In the aftermath of Parliament’s rejection of the draft Withdrawal Agreement, there is a way forward for the Government which allows a smooth transition into a No Deal scenario after 29th March, if found necessary, and then allows the UK to negotiate its desired comprehensive Free Trade Agreement with the EU without having to impose tariffs or quotas in the interim. There is a mechanism to ‘manage’ a No Deal scenario; one that works within existing WTO rules, and that is not widely known about.

This is essentially an alternate transition or interim period, but within WTO rules without having to levy tariffs or (arguably) pay membership fees to the EU, but requiring some customs forms levied on the 7% of UK businesses (400,000 out of 5.7 million UK private registered businesses) that actually trade with the EU. This is the deal with the EU used by China, the USA, India, Australia and New Zealand for example.

These recommendations are based on my nearly ten years of experience as a member of the European Parliament’s International Trade Committee, working on EU trade deals such as those with Canada, New Zealand, India, South Korea, Japan and Columbia/Peru, and drawing on high level discussions I have had with senior trade representatives for the EU and the World Trade Organisation (WTO).

In the event of No Deal, there is a strong case to maintain preferential tariff and quota rates at zero between the UK and the EU for a limited period – thought to be around two years. There are a number of arguments for exemptions to what are termed ‘Most Favoured Nation’ (MFN) rules, which require the same treatment in terms of tariff rates and treatment between WTO members to avoid discrimination. They are:

1) It is to the advantage of fellow WTO members to minimise disruption between our two large markets, which would reduce knock-on impacts to their imports/exports to the UK or EU markets. WTO members have to show financial harm to justify objections to practices (or tariff schedules). Civitas calculate that £13 billion of tariffs would have to be levied on EU goods entering the UK and £5 billion on UK goods entering the EU Single Market if standard tariffs are levied under No Deal. This is one justification for keeping preferential rates of tariffs for a period whilst a full trade deal is finalised.

2) There are exemptions under National Security grounds such as over the issue of Northern Ireland, which the IEA have argued as a case for an exemption, but this is less appealing given its association with US and Russian cases for exemptions, such as over US tariffs on Chinese steel.

3) Exemptions to ‘Most Favoured Nation’ (MFN) rules under Article 24 of the General Agreement on Tariffs and Trade (GATT) 1947. This appears to be the most substantive argument. WTO rules state that preferential benefits, such as tariffs and quotas for goods which are more favourable than MFN treatment, may only be extended to another country if it is part of a customs union or a free trade area. The ultimate legal authority to grant such preferences is Article 24 of GATT , incorporated into the WTO regime when that body commenced operations in 1995.

Article 24 is helpfully the ultimate basis in international law for the existence of the EU itself as a preferential trading bloc, which grants preferential treatment to its members within the Customs Union.

If the UK accepts Donald Tusk’s offer of a free trade agreement along the lines of CETA+++ or what I propose as ‘SuperCanada’, then the UK and EU will be in the process of moving towards creating a free trade area – Tusk has offered a tariff and quota free deal plus services (whilst leaving the EU Customs Union) – so qualifies under this criterion.

There are two under-appreciated aspects of Article 24 which have direct relevance to our situation, and which provide reassurance.

Firstly, Article 24, para 3 states:

The provisions of this Agreement [i.e. the requirement to extend MFN treatment equally to all] shall not be construed to prevent:

(a) Advantages accorded by any contracting party to adjacent countries in order to facilitate frontier traffic

  • This has direct relevance to the position of Northern Ireland, and our adjacent country of Ireland. Some commentators have claimed that a sensitive and appropriate management of trade which respects and upholds both the letter and the spirit of, for example, the Good Friday Agreement would be in some form an unauthorised infringement of MFN treatment. That claim is clearly untrue.
  • There is also no obligation under WTO rules to erect a so-called “hard border” on 29th March. Government may continue discussions with our counterparts in Dublin to arrive at adequate and effective technological measures for the management of trade with minimal friction. You will have noticed the encouraging signs that the Irish Government already appreciates this fact. (See, for example, “Ireland has no plans for hard border after Brexit, says Varadkar”, from The Guardian of 21st December 2018)
  • We can expect that there will be considerable international sympathy for measures which support the situation in Northern Ireland, and hence a reluctance on the part of third countries to lodge objections. Although given the sensitivities this should not be stressed too heavily, such an exemption falls into ‘National Security’ related actions.

Secondly, Article 24 not only authorises member states to operate lower/zero tariff free trade agreements, it also permits them to offer lower/zero tariffs pre-emptively during the course of negotiations. The relevant provision, Article 24 para 5, is worth quoting at length, with emphasis added to the critical wording:

Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of… a free-trade area or the adoption of an interim agreement necessary for the formation of… a free-trade area; Provided that:…

(b) with respect to a free-trade area, or an interim agreement leading to the formation of a free-trade area, the duties and other regulations of commerce maintained in each of the constituent territories and applicable at the formation of such free–trade area or the adoption of such interim agreement to the trade of contracting parties not included in such area or not parties to such agreement shall not be higher or more restrictive than the corresponding duties and other regulations of commerce existing in the same constituent territories prior to the formation of the free-trade area, or interim agreement as the case may be; and

(c) any interim agreement referred to in subparagraph… (b) shall include a plan and schedule for the formation of such… a free-trade area within a reasonable length of time.

(A WTO declaration, the Understanding on the Interpretation of Article 24, 1994, clarifies that the ‘reasonable period of time’ in para 5(c) will generally taken to be no more than 10 years.) I estimate based on EU trade deals to date, that a UK-EU comprehensive Free Trade Agreement could take around two years, especially given the unique reality that the UK is starting from a convergent position with the EU, with zero tariffs and quotas and with our laws and standards currently harmonised.

  • If, before 29 March, the UK has reached an ‘interim agreement’ with the EU to pursue negotiations towards a comprehensive free trade deal, both sides would be permitted under WTO rules to continue with the present zero tariff/zero quota trading arrangements. There would be no disruption to the man or woman on the high street. No Deal would mean No Change, as the cost of goods would not go up.
  • In the present situation the ‘interim agreement’ would not have to be an extensive document running to hundreds of pages. The schedule of items covered by the negotiations would be all goods, as already envisaged in our discussions with the EU. The plan which the document sets out would have to amount to little more than a timetable for regular meetings and an ultimate deadline, some years hence, by which point negotiations will have to be concluded.
  • An ‘interim agreement’, then, need be little more than an agreement to continue talks – while also continuing zero-tariff and zero-quota trade on both sides – plus a deadline no later than 29th March 2029. I accept that the EU has so far declined to agree any deadlines (other than 29th March) but since the absence of a final cut-off point has been a major contributing reason for Parliament’s rejection of the Draft Withdrawal Agreement, perhaps the EU will now reassess that stance.
  • Whilst legal challenges at WTO level might be expected from an unhelpful member, the reality is that any such challenge is unlikely to get to the WTO ‘court’ – its appellate body – for at least two years and possibly longer, and only if that body finds the UK non-compliant would any compensating actions be authorised such as tariffs. This is within WTO rules, and if any challenges arise a fully compliant Free Trade Agreement should already be in place by the time any appellate body were to meet. The EU is now under extreme pressure from EU27 industry and commerce who enjoy a £96 billion surplus with the UK.
  • You will recall that the draft Political Declaration indicates the EU want to reach a comprehensive Free Trade Agreement with the UK on the basis of zero tariffs and quotas (see paras 17, page 5, and para 23, page 6) and extending to services (para 29, page 7). Those provisions are fully in line with numerous public statements made since the 2016 referendum by Donald Tusk, President of the European Council, and Michel Barnier, European Chief Negotiator – offering a CETA+++, or what I term a ‘SuperCanada’ trade deal, on 7th March 2018, 30th August and 6th October 2018.

It is significant that Heiko Maas, Foreign Minister of Germany, has already indicated a willingness to continue talks (see “Germany says EU ready to talk if UK rejects Brexit deal” on Reuters, 15th January).

Conclusion

This approach would continue the pre-29th March status quo in trading arrangements and patterns without interruption, justified by an explicit provision of the WTO regime. The possible grounds on which any third country could lodge an objection to this are extremely slight (unlike for schedule changes).

An ‘interim agreement’ would therefore be an important component of a ‘Managed No Deal’ outcome from 29th March. It permits trade between us and the EU to continue without tariffs or quotas under No Deal while creating a space for negotiations to be reset and recommenced on the basis of reaching a SuperCanada or CETA+++ trade treaty.

I urge the Government to now adopt this course of action, as it will mitigate the main impacts of a ‘No Deal’ Brexit and eliminate the task of having to assess and charge tariff rates on 19,753 MFN tariffs under the EU Customs Union, thereby substantially reducing friction at borders.

The post A ‘Managed No Deal’ WTO option using Article 24 of GATT can avoid raising tariffs or quotas appeared first on BrexitCentral.

The letter sent from Jean-Claude Juncker and Donald Tusk to Theresa May in the last 24 hours shows more clearly than anything else possibly could why the draft Withdrawal Agreement is fundamentally flawed: not only the lack of substance in the letter, which adds nothing new to the sum of human knowledge, but also the lack of any form of collegiate kindness or helpfulness to the Prime Minister.

When the Prime Minister addressed the 1922 Committee on 12th December, she assured colleagues that she would secure legally-binding wording to address concerns over the Northern Ireland backstop. Now we learn there will be no end date to the backstop or unilateral exit mechanism for the UK. So, yet again, the EU have let the Prime Minister down.

The lesson is clear: we need to vote down the Withdrawal Agreement by as large a majority as possible. Only then can we move on and either negotiate a new agreement (as David Davis argued at the weekend) or Leave without a deal on World Trade Organisation terms with a view to later negotiating a new relationship.

The Government and the Conservative Party must remain committed to delivering the result of the referendum, as repeated in our 2017 manifesto, which pledged to leave the Customs Union and the Single Market, accompanied by the declaration that No Deal was better than a Bad Deal. Otherwise, the credibility of our democracy will be thrown into chaos.

The draft Withdrawal Agreement does not respect the result of the referendum. The Government should be seeking to unlock the negotiations by returning to the Canada-style option offered by President Tusk, using the tried and trusted techniques and procedures so that rules of origin and customs checks are conducted away from the Northern Ireland border, to make unnecessary the hard border that everyone agrees must be avoided.

The backstop means we will be trapped under the thumb of the EU with no date to escape – and unable to strike trade deals. It means we would be trapped indefinitely as a satellite of the EU, obeying its laws without a say, unless the EU and its Member States gave permission for us to leave. The UK will be paying £39 billion – equivalent to £1,443 per household, or £60 million per constituency – and getting nothing in return. We will not take back control of our money, laws and trade. Remaining in the Customs Union is a breach of the 2017 Conservative Manifesto on which I and all my colleagues stood.

The backstop drives a regulatory barrier down the Irish Sea, severely damaging the Union and moving Great Britain and Northern Ireland further apart. This deal keeps the supremacy of the European Court over our own law and sells out the UK fishing industry, excluding them from any trade deal, and envisaging a deal where the Prime Minister trades away our fish in return for market access.

We remain effectively in the EU for an extendable ‘transition’ period, paying and accepting new laws over which we will have had no say. Unrestricted immigration of EU nationals will still be continuing for years after we leave. This commitment comes with no guarantee of a future trade agreement. Worryingly, this deal will deny the UK an independent trade policy while potentially keeping us out of existing EU trade policy. We would be cut off from the world with our trade and economy regulated from Brussels without any say.

So, let us be honest: the Withdrawal Agreement is a terrible deal – worse than Chequers, less popular than the Poll Tax and only one in five voters think it honours the referendum result. The only way to get a better deal for the UK is for Parliament to reject it and force the Government to renegotiate with the EU.

The post Juncker and Tusk’s letter to Theresa May changes nothing: we must vote down the draft Withdrawal Agreement appeared first on BrexitCentral.

The letter sent from Jean-Claude Juncker and Donald Tusk to Theresa May in the last 24 hours shows more clearly than anything else possibly could why the draft Withdrawal Agreement is fundamentally flawed: not only the lack of substance in the letter, which adds nothing new to the sum of human knowledge, but also the lack of any form of collegiate kindness or helpfulness to the Prime Minister.

When the Prime Minister addressed the 1922 Committee on 12th December, she assured colleagues that she would secure legally-binding wording to address concerns over the Northern Ireland backstop. Now we learn there will be no end date to the backstop or unilateral exit mechanism for the UK. So, yet again, the EU have let the Prime Minister down.

The lesson is clear: we need to vote down the Withdrawal Agreement by as large a majority as possible. Only then can we move on and either negotiate a new agreement (as David Davis argued at the weekend) or Leave without a deal on World Trade Organisation terms with a view to later negotiating a new relationship.

The Government and the Conservative Party must remain committed to delivering the result of the referendum, as repeated in our 2017 manifesto, which pledged to leave the Customs Union and the Single Market, accompanied by the declaration that No Deal was better than a Bad Deal. Otherwise, the credibility of our democracy will be thrown into chaos.

The draft Withdrawal Agreement does not respect the result of the referendum. The Government should be seeking to unlock the negotiations by returning to the Canada-style option offered by President Tusk, using the tried and trusted techniques and procedures so that rules of origin and customs checks are conducted away from the Northern Ireland border, to make unnecessary the hard border that everyone agrees must be avoided.

The backstop means we will be trapped under the thumb of the EU with no date to escape – and unable to strike trade deals. It means we would be trapped indefinitely as a satellite of the EU, obeying its laws without a say, unless the EU and its Member States gave permission for us to leave. The UK will be paying £39 billion – equivalent to £1,443 per household, or £60 million per constituency – and getting nothing in return. We will not take back control of our money, laws and trade. Remaining in the Customs Union is a breach of the 2017 Conservative Manifesto on which I and all my colleagues stood.

The backstop drives a regulatory barrier down the Irish Sea, severely damaging the Union and moving Great Britain and Northern Ireland further apart. This deal keeps the supremacy of the European Court over our own law and sells out the UK fishing industry, excluding them from any trade deal, and envisaging a deal where the Prime Minister trades away our fish in return for market access.

We remain effectively in the EU for an extendable ‘transition’ period, paying and accepting new laws over which we will have had no say. Unrestricted immigration of EU nationals will still be continuing for years after we leave. This commitment comes with no guarantee of a future trade agreement. Worryingly, this deal will deny the UK an independent trade policy while potentially keeping us out of existing EU trade policy. We would be cut off from the world with our trade and economy regulated from Brussels without any say.

So, let us be honest: the Withdrawal Agreement is a terrible deal – worse than Chequers, less popular than the Poll Tax and only one in five voters think it honours the referendum result. The only way to get a better deal for the UK is for Parliament to reject it and force the Government to renegotiate with the EU.

The post Juncker and Tusk’s letter to Theresa May changes nothing: we must vote down the draft Withdrawal Agreement appeared first on BrexitCentral.

Pulling the vote on its Withdrawal Agreement at the eleventh hour, the Government acknowledged what we already knew: the Backstop proposal is completely unacceptable and the Agreement stood no chance of winning the support of Parliament.

But rather than simply seeking “reassurances” on this issue – which, though a central objective, is but one of many – the Government needs to consider more boldly the possible alternative arrangements which might command Parliament’s support. The President of the European Council, Donald Tusk, offered just such an alternative in March: a wide-ranging, zero-tariff trade agreement.

That deal foundered on the question of the Northern Ireland border, but existing techniques and processes can resolve this.

This view is endorsed by the professional customs body, CLECAT. They recommend we acknowledge the present state of customs technology, using procedures based on intelligence and risk management available in current EU law. These are currently used to manage the border which already exists – for VAT, tax, currency, excise and security – and can form the foundation for continued seamless trade.

From my October meeting with Michel Barnier and senior officials, I know that a willingness exists on the EU side to explore these possibilities more fully. The meeting also confirmed that Tusk’s offer is still on the table.

Rather than cling hopelessly to the Withdrawal Agreement, the Government must return to that offer. By resolving the border question with existing techniques, we can immediately start negotiating an optimal, wide-ranging Free Trade Agreement. I have already presented the Government with a Trade Facilitation Chapter and new Border Protocol to catalyse this process.

In parallel, we must intensify our preparations for trading on WTO terms. This is no cause for alarm, and those doubting this should look to the UK’s booming exports – up by nearly £100bn since before the referendum. The latest ONS figures put exports to non-EU countries at £342bn, compared to exports to EU countries of £274bn.

Much of that boom is through expansion into new markets. Since 1998, UK goods exports to non-EU countries have grown 16 times faster than its exports to the EU.

Yet scaremongering has clouded our perception of WTO rules. We are told that just-in-time supply chains will be unable to continue across customs borders. But in reality the operation of these chains is as dependent upon non-EU goods as on those from the EU. 21% of UK automotive manufacturers’ bought-in supply chain comes from outside the EU – compared to 36% from the EU and 43% from the UK – yet the customs procedures required for that sizeable proportion do not pose an insurmountable problem.

We are told that even minor customs delays will cause unprecedented queues on the M20 and economic disaster. But Operation Stack – limiting access to the Channel Tunnel and the Port of Dover – was activated for seven months in total between 1998 and 2015, without any of the “catastrophes” now imagined.

Responding to these Project Fear claims, we must always ask: why? Why would a rules-based organisation like the EU suddenly start behaving illegally, to the detriment of its people and in defiance of international agreements? As Xavier Bertrand, President of the Hauts-de-France region, has said in dismissing fears of major disruption between Dover and Calais: “Who could believe such a thing? We have to do everything to guarantee fluidity.”

It is true that the EU has trade deals with around 70 countries, which the UK will have to novate. This process has already begun and no country has signalled an unwillingness to co-operate. But remember that many of these agreements are very small. Switzerland alone accounts for half of UK exports to these 70 countries and it, Norway, Turkey and South Korea account for over 75%. Renegotiating a small number of agreements to cover the vast majority of this trade should not be a prohibitive task.

Though not an optimal arrangement, there is thus nothing to fear from WTO rules. Its 164 members represent 98% of world trade. We must be ready to trade on those terms to smooth the transition and demonstrate that we are serious.

That way, we shall be negotiating a Free Trade Agreement with the EU on sure foundations. Realistically, of course, a full agreement will not be reached by March, but this need not pose a problem. So long as progress has been made towards an agreement by then, the EU and the UK can jointly notify the WTO as soon as possible after our exit date of our intent to negotiate an FTA. Under Article XXIV of the General Agreement on Tariffs and Trade, after notification of a sufficiently detailed FTA with an appropriate plan and schedule, we could maintain zero tariffs and no quantitative restrictions for a “reasonable length of time” (exceeding “10 years only in exceptional cases”) without violating the bar on discriminating against other nations under WTO rules.

So, rather than the Withdrawal Agreement’s choice of a transition period ending in “20XX” or a potentially permanent and definitely intolerable backstop, this proposal would provide stability and clarity for the time-limited negotiating period, delivering a zero-tariff, mutually beneficial trade agreement. That would surely command a majority in Parliament. That is the alternative. That is the way ahead.

This is an extended version of an article originally which appeared in the Daily Telegraph

The post We must intensify plans for trading on WTO terms and then negotiate a UK-EU trade deal on those sure foundations appeared first on BrexitCentral.

Well, well, well. What a 24 hours it has been. On the one hand there’s so much to say, while on the other I am struggling to summon the words to express a whole range of feelings and emotions about yesterday’s events at Westminster: bemusement, anger, disappointment, confusion and, dare I say it, contempt.

Yesterday morning, Michael Gove was on Radio 4’s Today programme vigorously insisting that the meaningful vote on Theresa May’s Brexit deal would go ahead amidst rumours that tonight’s Commons division – following a fourth and fifth day of debate yesterday and today – would be pulled. “The vote is going ahead,” the Environment Secretary said. Even late yesterday morning, Downing Street continued spinning the same line to the media. “The vote is going ahead as planned,” said a No. 10 spokeswoman who, when asked if the Prime Minister was confident of winning the vote, replied: “Yes”.

And yet within minutes reports began to emerge that the vote was indeed being pulled, despite the Commons having already spent 24 hours over three days last week on the debate in which more than 160 MPs had already participated.

And so it was that just after 3.30pm, Theresa May rose to her feet at the Despatch Box to declare that the vote would be postponed, with the following explanation:

“I have listened very carefully to what has been said, in this chamber and out of it, by members from all sides. From listening to those views it is clear that while there is broad support for many of the key aspects of the deal, on one issue – the Northern Ireland backstop – there remains widespread and deep concern. As a result, if we went ahead and held the vote tomorrow the deal would be rejected by a significant margin.”

What struck me as particularly absurd about this statement was that it was clear to me and anyone else paying the slightest attention to current events that there was “widespread and deep concern” about the backstop as soon as the details of it emerged in November and certainly by the time of the debate beginning last Tuesday. Yet she stubbornly concluded:

“I am in absolutely no doubt that this deal is the right one. It honours the result of the referendum… But it also represents the very best deal that is actually negotiable with the EU. I believe in it – as do many Members of this House. And I still believe there is a majority to be won in this House in support of it, if I can secure additional reassurance on the question of the backstop. And that is what my focus will be in the days ahead.”

You can read her full statement here, but there you have it: the aim of the shuttle diplomacy on which she is now embarking and for which the debate and vote were abandoned is to “secure additional reassurance on the question of the backstop”.

As former Northern Ireland Secretary Theresa Villiers writes for us on BrexitCentral this morning, “even more disappointing than the cancellation of the vote was the announcement on what the Government plans to do next” since “Mrs May is not going to ask for the major rewrite of the withdrawal deal which is needed”. She explains the numerous aspects of the draft Withdrawal Agreement about which she has concerns – and on which the Prime Minister evidently has no intention of reopening negotiations.

Senior Labour backbencher Yvette Cooper perfectly summed up the feelings of many of us following proceedings in her intervention following the statement yesterday:

“Nothing has changed in the level of parliamentary concern about the Prime Minister’s deal since last week, but she still sent her Ministers and her official spokesperson out at 11 this morning to say that this vote was 100% going ahead, and yet we still, even now, do not know when she wants to bring this vote back, or even what she wants the deal to be. Does she not realise how chaotic and ridiculous this makes our country look? Given the importance of trust and credibility in this entire process, how can she possibly talk about duty and honour, and faith in politicians, when we cannot even trust the most basic things her Ministers are saying?”

May gave no answer to questions about the length of the postponement of the vote and while it was initially thought there might be a week’s delay, there was widespread speculation last night that it might not come until January.

The chamber was also treated to this astute observation from veteran left-winger Dennis Skinner yesterday afternoon:

“Does the Prime Minister realise that she has handed over power not to people in this House, but to the people she is going to negotiate with over there in Europe? She looks very weak, and she is. They want to be able to demonstrate their power to every other country that might be thinking about getting out of the EU, and she has handed them that power by demonstrating what Britain is doing. The British Prime Minister does not know whether she is on this earth or Fuller’s because of the actions she has taken. Mrs Thatcher had a word for what she has done today. F-R-I-T — she’s frit.”

Frit is of course the Lincolnshire dialect word for frightened or scared that the Grantham-born former Prime Minister once let slip out in the Commons in reference to Neil Kinnock. Those interventions from Cooper and Skinner are both included in our video highlights of yesterday afternoon’s proceedings which I would recommend catching up with here.

What many found confusing over the turn of events is that May arguably missed the opportunity that losing a vote in the Commons would have provided in terms of strengthening her negotiating hand. As of today, there has been no formal rejection of the deal from parliamentarians that she could have used as a tangible bargaining chip in Brussels, where the EU is eager to secure a deal.

And it was a non-vote in advance of which we learnt yesterday that the Government had spent near enough £100,000 during the last week alone on Facebook adverts promoting May’s deal. That’s surely a grotesque abuse of hard-earned taxpayers’ money in anyone’s book.

There was also damning criticism of the procedural trick of pulling the debate three-fifths of the way through, with Tory backbencher Mark Francois offering the following scathing assessment:

“What the Government have done today is shameful. It is a complete abuse of this House. Having been found in contempt recently for the first time in living memory, they have now gone for a “buy one, get one free.” The whole House wanted to debate this. We wanted to vote on it. The people expected us to vote on it, and the Government have gone and run away and hidden in the toilets. People watching this on television will be confused and bemused, and very, very angry at the way their own Parliament has let them down. The Government Front Benchers should literally be ashamed of themselves.”

Also irate was the Speaker himself, John Bercow, who observed from the Speaker’s chair:

“Halting the debate, after no fewer than 164 colleagues have taken the trouble to contribute, will be thought by many Members of this House to be deeply discourteous… many colleagues from across the House have registered that view to me in the most forceful terms.”

A little later he agreed to the request for an emergency debate on the Government’s handling of the issue which came from Jeremy Corbyn and that three-hour debate will be the first main business after question time today at around 12.45pm – although there will not be a substantive motion on which MPs can vote.

In the meantime, Theresa May has headed off on her European travels, with a bilateral meeting taking place between her and Dutch Prime Minister Mark Rutte over breakfast in The Hague this morning before she heads to Berlin for face-to-face talks with German Chancellor Angela Merkel. Then will come talks in Brussels with European Commission President Jean-Claude Juncker and European Council President Donald Tusk later this afternoon. The Cabinet meeting scheduled for this morning has been postponed until later in the week.

But what is she realistically going to achieve from a new round of talks? Tusk announced yesterday that he was calling a meeting of the EU27 leaders as part of the summit already taking place in Brussels this Thursday. But he was also clear that “we will not renegotiate the deal, including the backstop, but we are ready to discuss how to facilitate UK ratification”.

Meanwhile, Irish Taoiseach Leo Varadkar ruled out reopening negotiations around the Irish backstop and insisted the draft Withdrawal Agreement is “the only agreement on the table”.

So the Prime Minister may have bought herself a little more time, but right now it’s hard to see the House of Commons coming to anything other than the same conclusion as it would have done tonight whenever MPs are finally afforded the opportunity to vote on her deal. As someone once said: nothing has changed. But she has lost a whole heap of a rapidly diminishing supply of goodwill and trust as a result of yesterday’s shenanigans.

The above is the text of Jonathan Isaby’s Editor’s Letter in today’s BrexitCentral daily email briefing. To have it land in your inbox every morning, please click here.

The post Fundamentally nothing has changed – my take on yesterday’s contemptuous shenanigans appeared first on BrexitCentral.

The current political turmoil and constitutional crisis has so many twists and turns that it makes House of Cards look pedestrian.

Of course the real issue comes down to what happens when – rather than if – the proposed deal is voted down on tomorrow, 11th December (or even dropped).

Here there is a clear gap opening up between media reports and hard legal reality – what the actual effects are of the political manoeuvring of Dominic Grieve, Sir Keir Starmer and their merry conniving bands. There have been desperate media reports that ‘no deal’ is off the table, when it is actually remains the ‘default position’ as Andrea Leadsom told Radio 4 just last week.

Let’s assume Conservative MPs think there is enough turkey on Christmas menus not to be part of the required two-thirds majority needed to vote for a General Election, and that the EU have indeed ruled out any major renegotiation.

The bottom line is that the various options being desperately pushed by those who want ‘anything but a true Brexit’ are just not viable. There is:

  • ‘Norway Plus’ – even worse that the slavish EEA, which adds back membership of the customs union, thereby killing all future UK trade deals, and with no control of immigration, no say over EU laws, and large payments;
  • A ‘Second Referendum’ – with its totally confused offer: ‘tell us if this final 2,000-page deal is better than staying in the EU when we’ve already left. Oh, and by the way you will have to join the euro and lose the rebate’. Pointless too in that Leave is predicted to win again; or 
  • Extending Article 50 to allow more muddle time – which will either mess up the EU by landing the Brexit issue right in the middle of European Parliament elections in May or mess up all the groups, chairmanships and procedures of the European Parliament in the farcical situation of British MEPs being elected for a few months.

But all such amendments to the motion are not legally binding anyway – they can only be advisory. They might bring political pressure, but they do not have legal effect. As the Commons Chief Clerk, Sir David Natzler, confirmed: whatever MPs vote on by way of motion “has no statutory significance”, as they do not constitute “a vote on whether to accept or reject no deal.” That requires new legislation. The actual law – in the EU Withdrawal Act – states clearly that we will leave on 29th March 2019.

Given that reality, and bearing in mind how rash it is to try to indicate a way forward in this maelstrom, this is what I propose now as the best next steps:

1) Assuming the vote fails on 11th December, or is put off, I believe the Government should make a statement immediately saying that preparations for a ‘no deal’ option – better called a ‘Clean Global Brexit’ or ‘World Trade Deal’ – will go into SuperDrive. Sorry, but defer Christmas!

Where there’s a will, there’s a way: in the Falklands War, the Ministry of Defence managed to put together a task force of 100 ships in just 48 hours. We can manage this process, and thousands of civil servants have been on the case for years. Like the Millennium Bug, claims of Armageddon and planes falling out the sky gave way to nothing happening on 1st January 2000.

2) The UK should then go back to Brussels, not to renegotiate this current draft Withdrawal Agreement, but to agree a pared-down, bare bones emergency series of bilateral agreements covering only the essential ‘must haves’: aviation, customs, citizens’ rights, medical products, European Investment Bank assets etc. The beauty of this is that if one agreement falls, then the others are not lost. The DUP’s Arlene Foster has proposed bilaterals. These bilaterals could be agreed by Westminster and the EU by March, and would any sane MP or MEP dare to seek to derail any such vital preparation in these circumstances? They should hold all further Westminster business, such as the Immigration and Trade bills, that may be hijacked.

3) The UK should also formally advise the EU that it wishes to accept the offer made not once but three times by the EU: that of a SuperCanada/CETA+++ Free Trade Agreement with 100% tariff- and quota-free access to the EU Single Market plus comprehensive services (first offered by Donald Tusk on 7th March), and which we could start negotiating from the day we become a ‘third country’ – 30th March next year.

We can build on the three pages on trade in the more appealing draft Political Declaration, but drop all notion of a ‘Single Customs Territory’ – the UK must firmly leave the EU’s Customs Union and Single Market. We are in a unique position to negotiate an FTA fast – as all our laws are convergent at present and we don’t have to spend years wrangling over which tariffs to keep or get rid of, as others do.

4) Having initiated moves to agree a SuperCanada FTA, the UK and EU can now jointly notify the World Trade Organisation (WTO) that in the light of working to agree a comprehensive FTA and future Political Declaration, we are invoking Article 24 of GATT (the General Agreement on Tariffs and Trade).

This is important because Article 24 allows us to maintain the same tariff-free access to both our markets without breaching WTO discriminatory Most Favoured Nation (MFN) laws. Article 24 allows “an interim agreement leading to a formation of a free trade area” and allows “a reasonable length of time” – up to 10 years – to negotiate it.

So, we whilst we will need customs declarations under WTO, we will be able to maintain the same zero tariffs as now with the EU – the free trade area will remain. EU exporters to the UK would save £13 billion in tariffs (and our consumers too) and UK exporters £5 billion. We will also be free to lower tariffs for other trading partners as we wish – something specifically excluded in the Backstop. Nor should there be any Non-Tariff Barriers (NTBs) either under WTO agreements.

We can also enact the WTO’s Trade Facilitation Agreement which recently came into force that obliges the EU27 to adopt measures like authorised economic operators (trusted traders), which are part of the solution for the Northern Ireland border issue along with electronic declarations and remote checks away from the border.

5) As a sign of Britain’s free trade intent, we can now immediately initiate full and unfettered negotiations with international trade partners such as the USA, China and India, without these deals being torpedoed by being tied into the EU Customs Union, Chequers or the Backstop. The picture would be clear at last, and not be delayed by unending years of transition. Similarly, we will seek to build on current work to ‘roll over’ the benefits and obligations of existing EU trade deals such as that with South Korea.

6) So, on 30th March the UK can be cleanly out of the European Union and back into the world, with an acceptable and managed World Trade Deal option in place, free of years more wrangling over transitional arrangements, cost demands, alternative models and heightened business uncertainty – and with negotiations underway for a closer SuperCanada trade deal. We can reallocate much of the £39 billion payment lost by the EU to compensate UK-based companies legally in terms of R&D, regional aid and transport infrastructure – helping to stimulate our economy.

Like an operation we know needs doing, let us get on with the surgery quickly and speed up the recovery process.

This is indeed a Clean Global Brexit. Brexit could be over in a few months, rather than drag on for years on end.

And, for all our sakes – both Remainer and Brexiteer – let’s just get it done.

The post How to get Brexit back on track when the Withdrawal Agreement is rejected by MPs appeared first on BrexitCentral.

After the end, the beginning. The long months of talks in Brussels have brought forth a draft withdrawal agreement to leave the European Union – all 585 pages of it. Amid the drama, the essential themes are clear. There will be a backstop agreement to the deal without an end date and with no ability for the UK to extricate ourselves without the consent of a third party. And there will be a grave threat to the Union.

Northern Ireland will find itself in a different regulatory regime to the rest of our country – to use the analogy that is being deployed about the “backstop within a backstop”, it will be in the deep end of the swimming pool while the rest of us are only paddling up to our knees. This represents gold dust for the Scottish Nationalists, who will seize on a different arrangement for one part of the country to demand a separate arrangement for Scotland.

We will be asked to sign up to all this, and hand over £39 thousand million, in exchange for a flimsy 15-page “political declaration” about the hoped-for trade relationship that would lie beyond this, should we ever be able to escape. That political declaration will be drafted to mean all things to all men, but will lead inexorably to the ultra-high alignment agreed at Chequers in July rather than the Canada-style free trade deal we should be aiming for. There will be so-called “non-regression clauses” to ensure the UK cannot out-compete the EU. This would scupper our hopes of being a global trading titan and bind us into EU manufacturing rules in perpetuity. As humiliations go, this would be complete and unendurable. The Prime Minister will have unerringly delivered a deal that delivers none of the benefits of leaving the EU and none of the benefits of remaining.

85 years ago, Churchill warned: 

“All down the centuries, one peculiarity of the English people has cost them dear. We have always thrown away after a victory the greater part of the advantages we have gained in the struggle. The worst difficulties from which we suffer do not come from without. They come from within… from the mood of unwarrantable self-abasement into which we have been cast by a powerful section of our own intellectuals. They come from the acceptance of defeatist doctrines by a large proportion of our politicians… Nothing can save England if she will not save herself. If we lose faith in ourselves, in our capacity to guide and govern, if we lose our will to live, then indeed our story is told.” 

Such will be the legacy of Brexit if this deal goes through. The brave decision of the British people to leave the European Union, taken in the largest democratic vote in our history, will have been reduced in two years to a shameful and squalid surrender. This must be resisted at all costs, and I have little doubt that the House of Commons will indeed defeat the deal should matters go that far.

The burning question will then arise: what next?

A deal may still be salvageable, based around the broad and generous offer made by European Council President Donald Tusk in March. This would be an advanced free trade agreement, encompassing services and covering all sectors with zero tariffs and no quantitative limitations. Alongside this the UK would offer deep security cooperation and mutual recognition of practical issues from aviation regulations to driving licences. The EU’s offer, of course, was made to Great Britain and not the whole of the UK. The EU was not prepared to extend its offer to Northern Ireland – hence so much of the tortuous negotiation that has ensued.

But there is a way to deliver such an agreement, in the form of a free-standing treaty on trade facilitation between the UK and Ireland to be negotiated in parallel to the wider negotiations, as it surely could be. Such a treaty would deliver an invisible border that would satisfy WTO rules and could be referenced in the wider UK-EU free trade agreement. There would be no hard border and no need for a backstop beyond this.

This seems to me to represent a deal that could secure sufficient votes to satisfy Brussels and pass the House of Commons. In tandem with this, an immense national effort must be set in motion so that the UK Government and businesses prepare themselves day and night between now and 29th March next year for a no-deal scenario. Every moment that passes without such an effort is a moment wasted, and weakens our hand in securing the good Brexit deal that our country expects and deserves.

The post As humiliations go, accepting this Brexit deal would be complete and unendurable appeared first on BrexitCentral.

What is going to happen if the Prime Minister’s Brexit deal fails to secure parliamentary support? Are we really facing a catastrophic “no deal” scenario? Very probably not. “No deal” – at least in its extreme form – is so obviously in nobody’s interest that it is very unlikely to happen.

It is much more probable that Brexit will go ahead on 29th March 2019 but that – pending the outcome of further negotiations – common sense and practicality will prevail.  Most existing arrangements for trade and other forms of co-operation will continue substantially as they are for the time being. Albeit with some disruption, negotiations to find workable solutions for the future will continue.

Parliament and the UK generally – and the EU27 – will nevertheless have to make up their minds what they are aiming for. So far, the main ways ahead – both for Parliament and maybe for the electorate, if we have either a general election or even a second referendum, have been portrayed as a choice between reapplying to re-join the EU, accepting some variant of Chequers, or “crashing out”.

Not nearly enough has been heard recently of Canada+++. This could be a big mistake because – especially in the new situation in which we may well find ourselves – Canada+++ has very substantial advantages over other options.

First, it has always been the most obvious way of fulfilling the result of the EU referendum and all the promises about honouring its result that were made at the time, thus abiding by the critical democratic decision taken in the June 2016. This approach is very much in line with the policy laid out in the Prime Minister’s Lancaster House speech, before the Brexit negotiations got side-tracked into Chequers by the outcome of the 2017 General Election.

Secondly, with caveats about the Irish border discussed below. Canada+++ is an option which the EU27 have repeatedly offered to us – not least by Donald Tusk in March this year and by Michel Barnier again just recently.  It is easy to see why the EU27 should favour this approach. If the UK is out of the Single Market and the Customs Union, the integrity of these crucial components of the EU structure would not be compromised or destabilised. This has always been a primary – and understandable – aim of the EU27 negotiators.

Thirdly, Canada+++ would supply Leavers with pretty well all that they thought they were voting for in 2016, while also providing Remainers with an outcome with which at least the more reasonable among them ought to be able to accept, especially if trade between the UK and the EU27 was on the widest possible free trade basis.

Trade would not be quite as frictionless as “free movement”, but pretty close to it. Supply chains would not be disrupted. It is worth bearing in mind that although 36% of the bought in components for the UK car industry come from within the EU, 21% arrive from outside, imported into the UK on WTO terms.

Fourthly, Canada+++ has a better chance than any of the alternatives of providing the UK with a stable long-term relationship with the EU, reducing differences of opinion and approach  to Europe from being a constant source of friction and disharmony, distracting our MPs and many other people from addressing the many problems faced by the UK other than our relations with the EU27.

Fifthly, Canada+++ may provide us with a way of dealing with the Irish border issue. In a new negotiating environment, we would no longer be under the obligation to go along with the concessions made by the UK in December 2017. The UK could then agree unilaterally not to have a hard border, to implement electronic pre-clearance as soon as practical for larger companies, to provide local traders with exemptions, and to recognise that there might be some slippage to start with. If there are no tariffs to collect, this seems a small price to pay to overcome an otherwise intransigent issue.

The reason why Canada+++ has slipped down the agenda is because the Parliament elected in 2017 had no majority for any arrangements which left us outside the Single Market and the Customs Union. Now that everyone can see that trying to leave the EU while staying in either one or both of these constraints simply does not work, the advantages of a free trade deal with the UK outside both of them are increasingly obvious.

Of course, Canada+++ is not absolutely ideal from every point of view.  Nothing ever is. But from the perspective of both the heavily divided Conservative and Labour parties, it now looks like a much better option than anything else on the horizon.

The post It is time the Conservative and Labour parties united in support of a Canada+++ deal 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.




Recommended news

© 2019 Brexit and Ireland - All Rights Reserved. Individual site feeds info belong to individual site holders.

Follow us: