Saturday, 19 October 2019

The day that decided nothing

The latest parliamentary dramas can seem perplexingly arcane or, alternatively, as the ‘Super Saturday’ terminology suggests, like some kind of sports tournament. The latter trivialises that the future of country is at stake. The former distracts from what are at heart quite simple issues.

No actual form of Brexit can be agreed on by Brexiters

The first such issue is the familiar one that has been at the core of the entire row over Brexit. As soon as its gets defined in any particular way, some who support it in principle do not support it in that version. As regards Johnson’s deal, predictably, that includes Farage and his Brexit Party followers. For them, not just that deal but any deal will be unacceptable. That is partly because nothing can ever live up to their fantasy, and partly because they are invested in the politics of protest.

The Brexit Party has no MPs, of course, but its views are often closely shadowed by members of the ERG and their sympathisers, principally amongst Tory MPs. That was clear at the time of May’s ill-fated deal. Surprisingly, they are now signed up for Johnson’s deal. Perhaps that is just because they realise that to reject it might well mean ending up with no Brexit at all. Perhaps it is that they recognize that Johnson’s deal takes them to the hardest form of Brexit short of no deal. Still, it is surprising in that it concedes that – not as a backstop but as the definite form Brexit will take – one part of the UK will remain for very many intents and purposes within the EU. That, apparently, is the price worth paying.

As a result, the people who have fallen off the end, of course, are the DUP. Since they sometimes give the impression of being in a permanent state of anger it is easy to miss the fact that they are currently genuinely and deeply angry. And they have good reason to be, in that it is unarguably true that Johnson’s deal constructs a significant border between Great Britain and Northern Ireland, in clear violation of the DUP’s core principles. Moreover, they have been sacrificed by those with whom they made common cause over Brexit, and who professed to have common cause with them over the union.

Their votes proved crucial in ensuring the passing of the Letwin Amendment on Saturday, which withheld parliamentary agreement to Johnson’s deal in the absence of the passage of the Withdrawal Agreement legislation. This in turn triggered the Benn Act provision, requiring Johnson to apply to the EU for an extension.

So that’s the first part of the story of this Saturday: once Brexit got defined in a particular way, some Brexiters – in this case the DUP – didn’t like it. Of course, at the other end of the spectrum, some Tory MPs who would have accepted a soft Brexit have long ago jumped ship because of the hard Brexit nature of May’s deal.

A total breakdown of political trust

The second part of the story relates to the total breakdown of political trust within parliament, and the ongoing battle between Executive and legislature. That, too, has been a feature of the Brexit saga from the outset. It was first manifest in the attempt – blocked by the Supreme Court in the first Gina Miller case – to prevent parliament having a vote on triggering Article 50. But it continued throughout Theresa May’s premiership in all kinds of ways, including literal contempt of parliament and the metaphorical contempt that May showed in, for example, her extraordinary public broadcast last March castigating parliament for not passing her deal.

Such conduct would be ill-advised at the best of times. In the context of having no overall majority it is supremely ill-judged. But Johnson has continued down the same path. It is worth recalling that the Letwin Amendment only arose because of the possibility that the government, or at least some Brexiter MPs, might try to use a loophole in the Benn Act. That is, if the motion to support Johnson’s deal had passed unamended then the extension letter would not need to be sent on 19 October, and the provisions of the Benn Act would lapse. But if the withdrawal legislation were then collapsed – perhaps by the ERG – then no-deal Brexit, which the Benn Act had been designed to prevent, could occur via the back door.

That suspicion was greatly exacerbated by the constant messages from Johnson – including his loutish baiting of other MPs about ‘the Surrender Act’ - that he does not see the Benn Act as legitimate and would do all he could to flout it. Even on Saturday, and despite the most recent Cherry case in the Scottish courts, he spoke as if he might not send the letter (it was later confirmed that he would, so it was a pointless bit of petulance not just to say so, outright). At any event, the seeds of distrust had been sown long before, and MPs had good reason to fear that, absent the Letwin amendment, a way would be found to flout the clearly expressed opposition of parliament to no-deal Brexit.

But, recall, the Benn Act itself was the product of the reckless way that Johnson has conducted himself since coming to office. On the one hand, again, it arose because of his insistence that leaving with no deal at the end of October was a real possibility, despite previous parliamentary votes against it. On the other hand, his ill-fated plan to suspend parliament was precisely designed to head off the possibility of something like the Benn Act being passed. Yet, because of imminent prorogation, MPs were pushed to act immediately, with the Benn Act the consequence just before prorogation began. Plus, in angrily taking the whip from the 21 Tory MPs who voted for it, Johnson set up at least some of the support for the Letwin Amendment and, possibly, for opposition to passing his deal as well.

So, over and over again, the actions of Johnson – like May before him – have provoked the circumstances of greater mistrust, greater suspicion, and greater acrimony. And how did the government react to Saturday’s defeat? By Rees-Mogg using the device of a point of order (which meant he did not have to answer questions about it) to announce that on Monday there is to be a new ‘meaningful vote’ – that is, a vote on whether to accept Johnson’s deal or not, the same question as the motion that was not voted upon because of the Letwin Amendment. And, as points of order were made in response, he arrogantly walked out of the chamber of the House of Commons.

It was, yet again, contemptuous of parliament and, perhaps most foolishly, of those on his own benches who had just supported the Letwin Amendment. It can also only increase the suspicions that lay beneath that amendment. For, if held and passed, the Monday vote would mean the extension letter being withdrawn and the possibility of no-deal Brexit would be reinstated.

The immediate question that arises is whether the Speaker, John Bercow, will allow this vote to occur. It seems to fall foul of his ruling – with respect to May’s repeated meaningful votes – against bringing the same motion back. But there may be some chicanery possible that circumvents that.

There will be no end to uncertainty

So that’s the second part of today's story. The last part is that, somehow or other, there will be debates about and votes on the legislation that would actually implement Johnson’s deal. Then, all the detail of what it really means will get picked over. Some who might currently look like supporting it may not do so. Amendments are possible, including an amendment attaching a confirmatory referendum. At the moment, the numbers are probably just about there for Johnson to get his deal done, and not there to get another referendum. But those numbers are tight, and could change – not least if Johnson, Rees-Mogg and – presumably, behind the scenes – Dominic Cummings continue with their combative and counter-productive tactics.

All that is to come, and there’s no point saying much about Johnson’s deal and the problems with it now. But one thing is worth saying, because it came up repeatedly in Saturday’s debate. The idea that Johnson’s deal should be passed in order to get certainty, including business certainty, is totally bogus.

One aspect of this is that although it is a cliché that ‘business likes certainty’, it doesn’t follow that having certainty will be good for the British economy. Certainty just enables business to make plans more easily. So if the certainty delivered is – as Johnson’s deal means – that there will be greater trade barriers between the UK and the EU than at present, it doesn’t mean that businesses just shrug and say ‘ok, so now we know’. It means that those affected by this will divert themselves or their new investments elsewhere. Similarly, individuals with the ability to do so will relocate accordingly. What is needed for economic prosperity is not certainty, per se, but certainty of the conditions that enable economic prosperity.

Beyond that, if Johnson’s deal passes and Britain leaves the EU at the end of October, there will be just 14 months to negotiate a new trade agreement (not to mention all the non-trade things, including regulatory cooperation) before the end of the transition period. That is clearly not long enough, and so we would very soon be having debates about whether to extend the transition period, application for which would have to be made by July 2020.

Johnson has already ruled out seeking such an extension. Which means that there will be a new business cliff edge looming at the end of 2020. Moreover, it will be a steeper cliff than would have been the case under May’s deal, because the backstop in that deal would have had the whole of the UK in the customs union, whereas under Johnson’s deal it will only be Northern Ireland.

To which should be added this. Not only will there be no certainty even if Johnson’s deal happens, nor will there be any let up in the political and cultural divisions Brexit has caused. For that goes back to the issue with which I began this post, about how no form of Brexit is acceptable to all Brexiters.

The national tragedy this creates is that even if Brexit is done through Johnson’s deal – or any other – the most passionate advocates of Brexit will still be bitterly unhappy. So an entire nation will have deformed its future for something that half – probably now more than half, and their voice was heard loud in demonstration today - the country don’t want, and a sizeable part of the other half, who did, don’t want in this form. We’ll still be just as deeply divided, but also much poorer into the bargain. Underneath all the obscure parliamentary protocols and procedures, it’s this which is at stake.

Thursday, 17 October 2019

Time and motion

Apart from grotesque pointlessness of the Queen’s Speech and the understandable, but also pointless, proliferation of predictions and counter-predictions about the Brexit negotiations, the guiding theme of this week has been that of time. Could a deal be done, at all, and if so could it be in time for the EU Council meeting and for a UK parliamentary vote on Saturday, potentially avoiding the implementation of the Benn Act seeking an extension? The answer to both questions turned out to be yes.

We now face a situation whereby, within less than 48 hours, MPs will make a rushed, pressured decision which will shape our future for decades to come.

As ever, the roots of these events lie deep in the tangle of the last three painful years, and in particular from the aborted 2017 ‘row of the summer’ over sequencing.

A brief history of time

The theme of time has been present since the triggering of Article 50. Yet in and of itself Brexit needn’t have been characterised by relentless time pressure. The Referendum did not specify a date for leaving and had Brexiters been honest they would have recognized that, if they were serious about their project, it would entail a process of many years to complete it. For that matter, given that we are constantly told that those who voted leave knew exactly what they were voting for, it hardly behoves them now to complain that it ‘should just be done’. It can’t ‘just be done’ and if people voted thinking it could then they didn’t know what they were voting for.

But of course there has been no such honesty. That a deal would be quick and easy was a repeated promise during the Referendum campaign. Perhaps it was a lie; perhaps it was complacency born of ignorance of even the most basic of facts; perhaps, puffed up on chauvinistic dogma that all the UK needed was to name its terms, the leave campaigners believed it. Perhaps all three.

At all events, even after the Referendum, in December 2016 Boris Johnson was insisting that 18 months would be “absolutely ample” to get a “great deal” done. Who knows, but had the UK developed a detailed and realistic plan for Brexit before triggering Article 50 there might have been a grain of truth in that. Instead, entirely in order to appease the paranoid fears of the Brexit Ultras that they were going to be ‘cheated’, Theresa May initiated the Article 50 process.

From then on, the drumbeat of time has been the constant backdrop to Brexit. And yet May immediately squandered effectively six months by holding an election. And even when negotiations finally started the government was woefully under-prepared, starkly symbolised by the photo of David Davis, hapless and paperless, facing his EU counterparts with their bulging files of notes.

The timewasting went on. Having pushed for completion of phase 1 of the talks in December 2017, desperate to get to the 'real business' of trade talks, it emerged that the government had no agreed ideas as to what they wanted from phase 2. Worse, May almost immediately repudiated what had been over-hastily agreed in terms of a Northern Ireland only backstop during phase 1.

As a result, to all and intents and purposes there never were any phase 2 negotiations. Instead, there was a de facto re-negotiation of phase 1, leading to the all-UK backstop of the eventual Withdrawal Agreement (fuller detail on the convoluted history of the backstop here). As for phase 2 issues, it was not until the ‘Chequers’ Proposal’ of July 2018 that any kind of plan emerged from the UK and at that point the government effectively fell apart in acrimony, setting in place the long grind that ended in the extension of the Brexit deadline to the end of October 2019.

Despite warnings from Donald Tusk not to waste this time, the Tory Party decided to ditch May, have a leadership contest, and installed Boris Johnson who did nothing other than declare the inviolability of the October leave date, apparently expecting the EU to come up with new proposals rather than risk no deal. That ‘strategy’ foundered partly because the Benn Act rendered it impossible and partly, if rumours are true (£), because Johnson – like May before him – finally came to realise the disaster that no-deal Brexit would mean, both economically and, especially, for security in Northern Ireland.

Hence we arrived at this week’s panicky ‘essay crisis’ politics. It’s a consequence not of that Brexiter canard that EU talks ‘always go to the wire’ (the dynamic of the Brexit negotiations are quite different to those of, say, an EU summit) but of this long history of dishonesty, ignorance, and incompetence.

Time sequencing

Nested within that history is something much more complicated and, I think, somewhat under-appreciated. Apart from the general effluxion of time, the issues around sequencing in particular are crucial to what happened this week. Brexiters always thought and talked of the negotiations as being about future terms, specifically future trade terms, with the EU. Whereas from the beginning, and anyway entailed by the Article 50 process, the EU saw the negotiations as being about withdrawal terms and only when these were agreed could future terms negotiations begin.

Moreover, Brexiters usually talked, and still often talk, as if a trade deal can be completed as part of withdrawal or at least be ready for “the day after”. Theresa May herself seems only to have recognized the legal impossibility of this (the EU can’t do a trade deal with a country that is still a member state) in April 2017. That was after the Article 50 letter which, at the very least, envisaged withdrawal and future terms talks occurring in parallel, rather than in sequence.

This was the background to the threatened ‘row of the summer’ of 2017, a row which never materialised because the UK accepted sequencing, leading to the phase 1 agreement mentioned earlier. But Brexiters have never really accepted that sequence. That is evident in the repeated complaints about having to agree the financial settlement without having any guarantees about future trade terms (mistakenly, of course, since the settlement is for past commitments). But most significantly of all it is evident in relation to the Northern Ireland backstop.

Here, the Brexiters’ position – not entirely unreasonably – has been that the arrangements for Northern Ireland are to a degree contingent upon the future trade terms. Why, then, should the EU insist on sorting them out first? The answer is that the moment the UK made ending single market and customs union membership its red lines there were inevitably going to be implications of some sort for the border. In the absence of knowing what these would be, a backstop was necessary to ensure that, whatever happened, the border would remain unchanged.

In Johnson’s approach over the last two weeks, this basic structure, embedded in sequencing and legally articulated in May’s Withdrawal Agreement, has been ripped up. Thus rather than making new proposals for the backstop, what he made were new proposals for what the final state of the Irish border will be. This remained the case even after the original ‘two border’ proposals of 2 October were discarded in favour of the dual customs approach (see below) that has now been agreed. Many commentators expressed surprise when the new deal was unveiled to find that there was no longer a backstop. They shouldn’t have been – that is precisely what has been at stake over the last fortnight.

This is significant partly because it develops out of a persistent misunderstanding amongst Brexiters of what the backstop meant. For, in their eyes, it “permanently trapped” the UK (in May’s agreed version) in the customs union. That was nonsense to the extent that were a different solution to materialise then the backstop would never be used, or would be superseded. Nevertheless, they treated the backstop as a statement of the final state.

Now, instead, they have successfully sought to make a different solution (not Johnson’s original proposal, of course) the front-end agreement and to render this the permanent outcome, notwithstanding the new ‘consent’ clauses requiring periodic agreement from the Northern Ireland Assembly which set a very high bar indeed to consent being withdrawn. This seems a strangely pyrrhic victory from a Brexiter point of view, since it makes permanent a jurisdictional role for the ECJ in one part of the United Kingdom. It is also, of course, deeply ironic that what this new permanent arrangement looks like is not so very different to the original idea of a Northern Ireland only backstop, with an Irish sea border, that May had said no British Prime Minister could accept.

The other big change in Johnson’s deal compared with May’s deal also roots back to the earlier issue of sequencing. Along with expunging the UK-wide backstop in the Withdrawal Agreement (WA), the Level Playing Field (LPF) clauses have also disappeared from there, but have re-appeared in the new Political Declaration (PD). These clauses relate to things like employment and environmental standards and competition rules.

Their removal from the WA was proposed in the original Johnson plans [paragraph 4]. Whether he had originally wanted them to move to the PD, or whether this was forced upon him by the EU I don’t know. But it is a significant change because whereas the WA is legally binding the PD is not. In terms of sequencing, this puts LPF exactly where Brexiters said it should be during the withdrawal negotiations – in phase 2. This in turn means that it could be abandoned in the future trade talks.

There would be a price to pay for that, of course, since without agreeing to LPF any trade deal would at best be of a minimal ‘Canada Minus’ sort, whereas Brexiters typically say that they want a Canada +++ deal. Still, it may well be that Canada Minus is where they now want to go, especially given Johnson’s desire to do a quick trade deal with the US, which would be impeded by LPF. Moreover, the fact that the government are now talking about the trade deal with the EU being completed within about a year suggests either that it still hasn’t understood the complexities of trade negotiations or that it is content with a very narrowly-scoped agreement.

Politically, the presence of the LPF clauses in the PD may also prove significant in the coming parliamentary vote, but in ways that are rather unpredictable. On the one hand, the fact that they are in the PD not the WA is more palatable to Brexit Ultras. On the other, that they exist at all may be encouraging to Labour MPs who want to vote for a deal but not see rights eroded. The trouble for the government is that what is attractive to one group is unattractive to the other. Both may see it as ‘good enough’ but, equally, might conclude the opposite.

Time travel

Finally, it’s worth considering the proposed dual customs arrangement for Northern Ireland. That is, Northern Ireland like the rest of the UK would leave the customs union, but would apply the EU tariff regime. Thus (with the caveat below) a good entering Northern Ireland would be subject to the relevant EU tariff, but the importer would be rebated if the UK tariff were lower. If, on the other hand, it were then to be shipped into Ireland (or any other EU country) there would be no such rebate since the good had, indeed, had the correct EU tariff charged.

The problems with this are numerous, since the entire system is massively complicated and completely untried. But the central problem is that of rules of origin. It is one thing to identify the tariff to be paid on a good moving from one customs territory to another, and then make the appropriate adjustment. It is quite another to determine what to do if and when that good is then combined with others and then sold in a different territory.

Michel Barnier used the example of combining imported sugar with other ingredients to make a fizzy drink in Northern Ireland that is then sold in Ireland. There is really no practical way of working out what tariff should apply to this sugar (assuming that the EU and the UK tariffs are different). Multiply that across the full range of goods that are traded and it becomes very difficult indeed to implement it. The wrinkle that the new deal adopts to try to make this more manageable is to say that tariffs will only be charged on goods travelling from Great Britain to Northern Ireland if they are “at risk” of onward travel to Ireland. But which goods these will be is to be decided by the Joint UK-EU Committee. In this sense, the most difficult operational details of the new arrangement have been deferred, or side-stepped. It will be interesting to see, if this all comes to pass, just how it will actually work in practice.

Such apparently abstruse technical details matter, because they are the practical substance of what Brexit means – precisely the kind of substance that Brexiters have for the most part been uninterested in. But they also matter because they exemplify a persistent problem within Brexiter thinking. It is widely remarked upon that much of that thinking exhibits a nostalgia for the past, for the latest discussion of which see Professor Robert Saunders’ excellent article in New Statesman. That nostalgia is apparent not just as a general pre-disposition but in an extraordinarily outdated understanding of how modern businesses and trade work. That is apparent whenever Brexiters talk about how ‘we managed perfectly well before we joined the EU’, in denial or ignorance of the multiple ways that business has changed since the early 1970s, as if they had not just won a referendum but built a time machine.

In the present example, it manifests itself in the problems Brexit poses given the complexity of modern supply chains. The new deal tries to accommodate this through the fiendishly complicated dual customs system, which may just about work for goods. But completely cut adrift by this system are cases where goods are combined with services (e.g. maintenance contracts), otherwise known as Mode 5 services which, within the EU, are intimately tied to freedom of movement rights. (It presumably goes without saying that services, per se, do not figure at all, either for Northern Ireland or Great Britain: they are the biggest economic casualty of hard Brexit).

This lack of understanding has more generally been shown by the Brexiter failure to comprehend not just modern international supply chains but their often just-in-time character. Because it has dropped the UK-wide backstop, Johnson’s deal, even more than May’s, probably sounds the death knell for businesses – most obviously auto – working on that model.  Relatedly, it is shown by constantly configuring trade barriers and trade agreements in terms of tariffs and their removal in a way that may have been true in the nineteenth century but is entirely inadequate in a world where non-tariff and regulatory barriers, especially for services, are the main obstacle. This then feeds through into the false proposition that a Free Trade Agreement (FTA) could substitute for single market membership, all the more false if it were to end up being an FTA of the most limited sort i.e. Canada Minus.

Clearly this will have long-term implications not just for Northern Ireland, where the focus of attention now sits, but for the viability of British business in general. This was underscored by the report this week from the UK in a Changing Europe research centre, showing how Johnson’s deal is more economically damaging that May’s deal. This forecasts that Johnson’s deal would over 10 years make the UK’s GDP between 2.3% and 7% lower than would have been the case if remaining in the EU, compared with between 1.9% and 5.5% under May’s deal. To which might be added that, according to the latest update from John Springford of the Centre for European Reform, by June 2019 the UK economy was already 2.9% smaller than it would have been had the Referendum vote been to remain.

Time for a parliamentary motion

And so, finally, it is parliament’s time again – and perhaps the last time it can postpone, or find a path away from, Brexit. It is utterly ludicrous that, after all the years of wasted time, delays and backtrackings described above, it should come down to a rushed debate barely hours after the new agreement has been made with the EU. In fact it is more than ludicrous, it is actually offensive to any lingering idea of rationality in politics, arising solely from Johnson’s fetishisation of the 31 October deadline.

The outcome now rests on the complex parliamentary arithmetic. Will the DUP stick to their present intention to oppose the deal? How many ERGers will remain Spartans to the last, and, like Farage, regard any actual form of Brexit as a betrayal of ‘true Brexit’? How many Labour MPs of the ‘Brexit must be done’ persuasion will support the deal just because it is a deal, regardless of its economic impact on their constituents? How many of the ‘Tory 21’ who lost the whip – even though many had voted for May’s deal – will feel inclined to support their one time leader?

As things stand, it seems impossible to predict how these numbers will land, both as regards supporting the deal and supporting an amendment – if tabled – on making support for the deal conditional on a referendum (which, in turn, would mean applying for an extension).

That latter option, to my mind, is the only sensible and morally correct course to take. Sensible, because if this deal is passed it is only going to lead to many more years of acrimony and dispute, so it would be better to seek explicit popular consent. And morally correct because nobody voting in 2016 could possibly have known that Brexit meant Brexit as defined in the agreement published just today.

Given that we are all going to have to live with this for decades, we should surely take just a little more time to check that this is really what we want to do.
I will probably do a short blog after Saturday’s votes