheap. We won't be saving any money - but that was always a fringe concern. What we will have is a UK more involved in global forums looking at how we get the best from current trends in trade and regulation. We will be taking more of an interest in it since we have the right to refuse bad rules we don't want. No more will we watch helplessly as the commission overrules our vote.
In the long run I think it will be totally worth it and the snivelling and petulant remainers will then pretend they always thought Brexit could be a success. From my point of view, this is an exciting time for Britain. Politics has not been this interesting for as long as I can remember and it's a far cry from debates around how Mr Miliband eats a bacon sandwich. It's a revival of politics and media where there is genuine competition to see who can surround the issues. For sure, the laziness of silly season is starting to grate, but very soon the debate will be introducing entirely new concepts to the media - concepts that have been neglected for forty years. It's going to be great!
Only if you're bogged down with the dismal dogmas of the status quo do you find Brexit a threatening prospect. You have to be lacking in ambition and imagination to think that the creaking and stifling EU represents the best of what is possible. How shrivelled and cynical must you be to think that because something is time consuming and complex that it should not be attempted? Those are people we absolutely should not listen to.
On the other side of this we'll have a government equipped with extensive know-how along with a boot up the backside for the electorate to use it in our interests. No longer can we dither and defer decision making to the EU. They will no longer have that excuse. EU cooperation will be by choice instead of by diktat. We will have a veto and we will use it. Once we get used to wielding our influence we will look back and wonder why we ever gave it up. To hell with the naysayers. This is the best thing that has happened to Britain in my entire lifetime. Britain has made a wise decision.
Saturday, 20 August 2016
I keep feeling a compulsion to write about the Labour leadership contest but then I realise no-one cares and I don't either. If you want compelling commentary on the subject then you should read Sam Hooper's blog. If I were to add anything at all it would be that the present Labour delusion is perplexing.
There seems to be a view that keeping Corbyn means perpetual opposition. That might well be a valid concern as there is no way that a radical leftist party can win power, but if that is your view then surely you would want to replace Mr Corbyn with someone compelling, clever and presentable. Not so for Labour who have instead presented us with Owen Smith, a man who is equally incoherent but with all the charm and charisma of B&Q flat pack furniture (and equally disposable).
And there's something to read into that. Either Labour is saying it has no heavyweights or that it has completely written off any hope of winning the next election. I do not believe it to be the former. Labour has some formidable people. I happen to detest Labour big beasts but I don't deny they pose a threat. And were I to name a prominent one I would name Rachel Reeves. She is shrewd, ambitious, clever to a point and somewhat attractive. Labour would come back fighting under her leadership.
So why haven;t they come forward? Simply put, nobody wants the job. It's a poisoned chalice. If you stand for the job and win, you lose the next election and then you're compelled to resign and your career is over. And that might well be an intelligent career choice but the subtext of this is that all of the Labour big beasts value their long term career prospects over and above presenting a credible oppisition at a time when you might think an opposition might be a useful things.
While I am appalled by members of the house on both sides in their determination to derail Brexit the Tory right ideologues worry me just as much and if Britain wants an amicable settlement then these people must be marginalised. Labour seems too caught up in its own internal affairs to present any real opposition.
What we are witnessing is a Labour party in hibernation willing to let the Corbyn virus run its course in the knowledge that they cannot defeat it. But Corbyn presents a real problem for them. Corbyn does actually hold true to a belief system. He does not believe that one should sell out for the sake of electability. He believes in old fashioned politics where one sets up a movement, sets out the stall and sells the ideas. That in itself is commendable even if voters will not go for it.
This principled approach is the very opposite of Blairism which is why those who do not support Corbyn are labelled as Blairites regardless of their beliefs. The fact is that Blairism is a byword for substance free managerialism chasing power for its own sake. There are those like former Labour treasurer, Tony Robinson (of Blackadder fame) who find this sufficient, but the zeitgeist has changed.
If we want a middle of the road government that believes in maintaining the social democratic consensus then there is simply no need to vote Labour. Theresa May's government speaks to middle England and is proving quite popular. A generic Blairite Labour has nothing to offer that can compete. And it's easy to see why.
Lefties have never been especially credible on defence and security and the left tend to be the peaceniks historically speaking. That is what Corbyn represents and that is why Labour under Corbyn is unelectable. But when you look at the substance of the left who oppose Corbyn you find the likes of James Bloodworth who seems to be suffering from nominative determinism. The Blairite wing is a particularly bloodthirsty bunch who just can't wait to bomb Syria and find new wars of righteousness.
The aim is to prove that Labourists are credible on foreign policy and defence in a field normally reserved for the Tories. But this is really the politics of the last decade. Now we are in the politics of Brexit. In this, Owen Smiths bold bid to reconnect with the working class is to tell the people of Sheffield that they must think again on their vote to leave the EU. And he's not alone. The right of the Labour party still believes there is a chance to overturn the referendum and bizarrely think this approach is where their fortunes lie. So in that regard most impartial outsiders are wondering why Labour is even bothering to unseat Mr Corbyn. His lack of enthusiasm of the EU is more in tune with Labour's core vote than any of them.
But this is really why Owen Smith is going to lose. The Labour leadership is a job that none of the big beasts want because none of them have the courage of their convictions enough to risk career oblivion and they have no ideas to challenge Mrs May. They are a spent force in politics without any ideas. They have to sit this one out until they work out what they are for.
Corbyn, however, does have the right idea. He believes that power is not the immediate objective. He believes that Labour needs to retrench as a movement and build upon it in order to restore legitimacy and confidence. That means playing the long game. If the objective is power for its own sake to continue with the status quo then there is no point in taking power.
And that should worry the right. After all, a rag bag of closet racists, loonies and fruitcakes managed to force a referendum bringing about a realignment of politics for the entire continent without winning a single seat in their own right. Movements have real power in a way that caretaker leaderships don't.
So when we see the grandees of the left like Neil Kinnock telling activists to ditch what they believe in order to install a cardboard cut out caretaker, you can see why the response is hostile. As some have remarked, what is the point of being an activist if you serve as a mere functionary for an out of touch Labour elite fighting for office rather than for principle?
As it happens, I think the Corbyn virus will run its course and it will be defeated thanks to its outdated ideas and obsolete agenda but that will not entitle Labour to anything. If they want to take power and use it for the common good they will have to come up with a fresh agenda for a post-Brexit world.
The tired old mantras of borrow and spend, enslaving the poor on welfare are the policies of the booming naughties. With Brexit, Britain has voted for something entirely new. That is why Corbyn will fail, but it is also why the rest of the party has nothing of value to contribute. They can't even admit there has been a sea change in politics. Until they do they will languish on the sidelines. That is no bad thing for the time being.
It would be fair to conclude that when it comes to agriculture the Tory right do not have a solitary clue what they're talking about. What they want to do is pull out of the single market and abolish farm subsidies. The free market will prevail we are told. This is adolescent claptrap.
If we open up agriculture to the full force of globalisation then the result is that we have no agriculture at all. We've done the same with shipbuilding and coal mining and just about everything else and the result is that we have none of it. So it comes down to whether we really want an agriculture sector.
The bottom line is that Britain cannot compete in it comes to livestock. We do not produce sufficient volumes, we insist on welfare and disease control rules and because we do not produce on an industrial scale we can't simply shoot animals because they are sick. British farmers have vets bills. Argentinian farmers do not. They shoot sick animals because they can afford to on that scale.
Similarly our capacity for arable crops is puny when compared even with France. Northern France has vast tracts of uninterrupted fields which lend themselves to industrial farming. Not so for Somerset or East Yorkshire. This incidentally is why a common agricultural policy does not work. The landscapes are too diverse.
So if we are saying we are giving up on agriculture then we must also give up on a managed landscape which has a number of spin off activities for leisure and tourism, wildlife and habitats. If we abandon agriculture we depopulate the countryside and all land is then turned over to industrial or residential use. And this is without even opening up the debate about food security.
Whether they know it or not, the Tory right are pretty much advocating the end of British agriculture for no real gain. So we have to answer the basic question of whether we ant agriculture at all. If we do, then yes we have to subsidise it, and on balance there is every reason to believe it is worth the investment.
In other countries the primary purpose of farming is the production of food. What else would it be? But in the UK, a services and knowledge based economy, agriculture is central to a number of pursuits. Britain is a major exporter of know-how be it from pesticides and agricultural chemicals, veterinary science, GM crops, irrigations systems, farming machinery, specialist agricultural engineering and any number of smaller activities that contribute to UK exports. If anything UK agriculture is one of the world's food laboratories and expertise in agriculture will be key to our foreign and trade policy.
And as we have discussed, diversity is part of the UK's assets. As much as it matters for tourism, it is that same diversity that gives us such a breadth of expertise. And since there is such a diversity and many distinct landscapes, as much as we should abandon any continent wide policy on agriculture, there is every advantage to devolving agriculture to the regions, if not councils. After all, farming on the Somerset Levels has little in common with Scottish crofters and Cumbrian hill farmers. And though there are similarities between South Gloucestershire and North Somerset the landscapes are also distinct. Why should there not be farming policies developed for distinctive regions encompassing the wider demands of rural policy?
And as much as I see an advantage in having locally derived policy I see it as a worthwhile endeavour to have agriculture departments in every regional authority so that we replicate the knowledge we have across the country. The UK could well be a lead innovator if every region formulates policy according to their own distinct needs.
What we have to do post-Brexit is to look at agriculture in a different way and be thinking in terms of broader rural policy where agriculture is the loss leader for a more productive sector. As we move away from the one size fits all policy of the CAP we need to explore how the UK can become the agricultural academy of the world with tie-ins to universities. We could even encourage universities to run their own farms.
And if there is one thing that goer hand in hand with food production it is paperwork and accountancy. This all forms an important part of the supply chain where again we can export our expertise. It's one thing to produce food, but it's a whole other discipline in terms of conformity and regulatory compliance. Even with the best deregulation in the world, supply chain systems will always need to be regulated and we will always need specialists.
Farming is pivotal to the UK economy and we cannot causally dispose of it. It's easily dismantled, but not so easily rebuilt. We have to ensure that farming is protected and that we appreciate the role it has in keeping Britain at the forefront of innovation. If then Tory radicals come forth with ideas as to how to make farming competitive without destroying all that rests on it then we should welcome their ideas - but ideological wreckers we can do without. You may not like farm subsidies but we keep them because they represent the least worst option. Free market dogma cannot take the place of well thought out policy.
Of all the different strands of concerns that must be brought under the microscope in the Brexit process, I think agriculture is one of the most daunting. It's one of those subjects that should be interesting but is made eyewateringly tedious by way of the myriad of subsidies, quotas and tariffs - and by contrast makes the rest of the Brexit negotiations look like a walk in the park.
Hardline Brexiteers would like nothing more than to axe the Common Agricultural Policy and instead operate a temporary subsidy system with a view to phasing out all subsidies and leaving farmers to fend for themselves. It satisfies the ideological impulses of free marketeers while at the same time simplifying the complex.
But as we have seen time and again there is very often no simplification to be had and attempting to do so is to misrepresent the issues. This is the profound dishonesty of Tory Brexiteers throughout - the persistent pretence that the complex is needlessly complex and can be rapidly replaced with something far simpler.
Admittedly there are some legacy measures within the sector that exist because hitherto now it has been politically impossible to challenge them but some mechanisms exist for a very good reason and the reason bad systems stay in place is because the alternatives are worse. Agricultural subsidies the likes of what we have now have evolved over forty years to the satisfaction of nobody but all would complain were the system to be abolished.
And though we could unilaterally end our subsidy system we would at the stroke of a pen ensure that domestic producers could not compete because nobody else is going to drop their subsidies and we lack the necessary tools and the leverage to protect our own industries.
But then we must also consider that agriculture is a wholly different kind of market. In most respects free marketeers have got it into their heads that protectionism is baaaad. Except that agriculture is a strategic national asset, food security is always a reserved concern and agriculture is deeply intertwined with rural policy that links in with wildlife policy and flood management along with tourism and the likes. Though Brexit presents an opportunity to integrate such policymaking we first have to examine how we disentangle ourselves without collapsing the sector and be able to meet our own strategic objectives.
You can't actually do that until you first know what your strategic objectives are. And for that you need a food and rural policy and if there is one thing we have proved it is that we do not do joined up thinking and that we do not do strategic thinking. Since there is no vision nor leadership from the government, or Brexiteers for that matter, we're better off looking for a continuity settlement.
Some on the Tory right propose that we pull out of the single market and end all subsidies in favour of competing globally but this overlooks the fact that agriculture the world over is subject to very similar rules and other nations have their own impenetrable systems of protections and reservations and are not going to drop them on the say so of the United Kingdom. Only the Legatum Institute has floated this as feasible but that's because they are telling Brexiteers what they want to hear and they smell consultancy fees. The likes of Andrea Leadsom are just gullible enough to fall for it.
The fact is that there is a thick tapestry of rules and regulations and subsidy systems whereby if you pull at one loose thread you soon start to wish you hadn't. In this the politics then starts to obscure the truth. The remain camp will add complexity that does not exist while the leave camp will oversimplify to the point of credulousness.
My view is that agriculture is a mess all of its own and for the purposes of Brexit we should move for a long transitional agreement that maintains the CAP for a period of at least ten years in order to defer the issue. Brexit is enough of a headache without adding to it a complex set of negotiations that could very well stall the entire process. In order to keep the process of establishing ourselves independently at the WTO we will have to keep all of our subsidy schedules in tact in order to avoid conflicts in the aftermath of Brexit. What we definitely don't want to do us open up a number of avoidable conflicts where there are opportunities to derail the process. We must pick our battles carefully.
This of course means that Brexit will not look radically different from the status quo which Mrs May will have a hard time selling but really the fault lies with Brexiteers who failed to plan and offered nothing but flim-flam in place of policy. The advantage to this approach means that uncertainty is reduced but it means there will be no immediate policy gains for agriculture.
The question this then raises is that if we are maintaining the CAP for an interim period, supposing we do elect to leave the single market, how much of the single market can we actually dispense with? The answer, I imagine, is not very much. We will have to do as the Australians have done and invoke a unilateral declaration of conformity and adhere to all of the global and regional standards. We then secure a mutual recognition agreement on conformity assessment and then there is no disruption to trade in goods. That means that though we have left the single market in principle, in practice we haven't.
The short of it is that if anyone was expecting a buccaneering free trade approach to food in a post-Brexit world they need to think again. Nor is there are real departure from the EU regulatory regime because it stems from the UN Food & Agriculture Organisation and Codex. We will gain some flexibility in policy making but only after an intense national debate to overcome the political difficulties in deviating from existing policy. There are already moves afoot in the form of private members bills to ensure we keep various environmental protections in place. There is enough traction in the country to ensure they stay in place.
I now take the view that it will take many years for the political machine to wake up to what Brexit could do for agriculture and later down the line we will see Brexit scale negotiations with the EU about reforming and possibly abolishing the CAP but I don't see that happening until we have a coherent idea of what we replace it with. That will require a level of engagement that the current crop of politicians is manifestly incapable of and only when we have restored a degree of institutional expertise can we make any radical moves.It doesn;t help that the government is deaf to new ideas.
But then at least we will be building up institutional expertise on trade and agriculture. This is something that as long since atrophied to our eternal shame. After twenty years of unreformable policy we will finally be able to address something we have entirely neglected and we can start to debate what role we see for agriculture as we move out of the gravitational pull of the EU. It won't happen soon, but the possibilities are endless. The world has changed a great deal since the inception of the CAP. Governance of agriculture is increasingly global. That presents new challenges and new opportunities. Telling them apart will be half the problem. Collectively it is an issue we haven't begun to understand.