The last ten days were supposed to be my break from Brexit hence, as trailed two weeks ago, there was no post on this blog last Friday. But escaping did not prove easy, gloomily conscious as I was of taking my first trip to the EU since Britain ceased to be a member and my last before the transition period ends. Even if that had not been in my mind, in motorway service stations and elsewhere was the unavoidable message of the government’s increasingly panicky campaign: “time is running out”. Brexit is not mentioned of course, for we are not supposed to recall that what were to have been the ‘sunny uplands’ turn out to be a quagmire of paperwork, cost, and inconvenience.
A further reminder, as I drove through Kent, was the sight of huge construction works for one of the lorry parks that will be needed post-transition. Then, taking the Dover to Dunkirk ferry laden with lorries from Portugal to Lithuania to Bulgaria, just a few of the 2.1 million that Dover’s port handles each year, it was hard not to wonder who thinks that what this huge, complex artery of international trade really needs is to have a whole lot of new disruptions. And, over in Dunkirk, the new sanitary and phytosanitary lanes were a visible indication of just what leaving the EU and the single market means in, literally, concrete terms (it is notable that the new facilities and systems needed for Brexit in EU ports have been in place for months whereas, for all the talk of taking back control, the UK is still developing them).
Petulant children and the role of the man-baby
None of this, as everyone should know by now, will be avoided by an EU-UK trade deal, although it will be worsened without a deal. On that issue, the outcome remains opaque. The talks have resumed after the UK’s sort-of-but-not-really walk out, a resumption enabled by Michel Barnier ‘conceding’ to British demands to use the ‘right’ words (intensification, compromise needed on both sides, British sovereignty respected).
In the Ladybird book of international negotiations that seems to be Boris Johnson and David Frost’s go-to text this perhaps counts as a victory and I doubt they have any inkling that to outsiders it resembles an adult placating a petulant child. As Tony Connelly of RTE reports – within a detailed explanation of how the talks faltered and resumed - an EU diplomat described the conversations that preceded the resumption as the UK being “in the therapeutic phase”.
Connelly and others also report that one reason the outcome remains unknowable is Johnson’s almost pathological aversion to making the necessary choices, with their inevitable costs. One widely discussed suggestion is that he will await the outcome of the US Presidential election before deciding which way to jump. In brief, if Trump were to win then Johnson would be more likely to opt for no deal with the EU, in the expectation that a trade deal with the US is more likely than it would be under Biden (for a wider discussion of what the US election means for the UK see Patrick Wintour’s excellent in-depth analysis, and for what it means for the prospects of a trade deal see my recent article in Byline Times).
It is a plausible enough theory of Johnson’s decision-making process if only because it is so inane. Economically, of course, no US trade deal could come close to compensating for the damage of there being no deal with the EU (government estimates being +0.16% GDP over 15 years for the former and -7.6% GDP over 15 years for the latter). And if Johnson hasn’t yet learned that Trump is a blowhard who, for all his talk, is not going to do Brexit Britain any special favours, then he simply hasn’t been paying attention. Not that that would be a radical departure from character.
Yet there is a political, or perhaps just a superstitious, rationale for this theory. Trump’s demise, if it comes, will be as symbolically important for Brexit as Brexit was for his election in 2016. It will mark the rout of the figurehead of nationalist populism and, as Rafael Behr observed some time ago, would scupper Johnson’s “bumbling English Trump tribute act” and the “tantrum diplomacy” that goes with it (of which the UK’s recent outburst over continuing the talks is a good example). Indeed the parasitical relationship of the Brexiters to Trump was made plain this week by Nigel Farage’s cringingly sycophantic endorsement of his idol, in which he underscored that a defeat for the Washington man-baby would be a defeat for nationalists globally.
So on this account a Biden win most likely heralds a trade deal with the EU (unless, something underpriced in UK discussions which are almost invariably parochial, such a win hardens EU demands upon the UK or at least reduces willingness to accede to those made by the UK). If so, for all that it will by definition make Britain poorer than the present trading relationship, it will be spun as a great victory by Johnson.
Turning Japanese
A tiny foretaste of just how dishonest that spin will be came this week in the government’s triumphant announcement that, as a result of the trade deal it has just signed with Japan, soy sauce will be cheaper from 1 January as it will attract a zero tariff. It turned out to be a lie of a strange and complex sort in that soy sauce currently has no tariff charged anyway because of the EU-Japan trade deal which the UK is leaving, so the deal with Japan doesn’t make it cheaper it just stops it getting more expensive by virtue of trading on WTO terms. Anyway, much of it doesn’t come from Japan but from the EU, with which the government says trading on WTO terms is fine. And, anyway, you’d have to use an awful lot of soy sauce to benefit by more than a few pence. These and other nonsensical or misleading features of the announcement have been documented by Full Fact.
As for the Japan trade deal more generally, it should be filed under ‘not bad news’ rather than ‘good news’ in that, despite some features which do go beyond what the UK had via the EU-Japan deal, it mainly continues those provisions. So if it hadn’t happened it would be a further example of Brexit damage. That it is being trumpeted as evidence of the virtues of Brexit is indicative of the shameless disinformation and ludicrous boosterism of this government, which will go into overdrive if there were to be a deal with the EU. If and when that happens it will be worth recalling how Johnson’s Withdrawal Agreement was also greeted as a huge triumph by those who, only months later, denounced it as a disaster.
Meanwhile in the real world …
Moving from Brexiter PR back into the real world what we find are new reports of impending labour shortages once transition ends in fields ranging from agriculture to dentistry (£), of regulatory uncertainty in industries from aerospace (£) to chemicals (£), and of ongoing difficulties in the recruitment of trained customs staff (£). Many of these stories are, as they have been for years, under the public radar, appearing in the business pages of newspapers or in the specialist media of particular industries. There is more cut through when the Brexit effects on holidaymakers are reported, as with last weekend’s outrage at the “petty EU” for “threatening” British tourists with longer passport queues from next year.
It’s a story that encapsulates so much of the Brexiter mindset. That this was likely to be an effect of Brexit is not a new idea, but they dismissed it as more Project Fear. Then, when it threatens to become a reality, they treat it as a form of punishment as if whilst leaving the EU Britain ought to retain the rights it had as a member. As the years have gone on, this mindset seems to have become so ingrained that there is no way of reasoning with it: all the adverse effects of Brexit are either denied (they won’t happen, it’s just scaremongering), ignored (they aren’t happening), displaced (they are happening but it’s not because of Brexit) or disowned (they shouldn’t happen, it’s only because the EU are punishing us).
Between this barrage of misinformation and the general lack of profile in the news of Brexit effects, it’s perhaps unsurprising that a YouGov poll this week found a very low level of public awareness of how things will change once the transition ends. It should also be noted that even where respondents believe they are clear about what will happen it doesn’t mean that they are. On one specific issue which will affect individuals travelling to the EU – the need to pay for electronic authorization to travel – just 9% knew that from 2022 this will be a requirement, whilst another 14% knew it would be required, but wrongly thought it would begin in 2021 (it doesn’t because the system isn’t ready yet).
The interesting and important question will be how people react as the post-transition effects become obvious and, crucially, who they blame. Another YouGov poll this week suggests that 57% of people would blame the government if the transition ends with no deal. But what of those adverse effects that will arise even if there is a deal? Clearly the Brexiter press will push the EU punishment narrative, but this may have much less traction than in the past, if only because public perceptions of governmental competence have been damaged by the handling of the Covid-19 crisis. That of course is now the backdrop to everything and whilst it does not diminish the significance of Brexit it does inflect it in new ways.
The blindingly obvious is undiscussable
As I return from France, it, like Germany, is going back into lockdown (and I am beginning a two-week quarantine). The clocks have changed, the weather is awful, much of the UK is subject to stringent restrictions and everyone can see that even greater ones are in prospect. Over 45,000 of our fellow citizens have died because of the virus – in March, it was hoped that 20,000 would be the maximum – and infections continue to rise. We are heading for a long, hard winter and with some two-thirds of businesses at risk of insolvency along with millions of jobs we face a potentially cataclysmic situation that will damage the livelihoods of all but the most comfortably cushioned.
Few of us have experienced anything like this and much that is familiar is being ripped up by force majeure. But, still, Britain pushes on with the one, supposedly inviolable, immutable policy of Brexit. A policy of such folly that the government no longer dares mention it by name and which even its most enthusiastic proponents have ceased to try to justify in any serious way. The Brexit Emperor lacks not just clothes but skin and flesh.
Yet even now – hugely difficult as it would be – it wouldn’t be totally impossible given the extraordinary circumstances for the UK to at least try to find some route to extending the transition, which ends in only two months’ time, rather than to just parrot that “time is running out”. It seems feasible that if the UK was open to such an idea the EU would be at least willing to explore how to make it work, if only because of the worsening Covid-19 situation in many of its member states.
There are plenty of people who can see just how ludicrous this is, but it isn’t in any serious sense within the realms of what is even politically discussable - and way beyond what Johnson’s woefully incompetent and incontinently dishonest leadership is able to deliver. And whilst the mechanics would be hugely complicated the proposition is not: in the face of so overwhelming a public health crisis, and with so much undecided even about the implementation of the Withdrawal Agreement (especially as regards Northern Ireland), there is just not enough time to agree and to move to a new relationship which by any standards is important for both parties. So - let’s just take some more time.
In any other context, political or personal, it would be so blindingly obvious as to not need saying. That it is near to unsayable and certainly won’t happen is down solely to the warthog stubbornness of a small group of fanatical Brexiters still fighting the battle to leave that they have already won, and totally indifferent to its costs.
So we blunder on, prisoners of a series of past decisions that we do not have the wit or the will to revisit, and of a small but powerful group of ideologues we are either too cowardly or too weak to face down.
It is worse than folly. It is insanity.
Showing posts with label Japan. Show all posts
Showing posts with label Japan. Show all posts
Friday, 30 October 2020
Friday, 14 August 2020
The sillier season
This week’s headlines about migrants seeking to cross the channel served as a reminder – not that it should ever be forgotten, still less forgiven – of the way that the more general migrant ‘crisis’ (in scare quotes for a reason) of 2015 was weaponised in the 2016 Referendum campaign. Of course, as with their economic claims, Brexiters have now deemed it politically incorrect to even suggest that migration and immigration were central to their case (which, we are now expected to believe, was all about Edmund Burke’s theories of sovereignty).
The official Vote Leave campaign confined itself, relatively speaking, to dog whistles, most notoriously in the implications of the, in any case untrue, claim that ‘Turkey is joining the EU’, and the linkage of this to Syria and Iraq. Nigel Farage and UKIP, by contrast, were happy to blow the hunting horn, as with their hideous ‘Breaking Point’ poster. Indeed, cynics might say that the two campaigns were not so unconnected, and that Farage acted as an enabler for the official campaign to keep itself relatively clean whilst reaping the rewards of that which they ostensibly disavowed.
At all events, between them the two campaigns exploited the refugees both directly and also by the wholly dishonest conflation of freedom of movement, immigration in general, refugees and asylum seekers (for more detail on this aspect of the Referendum, see this article by Dr Amanda Garrett of Georgetown University).
The current bogus panic about cross-channel refugees also has Farage lurking sweatily in the background as for some months now, like a censorious suburban curtain-twitcher newly equipped with a bus pass, he has been hanging around beaches and hotels (£) in his grubby mac trying to whip up talk of an “invasion” – talk which then all too predictably crossed over into the mainstream. Farage - who let’s not forget no longer holds elected office and heads a basically defunct ‘party’ - may have done more to pollute British politics than any other politician of his generation but, as ever, the government are more than happy to splash around in his fetid cesspit.
Less control, not more
In this way, there are direct parallels between Brexit and this current “artificial emergency”, and polling evidence shows a clear relationship between views about the two, but with a new twist. For what this latest episode brings into focus is that Brexit, far from allowing Britain to take back control, is likely to make the situation much more complicated. This is because, as Professor Steve Peers explained in an excellent blog this week, within the tangled maze of international law and conventions about refugees and asylum seekers, the EU’s Dublin rules provide part of the framework to address this issue.
To very briefly summarise (as so often, it’s a complex issue, so do please use the links to get a fuller picture), Peers explains that the oft-quoted idea that those seeking asylum are obliged to do so in the first safe country they reach is bogus (and there are often good reasons why they do not). However, amongst its participants, the Dublin rules do often assign responsibility to that country, even if asylum has been sought elsewhere in the EU. In practice, this often provides the basis on which some of those relatively few asylum seekers who reach the UK are returned to France and elsewhere which, apparently, is what Brexiters want (the idea of any obligation either to the people themselves or to other countries not being a prominent feature of their moral universe, and indeed, reading posts on social media, the idea of refugees being people at all seems to be beyond some of them).
Yet that and other EU provisions will be lost to the UK at the end of the transition period. It may be that the UK and the EU agree something similar (or, even, better) but it is by no means clear that this is in prospect – or even that it has been the subject of substantive discussion - and Peers concludes trenchantly that as regards asylum seekers “the effect of Brexit may be ultimately to reduce UK control of migration, not increase it”. Equally, the idea that Brexit will miraculously free the UK from the Dublin rules to do more advantageous bi-lateral deals on refugee return with individual EU member states “seems extremely implausible” according to Professor Jonathan Portes. But in the tautological theology of Brexit, any EU rules are seen as suspect so it becomes an article of faith that leaving them will be ‘liberating’.
How (not) to make friends and influence people
It does not follow, as is being widely said on social media, that Home Secretary Priti Patel talking about the need for co-operation with France is in and of itself a further indication of the folly of Brexit. After all, there have been bi-lateral agreements with France about refugees even whilst the UK was an EU member. But it does serve as a reminder that international problems entail international co-operation in general and, in this case, constructive relations with France in particular, which have hardly been aided by Brexiter rhetoric, such as Boris Johnson’s ill-judged and offensive remarks about ‘World War Two punishment beatings'.
Nor is the cause of co-operation well-served by the current headlines about Patel issuing ‘ultimatums’ to France, or about the ‘outrage’ of France seeking financial contributions to its control of the border. As with the Brexit negotiations, antagonistic messages that may be designed by the British media and politicians solely for domestic consumption are seen and heard abroad, and inevitably sour international relations. Not just France but Germany, Ireland and Spain have all been subjected to repeated insults during the Brexit process. It would be foolish to think that this has no effect, or that it can make co-operation with such countries (over refugees or anything else) anything other than more difficult.
Post-Brexit, Britain risks becoming friendless as a stark new YouGov survey shows and, even on the Brexiters’ own ‘Global Britain’ reckoning, will need to become adept at neat diplomatic footwork in order to avoid isolation. But such footwork is alien and, even, anathema to this Brexit government, which would prefer to blunder bullishly around the diplomatic china shop so as to pander to its core vote – and its own antediluvian party and parliamentary membership - than do anything that might actually be construed as being in the national interest. It’s yet another example of this Vote Leave administration permanently re-fighting the leave campaign rather than governing. The effects on Britain’s well-being, let alone its international reputation (£), are of course irrelevant to these Brexit ‘patriots’.
An article this week by a senior former diplomat, David Hannay, underscored just how damaging this approach is proving to be for the trade negotiations with the EU. The British government, he argues, is acting in a way which is “unprincipled” and is destroying trust. This is principally because of the way that the Political Declaration (PD) has effectively been treated by the UK as totally irrelevant whereas it had been signed with the EU on the understanding that it constituted a shared framework (I would add that this has come on top of repeated ways during the Article 50 negotiations that the UK behaved in an untrustworthy manner, principally when the phase 1 agreement was disowned). This, Hannay, argues, is damaging not just to the prospects of a trade deal but to Britain’s more general need to build friendships abroad including with European countries.
No one likes us, we don’t care
If the government is already reckless of such considerations, the Brexit Ultras are as always urging an even more irresponsible and dangerous course with their now growing clamour against not only the PD but the Withdrawal Agreement (WA) itself. This of course would be even more serious: in rejecting the PD, Britain is breaking its word but if it rejects the WA it breaks an international treaty.
I wrote about this last week, with links back to how it has been in prospect ever since the 2019 Election, despite the ERG voting for the agreement. This week has seen yet another salvo in the Express from Iain Duncan Smith against the WA (which was nicely taken down by, again, Steve Peers), as well as a report in the Sunday Telegraph (£) which headlined the bizarre suggestion from an unnamed source that the WA was ‘not worth the paper it was written on’. That accusation is usually made of an agreement the other party can readily ignore, and so is a strange thing to say of one which you propose illegally to disown.
But that is hardly the strangest feature. Whereas last week Duncan Smith was talking about things “buried in the fine print” of the WA now – perhaps stung by the many criticisms of him for having apparently voted for something he didn’t understand – he loftily declares (in the Telegraph piece) that “everyone knew this stuff before” but voted for it so as to be out of the EU and able negotiate as a “sovereign nation” (inevitably, it has not sunk in that had Britain not been a sovereign nation it couldn’t have signed the WA anyway). Similarly, in his own Express piece he writes of his “surprise” that his comments of the previous week were a “revelation” (even though he had presented them as just that) and claims that the WA “was always a work in progress” rather than, in fact, an international treaty. He clearly doesn’t realise, or perhaps just does not care, that this is an even more indefensible position since it implies that he and his ERG cronies acted with deliberate bad faith rather than simply incompetence.
I won’t add to what I have written before about this latest piece of Brexiter duplicity and irresponsibility, with its potential to take Britain to international pariahdom. As noted last week, it will be repeated endlessly in the coming months so there will be plenty of opportunities to analyse it then. In any case, repeatedly pointing to its flaws is largely irrelevant: its purpose, probably already achieved, is to persuade the Brexiters’ base that the WA can and should be repudiated.
Even on the most charitable interpretation that it is designed as a signal to Boris Johnson not to make ‘concessions’ in the EU trade negotiations it will already have done further damage to Britain’s reputation – again, the British press is read in other countries. But, increasingly, the Brexit Ultras resemble those Millwall fans who used to chant “no one likes us, we don’t care”, although possibly even this credits them with a greater degree of self-awareness than is warranted by the evidence.
The art of the deal?
Meanwhile, trade negotiations with non-EU countries continue – sort of. A shouty headline in the Express (interestingly now changed to something much more anodyne, but see the original here) reported the “Brexit DISASTER” that talks with the US had been delayed, with the growing possibility that they would end up being held under a Biden presidency if Trump loses the November elections. This wasn’t actually news to anyone following the news (£). But its prominent discussion in such a rabidly pro-Brexit ‘newspaper’ has its own significance in the gradual falsification of all the promises made by Brexiters to its readers.
The idea of a UK-US Free Trade Agreement has always been held up as the iconic economic prize of Brexit (even though its actual economic effect would be very small). Moreover, it has been an article of faith to Brexiters that Trump would facilitate a good, quick deal in contrast to Obama’s much-resented ‘back of the queue’ warning during the Referendum campaign. That, too, was highly unrealistic given Trump’s capricious nature, not to mention his avowed ‘America First’ position (though, by the same token, the substance of talks with a Biden administration wouldn’t necessarily be any different).
So as early as July 2017 The Lord Jones of Birmingham, better known as Digby Jones, the fanatically pro-Brexit former head of the CBI, with all the august dignity we expect from a Peer of the Realm bated “remoaners” that a trade deal with the US was “in the bag”. More seriously, in September 2019 Johnson and Trump were reported to have agreed that a deal would be done “in lightning quick time by July [2020]”, explicitly to precede the Presidential elections (albeit that at that time Trump looked likely to win).
It is in that context of over-blown promises that imparting the news to Express readers that they won’t be kept is important (I assume the subsequent significant change to the headline was because they were infuriated by the original - or someone was). And it can hardly be blamed on coronavirus given that this is not seen as an adequate reason to extend talks with the EU. Nor, given the previous emphasis put on completing a deal this summer, can it be seen as anything other than sophistry to now claim, as Liz Truss did at a House of Lords Committee last month, that setting a target date is being avoided to deny US negotiators the benefit of time pressure.
But the UK-US negotiations have another role within Brexiter mythology. According to former Brexit Secretary David Davis – the man of whom it can fairly be said that he gets everything about Brexit wrong – they would provide leverage in the talks with the EU. Shanker Singham, the Brexiters’ favourite trade guru, agreed that the London-Brussels -Washington “game theory” triangle would put pressure on the EU. It was a highly dubious proposition, which has shown no signs whatsoever of coming true but, in any case, it is now dead in the water since negotiations with the EU – which resume next week - must finish by (in fact before) the end of the year.
Crackers
On the subject of doing deals, the other Brexit story of (passing) interest this week is the supposedly soon to be completed trade re-negotiation with Japan. This is reported to be snagged on last-minute differences over market access for Britain’s Stilton cheesemakers. Trade negotiation experts have explained that such hold ups over apparent trivialities are more the norm than the exception and no doubt they are right.
At the same time, it is hard to resist the thought that this particular row has a special piquancy as it will be Britain’s first post-Brexit trade deal and the government desires to demonstrate that it can achieve more favourable terms for British interests than those of the EU-Japan deal. And, moreover, to do so in relation to an iconic British product.
If successful, it will be more headline fodder for the core voters but – as with the entire ‘sovereignty’ schtick - will in any substantive sense be meaningless. For, economically, it is only of symbolic value (British sales of blue cheese to Japan last year totalled just £102,000) but, then, as with the US talks, the whole point about an independent trade policy is not the ‘trade’ part but the word ‘independent’. Still, like the issue of fisheries, which it closely resembles in that respect, it is at least a rich source of cheesy puns.
My modest contribution is to point out that the whole thing is crackers, and half-baked crackers at that.
I don’t just mean the Stilton story.
The official Vote Leave campaign confined itself, relatively speaking, to dog whistles, most notoriously in the implications of the, in any case untrue, claim that ‘Turkey is joining the EU’, and the linkage of this to Syria and Iraq. Nigel Farage and UKIP, by contrast, were happy to blow the hunting horn, as with their hideous ‘Breaking Point’ poster. Indeed, cynics might say that the two campaigns were not so unconnected, and that Farage acted as an enabler for the official campaign to keep itself relatively clean whilst reaping the rewards of that which they ostensibly disavowed.
At all events, between them the two campaigns exploited the refugees both directly and also by the wholly dishonest conflation of freedom of movement, immigration in general, refugees and asylum seekers (for more detail on this aspect of the Referendum, see this article by Dr Amanda Garrett of Georgetown University).
The current bogus panic about cross-channel refugees also has Farage lurking sweatily in the background as for some months now, like a censorious suburban curtain-twitcher newly equipped with a bus pass, he has been hanging around beaches and hotels (£) in his grubby mac trying to whip up talk of an “invasion” – talk which then all too predictably crossed over into the mainstream. Farage - who let’s not forget no longer holds elected office and heads a basically defunct ‘party’ - may have done more to pollute British politics than any other politician of his generation but, as ever, the government are more than happy to splash around in his fetid cesspit.
Less control, not more
In this way, there are direct parallels between Brexit and this current “artificial emergency”, and polling evidence shows a clear relationship between views about the two, but with a new twist. For what this latest episode brings into focus is that Brexit, far from allowing Britain to take back control, is likely to make the situation much more complicated. This is because, as Professor Steve Peers explained in an excellent blog this week, within the tangled maze of international law and conventions about refugees and asylum seekers, the EU’s Dublin rules provide part of the framework to address this issue.
To very briefly summarise (as so often, it’s a complex issue, so do please use the links to get a fuller picture), Peers explains that the oft-quoted idea that those seeking asylum are obliged to do so in the first safe country they reach is bogus (and there are often good reasons why they do not). However, amongst its participants, the Dublin rules do often assign responsibility to that country, even if asylum has been sought elsewhere in the EU. In practice, this often provides the basis on which some of those relatively few asylum seekers who reach the UK are returned to France and elsewhere which, apparently, is what Brexiters want (the idea of any obligation either to the people themselves or to other countries not being a prominent feature of their moral universe, and indeed, reading posts on social media, the idea of refugees being people at all seems to be beyond some of them).
Yet that and other EU provisions will be lost to the UK at the end of the transition period. It may be that the UK and the EU agree something similar (or, even, better) but it is by no means clear that this is in prospect – or even that it has been the subject of substantive discussion - and Peers concludes trenchantly that as regards asylum seekers “the effect of Brexit may be ultimately to reduce UK control of migration, not increase it”. Equally, the idea that Brexit will miraculously free the UK from the Dublin rules to do more advantageous bi-lateral deals on refugee return with individual EU member states “seems extremely implausible” according to Professor Jonathan Portes. But in the tautological theology of Brexit, any EU rules are seen as suspect so it becomes an article of faith that leaving them will be ‘liberating’.
How (not) to make friends and influence people
It does not follow, as is being widely said on social media, that Home Secretary Priti Patel talking about the need for co-operation with France is in and of itself a further indication of the folly of Brexit. After all, there have been bi-lateral agreements with France about refugees even whilst the UK was an EU member. But it does serve as a reminder that international problems entail international co-operation in general and, in this case, constructive relations with France in particular, which have hardly been aided by Brexiter rhetoric, such as Boris Johnson’s ill-judged and offensive remarks about ‘World War Two punishment beatings'.
Nor is the cause of co-operation well-served by the current headlines about Patel issuing ‘ultimatums’ to France, or about the ‘outrage’ of France seeking financial contributions to its control of the border. As with the Brexit negotiations, antagonistic messages that may be designed by the British media and politicians solely for domestic consumption are seen and heard abroad, and inevitably sour international relations. Not just France but Germany, Ireland and Spain have all been subjected to repeated insults during the Brexit process. It would be foolish to think that this has no effect, or that it can make co-operation with such countries (over refugees or anything else) anything other than more difficult.
Post-Brexit, Britain risks becoming friendless as a stark new YouGov survey shows and, even on the Brexiters’ own ‘Global Britain’ reckoning, will need to become adept at neat diplomatic footwork in order to avoid isolation. But such footwork is alien and, even, anathema to this Brexit government, which would prefer to blunder bullishly around the diplomatic china shop so as to pander to its core vote – and its own antediluvian party and parliamentary membership - than do anything that might actually be construed as being in the national interest. It’s yet another example of this Vote Leave administration permanently re-fighting the leave campaign rather than governing. The effects on Britain’s well-being, let alone its international reputation (£), are of course irrelevant to these Brexit ‘patriots’.
An article this week by a senior former diplomat, David Hannay, underscored just how damaging this approach is proving to be for the trade negotiations with the EU. The British government, he argues, is acting in a way which is “unprincipled” and is destroying trust. This is principally because of the way that the Political Declaration (PD) has effectively been treated by the UK as totally irrelevant whereas it had been signed with the EU on the understanding that it constituted a shared framework (I would add that this has come on top of repeated ways during the Article 50 negotiations that the UK behaved in an untrustworthy manner, principally when the phase 1 agreement was disowned). This, Hannay, argues, is damaging not just to the prospects of a trade deal but to Britain’s more general need to build friendships abroad including with European countries.
No one likes us, we don’t care
If the government is already reckless of such considerations, the Brexit Ultras are as always urging an even more irresponsible and dangerous course with their now growing clamour against not only the PD but the Withdrawal Agreement (WA) itself. This of course would be even more serious: in rejecting the PD, Britain is breaking its word but if it rejects the WA it breaks an international treaty.
I wrote about this last week, with links back to how it has been in prospect ever since the 2019 Election, despite the ERG voting for the agreement. This week has seen yet another salvo in the Express from Iain Duncan Smith against the WA (which was nicely taken down by, again, Steve Peers), as well as a report in the Sunday Telegraph (£) which headlined the bizarre suggestion from an unnamed source that the WA was ‘not worth the paper it was written on’. That accusation is usually made of an agreement the other party can readily ignore, and so is a strange thing to say of one which you propose illegally to disown.
But that is hardly the strangest feature. Whereas last week Duncan Smith was talking about things “buried in the fine print” of the WA now – perhaps stung by the many criticisms of him for having apparently voted for something he didn’t understand – he loftily declares (in the Telegraph piece) that “everyone knew this stuff before” but voted for it so as to be out of the EU and able negotiate as a “sovereign nation” (inevitably, it has not sunk in that had Britain not been a sovereign nation it couldn’t have signed the WA anyway). Similarly, in his own Express piece he writes of his “surprise” that his comments of the previous week were a “revelation” (even though he had presented them as just that) and claims that the WA “was always a work in progress” rather than, in fact, an international treaty. He clearly doesn’t realise, or perhaps just does not care, that this is an even more indefensible position since it implies that he and his ERG cronies acted with deliberate bad faith rather than simply incompetence.
I won’t add to what I have written before about this latest piece of Brexiter duplicity and irresponsibility, with its potential to take Britain to international pariahdom. As noted last week, it will be repeated endlessly in the coming months so there will be plenty of opportunities to analyse it then. In any case, repeatedly pointing to its flaws is largely irrelevant: its purpose, probably already achieved, is to persuade the Brexiters’ base that the WA can and should be repudiated.
Even on the most charitable interpretation that it is designed as a signal to Boris Johnson not to make ‘concessions’ in the EU trade negotiations it will already have done further damage to Britain’s reputation – again, the British press is read in other countries. But, increasingly, the Brexit Ultras resemble those Millwall fans who used to chant “no one likes us, we don’t care”, although possibly even this credits them with a greater degree of self-awareness than is warranted by the evidence.
The art of the deal?
Meanwhile, trade negotiations with non-EU countries continue – sort of. A shouty headline in the Express (interestingly now changed to something much more anodyne, but see the original here) reported the “Brexit DISASTER” that talks with the US had been delayed, with the growing possibility that they would end up being held under a Biden presidency if Trump loses the November elections. This wasn’t actually news to anyone following the news (£). But its prominent discussion in such a rabidly pro-Brexit ‘newspaper’ has its own significance in the gradual falsification of all the promises made by Brexiters to its readers.
The idea of a UK-US Free Trade Agreement has always been held up as the iconic economic prize of Brexit (even though its actual economic effect would be very small). Moreover, it has been an article of faith to Brexiters that Trump would facilitate a good, quick deal in contrast to Obama’s much-resented ‘back of the queue’ warning during the Referendum campaign. That, too, was highly unrealistic given Trump’s capricious nature, not to mention his avowed ‘America First’ position (though, by the same token, the substance of talks with a Biden administration wouldn’t necessarily be any different).
So as early as July 2017 The Lord Jones of Birmingham, better known as Digby Jones, the fanatically pro-Brexit former head of the CBI, with all the august dignity we expect from a Peer of the Realm bated “remoaners” that a trade deal with the US was “in the bag”. More seriously, in September 2019 Johnson and Trump were reported to have agreed that a deal would be done “in lightning quick time by July [2020]”, explicitly to precede the Presidential elections (albeit that at that time Trump looked likely to win).
It is in that context of over-blown promises that imparting the news to Express readers that they won’t be kept is important (I assume the subsequent significant change to the headline was because they were infuriated by the original - or someone was). And it can hardly be blamed on coronavirus given that this is not seen as an adequate reason to extend talks with the EU. Nor, given the previous emphasis put on completing a deal this summer, can it be seen as anything other than sophistry to now claim, as Liz Truss did at a House of Lords Committee last month, that setting a target date is being avoided to deny US negotiators the benefit of time pressure.
But the UK-US negotiations have another role within Brexiter mythology. According to former Brexit Secretary David Davis – the man of whom it can fairly be said that he gets everything about Brexit wrong – they would provide leverage in the talks with the EU. Shanker Singham, the Brexiters’ favourite trade guru, agreed that the London-Brussels -Washington “game theory” triangle would put pressure on the EU. It was a highly dubious proposition, which has shown no signs whatsoever of coming true but, in any case, it is now dead in the water since negotiations with the EU – which resume next week - must finish by (in fact before) the end of the year.
Crackers
On the subject of doing deals, the other Brexit story of (passing) interest this week is the supposedly soon to be completed trade re-negotiation with Japan. This is reported to be snagged on last-minute differences over market access for Britain’s Stilton cheesemakers. Trade negotiation experts have explained that such hold ups over apparent trivialities are more the norm than the exception and no doubt they are right.
At the same time, it is hard to resist the thought that this particular row has a special piquancy as it will be Britain’s first post-Brexit trade deal and the government desires to demonstrate that it can achieve more favourable terms for British interests than those of the EU-Japan deal. And, moreover, to do so in relation to an iconic British product.
If successful, it will be more headline fodder for the core voters but – as with the entire ‘sovereignty’ schtick - will in any substantive sense be meaningless. For, economically, it is only of symbolic value (British sales of blue cheese to Japan last year totalled just £102,000) but, then, as with the US talks, the whole point about an independent trade policy is not the ‘trade’ part but the word ‘independent’. Still, like the issue of fisheries, which it closely resembles in that respect, it is at least a rich source of cheesy puns.
My modest contribution is to point out that the whole thing is crackers, and half-baked crackers at that.
I don’t just mean the Stilton story.
Friday, 7 August 2020
The Brexit screw tightens
Almost since the day of the Referendum, the Brexit process has gone round in circles with the same issues resurfacing, and the same contradictions and paradoxes recurring. That continues to be the case, but the repetitions can be misleading in two ways. One is that with each re-run some new evidence emerges to re-enforce the underlying issue or contradiction. The other is that, as the end of the transition period gets closer, each iteration of the circle makes the matter in question more urgent. In the past, I’ve used the metaphor of the Mobius strip to capture these repetitions, but perhaps a better image is that of a thread being screwed inexorably tighter.
Freeports and chemicals
This week has seen several examples. Freeports have for years been touted as a benefit of Brexit, and became government policy when Boris Johnson became Prime Minister, with a consultation exercise launched last February. I discussed the issue at that time and won’t repeat that analysis here, except to say that it pointed to the very mixed evidence of their benefit, even in their ‘non-EU’ form. Last week saw another outing of the argument for their virtues but the very same day new research from the UK Trade Policy Observatory showed these to be “almost non-existent” (£). If this is to be a major component of post-transition trade and industrial policy, it is misplaced.
If freeports will not provide an economic boost, the dangers of Brexit to the economically and strategically vital chemicals industry were again laid bare (£) in the latest of a series of excellent reports by Peter Foster on the practicalities of Brexit. The industry is the UK’s second largest manufacturing sector and its trade and supply chains are massively tied to the EU. These dangers have always been incipient because of the decision to leave the European Chemicals Agency (ECHA) and the REACH regulations it oversees, but under Theresa May there had been a plan to seek some form of Associate Membership.
That might or might not have succeeded (a House of Lords Report in 2018, which also sets out in clear detail the entire ECHA/REACH issue, was doubtful), but under Johnson’s even more hard line approach, complete regulatory independence is now the policy. This is going to be hugely costly (£1 billion, according to Foster’s report) and bureaucratically cumbersome however it is done, and the more so if no agreement is reached with the EU on accessing ECHA data – which is doubtful. In short, no one yet knows how it is going to work or whether it will be ready in time for the end of transition, and that’s less than five months away.
But the real kicker is that even if it all goes ahead, what in effect will have happened is to a very large extent a replication of the existing regulatory regime with the sole ‘advantage’ of it being badged British. Indeed, it’s an example of one of the many things that the UK’s budget contribution was paying for, though not included in the crude accounting that dominated the Referendum campaign. Its replication is also an example of how, in practice, Brexit Britain will be pulled by the gravitational force of EU regulation because REACH is also, increasingly, a global standard.
This is the purely theoretical ‘sovereignty’ which is being regained; the costs to businesses, trade and jobs, which are real, are the price. It is a paradigm case of what Brexit is going to mean in practice, as has been clear since August 2017 – back when all we knew about Brexit was that it meant Brexit – when the provisions of the (then) Data Protection Bill were outlined.
Round-up of other news
We have also seen updates on the objections of Kent residents to the new Brexit lorry parks plus the news that Operation Brock is to be revived for the end of the transition (as for Holyhead, goodness knows how its problems will be dealt with), new warnings of food shortages in Northern Ireland because of the Irish Sea border, new warnings of an ‘environmental governance gap’ at the end of the transition, the revival of government plans for stockpiling medicines in preparation for possible disruptions, a new CBI survey showing business concern about, and lack of preparedness for, the end of the transition period, and the latest culture war volley in the elevation of prominent Brexiters to the House of Lords (forgotten, now, is the Brexiters’ insistence that it is crucial that our laws be made by those the people can vote out of office). As with the list of some of last week’s developments in last week’s post, the sheer diversity of complex problems is striking.
As for the latest good news about Brexit, that’s easily dealt with: there is none. Some might propose that the imminent UK trade deal with Japan is an exception but, although we don’t yet know the detail, it isn’t likely to be significantly different (£) to the EU-Japan deal the UK is currently part of. It’s certainly true that not doing such a deal would have been damaging, but that just means that this story is ‘not bad news’ rather than being ‘good news’ - despite the jubilance of the Brexit press, of which we will have more when the agreement is signed (and, note, this deal is, at Japanese insistence, a speedy re-negotiation rather than a roll over, to which Japan would not agree). It is also possible, as mentioned in a recent post, that if and when the UK and the EU reach a trade agreement then a further, more extensive, deal with Japan might follow.
Similarly, are we really meant to welcome today’s news that up to £355 million is to be spent to support new systems and processes for trade between Great Britain and Northern Ireland? That may be helpful to Northern Ireland’s businesses – though there are many questions as to how, whether and when it will work – and if it was offsetting the damage of a natural disaster might in that sense be welcome. But Brexit is self-inflicted, and all along it was denied that this, or any, damage would occur.
So if good news means something unequivocally good that is happening as a result of Brexit, and which wouldn’t have happened without Brexit then we are still waiting for it.
The significance of Iain Duncan Smith
In the face of this, it might be expected, in any rational polity, that those who have championed Brexit and its unalloyed advantages would now be starting to express some alarm about – perhaps even some contrition for – what they have foisted on us. And in a way they are – but it is a way that is neither rational, nor moral, nor honest. Witness how this week we have seen veteran arch-Brexiter Iain Duncan Smith bemoaning the financial commitments signed up to in the Withdrawal Agreement (WA).
It’s a story with multiple layers of absurdity and disingenuity. He complains that “in the fine print, unnoticed by many” of the WA is a £160 billion bill for EU loans. But this is the WA which was Johnson’s great ‘oven ready deal’ that was presented to the voters at the 2019 Election and which, afterwards, Duncan Smith enthusiastically voted for in the House of Commons. That vote on the Withdrawal Agreement Bill was rushed through, but did he then join the calls for more scrutiny of “the fine print”? No. On the contrary he said “if there is anything about this arrangement that we have not now debated and thrashed to death, I would love to know what it is”.
So he fully supported it, but apparently didn’t understand its implications which it was his job to scrutinise and to which he now objects, and argued against further scrutiny. But – the final ridiculous twist – the £160 billion story isn’t really true anyway (it is based on the effectively zero possibility of every loan made by the European Investment Bank being defaulted on simultaneously).
It’s easy – almost obligatory - to mock this depressing farrago of stupidity and lies, but to do so misses its deeper significance, which is two-fold.
First, it is the latest salvo in the Brexit Ultras’ attempt to disown the entirety of the WA. In a post immediately after the 2019 election I flagged up the likelihood that they would do this, and have since recorded how it is becoming a growing, concerted campaign, which carries profound dangers of international pariahdom. It will intensify through this autumn, and reach a crescendo if there is no trade deal.
Second, and more broadly, it is the latest indication of the truly tragic fate that Brexiters have inflicted on Britain, whereby they insist that Brexit must be done or else the will of the people is betrayed, but also insist that any actual way that Brexit is done is a betrayal of the will of the people. It is a paradox from which there is no escape, and which dooms us to years, probably decades, of culture war.
Culture war ‘refugees’
One effect of that culture war is to produce ‘refugees’. Again, it’s been obvious from the beginning that Britain would suffer an exodus of people alienated by Brexit. Most obviously that means EU nationals in the UK who both for reasons of practical uncertainty and cultural affront no longer wish to be here. It also means UK nationals, and again for both economic and cultural reasons – those who see Britain headed for economic danger but who also feel politically exiled by Brexit.
Inevitably, those most likely to leave are those with the skills to do so easily. Anecdotally, including from my own experience, this has been underway since 2016 but this week saw the first hard evidence of a brain drain as regards UK nationals moving to the EU (though it is still partial, and it will be a while before we know the full effect, which will also be on emigration to non-EU countries; it can be expected that rates of UK emigration to the EU are now peaking, as after transition freedom of movement and associated rights will cease).
That this is a ‘brain drain’ – a term we have only rarely heard in the UK since the 1970s though in June 2017 I warned it was in prospect – is significant because it indicates that this is another economic cost of Brexit. But it also reflects some crucial issues in the underlying demographics of the Brexit vote in which both post-compulsory education and being economically active associated with voting remain, whilst the converse was true for leave voters.
The consequence of this has become the new ‘unsayable’ in the political correctness of Brexit. It means that those who actually have to deal with the practical consequences of Brexit do not greatly overlap with those who chose it. That can’t be a condescending comment to make, since Brexiters themselves constantly say that the remainers are the elite. And what does an elite do, other than run things? Of course, they aren’t for the most part plutocrats, tycoons or even big business leaders (all of whom, by definition, aren’t very numerous). Rather, they are the private and public sector managers, the professionals, scientists, entrepreneurs, academics, game designers, tech workers, musicians and so on.
In the main they aren’t high born – most probably have working-class parents, many may even consider themselves to be working-class – nor are they necessarily very well-paid. What Brexit has done is to spit in their faces. Not so much because of the Referendum result but because of the ‘winner takes all’ refusal to enact a compromise form to reflect the narrow result. And more than anything because of the constant insults since the vote. They are now open game for every taunt. They have been told every day for four years that they are metropolitan elitists, in the pay of the EU, exploiters of Bulgarian nannies or Polish plumbers, cry-babies, saboteurs, traitors, and enemies of the people. And, constantly, they are told that if they ‘love the EU so much’ then they should go and live there. So it’s not particularly surprising that they are doing just that if they can (or, as seems to be happening with the Civil Service, resigning rather than be used as “political punchbags”).
The culture war on the middle class
It used to be a cliché that any History exam paper answer on any period about any country could gain marks by reference to ‘the rising middle class’. Brexit has in effect declared culture war on Britain’s middle-class – or at least the most productive, active parts of it. It’s that which is leading skilled people to leave or to withdraw from public life. Yet at the same time it is they who are charged with actually dealing with Brexit since, of course, most of them are not in a position to emigrate or resign.
For it is not the archetypal Brexit-voting coastal town pensioner who thinks that immigration has gone too far, is fed up with being told what to do by Brussels and just wants his country back who has to manage social care provision for his peers. It’s his, again archetypal, remain-voting grand-daughter with a social science degree who works in local government, is desperate as she can no longer recruit EU workers, has had her hopes of further study in the Netherlands dashed and her relationship with her Dutch boyfriend jeopardised. The horrible achievement of the Brexiters has been to configure the grandfather as an ‘ordinary, decent person’ who has ‘taken revenge on his remoaner elitist’ grand-daughter.
By setting up that bogus – but vicious - cultural conflict, Brexiters have potentially set in train something much more dangerous. It’s obvious to anyone paying attention that we’re at the start of an unemployment bloodbath with, daily, new redundancy announcements because of Covid-19 and it’s going to be exacerbated by Brexit, especially when the transition period ends. Traditionally, the socially liberal middle classes were happy – or, if not happy, felt a moral obligation – to support through taxes the unemployed, as a kind of implicit social contract.
A broken social contract?
I’m not sure that will be so true anymore for those who, whilst not able to join the brain drain, now feel like exiles in their own country. Whenever some adverse effect of Brexit is reported social media posts immediately focus on who voted for it – so, for example, the current stories about Kent lorry parks, in a county where the majority voted for Brexit, are not viewed sympathetically. Stories about the concerns of people in Sunderland or Cornwall about the effects of Brexit get similar treatment. The response is invariably to point out, often gleefully, that a majority in those areas voted for Brexit so they must accept the consequences.
I don’t defend those sentiments: leave voters were misled, and worse, by the Referendum campaign and years of media poison and, anyway, the adverse effects of Brexit are not going to smartly target leave voters but spare remainers. Moreover, whilst remainers certainly have no obligation to ‘get behind Brexit’, they need not make their own contribution to prolonging the culture war. And, in any case, it would be a cruelly moralistic world if we all got punished for every mistake we made. But, defensible or not, those responses are real and can be read every day.
Perhaps they are not widely shared, and represent only a vocal sliver of remainer opinion. But if these sentiments are more extensively held, as I suspect they are, this means that the economically inactive and low-skill demographic and the ‘left behind’ regions that voted for Brexit will no longer be seen by the liberal middle class as deserving of support. It will be said that they have got what they voted for, and will have to live with it.
That, after all, is the logical consequence of the Brexiters’ ‘elitist’ narrative: they chose to say that leave voters were ‘the people’ and remain voters weren’t. They infected Britain with this culture war as a tactic to win the Referendum. So, harsh as such remainer ‘vengefulness’ may be, it does grow from soil cultivated by leading Brexiters. For that matter, the first part of my critique, above, of this vengefulness is what Brexiters insist to be the elitist condescension of denying that leavers knew what they were voting for.
Yet as I said in a tweet which – by my modest standards – went viral this week, the proposition that voters in 2016, when Brexit had no detailed or settled definition, knew exactly what they were voting for hardly sits easily with Duncan Smith’s claim that, equipped with the detailed Withdrawal Agreement in 2019, he didn’t understand what he was voting for.
Freeports and chemicals
This week has seen several examples. Freeports have for years been touted as a benefit of Brexit, and became government policy when Boris Johnson became Prime Minister, with a consultation exercise launched last February. I discussed the issue at that time and won’t repeat that analysis here, except to say that it pointed to the very mixed evidence of their benefit, even in their ‘non-EU’ form. Last week saw another outing of the argument for their virtues but the very same day new research from the UK Trade Policy Observatory showed these to be “almost non-existent” (£). If this is to be a major component of post-transition trade and industrial policy, it is misplaced.
If freeports will not provide an economic boost, the dangers of Brexit to the economically and strategically vital chemicals industry were again laid bare (£) in the latest of a series of excellent reports by Peter Foster on the practicalities of Brexit. The industry is the UK’s second largest manufacturing sector and its trade and supply chains are massively tied to the EU. These dangers have always been incipient because of the decision to leave the European Chemicals Agency (ECHA) and the REACH regulations it oversees, but under Theresa May there had been a plan to seek some form of Associate Membership.
That might or might not have succeeded (a House of Lords Report in 2018, which also sets out in clear detail the entire ECHA/REACH issue, was doubtful), but under Johnson’s even more hard line approach, complete regulatory independence is now the policy. This is going to be hugely costly (£1 billion, according to Foster’s report) and bureaucratically cumbersome however it is done, and the more so if no agreement is reached with the EU on accessing ECHA data – which is doubtful. In short, no one yet knows how it is going to work or whether it will be ready in time for the end of transition, and that’s less than five months away.
But the real kicker is that even if it all goes ahead, what in effect will have happened is to a very large extent a replication of the existing regulatory regime with the sole ‘advantage’ of it being badged British. Indeed, it’s an example of one of the many things that the UK’s budget contribution was paying for, though not included in the crude accounting that dominated the Referendum campaign. Its replication is also an example of how, in practice, Brexit Britain will be pulled by the gravitational force of EU regulation because REACH is also, increasingly, a global standard.
This is the purely theoretical ‘sovereignty’ which is being regained; the costs to businesses, trade and jobs, which are real, are the price. It is a paradigm case of what Brexit is going to mean in practice, as has been clear since August 2017 – back when all we knew about Brexit was that it meant Brexit – when the provisions of the (then) Data Protection Bill were outlined.
Round-up of other news
We have also seen updates on the objections of Kent residents to the new Brexit lorry parks plus the news that Operation Brock is to be revived for the end of the transition (as for Holyhead, goodness knows how its problems will be dealt with), new warnings of food shortages in Northern Ireland because of the Irish Sea border, new warnings of an ‘environmental governance gap’ at the end of the transition, the revival of government plans for stockpiling medicines in preparation for possible disruptions, a new CBI survey showing business concern about, and lack of preparedness for, the end of the transition period, and the latest culture war volley in the elevation of prominent Brexiters to the House of Lords (forgotten, now, is the Brexiters’ insistence that it is crucial that our laws be made by those the people can vote out of office). As with the list of some of last week’s developments in last week’s post, the sheer diversity of complex problems is striking.
As for the latest good news about Brexit, that’s easily dealt with: there is none. Some might propose that the imminent UK trade deal with Japan is an exception but, although we don’t yet know the detail, it isn’t likely to be significantly different (£) to the EU-Japan deal the UK is currently part of. It’s certainly true that not doing such a deal would have been damaging, but that just means that this story is ‘not bad news’ rather than being ‘good news’ - despite the jubilance of the Brexit press, of which we will have more when the agreement is signed (and, note, this deal is, at Japanese insistence, a speedy re-negotiation rather than a roll over, to which Japan would not agree). It is also possible, as mentioned in a recent post, that if and when the UK and the EU reach a trade agreement then a further, more extensive, deal with Japan might follow.
Similarly, are we really meant to welcome today’s news that up to £355 million is to be spent to support new systems and processes for trade between Great Britain and Northern Ireland? That may be helpful to Northern Ireland’s businesses – though there are many questions as to how, whether and when it will work – and if it was offsetting the damage of a natural disaster might in that sense be welcome. But Brexit is self-inflicted, and all along it was denied that this, or any, damage would occur.
So if good news means something unequivocally good that is happening as a result of Brexit, and which wouldn’t have happened without Brexit then we are still waiting for it.
The significance of Iain Duncan Smith
In the face of this, it might be expected, in any rational polity, that those who have championed Brexit and its unalloyed advantages would now be starting to express some alarm about – perhaps even some contrition for – what they have foisted on us. And in a way they are – but it is a way that is neither rational, nor moral, nor honest. Witness how this week we have seen veteran arch-Brexiter Iain Duncan Smith bemoaning the financial commitments signed up to in the Withdrawal Agreement (WA).
It’s a story with multiple layers of absurdity and disingenuity. He complains that “in the fine print, unnoticed by many” of the WA is a £160 billion bill for EU loans. But this is the WA which was Johnson’s great ‘oven ready deal’ that was presented to the voters at the 2019 Election and which, afterwards, Duncan Smith enthusiastically voted for in the House of Commons. That vote on the Withdrawal Agreement Bill was rushed through, but did he then join the calls for more scrutiny of “the fine print”? No. On the contrary he said “if there is anything about this arrangement that we have not now debated and thrashed to death, I would love to know what it is”.
So he fully supported it, but apparently didn’t understand its implications which it was his job to scrutinise and to which he now objects, and argued against further scrutiny. But – the final ridiculous twist – the £160 billion story isn’t really true anyway (it is based on the effectively zero possibility of every loan made by the European Investment Bank being defaulted on simultaneously).
It’s easy – almost obligatory - to mock this depressing farrago of stupidity and lies, but to do so misses its deeper significance, which is two-fold.
First, it is the latest salvo in the Brexit Ultras’ attempt to disown the entirety of the WA. In a post immediately after the 2019 election I flagged up the likelihood that they would do this, and have since recorded how it is becoming a growing, concerted campaign, which carries profound dangers of international pariahdom. It will intensify through this autumn, and reach a crescendo if there is no trade deal.
Second, and more broadly, it is the latest indication of the truly tragic fate that Brexiters have inflicted on Britain, whereby they insist that Brexit must be done or else the will of the people is betrayed, but also insist that any actual way that Brexit is done is a betrayal of the will of the people. It is a paradox from which there is no escape, and which dooms us to years, probably decades, of culture war.
Culture war ‘refugees’
One effect of that culture war is to produce ‘refugees’. Again, it’s been obvious from the beginning that Britain would suffer an exodus of people alienated by Brexit. Most obviously that means EU nationals in the UK who both for reasons of practical uncertainty and cultural affront no longer wish to be here. It also means UK nationals, and again for both economic and cultural reasons – those who see Britain headed for economic danger but who also feel politically exiled by Brexit.
Inevitably, those most likely to leave are those with the skills to do so easily. Anecdotally, including from my own experience, this has been underway since 2016 but this week saw the first hard evidence of a brain drain as regards UK nationals moving to the EU (though it is still partial, and it will be a while before we know the full effect, which will also be on emigration to non-EU countries; it can be expected that rates of UK emigration to the EU are now peaking, as after transition freedom of movement and associated rights will cease).
That this is a ‘brain drain’ – a term we have only rarely heard in the UK since the 1970s though in June 2017 I warned it was in prospect – is significant because it indicates that this is another economic cost of Brexit. But it also reflects some crucial issues in the underlying demographics of the Brexit vote in which both post-compulsory education and being economically active associated with voting remain, whilst the converse was true for leave voters.
The consequence of this has become the new ‘unsayable’ in the political correctness of Brexit. It means that those who actually have to deal with the practical consequences of Brexit do not greatly overlap with those who chose it. That can’t be a condescending comment to make, since Brexiters themselves constantly say that the remainers are the elite. And what does an elite do, other than run things? Of course, they aren’t for the most part plutocrats, tycoons or even big business leaders (all of whom, by definition, aren’t very numerous). Rather, they are the private and public sector managers, the professionals, scientists, entrepreneurs, academics, game designers, tech workers, musicians and so on.
In the main they aren’t high born – most probably have working-class parents, many may even consider themselves to be working-class – nor are they necessarily very well-paid. What Brexit has done is to spit in their faces. Not so much because of the Referendum result but because of the ‘winner takes all’ refusal to enact a compromise form to reflect the narrow result. And more than anything because of the constant insults since the vote. They are now open game for every taunt. They have been told every day for four years that they are metropolitan elitists, in the pay of the EU, exploiters of Bulgarian nannies or Polish plumbers, cry-babies, saboteurs, traitors, and enemies of the people. And, constantly, they are told that if they ‘love the EU so much’ then they should go and live there. So it’s not particularly surprising that they are doing just that if they can (or, as seems to be happening with the Civil Service, resigning rather than be used as “political punchbags”).
The culture war on the middle class
It used to be a cliché that any History exam paper answer on any period about any country could gain marks by reference to ‘the rising middle class’. Brexit has in effect declared culture war on Britain’s middle-class – or at least the most productive, active parts of it. It’s that which is leading skilled people to leave or to withdraw from public life. Yet at the same time it is they who are charged with actually dealing with Brexit since, of course, most of them are not in a position to emigrate or resign.
For it is not the archetypal Brexit-voting coastal town pensioner who thinks that immigration has gone too far, is fed up with being told what to do by Brussels and just wants his country back who has to manage social care provision for his peers. It’s his, again archetypal, remain-voting grand-daughter with a social science degree who works in local government, is desperate as she can no longer recruit EU workers, has had her hopes of further study in the Netherlands dashed and her relationship with her Dutch boyfriend jeopardised. The horrible achievement of the Brexiters has been to configure the grandfather as an ‘ordinary, decent person’ who has ‘taken revenge on his remoaner elitist’ grand-daughter.
By setting up that bogus – but vicious - cultural conflict, Brexiters have potentially set in train something much more dangerous. It’s obvious to anyone paying attention that we’re at the start of an unemployment bloodbath with, daily, new redundancy announcements because of Covid-19 and it’s going to be exacerbated by Brexit, especially when the transition period ends. Traditionally, the socially liberal middle classes were happy – or, if not happy, felt a moral obligation – to support through taxes the unemployed, as a kind of implicit social contract.
A broken social contract?
I’m not sure that will be so true anymore for those who, whilst not able to join the brain drain, now feel like exiles in their own country. Whenever some adverse effect of Brexit is reported social media posts immediately focus on who voted for it – so, for example, the current stories about Kent lorry parks, in a county where the majority voted for Brexit, are not viewed sympathetically. Stories about the concerns of people in Sunderland or Cornwall about the effects of Brexit get similar treatment. The response is invariably to point out, often gleefully, that a majority in those areas voted for Brexit so they must accept the consequences.
I don’t defend those sentiments: leave voters were misled, and worse, by the Referendum campaign and years of media poison and, anyway, the adverse effects of Brexit are not going to smartly target leave voters but spare remainers. Moreover, whilst remainers certainly have no obligation to ‘get behind Brexit’, they need not make their own contribution to prolonging the culture war. And, in any case, it would be a cruelly moralistic world if we all got punished for every mistake we made. But, defensible or not, those responses are real and can be read every day.
Perhaps they are not widely shared, and represent only a vocal sliver of remainer opinion. But if these sentiments are more extensively held, as I suspect they are, this means that the economically inactive and low-skill demographic and the ‘left behind’ regions that voted for Brexit will no longer be seen by the liberal middle class as deserving of support. It will be said that they have got what they voted for, and will have to live with it.
That, after all, is the logical consequence of the Brexiters’ ‘elitist’ narrative: they chose to say that leave voters were ‘the people’ and remain voters weren’t. They infected Britain with this culture war as a tactic to win the Referendum. So, harsh as such remainer ‘vengefulness’ may be, it does grow from soil cultivated by leading Brexiters. For that matter, the first part of my critique, above, of this vengefulness is what Brexiters insist to be the elitist condescension of denying that leavers knew what they were voting for.
Yet as I said in a tweet which – by my modest standards – went viral this week, the proposition that voters in 2016, when Brexit had no detailed or settled definition, knew exactly what they were voting for hardly sits easily with Duncan Smith’s claim that, equipped with the detailed Withdrawal Agreement in 2019, he didn’t understand what he was voting for.
Friday, 24 January 2020
Is "f*** business" now government policy?
Hardly had the electronic ink dried on my previous post, which included some discussion of the government’s approach to the business effects of Brexit, than Sajid Javid gave a clear and strong indication of just what that is to be. In an interview with the Financial Times, the Chancellor stated that “there will not be alignment” with EU regulations, that businesses have already had since 2016 to prepare for this, and still have until the end of the year to “adjust”.
In a way, there was nothing new in this. Ever since Boris Johnson came to power, and certainly since the changes to the Withdrawal Agreement and Political Declaration that followed, it has been clear that his government will be far less committed to alignment than, even, Theresa May’s (the ‘even’ is worth stressing since, of course, she had already taken the biggest step towards divergence by ruling out single market membership). Yet Javid’s was perhaps the hardest statement so far, and significant in coming from the person in charge of economic policy. For it seemed to suggest that there would be no regulatory alignment at all.
One problem with assessing such statements is that it is by no means clear that government ministers, even including the Chancellor, actually understand the full meaning of the terms they use and, therefore, the implications of what they are saying. But business groups certainly took him at his word (£), with the motor industry immediately warning – for the umpteenth time - that this would add billions of pounds to their costs, and aerospace, chemicals, and food and drinks industry spokespeople giving similar responses.
Known unknowns
There are multiple problems with what Javid said. One is that it is simply absurd to suggest that businesses have had since the Referendum to prepare. As anyone who has followed even the cursory details since then knows, the entire British polity has been convulsed in the debate about what leaving the EU actually means. Even now, with 11 months to go until the end of the transition period, the nature of that relationship has still to be negotiated. So how are businesses expected to prepare?
It is not enough just to know the general shape of what is in prospect (‘a free trade deal’) since that says very little about the detailed operational issues which will arise according to the specific nature of that deal. Moreover, a strict interpretation of the ‘no alignment’ line might well suggest that no such deal will even be reached, or only one of the most minimal sort, so in that sense even the general shape of things is not clear. At the very least, as things stand, there is no assurance of any deal, so even the most basic question of whether and what tariffs will apply is still open, and for some businesses the answer to that in itself will be the make or break issue.
Beyond that, if alignment with the EU is to end, then what regulations will replace them? None of that has been specified (except in a very few areas, such as the post-Euratom nuclear regulatory system), and so no business can know what it is supposed to be adjusting to. Very large businesses might be able to afford to plan for various scenarios, but even that would not be enough to make all the detailed operational preparations.
Did Javid know what he was saying?
One clue to the fact that Javid may not really have understood the implications of what he said lies in his comment in the same interview that Japan exports cars to the EU, yet does not follow EU regulations. That’s clearly nonsense – those cars it sells to the EU must conform, and the extensive investment by Japanese car firms within the UK and elsewhere, in order to be in the single market, is partly explained by this. But I think that what Javid probably had in mind was one of the basic, but mistaken, beliefs of many Brexit advocates (who, presumably, are now influential as advisors to the government). It is that what is at stake is adherence to product standards and that, therefore, a firm simply adopts the standards of the country it wants to export to for the products it wants to sell there. Meanwhile, firms which are solely domestic should not be subject to EU regulations, and their being so represents an objectionable intrusion into national sovereignty.
There are numerous difficulties with this. First, it ignores the fact that the issue isn’t just one of conforming with standards – as if all that meant was a business making internal changes to what it produced, though that in itself is a cost - but of the licensing and/or inspection needed to ensure or to demonstrate that conformity. The more regulatory regimes a business has to comply with, the higher the cost. So, far from ‘reducing the regulatory burden’ on business, that burden is increased when countries have their own regulations. Indeed, that is the foundational insight and basis of any single market, including that of the EU.
Second, it is not just about the EU. EU standards are substantially intertwined with wider, global, standards. That is, they have to some extent spread beyond the EU (e.g. chemicals regulations) or themselves incorporate standards systems from outside the EU (e.g. automotive regulations). Thus divergence from EU regulations is incompatible with the ‘Global Britain’ strategy that supposedly underpins Brexit. Or, to put it better, the distinction that Brexiters draw between being an EU member and being a global trading nation is a totally false one.
Conversely, the idea of a British set of regulations is deeply constraining. It is inconceivable that such regulations would themselves become a new international standard, so as to, again for example, supplant existing international chemicals and automotive regulations. In this sense, the question of whether these British standards would be ‘higher’ or ‘lower’ than those of the EU – whilst potentially important in its own right – isn’t so much the issue as the fact that, higher or lower, they would only apply to British businesses (though see below for clarification on what ‘British’ means here). Even if the standards are the same – which makes the whole exercise pointless anyway – there would still be a need for double registration/ licensing of conformity.
Regulatory independence has no benefits
For those businesses that currently export, that just adds a layer of regulatory cost (i.e. regulation for the domestic market only), whilst for those that currently don’t it adds a huge barrier to developing export business in the future (i.e. having to shift to, and/or demonstrate conformity with, the international standards). And it is actually even more constraining than that, because these domestically-regulated businesses would also be precluded from supplying exporting companies to the extent that their products were components within a finished product that did need to comply with EU and international regulations. There is simply no business benefit to this at all – its only conceivable value is political flag waving that we have ‘our own’ standards.
As regards the automotive industry – but something similar would apply to many others – all of this was laid out quite starkly by the Brexit Select Committee in 2017 when it considered the question of regulatory alignment: “there is no argument for a separate set of UK standards” (paragraph 27) … “we have not identified any potential benefits for regulatory divergence from the EU … There are only costs.” (Paragraph 30)
There is a further and very important dimension to all this. Not only does divergence from EU regulations damage British participation in the European single market, it also substantially damages the existence of the UK single market. That is to say, because of the terms of the Withdrawal Agreement for Northern Ireland, the more (Great) Britain diverges from the EU, the more significant the Irish Sea border becomes. That has economic consequences in shrinking the UK single market, but it also has major political consequences, most obviously for Northern Ireland but also for Scotland, since it further cements the ways in which Northern Ireland will remain in the EU single market. That is to say, the more Great Britain diverges from the EU, the more Northern Ireland diverges from the UK.
Clarifications?
Subsequent to Javid’s interview, some supposed clarifications were made by the Business Minister, Nadhim Zahawi, but if anything these muddied the waters further. First, he said that a zero tariffs, zero quotas trade deal would mean that there would be no cliff edge at the end of the transition period, and would eliminate the bulk of the paperwork for exporters. But, apart from the fact that such a deal has yet to be done, it would certainly not solve the paperwork problem, as Pauline Bastidon of the Freight Transport Association pointed out.
Second, as so often in the Brexit debate, it seems that Zahawi doesn’t appreciate the different issues posed by tariff and non-tariff barriers to trade. A tariff deal is irrelevant to the regulatory issues and, on those, he was back in the same territory as, implicitly, Javid had been. That is, again, he seems to think that it is just a matter of British firms following particular standards. He implied that these might be the same as EU standards – for example of chemicals – but that Britain would no longer be a rule-taker.
But this makes no sense at all. If Britain simply replicates EU rules then it is, effectively, a rule-taker. Yet at the same time, unless it is formally within the ambit of EU regulatory agencies then simply following the rules will not be enough, without licensing and enforcement, to gain the economic benefits of doing so. And, as noted above, it would entail double registration and licensing processes simply in order to follow the identical standards. So, if he actually understands and means what he says, it is yet another Brexit lose-lose: as a rule-taker there is a loss of ‘sovereignty’, whilst without formal participation in regulatory systems there is also an economic loss.
Sajid Javid also made some subsequent remarks on the subject, this time at the World Economic Forum in Davos (in between being taught some brutal, public lessons in realpolitik by the US Trade Secretary). In response to questions he re-stated that there was no point leaving the EU and still “sticking to all its rules”. This can be parsed in two ways. It might mean, as he implied before, exiting ‘all its rules’, or it might mean sticking to some but not others. The next day he spoke of not diverging "for the sake of it", which might imply the latter. But, in that case, which of them? Without saying, businesses can’t be expected to prepare. He also reiterated his belief that a trade deal could be done by the end of the year, but mentioned as if in passing that this would include “services”. But since any deal on services would necessarily include some element of regulatory alignment, did this mean that he now accepted this? Or did he not realise that this was an implication? And which specific services was he referring to anyway?
When dogma becomes policy
It’s by no means impossible that our politicians simply don’t understand what they are doing. If so, that isn’t unusual – they are not elected or appointed as ministers for their technical expertise – but it is being compounded by not listening to those who do and, very likely, listening too much to Brexit dogmatists who do not, or do not want to, understand. It really would not be a big ask to expect them to sit down for short lectures from non-partisan experts like Dmitry Grozoubinski on trade, Pauline Bastidon on logistics, and Anna Jerzewska on customs. Not with a view to coming to terms with the horrendously complicated technical details of these domains, which isn’t their job, but just to grasp the broad outlines of each which, on current evidence, they don’t.
That seems unlikely to happen. So we have to conclude that they may not know what they mean, but they do mean what they say. That is, perhaps without really understanding the consequences, they will pursue a policy of wholesale regulatory divergence. For this is not now a matter of an interview here or a speech there. There have been reports that government ministers actually regard whole, highly successful, sectors of the economy as expendable. Even that might – just about – make sense if at the same time they could point to sectors which are going to be boosted by their Brexit plans. So far, none have been identified.
Certainly there was much Brexiter excitement about a Reuters’ report this week that more than a thousand EU financial firms are to open new offices in London because of Brexit. But, alas, beneath the headline lay a different, more complex and less positive story – that, precisely in order to cope with the separation of regulatory regimes (i.e. the anticipated shift from ‘passporting’ to ‘equivalence’), these firms were establishing London offices. This would create an estimated 2,400 jobs. There was some ambiguity in the report as to whether this was across the headline 1000+ firms (<2.4 jobs per firm) or just across 300 of them (8 jobs per firm) but, either way, these are presumably ‘brass plate’ operations for registration purposes, not substantive operational moves.
Thus, as the report confirmed, it only mitigates the flow of jobs the other way. For example, just this week investment bank JP Morgan announced the latest phase of its relocation from London to Paris, where hundreds of its staff will be amongst the estimated 4000 from across the financial services who by the end of the year will have moved to Paris alone, with Dublin, Frankfurt and Amsterdam also pulling in jobs (and business and taxes).
As soon as the decisions was made that Brexit could not mean the ‘Norway model’ of single market membership that many leavers voted for, it was clear that the services sector was going to be substantially damaged. And frictionless trade for goods has long been a pipe-dream. But this apparent hardening to complete regulatory unilateralism suggests that manufacturing industry, too, is to be sacrificed simply in order to proclaim ‘independence’. Like blue passports, the value is purely symbolic. Unlike blue passports, the economic consequences will be severe in terms of jobs, the tax base and, hence, public services.
For in telling businesses so clearly that they have less than a year to prepare for a scenario that is still unknown but which looks to be deeply problematic for them, and which they have repeatedly and explicitly warned against, Javid has sent a message as clear in its own way as Boris Johnson’s revealing “f*** business”* comment. For businesses that export, have international supply chains, or which supply such firms, the message to those that can do so is to use the transition period to relocate. For others, perhaps especially SMEs, for whom relocation may not be an option, it may simply mean closing down. The costs and complexities just of new customs procedures, let alone those of future but unspecified regulatory changes, may simply be overwhelming.
But, as suggested in my previous post, we seem now have reached a point where all costs are irrelevant and all that matters is the bright, shining light of Brexiter purity. Which may be a fine and splendid thing to some, but you can’t eat it and it doesn’t pay the bills.
*I dislike the coy use of asterisks, but have used them because I have the idea that, otherwise, some internet filter settings may prevent readers accessing this post.
In a way, there was nothing new in this. Ever since Boris Johnson came to power, and certainly since the changes to the Withdrawal Agreement and Political Declaration that followed, it has been clear that his government will be far less committed to alignment than, even, Theresa May’s (the ‘even’ is worth stressing since, of course, she had already taken the biggest step towards divergence by ruling out single market membership). Yet Javid’s was perhaps the hardest statement so far, and significant in coming from the person in charge of economic policy. For it seemed to suggest that there would be no regulatory alignment at all.
One problem with assessing such statements is that it is by no means clear that government ministers, even including the Chancellor, actually understand the full meaning of the terms they use and, therefore, the implications of what they are saying. But business groups certainly took him at his word (£), with the motor industry immediately warning – for the umpteenth time - that this would add billions of pounds to their costs, and aerospace, chemicals, and food and drinks industry spokespeople giving similar responses.
Known unknowns
There are multiple problems with what Javid said. One is that it is simply absurd to suggest that businesses have had since the Referendum to prepare. As anyone who has followed even the cursory details since then knows, the entire British polity has been convulsed in the debate about what leaving the EU actually means. Even now, with 11 months to go until the end of the transition period, the nature of that relationship has still to be negotiated. So how are businesses expected to prepare?
It is not enough just to know the general shape of what is in prospect (‘a free trade deal’) since that says very little about the detailed operational issues which will arise according to the specific nature of that deal. Moreover, a strict interpretation of the ‘no alignment’ line might well suggest that no such deal will even be reached, or only one of the most minimal sort, so in that sense even the general shape of things is not clear. At the very least, as things stand, there is no assurance of any deal, so even the most basic question of whether and what tariffs will apply is still open, and for some businesses the answer to that in itself will be the make or break issue.
Beyond that, if alignment with the EU is to end, then what regulations will replace them? None of that has been specified (except in a very few areas, such as the post-Euratom nuclear regulatory system), and so no business can know what it is supposed to be adjusting to. Very large businesses might be able to afford to plan for various scenarios, but even that would not be enough to make all the detailed operational preparations.
Did Javid know what he was saying?
One clue to the fact that Javid may not really have understood the implications of what he said lies in his comment in the same interview that Japan exports cars to the EU, yet does not follow EU regulations. That’s clearly nonsense – those cars it sells to the EU must conform, and the extensive investment by Japanese car firms within the UK and elsewhere, in order to be in the single market, is partly explained by this. But I think that what Javid probably had in mind was one of the basic, but mistaken, beliefs of many Brexit advocates (who, presumably, are now influential as advisors to the government). It is that what is at stake is adherence to product standards and that, therefore, a firm simply adopts the standards of the country it wants to export to for the products it wants to sell there. Meanwhile, firms which are solely domestic should not be subject to EU regulations, and their being so represents an objectionable intrusion into national sovereignty.
There are numerous difficulties with this. First, it ignores the fact that the issue isn’t just one of conforming with standards – as if all that meant was a business making internal changes to what it produced, though that in itself is a cost - but of the licensing and/or inspection needed to ensure or to demonstrate that conformity. The more regulatory regimes a business has to comply with, the higher the cost. So, far from ‘reducing the regulatory burden’ on business, that burden is increased when countries have their own regulations. Indeed, that is the foundational insight and basis of any single market, including that of the EU.
Second, it is not just about the EU. EU standards are substantially intertwined with wider, global, standards. That is, they have to some extent spread beyond the EU (e.g. chemicals regulations) or themselves incorporate standards systems from outside the EU (e.g. automotive regulations). Thus divergence from EU regulations is incompatible with the ‘Global Britain’ strategy that supposedly underpins Brexit. Or, to put it better, the distinction that Brexiters draw between being an EU member and being a global trading nation is a totally false one.
Conversely, the idea of a British set of regulations is deeply constraining. It is inconceivable that such regulations would themselves become a new international standard, so as to, again for example, supplant existing international chemicals and automotive regulations. In this sense, the question of whether these British standards would be ‘higher’ or ‘lower’ than those of the EU – whilst potentially important in its own right – isn’t so much the issue as the fact that, higher or lower, they would only apply to British businesses (though see below for clarification on what ‘British’ means here). Even if the standards are the same – which makes the whole exercise pointless anyway – there would still be a need for double registration/ licensing of conformity.
Regulatory independence has no benefits
For those businesses that currently export, that just adds a layer of regulatory cost (i.e. regulation for the domestic market only), whilst for those that currently don’t it adds a huge barrier to developing export business in the future (i.e. having to shift to, and/or demonstrate conformity with, the international standards). And it is actually even more constraining than that, because these domestically-regulated businesses would also be precluded from supplying exporting companies to the extent that their products were components within a finished product that did need to comply with EU and international regulations. There is simply no business benefit to this at all – its only conceivable value is political flag waving that we have ‘our own’ standards.
As regards the automotive industry – but something similar would apply to many others – all of this was laid out quite starkly by the Brexit Select Committee in 2017 when it considered the question of regulatory alignment: “there is no argument for a separate set of UK standards” (paragraph 27) … “we have not identified any potential benefits for regulatory divergence from the EU … There are only costs.” (Paragraph 30)
There is a further and very important dimension to all this. Not only does divergence from EU regulations damage British participation in the European single market, it also substantially damages the existence of the UK single market. That is to say, because of the terms of the Withdrawal Agreement for Northern Ireland, the more (Great) Britain diverges from the EU, the more significant the Irish Sea border becomes. That has economic consequences in shrinking the UK single market, but it also has major political consequences, most obviously for Northern Ireland but also for Scotland, since it further cements the ways in which Northern Ireland will remain in the EU single market. That is to say, the more Great Britain diverges from the EU, the more Northern Ireland diverges from the UK.
Clarifications?
Subsequent to Javid’s interview, some supposed clarifications were made by the Business Minister, Nadhim Zahawi, but if anything these muddied the waters further. First, he said that a zero tariffs, zero quotas trade deal would mean that there would be no cliff edge at the end of the transition period, and would eliminate the bulk of the paperwork for exporters. But, apart from the fact that such a deal has yet to be done, it would certainly not solve the paperwork problem, as Pauline Bastidon of the Freight Transport Association pointed out.
Second, as so often in the Brexit debate, it seems that Zahawi doesn’t appreciate the different issues posed by tariff and non-tariff barriers to trade. A tariff deal is irrelevant to the regulatory issues and, on those, he was back in the same territory as, implicitly, Javid had been. That is, again, he seems to think that it is just a matter of British firms following particular standards. He implied that these might be the same as EU standards – for example of chemicals – but that Britain would no longer be a rule-taker.
But this makes no sense at all. If Britain simply replicates EU rules then it is, effectively, a rule-taker. Yet at the same time, unless it is formally within the ambit of EU regulatory agencies then simply following the rules will not be enough, without licensing and enforcement, to gain the economic benefits of doing so. And, as noted above, it would entail double registration and licensing processes simply in order to follow the identical standards. So, if he actually understands and means what he says, it is yet another Brexit lose-lose: as a rule-taker there is a loss of ‘sovereignty’, whilst without formal participation in regulatory systems there is also an economic loss.
Sajid Javid also made some subsequent remarks on the subject, this time at the World Economic Forum in Davos (in between being taught some brutal, public lessons in realpolitik by the US Trade Secretary). In response to questions he re-stated that there was no point leaving the EU and still “sticking to all its rules”. This can be parsed in two ways. It might mean, as he implied before, exiting ‘all its rules’, or it might mean sticking to some but not others. The next day he spoke of not diverging "for the sake of it", which might imply the latter. But, in that case, which of them? Without saying, businesses can’t be expected to prepare. He also reiterated his belief that a trade deal could be done by the end of the year, but mentioned as if in passing that this would include “services”. But since any deal on services would necessarily include some element of regulatory alignment, did this mean that he now accepted this? Or did he not realise that this was an implication? And which specific services was he referring to anyway?
When dogma becomes policy
It’s by no means impossible that our politicians simply don’t understand what they are doing. If so, that isn’t unusual – they are not elected or appointed as ministers for their technical expertise – but it is being compounded by not listening to those who do and, very likely, listening too much to Brexit dogmatists who do not, or do not want to, understand. It really would not be a big ask to expect them to sit down for short lectures from non-partisan experts like Dmitry Grozoubinski on trade, Pauline Bastidon on logistics, and Anna Jerzewska on customs. Not with a view to coming to terms with the horrendously complicated technical details of these domains, which isn’t their job, but just to grasp the broad outlines of each which, on current evidence, they don’t.
That seems unlikely to happen. So we have to conclude that they may not know what they mean, but they do mean what they say. That is, perhaps without really understanding the consequences, they will pursue a policy of wholesale regulatory divergence. For this is not now a matter of an interview here or a speech there. There have been reports that government ministers actually regard whole, highly successful, sectors of the economy as expendable. Even that might – just about – make sense if at the same time they could point to sectors which are going to be boosted by their Brexit plans. So far, none have been identified.
Certainly there was much Brexiter excitement about a Reuters’ report this week that more than a thousand EU financial firms are to open new offices in London because of Brexit. But, alas, beneath the headline lay a different, more complex and less positive story – that, precisely in order to cope with the separation of regulatory regimes (i.e. the anticipated shift from ‘passporting’ to ‘equivalence’), these firms were establishing London offices. This would create an estimated 2,400 jobs. There was some ambiguity in the report as to whether this was across the headline 1000+ firms (<2.4 jobs per firm) or just across 300 of them (8 jobs per firm) but, either way, these are presumably ‘brass plate’ operations for registration purposes, not substantive operational moves.
Thus, as the report confirmed, it only mitigates the flow of jobs the other way. For example, just this week investment bank JP Morgan announced the latest phase of its relocation from London to Paris, where hundreds of its staff will be amongst the estimated 4000 from across the financial services who by the end of the year will have moved to Paris alone, with Dublin, Frankfurt and Amsterdam also pulling in jobs (and business and taxes).
As soon as the decisions was made that Brexit could not mean the ‘Norway model’ of single market membership that many leavers voted for, it was clear that the services sector was going to be substantially damaged. And frictionless trade for goods has long been a pipe-dream. But this apparent hardening to complete regulatory unilateralism suggests that manufacturing industry, too, is to be sacrificed simply in order to proclaim ‘independence’. Like blue passports, the value is purely symbolic. Unlike blue passports, the economic consequences will be severe in terms of jobs, the tax base and, hence, public services.
For in telling businesses so clearly that they have less than a year to prepare for a scenario that is still unknown but which looks to be deeply problematic for them, and which they have repeatedly and explicitly warned against, Javid has sent a message as clear in its own way as Boris Johnson’s revealing “f*** business”* comment. For businesses that export, have international supply chains, or which supply such firms, the message to those that can do so is to use the transition period to relocate. For others, perhaps especially SMEs, for whom relocation may not be an option, it may simply mean closing down. The costs and complexities just of new customs procedures, let alone those of future but unspecified regulatory changes, may simply be overwhelming.
But, as suggested in my previous post, we seem now have reached a point where all costs are irrelevant and all that matters is the bright, shining light of Brexiter purity. Which may be a fine and splendid thing to some, but you can’t eat it and it doesn’t pay the bills.
*I dislike the coy use of asterisks, but have used them because I have the idea that, otherwise, some internet filter settings may prevent readers accessing this post.
Thursday, 18 April 2019
A quiet week reminded us of some Brexit realities
It has been a
mercifully quiet Brexit week, with a
palpable sense of exhausted relief all round. True, there have been the opening
salvos in the European Parliament election campaign. I’m not going to write much
about those now, though, in anticipation that the election – if it goes ahead –
will surely be the subject of future posts.
My only initial thoughts are that the remain parties really do need to develop some kind of pact or co-ordinating agreement (to the extent this is allowable under electoral rules), and that the initial Farage Brexit Party bounce may not prove very durable. After all, newly launched parties often achieve spectacular opinion poll results (witness the 18% recorded for TIG a week after launch in February). The Brexit Party faces a particular challenge in presenting itself as ‘new’ precisely because Farage, although their greatest electoral asset, is hardly a fresh face. He has an appeal to those who already find him appealing, and appals those who already find him appalling, but is unlikely to galvanise a whole new following.
The Pelosi delegation
Leaving all that aside for now, there’s been one (relatively) ignored event which served as a reminder of several Brexit realities. A delegation of senior US politicians led by Nancy Pelosi, the Speaker of the House of Representatives, has been visiting the UK and Ireland, including the border between the two countries. The message they have brought is that any damage done to the Good Friday Agreement (GFA) and the peace process would undermine the prospects of a future US-UK trade agreement.
There are various strands to this which are worth unpicking. One, which is important to remember, is just how heavily the US was involved in, and is invested in, the peace process. It was one of President Clinton’s major foreign policy initiatives, and his Special Envoy, Senator George Mitchell, played a key role in brokering the agreement. That commitment and active involvement continued under the Bush and Obama presidencies. And although it is true that Trump has been much less engaged, Pelosi’s comment this week that the GFA is a “beacon to the world” is a reminder that Northern Ireland still matters to the US.
By extension, this is also a reminder that leaving the EU is not just a matter of renegotiating that relationship. It has knock on effects in terms of re-calibrating all of the relationships, both economic and geo-political, that the UK has with the wider world. Brexit affects all of those – from Japan, to India, to Russia – in a variety of ways, adding multiple layers of complexity to what is already a complex process. Brexit is Brexit, to coin a phrase - but it is not just Brexit.
Brexit and a UK-US trade agreement
A second strand is the role that the idea of a US-UK trade agreement has played, and continues to play, in the Brexit debate. Obama’s warning during the referendum campaign that Britain would be at “the back of the queue” for such a deal was greeted with fury by Brexiters, whilst Trump’s subsequent enthusiasm for one has delighted them.
In fact, the economic reality is that a UK-US deal would be of negligible value – in the range of 0.1% and 0.3% of GDP, in the long-term according to government modelling (see p.14 of link). To put that figure into context, Brexit has already led to UK GDP being an estimated 2.5% smaller than it would have been had the vote gone the other way.
But, as with the more general Brexiter infatuation with an ‘independent trade policy’, economics is not really the issue. There’s never been any realistic suggestion that the UK will achieve better trade agreements on its own than as part of the EU. The issue is the political symbolism of it being an ‘independent’ policy, not that it is a better ‘trade’ policy.
That, actually, is not so unusual. Many aspects of the trade policy of many countries have little to do with trade and economics. Rather, they are also bound up with domestic political interests, geo-political strategy, and diplomatic and military relationships. Indeed, it is precisely Pelosi’s message that political factors would be relevant to whether or not there would be a UK-US agreement. For that matter, the EU stance on a future trade deal with the UK will in part be political rather than economic. That is why, for particular example, the Brexiter ‘Malthouse Plan B’, in which the Withdrawal Agreement is torn up, but a trade deal negotiated anyway, is a fantasy.
Just as a UK-US trade deal has a symbolic – even totemic – appeal to Brexiters, so too does it play an important role in critiques of Brexit. In particular, the spectre of ‘chlorinated chicken’ stands as an example of, and as a symbol of, the danger of an erosion of regulatory standards post-Brexit. The wider concern it references is a recognition that Britain would be too weak – and, no doubt, too eager for a deal – to maintain these standards. Moreover, for at least some Brexiters, the erosion of regulatory standards (including those for workers’ rights and environmental protection) would be not just something forced upon Britain but something to be actively welcomed.
In any case, whether standards were weaker or stronger, the key issue coming back to the Irish border is simply the possibility of their being different to those in the EU. It is this regulatory divergence from the single market – more than leaving the customs union – which goes to heart of why hard Brexit entails a hard border. This fact, more than any other, is what has given the lie to the pre-referendum Brexiter claim that there would be no implications for the Irish border.
Pelosi, the ERG, and the Irish border
This, then, is the third strand of the significance of Pelosi’s visit. During the London leg, her delegation had lunch with leading members of the ERG – Rees-Mogg, Francois, Jenkin and Baker. Reportedly, this led to Pelosi delivering a sharp rebuke to Mark Francois for being condescending (this would have been something to witness, since Pelosi is a talented, serious and heavyweight politician whereas Francois is, let’s say, less obviously impressive in his endowments). The hapless Francois apparently “turned from already red to even brighter red”. The point of contention was the now familiar Brexiter conspiracy theory that the Irish border issue has been ‘concocted’ by the EU and Dublin in order to derail Brexit.
That claim matters hugely, because it is central to the Brexiter belief that Theresa May unnecessarily agreed to the backstop and, therefore, has ‘betrayed’ Brexit. It seems certain to play a central role in the race to succeed her as Tory Party leader. The idea that the border issue is either non-existent or, at least, readily solved through ‘technological and administrative solutions’ – solutions which do not currently exist anywhere in the world, be it noted – has moved from the ERG fringe to become part of the Tory mainstream. The pivotal moments in this shift came with the government endorsement of the ‘Brady Amendment’ and with the development of the ‘Malthouse Compromise’.
The key to understanding why the latter was pivotal is the word ‘compromise’, because what it referred to was the endorsement of both ERG members and hitherto pragmatic Tory MPs like Damian Green and Nicky Morgan. In other words, like so much of what has characterised the Brexit debate, it is not about the realities of Brexit itself but about the internal dynamics of the Tory Party. Hence we now see potential contestants for the leadership endorsing it (£) in order to burnish their credentials. But as Peter Foster, the extremely well-informed Europe Editor of the Daily Telegraph, pithily put it “the point is, this stuff is – frankly – garbage” (the whole thread of which this tweet forms a part is well worth reading).
Pelosi is just the latest figure – albeit one of the most important – to try to explain to Brexiters why their attempt to pretend the Irish border is a non-issue is, indeed, garbage. It is unlikely to have an effect, though, and they will continue, no doubt, to refer to cherry-picked quotes from Varadkar, Barnier and others to pretend otherwise. I’m not sure that it is even a lie, anymore anyway, for most of them. It seems more to be a matter of group think in which what they want to be true must be true because they all agree it is true. Be that as it may, it is plainly false and if the next Prime Minister comes to office on the basis of a promise to implement it* then the prospects for the future Brexit negotiations are very poor. Indeed, if we get that far, it virtually guarantees that the ultimate outcome would be no future terms deal and the implementation of the backstop.
My only initial thoughts are that the remain parties really do need to develop some kind of pact or co-ordinating agreement (to the extent this is allowable under electoral rules), and that the initial Farage Brexit Party bounce may not prove very durable. After all, newly launched parties often achieve spectacular opinion poll results (witness the 18% recorded for TIG a week after launch in February). The Brexit Party faces a particular challenge in presenting itself as ‘new’ precisely because Farage, although their greatest electoral asset, is hardly a fresh face. He has an appeal to those who already find him appealing, and appals those who already find him appalling, but is unlikely to galvanise a whole new following.
The Pelosi delegation
Leaving all that aside for now, there’s been one (relatively) ignored event which served as a reminder of several Brexit realities. A delegation of senior US politicians led by Nancy Pelosi, the Speaker of the House of Representatives, has been visiting the UK and Ireland, including the border between the two countries. The message they have brought is that any damage done to the Good Friday Agreement (GFA) and the peace process would undermine the prospects of a future US-UK trade agreement.
There are various strands to this which are worth unpicking. One, which is important to remember, is just how heavily the US was involved in, and is invested in, the peace process. It was one of President Clinton’s major foreign policy initiatives, and his Special Envoy, Senator George Mitchell, played a key role in brokering the agreement. That commitment and active involvement continued under the Bush and Obama presidencies. And although it is true that Trump has been much less engaged, Pelosi’s comment this week that the GFA is a “beacon to the world” is a reminder that Northern Ireland still matters to the US.
By extension, this is also a reminder that leaving the EU is not just a matter of renegotiating that relationship. It has knock on effects in terms of re-calibrating all of the relationships, both economic and geo-political, that the UK has with the wider world. Brexit affects all of those – from Japan, to India, to Russia – in a variety of ways, adding multiple layers of complexity to what is already a complex process. Brexit is Brexit, to coin a phrase - but it is not just Brexit.
Brexit and a UK-US trade agreement
A second strand is the role that the idea of a US-UK trade agreement has played, and continues to play, in the Brexit debate. Obama’s warning during the referendum campaign that Britain would be at “the back of the queue” for such a deal was greeted with fury by Brexiters, whilst Trump’s subsequent enthusiasm for one has delighted them.
In fact, the economic reality is that a UK-US deal would be of negligible value – in the range of 0.1% and 0.3% of GDP, in the long-term according to government modelling (see p.14 of link). To put that figure into context, Brexit has already led to UK GDP being an estimated 2.5% smaller than it would have been had the vote gone the other way.
But, as with the more general Brexiter infatuation with an ‘independent trade policy’, economics is not really the issue. There’s never been any realistic suggestion that the UK will achieve better trade agreements on its own than as part of the EU. The issue is the political symbolism of it being an ‘independent’ policy, not that it is a better ‘trade’ policy.
That, actually, is not so unusual. Many aspects of the trade policy of many countries have little to do with trade and economics. Rather, they are also bound up with domestic political interests, geo-political strategy, and diplomatic and military relationships. Indeed, it is precisely Pelosi’s message that political factors would be relevant to whether or not there would be a UK-US agreement. For that matter, the EU stance on a future trade deal with the UK will in part be political rather than economic. That is why, for particular example, the Brexiter ‘Malthouse Plan B’, in which the Withdrawal Agreement is torn up, but a trade deal negotiated anyway, is a fantasy.
Just as a UK-US trade deal has a symbolic – even totemic – appeal to Brexiters, so too does it play an important role in critiques of Brexit. In particular, the spectre of ‘chlorinated chicken’ stands as an example of, and as a symbol of, the danger of an erosion of regulatory standards post-Brexit. The wider concern it references is a recognition that Britain would be too weak – and, no doubt, too eager for a deal – to maintain these standards. Moreover, for at least some Brexiters, the erosion of regulatory standards (including those for workers’ rights and environmental protection) would be not just something forced upon Britain but something to be actively welcomed.
In any case, whether standards were weaker or stronger, the key issue coming back to the Irish border is simply the possibility of their being different to those in the EU. It is this regulatory divergence from the single market – more than leaving the customs union – which goes to heart of why hard Brexit entails a hard border. This fact, more than any other, is what has given the lie to the pre-referendum Brexiter claim that there would be no implications for the Irish border.
Pelosi, the ERG, and the Irish border
This, then, is the third strand of the significance of Pelosi’s visit. During the London leg, her delegation had lunch with leading members of the ERG – Rees-Mogg, Francois, Jenkin and Baker. Reportedly, this led to Pelosi delivering a sharp rebuke to Mark Francois for being condescending (this would have been something to witness, since Pelosi is a talented, serious and heavyweight politician whereas Francois is, let’s say, less obviously impressive in his endowments). The hapless Francois apparently “turned from already red to even brighter red”. The point of contention was the now familiar Brexiter conspiracy theory that the Irish border issue has been ‘concocted’ by the EU and Dublin in order to derail Brexit.
That claim matters hugely, because it is central to the Brexiter belief that Theresa May unnecessarily agreed to the backstop and, therefore, has ‘betrayed’ Brexit. It seems certain to play a central role in the race to succeed her as Tory Party leader. The idea that the border issue is either non-existent or, at least, readily solved through ‘technological and administrative solutions’ – solutions which do not currently exist anywhere in the world, be it noted – has moved from the ERG fringe to become part of the Tory mainstream. The pivotal moments in this shift came with the government endorsement of the ‘Brady Amendment’ and with the development of the ‘Malthouse Compromise’.
The key to understanding why the latter was pivotal is the word ‘compromise’, because what it referred to was the endorsement of both ERG members and hitherto pragmatic Tory MPs like Damian Green and Nicky Morgan. In other words, like so much of what has characterised the Brexit debate, it is not about the realities of Brexit itself but about the internal dynamics of the Tory Party. Hence we now see potential contestants for the leadership endorsing it (£) in order to burnish their credentials. But as Peter Foster, the extremely well-informed Europe Editor of the Daily Telegraph, pithily put it “the point is, this stuff is – frankly – garbage” (the whole thread of which this tweet forms a part is well worth reading).
Pelosi is just the latest figure – albeit one of the most important – to try to explain to Brexiters why their attempt to pretend the Irish border is a non-issue is, indeed, garbage. It is unlikely to have an effect, though, and they will continue, no doubt, to refer to cherry-picked quotes from Varadkar, Barnier and others to pretend otherwise. I’m not sure that it is even a lie, anymore anyway, for most of them. It seems more to be a matter of group think in which what they want to be true must be true because they all agree it is true. Be that as it may, it is plainly false and if the next Prime Minister comes to office on the basis of a promise to implement it* then the prospects for the future Brexit negotiations are very poor. Indeed, if we get that far, it virtually guarantees that the ultimate outcome would be no future terms deal and the implementation of the backstop.
*Note: for
the avoidance of confusion, the ‘it’ here is some version of Malthouse Plan A
(i.e. the scenario I am envisaging is a Withdrawal Agreement being agreed by
Parliament and ratified, May resigning, and her replacement then undertaking the
future terms negotiations). It is of course a nonsensical scenario in that
Malthouse Plan A entails revising the Withdrawal Agreement, which in this
scenario would already have been passed. But anyone who thinks that nonsensical
scenarios can be ruled out hasn’t been paying attention to the politics ofBrexit. In fact, it is doubly nonsensical because if the alternative arrangements
envisaged by Malthouse A were ever proved to exist then their implementation is
catered for in the Withdrawal Agreement. Thus, if Brexiters believe they are,
or will be, developed then their objection to the backstop is redundant anyway.
On reflection, perhaps this footnote only adds to rather than avoids confusion.
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