Monday, 19 March 2018

Still no closer.

There was an announcement of some sort today from Barnier. Precisely why escapes me because there is still no agreement on the backstop position for Northern Ireland and the rest is roughly what we already assumed it was. We still don't know any more than we did yesterday and if this was going to be a long article it would look very very similar to the dozens I have already written.

We basically know that there will be a two year vassal state transition, but that brings little comfort to those who have examined the issues who cannot in any way imagine how the process would be complete, let alone implemented in two years. Moreover, we have no more idea of what will happen in respect of border controls generally, so the Institute of Director's boiler plate assertion that business leaders will welcome this can be thrown out.

If there is anything noteworthy it is that the Twitter half-life of Brexit announcements is now a matter of hours - not least since we have all seen the leaked material previously - and even that didn't tell us anything we weren't expecting.

We are told that the UK has won a concession - that it can conclude trade agreements during the transition- but nobody with a grasp of the basics anticipates this "freedom" to be used in any meaningful way - save for the patch up job of existing agreements we enjoy via the EU.

Being that nothing is agreed until everything is agreed, the omission of a conclusion on the backstop position for Northern Ireland means that I cannot see that anything at all has been achieved save for once more kicking the can down the road.

Friday, 16 March 2018

Dismal inevitability.

Bored as most of you are with Brexit, I get the distinct impression that the government has also run out of steam and is marking time until the inevitable deadline where it simply signs what is on the table.

We will drift toward the last possible minute, filling up the timetable with distractions in between, doing anything to keep Brexit off the agenda. That therefore leaves only a short window for protest, after which May will flex her minimal authority and sign the deal.

She will then instruct her party apparatus to sell the Northern Ireland arrangement as a "common regulatory area" which in effect will be single market and customs alignment. Since it's that or WTO oblivion, she'll have to put it to the commons an depend on opposition MPs.

That then provides the backstop which can only really be overridden by a new trade agreement, whereupon the framework set out in the negotiating guidelines suggesting a base level FTA will leave the NI arrangement virtually the same.

In other words, the script is already written but she has just enough wiggle room to kick the NI issue into the long grass until after we leave. She will then rely on the flim flam of Brexiters to muddy the water on the matter of customs at Calais.

The writing, however, is on the wall - that if we have a base level FTA with only minimal customs cooperation then we are looking at the carnival of delights with rules of origin and vehicle tariffs - along with BIPs for food exports.

That reality has not dawned on this government which still believes an alternative is possible and that the EU will fold at the last minute. It won't. The EU has designed its framework in accordance with May's red lines and if she won't back down, neither will they.

There is the outside chance that Verhofstadt's association agreement bandwagon will gain traction and there may be a political opportunity for both sides to change tack, but my bet is that Brexiters will choose that ditch to die in.

The impression I get is that the EU parliament's fondness for an association agreement is not shared by the Commission or the Council who will simply be seeking to reward May with the full consequences of her decisions.

Again there won't be much actual negotiation on this. The frameworks for nuclear and aviation cooperation are pretty much settled and we will get no more or less than any other third country. For border inspections we might just be able to leverage a Switzerland solution.

Inevitably that does mean a wet border between us and Northern Ireland but that is the consequence of leaving the single market. That also means the loss of self-authorisation for circulation of goods in the market without inspection which means masses of red tape for UK exporters.

What that means in practice is long tailbacks at the ports whereby it becomes impractical to send driver accompanied loads and we will depend a lot more on container freight and costs of exporting will skyrocket.

I now think we have missed the window for an EEA solution simply because the government hasn't the intelligence to understand why we need it nor the skill to pull it off. It would need entirely fresh thinking.

What we can then expect is a wave of business relocations and considerable job losses. It's difficult to quantify because we don't know how resilient exporters will be to the added costs and red tape. Some will adapt but can expect far fewer continental sales.

Impact assessments tend to be pessimistic and underestimate the resilience of UK businesses but to be clear, this is absolutely not good news for the economy. Exporter of goods and services will take a substantial pruning. I don't see any silver lining.

Many expect fishing will give us some leverage, but its more politically significant than financial so it won;t buy us much - but that does mean we can expect a reciprocal access agreement. The fishing lobby is going to be very disappointed.

From my cursory glance at the negotiating guidelines we can expect that there will be some concessions on ECJ on food safety measures and very possibly aviation, and EU will dictate the ROO framework unless we can buy a workable alternative.

This arrangement will satisfy those who insisted on a "clean Brexit" except for the zealots who demand nothing short of WTO ruin. The rest of us will then have to put up with their mess. It will then be for them to explain why our exports tot he EU are decimated.

Throughout they have insisted, in contradiction to all professional evidence, that this mode of Brexit would retain free movement of goods. The game then will be one of blame deflection - with the narrative of EU "punishment beatings".

Whether they get away with it or not is really down to the gullibility of the public. At that point it won't especially matter. We'll be stuck with it but May will have at least stayed true to her word that Brexit means Brexit.

Shortly afterwards the Brexit recession begins and then we see the real political fallout of our decisions. You can then expect an implosion of the Tory party and extremely sour relations with the EU. One thing I can promise you... it won't be boring.

Monday, 12 March 2018

Trouble at the borders

Friday, 9 March 2018

Sam Hooper: on point

If you read one blog today, make it this one. That is all.

All at sea on fishing

Fishing was always going to be a big row in Brexit because its one of the most emotive issues - touching on matters of territory, identity, heritage and sovereignty - but especially because it was one of the most visible symbols of what was done to the UK without consent.

Effectively the EU in conjunction with the British government did to the fisherman what Mrs T is said to have done to the miners. Anyone alive at the time will have vivid memories of family boats at the wreckers. It left a deep economic and emotional scar on coastal towns.

Consequently it attracts a lot more political runtime than it should, and the fishing lobby are expert at playing the victim. Possibly they are the most politically overindulged constituency there is because they are totemic for eurosceptics.

But like Mr Corbyn and his silly notions about reopening mines, what has been built over the last 25 years is a single market in fish of amazing complexity, hooking in with a number of environmental objectives derived from EU and international law.

Moreover this hooks in with a major global industry where 38% of workers in the North Sea fleet are from outside the European Economic Area. Its a dangerous job that increasingly does not attract British youth. Fish processing for export is worth more to us than fishing itself.

So this idea that Brexit means that once again British harbours will be bristling with masts and alive with bearded Scotsman singing sea shanties is something of a romantic delusion. Nobody wins from the British fish for British fishermen mentality.

And then if we want a market for all that processed fish then naturally we would wish to avoid tariffs and non-tariff barriers so whatever regime that follows will have a great deal of legacy conformity. There will be no miraculous deregulation.

Where it gets intensely political is over quota allocations where the UK will nominally be back in control but for a number of years will have to respect that quotas are bought and sold under a particular framework and foreign boats will have legacy rights.

We should not, therefore get carried away with the idea that there will be a great renaissance for British fish. Even if we took a nationalistic protectionist path with a view to consuming more domestically, we'd likely be no better off for it.

Once again I would remind you that fishing is worth less than a billion as an industry and is a fraction of our GDP and overemphasis on fishing is a huge distraction from the bigger issue of the single market which is worth £240bn per annum.

In this, EU member states have their own interests to protect. As much as our land trade has built up around free movement of goods, EU sea trade has built up inside the framework of the CFP. That is an ace in the hand but it doesn't buy much in the grand scheme of things.

We should note, though, that fishing is just as political for EU member states an cutting off fishing access is PR the EU does not want. It is therefore some leverage. The thing to watch for eurosceptics is not UK gov bartering quotas away. That was always going to happen. Trade is trade-offs. What matters is repatriation of control of British waters and the sole right to legislate over it.

On this we may wish to enter a bilateral accord with an independent body but if it falls within the EU stack of governance under ECJ then that to me is a big no. We do not, however have a free hand because we are bound by a number of global accords, not least on conservation.

I have seen accusations that the EU is seeking to cherrypick, but the reality is that the EU is the larger, more powerful side of this negotiation and it is we who are petitioners. We do need to get real about this.

In my view it would be a mistake to treat fishing as a bartering chip in respect of unrelated concerns. The reason we have a CFP is deliberately to keep it siloed from other concerns. We are opening a can of worms if we break that convention.

This is really why I think we should stay in the EEA, so that current trade is protected and we are not held over a barrel and then we have an entirely different framework for negotiating a gradual dismantling of the CFP.

We should not in any way underestimate the complexity of fishing regulation and unpicking the CFP is a feat of legal engineering requiring a whole new set of domestic institutions for which we are not yet equipped. It will take some time and will have to consult the industry.

The fatal mistake would be to enter discussions about fishing with the notion that Brexit is in any way restorative. What was done is done. There is no going back. Nor especially do we want to be lumber with the costs of whole system administration. It pays to share.

If anything, Brexit is a chance to modernise, and to an extent remove the blocking commercial interests so that we can have real reform. That, though, is not guaranteed. That said, whatever we come up with will struggle to be worse than the CFP.

Wednesday, 7 March 2018

Things which are not surprising.

On this of all days you might expect me to have something substantive to say - but really there is nothing here which could not be anticipated. As outlined countless times, if we want the benefits of the single market then you have to be in the single market. If not, then there's not much the EU can do to accommodate us.

Since the EU is taking us at our word on our red lines, all it can really do is drop heavy hints to hammer the point home. Free movement of goods is an outcome of a regulatory system and you are either in it or you are not. Since we have chose to be out of it, the only remaining option is precisely that which The Leave Alliance set out to avoid.

Unless I'm mistaken the EU is apparently proposing an association agreement whereby we adopt most of the regulatory controls on goods under ECJ supervision and are still subject to third country controls. Precisely what we were warning from the very beginning when we first launched Flexcit. 

Politically this deal is not acceptable but it's the only thing on offer so we have reached something of an impasse. Either Mrs May makes a u-turn on the EEA or meekly shackles us to the ECJ. This is, of course, assuming talks do not collapse over the matter of Northern Ireland. 

No doubt this offering from the EU will be ignored and the government will persist with the line, for the time being, that this is still a negotiation - and will continue to press on managed divergence until there is a formal and explicit rebuke. That's when things get interesting. 

The ultimate irony in all this is that the government has been told "no cherrypicking" by the EU, failing to appreciate that with the EEA being an adaptive framework, the way to actually cherrypick from the single market, as indeed EEA members do, is to be in it. 

One might almost get the idea that a Brexit plan was a good idea - but Vote Leave, Farage, Cummings, Hannan, Banks, Bannerman, Hoey, Stuart and the rest thought better of it. It would seem their toxic blend of arrogance and ignorance is about to be rewarded. 

Tuesday, 6 March 2018

The legacy of the EU is political atrophy

Yesterday I wrote a piece on how eurosceptics neglected to provide an intellectual foundation for Brexit and now that we are here we find their vague aspirations have been thwarted by the encroachment of globalisation. This was met with nods of approval from remainers.

ll the ideas of the Tory right simply do not stand up to scrutiny and day by day their flimsy "free trade" ideas crumble. Twenty five years have past since even their most modest of ambitions were achievable. They've been badly caught out.

But then we all have. There's been nothing less edifying to watch than remainer MPs scrambling to tell us we should stay in the customs union without even being able to define it. Collectively our polity kicks around terminology like a infant walks around in mummy's high heels.

Even those of us whose job it is to know these things still fumble with it. There is a vast bureaucratic machine made of hundreds of separate mechanisms and not only do we not know their function, we have even less idea of how they interact.

It was interesting listening to Barnier's adviser last night (Stefaan de Rynck) who seems to regard the single market legal entity as a thing of beauty. And in many ways it it is. It may look like a legal jumble but to the technocrat it's a frontline legal technology.

The success of the machine is how it has sidelined politics and to a large extent made it superfluous; redundant even. So when you have a system running in abstract of politics, irrespective of voting rituals we may have, it is not controlled or influenced by democratic inputs.

Worse still, the technocrats would rather it remained that way. Politics is messy and slow and to their mind nothing is served by having ignorant politicians poking around inside the machine. A view I have some sympathy with.

But if it's not driven by politics and politics has little input, what is our politics even for? And when it is not tasked with running the apparatus of governance it withers and retreats into its own dismal fixations of increasingly diminished significance.

And that is what we are left with now. A redundant polity ill-equipped to manage change, terrified of it and desperate to avoid taking any responsibility. Brexit is a rude interruption to their narrow tribal bickering.

So the cultural problem is twofold. This is why we can't blame everything on the EU. On the one hand we have eurocrats who don't want democratic input, and domestic politicians who have no interest in it and no aptitude for it.

So that collective slumber of the eurosceptics who took their eye off the ball is one shared by the entire political apparatus, the thinks tanks and the media, who focus on the narrow and immediate with no vision extending beyond the horizon of the next elections.

Consequently the system is left unscrutinised, unmonitored and taken for granted in the assumption that it is working for the greater good. It would seem, however, that slightly more than half of the population have a different opinion.

Successive generations of politicians have gradually ceded control to the point where the levers of power are not actually attached to anything. Everything is locked up in a system of directives, rulings and regulations, and beyond reform.

Here we find that reform is only theoretical. No one nation on the instruction of its peoples can act and even acting in collaboration the interests of the people have to be reconciled with incumbent commercial interests. Quotas, subsidies, tariffs etc.

And so with reform proving impossible our politicians get in the habit of of blaming the EU and gradually things start to degrade - lacking the vitality and ambition that healthy politics brings to governance systems.

We were told that Brexit would make us inward looking, yet we find trade; a core instrument of international relations, is shrouded in mystery in Westminster. We do not engage in the subject matter because it's outsourced to Brussels. We're on autopilot.

In respect of this it's a wonder anything works as well as it does. But then with a chain of accountability so clouded, and no political intelligence, there is a good chance we wouldn't even know if these systems were failing until the failure is critical.

That is indeed the danger of continued EU membership. When systems like this fail they fail hard and Brexit has wonderfully illuminated the stark fact that our politics is incapable of adequately responding.

It's not just the Brexiteers who went to sleep for the last two decades. We all did. As a nation we became self-absorbed and insular, dismantling our foreign office and consular services, culling our navy and pruning governance to feed our voracious appetite for entitlements.

Consequently what we are left with is political cannibalism, where authority is transferred to Brussels while our own politics strip mines what is left to hand out to its respective constituencies. That is how a vibrant nation quietly dies.

Quelle surprise!

Above is a bucket of ice cold water on Tory trade ambitions. The USA does not do competition and it does not look to trade unless there is an opportunity to offload agricultural surpluses. Since there is no question of deviating from standards, no public will to do so, and too much at stake in respect of EU trade, it is unlikely that a deal with the USA would be ratified even if there is one on the table. Our own farming lobby would see to that. Little by little, reality is beginning to bite.

Monday, 5 March 2018

Rebels without a clue

The one component missing from Brexit is an intellectual foundation. Eurosceptics once had one. There was a committee meeting in a Salisbury farmhouse twenty years ago and that's the last time we collectively gave it any thought.

At the core of it, the one thing we all agree on in the Benn/Foot angle on democracy - but there has never been agreement on an alternative vision. The old boys wanted the Commonwealth whereas some wanted to revive Efta.

A common strand has been an aversion to regulation and red tape and collectively eurosceptics have never really understood the economic utility of regulatory harmonisation. It was largely seen as a sinister integrationist device.

To a point they were right. An economic foundation was only the first step, upon which they would build their superstate. The regulatory frameworks were inferior to those of the UK - which is why so much UK law informed single market rules.

The problem we have is that we decided collectively that we hated the EU, we wanted out of it and spent the next two decades scheming on how to get us out. Through general economic dissatisfaction and discontent with immigration it built its own momentum.

To a large extent Brexit is something that sort of just happened. Now that it has, the eurosceptic aristocracy have been put on the spot. They wanted it so the government looks to them for direction. "You wanted this. Now what?"

And now that we are here all the towering figures of euroscepticism find that the cupboard is bare. We haven't updated our ideas or our understanding since the 90's and our solutions do not account for 25 years of integration and globalisation.

We are therefore in quite a pickle as we have no real world deliverable answers and of the few options available, none of them fully satisfy any of euroscepticism's core demands. The world moved on and we didn't.

So really we have won yesterday's war - only fifteen years late. All the options that would have been available to us pre-Lisbon are now impossible and the advancement of EU systems pretty much shafts the idea of leaving the EU regulatory sphere.

Meanwhile we face the double coffin lid whereupon we punch through the layers of EU political integration only to find an elaborate web of global conventions and rules which constrain the EU in much the same way.

Arguably we are moving toward a model of a global single market of rules and regulations, pointing to the obsolescence of the EU - but we are a long way off accomplishing that so we will remain heavily influenced by the EU.

And though we have always argued that the EU is a mess of protectionism - which is indeed demonstrable, being outside of those protectionist barriers puts us in a tiny European minority. That would not have been the case prior to enlargement.

Rather than accepting the reality of our predicament, the eurosceptic (Tory) aristocracy are hell bent on fighting for those yesteryear solutions with no reference to reality and will tell any lie to get it.

Being that they are London based they dominate the Television Brexit debate and the second generation latecomers (Spiked et al) who have never thought it through have hitched their wagon to the mainstream eurosceptics. They're being led up the garden path.

By and large they have done no thinking of their own, gladly repeat obsolete mantras and and prate about "free trade" without having the first idea what that actually means or the consequences of it.

The skill of the euroscpetics is that they have made the issue of the single market part of a culture war where otherwise intelligent people demand that we leave it simply because the opposition wants us to stay.

With both sides having lied about the EEA it is seen as staying partially in the EU - and thus not honouring the referendum. Lies do indeed have consequences. So here we are headed out with no satisfactory answers to any of the difficult questions.

Unless that argument can be resolved then we will leave the single market, we will see NI remain in the EU customs territory, a sea border and the end of free movement of goods with a meagre set of post-Brexit trade options.

Ultimately the Brexit debate has been dominated by dinosaurs who don't understand how trade works thus are plumping for the UK to hit the self destruct button backed by nihilists who would gladly trash the economy to stick it to the EU.

There are certainly days when I have some sympathy with this view but this ultimately decides the UK's political and economic standing for the next fifty years - thus it is a matter of urgency that the Brexit Taliban in the Tory party are defeated.

Give us this day, our daily thread

Just lately I have not invested the same level of energy in this blog since hits have levelled out and I have all the reference essays I need. I get more traction with Twitter threads so it makes more sense to invest my energies there. Below is a typical example of a Twitter thread. Largely a repetition of what I have already said countless times, but part of the job is repetition, no matter how tedious it gets.


For the moment the Torybots (compliant activists) are satisfied with Mrs May's proposal. To the uninitiated it sounds like a reasonable proposal and if there weren't already an established system for movement of goods it would be but as a real world proposal it just won't fly.

What Mrs May is asking for is an overall weakening of the EU system, placing authority over its lowest market entry requirement in the hands of the UK government - a non-EU member. This it cannot do.

In order to have free movement of goods you need a number of secondary mechanisms, not least recognition of qualifications and authorisations. Simply relaxing borders is not a legal option. It isn't going to happen.

While the politicians are distracted by the red herring of customs unions, ultimately the instrument central to free movement of goods is the single market. there is no renegotiation of its core features. You are either in it or you are not.

So all Mrs May really has to do is answer a very basic question. Do you want free movement of goods? If the answer is yes (which in part answers the NI question) then we have no choice but to remain a party to the EEA agreement.

If the answer is no then she must invest to ready the UK for standard third country controls whereupon food and general goods must face a whole raft of inspections and red tape. Self-authorisation for circulation of goods in the market comes to an abrupt end.

Since the UK will then seek to keep inspections to a minimum, it will still have to be careful where and how it diverges, not forgetting our international obligation to conform to global standards. Consequently those "bumper trade deals" will not materialise.

Significant divergence leads to a higher risk of regulatory contamination for the EU. It will therefore use its alert systems to determine how invasive inspections of UK goods are. This adds considerable costs for exporters as the exporter bears the costs of inspections, lab tests and the consignment delays. This effectively wipes out JIT exports which have grown specifically because of frictionless trade.

We then find ourselves having lost substantial trade with the EU but still obliged to uphold existing standards and ensure our regime is still roughly in keeping with that of the EU. Substantial divergence will not be possible - which business doesn't even want.

In terms of subsequent deals with other countries we are then left with very little to play with save for marginal tinkering with tariffs - which will be something of an irrelevance since we have tariffs agreements with most of our major partners via the EU already. There is no compelling evidence that leaving the single market will afford scope to enhance trading relationships and no third party agreements can possibly compensate for the loss of EU trade.

A single market settlement may well be suboptimal but I think of it more as a line in the sand that says "this far and no further". It is then a firewall against "ever closer union". That would be a a sufficient compromise.

Short of that we are going to end up spending a small fortune on systems to manage any new trading relationship which would result in more barriers to trade. A collapse of tax receipts and increased red tape would then wipe out any supposed "Brexit dividend".

There are plenty of good reasons for terminating political union and becoming an independent country, but needlessly severing our real world economic integration for a mythical "regulatory sovereignty" just doesn't make any sense. If we want a whole-UK settlement that preserves UK trade, protects jobs and avoids substantial disruption at the borders then we have no choice but to remain members of the single market. I cannot see any advantage in doing otherwise.

Saturday, 3 March 2018

The politics has been decided, but economics remains an open question

Mrs May has said our regulations would remain "substantially similar". Though this does not confer any special rights, it will be the foundation of any new relationship with the EU. This prompts remainers to ask what the point of leaving is.

That actually underscores why remainers have not understood what the EU is. Were it just a regulatory union (a single market) we would not in all likelihood be leaving it. Were it simply there for facilitation of goods and services there would not be sufficient reason to object.

The EU was never intended to be just a trade bloc, and it's only really British politicians who have pretended otherwise. It was always destined to be a supreme government for Europe expanding far beyond the domain of trade.

The single market (of which 3/4 Efta states are a member) is a regulatory union based on a body of law which represents only a quarter of the entire EU acquis. The rest is to serve the function of building and expanding its political power.

The obvious complaint being that the more power it has the less nation states have and the more remote the decision making, whereupon it imposes one size fits all political ideals on a diverse set of cultures. This makes meaningful democracy impossible.

I could expand on that and we could be here all day but I feel that question was settled by the referendum. Voters may not have been aware of how the system works but they knew enough to know they didn't want to be part of the political union & have the EU as their government.

So that leaves the question of how we leave and what relationship we want. This is where Brexiters lose the plot in wanting absolute sovereignty over every last detail. That's where I part company with eurosceptics. It's a matter of proportionality.

I'm never going to have strong opinions on aubergine marketing standards and it really doesn't bother me that we have a uniform set of rules for the manufacture of cars. In the grand scheme of things it's not that important.

So really this is a question of what we are prepared to go to the barricades over. This is where there are philosophical debates to be had about the nature of the UK legal system and how the EU system of rights tramples too much on our ability to govern ourselves.

It's fine to have a Europe wide system of values but as they ossify we find that translates into a number of entitlements and intolerable restraints on democracy to the point of absurdity. We then becomes victims of the letter of the law and ill served by it.

I have no objection to economic and regulatory collaboration - which is an essential component of modern trade and there is every advantage in sharing the load for European defence - but not if it involves the wholesale transfer of political authority to the EU.

To my mind the EU represents too much power in the hands of too few in a framework that will never respond to democratic demands for reform and will never have the self-awareness to realise its own role aggravating divisions.

For the most part the Remain campaign centred on the economic advantages of the EU but what we find is that we can have all of that as a participant of the single market without being under the political control of the EU apparatus.

The reason they focused on the economic (and still do) is simply because the core proposition of dissolving the nation states of Europe to create a federal Europe is simply not wanted by the vast majority of Brits.

You can demonstrate how the UK frustrates that agenda by way of being a member but political integration is in the DNA of the EU and no euro-election is ever going to change that direction of travel. We can dictate the pace but not the destination.

I can therefore see every reason for leaving the EU but virtually no advantage to leaving the single market. The economic arguments for Brexit are flimsy - but then Brexit isn't and shouldn't be an economic proposition. It is fundamentally about democracy.

This is another area where I part company with Tory leavers. There are many good reasons for leaving the EU but "free trade" isn't one of them and teenage libertarian fantasies based on a woeful misapprehension of how the system works is not a sound basis for public policy.

We are then in a position of choosing the mode of economic partnership with the EU whereupon we must decide whether we wish to maintain free movement of goods and services and whether we are prepared to accept the obligations that go with it.

Being that the single market is the most advanced regulatory union in the world, one which gives consumers the confidence to buy goods on trust, its inherent value is far more than the sum of its parts. That is why the EU opposes any cherrypicking of it.

There are many valid criticisms of it, and still it is fair to say that there is a democratic deficit, but in my view the EEA represents the best compromise available and one which would facilitate Brexit without the economic harm we are sure to endure otherwise.

Many argue that it does exclude a number of goods, very often for less than honest reasons, but in a world of predatory operators and criminal gangs, we are better with than without. To date, I have not seen a compelling reason to leave the single market.

The price of ignorance

So why is the EU against the UK diverging on standards and regulations? In simple terms, the EU is aiming for regulatory hygiene whereby it is seeking to avoid cross contamination: where there is a risk of polluting the system with substandard or unrecognised goods.

It is the knowledge that single market members extend their own controls and have a single regime that allows for free movement of goods. That level of conformity is the guarantee against cross contamination. It is a single regulatory area - or regulatory union.

What Mrs May has said she wants is an agreement to recognise UK standards as equivalent no matter how far we diverge, even if we diverge without consultation. The UK then sets the lowest barrier to entry independently. That puts power over the single market in the UKs hands.

It means that if the UK goes for a pick & mix then there is an increased risk of controlled foodstuffs or components entering the EU market for circulation thus weakening the integrity of the system. Consequentially there is no possible way the EU can waive border inspections.

As part of the regulatory union the UK is presently permitted to approve its own goods for circulation negating the need for border inspections. This is on the assumption that UK conformity assessment is done to standard as well as the product meeting regulatory specification.

Through mutual recognition it is possible to grant some added freedoms but if the UK is not part of the regulatory union, independently changing its regulatory code, it cannot be treated as a single market equal. This is third country status. Third country controls apply.

That means, depending on the product type, the UK has no means of self-approval and must submit to border inspections which vary intensity according to the risk. This can be time consuming and expensive. The savings from deregulation, therefore, are overstated.

For instance, if you depend on rapid transit and you have a supply chain costed to the last cent, you cannot introduce the random variable of an unscheduled stop where goods perish and you're paying a driver to stand idle.

Not only are you subject to third country controls, you also have to have product authorisation so there are upfront costs and you need to find an importer willing to take responsibility for import. Leaving the single market means considerably more red tape for business.

Obviously there are mechanism available to speed up this imposition and high volumes of trade will establish certain precedents and routines which is what allows exporters to build up a trusted reputation whereby "good actors" face fewer interventions. Trusted trader etc.

This is mooted as part of the solution for Northern Ireland. It is part of a solution but without the regulatory infrastructure behind it and without measures to prove conformity, you still do not have frictionless trade.

In an ideal world the EU would be able to concede that the UKs system is and will be as good as theirs, therefore could grant equal standing to the UK. This is what May wants. The single market, however, is a system of rules, governed by EU law and WTO conventions.

If a preference is extended to the UK or is given unprecedented exemptions which cold reasonably be extended to others then others can reasonably demand the same treatment. That's why Mrs May cannot have what she wants.

Sitting over and above this system is a network of border inspection posts, market surveillance systems, disease control measures and policing systems to tackle food fraud, counterfeiting and smuggling. This is what we pay for and it's why market participation isn't free.

We are, therefore, faced with a stark choice. Either we want free movement of goods or we don't. If we do then there are costs and obligations that go with it, which requires compromise of regulatory sovereignty. That's just how the system works.

This is what the EU means when it says there can be no cherrypicking. From a practical point of view, to make any substantial concession it must compromise its own system of controls for which it would have to seek agreement from all member states.

This is simply not a credible demand. The system has evolved this way over twenty years and they are disinclined to modify it for the sole benefit of the UK on its own whim with no real idea of where and how the UK would diverge.

In fact, only someone who didn't understand the system would even ask this of the EU. That is why Mrs May's speech is inadequate. What she wants is impossible. UK would get the advantages of single market membership with no obligations. There is no advantage for the EU.

Some suggest that the UK could negotiate market participation sector by sector, but this fails to note that the single market is an interwoven system with multiple dependencies. This would create more bureaucracy for the EU. Their system is not up for renegotiation.

All the EU can do to accommodate us is to offer the maximum cooperation it can to facilitate UK trade inside the scope of its current controls for third countries. That though cannot compare to being an actual single market member.

The UK can grumble but Mrs May has chosen third country status of her own volition. The consequences were known. May simply refused to accept them. We are therefore certain to lose a substantial amount of trade. Ignorance is expensive.

Friday, 2 March 2018

Anyone for cake?

So, the PM's speech. In effect it is a remix of the Florence speech with little new to say. It demand many of the rights of the single market, borrowing some of its structures, while conceding to none of the obligations, failing to note that the single market is a regulatory union and that only full harmonisation can produce anything close to the level of free movement of goods that we need.

Again we hear the mutterings of "managed divergence", a Legatum based fantasy whereupon the structures allow for mutual recognition but unilateral divergence. This is made all the more bizarre by the first ever mention of UNECE by a UK Prim Minister. If you acknowledge that global standards form the basis of cross border trade then you also concede there is little need for, or indeed value in, substantial divergence.

May also spoke of a number of tack on agreements covering everything from air travel to Euratom - the additional components that would come in addition to a trade framework. All of this is achievable and there are real world examples which takes us into the realms of a deep and comprehensive relationship of multiple strands which in effect makes it comparable with Switzerland.

This could be described as a single market in goods only while suggesting limited rights on services, but here we are drifting into accusations of cherrypicking where inside the scope of an FTA it would trigger demands from third countries for equal concessions under the WTO MFN principle.

For the most part Mrs May has chosen to stick to all of her red lines with no shared competences which in law will limit what the EU can acquiesce to. In other words, it's total baloney. What she wants cannot happen, will not happen and is not possible.

She could have most of what she has suggested by joining Efta and retaining the EEA agreement but instead has chosen to rebuild it from the ground up by another name, ditching obligations as she goes. To the uninitiated it sounds plausible, reasonable even, but ultimately what she asks goes far beyond what can be delivered inside the framework of an FTA - a form of agreement governed by a particular strand of WTO rules.

Norway and EEA states manage to avoid triggering MFN issue by way of the EEA being a regional trade agreement and not subject to the same strata of governance. That is why they can have more. Being that the EU is taking the UK at its word on its red lines the FTA remains the only instrument which conforms and consequently cannot have the added extras.

So where are we? Nowhere. What has been suggested will be politely received today by the Council and subsequently rejected. There may be enough in the proposal for the EU to work up a legal draft of a framework toward a DCFTA but details will be left out of the Article 50 withdrawal agreement; the dispute over which was successfully ducked by Mrs May this afternoon.

On the subject of Northern Ireland she maintains that the UK will leave as a single customs entity which is to be commended but as yet there is no coherent suggestion as to how this may be achieved. We are sill in the land of unicorns and most of the central questions remain unanswered. When Mrs May is rebuffed she will find she is back where she started as though this speech never happened. Where we go from there is anyone's guess.

Thursday, 1 March 2018

Who will spare us from these deadbeat ex prime ministers?

So I read the Major speech. The first half just rolled out the classic remain narrative about becoming poorer, completely misunderstanding the motives for Brexit. The second half was just a blistering attack on the government as if we didn't know they were making a hash of it.

The subtext is that the public were taken in by the promises of the Brexit ultras which is only one step removed from saying it was the bus wot won it. Condescending.

This fails to note that nearly everyone outside the London bubble thought the Vote Leave campaign was dire and voted to leave in spite of it largely *because* of hectoring from establishment figures like Major and Blair - two leaders who in their own way did enormous damage.

This betrays a total lack of self-awareness. To then say the vote should be overturned because he knows better is a "compromise" is absolutely breathtaking. Where do these people get off?

Ultimately Britain can withstand the pain of Brexit. We were warned of those dangers and we accepted the risk because political renewal matters more. We voted for change. A departure from the rule of Blairs, Majors and Camerons.

The vote to leave was not an endorsement of Boris Johnson et al. It was a rejection of the establishment consensus and it's iron grip on politics. Now we have rid ourselves of them the political field is wide open and for once we have real choices.

Nobody is satisfied at the government's handling of Brexit but this is just something we have to endure before we come out the other side. Then we shall be rid of the Tories and soon after we'll be rid of Corbyn's clan too. It may take a decade but this is part of the process.

Nobody can say what the UK political scenery will look like in a decade or even what the EU will look like but from there we will have turned a page to begin a new chapter having completely overturned the 20th century order imposed on us.

That may mean a lost decade but the legacy of Brexit will be to rid ourselves of all of these drongos who fall to pieces at the very suggestion of change. This institutional incompetence is the legacy of Heath, Thatcher, Blair, Brown and Major.

We are no longer in the post war settlement. This is the internet age. The age of democratised media. We demand politics and institutions befitting it - not the dead hand of London and Brussels and their weak pastiche of democracy. This is our time. His has past.