Saturday 14 November 2015

What is David Campbell Bannerman smoking?


It's really quite amazing how some people can drift though a career in politics and still not grasp the basics of what they're talking about. One such example is , writing in the Telegraph about the Brexit options. He devotes much of his column to the so called "WTO option", or as we call it, Sudden Death Brexit.  EUreferendum.com will elaborate on that later on today. I'll just address one particular point.

It's all very well blethering on about free trade, but trade is no longer about tariffs. It's about the removal of technical barriers to trade. A single market is a single regulatory framework. And in just one paragraph Bannerman exposes not only his own ignorance but also that of Ruth Lea.
But hang on! The Single Market is so important to the UK, we could never leave it surely?! Actually no again – even EU Commission figures analysed by economist Ruth Lea show that the costs of the EU Single Market outweigh the benefits by 2.5 times, and the reality is that only 8% of the UK economy trades with the EU and just 5% of UK businesses. So we could strip out in theory the overburdensome and job destroying EU red tape on 92% of the UK economy and 95% businesses, whilst also saving every household in the UK nearly £1,000 a year. We’d be Big Globalists not Little Europeans; and be better able to capitalise on the reality that 90% of economic growth in the next 10-15 years will take place outside the EU.
This is a child's fantasy that completely ignores the essence of what free trade areas are now. For sure, we could get a zero tariff agreement with the EU but if we want to continue trading with the rest of the world then we still have to abide by those same rules.

EU regulations and standards extend well beyond the European single market because the EU rules, as we have discussed at length, are not made by the EU. They are global conventions. If Bannerman had done any research at all, he would know that over a hundred countries subscribe to entities like the UNECE, which means we have to produce to EU standards anyway if we want to export to other places.

If Bannerman is suggesting we scrap those production standards and have two sets of standards, one for the domestic market and one for the export market, then he's saying companies will have to run two separate production lines if they export.

The implication of Bannerman is that we would continue to abide by rules for the 8% who export to the EU but that ignores entirely that British suppliers of components to those exporters must also comply with those standards. Ruth Lea hasn't factored any of this into her fag packet calculations. She has been challenged on this by a number of people but her response is to block people immediately. Such is her arrogance.

More to the point, regulatory divergence is probably the last thing we want. It only makes trade more complex and more costly for importers too - unless of course we recognise EU standards - in which case the relationship is wholly asymmetrical.

And would we even want to scrap the regulations for companies that don't export? Do we want them to bin health and safety rules and food safety laws and abolish long established practices that companies have spent millions on to comply with? Do we want to turn round to them and tell them they must learn a new set of rules and re-equip and retrain for them?

If we have a different set of rules, that also makes it expensive for European companies operating in the UK and they might conclude that it isn't even worth it. This generates more questions than answers. I know the answers. Bannerman doesn't.

Just thinking in insurance terms, underwriters would have a mammoth task risk assessing the new UK frameworks and an under regulated environment largely means more risk and higher premiums. And have they given so much as a nanoseconds thought as to how long such a transition would take and what that would involve? The last time we had a significant change of regulatory regimes it caused a major panic.

Both Lea and Bannerman insist on focussing only on the tariffs aspect of single markets and totally ignore how much is saved and facilitated by having common standards - and how they manifestly improve the functioning of trade for exports and internally. That's all complex conceptual stuff that can't be punched into a spreadsheet and requires a little real world experience.

This is all just at a cursory glance at their assertions, and this is without going into any detail on the discredited WTO option. It's not just wrong, it is embarrassingly wrong. While your average Daily Telegraph reader is going to lap up every word without engaging their critical faculties there will be opinion forming industry professionals reading this and thinking we Brexiteers are off our rockers and living in a dreamworld.

The short of it is, in order to win a referendum we must win the intellectual argument. People will make their choice on the basis of what they hear from those around them and the interpretations of those they trust. If we cannot secure the confidence of opinion formers then it will filter though that we do not have a credible case. This slapdash stuff really is damaging.

More than anything, there is no excuse for it. This has all been set out and explained in Flexcit and at a mere 419 pages it's not exactly a big ask for an MEP devoted to getting us out of the EU to have actually read it.

It may be that Bannerman has read it and instead is pegging the strategy on some other plan hoping that the inherent weaknesses and falsehoods will go unnoticed. That is a dangerous gamble as the Remain camp will have experts pouring over such arguments, and if they are worth their salt they will find the same gaping holes we have and they will advertise them in full. More to the point, why gamble when you don't have to? The Norway Option is the one option that takes all these questions out of the equation, yet Bannerman barely mentions it.

The article falls into two classic traps of over-promising what Brexit can achieve and making statistical suppositions about the costs. There isn't going to be a bonfire of regulation, nor is there much value in getting into games of statistical Top Trumps either. People switch off and won't know who to believe. (see illustration)

At this point I am reminded of that Winston Churchill quote "You can always count on Americans to do the right thing - after they've tried everything else." It would appear that the Leave campaign is employing the same approach - but I have my doubts as to whether we can count on them to do the right thing. No confidence at all in fact.

UPDATE: I challenged Bannerman on these points. His response was repeated obfuscation with totally irrelevant points, followed by blocking me. I suspect he just doesn't understand the point at all. These people are not up to the job of running the leave campaign.



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