Since as far back as 2016, the Treasury and other elements of the UK Government have been pushing for the UK to remain in some form of customs union with the EU after Brexit. Recent weeks have seen this idea again coming to the fore, with talk of a ‘temporary’ customs union to be created after the ‘transition period’. Those proposing this idea put it forward as a solution to what they see as the problems of Brexit. In reality, it would be in no way a solution, and it would create a whole new raft of problems.
The main arguments for a customs union are that it will guarantee tariff- and quota-free access for UK exports to EU markets and that it will avoid UK firms having to bear customs and ‘rules of origin’ costs that they would face in a free trade agreement (the latter involve the costs of ensuring your product has enough ‘local’ content to qualify for zero tariffs). On top of this, it is claimed that a customs union solves the problem of the Irish border.
In my view, the purely economic arguments in favour of UK customs union membership with the EU are weak:
- There is not much evidence that a customs union would be more beneficial for UK-EU trade than a standard free trade agreement (FTA). The study by Cippolina and Salvactici (2006), based on a large number of estimates of the trade-creating effects of FTAs and customs unions, finds no evidence that customs unions outperform FTAs. The similarly large-scale study by Head and Mayer (2013) found membership of the EU customs union had modest trade-boosting impacts (15-20%) but that these were often smaller than the trade-creating effects of FTAs such as NAFTA.
- Rules of origin costs are often hugely overstated. Claims that rules of origin costs for UK businesses in case of a UK-EU FTA could be as high as 7-8% of trade values are far too high. A careful study by the WTO points to the cost of compliance with rules of origin being less than 1% of traded values, and often negligible.
- Costs of customs processing are also massively exaggerated. Claims by HMRC earlier this year that customs costs could total 1% of UK GDP or 6% of trade values are anything from five to twenty times too high, being based on a mixture of double-counting (now admitted) and dubious claims about the future costs and numbers of customs declarations.
- It is not even clear that a ‘new’ UK-EU customs union would entirely remove customs-related costs. The EU’s customs union with Turkey has not led to ‘frictionless’ border trade – queues at the border are often lengthy. Formal customs checks within the EU only ended in the early 1990s due to the Single Market Programme.
- The UK’s foreign trade structure is not suited to a customs union. Customs union arrangements have some logic where one economy does a very large share of its trade with another. But the EU now represents only around 45% of UK goods exports. And this share has been dropping rapidly as the EU grows slowly compared to the rest of the world. Twenty years from now it is likely that the EU will take only around a third of UK goods exports.
- The UK would remain locked into the EU’s highly protectionist agricultural trade system. While average EU tariffs are not very high, they are often steep on agricultural products. This represents a heavy effective ‘tax’ on UK consumers, especially given the UK’s status as a large net food importer. UK consumers are denied the choice of cheap food from outside the EU and pushed towards consuming expensive products from within it. This cost is high at 0.5-1% of GDP – almost certainly higher than possible rules of origin costs for manufacturers under an FTA.
Moreover, the strategic/political arguments in favour of a customs union are even less compelling:
- Entering a customs union would make meaningful trade deals with other economies impossible. While there might be scope for very limited deals on trade facilitation or deals on services the scope even for these would be very small. Why would India or the US be interested in a deal on services (potentially benefitting the UK) when the UK had nothing to offer on the goods side?
- The EU would be effectively able to ‘sell’ access to UK markets with no reciprocal benefits for the UK. The EU-Turkey customs union is a good example of this. When the EU does trade deals with third parties, these third countries gain tariff-free access to Turkish markets but Turkish exporters do not gain automatic reciprocal access to these third countries and Turkey has to try to negotiate parallel arrangements (not always successfully). Notably, Turkey came close to cancelling its customs with the EU when the EU was negotiating the TTIP trade deal with the US. Britain in a customs union would be in the same position as Turkey.
- A future customs union would jeopardise the UK rolling over existing EU FTAs. Under a Turkey-style arrangement, the UK would be reduced to trying to replicate any new EU FTAs with third countries to get access to the markets of the EU’s FTA partners – but these partner countries would have little incentive to agree having already got access to UK markets. For the same reason, the prospect of an open-ended future UK-EU customs union could undermine attempts the UK is currently making to transform existing EU FTAs with countries like Korea into UK-only FTAs. Current EU FTA partners would continue to benefit from free access to UK markets under a new UK-EU customs union – so they would have no incentive to negotiate new UK-only FTAs.
- Britain would have no voice at future WTO discussions about global tariffs. It would simply have to accept whatever the EU agreed.
- The EU would be able to damage UK business using anti-dumping actions. Under a new UK-EU customs union the EU would be likely to be in charge of the UK’s ‘trade defence’ measures such as ‘anti-dumping’ actions (where large tariffs are levied on countries deemed to be ‘dumping’ their goods on the EU market). Again, the EU would make anti-dumping decisions without a UK say and such decisions could damage UK business and consumers. So, engineering and vehicles manufacturers could be hurt if punitive tariffs were imposed on some steel imports, and consumers hurt if food or other imports were raised in price by anti-dumping duties. Worse still, the EU might well insist on being able to impose anti-dumping duties on the UK as well – as is the case with Turkey.
- A customs union would not simply cover tariffs and quotas, i.e. a ‘bare bones’ arrangement. The EU would also require the UK to follow EU rules in a broad swathe of policy areas including competition policy, environmental policy and social and labour standards – without any say at all in how these rules were set. This would not only be a huge loss of UK sovereignty but also dramatically narrow the UK government’s freedom of action in key economic policy areas.
- The ‘temporary’ customs union would be unlikely to be temporary. The EU has made it quite clear in recent days that it would require such an arrangement to be permanent. The proposed withdrawal agreement currently being negotiated between the UK and EU (and which would potentially contain proposals for a ‘temporary’ customs union) looks unlikely to have a unilateral exit clause, leaving the UK tied to the customs union indefinitely.
- A customs union does not solve the Irish border ‘problem’. Customs checks only represent a small element of potential border checks at EU borders today. A bigger issue is generally product conformity and other single market rules. This is another reason why any customs union would require either effective UK single market membership (see above) or border checks between Britain and Northern Ireland and/or Britain and the rest of the EU.
In sum, a customs union arrangement whereby the UK contracted out huge areas of trade and economic policy-making to the EU would be totally unsuitable for an economy like Britain’s.
Customs unions arrangements may work well for small economies that do an overwhelming share of their trade with a large neighbour (Liechtenstein and Switzerland for example). But the UK is the world’s fifth largest economy, with a diverse pattern of foreign trade and with business and consumer interests that will often diverge from those of the EU.
It is no accident that Canada and Mexico are not interested in joining a customs union with the US, despite their strong trade orientation towards the US. They know that the loss of economic independence involved would be far too great to justify what would probably be quite a modest reduction in border frictions. The calculation should be the same for the UK.
Supporters of a customs union have suggested the UK could somehow retain some influence over decision making in such a new UK-EU arrangement. But this looks like a fantasy. It would be legally and politically difficult for the EU to grant any significant decision-making power to the UK. The best the UK could hope for would be some kind of observer status (again as proposed for Turkey). But the arrangement would remain a thoroughly one-sided one where, at the end of the day, the UK would have no power either to veto potentially damaging agreements or push for deals that benefitted it.
Entering a new customs union with the EU would be a backward-looking step for the UK, with a massive loss of policy independence and flexibility and businesses and consumers at risk of having damaging decisions imposed on them with no say in how those decisions were taken. It would be a significant downgrade from the UK’s current position whereby it retains some authority over EU trade policy. It would also give the UK minimal additional policy freedom in the trade and economic policy area. Meanwhile the benefits would be small and mostly accrue to a handful of industries (the car industry, for instance, accounts for less than 1% of UK GDP). Overall, it is hard to imagine a more sub-optimal policy.
Reaching a deal with the EU was never going to be easy, and there was no chance whatsoever of agreeing something that would satisfy everybody. But we appear to be heading for an agreement with Brussels that nobody at all is happy with. According to some Leave voters, the person responsible, Theresa May, is a rabid Remainer who has deliberately scuppered Brexit. Their anger is understandable, but wide of the mark. May was a Remainer, but her early pronouncements – “Brexit mean Brexit” and “no deal is better than a bad deal” – were honest and genuine. The fact that she decided to hold a general election to make it easier to get Brexit through Parliament surely demonstrates that. Unfortunately, that proof of her honesty is also evidence of the real problem – her inability to understand and navigate complex problems.
Anyone with experience negotiating deals has watched May’s performance first with incredulity and then with something akin to despair. No doubt at some point these negotiations will be used as a case study of what not to do, from failing to establish a credible walk away position, through allowing yourself to be salami sliced to the bizarre insistence that each part of the deal – say rights for EU citizens in the UK – can only be negotiated against the reciprocal issue – rights for UK citizens in the EU – rather than as part of the whole package. Agreeing the one thing the EU really wanted – the money – before even starting to discuss the one thing we really wanted – trade – beggars belief.
At the same time, May has totally failed to put any pressure on the EU. The Government could have started negotiating trade agreements and dared the EU to stop us. We could have said the UK will no longer apply tariffs on the import of foods which we do not grow, such as rice or oranges (the latter have a particularly unbelievable complex schedule of tariffs) but which the EU exports to us. And since EU member states have made no secret of their attempts to persuade UK businesses to relocate, why have we not responded by offering preferential terms for EU firms willing to come to the UK?
Compounding the problem, this timid and defeatist approach has played to the worst of the EU’s tendencies – its hubris and its pathological need to overturn democratic decisions it does not like. The EU has been encouraged to believe that we will change our minds about leaving. There is undoubtedly a substantial dollop of wishful thinking in that on the part of both the EU and those Remainers who have helped them reach that conclusion. It is unclear that either Labour or the Conservatives could propose a second referendum without losing the next election. The Tories almost certainly cannot and Labour would be taking a very large risk in doing so. Ironically, May’s incompetence has prevented Leave votes from changing their minds: Brexit still seems a good idea if somebody were to do it properly. But the EU believes that if it keeps ratcheting up the pressure, we will give in.
Cannily, the EU has also been running a deeper plan for the last twelve months using the Irish backstop. This is a modern-day reworking of the Schleswig-Holstein Question, another geographical conundrum with no apparent solution. By taking a hardline position on the imposition of a hard border in Ireland, the EU has given Theresa May an impossible choice. There are three things May wants to do: maintain the Union, leave the Customs Union and avoid a hard border. But the EU has manoeuvred her into a position where no matter what she does, she can only ever have two of these things. This is imposed by the EU insisting that only it can adjudicate on whether a trade proposal makes the border “hard” or not. That gives them complete control over what the eventual trade deal looks like. And of course until we have left the Customs Union, no new trade deals can come into force.
The frustration is that May does not seem to have understood what has happened. She continues to search for solutions to what is deliberately an impossible problem. The EU will not give her a unilateral way out of the backstop. Not only would that ruin their stratagem, but it would be an Emperor’s new clothes moment for the border issue. The cabinet, let alone the ERG and other MPs thinking sensibly, will not accept weasel words that do not give us a way out of the customs union unilaterally. No Robbins plans that confuse with complexity will pass muster.
It is in this context that May appears to be considering yet another bout of can-kickery, with an extended transition agreement. But as so many have said, that does not solve the problem. In fact, it again illustrates the trap the EU has made for May – you can either stay in the Customs Union through an extended transition or stay in the Customs Union through the Irish backstop mechanism. Or vote again and just stay in.
The further frustration is that May appears to think that if she somehow solves the border problem, the EU will accept her Chequers plan. But the EU has already rejected it, many times. They have not formally rejected it because they do not have to. But if it comes to it, the EU will reject Chequers because their own analyses shows that the UK setting its own tariffs and freed from only some regulatory constraints will be highly competitive. Michel Barnier himself, in a speech on 10th October (largely ignored by the media), said:
“Minor divergences in regulations can create a significant competitive advantage for the UK if it remains in the single market for goods while diverging for all the rest. This means that it (the UK) could apply lower tariffs than ours while remaining in a single market for goods with us. From our standpoint, this could cause a serious risk of distortion of trade flows, to the detriment of our enterprises.”
He went on to say:
“We have therefore proposed to the UK… an economic partnership founded on an ambitious free trade agreement, doubtless accompanied by a customs co-operation, a regulatory co-operation, and also a level playing field commensurate with such a free trade agreement.”
In other words, the trade deal the UK will be offered during the transition period will be membership of the Single Market and the Customs Union! Just as clearly, this is what the UK will be offered if we take any other “temporary” route, such as the Norway option. The EU simply will not offer us frictionless trade unless we are bound into the EU’s regulatory and tariff structures.
In all the ways that matter, May has been negotiating the UK staying in the EU, but with less say than now. What is unclear, however, is whether despite all its cleverness, the EU has massively underestimated the risk that we reject what is on offer. The EU tends to assume that any resistance is not just futile, but short-lived and irrational. The UK may not take that view. Barnier was clearly surprised by May’s rejection of the unlimited backstop, and the EU has left itself very little time and very little room for manoeuvre if it has got this wrong.
Of course, No Deal would not be nearly as bad as some have suggested. The UK would survive and probably thrive, but with some short-term pain. But the EU will suffer as well, and not just through increased trade friction. There will be no divorce payment and the reputation of the EU – about which it cares deeply – will be damaged. Most importantly, the UK will be free to deregulate and lower tariffs. That threatens not just the competitiveness of businesses in Europe, but the whole raison d’être of the EU itself. It is this that the EU fears, not another country following the UK out – there are no real candidates for that. Proving wrong the EU’s claim that its rules and commissions and technocracy are essential for prosperity and progress brings the EU to an existential crisis.
But must we accept that there are only now two choices? There must be a better option, a partial deal that captures some benefits and avoids some costs, for both sides. To achieve that, however, requires Theresa May to reverse course, something she may not be capable of doing.
First, May has to accept where she is and that she must make a choice. The obvious choice is that that maintaining the Union and respecting the referendum are more important than the hard border issue. Nobody wants to see the return of violence in Northern Ireland, but neither the Union nor our democratic processes can be held hostage by violent men. To soften that decision, she should announce that the UK will not implement a hard border, and will conduct customs searches on an intelligence-led basis only. A small number of dodgy lorries crossing the border unsearched is a small price to pay for peace. It is then up to the EU what it forces the Irish Government to do.
Second, she should tell the EU that the UK will sign the Withdrawal Agreement as it stands, but with the removal of the transition period. No Deal will have no transition period either, so this is no worse than the alternative. The transition period simply delays the benefits of leaving for the vast majority of the UK, to the benefit of a small number of large businesses. The CBI and others will have a fit, but they have had warning of No Deal for some time now, and still have five months to prepare. The Government can make substantial funds available to them to help. Hammond has some headroom now, given the strength of tax revenues. The UK will pay the amounts already agreed as a gesture of good faith. Leavers will not like that, but we basically owe it.
Third, it is not too late to start trade negotiations with the US and others. Let the EU take us to court, let them fine us, but start talking now. Nothing will be agreed by the time we leave, but we can make a start and make progress. We have the offers, we have the markets. Let us not waste yet more time. Daniel Hannan has led the thinking on new ways to trade, so appoint him under Liam Fox to lead a new team talking with governments around the world on alternatives to traditional Free Trade Agreements.
Fourth, announce a group led by a free market advocate to urgently report on what tariffs can be cut and simplified immediately after Brexit. Announce a similar group (headed by, say, Jacob Rees-Mogg) to look at regulation, replacing those supposedly doing that now. And force Philip Hammond to come up with a package of attractive measures to be offered to businesses willing to invest in the UK after Brexit. That can include new investments made by existing firms such as Nissan and new ones relocating from the “near abroad”.
Fifth, offer the EU the opportunity to negotiate a comprehensive free trade agreement with the UK after Brexit, but with a two-year time limit, after which the UK will walk. The UK will start negotiating immediately if the EU wants. Again, the EU may claim its rules prevent it starting now, but those rules are made by the EU, so they can probably ignore them if they want. Two years is of course far too short a time for the EU normally, but the UK and the EU are starting from a point of perfect alignment on standards and with an accepted and existing level of zero tariff and frictionless competition. It will never be easier to do a deal, if the EU actually wants one. If the government was very bold, it could even offer a two year import-only deal immediately, as I described before on CapX.
The next few months do not have to be some sort drab and fatalistic damage limitation exercise. There is no point in continuing this pointless back and forth with the EU, which will achieve nothing but leaves businesses and individuals in limbo. May must make her choice.
Would this mini-deal get through the Commons? The DUP ought to back it as it crosses none of their red lines. The ERG should find it enough of a proper Brexit. Labour will not, but it should be good enough to persuade a handful of Labour Leavers to vote with the Government. That leaves the Tory die-hard Remainers, but the numbers seem to just about favour May. But is she capable of reversing course like this? History suggests not, but perhaps May can surprise us all.
The post Thus far we’ve seen a masterclass in how not to negotiate but Theresa May could yet turn things around appeared first on BrexitCentral.
“We need to be mob-handed out on Angel Hill.”
This startling phrase has lingered in my mind since my most recent public meeting on the battle to save Brexit. It was uttered by a gentleman who, I would estimate, had certainly passed the age of sixty though seemed in fine physical health. And it was greeted with enthusiastic applause by many people in the room.
It was in the splendid surroundings of the Athenaeum meeting rooms in the middle of the genteel Suffolk market town of Bury St Edmunds, that my latest Brexit SOS meeting took place last Tuesday. Angel Hill, I should add, is the town’s most famous thoroughfare.
I replied to the gentleman that although I was as outraged as anyone by the apparent betrayal of Brexit by the British political establishment and would certainly consider innovative ways to protest – up to and including peaceful civil disobedience – if he was looking for someone to lead a mob then he had come to the wrong man.
In truth, I had arrived in Bury – my favourite town in the East of England – with a slight sense of trepidation. Suffolk had not, over the years, been the county that produced the biggest turnouts for the many pro-Leave events I have hosted. I was expecting an audience of maybe 40 people to show up – mostly UKIP diehards. I even felt a bit awkward in advance that my guest speaker, Suzanne Evans, might think it had been a long way to travel for a modest turnout.
But still, my research had earlier in the day confirmed my recollection that this was a county in which every MP had campaigned for Remain and yet every parliamentary constituency had voted Leave. So we had something to work with.
And as the clock approached 7pm, the meeting’s scheduled start time, the people just kept streaming in. Twice extra chairs had to be located and laid out. There were well over a hundred in the hall by the time we got going.
And considering this was Suffolk – the most laid-back part of my MEP patch – the most notable feature of the audience was how angry it was about the slow-motion spectacle of Westminster selling out on the referendum result.
There is a moment in the new film Peterloo, about the massacre of people protesting for democratic reform two centuries ago, where a character laments: “What is the use of a Parliament if it does not listen to the people?”
During my meeting this theme was reprised time and again. The most thunderous applause was reserved for those who argued that the spectacle of Brexit betrayal showed that the whole political system was rotten and in dire need of sweeping change to make it properly accountable to the people.
The biggest spontaneous applause I received was when I pondered whether many people might decide they were no longer willing to pay £150 a year on a TV licence in order to fund an organisation which has played a key role in disseminating a media narrative designed to help the elite avoid implementing what had been decided in June 2016.
So far, the level of anger among the 17.4 million who voted to Leave the EU has been the dog that has not barked in the protracted Brexit process. We have seen several hundred thousand anti-Brexit diehards marching through central London in their EU berets, noisily calling for Brexit to be abandoned.
But the pro-Brexit forces – bar an enterprising picket of a recent Cabinet meeting organised by the excellent Leavers of London group – have in general just got on with their lives and maintained a watching brief. Their quietness has even led some Tory MPs to consider the possibility that a wholesale sell-out of Brexit – keeping us locked in a customs union we cannot get out of, for example – will result merely in a containable bout of grumbling which will have played itself out well before the next general election.
I am convinced that is a major miscalculation. The quiet, watching brief of those oh-so-patient Brexit voters seems to me to be coming to an end. Many of them are indeed of mature years and do not correspond to anyone’s stereotype of a street protester. I am not going to make any blood-curdling predictions of how nasty things will get if the spirit of Brexit and restoring national independence is seen to be betrayed. That would not be responsible.
Indeed I still find it hard to visualise the folk of Middle England running amok on Angel Hill and equivalent streets in market towns across our country. But all those legislators who will soon determine the Brexit course – whether it is to be Theresa May’s impending sell-out, a full-on WTO ‘no deal’ Brexit, or even a pulling of the emergency brake and no Brexit at all – should not for a moment think that a corporate political failure to implement the referendum result will allow them to steer Britain back to the way things worked before (i.e. very nicely for them and less so for the populace).
And all those multinational CEOs who seem to have succeeded in turning Brexit into quasi-Remain via their noisy and well-funded lobbying about the non-negotiable status of frictionless supply chains will need to wake up to the difficulties of doing business in a country that has suddenly become ungovernable. The demons will indeed have been unleashed.
Had any been at my meeting and stared into the eyes of our would-be Angel Hill mobster, I think they would have found themselves asking the Dirty Harry question: Do I feel lucky? Sometimes in life it is better not to push it.
The post A betrayal of the Brexit vote by the establishment could leave the country ungovernable appeared first on BrexitCentral.
On Monday night I had an energising, heartening look at what Britain’s global future will be outside the European Union. That is to say, what our future will be if Theresa May is not allowed to betray Brexit and keep us tied to into a customs union – because if she does that, Britain will be blocked from negotiating its own international trade agreements.
But on Monday night, I put that fear aside and what I saw instead was a glimpse of the opportunities British trade and investment will have if we become free at last. This came when I had the honour and privilege to be host at a dinner for the President of Sierra Leone, His Excellency President Julius Maada Bio and his leading government ministers, at the European Parliament.
President Bio, who only recently took office, is determined to clear out the corruption which stained earlier governments in Sierra Leone. Indeed, at the dinner, President Bio’s Attorney General told me that those involved in corruption in previous administrations will be brought to justice for their shameful neglect of the people.
The dinner gave me and a delegation of MEPs – as well as the Ambassador from Britain to the EU and key business representatives – the chance to reach out to a nation which is undergoing immense change and looking outward – in line and in tune with Britain once it breaks free of the EU.
Sierra Leone is exactly the sort of new, young and growing market to which the UK must turn. It is home to the oldest African university, based in Freetown. Those who have access are among the most educated people on the African continent, yet 70 percent of children in Sierra Leone cannot read or write. President Bio will not tolerate this. Just a few days ago he was at the African Industry Transparency Initiative Conference in Dakar, Senegal. He emphasised the plans of his government to educate two million of his country’s children. He calls this “human capital investment.”
The country is rich in natural resources but the people have not yet benefited from them. Rather, the riches have lined the pockets of rogue investors with no loyalty or interest in the future of the country or its people.
President Bio, an American-educated, Western-looking leader, made it clear to all of us he met in Brussels that he will end this injustice. He wants investors who mean business – not corruption, and not political influence, but business. In particular, he intends to stop attempts by China to gain influence in his country. Recently a £500m airport deal signed between the previous administration and Chinese investors was cancelled. President Bio’s Government has no further plans to negotiate with the Chinese. He would rather talk to us.
Opportunities for partnerships with British business are huge. For example, the main power station for Freetown suffers intermittent power loss, leaving everyone entirely off-grid. Someone from the UK ought to be in Freetown right now to see what needs to be done and just how a British company can do it.
The same goes for tourism along the country’s magnificent beaches, manufacturing possibilities, mining for minerals and diamonds, and agriculture and fisheries. All can gain in particular from inward British investment. That should be no surprise: Sierra Leone is a Commonwealth country and an English-speaking country whose laws are in large part based on our own Common Law.
We succeeded on Monday in bringing together people who want the same things for their countries. Diplomatic and business ties are crucial now for both Britain and Sierra Leone; this event was not just an ordinary dinner. That is why I will be following through and acting quickly. President Bio has now invited me to visit Sierra Leone later this month and I look forward immensely both to being a part of this adventure and developing the business and investment opportunities of our countries further.
On Monday I saw our future, and it’s global.
The eyes of the world are upon the British Parliament as we move ever closer to the date set for leaving the European Union. The Chequers proposal is a test of the trust that the British people decided to place in Parliament when voting to leave the EU. Either MPs will shun that trust by accepting the Chequers proposal or MPs will champion the national interest and the democratic mandate to leave the EU without a new deal.
The people consistently voted for a free and sovereign UK, both at the 2016 referendum and the 2017 general election, and politicians must be held to account for their commitment to leave the European Union.
In rejecting Britain’s membership of the EU, the people decided the UK’s policy. We need to put the decision behind us and the national interest ahead of us. The national interest is greater than any political party or special interest lobby group. The national interest and the outcome of Brexit is Britain’s place in the world on our own terms; it is the confidence, ambition, dynamism and agility which can once again be virtues of a global Britain.
Leaving the EU opens up the world to Britain, and opens up Britain to the world, beyond our immediate friends and neighbours across the Channel. It is for this reason that any deal, policy, treaty or political arrangement with the EU which comes into effect as we leave, must be commensurate with our standing as a sovereign nation on the world stage. This is why Chequers must be rejected. Chequers means EU control over Britain, as would remaining in the Single Market and Customs Union. Chequers does not mean Leave.
The Chequers common rule book compels the UK to comply with EU regulations without any say. Binding the UK to a Customs Union creates barriers for our businesses which grow by trading with other nations. And a continued period of uncertainty in ‘transition’ means the EU can impose its will upon the UK without an ability to stop them.
Tying the UK to EU Single Market rules defies economic sense and the best interests of UK business. Small and medium sized businesses cannot afford to lobby Brussels, though they can adapt quickly to maximise the benefits of business outside the EU. It is the large multinationals who make up the business groups who lobby to remain, despite the interests of UK business as a whole.
In seeking to placate the EU instead of working with them as an equal partner, the UK falls into the trap of the EU ideologues who will feel no shame in positioning Britain as a vassal state, warning other states of the punishment that awaits if they seek independence. The EU’s institutions are a natural concern to Brussels; the UK does not wish to harm those institutions – we simply see no future in them for us.
The British people voted to Leave without a new deal on the table, rejecting remaining in the EU with the empty deal that Prime Minister David Cameron had agreed. If there is a mandate for a new deal, it is for a free trade deal as outlined in Theresa May’s Lancaster House speech and the Conservative Party manifesto. Leaving the EU with a free trade deal is a worthy ambition, but we do not need a new deal before we leave, and we can thrive without one.
As the Government has no policy to leave the EU with a mutually beneficial free trade deal, politely ceasing negotiations and pursuing a Brexit without a new deal is in the national interest. Halting talks with Brussels would strengthen Parliament’s hand and taking control of our departure provides the people and our businesses certainty. We can govern ourselves once more and begin trading on WTO terms. There would be no more payments to the EU and the £39 billion promised to Brussels in exchange for a new deal would remain in our hands.
Michel Barnier is right about one thing: the clock is ticking. When the time comes will our MPs stand on the side of democracy by voting down the Chequers proposal? Or will our MPs lay down and let the EU machine trample on their principles, crush the unequivocal mandate from the people to leave the EU and destroy all trust in politics?
When the covers and scaffolds are removed from the House of Parliament, will it be repaired in all its glorious splendour, a beacon to the watching world, a shining example of representative parliamentary democracy? Or will the building be reduced in status to a museum to the democracy that was, the democracy that could have been, the looming statue of government failure and a symbol of political decline? As we restore the fabric of our Parliament, we must restore the institution it represents, the parliamentary institution in which the people put their trust in when they voted to leave the EU.
Few MPs knew when they first took their seats in Parliament that they would bear ultimate responsibility for the governing of our great nation; they were elected when so much power and responsibility resided outside of our shores in the many bodies of the EU in Brussels. Our MPs may not have expected such a responsibility; however, the people expect more from their MPs, more from Parliament, more from democracy, and in this the people show their confidence in the institutions, businesses and people of Britain. It is time for our MPs to take up that confidence and that trust, to seize the agenda that a truly global Britain can realise, and the benefits we can maximise outside the EU.
The country voted to Leave the EU with the largest democratic mandate in the history of our great nation. MPs must answer that call, trust in the people as they were trusted and reject the Chequers proposal. I urge MPs of all parties to accept that Britain will leave the EU on 29th March 2019, without a new deal with the EU, and start trading globally on WTO terms. Leaving on those terms means we have a new deal for the people of Britain; we will have control of our laws, our borders, our fishing waters, our taxes and our regulations.
The sooner Britain truly leaves the EU, the sooner Parliament can devote its efforts and attention to the challenges our country faces at home, challenges which we can solve together when Parliament is once again sovereign, when we are outside of EU control and free to prosper.
The post The people gave our politicians their instructions – now they need to obey them appeared first on BrexitCentral.
The Government has been rocked this afternoon by a resignation over Brexit policy from a minister who has concluded that the likely deal to be struck by the Government will “leave us trapped in a subordinate relationship to the EU with no say over the rules that will govern huge swathes of our economy”.
But the minister in question is not a Brexiteer, but Remain-backing Transport Minister Jo Johnson, whose resignation reminds us that there is discontent at the Government’s position from all swathes of opinion on the Tory benches both inside and outside the Government.
In his resignation blog post this afternoon he wrote that the Government’s proposals would leave the UK “out of Europe, yet run by Europe” – a line I first heard used by his brother Boris Johnson’s former parliamentary private secretary, Conor Burns, in his speech at the BrexitCentral rally at this year’s Conservative conference.
Johnson wrote in his blog post:
“While we wait to negotiate trading terms, the rules of the game will be set solely by the EU. Britain will lose its seat at the table and its ability to amend or vote down rules it opposes. Instead of Britain “taking back control”, we will cede control to other European countries. This democratic deficit inherent in the Prime Minister’s proposal is a travesty of Brexit. When we were told Brexit meant taking back powers for Parliament, no one told my constituents this meant the French parliament and the German parliament, not our own. In these circumstances, we must ask what we are achieving. William Hague once described the goal of Conservative policy as being “in Europe, but not run by Europe”. The government’s proposals will see us out of Europe, yet run by Europe, bound by rules which we will have lost a hand in shaping.
“Worse still, there is no real clarity about how this situation will ever end. The proposed Withdrawal Agreement parks many of the biggest issues about our future relationship with Europe into a boundless transitionary period. This is a con on the British people: there is no evidence that the kind of Brexit that we’ve failed to negotiate while we are still members can be magically agreed once the UK has lost its seat at the table. The leverage we have as a full member of the EU will have gone. We will be in a far worse negotiating position than we are today. And we will have still failed to resolve the fundamental questions that are ramping up uncertainties for businesses and stopping them investing for the future.
“My brother Boris, who led the leave campaign, is as unhappy with the Government’s proposals as I am. Indeed he recently observed that the proposed arrangements were “substantially worse than staying in the EU”. On that he is unquestionably right. If these negotiations have achieved little else, they have at least united us in fraternal dismay.”
Johnson has pledged to vote against legislation enacting the Withdrawal Agreement, but in his resignation blog he also signalled his desire now for another referendum:
“It is now my intention to vote against this Withdrawal Agreement. I reject this false choice between the PM’s deal and “no deal” chaos. On this most crucial of questions, I believe it is entirely right to go back to the people and ask them to confirm their decision to leave the EU and, if they choose to do that, to give them the final say on whether we leave with the Prime Minister’s deal or without it.”
It is not clear whether he envisages one referendum with two questions or an initial vote to confirm the June 2o16 decision and then another on the deal. However, time constraints over the passing of legislation and the rules surrounding the running of referendums make it impossible for the holding of any such referendum before the UK leaves the EU on 29th March 2o19.
A Downing Street spokesman responded by saying:
“The referendum in 2016 was the biggest democratic exercise in this country’s history. We will not under any circumstances have a second referendum.”
The June 2016 referendum took place because the 2015 Conservative manifesto promised to:
“hold that in-out referendum before the end of 2017 and respect the outcome. We will honour the result of the referendum, whatever the outcome.”
As Guido Fawkes points out, the lead author of that manifesto was one Jo Johnson.
The post Jo Johnson quits Government over likely “out of Europe, yet run by Europe” Brexit deal appeared first on BrexitCentral.
Yesterday on this website George Trefgarje made the case for the so-called “Norway for now” model
In responding to George Trefgarne’s piece, I acknowledge that the EEA model provides some advantages over EU membership, but I am afraid I regard the whole proposition of ‘Norway for Now’ as ill thought through and so politically naive to the point of being actively misleading. This proposal is no more than a Trojan Horse to recapture the UK into the EU at a future date. The EEA after all was created in 1993 to help countries into the EU, not out of it.
So taking Mr Trefgarne’s points:
- Firstly he claims that everything will be rejected in Westminster apart from EEA. He fails even to mention the future relationship that has been offered to us not just once but three times by the EU – that of a SuperCanada/CETA+++ free trade agreement: it was offered first
by President Tusk on 7th March in response to our red lines, restated by Michel Barnier in August, and adding in public procurement access, and yet again by President Tusk on October 4th saying: “From the very beginning, the EU offer has been a Canada+++ deal. Much further-reaching on trade, internal security and foreign policy cooperation. This is a true measure of respect. And this offer remains in place.”
I have heard directly that the EU does not want us messing with their Single Market or Customs Union, they want the kind of deal they are currently doing with Japan, Australia and New Zealand – a global free trade agreement. This is also strongly the position of my fellow Brexiteers in the ERG group, and media indications such as in the Sunday Times and Times suggest a most welcome ‘pivoting’ by the Government towards this position.
Consider then the scenario where the EU and UK agree a SuperCanada style agreement – will MPs at that point turn their back on their friends and allies in the EU, and the delight and relief of the public to embrace a ‘no deal’ option, especially when they are the first to highlight no deal as worse than Armageddon? Caroline Flint sensibly talks of 30 to 40 Labour MPs backing a reasonable deal, and in these circumstances a SuperCanada is entirely deliverable and highly desirable.
The reality is that even if we have to accept a no deal ‘hell’ as he puts it, the UK will be a third country and the largest single market for the rest of the EU, and just as Japan, Canada, Australia and New Zealand have done or are doing EU FTAs, so the UK would be doing one from the same WTO rules position.
- ‘Norway for Now’ really means ‘Norway or EU forever’.
What is ‘now’ meant to mean? Is it the 23 years that Turkey has spent in the ‘temporary’ EU Customs Union for goods, or the 25 years Norway has spent so far in the EEA? I think the idea that we can somehow adopt this ‘less than perfect’ alternative now only to renegotiate a Canada deal later is totally disingenuous. This is a case of getting out of the Chequers frying pan into the EEA fire.
I have spent 9 years on the EU’s trade committee and I can report that all trade deals require huge amounts of time, resource (I challenged why the EU’s trade negotiator with the US was also doing India on the side!), and above all political will. I met Justin Trudeau when the Canadian deal CETA was signed, but he was not even sure the deal would be voted through at that point after seven years on and off negotiations, and risked humiliation giving a speech to a Parliament that may have voted no to the deal.
The reality is that we have a unique situation and opportunity now that will not be repeated. Article 50 compels the EU to negotiate a withdrawal agreement and future relationship/trade agreement with us, by law. After 29th March 2019 there is no compulsion on the EU to negotiate a better trade deal with us. They may prioritise the USA, or India (10 years of negotiation so far), or China, or deny us out of spite. Look too at how long the wealthy states of the Gulf Cooperation Council have been kept waiting – 18 years. Now is our time.
The campaign group who won the 1994 referendum in Norway against joining the EU then (by 52% to 48% incidentally) have long wanted an alternate free trade agreement along Canada lines, but there has been no progress at all towards renegotiation. Helle Hagenau of ‘Neil til EU’ concludes: “we would warn you that EEA membership is subject to the same tidal pull of European integrationism as EU membership; that the safeguards are rarely robust enough, and that the costs are greater than with a looser and better form of trade deal.” Nor is it the simple solution that is claimed: Norway’s affiliation to the EU comprises over 70 different agreements, formally independent of the EEA. When and how are these add ons to be negotiated?
There is the issue of money. We have offered £39 billion – not to ‘buy’ a trade deal but to settle our dues and to create longer term goodwill. So, given the EU doesn’t have to negotiate with us next time, how much will be the bill then: £50 billion? £100 billion? Certainly enough to put us off renegotiating a deal – something even Cameron struggled to do. Cameron dismissed Norway’s EEA memorably being: “no say, still pay, no way!”.
And for Mr Trefgarne’s claim the EFTA Court being separate from the ECJ, I find with former International Trade Minister Greg Hands conclusion: “the EFTA court does not exist for divergence, but harmonisation” with the EEA agreement requiring the EFTA court “to follow the rulings of the European Court of Justice”.
In short we would get stuck in EEA forever, if not forced back into the EU forever, on this false premise.
- The UK risks humiliation as Norway (and even Switzerland) may well veto the UK’s application to EFTA, which out of the EU is the only means for staying in the EEA.
Devotees of this scheme blithely assume EFTA nations will welcome the UK back into EFTA with open arms. The Norwegian Prime Minister Erna Solberg made it very clear that is not the case. She said just last month that it would be “a little bit difficult for the rest of us” in accepting our application. Other trade MEPs have reported that Switzerland would also veto. Essentially we would be messing up their cosy arrangement with the EU, and as an EU diplomat was reported saying: it would be like an elephant getting in a bath and then getting out, leaving no water for the others.
- The UK economy is much more diverse, wide and complex than the Norwegian economy making the EEA unsuitable for the UK to slavishly accept EU laws.
Despite Norway’s impressive wealth per head, the UK is still 12 times its size, and is larger than India or Russia as the fifth largest in the world. Norway’s economy is mainly confined to oil, gas, fish and defence – whilst the UK would be enslaved to all sectors from engineering to cars, aeroplanes to chemicals, pharmaceuticals to financial services with next to no say.
Vicky Ford MP, a former Chairman of the European Parliament’s Internal Market Committee has frequently alluded to Norway having to lobby MEPs on vital national interests because it lacked its own – a deeply unattractive halfway house. Mrs Ford said in the Commons: “The economic links between the UK and the EU are too diverse to simply adopt the Norway model. In return for access to the single market on certain sectors, Norway accepts complying with the EU regulations for those sectors with only a very limited say on how those regulations are formed. Maintaining a regulatory framework without the UK being able to contribute input in sectors where the UK has leading expertise such as financial services, advanced pharmaceuticals and increasing digital is bound to end up in continual arguments.”
The ‘Decision shaping’ of Norway for Now is no substitute for sovereign decision making.
- The Brexit would be grossly betrayed by this outcome, as there will be no control of borders against free movement
Mr Trefgarne claims there are some controls on free movement under the EEA. I am sorry this is a comic level overclaim. Yes Liechtenstein has a derogation on free movement but only because it is very small – it’s population of 38,111 people is one tenth of Britain’s net immigration every year. Signing up to the EEA would give us no effective control over EU migrants, which was a major issue in the Referendum (33% of Leave voters voted primarily due to control of borders; but many of the 49% voting Leave on the basis of sovereignty included sovereign control of borders).
Migrationwatch found the “so-called ‘emergency brake’ is most unlikely to be effective so the outcome would be continue free movement for a number of years” and cite a NatCen poll in March 2017 which found 68% people wanting an end to free movement.
This betrayal would either put UKIP back into business with 20% plus of the vote or lead to a far more angry movement such as the anti-immigrant Alternative for Deutschland party that has effectively toppled the mighty Merkel as Chancellor, splitting the Conservatives and keeping a Corbyn government in power.
- EEA does not automatically solve the claimed Northern Ireland issue
Frequently confused is whether Norway is in the EU Customs Union – I even heard this claimed on the BBC News. It isn’t – it has its own customs union, and is quite protectionist over high tariffs on agricultural products and high in alcohol duties. So it does not solve the claimed issue of the border on the island of Ireland – there will still be the same need to have a customs border North and South that the Canada option will also need to address, except that offers 100% tariff and quota free access.
So the real choice is a more fundamental one than such technical models: it is about what we want to be as a country and where we choose ‘Globalsphere’ – to be a fully independent, sovereign nation such as the USA, Canada, Australia, India, Japan or New Zealand with a friendly global trade deal with the EU – or ‘Eurosphere’, where we remain entrapped in the EU’s orbit through EEA, EFTA or the Defence Union – rather like the dead moon revolving around a living earth.
Norway for Now just keeps us trapped and it should be politely but firmly written off.
The post Why Brexiteers should write off the idea of ‘Norway for now’ appeared first on BrexitCentral.
My biggest beef with the European Union has always been the way it stifles consumer-friendly innovation in the interests of incumbent businesses and organisations. Today’s victory for Sir James Dyson at the European General Court lays bare an especially shocking example.
Dyson’s case, which has taken five years in the courts, reveals just how corrupt and crony-capitalist the European Union has become. It is no surprise that Sir James was and is a big supporter of Britain leaving the EU. Essentially, the rules have been bent to allow German manufacturers to deceive customers about the performance of their vacuum cleaners, in a manner uncannily similar to – but even worse than — the way mostly German car manufacturers deceived customers about the emissions from diesel vehicles.
In today’s decision – a very rare case in which the EU courts have had to back down — the EU’s General Court said it would uphold Dyson’s claim and that “tests of a vacuum cleaner’s energy efficiency carried out with an empty receptacle do not reflect conditions as close as possible to actual conditions of use”. Yes, you read that right: until now, in Europe only, vacuum cleaners were tested without dust, the better to suit German manufacturers.
The case concerns labels on vacuum cleaners stating how much energy they use. The Energy Label for corded vacuum cleaners is mandated by the EU’s Ecodesign and Energy Labelling regulations. The purpose is to encourage energy efficiency in such products and the job of the Energy Label is to make sure that consumers get clear information about product performance. Dyson was the first manufacturer to support limits on the power consumption of motors in vacuums. Why wouldn’t it be: its Cyclone product is very efficient?
The Energy Label was introduced throughout the EU in September 2014 and updated in September 2017. It covers overall energy rating, rated A to G, with A being best and G being worst; annual energy usage: in kWh; the amount of dust in air emitted from the machine’s exhaust (A to G); the noise level in decibels; how much dust the machine picks up from carpets (A to G); and how much dust the machine picks up from hard floors and crevices (A to G).
All very reasonable, until you find that the European Commission stipulated that under these regulations, vacuum cleaners are tested empty and with no dust. This flies in the face of the methods developed by the International Electrotechnical Commission (IEC), an international standards organization, which have been adopted by consumer test bodies and manufacturers worldwide. It is out of line with the way other appliances, such as washing machines, ovens and dishwashers are tested “loaded”, not empty.
Why would the EC have made this strange decision? Because the big German manufacturers make vacuum cleaners with bags. Sir James Dyson invented ones without bags. And the bag ones gradually become clogged with dust so they have to use more power or lose suction. The decision to test them empty plainly benefits the bag-cleaners. Behind the scenes the German manufacturers lobbied for this outcome.
The result of this is that you can buy a bag cleaner with an A rating, take it home and find that most of the time it performs like a G-rated cleaner.
So in 2013 Dyson challenged the labelling rules in the EU General Court, arguing that, to reflect real-life experience, the performance of a vacuum cleaner should be tested in real-world conditions, and that might actually include – God forbid – encountering dust. In November 2015, the EU General Court dismissed Dyson’s claims saying that dust-loaded testing is not reliable or “reproducible” and therefore could not be adopted, despite the fact that the international standard does use dust. Nonsense: in its labs and in houses, Dyson tests its own machines using real dust, fluff grit and debris including dog biscuits and Cheerio cereals – of both the European and the American kind.
Dyson appealed to the European Court of Justice in January 2016 and on 11 May 2017 it won. The court said that to reach the conclusion it had, the General Court “distorted the facts”, “ignored their own law”, “had ignored Dyson’s evidence” and had “failed to comply with its duty to give reasons”. The ECJ said that the test must adopt, where technically possible, “a method of calculation which makes it possible to measure the energy performance of vacuum cleaners in conditions as close as possible to actual conditions of use”. The case was passed back to the General Court, which was given time to reconsider its verdict at leisure. Today, after eighteen months of cogitation (what do judges do all day?), and with nowhere to go, the court capitulated.
Dyson has this to say about the case: “the EU label flagrantly discriminated against a specific technology – Dyson’s patented cyclone. This benefited traditional, predominantly German, manufacturers who lobbied senior Commission officials. Some manufacturers have actively exploited the regulation by using low motor power when in the test state, but then using technology to increase motor power automatically when the machine fills with dust – thus appearing more efficient. This defeat software allows them to circumvent the spirit of the regulation, which the European Court considers to be acceptable because it complies with the letter of the law.”
How much more shocking does the crony-capitalist corruption at the heart of Brussels have to get before people rebel against this sort of thing? They did already? Ah yes, Brexit, true Brexit, cannot come soon enough.
The post Dyson’s five-year legal battle reveals the crony capitalist corruption at the heart of the EU appeared first on BrexitCentral.
The wide-ranging Free Trade Agreement with zero tariffs proposed by Donald Tusk in March foundered on the supposed problems of the border between Northern Ireland and the Republic of Ireland. In response, the Prime Minister proposed in her Chequers document to bind the UK to a “common rulebook” – really the EU’s rulebook – for goods in order, she said, to ensure continued frictionless trade between the EU and the UK.
This attracted little political support in the EU because it was seen as “cherry-picking” and even less in the UK for leaving us as permanent, non-voting rule-takers. The proposals were rejected on a technical level by the professional customs body, CLECAT, whose 19,000 members handle 80% of European customs transactions. They found that Chequers “would require five to ten years before it can be applied in practice… new/non-existing systems and procedures will potentially lead to more complications.”
Reports this week suggest that the Prime Minister has now gone even further to secure a deal at any cost. Her new “backstop” proposal is for an open-ended customs union. She has ruled out customs union membership 21 times, so this would represent a humiliating defeat. The UK would have submitted to everything the EU demanded, paying them over £40bn for the pleasure and completely ceding our international trade policy to Brussels in clear breach of the Conservative Party’s manifesto commitments.
How has the Prime Minister got into this mess? Her motivation – a seamless border – is well founded, but her premise is that the only way to guarantee this is by some new, complicated customs arrangement. This is simply not true.
Firstly, only 4.9 per cent of Northern Ireland’s sales are with the Republic of Ireland, representing under 0.2 per cent of UK GDP. We should not, surely, give up our law-making capability over a wide area for the sake of that tiny fraction.
Secondly, there is already a border now – for tax, VAT, currency, excise duty and security – managed by technical and administrative procedures. These existing measures provide the foundation to maintain frictionless trade after Brexit. The Heads of HMRC and the Irish Revenue have confirmed this, saying that any additional requirements can be achieved without any new facilities at the border.
To see why, consider the range of simplifications to customs procedures and administrative obligations available under EU law. These are an ideal fit for much cross-border trade, characterised by regular, repetitive shipments – the same milk, from the same cows, from the same farm, in the same tankers, on the same roads, to the same destination. These obligations typically require only a one-off registration and, for regular trade, negligible costs of repetition. Companies already have to report all cross-border trade for VAT purposes, and the current system provides a framework for streamlining customs controls. Even small traders can – and currently do – take advantage of a voluntary registration to claim back VAT.
The agri-food sector accounts for just under half of all cross-border trade. Inspections can be necessary for these products but can, in practice, take place many miles from the physical border. I saw this myself when I visited Rotterdam, Europe’s largest port, this week. The Border Inspection Point is 40km from the docks and deals with 30,000 shipments annually from all over the world, including from outside the Single Market and Customs Union. There, 97-98 per cent of chilled or frozen meat and fish are cleared without physical inspection. Only 2-3 per cent are physically checked, based on intelligence, and 90 per cent of those shipments are cleared well within an hour.
The simplest way to avoid the need for animal checks between Northern Ireland and the Republic of Ireland is by maintaining an all-island biosecurity zone for disease prevention and public health. I visited the facility where inspections already take place for livestock shipments from Great Britain at the port of Larne. There are clear lessons from Rotterdam as to how such checks can be managed efficiently and how intelligence can minimise the need for lengthy inspections.
The Prime Minister’s convoluted customs proposals are unnecessary. Existing technical and administrative processes can ensure that a frictionless border is maintained after Brexit, not as a temporary, cobbled-together “backstop” but as a durable, long-term arrangement which allows for the wide-ranging, zero-tariff trade agreement which Donald Tusk proposed. That, surely, is the optimal solution for all sides.
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Sentiment about a Brexit deal fluctuates wildly almost by the hour. Whatever the current state of speculation, we surely have to prepare ourselves for what happens if Chequers falls over.
I know this is anathema to many Brexiteers. But my personal view is that while No Deal would likely be fine in the long run, in the short term it would be an embarrassing economic fiasco. The consumer story from hell. It would be to Brexit what Gerald Ratner was to cut-price jewellery.
Instead of going down that risky route, I want to ask BrexitCentral readers to consider falling back on the UK’s membership of the European Economic Area. This is the so-called “Norway then Canada” or “Norway for Now” strategy advocated by myself, Nick Boles MP and others.
Please hear me out. It is quite possible that neither Chequers, nor “No Deal” nor trading on World Trade Organisation terms, nor a second referendum will pass in Parliament. In which case, the European Economic Area will be the only thing left on the table. Should we not seize it?
Far from reducing Britain to a “fax democracy”, where we have to pay huge sums into the EU and yet have no say over the rules and regulations passed in Brussels, the EEA is a commercial treaty between sovereign nations and could be a good resting point, outside the EU, the Common Agricultural Policy, the Common Fisheries Policy and the jurisdiction of the European Court of Justice – but with useful legal and economic options. We would effectively be members of the Single Market, but with sovereign protections.
George Yarrow, the Oxford professor who is the intellectual godfather of the strategy, also estimates that our payments to the EU – which would be limited to participating in relevant programmes – would fall from around £9.5bn to £1.5bn.
What is more, we are already contracting parties to the EEA. It is not true, as some have asserted, that we are leaving by virtue of having given notice under Article 50 to leave the EU. The EEA is a separate treaty, which we have signed on our own right, and has its own withdrawal arrangements. If we want to make the EEA treaty operative, all we have to do is to apply to the related European Free Trade Association (EFTA). This is the other “governance pillar” to the EEA.
There is not much the EU could do to stop us exercising our treaty rights without falling foul of a higher law, the 1969 Vienna Convention on the Law of Treaties. Don’t take my word for it. Take the word of Sir Richard Aikens, a former appeal court judge, on the Briefings for Brexit website. If the EU cut up rough, we could take them to the International Court of Justice (ICJ).
As for the infamous Irish backstop, the EEA would put in place the legal structure to make the technical border solution suggested by David Davis work. As we would be members of the Single Market, it would anyway be unnecessary.
On any measure, the EEA is also superior to the proposed transition arrangements. Inside the EEA we would have decision-shaping rights, and also the right to adapt and veto new legislation. We would, anyway, only be in the Single Market which accounts for just 28% of EU legislation.
If, while in the EEA, there was a dispute with the EU, it would be adjudicated by the EFTA Court, on which we would have two out of five judges. Contrary to myth, it is not bound by the ECJ. They do have to develop a homogenous area of law together but frequently the EFTA Court has disagreed with the ECJ.
Nor is it true that we would not be able to control freedom of movement. The EEA Treaty focuses in freedom of movement of workers and includes various measures to impose limits and restrictions, including an emergency break (as used by Liechtenstein). There is no common citizenship and British passports would be back.
Let’s be honest. It isn’t perfect. And it seems to me the biggest risk, which some Brexiteers have already pointed out, is we get stuck. Like Income Tax (introduced temporarily in 1798, it remains with us) the EEA might perpetuate itself. Some have called for a hard legislative commitment to leave before 2021.
However, I would contend that is a glass half empty way of looking at the EEA treaty. The exit mechanism, giving one year’s notice under Article 127, is much more permissive than the Article 50 process. Rather than put a hard stop on our departure date, which creates another cliff edge against UK interests and upsets the Norwegians, we should commit to a review and a break clause to be voted on by Parliament. If it did not work, we could leave to join a Canada-style free trade agreement. And in the meantime it might evolve into a congenial home for us.
The question to which the EEA is the answer is clear. So let me repeat it. What happens if Chequers falls over and the other options are blocked too? It is hard to see any other realistic, legally deliverable alternative. I urge Brexiteers not to rule it out.
The post The ‘Norway for now’ option is far from perfect, but Brexiteers should consider its merits appeared first on BrexitCentral.
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