Friday, 13 July 2018

This White Paper should be put out of its misery

The new Brexit White Paper has now been published, filling out the three page summary of the Chequers proposal and, in doing so, has both confirmed and amplified the obvious flaws of that proposal, discussed in a previous post.

As commentators including Chris Giles, Economics Editor of the Financial Times and Piet Eeckhout, Professor of EU Law at University College London quickly pointed out, the White Paper is cakeism or cherry-picking writ large. Or, as Ian Dunt more colourfully put it in a detailed and damning assessment, “they have a cake, they have eaten it, some of it is still magically on the plate, and the rest is being vomited up on the floor”. I don’t think he meant it in a good way, either.

The central problems, as pre-figured by Chequers, are the idea of separating the single market in goods from that in services, an ambiguous role for the ECJ, a customs arrangement that is pure hokum, and the rejection of freedom of movement of people. But beneath that there are a myriad of ways, relating to trade and non-trade matters, where the proposal is to continue to participate in EU institutions – for example those relating to aviation safety, medicines and policing – as if Britain were still a member state.

There is even a proposal that – as pointed out by Ed Conway, Economics Editor of Sky News - the EU would re-write its existing and future trade agreements with other countries so as to count UK components as if they were of EU origin. Not so much ‘I’ll have my cake and eat it’ as ‘I’ll have my cake, eat it, and eat yours as well’.

The government is clearly aware that what is being proposed is completely at odds with what being a third country to the EU means, and say as much (p.7). Specifically, the idea is that the agreement “should reflect the UK’s and the EU’s deep history, close ties, and unique starting point”. This I think lies at the absolute heart of the problems of the White Paper and, indeed, the government’s entire approach to Brexit since the Referendum. It is based on the notion that there is a kind of alumnus status which is different both to membership and to non-membership.

It is a fantasy. No such status exists, and the EU have been clear both before and since the vote that it can’t exist. Either Britain wants to leave, or it doesn’t: it can’t both leave and not leave in what some have called ‘Schrodinger’s Brexit’. At the very best, the White Paper is the basis – far too late in the day – to begin a negotiation. Yet some are suggesting that, far from being negotiable, it should all be accepted by the EU because it is as far as the government can go given the domestic political constraints imposed by the Ultras.

But that is to view matters entirely through the prism of Tory party infighting. That’s unrealistic. Although as a continuing member Britain was able to extract numerous special concessions in part because other countries recognized those domestic issues, it has far less traction coming from a departing member. For the EU-27, Britain’s political problems are its own and are recognized only to the extent that the EU will (and are) making polite noises about the proposal rather than rejecting it immediately. But reject it they surely will. And if the response to that is to say that ‘no deal’ would be bad for everyone, consider that it is Britain, not the EU-27, which is drawing up plans to stockpile food, medical supplies and portable generators.

As for that Tory infighting, it is becoming more intense. The Brexit Ultras are back in their comfort zone of protest and victimhood – there is a real spring in their step now that they can drop any pretence of having to take any responsibility for this mess. A few weeks ago they were decrying the Tory ‘rebels’ for having the temerity to seek amendments that would ‘bind the Prime Minister’s hands in the negotiations’. To do so, they fulminated, was to sabotage the will of the people. Now, suddenly, tabling amendments to Brexit legislation is back in fashion with them.

In this context, Labour’s stance becomes more important – and the extent to which Labour MPs back it. For the time being, the official position remains as absurd as the government’s, albeit in a different way. No single market, but something ‘as good as it’, and a customs union. But, listening to Emily Thornberry at this week’s PMQs, it does not seem that Labour even understand the difference between a single market and a customs union anyway. And whilst they are, rightly, talking about the damaging effect of the government’s (lack of a) plan for services they are committed to leaving the single market for goods as well as services. So in some respects, the Labour position on Brexit is now slightly ‘harder’ than the government’s. But it hardly matters, as neither is remotely realistic. What does matter is that the parliamentary arithmetic is now so peculiar that it’s possible that no one Brexit policy would command a majority. That makes a General Election or another Referendum more likely.

As all this grinds on, it’s impossible not to be struck by the sheer pointlessness of it all. What is being gained? An independent trade policy? That is effectively precluded by the White Paper but even if it were not it is no prize at all in economic terms. If it is supposed to be a symbol of sovereignty, it’s illusory (all trade agreements entail diminished sovereignty in the Brexiter sense). Is it sovereignty to exit all the EU agencies just to rejoin them and pay with no say? Was it the will of the people, when these agencies were scarcely mentioned in the Referendum? As for freedom from the ECJ, virtually everyone I talked to before the vote who was concerned with this issue confused the ECJ with the ECHR.

Of course, in the new political correctness of Brexit we are not allowed to suggest that the people did not know what they were voting for, for fear of being labelled elitist by some billionaire, ex-public schoolboy, or tax exile (or all three). But it’s plainly true that they did not, and for that matter that they could not. That is easily demonstrated by the fact that it is only now, over two years after the result, that the government has produced any detailed plan for what leaving means.

It’s no good Brexiters saying that people voted for a different plan: there was no plan at all on offer at the time. And it’s no good them saying that all would be well if their hard Brexit plan had been followed. This is exactly what May’s government has tried to do and, finding it unworkable in practice, it has morphed into the hopeless effort that was produced yesterday. Hopeless because it certainly won’t be accepted by the EU, is already not accepted by the Brexiters, and probably won’t be accepted by Parliament. If it were a horse, then it would be put out of its misery as an act of kindness.

But, then, the same could be said of Brexit itself.

Tuesday, 10 July 2018

May's pain with no gain crisis leaves Brexit snookered

Towards the end of my previous post, I wrote that it was still perfectly possible that the Tory Party would implode into civil war over the Chequers proposal. Now it has. This has obviously always been on the cards throughout the Brexit process, and not simply because the party has been split for 30 years over the EU.

More, it reflects the structural paradox I have been writing about for months now: the irreconcilability of declaring that hard Brexit is the inviolable will of the people with the general political imperative of not following policies that do major damage to the country. This entails, as has been clear since the February 2017 White Paper, that Brexit must be done and yet must not be done: an impossibility.

May’s ill-judged decision that Brexit meant the hard Brexit of the Lancaster House speech (which may have been at the behest of her then advisors, but she, as PM, has to take the responsibility) meant she was always likely to have to dial back towards a softer Brexit. In the process, she gave those who would always have cried betrayal anyway a semi-legitimate reason to feel betrayed.

After all, she had promised them that hard Brexit was both deliverable and would be delivered. She could never quite bring herself to say it was desirable, of course, but that isn’t the reason she has diluted her stance. The reason is a combination of the realpolitik of what it would mean economically and of what the parliamentary arithmetic allows.

Hence the Chequers proposal and hence, to an extent, the resignations. I say to an extent because there is more to them than purist Brexit principle. Such principle may have been behind the resignations of Steve Baker and Chris Green (who he?), but Davis and Johnson are more complicated.

The resignations

Davis, it has been clear from the outset, was too vain, lazy and incompetent to do the job and was completely out of his depth (see Ian Dunt’s excoriating profile for more detail). He’s been looking for a chance to jump for a long time. Now he can claim that he was undermined, rather than having to accept that he failed to understand the most basic things about Brexit. It was he, amongst many other Brexiters, who claimed that “within minutes” of a vote to leave German car makers would be busy insisting on a great deal for Britain.  More charitably, it’s fair to say that the governmental machinery of DExEU vis a vis the Cabinet Office was never properly designed nor viable (it is surprising that May hasn’t taken this opportunity to address it).

Johnson, of course, has never had any principled attachment to Brexit. The issue for him is, obviously, just personal ambition and, I also think, the fact that he revels in making a drama just because he can. It’s the lazy politics of ego and entitlement. I doubt, by the way, that he will ever become PM so shop-soiled is his reputation, and my sense is that even Brexiters regard him with contempt. But he has his uses to them as a figurehead for the ‘betrayal’ narrative.

It is telling what that consists of. As per his resignation letter, it is that the “Brexit dream is dying through unnecessary self-doubt”. Note the complete absence of any concrete alternatives or practical plans. It’s all about dreams and beliefs. As with his ‘road to Brexit’ speech in February it shows that whilst he can campaign for Brexit he has not the glimmerings of an idea about, or any interest in, how to deliver it. That is singularly useless in the present circumstances.

Whatever the reasons, the resignations were triggered by May taking just a small step away from hard Brexit. This can be read as showing that the Brexiters were always on a hair trigger, ready to jump. This is an illustration of a point I’ve made before – the Brexiters are far more ready that the remain or soft Brexit ‘rebels’ to act forcibly and ruthlessly (witness the ‘meaningful vote’ climb down). It can also be read as indicative of how narrow is the tightrope that May must walk – although, again, note that she created a rod for her own back in her early embrace of the Ultras. She should have known that whatever they were given they would want more, so to offer them what they wanted and then take some of it away was always going to be a problem. Maybe she thought she could boil the frog. If so, it has jumped before the water has boiled.

May is taking the pain without making the gain

The crucial consequence of this is that May is now experiencing the ‘pain’ of resignations and party civil war without having got the ‘gain’ of a pragmatic, workable, soft Brexit policy. For the Chequers proposal is most certainly not workable for reasons pointed out it in one of my recent posts. In brief, the split of goods and services is a nonsense (and highly unlikely to be negotiable with the EU-27), and the role of the ECJ and the issue of freedom of movement of people would almost certainly need to soften further. As, indeed, the Brexiters suspect.

So Chequers now looks like a big mis-step. It would have been better to have got all the softening out of the way – in other words, to go full on to proposing soft Brexit – and get all the resignations and rebellions out of the way as well. Then May would have got the gain of something workable – and eminently acceptable to the EU – and paid the price. Instead, she’s just paid the price.

Further softening remains quite likely, but what then? Dominic Raab, for a start, would surely walk. Presumably in taking the job he has accepted Chequers, but it’s inconceivable (to me) that he would accept the next logical step of softening it further. How many Brexit Secretaries can be shed? And others – Fox, Leadsom, Mordaunt – might well go with him in this scenario, extending and deepening the crisis.

The Brexit that no one wants

The other main consequence of what has happened is that, rather extraordinarily, pretty much every one, regardless of where they are on the Brexit spectrum, is now unhappy. The hard Brexiters see it slipping away, the soft (EEA/EFTA) Brexiters are not getting their version of it, the remainers are still stuck with it, and those that might be called ‘pragmatists’, who just want some kind of workable solution, haven’t been offered it. Brexit in its nature is divisive, but it’s quite an achievement to have alienated every shade of opinion.

Worse than that, wherever people are on the spectrum, there’s no obvious route to achieving what they want. For various reasons – time, political numbers, party political structures – there are almost insuperable barriers to getting to hard Brexit, to soft Brexit or to remain. All of these outcomes are still possible, but each of them is currently snookered. That makes the possibility of an application to extend the Article 50 period slightly more likely, as David Allen Green argues in the FT today (£), but of course there are many barriers to that as well. Ultimately, it will not be until there is an even greater political crisis, which throws all the pieces into the air again, that one or more of the outcomes will become possible. But no one knows where the pieces would land and whether their preferred outcome would be the one that the new configuration would favour.

In the absence of the logjam being broken, of course, there will be an outcome simply by virtue of the Article 50 process: no deal. Which is, indeed, the outcome that some of the Ultras want. For almost everyone else this would be a disaster on an unprecedented scale: massive economic and social dislocation leading to goodness knows what political calamity. This now seems more likely than it ever has done before, simply because it is the default if all other outcomes are rendered impossible (and the prospect of it is what increases the chances of an extension to the Article 50 period).

We are not there yet, but we are getting close. Standing back from the detail of the domestic political drama it is simply extraordinary that just a couple of working months before the Withdrawal Agreement is meant to be ready for ratification Britain has an entirely new (and yet still unworkable) model of what Brexit looks like and a new person in charge of negotiating it (and one, moreover, who almost certainly doesn’t really agree with that model). Some of that might have been avoided. Most of it stems from having elevated to the status of the sacred ‘will of the people’ a narrow vote for something unspecified, which then became interpreted as something impossible. The end game is fast approaching.

Saturday, 7 July 2018

Chequers agreement: medium Brexit?

The outcome of the Chequers summit has been to produce, really for the first time, the beginnings of a proposal that can at least be the basis of a serious negotiation. For this, it seems we must thank Olly Robbins in particular. Although the detail is to follow in a White Paper next week, the three-page summary published last night indicates a substantial softening of the hard Brexit approach that has held sway since the Lancaster House speech. It does not, as yet, represent a soft Brexit approach either: what we have is a proposal for what might be called ‘medium Brexit’. As such, for now, the cabinet have signed up to it, although hardcore Brexiters in the Tory Party don’t like it, and those outside the party, like Nigel Farage, loathe it.

As expected, a core part of the proposal is for Britain to stay in a goods-only single market but, significantly I think, it is not described in that way but as a UK-EU “free trade area for goods”. This wording is either a sop to the Brexiters or represents the continuation of what has long been one of their core misunderstandings, namely that a single market is the same a free trade area. This confusion, discussed in detail in my blog post of 20 February 2017 is, as I wrote there, evidenced by an interesting insider account of the referendum campaign, written by Daniel Korski, formerly Deputy Director of David Cameron’s Policy Unit. He records the frustration during the pre-referendum re-negotiation with the EU: 

“Nor would our counterparts in Europe acknowledge that the EU’s four freedoms are very much divisible. A country can reduce tariffs and remove trade barriers and still maintain restrictions on which foreigners are allowed to enter the country. This is what the United States has done since World War II, with NAFTA being the best example.”

Later in that post, I suggested that the government’s approach to Brexit at that time was to try to shoehorn together the two fundamentally different models of international trade, a single market and a free trade area. On the basis of the wording of the Chequers statement that is still the approach or, at least, Brexiters are being allowed to believe that it is. It also panders to the ‘country cousin’ of the single market/ free trade area confusion, namely the habitual canard that ‘when we joined, we were told it was just a trade area’.

However, in other respects, the Brexiters are being asked to swallow something which looks more like ‘Ukraine plus’ or ‘Switzerland plus’ i.e. a goods but not services single market; some kind of UK-EU institutional arrangement which might look rather similar to the EFTA Court, or to the kind of ECJ-backstopped arbitration system associated with the Ukraine DCFTA; and an as yet unspecified ‘mobility framework’ that would be more or less close to free movement of people as per Switzerland. In addition to all of this, and very much in addition to Swiss or Ukraine models, there is the proposal for a new ‘facilitated customs arrangement’.

Will the EU-27 agree to this? Ultimately, no, for the reasons set out in my previous post. But they will almost certainly take it seriously and negotiate seriously about it, if only because, as noted above, it is the first time Britain has produced a basis for such a serious negotiation. In the course of it, I would expect the court arrangement to land up pretty close to the EFTA court and the mobility framework to get pretty close to freedom of movement.

As for the customs arrangement proposal – this remains a mess and it is very hard to see how it can generate something workable and, if so, not any time soon. So that implies a much longer transition period than is presently envisaged. Perhaps more likely it morphs into a straightforward replication of the existing customs union. What is most significant here is that by committing to a single market for goods and a customs arrangement, the statement also commits to agreeing to the existing Northern Ireland backstop agreement from phase 1, if only by dint of the assumption that it will never be used. That, at least, removes what has been the biggest obstacle to progress since the publication of the draft Withdrawal Agreement text.

Clearly if this does become the direction of travel, and it is hard to see how May can not expect it to be, it may fracture the very fragile unity of the cabinet and might provoke rebellions within the Tory Party. The question is whether what happened yesterday was that the Brexiters crossed the Rubicon and will now swallow pretty much anything that comes, or not. One irony, which I noted as a possibility in my post on the recent Withdrawal Bill votes is that the Brexiters have engineered a situation whereby a ‘meaningful vote’ on Brexit terms will not happen. They may live to rue that.

If things develop in the way just outlined, it will become increasingly difficult to see what the case is for not remaining in the single market for services, of course. It certainly makes no sense in terms of British economic interests for reasons set out by Charlotte Moore in a recent incisive article on the site. By implication, the government still expect mutual recognition agreements to do far more heavy lifting than can be asked of them. And there is very little mileage in having an independent trade policy for services given that free trade agreements rarely liberalise service trade to any depth (the implication to the contrary in the Chequers statement is wholly fanciful and, presumably, just a sop to Brexiters along with the reference to potentially joining TPP; for that matter, it’s hard to see how the Chequers proposals give much scope for free trade agreements in goods).

So perhaps the model then shifts towards ‘Norway plus’ (i.e. Norway plus customs arrangement). If so, another irony emerges: since most Brexiters have, since the Referendum, insisted that this would not be Brexit at all they would really have no convincing argument against simply abandoning Brexit altogether although (as always) the route and timing to that outcome remains unclear. In any case, to the extent that Chequers makes a soft Brexit more likely it may also reduce pressure to abandon Brexit in the face of a possible ‘no deal’ crash exit which, by contrast, is now less likely.

We’re not, of course, at anything like the point of knowing anything for sure yet. It is still perfectly possible that the Tory Party will implode into civil war over the Chequers position, or that for fear of that the government refuse to make the accommodations which might, conceivably, make something like this position fly in the negotiations with the EU.

The whole situation remains absurd, needless to say. None of this is remotely worth doing, and if it was worth doing it would have been better to have arrived at this proposal before embarking on Article 50. Still, yesterday was, by Brexit standards, slightly less absurd than usual.
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