Saturday, 13 August 2016
Brexit: taking the temperature
Two features of the last week though have been the news that Norway could choose to veto Efta accession. This is a real morale boost to remainers determined to prove themselves right. Except that this was always a possibility. I take it that Norway has rightly spotted there are opportunities for leveraging favourable conditions. Nothing is off the table.
We do not as yet know if Efta is open to us but we can deduce a few things. What we do know is that neither Britain nor the EU wants to disrupt trade. Nobody can afford to take the hit and there are few, if any, advantages in doing so. Consequently if the Efta avenue is closed then a clone of the EEA agreement is also possible. We have two years in which to develop an interface and we do not have time to develop one from scratch.
Far from agreeing just a trade deal we are looking at something far more sophisticated. The best analogy I can think of is that we are developing an EU API. In computer programming, an application programming interface (API) is a set of protocols and tools made for ease of interface by third parties. APIs allow developers to complete complex procedures calling on other software written by other companies. It allows functionality to be written into software without having to replicate functionality of other programmes.
I recently wrote an application to produce aviation safety documentation. I saw no value in writing my own PDF builder and so I used the Adobe API to create complex PDF documents by remote control. That means my software only works if the user has Adobe Acrobat installed which makes it a dependent programme - but that's fine because I work on the assumption that most PCs have it and if not, users can very easily install it. It works on the assumption that the target software will not deviate significantly in its core functionality.
That is roughly what we are looking at creating. We don't want to be rewriting our relationship from scratch, we do want to retain the use of various features within the EU and we will need mechanisms that allow it to happen without disruption, working to a set of core functions (EU treaties) which are unlikely to change.
The EEA agreement is an API that already exists but there is nothing to stop us developing a direct clone. It is not by any means ideal in that it is usually best if we don't deviate from the standard, but this is politics, not computing. Deviation may be required.
In short, nothing is impossible. If Norway wants to complicate matters, it is no obstacle to maintaining the single market and Norway is not likely to make any friends by frustrating the process.
The second theme dominating this weeks news is a gradual awakening to the peripheral complications of Brexit, with the FT hacks and remain bloggers only just getting to grips with WTO concessions and schedules of commitments. These things now exist in the Brexit lexicon because they have finally recognised what has been under their noses all along.
All they had to do was read Flexcit, but instead see fit to tell us Brexiteers these are realities we haven't considered. The latest from Flipchart Rick is especially hilarious. We are told that the UK will have to re-negotiate its membership of the World Trade Organisation. "Again, this could be subject to a veto from any one of the other countries" says Flipchart Rick.
This is not the big deal remainers would like it to be. The UK could very easily come to an agreement with the WTO within the two-year Article 50 period so that it was ready to roll when we leave. However, even if it was not ready, the UK could act unilaterally maintaining the existing terms and it would have no effect. The way the WTO works is that, in order for it to take action, a WTO Member has to demonstrate that it has suffered harm from the actions of another member. Since the UK would simply be continuing the status quo, no action could be taken and there would be no harm caused, even if the UK was technically in breach of the rules. That is the sort of politics we would wish to avoid but the option is there if we are forced into that position.
It seems the main objection is that Brexit is complex and will take many years to complete. If we let that kind of thinking prevail we would never have built Concorde. It doesn't especially bother me that Brexit will dominate British politics for a decade either. What it means is that politicians will have to down tools from their usual preoccupations and look closely at core policy areas they have abandoned for decades. Why this is viewed as a bad things beats me. It is long past the time we looked at serious reform of governance.
Then, according to the BBC this week, Italy's economy failed to grow between April and June as the country struggled with its creaking banking sector. GDP growth shrank to 0% in the second quarter compared to 0.3% in the first quarter. Germany's economy also slowed in the second quarter, albeit less markedly than had been expected. Europe's largest economy expanded by 0.4%, down from 0.7% in the first quarter, but above forecasts of 0.2%.
No doubt our own economic metrics will be looking peaky over the next few months and we may be looking at a recession but this is part of a Europe wide trend and the Eurozone has been in the doldrums for some time. Consequently those who attempt to frame it as a Brexit recession are simply at odds with the facts. This was not a choice between economic stability and uncertainty.
The facts show that the EU is not capable of delivering either certainty or meaningful growth. I don't doubt that we will take a hit for leaving the EU, but this is the process of remodelling our economy and the systems that govern it. Not before time. The existing model is not working and that is why it is necessary to re-evaluate our EU relationship and take back control of trade.
It would appear that both CETA and TTIP are headed toward the rocks. They may yet pass but in a much watered down form. What this shows is that the mindset of big bilateral deals is a deeply flawed one and that in order to get trade moving again we need to think in different ways. We cannot expect such a paradigm shift from the EU.
Only as we further navigate the complexities of Brexit will it emerge that the nature of trade has evolved. As Simon Cooke succinctly explains "Negotiations are about agreeing rules that permit trade while protecting against the possible negative affects of that trade and getting consistent regulation on things like how much hallucinogenic mycotoxin it's OK to have in a bushel of wheat".
This glimmer of understanding though is an understatement. Going forward, this is the very essence of trade, and consequently the trade "experts", whose prestige will be borrowed by the FT and remainer bloggers, are dinosaurs who will know very little of what it's like hammering out an agreement on hallucinogenic mycotoxins at Codex.
In that regard we will need to have a far reaching debate about global regulatory issues and their relationship with trade facilitation. Readers of this blog will be well versed in those such issues, but first we have to wait for the remainers to catch up and discover it all for themselves before we can debate the issues. Then FT hacks can tell us earnestly that we Brexiteers haven't considered the nature of global regulation - even though we have spoken of little else for the last three years.
In that though, there is no danger of them catching up any time soon. These issues will continue to exist in limbo waiting to be discovered by remainers who for the foreseeable future will be far too preoccupied with catastrophising Brexit to realise that there are bigger and more relevant issues than the little old EU. Until that happens we just have to tolerate the petulant whining. I think I can safely take the rest of summer off. Maybe next year they will have woken up.