Friday, 14 September 2018

Send in the clowns

The ‘will they won’t they’ publish question, discussed in my previous post, was answered this week when the ERG decided not to release their detailed plan for Brexit, despite having promised – or threatened – throughout the summer to do so. The reasons, apparently, were that they could not agree on it and that the draft contained ideas of such barminess that widespread mockery was feared.

It is worth reflecting for a moment on just how extraordinary this is. Here we have a group of politicians who in some cases have been dreaming and scheming for Brexit for 25 years or longer. Yet now, over two years after the referendum and just weeks before finalisation of the Withdrawal Agreement, they still cannot agree on what they think Brexit should mean or on something which they dare articulate in public. Even more absurd, despite this they persist with the claim that the 17.4 million who voted leave in 2016 knew exactly what they were voting for.

Rehashed hash

In place of producing the document, two others were launched. First, on Tuesday, Economists for Free Trade (EFT, formerly known as Economists for Brexit), the eccentric but media-savvy group led by Patrick Minford, published its latest document. It was a rehash of their familiar refrain about ‘trading on WTO terms’, rather meaninglessly – and misleadingly - rebranded as the ‘World Trade Deal’ (this is part of a wider recent attempt by Brexiters to avoid the term ‘no deal’, having noticed how badly it plays with the public).

It was almost immediately trashed by those long-acquainted with the EFT approach - a “shoddy piece of analysis” according to trade expert Sam Lowe of CER – whilst Tom Peck in The Independent described it as “deranged” and “bizarre gibberish”. Wholesale critiques of the EFT’s approach have been undertaken again and again, for example by several leading economists from the LSE and Sussex University - and Ian Dunt did so for the present iteration – but the group never retracts and rarely responds. Truly, these are the Brexit Bourbons who keep returning, having learned nothing and forgotten nothing.

Curiously, although their launch event was hosted by Jacob Rees-Mogg, the EFT are not propounding the ‘Canada-style’ deal which he and other ERG Ultras claim to want, but rather the ‘no deal’ Kamikaze Brexit (which, many suspect, is also the secret dream of many of the Ultras). But both approaches share the well-rehearsed problem of the Irish border.

The EFT report is about the post-Brexit trade arrangements rather than the Withdrawal Agreement (which, under the ‘World Trade Deal’ – i.e. no deal – would not be signed) and simply wishes the border problem away in a few sentences (p.11-12).

By contrast, the ERG document, launched by the group itself on Wednesday, with the ubiquitous Rees-Mogg again in the chair, is solely concerned with the Irish border conundrum. As with the EFT report it was a restatement of already discredited ideas, in this case about technologies which do not currently exist in the permutation proposed, and which would take years to develop, if at all (the brief mention in the EFT plan refers to the same fantasy). It was effectively a reheat of the MaxFac proposal of earlier this year, introduced at the launch by David Davis - who having been Brexit Secretary at the time must surely be aware of all the reasons why it doesn’t work and wasn’t pursued. But he still proposes it.

One of the strangest features of this is that if the Brexiters genuinely believe that they have a solution to the Irish border of the sort they outlined then they have no reason to oppose the Northern Ireland backstop in the Withdrawal Agreement. As agreed in December, this would only come into force if other options, including the kinds of things the ERG are proposing, failed to avoid a hard border. So if they are right, the backstop would never be invoked and there is no need for them to fight against its inclusion. Or is it that, in fact, they know they are proposing unworkable solutions?

Convergent divergence

Of course one issue is that the ERG are not just gunning for the NI backstop but also for the common rule book for goods, which is a central part of the Chequers Proposal’s attempt to develop an alternative of the Irish (and other border) issues. On this both the ERG and the EFT documents have as their central intellectual and practical flaw the fact that they rely on notions of regulatory equivalence and mutual recognition* to avoid border checks and non-tariff barriers to trade, which is depicted as achievable because, of course, the UK is currently in full regulatory convergence with the EU (this has long been a Brexiter fantasy, and underpins Liam Fox’s discredited ‘easiest deal in history’ claim). But at the same time they demand, and claim as a key benefit of Brexit, the right to regulatory divergence.

Beneath all the relatively complex detail of the two proposals, this fundamental contradiction (which is, I suppose, a rarefied form of ‘cakeism’) makes their ideas completely unworkable, and to the extent that either report acknowledges the problem, it is in vague terms with no realistic solution proposed or in terms which are simply factually incorrect.

Much of this – especially the use of semi-digested factoids about WTO rules – seems to derive from the familiar Brexiter pathology whereby what they believe ‘must be true’ and so every piece of evidence to the contrary is either ignored or distorted, sometimes in the most grotesque way.

A good example came when Bernard Jenkin appeared on Radio 4’s The World Tonight to defend the ERG document. In response, Irish Senator Neale Richmond pointed out very forcefully that the proposal was based on a fantasy that had already been discredited. But the particularly revealing moment came in relation to the question of UK access to EU VAT databases post-Brexit, which would be needed as part of the frictionless border. Jenkin opined that there should be no problem as Britain and the EU already had a “shared system” for this (another aspect of ‘convergence’). Richmond pointed out the obvious: that this was a “ridiculous statement” because it was not a ‘shared system’ between the EU and the UK but something the UK was part of because of being a member of the EU, and so would not continue after Brexit. All Jenkin could say in reply was that if the EU insisted on being “hardline” then the outcome would just have to be WTO Rules!

Here in microcosm was not just the convergence-divergence paradox but the wider way in which Brexiters continually expect many of the features of EU membership to persist because it would be ‘common sense’ and refuse to recognize that losing such features is an inevitable consequence of ending that membership (and, hence, one reason why ‘common sense’ would dictate not leaving). When this blatantly obvious point is put to them directly and plainly – as it far too rarely is – they can only respond with bluster about punishment or bullish talk of walking away with no deal.

Serious nonsense
How can our country have got to the point where the preposterous clowns of the ERG and EFT have their nonsensical proposals reported as headline news as if they constituted a serious response to what is rapidly becoming a national crisis? There are, of course, many answers to that which would take a book to enumerate. But one immediate explanation is because the Government’s own Chequers Proposal - most obviously as regards the Irish border but also, although less widely discussed, on issues of mutual recognition and equivalence - is equally unworkable. On that, if nothing else, the ERG are correct. And so we have the ludicrous spectacle of a political debate of great urgency and massive national importance being conducted in terms of the relative merits of two impossibilities.
That reflects the terrible error of judgment – one of several since she became PM – Theresa May made in developing as her Chequers Proposal something that finally lost her the support of the ERG without the corresponding benefit of the kind of soft Brexit that would have been just about viable, both economically and in terms of healing some of the societal divisions. As I wrote at the time, the proposal garnered all the pain of taking on the Ultras with none of the gain of creating a pragmatic plan. That is the real leadership story about what is happening, rather than the narrower issue of whether or not May will survive as PM.
The latter does matter in its own way, though, albeit not as a Westminster bubble story about personalities and political careers. If she does survive, it will most likely mean the scenario depicted in my previous post, whereby a much-modified version of the Chequers Proposal enables a Withdrawal Agreement alongside a very vague statement about future terms to get through parliament. If she doesn’t survive it will most likely be because the ERG topple her and in the process create a crisis which would open up all kinds of possibilities, including an extension of Article 50, and election or even another referendum.
Ironically, then, the best hope for remainers, or just for soft Brexit pragmatists, now lies in whether the ERG try and succeed in deposing May. In that sense, what the clowns do in the next few weeks could have deadly serious consequences for what happens in the next few decades.

 
*The EFT position of Mutual Recognition Agreements (MRAs) is completely contradictory. On the one hand, they dismiss (p.8) their significance in relation to how they supplement basic WTO terms in the trade that the EU does with third countries (such as the US) with which it has no FTA, noting that this “anti-Brexit” argument (which has been widely made by many, including me) “often is technically true” but then claim it is “not very relevant”. The weasel words are ‘technically’ (as if to imply that, somehow, it’s not really true) and ‘not very’. (They also claim, with no justification at all, that it “should not pose serious problems” (p.9) for the UK to renegotiate the existing EU MRAs with third countries). Yet, on the other hand, they make MRAs the central pillar for replicating existing terms of trade with EU, making it therefore abundantly clear that MRA adjustments to basic WTO terms are far from being irrelevant, but in any case completely failing to understand that MRAs do not and could not remotely cover the full range of regulatory harmonization which characterises the single market. For more detailed analysis of the limitations of MRAs in this respect see here and here.

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