Tuesday, 27 September 2016

The EEA is the only sensible option on the table

If you're Daniel Hannan or one of the libertarian Toryboys you think that Brexit will usher in a new dawn of free trade and light touch regulation. You will frequently cite Singapore or Hong Kong as an example of how things can be. You will of course not mention the vast slums, the slave labour and the shoddy building practices that will see tens of thousands killed come the next earthquake. Nor will you mention that housing for ordinary citizens is cramped and overcrowded.

If you're an average Joe existing on a diet of Daily Express, Telegraph and Breitbart articles you could be forgiven for thinking Brexit will usher in this new dawn. Most people have next to no idea what is regulated, by whom or why. Very few fully comprehend the extent and depth of EU integration. Hardly anybody understands the various systems and regulatory mechanisms that make modern life tick along the way it does. And there's really no shame in that. It's normal.

It's only after three years of intensive examination of regulation that I have any real idea how deep the rabbit hole goes. Even now I am still bumping into new concepts hitherto unexplored. What one finds is that the EU most people are aware of is only the tip of the iceberg and there are many tiers of invisible EU which function as part of a tapestry of treaties, agreements and contracts. There are now volumes of regulations and rules governing things that simply didn't exist when we joined the EU.

In a lot of areas some regulation is better than none at all and if you were going to deregulate you would want to make damn sure you had something of equivalence to replace it with. In most cases we would find that the regulation that exists is eminently sensible. The problem is usually overzealous interpretation or misapplication. The only time anyone pays any particular attention is when it affects them directly. So we must approach Brexit with care.

The issue of Brexit as much a legal and technical one as it is political. It's as easy or as difficult as you want to make it. We could, as some suggest, rip up agreements and let the chips fall where they may but this would have severe consequences politically and economically. It definitely would cause a recession and we definitely would be poorer.

So the question then becomes one of how do we leave without causing extensive damage to our economy and international standing. That is not so easy - especially when the pragmatic conflicts with the political. If we were being ultra pragmatic we simply wouldn't bother leaving the EU. Doing nothing is always the path of least resistance. But that is not acceptable to the majority of people. So now it's up to politics to discern what is. An unenviable task.

The dilemma of politicians is whether to stand up for what is right or whether to bend to irrational demands for no political or economic gain. What most people expect of Brexit is to be out from under the dead hand of technocracy and into a simpler, less bureaucratic world. That though does not exist anywhere - and if it did we would hate it even more than the status quo. So before we go into Brexit talks we need to define what it is we seek to achieve.

For anyone on the right the big red line is trade. We also want to take back control of labour laws. EU rights and entitlements reduce the availability of work and in reality offer no real protection. Legislation cannot replace a competent and active union. There is also no good reason to have a one size fits all agriculture policy and local control of our seas is better for the environment. There are plenty of areas where a reboot of policy would do Britain a massive favour. The converse of this is that there are also a number of opportunities to shoot ourselves in the foot.

With that in mind we need to apply a certain degree of risk management. The juvenile nihilist in me might like to start unplugging things to see what happens but then we have to live with the consequences of whatever we do. And so it stands to reason that we would want to negotiate a flexible agreement whereby we could uncouple from the EU carefully and slowly. We are embarking on major surgery, plucking away at connecting fibres. Were we to look at the list of subject headings for consideration they would span into the hundreds.

We then have to consider the commercial concerns. The single market is not just a free trade area. Not is it merely a region of regulatory harmonisation. There are hundreds of intricate systems to keep it all running and to keep it fair and legal. Losing access to these systems has very real ramifications in terms of quality of life and economic prosperity. To put it in stark terms there is never going to be a full divorce from the EU for as long as it exists. When the EU is our nearest and most integrated trading partner there must be a high degree of convergence and cooperation.

Right now, if the Brexit department is doing its job it will be consulting industry leaders and lobby groups to see what they wish to retain. In this it will become apparent that access to and retention of EU decentralised agencies is extremely important. As much as they are valuable to us we have nothing we could replace them with. By the time any such analysis is complete we will find we want to keep most, if not all and the list of things we do want from the EU will be far larger than the things we don't.

We hear Brexit politicians talk about the Canada Option which is nothing more than a vague aspiration. To understand why this is considered an option you have to examine how Brexiteers think. They think the core component of the EU is the free trade area - which in their tiny minds means an agreement on tariffs. Everything else is considered peripheral and unimportant sundries which can be covered by "transitional agreements". It is only a matter of time before reality intrudes on this quaint interpretation. Britain will need something far more comprehensive.

So we have quite a job on our hands don't we? The chances of sorting all that out in two years are nil. We are talking about forty years of technical evolution conducted by an army of lawyers, politicians and technocrats. To forge an agreement we will start with free trade as a baseline. Then we are in the process of adding on the extras. They will number in the hundreds. Any miscalculation could cause serious and irreversible damage. Our end proposal will be so close to single market membership that it will look very much like actual membership.

This though, is exactly the kind of picking and choosing the EU has largely warned us against. For sure we do not take their opening gambit as gospel and the whole point of negotiations is to overcome red lines. But then we have to consider that to construct the EEA agreement it took eight years. Do we seriously want to devote eight years to producing something similar. More to the point, does the EU? If I were in charge of negotiating for the EU I would be extremely reluctant to reinvent the wheel and negotiate an elaborate agreement only to do what the EEA agreement already does.

The most obvious and most sensible course of action is to take the EEA agreement and negotiate a series of opt outs and waivers using the system of annexes it has. And yes, that includes reforms to freedom of movement. With it being its own entity with its own secretariat there is already the physical infrastructure to administer it and bring measures up for review.

This means we can have a slowly evolving Brexit where the final agreement is not set in stone and miscalculations can be negotiated. The very last thing we want is a static agreement with the EU or we won't be in a better position than EU members. There is no good reason not to use the EEA as a baseline - not least as a means to shorten the process and reduce the uncertainty and disruption.

Critics of this approach are wrong. The fact is that Brexit is too big and too complex to attempt it all in one go, total separation is undesirable and not achievable and in the modern world there is no such thing as regulatory independence. Banking and finance regulation most originates from global agreements, technical standards and industry regulations are not made by the EU and the EU is largely a recipient of regulation rather than the creator of it.

As much as Norway is consulted on new regulation it does have a system for influencing them and it gets more of a say than the UK by way of being an independent voice in the global forums where the rules are made. Britain free of the EU is no longer under the whip of it and can vote according to its own interests.

The EEA agreement is completely in line with Brexit. It takes us out of EU political integration, it gives us our trade policy back and makes us an independent nation in all the ways that matter. The deregulation fantasies of the Tory right are a red herring, immigration concerns can be addressed, and though we will continue to pay into the EU budget there was never any possibility of ending payments and it was grossly irresponsible of Vote Leave to make issue of it.

In most respects the EEA is as close to a silver bullet we are going to get. Doing it some other way may have some peripheral advantages but critics need to spell out what they are and present assurances that the trade off is worth it. They will find the advantages are minimal. They also miss the point.

The point of the EEA is that it does not have to be the final destination of Brexit. It is a living agreement whereby modifications can be made through a dedicated system and the process of Brexit can be continuous until such a times as we are satisfied. If we attempt a big bang Brexit then we could find that there is no going back on our decisions.

The notion that we can design an agreement from scratch ignores the reality that we are negotiating an exit with a lot of baggage to consider. The EEA can form the core of a Brexit settlement and in so doing take a lot of the contentious issues with the potential to derail talks off the table entirely. Doing it any other way would be completely pointless. Our approach should be to minimise the risks while securing maximum flexibility. If we do so we will find that our willingness to keep it simple(ish) will buy is a lot of good will.

The Brexit process is going to require a good deal of cooperation from the EU and will chew up a lot of time the EU would rather be spending in some other way. Brexit is not the only crisis on the radar. Diplomatic run-time is a finite resource and one we can save for the EU by using mechanisms already at our disposal.

If instead we open up every can of worms we create a number of hazards for the EU that could well see other member states engage in mischief making that damages not only the UK but also the EUs ability to function. While the nihilists on the right might like to see that, nobody is served by weakening the EU and exposing it to unnecessary risks.

The only real disadvantage to the EEA is that it is a difficult thing to sell - but that is really the job of politics and politicians. Their profession is to take unpopular decisions. This will require exactly that kind of leadership. We cannot and should not pander to the fantasies of the Tory right nor can we indulge Ukip's dishonest conflation of freedom of movement with open borders. To do so would be a gross act of political cowardice that will cost us dearly.

If the Brexiteers don't like it then that's really their own fault. Throughout the referendum they had every opportunity to produce a plan and it would have bought them a lot of influence. They declined that invitation. If now they find that someone else gets to define Brexit then they should take that up with Dominic Cummings and Matthew Elliott. They had their chance. They blew it.

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