Monday 31 July 2017

The easiest deal in history?

As the British Government disintegrates over different approaches to a ‘transitional deal’ the question of what would be being transitioned to is almost forgotten (and, rather crucially, neither that nor any transition have even been discussed with the EU yet). It should not be, because all the warring positions within the government are variants of hard Brexit in which the end point is a UK-EU Free Trade Agreement (FTA) – or no deal at all. The factions hoping for an FTA differ only about timescale in which it might be reached.

Liam Fox, the International Trade Secretary, recently opined that a UK-EU FTA should be one of the easiest in history. This is a fantasy, but it is a more complex and superficially more plausible fantasy than is the norm amongst Brexiters, so it deserves some consideration.

The reason why Fox makes this claim is that because the UK is currently part of the single market not only does it enjoy tariff free trade with the EU but also it is in regulatory harmony with the EU and, therefore, there are no non-tariff barriers (NTBs) to trade. Fox’s argument was made before the Referendum by Nigel Lawson (although subsequently he decided that a trade deal was in fact highly unlikely) and the same argument was parroted by Owen Paterson recently (although he, by contrast, was an advocate of soft Brexit before the Referendum so didn’t think a trade deal would be necessary).

Confused and inconsistent as the Tory Brexiters making this argument are, they are at least ahead of the woefully inadequate position of the Labour Party which is still talking in terms of ‘tariff-free access’ to the single market. By contrast, Fox’s position does at least recognize NTBs which are in fact much more significant than tariffs.

In a normal trade negotiation it is indeed the case that reducing or eliminating NTBs is by far the most difficult thing to deal with. So it is true that if the UK were currently a third party seeking single market membership then it would be easy to achieve because of existing regulatory harmonization. The complexity is that the Brexit situation is the other way around from a normal trade deal. The UK is a member of the single market and is seeking to become a third party. Which means that predicting ease of negotiation on the basis of existing harmonization entirely misses the point. This will be perhaps the only trade negotiation in modern times which is about diminishing rather than extending free trade.

In concrete terms what this means is that regulatory harmonization at this moment in time isn’t the issue. What is the issue is regulatory harmonization in the future. What happens when EU rules change (as, in minor ways, they do on a daily basis)? Who decides on those changes and who adjudicates in the event of disputes? The answer is the EU and the ECJ. But the UK is leaving both of these.

Brexiters might argue that ECJ jurisdiction is not a pre-requisite of other EU trade deals, that with Canada (CETA) being the most often cited. But the CETA deal is not remotely comparable to what the UK would be seeking if anything approaching the current UK-EU situation were to be replicated because it does not include services. And services are both central to the UK economy and entail the most ferociously complex NTBs.

At a deeper level, any form of single market access via an FTA is wholly different to single market membership, something which Brexiters have persistently misunderstood, as I have written about elsewhere. And one way of looking at that is that free movement of people (and goods, services and capital) is about the removal of one of the central NTBs that no FTA touches. But avoiding free movement of people is a red line for Brexiters because of the UK politics of immigration. This means that from day 1 the UK will, in fact, be out of kilter with a key part of regulatory harmonization. Understood this way, Fox's argument is just a convoluted version of the 'have our cake and eat it' strategy: trading as if a member of the single market and yet not bound by its core principles. If Brexiters have learnt anything at all yet, they will surely have learned that this is not going to happen.

So it is ironic that Fox thinks that the only barrier to a UK-EU FTA would be if politics trumped economics. Ironic because by that he means the politics of the EU, whereas in fact the barrier is the politics of the UK. First because it is those politics that have made ECJ jurisdiction and freedom of movement red lines and second because, of course, the only reason the UK is giving up the perfect trade relationship it currently has as a member of the EU is because of UK politics.

Fox’s assertion of the easiness of a trade deal is all of a piece with the claims Brexiters have been making about every aspect of leaving the EU – from trade to air travel to the Ireland border – for years. But he is out of step with what is now emerging as the dominant Brexiter narrative, namely that they had always said it would be painful and difficult for years but in some way it will be worth it. Of course, during the Referendum campaign they said nothing of the sort. It is difficult to know which is more shameless: the continued repetition of the old lies, or the hypocrisy of the new lies. What can be said is that neither will survive contact with the realities of the negotiation with the EU.

Wednesday 26 July 2017

The German car industry and Brexit

The German car industry occupies a particular and peculiar place within the Brexiter imagination. Particular, because it is invariably cited to ‘prove’ that an excellent UK-EU trade deal is inevitable. French cheese and Italian Prosecco occasionally feature in pursuit of the same argument but less often, perhaps because Brexiters hope that referencing German cars will make some “Vorsprung Durch Technik” rub off on their threadbare case.

At all events, the centrality of German car makers to the case for Brexit was expressed repeatedly during the Referendum campaign by, for example, Peter Hargreaves, the biggest individual donor (£3.2M) to the Leave campaign:

"Can you imagine if they put up a trade barrier - and we would reciprocate immediately - just imagine the three phone calls [German Chancellor] Angela Merkel would get the following day, the chief executive of [Volkswagen], the chief executive of Mercedes and the chief executive of BMW."

The campaigning group Get Britain Out agreed, almost word for word:

“Can you imagine … Germany damaging sales of BMW and Mercedes cars to Britain? No! Trade will carry on as normal.”

And the sentiment was echoed by David Davis, now the Brexit Secretary, quoting from what seems to be the Brexiters’ scripture book:

“Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.”

There are several things that can be said about this. Firstly, it shows an extraordinary ignorance (if not downright dishonesty) about how government trade policies are made. Neither in Germany, nor anywhere else, is it just a matter of phone calls from leading manufacturers to the country’s leaders. The acid test of this is actually Brexit itself: if trade policy were made by businesses then there is no way that Britain would be leaving the EU anyway. Second, it shows a complete ignorance of how the EU does trade deals, including any post-Brexit deal with the UK, which will not be done by Germany but by the whole EU. Third, it contains a huge contradiction: Brexiters usually complain that the EU is slow and lumbering, with trade deals taking far longer than necessary. Yet they pretend that a post-Brexit trade deal would be done within a few minutes or at least that it will be the easiest trade deal in history, as Liam Fox put it last week.

But as well as occupying a particular place in Brexiter mythology, it is also peculiar because normally Brexiters insist that the key issue is regaining what they simplistically call ‘sovereignty’. Yet whereas the multiple systems of accountability within the EU are deemed to negate sovereignty, the idea that the fate of Britain should be determined in a few company boardrooms in Germany elicits no such qualms. In the strange lexicon of ‘taking back control’ it seems that ceding that control to BMW etc. is of no matter.

As the realities of Brexit begin to bite much less is now heard of the magical powers of the German car industry, but it lingers on in the minds of Brexit’s more gullible and disingenuous advocates. Last Sunday on BBC Radio 4’s The World this Weekend (time limited podcast) a long report on German industry’s views of Brexit demonstrated what had been said for months: that the integrity of the single market mattered far more than accommodating Brexit. But, undeterred and apparently unaware, up popped leading Brexiter Owen Paterson to repeat the scripture that German industry would ensure a good deal (along with the other, associated, Brexiter fantasy that the UK trade deficit in goods with the EU makes a good deal inevitable). It was truly extraordinary to hear one after another German industrialist explain that the Brexiter view was nonsense and then hear Paterson repeat that view as fact, and spoke volumes for the complete lack of realism of Brexiters. Paterson’s position is especially absurd as he is one of those Brexiters who before the referendum argued for the centrality of single market membership post-Brexit and now pretends that the benefits of the single market can be magically maintained despite leaving it.

Whilst the main Brexiter fantasy about the German car industry is that it will enforce a good trade deal, it also figures along with the car industries of other countries in the fantasy that Brexit will not impede inward investment. So, unsurprisingly, they greeted the news that BMW are going to build the electric Mini in the UK with great glee. But that glee was misplaced for several reasons. First, the investment is relatively small in car industry terms, involves no new production line and the main components will be built in Germany. The key issue is where car companies decide to build all-new models. Second, it does not negate the fact that car industry investment has collapsed catastrophically as a result of Brexit, from £1.66billion in 2016 to just £332M in the first half of 2017.

The real point, however, is this. No one ever claimed that Brexit would put an end to investment in the UK, just that it would reduce it. But Brexiters disparaged these and other warnings by a kind of reductio ad absurdum. So, for example, when warned that trade with the EU would be damaged they pretended it was a warning it would cease; that inward investment would be damaged, it would end entirely; that the EU promoted peace, it meant WW3 would break out. Reduced to absurdities, the warnings could be dismissed as Project Fear.

So the BMW investment in the Mini does not in any way make the case for Brexit. It shows that some investments that would have been made were Brexit not happening will still be made even though Brexit is happening. We know that many other investments that would have been made are not happening because of Brexit. But there is not a single case – this really needs to be emphasised: not one single case – of a company that would not otherwise have done so making an investment because of Brexit.

This matters because Brexiters have now switched to arguing that Brexit will not be a disaster, or that the bad effects are in some way worth it. But that isn’t how Brexit was sold to the British people. Voters were told that there would be no bad effects and, even, that Brexit would usher in a new age of prosperity. It’s not ‘remoaners’ who have cause to moan about this, it is the millions of leave voters who were so comprehensively misled. And nowhere were they more misled than in the Brexiter lie about what the German car industry would do for them. We now know that:

“German industry has warned Britain not to rely on its help in securing a good Brexit deal, in a stark intervention that strikes a blow at the government’s EU departure plans”.

In this, as in so much else, it’s time for Brexiters to get real. No one is going to rescue them from the consequences of their lies, they alone are responsible for their lies, and they will be held to account for their lies.

Saturday 22 July 2017

The myth of 'pragmatic' Brexit

It seems highly unlikely that any cabinet ministers read this blog or were they to do so that they would find much to agree with. Nevertheless, developments over the last 48 hours might suggest that ministers are alert to the situation I outlined in my last post. There, I said that the more inflexible and extreme a stance Brexiters took the more danger (from their point of view, or hope, from a remainer point of view) there was that voters would turn against them.

It is this, as well as pressure from businesses, that seems to have driven the new soundbite of Brexit ‘pragmatism’ from Michael Gove and other ministers. Substantively, this amounts to an acceptance of some form of transitional or – the government’s preferred term – implementation period to follow the end of the Article 50 period and the formal end of EU membership in March 2019. What this means in practice is not clear in terms of, for example, single market and customs union membership. Gove has suggested that it would mean continued free movement of labour which in turn seems to imply both of those things and, therefore, ECJ jurisdiction. Nor is it clear what timeframe is envisaged. Periods of two to four years are mentioned, but if the transition in question is to the completion of a free trade agreement with the EU it could be much longer than that.

As the howls of outrage from kamikaze Brexiters such as Jacob Rees-Mogg and Peter Bone suggest, this represents a victory for the more ‘economics-focussed’ Brexit of Philip Hammond. But as noted in my previous post it is vital to realise that this is not soft Brexit as normally understood (single market and, perhaps, customs union membership). It remains a hard Brexit and although it is not quite as ruinous as the ‘no deal’ or ‘cliff edge' variants of the kamikaze Brexiters it is only judged against that lunatic yardstick that it can be called pragmatic. Such pragmatism as is on display comes not, alas, from the government but from the decisions now being reported on a daily basis of individuals and companies to leave the UK. Whatever happens now, the Brexit ‘patriots’ have already done long-term damage to the country.

As for the politics of a transition period, once again the Brexiters are having an inward-looking, parochial discussion. It is by no means automatic that the EU will agree to such an arrangement. Although it would have the advantage of being more orderly and less disruptive for the EU-27, the prospect of the UK sitting half-in and half-out for a long period of time is unlikely to be appealing. That is especially so since Britain continues to act in the oppositional, awkward way that has long characterised our membership, even as we are in the process of leaving. For example, the government are currently fighting EU energy efficiency proposals, even though these would not come into effect until after we have left, and in May blocked a proposal for an EU military unit.

This, along with the bigger irritation of Britain’s failure to engage seriously in the Brexit negotiations, is hardly conducive to accommodating a transitional deal to mitigate the most catastrophic self-inflicted effects of Brexit. But there is another factor, too. So unstable and flaky has Britain’s reputation become – something commented on again this week in both the American and Irish media – that this latest cobbled together stance cannot be relied upon. Why should the EU invest in this newly forged ‘pragmatism’ when within a week or a month it may have unwound and the kamikaze tendency are back in control? It’s hardly unthinkable that, say, Boris Johnson – who has not yet publicly endorsed a transitional period – might pop up shouting ‘betrayal’ and the whole British approach gets thrown up in to the air again.

As for the politics of remainers, this mythical pragmatism can be read in two ways. One is that – as per my previous post – it is unhelpful in that it appears ‘moderate’ compared with kamikaze Brexit. From that point of view it is important to constantly challenge the idea that it is moderate or pragmatic. The other reading is that it represents the possibility (as, clearly, the extreme Brexiters fear) that Brexit gets endlessly deferred, and Britain remains in an ever-extended transition. However I, and I would imagine most remainers, do not want to be in an ever-extended transition. I want Britain to be in the EU or, at worst, to be in a settled position within the EEA. From that point of view the only positive is that a transition might be a staging post to the abandonment of Brexit and that the longer it goes on the greater the hope that public sentiment moves in favour of such an abandonment.

Thursday 20 July 2017

Could the Brexiters be the best hope for avoiding Brexit?

That the latest round of Brexit talks did not yield any particular resolutions is in no way surprising and no one, including Brexiters, would have expected otherwise. But the undercurrent of talk around this week’s meetings is alarming. The BBC’s Political Editor Laura Kuenssberg, amongst others, reports a sense that the British government has not agreed on what it wants, what it might compromise on, and is generally inadequately prepared for the negotiations. Instead, the UK seems to still be working at the level of meaningless generalities such as seeking “frictionless access” to the single market, something incompatible with the government’s stated policy of leaving the single market and customs union. That this is so was implicit in the end of meeting press conference, with Michel Barnier calling repeatedly greater clarity from the UK on its aims.

A significant sidelight on this was shed by former EU trade negotiator Miriam Gonzalez Durantez in a very interesting Guardian article. She argues that “the preposterous positions on Brexit taken by the government” are in part attributable to the leading advisory role played by the Legatum Institute think tank, the shortcomings of which she forensically dissects. Be that as it may, the core issue is that which is being played out daily in leaks and briefings, namely that the government is hopelessly divided on Brexit. It has lost its power to shock, but it is still worth remembering that they chose, of their own volition, to trigger Article 50 without having a settled view on what they wanted and how to go about it. It must rank as one of the most irresponsible acts by any government in living memory.

What is also worth recalling is that for all that the media misleadingly refer to the splits within the government as being between soft and hard Brexit they are nothing of the sort. The principle fault line is between those such as Philip Hammond, and perhaps David Davis, who want to seek a long transitional agreement and those such as Liam Fox, and perhaps Michael Gove and Boris Johnson, who do not. Perhaps within that there are other differences, such as a willingness or not to entertain a ‘no deal’ Brexit or to entertain some degree of ECJ jurisdiction. Nevertheless, this is not soft versus hard Brexit, it is hard versus kamikaze Brexit. Hammond’s position may be marginally more responsible, but the margin is fine.

The kamikaze tendency were out in force today, with Michael Gove refusing to endorse a government position paper which would allow the ECJ a role even in pending cases. A more high profile intervention came from Liam Fox which included the less than overwhelming claim that Britain could “survive” without an exit deal, and the less than plausible claim that a trade deal with the EU would be the easiest in history. That latter argument recycles one that Brexiters like Nigel Lawson used to make before the Referendum (Lawson has since said that he thinks there will not be trade deal) based on the fact that the UK already has zero tariffs and regulatory harmonization, the things that usually make trade deals slow. Thus, they argue, this one can be quick. But that ignores the fact that to make these arrangements ongoing entails membership of the single market and customs union which is precisely what the Brexiters don’t want. In particular, regulatory harmonization is not a one-off event but an ongoing process of evolution which is ultimately overseen by the ECJ. But Brexiters don’t accept ECJ jurisdiction. So if it was a normal trade deal, which sought to make trade closer, it would indeed be quick. But it is not a normal trade deal, because – uniquely in modern economic history - it seeks to make trade less close.

As this pantomime goes on, the costs of Brexit in any form are becoming ever clearer – with, for example, banks already preparing to move thousands of jobs out of the UK – and those of a kamikaze Brexit particularly so – with, for example, serious threats to food supplies and air travel. At the same time, Britain’s reputation in the world is already being eviscerated, as detailed in a very thoughtful piece by Jonathan Lis, Deputy Director of British Influence, on the indispensable site. One particularly interesting part of that analysis is discussion of the idea that the UK could somehow retain membership of various EU foreign policy, defence and security bodies after Brexit. This is of course, as Lis explains, completely unrealistic but all of a piece with other ideas about, for example, Euratom or the European Medicine Agency (EMA). As it becomes clearer what Brexit actually means in practice, so the UK tries to imagine that it can somehow avoid the damage by special arrangements. But one by one these fantasies are being exposed. For example, whereas David Davis airily opined that the EMA – which matters both in its own right and in its role in the strategically vital pharma industry and bio-medical research complex in the UK – might stay in Britain after Brexit that was simply brushed aside by the EU. The EMA will go.

There is therefore now a polarity amongst Brexiters (and sometimes within them). Sometimes they continue to cling to Pollyannaish fantasies of ‘having our cake and eating it’, whether as regards trade or non-trade issues. Sometimes they say that none of it matters, and that the cake can be hurled on the floor and trampled underfoot. And of course the one pole easily morphs into the other. When their fantasies are exposed as fantasies they stamp their feet like spoiled adolescents and say they don’t care.

All of this is both depressing and predictable to committed remainers. But I think its real importance lies in how it gets received by less committed remainers – the kind of remain voters who might say that whilst they did not vote for Brexit they now think we should get on with it – and less committed leavers – the kind of leave voters who accepted the Brexiter claim that leaving would be quick, easy and advantageous.

For these groups – and taken together they must be quite sizeable, perhaps half of the vote on each side – what is unfolding is likely to be increasingly alarming. On the one hand, it is all clearly proving to be far more complicated and protracted than they were led to expect. On the other hand, they are not like the Brexiter Jacobins for whom nothing matters so much as the purity of the flame. So they are likely to begin to see Brexiters as at best completely incompetent and at worst slightly mad.

From this perspective, for all that it will be a white-knuckle ride, committed remainers might have as their best hope that the government continue to display division and incompetence and bring Britain to the edge of disaster. If the relatively sensible and realistic voices of, for example, Hammond hold sway then it is less likely that Brexit will be discredited in itself, and more likely that its failures will be attributed to EU ‘punishment’. By the same token, if the kamikaze Brexiters are given their head and get to the point of disaster they will be less able in future years to nurture fantasies of betrayal (or, at least, those fantasies will have little traction outside their own fetid circle).

Of course this is very high risk stuff, not just for remainers but more importantly for the whole country. Precisely because it means going right to the brink of disaster in order to avoid disaster, it inevitably means damage. The jobs and investment lost, the companies relocating, the skilled workers leaving, the shredding of national reputation will all have long-term negative effects. But, against that, we might just get out of the even worse precipice that the Brexiters want to push us over. If this seems an unappealing set of options, that’s what the referendum campaign and its aftermath have left us with.

In this context, the Labour party stance – although I have been, and am, highly critical of it – might just possibly pay dividends. It is just sufficiently ambiguous and possibly sufficiently plastic that as the Tory Brexiters drive us towards what a majority of the public recognize as folly, Labour could, without too much pain, ride that wave of opinion, topple the government and pull back from Brexit. Alternatively, the idea that has been floating around since the referendum of a new centrist party emerging and taking power might come true. At all events, the more that Brexiters flail around incompetently, the more their mendacious predictions fail, the more extreme they become and the more the slim result of the referendum disappears into the past then the more fragile Brexit becomes. Very few people voted for the Brexit that is emerging; fewer still for the kamikaze Brexit some Brexiters dream of.

Friday 14 July 2017

Brexit news

After I started this blog last September, there were periods when very little seemed to be happening with Brexit, and much of what was happening was only visible through coded and ambiguous statements from various people and bodies. Now, events are happening apace and it is getting very difficult to keep a handle on what is happening and what it means. There is certainly far too much for me to analyse on my own, because even though I assiduously read up on developments I just don’t have enough time to write about all of them. So in this post I am going to give a brief round-up of some of the best pieces of Brexit reporting, analysis and comment I have read this week as well as some sources I find generally useful.

For an overall assessment of where Brexit stands now, see Guy de Jonqières’ piece on Borderlex and put this in the context of the Referendum campaign with Alistair Campbell’s latest, forceful blog and a good article by Nick Cohen in The Observer.

For a one year report on Theresa May’s premiership, with (inevitably) the main focus on Brexit, this by Ian Dunt on can’t be bettered.

Also by Ian Dunt is this great analysis of ‘the Great Repeal Bill’ which can be read alongside a good article on the same topic by Adam Bienkov of Business Insider UK.

Martin Wolf of the FT wrote a scathing piece on the Brexiter Jacobins and the catastrophe they are leading us to.

The National Audit Office produced a damning report on the “horror show” of leaving the Customs Union whilst this detailed piece by Dr Peter Holmes of Sussex University on the Scottish Centre for European Relations site unpacks the Customs Union issue more broadly.

I posted about Euratom which was in the news this week (and readers of the New European newspaper will find a revised version of that post in next week’s edition) but for those who can face it the UK Government’s position paper on this has since been published and can be compared with the EU’s position paper from a few weeks’ ago. But equally important issues are emerging around, for example, pharmaceuticals, as explained in a good blog by George Peretz QC and the European Arrest Warrant, covered by Camino Mortera-Martinez of the Centre for European Reform.

The very best thing I have read this week is David Allen Green’s FT Blog where he politely but quite devastatingly pulls apart the lies still being told by Brexiters about post-Brexit trade deals.

I have not included here the many news stories this week about company re-locations, deferred investments, labour shortages and so on caused by Brexit, but a very good source for these is the Brexit Record site. For regular analysis of the evolving Brexit situation the Remainiacs podcasts are great.

The news and comment websites I find most useful (leaving aside those of UK and Irish national newspapers) for good Brexit information and comment are, Reuters UK, Bloomberg, Bruegel, Centre for European Reform, Scottish Centre for European Relations, LSE’s Brexit Blog, KCL’s UK in a Changing Europe site, and the New Europeans site (not to be confused with the New European newspaper) which is especially good on EU citizens’ rights in the UK and UK citizens’ rights in the EU. [Declaration of interest: I have written for the last four on this list].

Of the many useful people to follow on twitter for (mainly) Brexit news and views consider @IanDunt, @davidallengreen, @JenniferMerode, @jonlis1, @jonworth, @lisaocarroll and @mattholehouse.

For regular postings exclusively focussed on good quality Brexit news and analysis from a wide variety of sources, follow me on twitter @chrisgreybrexit.

Wednesday 12 July 2017

What does the Euratom mess tell us about Brexit?

Readers of the blog will have been aware for some time of something which has only hit the headlines this week. It is that amongst the implications of Brexit are some very serious issues to do with nuclear safety, nuclear waste and nuclear medicine. These arise because the government’s hard Brexit plan entails leaving the European Atomic Energy Community (Euratom) and this in turn arises because although Euratom is not part of the EU it falls within the jurisdiction of the ECJ. Theresa May has made leaving all forms of ECJ jurisdiction as red line, non-negotiable and defining plank of Brexit and so leaving Euratom was included in both the Article 50 letter and also the parliamentary Act which authorised her to send that letter. This now seems likely to lead to a parliamentary rebellion amongst Tory MPs against, at least, this aspect of Brexit.

All this points up very sharply a whole series of very significant questions about Brexit in general:

·       It is an issue of great complexity and great importance, but it did not feature at all in the Referendum campaign. Can anyone say that those who voted for Brexit knew that they were voting for something that would, amongst other things, impact on the availability of cancer treatments? How many other aspects of Brexit is this true of? What, then, of the idea that Brexit is ‘the will of the people’?

·       Even Dominic Cummings, the Campaign Director of Vote Leave, has criticised leaving Euratom as “unacceptable bullshit”. But don’t leave campaigners have to take responsibility and be held to account for the practical implications of their ‘take back control’ slogan from which exiting Euratom directly flows?

·       It exemplifies the complete lack of planning for Brexit, shown also by the absence of UK position papers for the Brexit negotiations compared with detailed papers from the EU. So did the government understand what they were doing by deciding to leave Euratom? They have admitted that they did not conduct a formal impact assessment. How many other aspects of Brexit is this true of? Where are the assessments of, for example, a ‘no deal’ Brexit? Or of the different ways of enacting Brexit? Or of the government’s preferred way as expressed in the White Paper?

·       Why, relatedly, is the government still trying to dismiss the detailed, practical issues arising from Brexit as ‘Project Fear’, in the Euratom case as “scaremongering”? Are they, as widely reported, doing the same for all of the practicalities around trade, security, the Ireland border etc.? Can competent government proceed on an evidence-free basis, relying only on slogans and platitudes?

·       What does Euratom tell us about what appears to be the central tenet of the government’s White Paper, which is to create new bi-lateral shadow institutions to re-regulate what were formerly EU institutions? What will this cost? Is it possible? And, even if it is possible, what’s the point of Brexit anyway?

·       Did parliament understand what it voted for in approving the Article 50 Bill? The Euratom exit was clearly identified in that Bill, but now MPs are not happy with it. If they can revisit Euratom, then why not the other features of Act, such as single market membership or even the entirety of Brexit?

·       Relatedly, if parliament does decide that the UK wants to stay in Euratom and, therefore, to breach the red line of ECJ jurisdiction, then why not breach that red line for any number of other things (aviation, medicines, patents) up to and including the single market?

·       But even if the UK parliament were to decide it did not want to leave Euratom, what status does that have within the Brexit negotiations? Exiting Euratom was in the Article 50 notification letter sent to the EU, so does it any longer matter what the UK says? And if the UK can take back one part of that letter than does it not mean that the whole of it can be withdrawn (as discussed by Cambridge University Professor of EU Law Kenneth Armstrong)?

Or, to pose these questions at the most generic level, if there are very good reasons for avoiding the chaos, damage, cost, and complexity of leaving Euratom then do these not apply a fortiori to leaving the EU?

Monday 10 July 2017

What should remainers be fighting for now?

Vince Cable’s recent comment that Brexit might never happen has brought into focus the difficult discussion amongst remainers as to what should now be our goal. Should it be a soft Brexit (in the ‘original’ meaning of leaving the EU but remaining within the single market, customs union and other institutions via EEA/EFTA) if simply remaining in the EU proves impossible? Or should it be to remain as full members of the EU without even countenancing the possibility of soft Brexit? Within the remainer ‘community’ (if one can call it this) both views are in evidence. To take two of the most eloquent and influential remainers, if I am not misrepresenting them, in the first camp is Ian Dunt, editor of and author of Brexit: What the Hell Happens Now? In the second camp is the philosopher A.C. Grayling. Or, amongst politicians, many LibDems appear to be in that second camp whilst most Labour and Tory remainers seem to be in the first.

As for myself, I am torn. Since the day of the referendum result I have been writing that the best that can be hoped for is a soft Brexit. Not because that is my preferred outcome, but because it seems the best achievable outcome. As anyone who reads this blog regularly knows, I think the referendum was ill-conceived, the result bogus and the consequences catastrophic. But that result sits there as a political fact, and just as it is monstrous that the government have pursued a hard Brexit and so treated approximately half of those who voted with contempt so too would it be unreasonable to completely over-ride those who voted to leave, for all that I think they were ill-informed and just plain wrong. This is all the more true given what has happened since the Referendum, with Brexit coming to be defined as hard Brexit so that shifting from that to soft Brexit is already a bigger political ask than it would have been last year.

A soft Brexit would give most people some of what they want – there were many Brexiters who campaigned for leave, and surely many voters who voted leave, on just this basis: something like Norway or Switzerland. Even Nigel Farage recently opined that this was where we were heading and if so it would be, from his point of view, better than EU membership. For remainers, it also gives many of us something of what we want. In brief, soft Brexit as defined above gives Brexiters exit from the EU, CAP, CFP, common defence and foreign policy and de jure CJEU jurisdiction; but not from freedom of movement (except for maybe some tweaks), de facto CJEU jurisdiction and budgetary contributions. Nor does it enable independent trade deals. It gives remainers retained membership of the central EU institutions and continued freedom of movement. And it should be remembered that the majority of people are enthusiasts for neither leave or remain: to them, it gives a stable situation which avoids the economic shocks of hard Brexit and the political turmoil of no Brexit. It’s really how those people’s opinions move now that matters, rather than the hard core on either side of the debate whose opinions will never change.

In short, I don’t think it’s at all likely that we can go to the status quo ante of June 22 2016. This is only in part because the situation is so dire that we have to make compromises to salvage anything from the mess. It’s also because in some ways a soft Brexit would put Britain where it has in some ways been from the moment of joining – that is, seeing the EU primarily in transactional, economic terms; something evident during the remain campaign. I deplore that, but since it is so perhaps it is better for the institutional arrangements to reflect it.

But even if this were not so, what has happened in the year since the referendum result has meant that what would happen if we were simply to revert to remaining could be deeply problematic for both the UK and the EU, as leading Brexit expert Anand Menon has recently argued. On the one hand, despite comments from Macron and others that Britain would be welcome back if it changes its mind, the EU has to some large extent moved on from Brexit. On the other hand, a ‘remaining’ Britain would undoubtedly be wracked by a revived and embittered Euroscepticism which might even force another referendum on leaving within a few years’ time. Better for all to have Britain outside of the EU institutions, including for those of us who are pro-EU since no longer would Farage and his oafish followers be able to embarrass our country in the European Parliament. Of course the hard Brexiters would be furious but whereas in a no Brexit scenario they would surely regroup, in a soft Brexit scenario their chances of garnering much support would be minimal and they would be left, where they should be, on the fringes of political debate.

None of this is to say that soft Brexit is without adverse consequences (and, an important point, it cannot be assumed that it is automatically available as an option*). There will be a price to be paid for that Referendum result whatever happens. But soft Brexit would be better economically than hard Brexit – and especially if it took the form of, unlike Norway, being in the customs union as well as the single market. Still, it would be highly damaging in terms of geo-politics as the role that Britain has created for itself in the previous decades as the lynchpin between the EU and all the other multi-lateral bodies would have been squandered. Yet, even accepting that, it would at least defuse the sense abroad that we have completely lost all rationality and stability and to that extent would be preferable to hard Brexit and perhaps even to reverting to remain, which would compound the sense of a country which does not know what it is doing whilst yielding little in terms of the UK’s ability to be a dominant shaper of the EU which is shot for good now, whatever happens. (Or, almost: perhaps a new centrist party forming a government which went to the EU and strongly affirmed not just EU membership but commitment to the European project could change that – but this seems extremely unlikely).

It is possible, of course, that UK public opinion will shift quickly and decisively towards remaining in the EU and if so, despite all the issues raised in this post, that would become an attainable goal again. The emerging economic disaster of Brexit might well have that effect, and perhaps it would only take a couple of major company relocations to cement what is already beginning to show in the opinion polls. But that will only happen as a result of external events; it’s not going to make much difference how vociferously and articulately remainers argue the case for remain. That’s already been priced in to public debate and there are few minds that will be changed by it in itself. What could, however, make a difference to what happens now is for the remain camp to create and unite behind a single body, rather than the multiplicity of groups that currently exist. If they do, the first thing they will have to agree on is whether no Brexit is still a viable goal and, even if it is, whether soft Brexit is a tolerable and perhaps more feasible one.

It’s important to stress that even if united around the second soft Brexit (or perhaps one should say ‘soft remain’) position, achieving it is a daunting prospect. For all that since the election some of the steam has gone out of the ultra-Brexiters it is still the case that they have moved the terrain of debate significantly towards them in the last year. Thus the main arguments within the government are not so much about soft versus hard Brexit but crazy-hard (crash out) Brexit and awful-hard (transitional) Brexit. That ‘crazy-hard’ has become the new ‘hard’ and ‘awful-hard’ has become the new ‘soft’ shows how far things have shifted since the referendum, and how much work there will be for remainers to claw things back to anything resembling sanity.

*Addendum (10 July 2017): Just to elaborate a little on this (following comment on twitter by @LittleGravitas). The situation here is a complicated one. The Brexit debate has always assumed that remaining in the single market is a straightforward option, but it has several intricacies. First, there is the issue of EEA versus EFTA membership. EFTA members are Iceland, Liechtenstein, Norway and Switzerland whilst the EEA brings together the first three of these countries plus EU members, with Switzerland relating to the EEA via numerous bi-lateral treaties. As a broad generalization, EFTA members are rule-takers vis a vis the EU without representation (so-called ‘fax democracy’).
The UK left EFTA in 1972 and rejoining would require the agreement of the EFTA Council. Thus it would not be automatic nor would be in the gift of the EU (i.e. it could not in itself be an outcome of the Brexit negotiations with the EU). Would the UK be welcome to rejoin? Here there have been very different noises at different times and from different people. For example, the President of the EFTA Court sounded a positive note in December 2016 but the Swiss Economy Minister speaking in April 2017 was much more cautious, worrying that the size of the UK economy would swamp and therefore distort EFTA.
There is also much complexity in how independent trade deals operate. It is often said that EFTA countries like Norway can make their own trade deals because they are not part of the EU Customs Union and within that its commercial policy. That is so, but it neglects the way that EFTA members often make trade deals as an EFTA bloc and also (which matters for the UK) they are predominantly goods not services agreements. Moreover, it is not necessarily the case that EU composite trade deals are accessible to EFTA members (although some are). On the other hand, being outside the customs union poses other issues, especially for trans-European supply chains, that matter hugely for the UK since it has many industries (automotive being the most obvious) within such supply chains whereas the other EFTA countries do not.
There might also be the possibility of an associate agreement with EFTA, which would not necessarily entail freedom of movement of people (this is the kind of arrangement that Finland had between 1961 and 1986). But this model is more for countries moving towards eventual EU membership than for a country leaving the EU.