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.

Conservative party

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.

Conclusions

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 post A bad Withdrawal Agreement can be renegotiated in the context of post-Brexit realism and international law appeared first on BrexitCentral.

At Prime Minister’s Questions on 20th March, the Prime Minister stood at the Despatch Box and repeatedly told the Commons the maximum extension to Article 50 that she could countenance. Answering MPs from across the House, she said:

“I am not prepared to delay Brexit any further than 30th June… I could not consider a delay further beyond 30th June… There will be no delay in delivering Brexit beyond 30th June.”

Yet when, in the small hours on Wednesday morning, the EU offered an extension to 31st October – fully four months after her self-imposed cut-off and seven months after we should have left – she accepted. Another promise, made to Parliament and the country, was broken. We should have left at 11pm on 29th March. Even as the Prime Minister arrived in Brussels, the law of the land was that we would leave at 11pm this evening, Friday 12th April. All she had to do to deliver that was nothing.

So for all that the Prime Minister may speciously argue that she has been somehow forced to extend, there is no doubt that she has sought delays of her own volition. Remember that the formal letter requesting an extension was sent before Parliament had approved the change in domestic law.

Just as common law courts once applied the maxim Falsus in uno, falsus in omnibus, this latest broken promise could have been predicted from the previous occasions when what the Prime Minister has said and what she has done have not matched. Throughout her tenure, Mrs May had said that “no deal is better than a bad deal”. The Withdrawal Agreement is evidently a bad deal; the House of Commons has thrice told her so. Logically, she should then have pursued the “no deal” option, but did not. Evidently, she has bought into the ludicrous, apocalyptic predictions of Project Fear, convinced now that any deal would be better than “no deal”.

But the “no deal” which the prophets of doom continue to predict is a complete misnomer. In reality, when we say “no deal” we mean a WTO deal – leaving the EU without the Withdrawal Agreement but with a series of pragmatic, mutually-beneficial mini-deals in its stead.

The former Brexit Minister Chris Heaton-Harris – who resigned in exasperation – confirmed that such preparations are “well advanced” and told the Prime Minister that:

“I truly believe our country would have swiftly overcome any immediate issues of leaving without a deal and gone on to thrive.”

He is right. One by one, the absurd falsehoods peddled about “no deal” have been and are being debunked.

Air travel will continue. The EU confirmed in November that it would continue to allow UK airlines to fly over, land in and return from EU airports even if there is no Withdrawal Agreement, provided the UK reciprocates. Of course, it will. As Transport Minister Baroness Sugg confirmed in March:

“Measures put forward by the UK and the EU will ensure that flights can continue in any scenario; deal or no deal.”

Medical supplies will arrive. Health Secretary Matt Hancock has worked hard to neutralise this issue and, as the President of the Royal College of Paediatrics and Child Health, Professor Russell Viner, said in his message to 19,000 doctors:

“I have been considerably reassured by governments’ preparations relating to medicines supplies…Governments, the Medicines and Healthcare products Regulatory Agency and the NHS have been working hard behind the scenes… and we believe that our medicine supplies are very largely secured.”

Cross-Channel trade will continue. The Chairman of the Port of Calais, Jean-Marc Puissesseau, has robustly refuted the alarmist claims of disruptions to freight. Xavier Bertrand, President of the Hauts-de-France region has dismissed the scare stories with admirable clarity:

“Who could believe such a thing? We have to do everything to guarantee fluidity.”

The UK has been given approval to continue exporting animals and products of animal origin to the EU in the event of a no-deal Brexit. Live animals, including horses, will still be able to travel across borders. Will Lambe, Executive Director of the British Horseracing Authority, was right when he said that:

“This decision on listing from the European Union is extremely welcome and reflects the UK’s high health standards in respect of its animals, and of course the thoroughbred population within this. It provides important clarity for the racing and breeding sector ahead of a potential no-deal departure from the EU.”

Even the fears of a “hard” Northern Ireland border which have so dominated the debate are now subsiding. The Taoiseach, Leo Varadkar, has expressed confidence that arrangements can be implemented to avoid new border checks in the case of “no deal”. These arrangements are the same as our ERG proposals which were once smugly dismissed as “magical thinking”, but Michel Barnier has confirmed that in any scenario the Belfast Agreement will continue to apply and “there will be no hard border” using our alternative arrangements.

This approach would not be “crashing out”, as the fearmongers claim. Sensible measures, adopted in the best interests of both the UK and the EU, can mitigate any disruption and ensure that our relationships with our neighbours remain amicable and prosperous.

Nor is “no deal” an end state. With arrangements worked out for the Northern Ireland border, we can quickly return to the offer which Donald Tusk made in March last year of a wide-ranging, zero-tariff Free Trade Agreement – for the whole of the UK rather than just Great Britain.

In such a scenario, both sides can invoke Article XXIV of the WTO’s General Agreement on Tariffs and Trade. As long as the UK and EU agree to an FTA and notify the WTO of a sufficiently detailed plan and schedule for the FTA as soon as possible, we could maintain our current zero-tariff arrangements while the new deal was being negotiated.

Most importantly, this approach would provide the certainty which everyone craves. It would, finally, allow businesses to know where they stand and release much pent-up, pending investment.

All of this beckons if we leave with “no deal”. The decision from the European Council on Wednesday states that the UK must now, if still a member, hold European Parliament elections on 22nd May. If it “fails to live up to this obligation”, we will leave on 1st June.

This is an important opportunity which the Government must grasp. It is win-win. At a time when the Government is daily faced with the difficult task of balancing discipline on public expenditure with pressing demands for improving schools, roads and hospitals, it would be an act of the most outrageous folly to squander £100 million on unwanted elections when newly-elected British MEPs will immediately stand down in October, never mind the £39 billion which the Withdrawal Agreement would give away.

Yet by avoiding these utterly pointless elections, we can leave in an orderly way on 1st June and use the money on our own priorities. Do that, and the Government will honour the referendum result, its manifesto commitments, and repay the trust of the British people.

Do not, and its betrayal will be complete. If reports last night are correct that the Government has wound up its “no deal” planning at this crucial juncture, that would be stupidity verging on sabotage. The Government will have failed to deliver the single most important policy in a generation, and broken every promise it has made.

The post The mini-deals allowing us to leave without a Withdrawal Agreement are done – let’s embrace a WTO Brexit appeared first on BrexitCentral.

There is no doubt that Theresa May’s Withdrawal Agreement is a terrible deal. It gives the EU pretty much all they could have ever hoped for, and achieves absolutely nothing for the UK. That was cruelly illustrated by the Prime Minister’s doomed attempt to sell the deal directly to the electorate in December. Claiming that she had “negotiated” all sorts of things that we would have got simply by doing nothing for two years was sadly typical of our bumbling Prime Minister.

So yes, the Withdrawal Agreement is truly awful. But it looks increasingly as if it is all Brexiteers will get. So is it worse than Remaining, as some claim? No, it is not. There is hope, and we should carefully consider whether we accept the tiny sliver of Brexit being offered. That is not to say that if May’s deal passes, achieving a proper Brexit will be easy. The backstop looms over any negotiation, and there are many other obstacles. But it is still possible, and the backstop might just be the reason why.

Let’s start with the (very) limited good news. If May’s deal passes, we will legally have left the EU. That seems a small thing, but it is not. Leaving will kill off both the second referendum and revoke Article 50 campaigns. From 30th June, if we have left by then, the attitude amongst the general public will range from apathetic to ‘couldn’t care less’. The UK will breathe a huge sigh of relief and hope they never have to think about the EU again.

Those Remainers who want to fight on will have to rename themselves and become Rejoiners. And rejoining is a much harder task than remaining. The status quo is always powerful and the status quo will be out. Describing how wonderful it will be to hand over £9 billion (or more) each year to have more expensive food and to pay for a pointless parliament will not be easy. Nor will making the case for freedom of movement. And Rejoiners will have to set out where the EU will go. That means facing up to the claims about a federal Europe, the euro, an EU army and all of the other things that are deeply unpopular amongst the electorate.

As important, the EU is likely to be mired in its own problems for the next few years. The Eurozone economy is looking very fragile, populist parties are on the rise across the continent and the hole caused by the loss of the UK’s net contribution will need to be filled. The EU is unlikely to look a very attractive place to be part of, however hard Rejoiners try.

There will be therefore a breathing space for Leave MPs and supporters to regroup and recharge. Leavers have spent so much time and energy fighting on all fronts against all sorts of lies, disinformation, politically-motivated legal challenges and all the rest that there has been no time for the real arguments. Accepting May’s deal offers a chance to go back to the whole point of Brexit, rather than – at best – another year of the same old chaos.

Once the dust settles, it should then become apparent that the deal with the EU is largely something everyone in the UK can agree on: sensible rights for EU and UK citizens, ease of travel and flights, but the UK determining its own immigration policy, co-operation on security, crime, defence and terrorism. Most of us will want the UK to retain control over our fish and we will not want to pay over billions each year without some clear, defined benefit. Whether all of that can be achieved obviously depends on the EU, but also on how we negotiate.

That leaves the one area that will be contentious: the trade relationship. For most Leavers, (and many soft Remainers) the obvious stating point is to make an offer to the EU of a full and comprehensive free trade deal – Canada++ say, or something similar. That will put both the EU and those MPs who still demand a customs union in a difficult position. To say that it is not enough will be unconvincing: the differences between a proper FTA and a customs union are relatively small, and, crucially, smaller than between WTO terms and a customs union. More importantly, MPs and others will be able to approach the debate more sensibly. This will no longer be about Remain versus Leave, but about the benefits and costs of the different ways of trading with Europe.

Claims of economic disaster from going the FTA route will simply not be credible and the dense fog of Common Market 2.0, EFTA, Norway Plus and all the other options floated will have lifted. A clear choice can be presented: a deep and comprehensive FTA with no rule taking and our own trade policy or a customs union with rule-taking and no independent trade policy.

To back up that argument, the UK could show progress in negotiating FTAs with other countries. Conservative MPs, even those who today are fervent believers in a customs union, will struggle to turn down a coherent and liberal free trade policy and continue to claim that the customs union is vital to our prosperity.

Of course, this all presumes that the backstop does not drive the negotiations straight to a customs union. But that depends crucially on how the UK chooses to negotiate. We need to ditch our usual tactic of clichéd and pointless red lines. All that happens is that these get negotiated to within a whisker of being breached. Instead we must set a small number of clear goals that must be achieved. That makes the negotiation offensive rather than defensive.

Setting the two fundamental goals is crucial to the negotiating strategy: first, a comprehensive free trade agreement and second a non-trade based solution to the hard border issue. Crucially, these two objectives must be kept completely separate.

There is no doubt that will be very difficult. The EU – rightly – fears the UK becoming highly competitive outside its control. It will try and negotiate the two as a single issue to keep the UK in a customs union. But how could it refuse to negotiate an FTA with the world’s fifth biggest economy? Only by saying it doesn’t solve the border issue. That is why the border and the trade relationship must be considered separately from the outset. Have two teams, have two reporting lines, keep saying that trade and the border are different issues and, most importantly, that the two can conclude independently, at different times. In other words, the UK will sign an FTA even if it means going into the backstop for a while and putting the FTA on the shelf. Once we are out of the backstop, the FTA comes into force. Again, how could the EU refuse that approach?

This approach has numerous other benefits. It allows the trade deal to have a typical exit clause. It allows the UK to negotiate FTAs with other countries, knowing that we will have no restrictions once we solve the border problem. At the same time we can set out our tariff schedule and how we will help developing nations to trade with us. We can start to think about deregulation and tax and investment incentives, ready to implement what we want as soon as we can.

Pushing the EU on both fronts separately makes sure it uses “reasonable endeavours” on both issues. It also ensures that the EU has to properly consider every option for the border rather than relying on the customs union as the solution. So how would the EU react? If it cannot refuse to negotiate an FTA with us, would it simply dump us in the backstop and forget about us? That will be hard to do.

The EU says the backstop is not meant to be used and can be avoided. The EU may say that because it views it as a nuclear weapon, the ultimate deterrent. But if it does, it has miscalculated, because nuclear weapons are not deterrents in anything but massive, global conflicts. The backstop is simply too dreadful to be used except in absolutely exceptional circumstances. Mervyn King pointed this out, predicting that the terms are so bad the UK would eventually be forced to abrogate the treaty.

Nobody in the UK will demand that we enter – let alone stay in – the backstop, provided we can show that we have a reasonable answer to the hard border issue. Whereas now saying we have no solution to the hard border can be used by Remainers as a stick to try and keep us in the EU, once we have left it would be a stick to force us into or keep us in the backstop. Who is going to make that argument, even if they see it as part of a long-term plan to get us to rejoin the EU?

There has already been movement on the Irish border problem as the EU worries about No Deal. Over the next two years, there will inevitably be further progress because the technology that could be used there is beneficial everywhere. The EU could not implement or allow technological solutions at other borders and deny they could be used in Ireland. Hopefully Ireland will come to its senses once we have left, and drop its inflammatory rhetoric. It can then make a rational choice between forcing the UK into an unnecessary and hated backstop or accepting an FTA and technological solutions. It is difficult to see Ireland’s advantage in pursuing the former course once we have left.

Crucially, saying we will sign an FTA without agreement on the border dares the EU to drop the bomb. And that will give it pause because the nuclear option is the EU’s only weapon. Would the other EU members see it as appropriate and proportionate when there is an FTA waiting to be used? I suspect not, because it sets a terrible precedent for them too.

And this is the other aspect of the deterrent Leavers and the EU have not properly considered. We can call the bluff because otherwise the UK might as well not bother turning up to the negotiations at all. We might as well just wait for the EU to send us the deal and sign it. Leavers are right to point this out but we are being too defeatist to say we can do nothing to stop it. We can. All we need to believe is that there will be solutions to the hard border issue, and that if we hold our nerve, the EU will have to admit that. Is the Withdrawal Agreement something the UK should agree? No, absolutely not. Is there a chance to make it into something acceptable? Yes, if we are smart.

The post How to turn the Withdrawal Agreement into Brexit appeared first on BrexitCentral.

In the recent Commons indicative votes on alternative Brexit options, the idea of remaining in the EU’s Customs Union emerged as the most popular future relationship with the EU even though, like every other option, it failed to get a majority. This is of course because it is Labour’s preferred option although Labour, fantastically, supports the idea only if the EU gives the UK a say in determining future EU trade policy (which it won’t).

Labour supporters of the Customs Union rarely say anything much in detail about why they support this option beyond a vague intention to preserve jobs, though what these jobs might be is rarely made clear. In fact, there is little evidence that a customs union would be a good idea for the UK.

The main arguments for a customs union are that it will guarantee tariff- and quota-free access for UK exports to EU markets and that it will avoid UK firms having to bear customs and ‘rules of origin’ costs that they would face in a free trade agreement (the latter involve the costs of ensuring product has enough ‘local’ content to qualify for zero tariffs). On top of this, it is claimed that a customs union solves the problem of the Irish border.

In our view, the purely economic arguments in favour of UK customs union membership with the EU are weak:

  1. There is not much evidence that a customs union would be more beneficial for UK-EU trade than a standard free trade agreement (FTA). A large-scale academic study from 2006 finds no evidence that customs unions outperform FTAs, while a more recent study even suggests the EU customs union has a smaller trade creating effect than FTAs such as NAFTA (which covers North America).
  2. Rules of origin costs are often hugely overstated. Claims that rules of origin costs for UK businesses in case of a UK-EU FTA could be as high as 7-8% of trade values are far too high. A careful study by the WTO suggests such costs are less than 1% of trade values, and often negligible.
  3. Costs of customs processing are also massively exaggerated. Claims by HMRC last year that customs costs could total 1% of UK GDP or 6% of trade values are anything from five to twenty times too high; they are based on dubious calculations and are totally at odds with on-the-ground industry experience.
  4. A ‘new’ UK-EU customs union would not even remove customs-related costs. Formal customs checks within the EU customs union only ended in the early 1990s due to the Single Market Programme, and still exist in Turkey’s customs union with the EU. Moreover, the documentary requirements associated with trading in a customs union can actually be greater than for trading on WTO rules!
  5. The UK’s foreign trade structure is not suited to a customs union. Customs union arrangements have some logic where one economy does a very large share of its trade with another. But the EU now represents only around 45% of UK goods exports and this share has been dropping rapidly. Twenty years from now it is likely that the EU will take only around a third of UK goods exports.
  6. The UK would remain locked into the EU’s highly protectionist agricultural trade system. High EU tariffs on agricultural products represent a heavy ‘tax’ on UK consumers. UK consumers are denied the choice of cheap food from outside the EU and pushed towards consuming expensive products from within it. This cost is high at 0.5-1% of GDP.

Moreover, the strategic/political arguments in favour of a customs union are even less compelling:

  1. Entering a customs union would make meaningful trade deals with other economies impossible. There could be deals on trade facilitation or deals on services but their scope would be very limited. Why would India or the US be interested in a deal on services (potentially benefitting the UK) when the UK had nothing to offer on the goods side?
  2. The EU would be able to ‘sell’ access to UK markets with no reciprocal benefits for the UK. Britain would be in the same boat as Turkey: when the EU does trade deals with third parties, these countries gain tariff-free access to Turkish markets but Turkish exporters do not gain automatic reciprocal access to these third countries.
  3. Britain would have no voice at future WTO discussions about global tariffs. It would simply have to accept whatever the EU agreed.
  4. The EU would be able to damage UK business using anti-dumping actions. Under a new UK-EU customs union the EU would be in charge of the UK’s ‘trade defence’ measures such as ‘anti-dumping’ actions. The EU could force the UK to impose steep tariffs on goods from third countries, hurting UK businesses and consumers. Worse still, the EU might insist on being able to impose anti-dumping duties on the UK as well – as is the case with Turkey.
  5. A customs union would not simply cover tariffs and quotas. The EU would also require the UK to follow EU rules in a broad swathe of policy areas including competition policy, environmental policy and social and labour standards – without any say. This would not only be a huge loss of UK sovereignty but also dramatically narrow the UK government’s freedom of action in key economic policy areas.
  6. A customs union does not solve the Irish border ‘problem’. Customs checks only represent a small element of potential border checks at EU borders today. A bigger issue is product conformity and other single market rules. This is another reason why any customs union would require either effective UK single market membership or border checks between Britain and Northern Ireland and/or Britain and the rest of the EU.

In summary, a customs union arrangement whereby the UK contracted out huge areas of trade and economic policy-making to the EU would be totally unsuitable for an economy like Britain’s.

Customs union arrangements may work well for small economies that do an overwhelming share of their trade with a large neighbour. But the UK is the world’s fifth largest economy, with a diverse pattern of foreign trade and with business and consumer interests that will often diverge from those of the EU.

It is no accident that Canada and Mexico are not interested in joining a customs union with the US, despite their strong trade orientation towards the US. They know that the loss of economic independence involved would be far too great to justify a modest reduction in border frictions. The calculation should be the same for the UK.

Supporters of a customs union have suggested the UK could somehow retain some influence over decision making in such a new UK-EU arrangement. But this looks like a fantasy. It would be legally and politically difficult for the EU to grant any significant decision-making power to the UK. The best the UK could hope for would be some kind of observer status. But the arrangement would remain a thoroughly one-sided one where the UK would have no power either to veto potentially damaging agreements or to push for deals that benefited it.

Entering a new customs union with the EU would be a backward-looking step for the UK, with a massive loss of policy independence and flexibility while leaving businesses and consumers at risk of having damaging decisions imposed on them with no say in how those decisions were taken. It would also give the UK minimal additional policy freedom in the trade and economic policy area. Overall, it is hard to imagine a more sub-optimal policy.

The post A dozen reasons why a UK-EU Customs Union remains a terrible idea appeared first on BrexitCentral.

As we approach either 12th April or 22nd May 2019, it is worth recalling the chain of events which has led to where we are now.

The 2016 referendum produced a 52% to 48% majority in favour of Leave which the Prime Minister’s Lancaster House speech in January 2017 proposed should be implemented by the UK leaving the EU’s Single Market and the Customs Union and negotiating a free trade deal along the lines of the CETA negotiations between Canada and the EU.

With over two years to go between January 2017 and March 2019 and a model agreement between the EU and Canada on which to draw, a starting point of 100% alignment and indications from the EU that they thought that this was a viable way forward, the omens for a reasonable outcome being achieved looked relatively promising. The result of the 2017 general election, however, fatally undermined this relatively benign potential outcome.

This election was called by the Prime Minister with the intention of strengthening her majority in the House of Commons, to achieve the best chance of a smooth passage through the House of the necessary legislation to implement her Lancaster House proposals. Unfortunately, from her point of view, the outcome was the opposite to what she planned. The Conservative majority in Parliament disappeared, leaving the Tory Party dependent on DUP votes to provide it with a working majority.

Although all the Labour and Conservative Members of Parliament elected in 2017– over 80% of the total numbers of MPs returned – had stood on manifesto promises that they would implement the referendum result, there was a large majority – between 75% and 80% of MPs elected – who were of a Remain persuasion. They were not prepared to contemplate proposals along the Lancaster House lines. They were determined to keep the UK much more closely involved with the EU. Specifically, they wanted to remain at least partly in both the Single Market and the Customs Union.

It was trying to maintain free movement of goods within the Single Market framework and attempting to stay within the Customs Union, particularly to avoid a border problem between Northern and Southern Ireland, which led to the Withdrawal Agreement which Parliament rejected in January and again early in March. The EU were always uncomfortable with the UK being partial members of the Single Market and the Customs Union for understandable reasons. Maintaining the four freedoms – the movement of goods, services, capital and people – was a prime EU objective.

Understandably, the new UK aspirations were regarded by the EU as a serious threat to their security and integrity. The situation was further muddied by the UK agreeing to discuss citizenship, the Irish border and money before trade. This led to the Government getting desperate by late 2017 to get the trade negotiations going, leading to the UK conceding the Irish backstop arrangements in December 2017 which eventually got into the Withdrawal Agreement. The overall result was an Agreement so unsatisfactory to the UK that when a vote was held on it in January 2019, it was voted down by an unprecedented majority of 230, with a lesser but still large majority of 149 against it in early March 2019.

The problem is that rejection of the Withdrawal Agreement has left the House of Commons with no majority for any of the various possible ways ahead – as we saw confirmed last night – and a very short amount of time to get anything settled. Support for the so-called Norwegian option – with the UK in the EEA and EFTA – seems to have melted away. No majority in Parliament exists for a second referendum, which has recently been voted down by a majority of 249. A large majority exists for avoiding “No Deal”, but this eventuality can only be stopped if there is some concrete alternative in place, and it is far from clear what this might be.

It is obviously far from an ideal outcome for the UK to be drifting towards “No Deal” – the default outcome if nothing else is agreed before 12th April 2019 – with far too little preparation for it having been arranged and with no longer-term plans for this type of outcome as a favoured option having been made. Much then turns on a realistic assessment as to how disruptive and difficult “No Deal” would be.

Among some people – including evidently a substantial number of MPs – there appears to be an assumption that “No Deal” would be so damaging that it is not worth even trying to make a detailed assessment as to how difficult the situation might be and whether “No Deal” might be better as an outcome than the Withdrawal Agreement. There is little doubt that there would be disruption at least for a while, with some sectors of the economy much more adversely affected than others. Overall, however, especially if mitigated by a significant number of mini-deals on such key issues as flows of traffic at Dover and Calais, aircraft rights of movement, supplies of medicines etc, it seems likely that the challenges to the economy would be manageable.

There are also a number of significant upsides to “No Deal”. We would not be committed to paying the EU £39bn with no clarity as to what we would receive in return. The Irish border problem would have to be resolved by allowing trade to take place electronically for large companies and with exemptions for small ones, assuming that no-one wants a physical border. There would be no restrictions on the UK negotiating free trade deals. The huge trade deficit we have with the EU should put us in a reasonably strong position to negotiate a free trade deal with the EU on satisfactory terms. At the moment, however, Parliament has voted by a large majority against “No Deal” as an option that it is prepared to accept, although it remains the default outcome if nothing else is agreed. Whether it was wise to relinquish at this stage such a vital negotiating card with the EU remains to be seen.

If there is not going to be a “No Deal” exit from the EU by the UK on 12th April 2019, a further extension of Article 50 now seems inevitable. Unlike repealing Article 50, which could be done unilaterally by the UK, extensions require the unanimous assent of all 27 EU Member States and the European Parliament, whose last sitting date before its forthcoming elections is 18th April 2019. If there is any kind of deal agreed before 12th April 2019, a short extension would be necessary to provide time for passing the necessary legislation to make the deal effective. If the Withdrawal Agreement is not agreed, however, the EU is likely to insist on a much longer extension, possibly for as long as two years or more. They are also likely to try to make any such a delay conditional on the UK either holding a general election or a second referendum, although it is difficult to see how Parliament could be bound to follow through on any such undertakings if it was minded not to do so. During this period, the UK would remain in the EU and we would very probably be obliged to take part in the European Elections taking place in May 2019.

Postponement of any final decision on the UK’s fundamental relationship with the EU for a period of years would deal with the immediate problems faced by companies trading between the UK and the EU. It would maintain the status quo on the wide range of arrangements we have in place with our European neighbours, but it would also have heavy downsides.

It would inevitably prolong the uncertainty hanging over our relationships with the EU. A further long period of potentially acrimonious negotiations would be in prospect, providing a continuing major distraction from other pressing priorities. It is not clear that a general election would produce a parliament any less split than the one we have already, and therefore in a better position to negotiate a deal more generally acceptable than the one enshrined in the Withdrawal Agreement.

Another referendum would also be fraught with all the problems which caused it to be voted down as a way ahead in March 2019. Apart from concerns about its democratic legitimacy, it looks like being foisted on a government which would not want a referendum, with all the difficulties that this would entail in terms of getting the necessary primary legislation onto the statute book. There are also obvious problems around delay, uncertainty, cost, what the choices to be put to the electorate would be, let alone the impact on the country which a highly contentious referendum would entail – and with no certainty about what the result might be.

Faced with all these difficulties, what should the country – and particularly the Labour Party do? There are essentially four options ahead of us, whatever processes and procedures we may have to go through to get there. We either:

  • accept the Withdrawal Agreement or some close variant to it
  • rescind Article 50 and remain in the EU
  • leave the EU without an agreed way ahead
  • accept a much longer extension to provide time for a new approach

The vast majority of Labour MPs would undoubtedly like to see the second of these options as the eventual outcome. So would most Labour Party members. Traditional Labour voters, however, would be much more evenly split and a lot of these people live in marginal seats in Wales, the Midlands and the North.

Few Labour MPs, party members or voters are happy with the Withdrawal Agreement. While the electorate as a whole now seems much more inclined to go for “No Deal” than they did before, this is not an outcome favoured by either the Labour Party leadership or by the majority of Labour MPs.

What do Labour sceptics grouped round Labour Leave think should be done? We think that accepting the Withdrawal Agreement is an even worse option than staying in the EU and that there is less to fear from “No Deal” than most people in Parliament seem to think. At the very least, therefore, we think that “No Deal” is an option which should be kept in play. We still believe, however, as we always have done, that as comprehensive as possible a Canada+++-style free-trade deal between the UK and the EU, with the UK out of the Single Market and the Customs Union and the Common Agricultural and Common Fisheries Policies, would be the best outcome. This is why we think that extending Article 50 to give us time to negotiate a comprehensive free-trade deal is now the best long-term way ahead, providing both Leavers and Remainers enough of what they want to lead to an acceptable and permanent settlement.

The post Keep No Deal in play, but a Canada-style trade deal with the EU remains the best option appeared first on BrexitCentral.

The threat of an Article 50 extension is causing anxiety for some sincere and committed Brexiteers. Some say they should back Theresa May’s deal to “get Brexit over the line”.

But the deal won’t deliver Brexit. Worse than that, it’ll lock us in to not delivering Brexit for many years to come.

If the deal goes through, the next day we will not have left the EU in anything but name. For at least 21 months of “transition” – extendable up to four years – we will have to obey the EU’s laws and rules, and be subject to the Commission and the ECJ as now. The big difference is that we will no longer have a vote or voice in the EU institutions. So no vote or veto against EU law changes which damage the City, or against the Commission’s use of State Aid controls to suppress our competitiveness.

The Brexit process will not be “over”, or “done and dusted” by signing the deal. Those 21 months – or longer – will be filled with the turmoil of ongoing negotiations about our future relationship. We will be negotiating against a real “cliff edge” at the end of the transition – unlike the largely mythical and Project Fear 3.0 “cliff edge” we face now. If we do not submit to the detailed terms offered by the EU for our long-term relationship, we will automatically fall over the cliff edge into the backstop Protocol.

The threat of this happening will put huge negotiating power – blackmail power – into the EU’s hands, since the backstop locks us out of having an independent trade policy and divides the United Kingdom.

Some people say the negotiations are like a game of football where we have done badly in the first half. They hope maybe we can do better in the second half under a new captain. But these negotiations are more like a game of chess: our current leadership has sacrificed all the major pieces and left the remaining pieces in positions where check-mate is inevitable in a few moves. The most competent and Brexit-committed future Prime Minister could not magically get us out of that situation.

Being locked in the backstop

The Attorney General rightly reiterated his advice that if negotiations with the EU drag on or break down, then under international law the UK risks being locked indefinitely in the backstop. The key danger was spelt out in the last paragraph of his advice: if through no demonstrable failure to exercise good faith “but simply through intractable differences” the negotiations deadlock, then there would be “no internationally lawful means of exiting the Protocol’s arrangements, save by agreement”.

The fundamental problem is that there is no need for the EU to engage in bad faith conduct in order for us to be locked in indefinitely: they just need to negotiate hard for terms we can’t stomach.

But some arguments have been flying around that we might be able to get out by showing the EU is acting in “bad faith”, or because there had been a “fundamental change of circumstances” under Article 62 of the Vienna Convention on the Law of Treaties.

The “Star Chamber” group took the best public international law advice, and concluded that these arguments have little substance. Leading public international law experts such as Professor Philippe Sands QC and Sir David Edward (the former British ECJ judge) have publicly expressed similar views.

Professor Guglielmo Verdirame of King’s College London takes a different view from other experts. He says that it is “not fanciful” that the EU might be found in bad faith if it “persistently and unreasonably” refused to conclude an agreement.

Let’s assume that he is right and that other distinguished public international lawyers are wrong. After an unknown period of time stuck in the backstop, and depending on the behaviour of the EU, the UK might have a case which is “not fanciful”. That case would then go to an international arbitration panel which would take months or years to rule. Before coming to a decision that panel is required to refer any issues of EU law to the ECJ in Luxembourg for a binding ruling. If Prof Verdirame is right, it is “not fanciful” that the UK might win: but if the arbitration panel rules against the UK, then we are completely and utterly snookered.

If the best advice I can give a client about a case is that it is “not fanciful” that he might win it, the client would need to be mad to go ahead with it – particularly if the downside of losing is huge, and other lawyers thought that the chances of winning are near zero.

The upshot is that if we agree the deal, we will be locked into the backstop and there will be no way out of it which is under our own national control. These theoretical legal arguments do not change the dynamics of the negotiations in practice. We would still have to negotiate with the EU on the basis that we are certain to have to go into the backstop if no deal is agreed before then, and that we would then have no reliable way out of it except with the EU’s agreement. The prospect of hanging the whole fate of the country on the roulette wheel of presenting some novel legal arguments to an international arbitration doesn’t help in the real world.

But what happens if Mrs May’s deal is defeated for a third time?

What has spooked some Brexiteers is President Tusk’s talk about a possible 21-month extension to our EU membership under Article 50. Such talk is cheap – it does not commit the EU’s leaders to grant an extension. Tusk is clearly trying to influence the political process within the UK. People shouldn’t be naive and fall for it.

There are big obstacles against a long Article 50 extension actually happening. All 27 EU member states need to agree it unanimously. If the EU offer it at all, it needs to get through our Parliament with whatever conditions the EU attach to it – and these conditions could require Parliament to pass primary legislation.

The leaked ‘Room Document’ prepared by officials for the forthcoming European Council meeting makes it clear that if an extension goes past 2nd July at the latest, then the UK must as a matter of EU primary treaty law (which cannot be changed in the time available) hold European Parliament elections in May. This is a big downside for the EU, as is the prospect of the UK as a full voting member state causing trouble for the next two years.

But what if the worst happens and an extension is agreed? That would be an appalling betrayal of the referendum result by arrogant parliamentarians who would rightly be held to account for their actions.

But the actual legal consequences would be much less damaging than the May deal. We would be hugely better off than under the deal. We would have effectively the same transition period as under the deal, with the big difference that we would still have a vote and voice in the EU institutions. But the biggest difference is that we would not be locked into the backstop at the end of 2020 or into the other very damaging parts of the deal which have been overlooked in the furore over the backstop.

It is understandably difficult for people to follow the different parts of this complex deal, what is in the Withdrawal Agreement itself, what is in the backstop Protocol, and what is in the Political Declaration attached to the deal. At Lawyers for Britain we have published a master chart which shows where the main problems are and has links to more detailed explanations.

There are some very bad parts of the deal apart from the backstop Protocol. We would have to carry on paying vast sums of money after 2020 which we do not owe under international law. The EU law which the deal applies to us even after the transition period is over would carry on having direct effect and supremacy in our courts over UK law for the indefinite future – something that leaving the EU was meant to end.

And the overlooked Political Declaration contains very damaging provisions. People think that because it is not legally binding, it can just be ignored and we can negotiate with the EU afresh. That is not true. Article 182 of the Withdrawal Agreement commits the UK as well as the EU to use best endeavours to negotiate an agreement in line with the Political Declaration. This means that if we ask for something in the future agreements that contradicts the Political Declaration, the EU can legitimately say that we are not complying with our obligation to negotiate what is in the Political Declaration and therefore the EU has no obligation in turn to give us an agreement which departs from it. Result: we are locked into the backstop with no way out, and no way to complain.

Although much of the contents of the Political Declaration are mere outlines, it does contain prescriptive provisions which are contrary to UK interests. The most damaging is probably Paragraph 23 on tariffs, which is simply not compatible with us negotiating the Canada-style Free Trade Agreement with the EU favoured by most Brexiteers. Instead, it requires “ambitious customs arrangements… that build and improve on the single customs territory” in the backstop. Dominic Raab resigned over the inclusion of this wording in the Political Declaration.

Paragraph 124 of the Political Declaration pre-commits the UK to carry forward the unequal disputes procedures of the Withdrawal Agreement, under which the ECJ will maintain jurisdiction via a backdoor (but effective) mechanism under which the ECJ’s rulings on EU law issues will bind the neutral arbitration panel. This extraordinary mechanism is totally contrary to international treaty practice under which sovereign states do not submit themselves to the courts of the other treaty party, and has so far only been imposed by the EU on the desperate former Soviet republics of Ukraine, Moldova and Georgia.

Paragraph 75 states that: “Within the context of the overall economic partnership the Parties should establish a new fisheries agreement on, inter alia, access to waters and quota shares”. This does not contain detail but is a concession in principle by the UK on there being fishery quota sharing as part of the economic partnership with the EU. The EU will undoubtedly leverage this concession to demand continued access to UK fishing waters for EU boats and the UK will be in a very weak negotiating position to resist the EU’s demands.

Mrs May trumpets the end of free movement of persons as her great achievement. But Paragraphs 50 to 59 of the Political Declaration commit the parties to establish “mobility arrangements” to replace free movement, and “to consider addressing social security coordination in the light of future movement of persons”. The precise content of these arrangements is not spelt out, but in view of its weak negotiating position up against the backstop, the UK may well be hard pressed to resist pressure to expand these arrangements.

If we are subjected to an Article 50 extension instead of the deal, none of these damaging provisions or negotiating constraints would apply to us, leaving a future Prime Minister in a position to negotiate with a free hand.

Conclusion – the choice

The threats of an Article 50 extension have created a dilemma which worries many committed Brexit supporters. I understand those worries. An emotional response is to just grab onto the deal, even if it is horrible, in order to “get Brexit delivered”.

But at this critical time it is vital that our MPs should vote not just on emotion but after looking very carefully at the legal as well as the political consequences of the courses of action.

The deal does not deliver Brexit except in name. Not only does in not deliver Brexit, it also makes it impossible for a future Prime Minister to deliver a real Brexit as well, for many years to come or indefinitely. The momentary relief from some Leave supporters at nominally leaving the EU is sure to turn to anger, disillusionment and blame when it becomes clearer and clearer that Brexit has not been delivered, and that the Conservative Party in particular – including the Brexiteers – has failed to deliver real Brexit and has delivered a locked-in fake Brexit instead.

But if the deal is rejected, the most likely outcome is that we get out on 29th March with the referendum objectives achieved of taking back control of our laws, our borders, our trade and our money. Please see the excellent article by Christopher Howarth which explains why it is so difficult for Remainers to force through an Article 50 extension in the remaining few days if the deal is rejected again.

It was bound to get rough as we approach the point of actually leaving the EU. Now is not the time to lose our nerve and back a gravely damaging deal which would betray Brexit supporters and be very bad for the country. Contrary to the Prime Minister’s contention that it is patriotic to support her deal, the patriotic thing to do is to throw it out again.

The post Theresa May’s deal remains “fake Brexit” – the alternatives are far less damaging appeared first on BrexitCentral.

It is undeniable that the EU has been in the driving seat for Brexit negotiations to date.

The Withdrawal Agreement is specified under EU law – Article 50 of the Lisbon Treaty – and has never worked for us. Without one, all the EU treaties stop applying as of 29th March.

However, should the UK leave the EU under what is wrongly referred to as a ‘No Deal’, trade deals would then be carried out under the international trade rules of the World Trade Organisation (WTO) that the UK helped establish.

The 164 member WTO offers Britain a remarkable opportunity to leave the EU cleanly, avoiding all of the apocalyptic predictions set out by the likes of the CBI, Bank of England or Chancellor.

Because through GATT Article 24, the EU and UK are able to agree a very basic Free Trade Agreement that would keep tariffs at zero for the duration of the period the two sides negotiate a comprehensive Free Trade Agreement.

Article 24 is by no means a final destination, it is simply a stop gap that would allow Britain to leave the EU on 29th March 2019 – as promised time and again by the Prime Minister – while at the same time, avoiding any uncertainty that could negatively impact our economy or that of the EU.

Some have been dismissive of Article 24, arguing that with tensions between the UK and the EU at an all-time high, it would be impossible to agree to a Free Trade Agreement. However, they are missing the point that such an agreement does not have to be comprehensive. All that is needed is a one-page agreement signed by both sides. Cambridge law expert Dr Lorand Bartels has written a bare bones agreement that would suffice in order to instigate Article 24.

By doing so, the UK would be protected from discrimination claims by other WTO members. In the event that other WTO members did make legal challenges against the UK, they take a number of years to be heard and a comprehensive Free Trade Agreement would be the ideal remedy anyway.

One of the greatest benefits of implementing Article 24 would be that businesses would avoid having to calculate 20,000 tariffs, many of which are complex with very slight variants for many products. Granted, customs declaration forms would need to be completed, just as they are for suppliers from the rest of the world. But the removal of tariffs would make this process extremely straightforward. HMRC have introduced Transitional Simplified Procedures (TSP) for the 145,000 VAT-registered businesses which trade with the EU (meaning only 7% of UK businesses and 12% of the UK economy) removing the need for full customs declarations at our borders and import duty payments.

It is absurd to be voting on No Deal today as the option really does not exist. There should be a meaningful vote on GATT Article 24 as a safe, alternative Brexit deal that would get Britain out of the EU with minimal drama. The British people expect their politicians to deliver on the result of the referendum without causing chaos, and Article 24 ensures that can happen.

The post Forget about absurd votes on No Deal – MPs ought to be invoking GATT Article 24 appeared first on BrexitCentral.

As we rapidly approach the final showdown on the Withdrawal Agreement, it’s worth recalling what the problem with the backstop is.

At a visceral level, it really is about how we see our country. Are we going to keep the United Kingdom together? And what sort of trading country do we want to be once we leave the EU?

The United Kingdom as a whole gave notice under Article 50 that it was leaving the EU. That’s how it has to be under EU law: only states can be members. The EU has no legal basis at all, under the Treaties, for requiring that one part of the departing state be treated differently from the rest.

Yet we have acceded in that requirement without demur and the Withdrawal Agreement provides that Northern Ireland will be treated differently from the rest of the United Kingdom. Some say that this is because the Good Friday Agreement demands a different treatment and that it “trumps” the UK’s legal right to leave the EU under Article 50.

I have given my own views on the core issues in Ireland here. Our Government could have argued that there was hardly a word about borders and trade in the Good Friday Agreement and that it could be made perfectly consistent with our departure from the EU. The Government could have pointed out that, when Ireland ratified the creation of Article 50 in the Lisbon Treaty, it entered no reservation or objection that it might be inconsistent with the Good Friday Agreement – perhaps because it isn’t. As far as I know, these arguments were never made: we accepted that Northern Ireland had to be treated differently.

Now Northern Ireland is indeed different in one important respect and that is that its constitutional status within the UK is subject to the Good Friday Agreement, an international treaty that both recognises that it is fully part of the UK and makes provision for it to leave the UK and become part of the Republic, subject to a separate referendum in the two parts of the island of Ireland. In effect that provides the people of Northern Ireland with a guarantee of no constitutional change without their consent. It also means, as the Irish Taoiseach said at the time, that the decision on Irish re-unification is no longer one for the British government.

I have no doubt that the British government will and must adhere to that binding commitment. But we should bear in mind that it has two elements: the people of Ireland will decide if there is to be constitutional change; and the people of Northern Ireland have a veto on it, solemnly, through a referendum. The Withdrawal Agreement is heavy with declarations that it does not involve constitutional change in Northern Ireland. But this is like a burglar leaving a note in your ransacked sitting-room to say that he hasn’t burgled you. It doesn’t make it any less of a burglary. And the fact is that major constitutional change is being imposed on Northern Ireland with only opinion poll evidence that the change is acceptable. The people of Northern Ireland get no say and all but one (Lady Hermon MP) of their only functioning elected representatives are opposed.

And the constitutional change being imposed on them is significant. They will, under the backstop, be subject to the direct effect of EU law with no representation and a border will be erected in the Irish Sea going way beyond the plant and animal health checks that currently operate, putting Northern Ireland firmly in the EU’s economic sphere and outside that of the UK.

We will not therefore be leaving the EU together, as a single country, as we are entitled to do under international law, but in two broken bits, Northern Ireland and Great Britain.

But this backstop may never come into effect, surely. And the EU assures us it is temporary (but they won’t re-open the text to commit to that) while we sort out our future relationship. In fact no: the backstop as drafted is effectively permanent and it determines everything about the future relationship.

That is because the Withdrawal Agreement is explicit that the Irish Protocol stays fully in place “unless and until” it is replaced. Replacement is contemplated of course, in the form of a new trading relationship between the EU and the UK, but that new relationship will require assent from all EU member states, including Ireland.

So imagine if Ireland said, as is very likely, that they wanted the special economic status that Northern Ireland has in the backstop rolled over into the new trading relationship. Without that they’d veto the future trade deal. The UK could say no, and do without a formal trade deal. But then the backstop would remain in force, because it wouldn’t have been replaced. So if we agree to the demand, Northern Ireland retains its special status. And if we say no, Northern Ireland retains its special status. It’s the perfect EU snooker. Who would sign that?

So much for keeping the United Kingdom entire. But how does the backstop determine our future trading relationship, not merely with the EU, but with the world?

The impulse to maintain the Union is strong in the Conservative Party and not at all absent in other parties represented at Westminster. Mrs May and her team clearly decided at some stage that the economic severance between Northern Ireland and Great Britain would be too stark if the backstop kept the former in the EU economic sphere while the latter became an independent trading entity able to strike its own deals around the world: the full panoply of EU border controls at Larne, on UK sovereign territory, wouldn’t look good. So she persuaded the EU, somewhat against their will, that in the period when the backstop applied, Great Britain too would have a special status: not quite as fully under EU law as Northern Ireland, but in a basic customs union.

Confusingly (and the confusion may have been deliberate) she dubbed this proposal the “backstop to the backstop”, later shortened to “backstop”. So when the Government uses the word, it can mean one of two things or both, as the mood takes them. And it is probably true that many Conservative MPs, when they object to the “backstop”, are more fussed about this separate relationship between the EU and Great Britain than they are about the special status imposed on Northern Ireland.

This basic customs union for Great Britain is, in the eyes of the EU, definitely temporary: it was a concession they never wanted to grant. Both they and the UK expect to see it replaced in the future relationship. But with what?

It could in theory be with a Free Trade Agreement modelled on that signed by Canada. The EU has offered this (though it wouldn’t include Northern Ireland). It could be a much closer and subordinate relationship, similar to that between Norway and the EU. It could be as distant an economic relationship as that enjoyed by Moldova. In fact the EU has a whole suite of off-the-shelf models from which it has been inviting us to select for the last year.

The Government has declined to make that selection, partly because to choose is to divide your own followers, but also because selecting a point on the spectrum between “close and subordinate” and “distant but free” exposes the fundamental sacrifice of UK sovereignty in Northern Ireland.

The Government accepted early, and certainly by December 2017, that the decision as to what constituted a “hard border” in Ireland would be made by the EU and has spent the time since trying to pretend that this doesn’t oblige the UK as a whole to choose between maintaining its economic integrity and having an independent trade policy. That is the nub of the obfuscation and mistrust in which the Government has covered itself.

But behind the smoke, the Government, in agreement with the EU, has set a direction for the future relationship that resolves that choice at some mid-point between the two extremes. The special status of Northern Ireland, in the EU Customs Union and in large parts of the Single Market, will be set forever if we sign the Withdrawal Agreement. And to disguise the severance that creates in the economic integrity and sovereignty of the United Kingdom, Great Britain will enter some form of permanent Customs Union, shorn of any substantive ability to make trade deals and willingly subject to a broad array of EU law and regulation with no say.

This is not Brexit. Disruptive though it may be, we cannot go ahead from this point. We cannot sign the deal as it stands. The Irish backstop must go, or be rendered time-limited or terminable at the sole discretion of the British government. If the Attorney General cannot negotiate text (with the same legal status as the Withdrawal Agreement itself) that achieves one of those outcomes, then we need to take another path. That can only be fulfilling our obligations to British democracy and leaving with No Deal.

The post Why the Northern Irish backstop makes the draft Withdrawal Agreement unpalatable appeared first on BrexitCentral.

There has been much speculation about what the UK and EU will do in the event of No Deal, focused in the UK on the no-deal planning notices emanating from the Department for Exiting the European Union. What little attention has been paid to the Department for International Trade (DIT) has usually taken the form of criticism that crucial deals for the UK’s external trade will be lost because we will have failed to novate or roll over the agreements with a host of countries we have through the EU.

Any DIT announcement of a successful roll over or novation is usually accompanied by howls of derision from various doomsayers who say that this is a small percentage of the number of agreements the UK has through the EU with other countries outside the EU27. Reference is often made to 60 or 70 agreements that fall into this bucket (it is actually around 40 agreements covering around 70 countries).

When it comes to what we might have if we leave with no deal, the analysis is entirely static, assuming that some mythical gate will come down and foreclose all trade if we have not immediately rolled over all agreements, and assuming that whatever we have when we leave will remain the status quo forever from that point. It is also fair to point out that our trading partners have been confused by the UK’s EU negotiating strategy, something on which DIT has no input, and this has led our trading partners to doubt that we will ultimately be in a position to offer deep liberalisation in the future, because we will be locked into the EU Customs Union or have such high regulatory alignment that we will be unable to have the requisite regulatory autonomy to make us relevant to them.

This uncertainty has certainly impacted their negotiating strategy, and made them more determined to extract as much as possible from us now, because they believe our EU strategy will mean we will be unable to negotiate properly in the future. The more that parliamentary voices lobby hard to take No Deal off the table or extend Article 50, the less incentive these countries have to close these agreements with any urgency, so our own lack of discipline is contributing to the issue.

Despite this hostile working environment, DIT has been quietly and successfully rolling over many of these agreements; and with regard to the ones that matter – and that actually impact meaningful amounts of UK trade (as opposed to say agreements with Andorra and San Marino) – progress is relatively good (with a couple of exceptions which I will discuss below), even in the event of the UK leaving the EU without a signed withdrawal agreement.

First of all, some threshold points. It is often assumed that if 1% of our trade is with country X, and country X has a trade deal with the EU, this means that if that EU-X agreement is not rolled over in favour of the UK, then that means all of that 1% of our trade will fall to zero. But this is not how trade works. Clearly for some products, especially agricultural trade where tariffs are high, failure to novate could have a big impact on our exports (assuming the agreement in question lowers agricultural tariffs for country X, not always the case in the EU-X agreements).

But equally, where the tariffs are low, and industrial goods tariffs are very low (Most Favoured Nation rates for industrial goods are on average 3%-4%), then failure to novate will simply mean a marginally higher tariff that may be compensated for by a host of other factors such as currency fluctuations or tax policy. Right now, even in some of the most established agreements, such as NAFTA and the EU-South Korea agreement for example, some traders still choose to pay the MFN rate and do not take the benefit of the preferential rate because proving origin is more hassle than just paying the low MFN rate.

With that caution, let’s look at progress to date. The agreements that we have through the EU (excluding the recently-signed Japan agreement where tariff cuts only commence in January 2020) account for 11% of our total trade. Looking at how much trade is duty free around the world (or duty free under a GSP programme), it would not be surprising if the trade actually affected – in case the agreements are not rolled over – would be approximately half of that. Of these, the Swiss agreement alone – which has been rolled over – is worth 20% of our trade. Other significant agreements here include CETA, covering a further 12% of the trade under these agreements (almost rolled over), and the EU’s agreements with South Korea and Singapore, each covering around 10% of this trade.

Equally it is worth pointing out that 20 of these EU-X agreements account for only 0.8% of total UK trade. Many of the EU-X agreements are Economic Partnership Agreements (EPAs) that are with small developing countries, not critical to UK trade. We would certainly like to replace these arrangements with UK arrangements, but we should take the opportunity of having a different approach to development here. The EU’s approach to development is to charge high tariffs on the products that developing countries produce (often with significant tariff escalation), and to compensate by lowering that rate through its preference programmes such as GSP, and GSP+ which are conditional (and could be lost by the developing country for any number of reasons outside of the control of individual traders and exporters), and to limit the unconditional programmes (Everything But Arms) to only the poorest of the poor.

A smarter approach for all sides is for the UK to actually be genuinely open to the products of these countries, but to compensate them on a one-off basis for the preference erosion that this will cause. We should also eliminate tariff scalation from our schedules so that these countries are incentivised to go up the value chain and garner more value for their producers – a key element of development. Notwithstanding this, the UK and the Eastern and Southern African states have now rolled over their agreement with the EU.

The UK is very close to rolling over the EEA agreements which cover around 2% of UK trade, mostly with Norway, as Liam Fox pointed out in a ministerial statement last week. We have also rolled over a series of nuclear safeguarding agreements. The UK has acceded to the Common Transit Convention. Although the UK is a member of the WTO by right, and does not have to re-accede to it, it does have to accede to the WTO Government Procurement Agreement, and is in the process of doing so. The recently-signed Swiss agreement also contains important cumulation provisions covering goods originating in the EU, EFTA and Turkey. Crucially, goods that would have been considered ‘of community origin’ by either the UK or Switzerland will remain so.

But trade is also more than just about trade agreements. The UK has been able to roll over a number of mutual recognition agreements (MRAs) that are very important to facilitate trade. MRAs make it easier for people to trade and easier to prove that their products satisfy the standards and regulatory requirements of the other party. The UK has already signed MRAs with the US, Australia, Israel and New Zealand. There are sectoral agreements on insurance with the US and Switzerland, on wine with Australia, and the US. A range of air services agreements have been signed with the US, Canada, Switzerland, and Israel to name a few. The UK and New Zealand have rolled over the UK-NZ veterinary agreement. A distilled spirits mutual recognition agreement with the US (with whom there is a rapidly growing whisky trade) has been signed and a similar agreement is due to be signed shortly with Mexico.

It is true that there are issues with the Japanese and South Korean novations, but it is important to understand why this is the case. In the case of Japan, the Japanese recognise that the EU deal is not an ideal agreement in terms of Japanese trade policy. Japan has made concessions on data that do not suit its IP-based economy that relies on data flow. The Japanese would rather have the UK in the CPTPP arrangement rather than simply rolling over the agreement, and that would be in our interests too. They rightly don’t want the new EU-Japan agreement to be the basis for the UK-Japan trading relationship going forward. This is because Japan is particularly concerned about countries like its large neighbour, China, which are increasingly pushing anti-competitive and prescriptive regulations domestically and on the rest of the world. This would stifle their own innovative industries.

Like many global supply chain managers, Japan needs an open trading, pro-competitive regulatory environment. It sees the UK as potentially moving in that direction, and if the UK accedes to the CPTPP, it also sees a possibility that the US will one day return to the TPP fold. If the UK, US and new accession countries like Indonesia and South Korea accede to the CPTPP, then it will command 45% of the world’s GDP, and include the fastest growing countries in the world (compared to the EU27’s 20% assuming static performance over time, whereas it is likely that on current trends the EU27 will decline from this 20% figure).

Indeed, the Japanese may also think that their current negotiating position will prevent a “No Deal” situation arising. There is also a specific nuance with the EU-Japan agreement because it is a new agreement and the tariff cuts are only just starting, and the MFN rate applies to all UK and EU trade until January 2020 anyway. Whatever else is said, the Japanese are committed to a better agreement with the UK than the EU, but only want to go to the Diet for approval once with a better agreement. Other countries have complicated legislative processes too.

Australia

In the case of South Korea, they want to see more liberalisation from the UK than they secured from the EU, which is also to be expected. The UK can liberalise more than the EU, but does need a base line from which to operate. It is fair to say that the Koreans have been particularly affected by the confusion in Parliament regarding an extension of Article 50. Why should they negotiate with any urgency, if in fact there is no need to do so?

Additionally, both the Koreans and Japanese have given confused messages – on the one hand seeking more liberalisation either directly or through CPTPP accession, while maintaining that the UK should disturb their UK-EU27 supply chains as little as possible – two inconsistent positions. It would be better for all if these managers of global supply chains took the position that they wanted maximum trade openness between the UK and EU through a comprehensive, advanced FTA consistent with allowing their global trade ambitions of more liberalisation and pro-competitive regulation to be simultaneously fulfilled.

With regard to Turkey, the hysteria is even more divorced from reality. We could never negotiate anything with Turkey until we have actually left because Turkey is in a partial customs union with the EU. Nothing has changed there. It is not news that this particular agreement won’t be rolled over by March 2019.

Of course, if a deal can be agreed, the EU-X deals would continue to apply in their entirety until the end of the transition period. No-one wants a no-deal scenario, but the UK has made sufficient progress on rolling over some of the existing FTAs, MRAs and other sectoral agreements such that leaving without a deal would not be the disaster that some have painted.

We would of course continue this process after we have left the EU, and extend it to include further and deeper liberalisation. However, amendments like Cooper-Boles force other countries to assume that No Deal is in fact off the table, and so there is no point in drawing down political capital with their own legislatures if it not necessary – another example of the UK shooting itself in the foot, but that’s a mistake that is being made by those voices calling for No Deal to be taken off the table or for Article 50 to be extended. It cannot be laid at the door of the DIT. It’s a bit like sending your army into battle, but deliberately taking away its weapons.

The post The Department for International Trade’s no-deal planning is more advanced than the doomsayers claim appeared first on BrexitCentral.

Approaching “no deal” at the eleventh hour, as we may well now be doing, is clearly not ideal. It would have been much better if we had spent the last two years negotiating the Canada+++ free trade deal which was the logical outcome of the 2016 EU referendum. This would have enabled us to have had a smooth transition towards an inter-governmental relationship with the EU27, rather than the one based on political unity which the 2016 EU referendum rejected.

The alternative we are now facing is the Withdrawal Agreement or some variant of it, possibly after a protracted delay if Article 50 is extended. This may buy us some short-term stability, but at the cost of putting us in a desperately weak negotiating position in the future. It is therefore important to appreciate how much stronger our hand might be if we start from “no deal”.

First, we would not be obliged by a legally enforceable international treaty to pay the EU £39bn. This is not to argue that we should refuse to pay the EU27 a fair amount to cover our legal obligations. It would, however, put us in a position to ensure that the sum to be paid is what we really owe and not an inflated figure, as £39bn arguably is. It would also provide us with substantial leverage to ensure that we would be able to secure agreement to a fair trade deal in return for the money we are paying, which we should surely agree to pass over only when we know what we are getting in return.

Second, “no deal” would force the EU27 to resolve the Irish border problem. No one, including the Republic of Ireland, the UK or the EU27, wants a physical border. Everyone will, therefore, have to find a way of using technology, combined with AEO trusted trader status for major companies and exemptions for smaller ones, to manage the border without physical checks. Of course, this should have been planned long ago. Now it will have to happen.

Third, “no deal” would ensure that we were out of both the Single Market and the Customs Union and therefore in a position to push ahead straight away into negotiating free trade deals with the many countries which have already expressed interest in having FTAs with us.

Fourth, we would be able to start – without delay – negotiating with the EU a free trade deal which has already been offered to us on various occasions – by Donald Tusk, President of the European Council, and Michel Barnier, the EU’s chief Brexit negotiator. Politics tends to trump economics in the EU, but the huge balance of payments deficit we have with the EU27 – £96bn in 2017 compared to a surplus of £13bn with the rest of the world – must mean that EU exporters will press for continuation of as close as possible to frictionless trade between the EU and the UK. It would, in fact, be possible, under WTO rules, for the European Commission and the UK Government to agree to continue immediately with no tariffs and quotas. Because of their trade surplus, it would make even more sense for the EU27 than it would for us to agree this being done.

Contrast what could come out of negotiations on this basis with where we would be under the Withdrawal Agreement – stuck for two or three traditional years of ongoing uncertainty; stuck with paying £39bn with nothing concrete being provided in return; stuck with the Irish backstop; and stuck very probably with having to make more concessions – on fishing, Gibraltar, ongoing net payments and other issues – to get any sort of trade deal in place; and still half in and half out of the Single Market and the Customs Union, with all the obligations these entail, but with few of the benefits they provide which could not be secured by a free trade deal – and with no vote.

Of course, leaving the EU at the end of March 2019 with “no deal” involves risks of disruption and ill feeling. The probably short-term nature of these hazards, however, needs to be weighed against the years of humiliation which are in prospect if we have to negotiate our future on the basis of the terms of the Withdrawal Agreement. Falling back on “no deal” at the last minute may be far from ideal, but it seems hard to argue that it would not put us in a better negotiating position than any alternative likely to be on offer.

The post Better agree No Deal now than accept the weakness and humiliation of the Withdrawal Agreement appeared first on BrexitCentral.




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