It seems fair to say that the draft withdrawal agreement agreed between negotiators and published this week has not been universally welcomed. In particular the Protocol on Ireland/Northern Ireland has been the source of much criticism. In a detailed briefing by the Institute of Economic Affairs, I described how, if it were to come into effect, this Protocol would effectively rule out an independent trade policy for the UK, and would throw up serious trade barriers between Great Britain and Northern Ireland.

It’s worth reminding ourselves of why this Protocol was thought to be necessary. Our government agreed in December last year to guarantee that there would be no physical infrastructure or related checks and controls at the border between Ireland and Northern Ireland. In order to achieve this they conceded that, unless they could put forward alternative solutions, Northern Ireland would stay in alignment with the rules of the customs union and single market in all areas necessary for north south cooperation, the all-island economy and protection of the Belfast (“Good Friday”) Agreement. It was also stated in the Joint Report that the UK would not allow new regulatory barriers between Great Britain and the United Kingdom. The EU’s interpretation of that was a draft agreement under which, “unless and until” other terms were agreed that would meet the objectives for the Irish border, Northern Ireland would remain in a customs union and regulatory area with the EU. This is what the backstop is.

The facilitated customs arrangement and common rulebook of the Chequers plan were an attempt to provide the alternative arrangement that would mean the backstop would never be activated. When Chequers was roundly rejected by the EU, and the Prime Minister declared after the Salzburg summit that no prime minister could accept the EU’s terms, the negotiators went back into their tunnel and reformulated the backstop so that Northern Ireland and the rest of the UK would be in the same customs territory, and Northern Ireland would retain EU regulations on goods “unless and until” a new agreement could be reached. Mrs May is now satisfied that this is something that a British prime minister can sign up to.

Some of us have long been convinced that keeping the Irish border free of infrastructure could be achieved by way of legal, technical and technological solutions. European customs experts Hans Maessen and Lars Karlsson have confirmed to the Northern Ireland Affairs Committee that this can be done. But the EU negotiators and the Irish government have been adamant that the requirements of EU law mean that only a customs union and regulatory harmonisation on goods can achieve this, as even with a free trade agreement with zero tariffs and quotas, the risk of goods that have not been duly declared for customs purposes or that do not meet EU regulations might cross the border cannot be tolerated. Except, it now transpires, for fish. Because under article 6 of the Protocol, fisheries and aquaculture products will be excluded from the customs union arrangements (and therefore fish caught by British and Northern Irish boats would be subject to tariffs) unless an agreement between the UK and the EU on access to waters and fishing opportunities is reached. But by the EU’s own reasoning, the exclusion of even one product would require a full customs border, to ensure that that product isn’t smuggled in undeclared. Now Irish government and EU negotiators could be forgiven for assuming that the British negotiators will concede on this as they have on almost everything else, and sign away fishing rights to the EU. But they might not, and then we would need a hard border wouldn’t we, and the Protocol would be for nothing? Or could it be, that for fish, as for everything else, it is possible to manage a customs border without physical interventions, and the EU is prepared to take the risk of having to do so in order to leverage access to UK territorial waters.

It is often overlooked that as well as being by far the biggest market for goods sent outside Northern Ireland  64% of goods brought into Northern Ireland come from Great Britain, with 12% from Ireland and 59% of its external sales are to Great Britain, as against 12% to Ireland. In seeking to preserve frictionless trade with Ireland, the Protocol, if it were to come into effect, would introduce costs and formalities for the vastly more significant trade within the UK. As former Brexit minister Suella Braverman noted in her resignation letter, customs professionals are clear that this could have been avoided. It’s time to start listening to them.

The post The Irish protocol in the withdrawal agreement rules out an independent trade policy appeared first on BrexitCentral.

Theresa May’s negotiating technique with the EU has been to go in announcing red lines she wouldn’t accept, then – as soon as she found that she wouldn’t get them – to throw herself in front of the EU steamroller appealing to better natures the EU hasn’t got.

The calculation must have been that by acting humble she could get some kind of settlement, however unsatisfactory. The Tory Party in Parliament will then be forced to accept it as the price of staying in power and the accurate criticisms of the Brexiteers will be brushed aside. Then a long transition period can postpone the problems, rob the Rampant Remainers of their fear weapon and the People’s Vote wreckers of their hopes of staying in the EU by democratic deceit. Boris and his Brexiteers will grumble, even revolt, but most of the party will heave a sigh of relief and shuffle into line while Labour, even more divided, will be torn between its desire for an election and its commitment to a ‘soft’ Brexit. It may even fall apart with those keen to stay in the Single Market supporting the Government.

It’s a calculated strategy, which might work in a country getting fed up of the long futile argument. But it won’t achieve the Brexit the people voted for at the referendum and will leave Britain at the mercy of an intransigent and unforgiving EU. The two essential requirements of independence, control of EU immigration and the ability to come to trade deals with other nations whose trade is now growing while the EU’s share remains stagnant, will not have been delivered. We’ll still be subject to the EU rule book. That means dearer food and German dominance continuing to drain Britain.

The EU will have us over a barrel. We’ve already seen how rule-bound and hostile to British interests and arguments they can be, but in an infinitely extendable “transition period” to work out the details of Brexit, we’ll be well and truly trapped. An open-ended deal is infinitely extendable to keep the UK on a rack so they can refuse any of the changes we need and force us to observe the “EU rule book” as adjudicated by the EU court. We’d be hog tied unless we insist that no money will be handed over until we get an acceptable settlement. Nothing is settled (or paid) until all is settled.

After Theresa May has given away so much in her Chequers appeasement, the only point of leverage left is the enormous bill she’s undertaken to pay to allow the Commission to continue building marble palaces in Brussels and protect the other 27, who are already getting restive with the EU, from having to increase their contributions. “Can’t Buy Me Love,” as the Beatles sang. Theresa’s attempt to do so falls due next March when the notice we’ve given under Article 50 expires.

To pay that ransom, or anything at all, before everything is settled removes our last means of influence. The EU’s insistence that our departure allows them to punish us for being so naughty will prevail and we walk naked into the negotiating chamber. There we’re in limbo and they can dictate on all the issues remaining to be settled, as they most certainly can’t be before next March. That’s the reason they talk about a transition. To pay anything before it’s completed is to accept being a colony of the union our electorate voted to Leave.

Parliament can, and must, reject that, by insisting on a ‘no tickee, no takee’ clause before any deal is ratified. The Government would find it difficult to resist, Labour couldn’t vote against saving money and the canny Scots would be forced to choose between bawbees and their love of the EU. That leaves only the Liberals – who’re so Euro-daft that they’d be happy to pay even more to stay in – likely to vote against. As for the public, they’d be overjoyed that at last something is being done to implement their wishes, instead of all the wheedling, fear, manipulation, delay and weakness they’ve had to put up with up to now.

The post We must not pay the EU’s ransom unless and until all outstanding issues are satisfactorily settled appeared first on BrexitCentral.

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 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.

The post The Prime Minister must not go for a deal at any cost appeared first on BrexitCentral.

If you ask any cabbie who’s running the EU they are bound to mention Angela Merkel – at least for now. But if you asked anyone in the Foreign Office, it’s likely they would go through unheard of names like Antonio Tajani or Mário Centeno before they’d get to the German Chancellor. Even then, squeamish officials are likely to mention her as part of the wider group of EU leaders, without singling her out.

Germany’s formal position under the European treaties might be no different to other member states – in theory the European Commission makes proposals and the Council and EU Parliament make the decisions – but as the UK’s former ambassador to Germany, Sir Paul Lever, mentions in his recent book, it’s Germany’s view which is sought by the Commission before it acts, and other governments make sure they know what Berlin wants before they decide on a course of action.

The extent to which German decisions dominate is well-known by the left-wing firebrand and former Greek finance Minister, Yanis Varoufakis. Before Eurozone meetings he would receive support for his ideas in private discussions with his EU counterparts, who were keen and willing to sort out the crisis. However, once seated round the table, the very same Ministers would defer to one man: Germany’s Wolfgang Schäuble. Representatives of ostensibly sovereign nations would flip their position completely if it became clear that the Germans had made their minds up on a proposal.

In Britain, former Cabinet Minister Iain Duncan Smith watched in frustrated amazement as Angela Merkel sabotaged Britain’s attempts to control immigration during David Cameron’s failed renegotiation attempts before the referendum. Later, Duncan Smith described it as if they were “sitting in a room even though they weren’t there. There was a chair for them, a German chair. They had a veto over everything.”

All this matters because if the UK plans to sign up to a ‘Common rulebook’ with the EU it will be Germany calling the shots. Recently Dyson attracted criticism for deciding to build a new electric car plant in Singapore. According to the firm, the decision was made “based on supply chains, access to markets and the availability of expertise, which offset the cost factor”. UKIP founder Alan Sked pointed out it might have also had something to do with the regulatory framework Britain is planning to sign up to. Why would a company trying to join a new market want an EU common rulebook written by their competitors? Kept inside the EU’s regulatory framework, the German government, under pressure from Audi and Volkswagen, could conceivably out-regulate their plucky British challenger.

As a recent paper by Roland Vaubel explained, if a qualified majority of member states within the EU which favour a high level of regulation gang up, they can impose higher regulations on the rest: “Thus, while regulatory collusion presupposes unanimity, the strategy of raising rivals’ costs merely requires a qualified majority.”  Vaubel says the anti-regulation coalition includes Ireland, the Scandinavian countries and the Netherlands but that various indices show that the UK has the least regulated labour market of all. If we stay tied to the EU, Britain is most at risk from damaging rule-changes.

We need to recognise that the ‘Common rulebook’ isn’t a neutral body of legal text. Like the EU itself, it is a mechanism which can – and will – be used to bend the rules to favour some nations over others. Few dare to admit this and credit is due to Sir Paul Lever who devastatingly exposes Berlin’s influence in his book Berlin Rules. Sir Bill Cash is another notable example who over the years has highlighted the hidden hand of Germany. But it’s time our negotiators recognised that the EU is not a federation of equals. Angela Merkel may be on the way out but Germany has consistently been the determiner of EU policy decisions and that won’t change after she is replaced. We must accept that if we decide to remain it will be Berlin, not Brussels, who will decide our fate.

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The Chequers proposal had two aims: (1) ensuring frictionless trade and (2) solving the Irish border problem. Its proposal to keep the entire country (not just businesses that trade with the EU) perpetually locked to EU standards in which we have no say, and from which we cannot depart to enable us to agree trade deals with other countries, was totally condemned by both Leavers and Remainers.

The ‘common rule book’ was rejected by the EU for ‘cherry picking’ and undermining the Single Market; and the ‘combined customs territory’ was rejected by the EU which, justifiably, refuses to delegate its tariff collection to a third party. So Chequers was on life-support. The addition of “temporary” all-UK membership of the Customs Union is unacceptable to us without a time-limit and unacceptable to the EU without a backstop-to-the-backstop that could ultimately separate Northern Ireland from the UK. Finally, the idea of an extended transition (that wouldn’t necessarily solve the Irish border problem) has been universally rejected by all wings of the Conservative Party.

Even if Theresa May managed to pile in enough further concessions to solve the Irish border problem (if it really is a problem, not just a political device), that wouldn’t be the basis for a deal unless we were prepared to sign the Withdrawal Agreement and contract to pay £39 billion with no understanding of the nature of any future trading relationship (since Chequers has been rejected by the EU). Not even Mrs May – surely – would do that?

So, fortunately, through her successive and futile concessions to the EU, Mrs May seems to have put the final nail in the coffin of the Chequers plan, and left the way open for a fresh and possibly more sensible approach.

Boris Johnson’s Plan B or Canada+++, or whatever you want to call it, has been dismissed by critics, including Mrs May, as ‘fantasy’ because it does not solve the Irish border problem. Up to now, Mrs May has been able to claim that ‘only my plan can solve the Irish border problem’. That argument is now demolished.

So now a “no-deal” seems increasingly likely. There are some potential upsides: we will save most of £39bn (not all, because legal obligations will be honoured) and be free at once to negotiate Free Trade Agreements around the world. Downsides include the cliff-edge in March 2019 (although the Government is now, belatedly, making serious plans for no-deal); trading with the EU on WTO terms until a free trade deal is agreed with them; potential UK/EU border friction (at Dover, etc); and having to deal with the Irish border.

The exact wording of the backstop agreed in December 2017 was:

“In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.”

As Boris Johnson and David Davis were reportedly told, this wording and the implied definitions were pretty narrow and meaningless, i.e. that “those rules” which apply to goods exported from the UK to the EU across the Irish border must be aligned with EU regulations. That is seemingly obvious… and harmless. There’s not a word about Northern Ireland staying in the Single Market or having to follow the EU rule book for everything. “Those rules”, it says, not “all rules”. What the EU has been demanding is something far beyond what they agreed with the UK last December.

It must be perfectly plain that we will not allow the EU to try to split Northern Ireland from the rest of the UK (any more than they would expect Spain to split off Catalonia or France, Corsica or Normandy).

If there is no deal, the Irish border will still exist, and neither Ireland nor the EU will want to invoke a hard border. Britain certainly won’t. So some kind of pragmatic monitoring/enforcement arrangement would have to be agreed between the respective customs authorities in the event of a no-deal.

By offering one concession after another Mrs May is just manoeuvring herself and us further and further into a tight corner. Much simpler to say “no”, we won’t play your game, it’s no deal.

With no-deal, the EU will have to tolerate what they consider to be an unsatisfactory border arrangement and forgo their £39 billion. Why would they allow their intransigence force us into that situation when they could do a deal under which they tolerate – temporarily – that same unsatisfactory border arrangement and pocket their £39 billion?

So the choice for the EU becomes a simple one: do you want a no-deal-style Irish border arrangement with or without £39 billion?

As to future trading arrangements, Mrs May must be persuaded that the Canada-plus formula offered by the EU is the most favourable for the UK. While entirely frictionless trade would be very nice, the price she is proposing to pay – EU regulations imposed on all UK businesses including the more than 80% that trade only domestically or with non-EU countries; no say in regulations or trading standards or ability to challenge regulations that especially damage British businesses; no ability to innovate; no ability to negotiate trading standards as part of FTAs; cumbersome tariff reclaim procedures – is simply too high as an alternative to accepting some friction but minimising it. When encountering friction, you don’t scrap the machine, you apply oil: trusted-trader status for regular just-in-time supply-chain consignments; number-plate recognition that opens barriers at designated trusted trader lanes. Where is the friction?

Where are the obstacles? There is only one – the need for a firm negotiating stance.

Last Thursday, the same day that we read “Theresa May to trigger full-scale parliamentary no-deal planning ‘within three weeks’”, we read of Guy Verhofstadt brazenly insisting there’s a 0% chance of a deal unless we agree to the EU’s Irish border demands, apparently blind to the consequences to the EU – a no-deal Irish border problem and a £39 billion financial black hole.

On the other hand we have seen Wednesday’s news: “France threatens to block Calais port to the UK if we refuse to pay £39bn divorce bill”. The EU persists in making unjustifiable and unconscionable demands regarding the Irish border, aimed solely at keeping us in the Customs Union and so preventing us from entering into global free trade deals.

Their insistence on their childish game of chicken is getting beyond ridiculous. Is this how intelligent adults behave? Don’t intelligent adults just sit down and agree new feasible cooperative arrangements that will be to their mutual advantage? It’s called an amicable divorce.

The post We must stop playing the EU’s games and be clear we are willing to walk away with no deal appeared first on BrexitCentral.




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