The following is the text of the speech Theresa May has just delivered in London:
I became Prime Minister almost three years ago – immediately after the British people voted to leave the European Union. My aim was – and is – to deliver Brexit and help our country move beyond the division of the referendum and into a better future. A country that works for everyone. Where everyone has the chance to get on in life and to go as far as their own talent and hard work can take them. That is a goal that I believe can still unite our country.
I knew that delivering Brexit was not going to be simple or straightforward. The result in 2016 was decisive, but it was close. The challenge of taking Brexit from the simplicity of the choice on the ballot paper to the complexity of resetting the country’s relationship with 27 of its nearest neighbours was always going to be huge.
While it has proved even harder than I anticipated, I continue to believe that the best way to make a success of Brexit is to negotiate a good exit deal with the EU as the basis of a new deep and special partnership for the future. That was my pitch to be leader of the Conservative Party and Prime Minister. That is what I set out in my Lancaster House speech and that was what my Party’s election manifesto said in 2017.
That is in essence what the Labour Party’s election manifesto stated too. And over 80% of the electorate backed parties which stood to deliver Brexit by leaving with a deal.
We have worked hard to deliver that – but we have not yet managed it. I have tried everything I possibly can to find a way through.
It is true that initially I wanted to achieve this predominantly on the back of Conservative and DUP votes. In our Parliamentary system, that is simply how you normally get things done. I sought the changes MPs demanded. I offered to give up the job I love earlier than I would like. And on 29th March – the day we were meant to leave the EU – if just 30 MPs had voted differently we would have passed the Withdrawal Agreement. And we would be leaving the EU. But it was not enough.
So I took the difficult decision to try to reach a cross-party deal on Brexit. Many MPs on both sides were unsettled by this. But I believe it was the right thing to do. We engaged in six weeks of serious talks with the Opposition, offering to compromise. But in the end those talks were not enough for Labour to reach an agreement with us. But I do not think that means we should give up.
The House of Commons voted to trigger Article 50. And the majority of MPs say they want to deliver the result of the referendum. So I think we need to help them find a way. And I believe there is now one last chance to do that. I have listened to concerns from across the political spectrum. I have done all I can to address them. And today I am making a serious offer to MPs across Parliament. A new Brexit deal.
As part of that deal I will continue to make the case for the Conservative Party to be united behind a policy that can deliver Brexit. 9 out of 10 Conservative MPs have already given the Withdrawal Agreement their backing and I want to reach out to every single one of my colleagues to make the very best offer I can to them. We came together around an amendment from Sir Graham Brady – and this gave rise to the work on Alternative Arrangements to the backstop.
Although it is not possible for those to replace the backstop in the Withdrawal Agreement, we can start the work now to ensure they are a viable alternative. So as part of the new Brexit deal we will place the government under a legal obligation to seek to conclude Alternative Arrangements by December 2020 so that we can avoid any need for the backstop coming into force.
I have also listened to Unionist concerns about the backstop. So the new Brexit deal goes further to address these. It will commit that, should the backstop come into force, the Government will ensure that Great Britain will stay aligned with Northern Ireland. We will prohibit the proposal that a future Government could split Northern Ireland off from the UK’s customs territory.
And we will deliver on our commitments to Northern Ireland in the December 2017 Joint Report in full. We will implement paragraph 50 of the Joint Report in law. The Northern Ireland Assembly and Executive will have to give their consent on a cross-community basis for new regulations which are added to the backstop. And we will work with our Confidence and Supply Partners on how these commitments should be entrenched in law.
This new Brexit deal contains significant further changes to protect the economic and constitutional integrity of the United Kingdom and deliver Brexit. It is a bespoke solution that answers the unique concerns of all parts of the community in Northern Ireland.
But the reality is that after three attempts to secure Parliamentary agreement, we will not leave the European Union unless we have a deal that can command wider cross-party support. That’s why I sat down with the Opposition. I have been serious about listening to views across the House throughout this process. That is why when two Labour MPs, Lisa Nandy and Gareth Snell, put forward their proposals to give Parliament a bigger say in the next phase of the negotiations I listened to them.
So the new Brexit deal will set out in law that the House of Commons will approve the UK’s objectives for the negotiations on our future relationship with the EU and they will approve the treaties governing that relationship before the Government signs them. And while the talks with the opposition did not reach a comprehensive agreement, we did make significant progress in a number of areas. Like on workers’ rights. I am absolutely committed to the UK continuing to lead the way on this issue.
But I understand people want guarantees. And I am happy to give them. So the new Brexit deal will offer new safeguards to ensure these standards are always met. We will introduce a new Workers’ Rights Bill to ensure UK workers enjoy rights that are every bit as good as, or better than, those provided for by EU rules. And we will discuss further amendments with trade unions and business.
The new Brexit deal will also guarantee there will be no change in the level of environmental protection when we leave the EU. And we will establish a new independent Office of Environmental Protection to uphold the highest environmental standards and enforce compliance.
The new Brexit deal will also place a legal duty on the Government to seek as close to frictionless trade with the EU in goods as possible, subject to being outside the Single Market and ending freedom of movement.
In order to deliver this, the UK will maintain common rules with the EU for goods and agri-food products that are relevant to checks at the border. This will be particularly important for our manufacturing firms and trade unions, protecting thousands of jobs that depend on just-in-time supply chains.
The most difficult area is the question of customs. At the heart of delivering Brexit lies a tension between the strength of our ambition to seize the new opportunities that Brexit presents – and the need to protect the jobs and prosperity that are built on an interconnected relationship with other European economies. This ambition should not be divisive. There are many people who voted to Leave who also want to retain close trading links with Europe. Just as there are many people – like myself – who voted to Remain and yet are excited by the new opportunities that Brexit presents.
Indeed I believe that one of the great opportunities of leaving the European Union is the ability to have an independent trade policy and to benefit from the new jobs and industries that can result from deepening our trade ties with partners across every continent of the world. But I have never believed that this should come at the expense of the jobs and livelihoods that are sustained by our existing trade with the EU. And to protect these, both the Government and the Opposition agree that we must have as close as possible to frictionless trade at the UK-EU border.
Now the Government has already put a proposal which delivers the benefits of a customs union but with the ability for the UK to determine its own trade and development policy. Labour are both sceptical of our ability to negotiate that and don’t believe an independent trade policy is in the national interest. They would prefer a comprehensive customs union – with a UK say in EU trade policy but with the EU negotiating on our behalf. If we are going to pass the Withdrawal Agreement Bill and deliver Brexit, we must resolve this difference.
As part of the cross-party discussions the government offered a compromise option of a temporary customs union on goods only, including a UK say in relevant EU trade policy and an ability to change the arrangement, so a future government could move it in its preferred direction. We were not able to agree this as part of our cross-party talks – so it is right that Parliament should have the opportunity to resolve this during the passage of the Bill and decide between the government’s proposal and a compromise option. And so the Government will commit in law to let Parliament decide this issue, and to reflect the outcome of this process in legislation.
I have also listened carefully to those who have been arguing for a Second Referendum. I have made my own view clear on this many times. I do not believe this is a route that we should take, because I think we should be implementing the result of the first referendum, not asking the British people to vote in a second one. But I recognise the genuine and sincere strength of feeling across the House on this important issue. The Government will therefore include in the Withdrawal Agreement Bill at introduction a requirement to vote on whether to hold a second referendum. This must take place before the Withdrawal Agreement can be ratified.
And if the House of Commons were to vote for a referendum, it would be requiring the Government to make provisions for such a referendum – including legislation if it wanted to ratify the Withdrawal Agreement. So to those MPs who want a second referendum to confirm the deal: you need a deal and therefore a Withdrawal Agreement Bill to make it happen. So let it have its Second Reading and then make your case to Parliament.
Finally, we cannot expect MPs to vote on the same two documents they previously rejected. So we will seek changes to the political declaration to reflect this new deal.
So our New Brexit Deal makes a ten-point offer to everyone in Parliament who wants to deliver the result of the referendum.
- One – the Government will seek to conclude Alternative Arrangements to replace the backstop by December 2020, so that it never needs to be used.
- Two – a commitment that, should the backstop come into force, the Government will ensure that Great Britain will stay aligned with Northern Ireland.
- Three – the negotiating objectives and final treaties for our future relationship with the EU will have to be approved by MPs.
- Four – a new Workers’ Rights Bill that guarantees workers’ rights will be no less favourable than in the EU.
- Five – there will be no change in the level of environmental protection when we leave the EU.
- Six – the UK will seek as close to frictionless trade in goods with the EU as possible while outside the single market and ending free movement.
- Seven – we will keep up to date with EU rules for goods and agri-food products that are relevant to checks at border protecting the thousands of jobs that depend on just-in-time supply chains.
- Eight – the Government will bring forward a customs compromise for MPs to decide on to break the deadlock.
- Nine – there will be a vote for MPs on whether the deal should be subject to a referendum.
- And ten – there will be a legal duty to secure changes to the political declaration to reflect this new deal.
All of these commitments will be guaranteed in law – so they will endure at least for this Parliament.
The revised deal will deliver on the result of the referendum. And only by voting for the Withdrawal Agreement Bill at Second Reading, can MPs provide the vehicle Parliament needs to determine how we leave the EU. So if MPs vote against the Second Reading of this Bill – they are voting to stop Brexit. If they do so, the consequences could hardly be greater.
Reject this deal and leaving the EU with a negotiated deal any time soon will be dead in the water. And what would we do then? Some suggest leaving without a deal. But whatever you think of that outcome – Parliament has been clear it will do all it can to stop it.
If not no deal, then it would have to be a General Election or a second referendum that could lead to revocation – and no Brexit at all. Who believes that a General Election at this moment – when we have still not yet delivered on what people instructed us to do – is in the national interest? I do not. And my views on second referendum are well known.
Look at what this debate is doing to our politics. Extending it for months more – perhaps indefinitely – risks opening the door to a nightmare future of permanently polarised politics. Look around the world and consider the health of liberal democratic politics. And look across the United Kingdom and consider the impact of failing to deliver on the clear instruction of the British people in a lawful referendum. We do not have to take that path. Instead, we can deliver Brexit.
All the changes I have set out today have the simple aim of building support in Parliament to do that. I believe there is a majority to be won for a Brexit deal in the House of Commons. And by passing a deal we can actually get Brexit done – and move our country forwards. If we can do so, I passionately believe that we can seize the opportunities that I know lie ahead.
The world is changing fast. Our young people will enjoy opportunities in the future that my generation could have never dreamed of. This is a great time to be alive. A great future awaits the United Kingdom. And we have all we need as a nation to make a success of the 2020s and the 2030s. But we will not do so as long as our politics remains stuck in an endless debate on Brexit.
We all have to take some responsibility for the fact that we are in this impasse – and we all have a responsibility to do what we can to get out of it. The biggest problem with Britain today is its politics. And we can fix that. With the right Brexit deal, we can end this corrosive debate. We can get out of the EU political structures – the Parliament, the Commission, the Council of Ministers that are remote from our lives – and put our own Parliament back in sovereign control of our destiny.
We can stop British laws being enforced by a European court and instead make our own Supreme Court is genuinely supreme. We can end free movement and design an immigration system based around skills that work for our economy and society. We can stop making vast annual payments to the EU budget and instead spend our own money on our own priorities like the NHS. We can get out of the Common Fisheries Policy and the Common Agricultural Policy, and design our own systems around our own needs and resources. We can do all of these things.
And by leaving with a deal we can do so much more besides. By reaching an agreement with our EU trading partners we can keep tariff barriers down and goods flowing friction-free across borders. Protecting jobs, and setting our firms up for future success. We can guarantee workers’ rights and environmental protections. With a deal we can keep our close security partnerships – and keep working together to keep people safe. We can ensure that the challenge of the land border between Northern Ireland and Ireland is met in a way that works for people on both sides.
This is a huge opportunity for the United Kingdom. Out of the EU, out of ever closer union, free to do things differently. And doing so in a way that protects jobs, protects our security, maintains a close relationship with our friends and works for the whole United Kingdom. It is practical. It is responsible. It is deliverable. And right now, it is slipping away from us.
We risk losing a great opportunity. This deal is not the final word on our future relationship with the EU – it is a stepping stone to reach that future. A future where the people of the UK determine the road ahead for the country we all love. This deal lays the groundwork – and settles many of the core issues.
But in the years ahead, Parliament will be able to debate, decide and refine the exact nature of our relationship with the EU. Some will want us to draw closer, others will want us to become more distant. Both sides can make their case in the months and years ahead.
The key thing is, decisions will be made not by MEPs or Commissioners or the EU Council – but by the United Kingdom Parliament, elected by the British people. That is what being an independent nation state is all about. Those debates, those decisions, are for the future. What matters now is honouring the result of the referendum and seizing the opportunity that is right before us. So we are making a new offer to find common ground in Parliament. That is now the only way to deliver Brexit.
Over the next two weeks the government will be making the case for this deal in Parliament, in the media and in the country. On what is best and right for our country now and in the future. And on what the majority of British people of all political persuasions want to see happen.
Tomorrow I will make a statement to the House of Commons. And there will opportunities throughout the Bill for MPs on all sides to have their say. But I say with conviction to every MP of every party – I have compromised. Now I ask you to compromise too.
We have been given a clear instruction by the people we are supposed to represent. So help me find a way to honour that instruction, move our country and our politics forward, and build the better future that all of us want to see.
The post Full text of Theresa May’s speech introducing her “new Brexit deal” appeared first on BrexitCentral.
The pre-emptive strike by Keir Starmer insisting that a confirmatory public vote must be part of any deal with the Government stems from deep-seated weakness rather than strength; it is a sure sign of panic on the part of those intent on reversing the vote to leave the EU.
His claim that up to 150 Labour MPs would refuse to vote for a deal, any deal, if it doesn’t include a confirmatory vote is as unfounded as Tom Watson’s proclaiming that the Labour’s EU election manifesto will commit to a people’s vote. Both are attempts to bounce Labour into a Brexit policy contrary to that agreed at the last Labour Party Conference; Starmer’s attempt will no doubt meet the same fate as Watson’s.
It is worth reminding those who are thinking of flirting with Starmer’s latest depiction of what Labour’s Brexit policy is of what Labour’s conference resolution actually said. The relevant part states:
Should Parliament vote down a Tory Brexit deal or the talks end in no-deal, Conference believes this would constitute a loss of confidence in the Government. In these circumstances, the best outcome for the country is an immediate General Election that can sweep the Tories from power. If we cannot get a general election Labour must support all options remaining on the table, including campaigning for a public vote.
It is axiomatic therefore, that if there was an agreement between the Government and Labour on a deal to put to Parliament, then that deal would not be a ‘Tory Brexit deal’ and therefore the option of a public vote would not arise. This explains Starmer’s procrastination throughout the talks, complaining of red lines and the failure of the Government to compromise without a single hint of what Labour is prepared to compromise on in return.
Originally, Labour’s policy of a customs union was regarded as the lever to scupper the talks between the Government and the Opposition. While the Government is right to reject membership of the EU’s own customs union, forming a customs union is an entirely different creature. Remaining in the customs union would tie the UK to the EU’s trade policies without any meaningful say in the formulation of these policies. A customs union, on the other hand, is a trade and tariff arrangement between two sovereign bodies, the United Kingdom and the European Union – an arrangement between equals. Neither side can impose its policies on the other; neither side is predominant.
In a customs union, decisions on trade are mutually agreed. There is as much likelihood of the EU imposing its preferred policies on Britain as the UK imposing its preferred policies on the EU. And there is no such thing as a permanent customs union; all customs unions are temporary and once one side finds its interests are undermined by its participation in a customs union, it can and does have the right to withdraw from it.
Having failed to make the issue of a customs union a sticking point in negotiations – after all, some sort of customs arrangement is implicit in the Withdrawal Agreement and the agreed political declaration – Starmer and the hard-wired Remainers in the Shadow Cabinet, in a last desperate attempt to halt Brexit, invented a non-existing condition for an agreement, a confirmatory vote.
Irrespective of the pessimism from Starmer and his Remainer colleagues about the chances of a deal with the Tory Government – a pessimism quickly picked up by a media eager to inflate differences and heighten the political tension – the talks are heading towards a positive outcome.
Following a face-to-face meeting between the two party leaders with only their respective Chief Whips present, a Labour spokesperson explained that Corbyn ‘set out the Shadow Cabinet’s concerns about the Prime Minister’s ability to deliver on any compromise agreement’. There was no mention of a customs union, let alone a confirmatory vote. A text has obviously been agreed, the only concern is delivery – especially since Theresa May would not be there to oversee it. But Labour cannot afford to be too purist about this.
There is pressure on both party leaders to abandon the talks on the grounds that they will taint their respective image in the eyes of the electorate, as if the public is too stupid to understand the necessity for an agreement if Brexit is to be delivered. Once a deal is done, normal hostilities will resume on domestic and international issues. Warnings from both Labour and Conservative MPs of splits are self-serving and highly exaggerated. MPs should be more concerned about the rupture with the electorate than ruptures within their own parties if Parliament fails to deliver on the result of the EU referendum.
As we approach the circus that is the EU elections, it falls for the two party leaders, Theresa May and Jeremy Corbyn, to shift the talks forward towards an agreed Brexit deal. The public demands it. History would not look kindly at either if they fail.
The post The public expect May and Corbyn to strike a deal that delivers Brexit appeared first on BrexitCentral.
After a quarter of a century of continuous membership and service to the Labour Party, my decision to resign from it has not been easy. Unlike the high-profile resignations of stalwarts like Sir Tony Robinson (aka Baldrick in Blackadder), I’m a relative unknown. I’m just one of those many foot soldiers who has, until now, stuck with the party through thick and thin. But not anymore.
The party’s inability to tackle anti-Semitism and its ongoing dissembling and duplicitousness over Brexit has made it an intolerable place to be. This feels like a stark conclusion to reach about a party that has been my political home since I left school and foster care in the late 1980s.
When first joining, I met some real mentors and like-minded people who believed in Britain; ordinary everyday patriotic people who believed our country could and would be better with Labour. I campaigned for the party in my local working-class community of Nuneaton, where I grew up. And as a student at university, where I ran the Labour Club. Slogging away for the party whatever the physical and political weather had become almost hardwired into my DNA.
After Tony Blair’s landslide victory in 1997, it was a real privilege to be appointed as the national policy officer responsible for education and employment policy, working at the heart of the party’s campaign HQ in London. In government, I was able to work closely with Labour ministers, albeit as a junior staffer, on shaping the New Deal for young people; the introduction of the first ever national minimum wage; and improving skills training at all levels in our society, including the renaissance in apprenticeships. The values that drove these reforms have helped shape my professional life outside of politics where I have dedicated my whole career to improving post-compulsory education and training opportunities for people in this country and overseas.
Until the recent May local elections, I served as a Labour councillor in Brighton and Hove, including a challenging period as the lead member for children’s and social services. This role coincided with the election of Jeremy Corbyn and the transformation of the membership, driven by the leftist policies of Momentum.
In June 2016, I chaired the official Vote Leave campaign in Brighton and Hove and I’ve written for BrexitCentral previously about how this was really a democratic revolution for our country. It was the largest democratic decision in our history. The 52-48 split in the vote belies the fact that in the majority of our market towns, rural, coastal and working-class communities, often more than two-thirds of the electorate voted to end our membership of the European Union.
Two thirds of Labour’s representation in the House of Commons comes from Leave-voting seats. Yet the party’s treatment of these voters by the majority of Remain-supporting Labour MPs and MEPs has been despicable. They have been called thick, ignorant and racist. Leavers are patronised as people that “did not know what they voted for”. The majority of Labour’s MEP candidates in these futile upcoming European elections have actively goaded, on social media, five million Labour Leave voters – telling them that the party is no longer for them. Jeremy Corbyn and senior spokespeople, when asked by journalists whether Labour is a Brexit party or a Remain party, regularly contradict one another. As the socialist hero Nye Bevan once said: “We know what happens to people who stay in the middle of the road. They get run down.”
And therein lies the result of the unfolding betrayal of Brexit that the “constructive ambiguity” policy, pioneered by Keir Starmer. Remain zealots in the party will simply not rest until Article 50 is revoked. Leavers in the party, meanwhile, come under pressure to compromise on a Brexit-in-name-only approach as Starmer plots to anchor the UK permanently within the orbit of future EU-made laws. You only have to look at the party’s incoherent commitment to a permanent customs union with the EU, to see it has no interest in the United Kingdom becoming an independent self-governing nation again.
Rather, the party of Keir Hardie and Clement Attlee now seems content to allow unelected bureaucrats in Brussels to make our future trade policy — setting tariffs, taxes and regulations for whole swathes of the British economy — without any real say in how these rules are made. Labour is living in cloud-cuckoo land to think that the EU would grant a non-member state a seat around the table when negotiating future trade deals. In fact, what is most likely to happen is that large swathes of our public sector, like the NHS, would be open to privatisation, while German manufacturing and French agriculture would continue to sit behind a protectionist tariff wall.
At one point, I was sympathetic to Peter Kyle and Phil Wilson’s attempts at a compromise, by pegging the passage of any deal in Parliament to a so-called “confirmatory referendum”. The problem with this approach in practice, however, is that if it were to come to pass, there could be little faith in the Establishment or the Electoral Commission to allow that the choice of a clean WTO Brexit to even be on the ballot paper. Instead, the choice would likely be between Theresa May’s terrible withdrawal deal and remaining in the EU. This is the real agenda of the People’s Vote campaign. It is not to compromise over Brexit, but to nullify the 2016 referendum result by rigging a future contest.
The recent local election results and the loss of Labour councils and councillors in the Midlands and our Northern heartlands demonstrates that the party is continuing to allow itself to be defined and run by the interests of metropolitan London elites; socialist conspiracy theorists; and by a predominantly student, retired and public-sector profile of membership that resides mainly in our big university towns and cities.
No wonder the Brexit Party is now surging in the polls. People have really woken up to the fact that following the 2017 manifestos of both the major political parties, they were lied to. Both Conservative and Labour leaderships said they would respect the referendum result and take the country out of the institutions of the EU on 29th March 2019. As a result, Nigel Farage’s previous insurgent party, UKIP, was all but wiped out.
As the next set of elections approaches, there is so much more to fight for than Brexit. We have reached a point in this unfolding national crisis where the whole question of whether we actually live in a democracy is now at stake. In 1991, the late Labour legend, Tony Benn, said:
“Some people genuinely believe that we shall never get social justice from the British Government, but we shall get it from Jacques Delors; they believe that a good king is better than a bad Parliament.”
The salient point about where the country finds itself is that we have a ruling political class that lacks any real confidence in taking back control of our laws, borders, money and trade. That is, after all, fundamentally what the Brexit vote was all about. Instead, we appear to have some MPs and fellow travellers who are content to be merely supplicants of Brussels: a bad Parliament subservient to an even worse king.
It’s happening again. Have you noticed? The slurs. The smears. The tropes. With the phenomenal and unprecedented emergence of the Brexit Party (complete with election-topping poll predictions) Labour, the Conservatives and their faithful ambassadors in the media have gone on the attack.
Andrew Marr’s cringeworthy interview with Nigel Farage on Sunday revealed that the BBC research team spent licence fee-payers’ money trawling the archives for any historical statement he’s ever made to get off topic and detract from the debate on the veteran broadcaster’s eponymous political programme.
During a panel discussion for Radio 4’s Westminster Hour on Sunday, I found myself subjected to the usual lazy attacks from Labour insinuating that somehow our quest for autonomy is unsavoury. They did this in 2014 to no effect. They’re using the same strategy again.
The Great Brexit Debate is on rinse and repeat. What Nigel said to Marr about psychologically preparing for a second referendum is right. We need to be ready to go into battle for our beliefs yet again. It is now highly likely that to break the SW1-contrived political deadlock we will have to face some kind of public ballot. The problem with this is that, unless the result swings in favour of ‘Remain’, the cycle will have to be repeated ad nauseam while the status quo continues.
That is why it is time to change tack.
Whether we are forced back into a second referendum or a general election, where the First Past The Post system gives substantial in-built advantages to the two main parties, both will require a leap of faith from a fatigued electorate to ensure the democratic will of the British people is upheld. Much like Liverpool’s epic comeback in the Champions League semi-final last week, what we need is belief. We have to become, as Jürgen Klopp described his team, ‘mentality giants’.
So how do we do this? With positivity.
The more we can frame Brexit with the simple and patently true message of opportunity and agency, the harder it will be for the other side to argue any sort of positive of being involuntarily trapped within a declining and deceptive supranational bloc.
Let Guy Verhofstadt strut. Last week’s Storyville documentary on BBC4 where his staffers celebrate turning the UK into a colony could not be more helpful. If you haven’t watched it, I implore you to do so – part one is here and part two is here.
Challenge Remainers on their choice of Spitzenkandidaten: we are gifted with the fact that the candidates for European Commission President are currently setting out their respective agendas to be Juncker’s successor. How many Remainers do you think would be able to name even a single candidate for Europe’s top job, let alone outline their agenda to be imposed upon the UK forever? Their argument is that being governed by someone who (i) you can’t name (ii) whose plans you really don’t know, and (iii) who we can’t get rid of is irrelevant. Doesn’t this sound absurd?
Ensure that our youth are aware that Brexit is placing our country’s destiny, and their futures, entirely in their hands. Why the leaders of tomorrow would rather subject themselves to an unknowable future under the architects of the Eurozone crisis – which has caused mass unemployment for a generation of young people in the Mediterranean – is beyond me. Show them that Brexit means they are the sole authors of their own destiny.
Communicate that Brexit is progressive. It means changing the way a stagnated and outdated trading system works. Brussels is a one-stop-shop for big business and big banks to manoeuvre in the corridors of power in the interests of profit, not people. The Customs Union facilitates ongoing exploitation of the developing world, trapping three quarters of the workforce of Sub-Saharan Africa in agrarian toil at the behest of 30,000 corporate lobbyists in Brussels.
Explain that while international cooperation on big issues, such as climate change, is vital, this exists within the framework of the Kyoto Protocol. No need for us to remain a vassal state of the EU. Besides, Brussels’ handling of carbon trading is often cynical and corrupt and shifts the blame onto poorer countries. The UK already does better than our continental neighbours and would continue to do so.
Point out that the UK’s standards on workers’ rights, social protection and animal welfare are already some of the best in Europe and would improve further as our new-found autonomy enables even bolder steps.
Show that continental collaboration in academia and research, such as CERN and Erasmus+, are not beholden to EU membership; the large Hadron collider is in Switzerland and Erasmus+ has 34 member countries and 22 partner countries compared to the 28 member states of the EU. Remind our youth with pride that the UK boasts more of the world’s top 100 universities than the rest of the EU and we will always be not just a desirable research and academic collaborator, but a vital one.
There are so many moral arguments for Brexit. We need to tap into this positivity to capture the zeitgeist and take as many people with us as possible.
Show our countrymen and women that Brexit will enable Britain to become a global exemplar and that it is one of the most fantastic, inspirational and exciting journeys to be on.
The post Let’s challenge the Remainers’ slurs and smears with an unashamedly positive Brexit agenda appeared first on BrexitCentral.
Every relationship requires ground rules to work. Whether it is a marriage or a business partnership, a shared understanding of the ‘terms of reference’ are vital to its longevity and success. And yet, if one argued for full homogeneity – a partnership where a business colleague or a spouse completely acceded to every opinion or demand of the other, would we argue that such relationships are ‘perfect’?
Most people would say that in such situations, forcing one party to the other’s priorities creates a false sense of compatibility, and will eventually fold when it can no longer paper over the differences. Business partnerships dissolve and marriages end in divorce. Relations between nations – particularly in matters of trade – are no different. Indeed, the rise of populism and the phenomenon called ‘anti-globalisation’ are a consequence of this breakdown. But is it an indictment of globalisation, or just globalisation done badly?
For thirty years, free trade conditions have existed between Canada and the US. If there ever was a situation where a power imbalance could lead to the abuse of one party by another, this would certainly be it. One country has one tenth of the other’s population, and roughly one tenth of its GDP. The other is, arguably, the most powerful nation on earth by every measure.
The original Canada US Free Trade Agreement – and its NAFTA successor – did not harmonise currencies, courts or laws. There is no NAFTA flag, Parliament or anthem. There is no customs union, or equivalent of ‘Norway+’ or any kind of plus this-and-that. Any cursory reading of the history of these two nations would readily reveal that the United States places great importance in its ability to act independently of other nations, while Canada’s history is that of a nation where sensitivity to American power and influence is ever-present. Any sort of union – customs or otherwise – would be unacceptable to either side.
Despite this, the bilateral relationship is the most successful of any in the global economy. Not perfect, but better than virtually every other pairing. The two-way goods and services trade between the nations in 2017 totalled US$673.1 billion, with the US enjoying a surplus of US$8.4 billion – the equivalent of US$0.01 per dollar. In other words, it almost reaches the ideal for any trade deal – the ever elusive thing known as ‘reciprocity’.
Unlike the NAFTA experience, Britain has harmonised its economic laws and significant aspects of its governance with other EU members. It has, in a legal sense, “gone along to get along.” One would assume, therefore, that the relationship would be even more mutually beneficial than the North American case – after all, on so many measures, we are comparing ‘apples to apples’.
Yet, in the same year (2017), British two-way trade with the rest of the EU was US$800.8 billion, with a trade deficit of $87.25 billion – a loss of nearly US$0.11 on the dollar. When one subtracts the US$15.91 billion (£12.2 billion) surplus Britain enjoys with Ireland – arguably the most similar and compatible of EU member states absent legislative harmonisation – on US$77.72 billion (£55.8 billion) of bilateral trade, the deficit moves to US$103.16 billion on a total volume of US$728 billion – a loss of US$0.14 on the dollar, or a 21% worsening over the status quo.
Those losses have real consequences for the future of globalisation. They do not accrue to those in professions and industries – like finance and legal services – where incomes are earned on the total value of the transaction. They fall squarely upon those who earn their livings in sectors and activities where the deficits equate to substitution for foreign competition – like manufacturing.
Free trade, as a theoretical construct, considers this and argues that, at some juncture ceteris paribus, there is a levelling out and some form of equilibrium is reached. Canada, having agreed to only a free trade treaty with the world’s largest, most powerful economy, has achieved close to that balance. Britain – even after having outsourced so much of its legal, political and bureaucratic functions to Brussels for four decades – is nowhere close to that elusive goal.
The result of this flawed policy is a perfect storm. Forty years of sweeping trade problems under the rug has led to an electorate increasingly angered and motivated for change. Unfortunately, the only ones who can make a difference haven’t exercised that authority in Britain’s right for decades. The current debacle over implementing Brexit demonstrates that lack of vision and the courage.
Critics of Brexit are correct that it is not a magic bullet for Britain’s problems. It may very well be that it will not fix what is broken with UK-EU trade. What it will do is give Britain both the tools to address the economic dislocations it brings, and the freedom to pursue relationships where the benefits accrue both ways – something we Canadians have taken for granted for over thirty years.
The above was originally written for The Red Cell
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The Prosperity UK Alternative Arrangements Commission, which launched earlier this week, is a serious attempt to address the complexities of the Irish border and break the Brexit logjam. Co-Chair Nicky Morgan and I have decided to take an entrepreneurial approach to solving the conundrum of the Irish border, and ask the private sector for its help.
Our starting point is to find out what is possible by asking a panel of technical experts to develop credible Alternative Arrangements for the Irish border, which can be delivered in a timely fashion, and without the presence of physical infrastructure at the frontier.
The Commission will be made up of a broad spectrum of MPs and Lords, representing many different views on Brexit. The Commission is agnostic on the preferred future relationship between the UK and EU. Our work will be compatible with virtually all of the EU-UK end states currently under consideration and will ensure that the UK retains full flexibility in its future negotiations with the European Union.
There are three common misconceptions about Brexit which are relevant to the Commission.
The first is that Alternative Arrangements will not be necessary. But in every single scenario bar staying in both the EU Customs Union and the Single Market, for goods and agrifood, alternative arrangements of some kind will be necessary. And if we are in that scenario, we would have no ability to execute an independent trade policy or improve our domestic regulations, taking away all the potential economic gains of Brexit.
It is not well understood that free circulation of goods comes from both the Customs Union (CU) – and the rules of the Single Market. If the UK were a full member of the EU Customs Union, this would only address rules of origin. Checks would still be needed on animals, animal products (including processed food), plants and plant products. Technical regulations and standards that define specific characteristics of a product would also require checks. If the UK was in a CU, not the CU (like Turkey), the UK would need movement certificates for all relevant goods. For these very reasons, a customs union on its own does not solve the Irish border question.
Let us look at some of these potential scenarios:
- Membership of the EFTA/EEA? We will need to prove origin, and consequently, there will be customs checks.
- Membership of a Partial Customs Union? We will need movement certificates and there would need to be checks for standards, TBT (Technical Barriers to Trade) and SPS (Sanitary and Phytosanitary) issues.
- A Customs Union and EEA? We would still need movement certificates and some customs checks.
- A comprehensive Free Trade Agreement between the UK and the EU? Yes, this will require the complexities of the Irish border to be addressed.
- But what about leaving on WTO terms, a so-called ‘no deal’ scenario? Leaving the EU without a deal doesn’t absolve us from finding a solution to the Irish border. If anything, it makes it more important.
The second misconception is that there is no majority in Parliament for any Brexit alternative. But as avid BrexitCentral readers will know, the Brady Amendment was the only amendment during the recent Brexit debates to gain a parliamentary majority. Central to the amendment was the need to come to an agreed path on alternative arrangements for the Irish border.
The Alternative Arrangements Commission is – and was designed to be – a broad church. We welcome any parliamentarian who is committed to finding a workable solution to the Irish border, which means the UK can leave the EU.
The third misconception is that Alternative Arrangements for the Irish border would be a hi-tech unicorn, dreamt up by some futurologist in Silicon Valley and which would take years to develop. To that, I say, no, absolutely not. We are seeking solutions based on existing, working technology and processes. There just has not been sufficient practical work done on this by the Government or anyone else. And whilst this lack of work is regrettable, it does no good to look backwards.
The Commission has engaged a Technical Panel comprising border and customs experts, practitioners and lawyers with detailed knowledge of Ireland as well as the EU, UK and international trade regulations in order to create draft processes and procedures to fulfil our goal. In addition, the Commission will engage with established technology providers in order to develop a comprehensive set of solutions and timelines for review.
The Technical Panel will address the most challenging aspects of the Irish border including small traders, tax issues, security and movement of people, trusted trader schemes, rules of origin, financial settlement and issues relating to Sanitary and Phytosanitary Measures (i.e. treatment of food and plant-based goods).
The Commission is seeking solutions that are both realistic and sustainable and recognises that their formulation and implementation will require the engagement of many stakeholders in the UK, the Republic of Ireland and Europe. Central to the proposals will be a commitment to protecting the Good Friday Agreement.
There are no easy answers with Brexit, but I hope this Commission into Alternative Arrangements is the impetus for finding both the technical solutions and the political consensus for a deal with the EU. We owe it to the country, and Northern Ireland in particular, to do everything we can to create a seamless border in Ireland. Just because it has not been done before, does not mean it is impossible.
Anyone wishing to offer their expertise or to make a submission to the Commission can do so by emailing Greg Hands.
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At a crucial moment in the battle to leave the European Union, I am fighting to keep a dream alive.
It is a vision that could increase the UK’s economic competitiveness, boost international trade, create thousands of jobs, and rejuvenate many of Britain’s coastal communities and regions all at once, as set out in a brilliant paper by my colleague Rishi Sunak, it is The Free Ports Opportunity.
For the last two years, Teesside has been buzzing about the idea of hosting a Free Port at Teesport. This idea has huge support from the local business community and from local politicians like the Tees Valley Mayor Ben Houchen. The former Brexit Secretary David Davis visited our port last year to support the case.
But now this dream is in danger of dying – because of Labour’s demand that our exit from the EU must involve remaining in a Customs Union.
To understand why, you need to understand what a Free Port is.
A Free Port is an area that is physically within a country but legally outside it for customs purposes. Consequently, goods that enter a Free Port do not incur import duty. Instead, import duty is only paid if and when goods pass out of the Free Port and into the domestic economy.
This offers a number of advantages. Goods can be imported, processed, and then re-exported without incurring any duty. This incentivises international businesses to use the Free Port as part of their supply chain, thereby stimulating domestic manufacturing and creating jobs in the process. Free Ports also often offer their users a number of additional advantages, including tax reliefs and a simplified regulatory environment.
They are not a novel or untested idea. Indeed, there are now approximately 3,500 Free Ports operating in over 135 countries.
The UK is unusual in that we have no operational Free Ports. But there is a really compelling economic and social case that we need them.
Free Ports would make post-Brexit Britain a hugely attractive location for international businesses to process and trade their goods. Wherever Free Ports have been implemented properly around the world, they have demonstrated this effect.
Just look at how quickly and impressively the Jebel Ali Free Zone in the United Arab Emirates has transformed Dubai. In the space of just a few decades, this Free Zone has brought unimaginable wealth to the country. It now hosts 7,000 global companies, employs 145,000 people, and accounts for around 40% of the UAE’s total Foreign Direct Investment.
Jebel Ali may be a unique example, but Free Ports have also demonstrated their worth in highly developed and mature economies. The growth seen in Free Ports in the US, for example, has outperformed the US economy as a whole. Indeed, Rishi Sunak’s report predicts that if a Free Port programme in the UK were as successful as those in the US, we would create an additional 86,000 jobs.
Here in the UK, such a boost to our great port towns and cities is sorely needed. Half of the twenty most deprived UK districts are located on our coast. The European political project offered these communities very little – indeed, the Commons Fisheries Policy has been partly responsible for their demise. It was unsurprising, therefore, that almost 100 of the 120 English parliamentary constituencies that have a coastline voted to Leave in June 2016.
A report produced by the consultants Mace Group last year looked at what a programme of ‘supercharged freeports’ in the North of England might mean for the regional economy. It found that such a programme, once established, would:
- Boost UK trade by nearly £12 billion a year
- Create 150,000 extra jobs across the North
- Provide a boost to Northern powerhouse GDP of £9 billion a year (equivalent to £1,500 a year for every household in the North)
Although I’d eventually love to see Free Ports dotted around the entire UK coastline – like giant magnets pulling in container ships from every direction – I won’t miss an opportunity to fly the flag for Teesport in our bid to be the first new Free Port in the country.
Teesport is a hugely ambitious port, run by the extremely professional and impressive team at PD Ports. The container platform at Teesport has seen £120m invested over the past seven years, bringing improvements in infrastructure and state-of-the-art equipment to expand capacity. It would be the perfect site for a Free Port.
However, leaving the EU – and leaving it properly – is crucial for this opportunity to be realised.
This is where Labour’s demand for a customs union – and the Government’s apparent flirtation with it – is so dangerously misconceived.
A Customs Union would give the EU unilateral control over our trade and customs policy, and hand them power over the UK’s state aid rules. This would completely undermine any prospect of setting up meaningful Free Ports in the UK post-Brexit, as the necessary allowances would almost certainly be found to breach state aid requirements.
By pursuing their ideological drive for close alignment with the EU, therefore, the Labour Party is letting down many of their traditional voters in the UK’s most deprived regions, and denying them the opportunities that would otherwise be available if their decision to leave the EU were to be properly respected.
In areas like the North East, the Labour Party, with their narrative of gloom and negativity, has dampened the natural British spirit of enterprise and opportunity for too long. Denying our coastal communities the Free Ports opportunity because they are too afraid to let the British people govern themselves is just the latest expression of this defeatism.
We can and must do better – but we must reject the Customs Union if we are to do so.
Following the Easter break, Parliament may soon once again debate our future relationship with the EU. Despite numerous votes against the idea of the UK being in a or the Customs Union with the EU, it appears many still believe that some form of customs union is necessary to break the Brexit deadlock. This seems to be because of the perception that, in a customs union, there are no tariffs or non-tariff barriers to trade between its members. Unlike a free trade area, members of the Customs Union impose a common external tariff on all goods entering the union.
However, a customs union does not, by itself, lead to frictionless trade (only rules of origin checks would be avoided, and in the case of a partial customs union, some checks in the form of movement certificates would still be required) because the bulk of the checks come from other rules to be found in the EU’s Single Market. In the case of Turkey – the non-EU country that does have a partial customs union with the EU – not only are movement certificates required, but Turkey has committed to the EU acquis. The Turkish arrangements were intended as a way-station en route to full EU membership.
But there are strong reasons not to be in a customs union with EU.
Firstly, it is a myth that the UK would have any significant say in the operation of the EU Customs Union if we are not a fee-paying member of the EU. Those who believe we would have a say seem to assume that we would have more of a say than we currently have as one of 28. Since it is unlikely that the Commission has fallen asleep, there is no reason why a departing member state would be rewarded in this manner.
Secondly, the EU would set the common external tariff and the trade policy to suit them, not the UK. They would prioritise protecting French and German agricultural goods, and put in no effort to open up markets outside of Europe to UK financial services or even Scotch whisky.
The UK would also not be able to have its own meaningful and independent trade policy, and this would lead to a huge loss in British influence around the world. Trade is a big part of foreign policy, and the UK frequently uses its ability to change EU trade policy with various asks we might have in security cooperation when talking with other countries. Trade is a vital instrument of diplomacy.
Furthermore, the EU would run our trade remedies (or trade defences) against dumping of goods, most frequently from China. It is very doubtful that the EU would give much priority to defending our industries – those who pay the bills would be the priority.
Finally, and most importantly, in new trade agreements the EU would be able to offer – via the Customs Union – access to Britain’s 65 million consumers, without any equivalent access for UK goods and services. The US and the EU have announced their intention to re-start trade talks with each other. Even though the US is our largest single trading partner, we wouldn’t have a seat at the table. Worse still, if the EU lowered tariffs for US goods, or changed its regulations to allow in particular US goods which were previously not allowed, the UK would have to follow and seek to negotiate for ourselves what we need with no leverage.
Many say that we could agree a customs union with the EU and have a greater say than we have now. This is pure fantasy. The EU would not give the UK a greater say outside the EU than the member states have themselves. We will not be able to defend our interests better in a customs union than we could as members of the European Union. If we are also to align our regulations closely to the EU’s in a number of areas, we will certainly not have a say in how those regulations are made.
Currently, in the European Economic Area, members must accept the EU’s acquis in the relevant areas and do not have the ability to veto or change those regulations. Norway discovered this to their cost when they refused to implement the third postal directive and found themselves punished in unrelated areas like fishing. Even the Swiss, who are not even EEA members but have a series of agreements with the EU, have found themselves at the short end of EU negotiations. It would be this way for the UK in these types of arrangements – and the UK would be powerless to resist.
The real solution to the Brexit impasse is this: to find alternative arrangements on the Irish border; and to negotiate a deep and comprehensive Free Trade Agreement between the UK and the EU as equals. The UK and the EU can remain friends, while the UK also has its own independent free trade policy going forward, to take advantage of growing markets in Asia and around the world.
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In the below article, Patrick Minford writes in a personal capacity.
In the latest discussions on the Brexit Withdrawal Agreement and Political Declaration (WAPD), two views have emerged about the UK’s future choices. One, which I will call the lawyer view, is that once signed, the WAPD binds the UK indefinitely; this view is held by many of my friends and Brexit allies who are largely lawyers and as such tend to believe that the letter of the law will prevail. The other, which I will call the realist view, is that it can be ‘evolved’, to use a word popular with some politicians, in line with the mutually evolving interests of the two sovereign parties, the EU and the UK. The latter view is the one generally adopted in the economic analysis of international treaties, as the following quotation from a recent paper in a leading economic journal makes very clear.
At the national level, such conflicts [over payment for/usage of public goods] between individual and collective rationality can be resolved by the intervention of the government (Demsetz, 1967). At the international scale, however, there is no supranational authority that could coerce states into adopting efficient policies if they run counter to national interests. Filling the void are international agreements. Under the terms of the Vienna Convention on the Law of Treaties, a state that ratifies a multilateral treaty chooses partially to surrender its sovereignty and to subject its policies in a specific domain to the rules and prescriptions of the treaty. In so doing, sovereign states agree to coordinate their policies in mutually beneficial ways. By the very nature of sovereignty, however, the agreement is fundamentally non-binding and states can always withdraw from it. Therefore, the fact that public good provision is implemented through an international agreement should not change a country’s incentives to contribute per se — unless the treaty alters the country’s incentives to cooperate in other ways. (Wagner, 2016)
The point of economic analysis of treaties therefore is that a sovereign state only continues as a party to any treaty if it remains in its interests to do so. Therefore one must analyse treaty development over time with reference to how these sovereign interests evolve; and how at any time the sovereigns reach an accommodation based on their mutual interests. The basic reason, as explained in the quotation, is that there is no supranational power that enforces treaties in the way that a national state, with a monopoly of force, enforces domestic law.
The realist view is therefore asserting that once the UK is out of the EU, how it deals with the WAPD is a matter of subsequent choice and negotiation with the EU, which also has freedom of the same sort. Anyone supporting the lawyer view must therefore demonstrate that the WAPD remains an agreement that it is in the interests of both sides to maintain in the same form. It is not sufficient to say that because it has been signed it is indefinitely binding; this would only be sufficient if there was a supranational power that could enforce this, and I shall assume it as obvious that indeed there is no such power. In a recent posting on the Lawyers for Britain website my old friend and longtime Brexit ally, Martin Howe, argues that the Treaty of Utrecht binding Spain into Gibraltar’s status illustrates that treaties bind long-term. However, in fact this well illustrates the point about self-interest. Spain, like the UK, has had a strong interest in Gibraltar not accidentally becoming a casus belli, much as the Falklands, with a population similarly determined to remain British, became, at great expense to both the UK and Argentina. Ceaseless ongoing diplomacy on both sides to accommodate mutual complaints has found the Treaty a useful figleaf.
In the rest of this piece I will discuss what the interests of the UK and EU are and how, if at all, they might evolve, and with them the UK/EU future Treaty relationship. This type of analysis is a branch of game theory, which can involve highly complicated mathematics, as in the paper cited, but fortunately not in this case here.
Current UK and EU interests and the Withdrawal Agreement
Based on economic analysis within a rather standard World Trade model and other models described in Should Britain leave the EU? An economic analysis of a troubled relationship by Minford et al (2015) I suggest the following broad interests of the EU and the UK:
The EU: for the EU the status quo is optimal. The UK contributes 10% of the EU budget. Its food and manufacturing industries sell to UK consumers at 20% above world prices because the Customs Union places trade barriers of this tariff-equivalent value against products from the rest of the world. EU regulations prevent UK practices that would reduce UK costs and so undercut EU competition, driving down margins. Unskilled EU workers can be exported to the UK labour market where their wage is supplemented by the UK taxpayer by about 20%.
The UK: for the UK the optimal policy is abolition of protection against the non-EU; this ‘free trade’ policy eliminates the 20% premium paid to EU producers of food and manufactures and it also lowers consumer prices, pushing up productivity via trade competition. At the same time the UK would want to sign a Free Trade Agreement with the EU that keeps the current free access with zero tariffs between them; nevertheless it turns out that any tariffs or equivalent that are imposed will benefit the UK and be paid by EU traders, because UK prices of both imports and exports are set by world prices, so UK tariffs must be absorbed by EU exporters while EU tariffs must similarly be absorbed by EU importers. It follows that although the UK would be willing on the ‘good neighbour’ principle to sign an EU-UK FTA, it would strictly speaking be better off under WTO rules with no deal.
These descriptions of economic interests take no account of current political pressures. A natural question is: given its interests why on earth did the UK Government sign up to the WAPD? This effectively makes the status quo the most achievable agreement, given that the backstop endows the EU with effective veto power over anything it dislikes; under the backstop the UK effectively stays in the EU as now until the EU deems there to be an agreement.
The only way to account for this is in terms of the votes in Parliament. With a part of the Tory party led by Philip Hammond having a Remainer view of UK interests – that is wanting protection for reasons of preserving current jobs (notice not gaining the most jobs in the long term as would occur under free trade etc), following vested interests like the CBI – the Government of Mrs. May seems to have assumed that only the ‘soft Brexit’ WAPD could get through Parliament. Similarly, it assumed that Parliament would not support No Deal, because this too would sacrifice some current jobs to a free trade strategy under WTO rules; as a result the Government did not prepare for No Deal and so lost its only bargaining counter with the EU so that the WAPD failed to favour UK interests. As a result, the WAPD too cannot get through Parliament because the ERG Conservatives and DUP votes oppose it.
Now Mrs May is trying to get Labour votes to push through some even ‘softer’ WA, with a PD promising EU customs union in some shape or form. Hence the EU have not had any difficulty achieving a WAPD that favours its interests, because of parliamentary politics. Add to this that the EU was in any case determined – due to its own politics – to show that exiting countries get a bad deal, to discourage others. It is clear that the politics of the divorce situation was bound to produce a bad deal from the UK viewpoint. One does not need to go further and accuse Mrs May of being a closet Remainer, which she may well be, to account for what has been agreed.
The Economic Analysis puzzle
How those Remainer ideas took hold in the face of strong economic arguments to the opposite effect, as set out above, for the long-run gains of Brexit, is rather baffling. As I explained in a recent paper in World Economy, Remainers and their economist allies (e.g. Breinlich et al, 2016) used ‘gravity theory’ to argue that leaving the EU would be damaging to the UK and that gains from free trade with the rest of the world would be small. However, the ‘gravity models’ they used did not obey the canons of good general equilibrium modelling, in which all causal factors are simultaneously analysed for the effect of a major policy change like Brexit. All the gravity models were ‘partial equilibrium relationships’ in which trade, GDP, FDI and productivity were separately related without any overall inter-linking.
This approach was originally – in 2016 – also adopted by the Treasury; but at the end of 2017 the Treasury for this reason finally abandoned it, in favour of a full general equilibrium model, the GTAP model, bought in from the Purdue University Trade Modelling Project. This was used to reevaluate Brexit in the Cross-Whitehall Civil Service Report of that time. Given the strong Whitehall bias against Brexit the new model was given assumptions that produced similar negative results to the previous ones. These consisted of a) few and limited FTAs with the non-EU world; and b) large border barriers, even with an EU FTA, between the UK and the EU.
However, plausible alternative assumptions reverse the Brexit effect on GDP under a WTO No Deal for example from highly negative (-7%) to firmly positive (+3%).These assumptions are that the UK uses FTAs with the non-EU to eliminate all trade barriers on goods against them while also gaining wide market access; and that it signs an FTA with the EU that prevents any new barriers, or if it goes to WTO rules then only tariffs spring up at the border, other interferences being illegal under WTO obligations.
As this debate has unfolded between our critique and the Treasury, academic economists espousing the previous gravity methods have stayed strangely quiet while the Treasury dropped their methodology. Meanwhile we published another paper in which we tested a full ‘Computable General Equilibrium’ (CGE) model with gravity mechanisms against a plain Classical CGE trade model without them, to see how well each matched the UK trade facts. Using an elaborate and thorough Indirect Inference test we found that the gravity version was strongly rejected while the Classical one fitted the facts. Furthermore when we did the Brexit policies on the Gravity version the effects were much the same as with the Classical, our main tool; this was because Brexit gives gains with the rest of the world while not much disturbing our relations with the EU and so stirring up the negative gravity effects. Therefore it is clear that the anti-Brexit claims based on the gravity approach are invalid.
Unfortunately in the present fevered atmosphere, calm academic debate cannot take place; it is reminiscent of wars of religion where each entrenched side only wants to hear confirmation of its prejudices. One of the side benefits of Brexit occurring is that people may move on to normal technical discussions about optimal UK policies.
The way forward in Parliament
There are now three main parliamentary scenarios. In two of them, one or another WAPD – Mrs May’s or some even softer one agreed with Labour – gets through Parliament. The UK then leaves the EU in these two scenarios, initially for the transition period, as soon as either gets through.
In the third, there is no WAPD agreed and the possibility strengthens of a second referendum with Remain on the ballot paper, leading to either no Brexit or a renewed demand for Brexit. This third scenario is one in which Brexit uncertainty continues for a year or more, with unknown political consequences, given that the Leave voters in the first referendum would feel betrayed. This third scenario will only be welcomed by Remainers determined to reverse the democratic referendum decision. From a Brexit viewpoint, the only hopeful outcome would be a new Conservative leader and government determined to change the WAPD and get it through Parliament before exit. But how could this be achieved without an election to change Parliament’s composition? Also, what would be the odds on the Conservatives winning such an election, given the fury of the populace with the Conservatives for failing to deliver Brexit? Such hopes look forlorn.
Scenarios 1 and 2, if Brexit occurs: What of UK and EU interests post-Brexit?
In this section I ask what, given we have a WAPD as described, opposed widely by Brexiteers, is likely to occur if, as seems probable, Mrs. May steps down and is succeeded by a Brexiteer Conservative leader? Such a leader is likely to agree with my account above of UK interests. If so, what can such a leader do, if saddled with the WAPD?
Under the realist view espoused by economic analysis, this leader’s government moves to re-open bargaining with the EU. This would be done via normal diplomatic processes, in which the EU would face a possible general lack of UK political cooperation in a wide array of areas, including key ones like security and military matters; also the WTO option would be reactivated as a ‘walk away’ trade strategy, should the EU be unwilling to move away from its status quo aims.
The UK having left the EU after resolving basic administrative issues such as citizens’ rights, aviation/transport/visa agreements, there would probably be little appetite to revisit these issues; and the focus should be on the trade relationship quite narrowly. Nevertheless were it to be widened, the new government would make active preparations for a breakdown in these areas.
At the same time the UK would proceed to negotiate FTAs with non-EU countries, informing them of their aims on EU relations. These would be widely welcomed, as we already know.
How would the EU/UK bargaining go from here? We can think of the ‘game’ now as a series of proposals and counter-proposals. Start from the opening WAPD ‘proposal’ for the status quo. This violates UK interests radically, breaching its basic ‘red lines’. The UK counter-proposal is to walk away to WTO rules and No Deal. This UK counter-proposal damages EU interests radically, as we have seen: they face world prices in the UK market and tariffs in both directions are paid by EU traders. In order to counter this the EU now offers an FTA: Canada+ which consists not just of zero barriers on goods (Canada) but also the plus of mutual recognition in services where EU interests are served by free trade, given a wide reliance on UK service industries. The UK wants either Canada or Canada+ more or less indifferently as its service industries are all highly competitive around the world. As noted earlier, while No Deal gives strictly better gains, the UK is likely to agree to this proposal for the sake of neighbourly relations.
The bargaining round, which may well take a few years to play out, is therefore likely to be resolved by Canada+. We can essentially rule out any other resolution because all other alternatives leave one side unacceptably badly off – beyond its red lines – or can be improved on by one side without making the other worse off.
What I mean by ‘unacceptably’ is literally that it will not accept it in the long run, when by walking away or co-operating it can avoid it. The EU can avoid No Deal by co-operating. The UK can avoid the status quo by walking away.
All this is illustrated in the following diagram: the top line shows how the UK ranks all options, with No Deal the best; the second line shows the EU rankings, with the status quo the best. Each side’s red lines of unacceptability are marked out on each side. Any resolution must be inside these. Canada+ within these is better than Canada for the EU and an equals with it for the UK. So Canada+ gets chosen.
Notice that all this diplomacy is carried out between ‘consenting sovereigns’. Neither will bring in outsiders because no outside power has jurisdiction or indeed wants it. In so far as third parties have preferences, they tend to favour the UK as they typically want to agree FTAs with the UK. As for the WTO, it allows states to negotiate FTAs freely; and in general favours all agreements that in net terms reduce trade barriers, just as will occur under the EU-UK renegotiation.
The need for a new Conservative leader and government
In order for this new diplomacy based on the UK’s true economic interests, not sandbagged by Remainers within the tent like Hammond and Co., there plainly needs to be a new Conservative leader and government, fully seized of the Brexit case for free trade and so on. The current leadership/government has proved that it has neither the understanding nor the will to pursue the UK’s true interests. Without it changing no progress along the lines discussed here is possible.
It is now very likely that the Conservative Party will change its leadership, if only for reasons of pure survival. With the agreed extension, the Conservatives face carnage in the local elections and if the European elections take place, annihilation in those. This will inform the party of how unpopular its failure to deliver Brexit has made it. Its best hope then is for Mrs. May to go and for a new leader to chart a new direction, while making it clear that the new government rejects and regrets the old government’s failed Brexit agenda.
What are the implications of the realist view for parliamentary votes?
MPs now have some time for reflection during their Easter recess. They need to ponder the effects of their votes. Any MP that wants to avoid the chance of that third scenario of possibly No Brexit needs to consider voting for one or other WAPD. With either of them, Brexit occurs and the renegotiation can be launched under a new Prime Minister.
An ERG Brexiteer will prefer Mrs May’s original WAPD since it does not contain extra ‘soft’ commitments put in to satisfy Labour. These become yet another element to be renegotiated. In principle that too will be jettisoned; but it adds complication.
A DUP Brexiteer will remain nervous about the backstop in Mrs May’s WAPD; and could be less nervous with a softer one including a customs union because with that the backstop does not come into play. Nevertheless a DUP MP should reflect that none of these will survive renegotiation and should not therefore be unduly concerned. What it really needs from Mrs May and her potential successors is a guarantee that whatever is renegotiated it will never include differential treatment for Northern Ireland, or indeed any other devolved part of the Union. But they should feel confident on this: the Conservatives have been robustly and consistently a unionist party.
It should be noted by both these groups that in opposing any WAPD they are playing the role of ‘useful idiots’ to Remainers who want no Brexit, leading to a second referendum.
When one turns to Labour MPs and Mrs May, both involved in negotiations over a softer WAPD, they should reflect that their new WAPD causes both sides difficulties – Mrs May because it infuriates most Conservatives, Labour because it will infuriate the substantial Labour group that wants a second referendum rather than any sort of Brexit; but at the same time achieves no extra long-term ‘softness’ in the outcome, as the added-on soft elements will simply be the first to go in the inevitable renegotiation.
Reflection on all sides should therefore have the effect of terminating the May-Labour negotiation while logically inducing ERG and DUP Brexiteers to push the May WAPD over the line.
The realist view of post-Brexit affairs clearly implies that the UK, once it is out of the EU will behave like any other sovereign power and see that its foreign relationships evolve to suit its interests. So far, these have been stitched up in talks with the EU due to a Remainer group of Tories who have opposed the Government’s Brexit policies in favour of industrial vested interests, in alliance with Labour opponents, and undermined its bargaining position vis-à-vis the EU which was in any case politically determined not to agree a good trade deal. No sovereign state could put up with this sort of stitch-up in the long term. This piece has described how a new government, fully seized of the UK interest in free trade and domestically set regulation, besides control of borders and the ending of budget transfers to the EU, will have both the incentive and the scope to achieve a logical renegotiation that reaches an EU agreement tolerable to both sides.
Under this view the key aim for Brexiteers should be to get the WAPD in some form – it does not much matter what form – over the line, so that Brexit definitely happens as demanded in the referendum. Policy in the future will then evolve to meet UK interests.
The Prime Minister’s plan to drive her EU withdrawal deal through the Commons after Easter by bribing Jeremy Corbyn with an EU customs union will probably go down with voters like a lead balloon. It will also hasten her own exit. Even before Liam Fox, the International Trade Secretary, warned MPs that a customs union would give the EU power over the UK to clobber our economy, the scheme was unlikely to win over voters.
In fact, on each attempt to keep the country under the EU by the back door of the economy, voters were already ahead of the curve. They declared against Chequers by two to one, and followed that with a thumbs down to the Withdrawal Agreement and its backstop customs union for the whole UK. These compromises, seen by the Government as the only way forward, have no appeal to the voters, whether they are Remainers or Leavers. Amongst Leavers, on both the left and the right, the antipathy to them goes far, far further back. It is a battle, not as the media claims in a ‘Tory’ war over Europe, but a chapter in an older struggle about the authority on which this country is ruled: that of the governing faction and its interest groups, or the people?
The customs union is the latest episode in the story of the people’s determination to have a say in the laws under which they are governed, and thereby protect themselves and their country from arbitrary or bad rule. They showed this determination at the hustings, and at popular meetings, or through marches, movements, flysheets and ballads, even before many of them had the right to vote. Whatever the subject of the hour, great battles to enforce that principle – over tax, or for radical change to end the Corn Laws, to extend the franchise, home rule for Ireland, the 1910 budget, the House of Lords veto – and the accommodation of the popular will have brought long-term stability and security to the country. This has allowed orderly – often dramatic – change to happen, economic growth, prosperity and for people to have a real stake in how they are governed. In fact, in this country’s political system the struggles over how it is governed are in reality about who governs and about where sovereignty lies.
The battle over leaving the EU has been another such battle. Having waited the best part of three years and seen the date for Brexit come and go, Leave voters trust neither the Prime Minister to Leave, nor the Labour Opposition to force her hand. Indeed as Mrs May and Mr Corbyn schemed to stay in an EU customs union, Labour’s vote in the recent Newport West by-election dropped by almost 13 per cent, the Tories’ by 6 per cent and turnout halved, while UKIP, despite internal collapse, was up by 6 per cent.
In another Newport by-election, almost a century earlier, voters rebelled more dramatically against the stitch-up between the two main parties, Liberal and Conservative, in a coalition government under Lloyd George. Rejecting the government candidate, they elected an independent Conservative. The next day Conservative MPs withdrew their support from the Government, which duly collapsed. It fell to a different Conservative leadership to restore and reshape political life, to respect the reality of the popular will and to accommodate Labour, in place of the Liberals, as as a principal political force.
These changes restored the freedom and stability to inter-war Britain, brought peaceful, stable and free government here by contrast with the often violent, unstable or authoritarian regimes of left and right on a troubled inter-war continent. Baldwin trained two decades of new MPs to the humility that should guide their parliamentary life to remember ‘the people who put you here’ for it was they ‘who will remove you’. Baldwin also reflected the tradition of the founder of the modern Tory party, Sir Robert Peel, who had accepted the will of people flocking to the meeting halls and rooms, across Victorian England to demand the repeal of the protectionist Corn Laws. And he anticipated Churchill who, leading the war to resist German aggression and restore the freedom of conquered nations, described himself as the mouthpiece of the people, ‘the lion’s roar’.
These leaders understood the nature of a tradition, shared in common by people across the parties, about Britain’s constitution and its democracy. That tradition prompted voters across the political divide to decide in 2016 to restore to this country its own way of ordering life, by freeing itself from the EU. Across the country, north, middle and south, YouGov has discovered that 46 per cent of people want to leave the EU without a deal if none is agreed, compared to 44 per cent for Remain, the lead being up to ten per cent in some regions – with only Scotland and London having a Remain majority. A local poll for Nottinghamshire Live found 48 per cent wanted a no-deal Brexit and 28 per cent wanted to Remain – only 2 per cent were for a customs union, and 4 per cent for Mrs May’s deal. People do not want another layer of Europe, its tariffs or laws slapped on with a customs union via Mrs May’s backstop or through a Corbyn-inspired deal.
As both parties pay the price for flouting the democratic decision, a new Conservative leader must be installed now to change course so the UK genuinely leaves the EU on or before 31st October, with a revised deal from which the backstop is removed or ends by 31st December 2020, or on WTO terms. During the intervening six months the Government should work at full speed to make all ready so that a WTO exit at the end of October will be smooth and, in the current phrase, ‘orderly’ – while at the same the EU can practise its best endeavours to come up with the solution at which the German Chancellor-in-waiting has publicly hinted. For the UK exit should be treated as a matter of sovereignty under international law, not supplicancy to the EU. MPs, given the outrage amongst the majority of their voters, are unlikely to resist in sufficient numbers: the DUP will support and enough Labour MPs will recognise the game is up. But in the end it would be matter of political judgment whether to go to the country for a fresh mandate.
It would not most likely come to an election. For the EU, more brazenly than ever, has laid down the law about when, how and whether indeed the UK’s democratic decision can be executed. In throwing Britain’s democracy (and the world’s fifth largest economy) to the mercy of Messrs Macron, Juncker, Tusk and Mrs Merkel, the Prime Minister has reached the end of her rope. Such humiliating supplication bears testimony to the corrupting nature of the EU. It makes it all the more urgent that we leave and leave quickly.
The post Securing Brexit is the latest chapter in a centuries-old constitutional battle appeared first on BrexitCentral.
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