Only a credible non-cooperative strategy that cannot be blocked by either the EU or Parliament will get us out of the EU by 31st October 2019. And that strategy needs to be executed with ruthless conviction and commitment by the new Prime Minister. To demonstrate his support for Global Britain, his first trip abroad should be to the US to kick-start the UK-US Free Trade Agreement.
As the largest ever list of candidates to offer themselves as the next British Prime Minister has been whittled down to the final two, it is clear that we are in grave danger of validating Einstein’s definition of insanity – doing the same thing over and over and expecting a different result.
Between them, Boris Johnson and Jeremy Hunt have said that they will: renegotiate the Withdrawal Agreement (WA) and the backstop; leave the EU with a ‘deal’ on 31st October; and get parliamentary approval for their new improved deal. They both claim to be skilled negotiators, implying that this makes them ideally suited for the most important job in their career. There are differences, however: Johnson recognises that the WA as a whole is dead and just wants to lift some of its acceptable features, such as on citizens’ rights; while Hunt is prepared to delay leaving the EU for ‘a short while’ to achieve a ‘better deal’.
The naivety of the candidates’ positions is breath taking. Have they not observed how easily the EU has run rings around our current ‘skilled negotiators’? Are they like the Bourbons and learned nothing and forgotten nothing?
The new Prime Minister needs a credible negotiation strategy
It is going to be déjà vu all over again, unless the new PM has a clear strategy to leave the EU on the basis of what game theorists call a non-cooperative solution. That is one that the EU cannot block if it is not willing to cooperate in producing a solution that makes both sides better off.
This means that the starting point for any negotiations with the EU cannot be the WA. The EU says that it will not renegotiate this and it remains completely unacceptable to the vast majority of the British people. As Chairman of Lawyers for Britain, Martin Howe QC, says:
‘I can’t think of any clause in the WA end-to-end which is actually in the interests of the UK. The only neutral part of the agreement is the reciprocal rights of UK and EU citizens, in which the clauses on substantive rights are acceptable. However, even those are surrounded by completely unacceptable requirements that the treaty must perpetually have direct effect and must (as interpreted by the courts) override future UK Acts of Parliament in our own courts, and must be “interpreted” by the European Court of Justice for about 10 years by direct references and thereafter via a back-door mechanism in an international arbitration clause’.
His devastating criticism of the WA is here: Avoiding the Trap – How to Move on from the Withdrawal Agreement. How a British Prime Minister could collaborate with the EU to produce this document and how so many MPs could subsequently vote for it is beyond me. The WA is nothing less than a venus flytrap. It therefore needs to be avoided at all costs.
In any case, the WA does not offer a ‘deal’ about a future relationship in any meaningful sense. For example, there is nothing on services which account for 80% of UK GDP. Trade in services will be negotiated after the UK leaves the EU. It is completely bizarre for MPs to object to leaving the EU without a deal, when the WA itself involves leaving the EU without a deal.
A non-cooperative solution requires the UK to specify both the terms under which it will leave the EU and the terms under which it will trade with the EU in the future. And to do so in a way that the EU cannot block.
Theresa May specified the leaving terms very clearly in the Lancaster House speech in 2017. They were to leave the Customs Union, Single Market and the jurisdiction of the ECJ. In other words, a clean Brexit. This was a clear deliverable strategy that did not require EU cooperation. But then Remainer Philip Hammond stepped in and said there needed to be a transition period which would require EU cooperation and this was the beginning of the backtracking that led to the toxic WA and the equally toxic Political Declaration (PD).
The non-cooperative solution involves three steps. And each one has to be credible to the EU
The first step is for the new PM to restate that the clean Brexit set out in the Lancaster House speech will be implemented by 31st October 2019. This is credible and does not require EU consent.
In parallel with this, the new PM should immediately inform the US President that the UK will enthusiastically take up his long-standing offer to negotiate rapidly a US-UK Free Trade Agreement (FTA). This also is credible and does not require EU consent once we leave. During the few weeks that remain before 31st October, the UK can make much progress in setting the stage for post-Brexit negotiations – a task that the International Trade Secretary, Liam Fox, has consistently dragged his feet in doing. This will send an electric shock to the EU that will tilt every aspect of subsequent negotiations with the EU in our favour. The prospect of us concluding an FTA with the US when the EU has been struggling for years to achieve this will motivate the EU to conclude an FTA with us. They will fear the fact that the UK would be able to import virtually all of its requirements from the US and at lower world market prices. This would signal to the EU that we can leave them behind if necessary.
The second step is to set out in a new Departure Statement (DS) how the principal issues involved in departing from the EU will be implemented: citizens’ rights, the financial settlement and the border between Northern Ireland and the Republic. The PM can guarantee the rights of EU citizens living in the UK without granting them the special status of the WA. He can agree to pay our financial obligations up to the point of departure. Any additional money is not a strict legal requirement but can be used as a bargaining tool in negotiations about the future trade deal – as the EU is fond of saying, ‘nothing is agreed, until everything is agreed’. Let the EU take the UK to international arbitration if they want. Finally, he can restate that the UK will not impose a hard border. All these are credible and do not require EU consent.
The big advantage of being absolutely clear on the border is that it will force the EU and, in particular, the Irish Taoiseach Leo Varadkar to agree a workable solution that allows the UK to leave the Customs Union and Single Market at the end of October. Solutions exist to protect the integrity of both the UK and EU internal markets without any physical infrastructure on the border or any need for new technology. The Smart Border 2.0 report commissioned by the European Union Parliament from customs expert Lars Karlsson confirms this – as does the more recent report of the Alternative Arrangements Commission. Annegret Kramp-Karrenbauer, Angela Merkel’s successor as leader of the Christian Democratic Union, has said that a workable solution could be agreed in five days of discussions. There were discussions between British and Irish customs officials on creating an invisible border, but Varadkar stopped these when he came to power. In doing so, he politicised the border issue and turned it from being the EU’s Achilles’ heel into the UK’s – ably abetted by collaborating British ‘negotiators’.
It was this single issue that was then exploited in order to propose the backstop comprising a ‘single customs territory between the (European) Union and the United Kingdom’, without rules of origin. Northern Ireland, in addition, would have to abide by the rules and regulations of the EU Single Market. So long as the backstop is in operation, the UK would have to meet ‘level playing field conditions’ that prevented the UK competing against the EU. The UK would not be able to leave the backstop without the consent of the EU.
This, of course, is completely unacceptable. By making it clear that the UK will leave the EU on 31st October, the positions are immediately reversed. Both the EU and Varadkar have said that there will be no hard border. Varadkar would be forced to restart the discussions between British and Irish customs officials. He knows full well how devastating for the Republic’s economy a ‘no deal’ Brexit would be: the Irish Central Bank predicts a 4% cut in GDP and 100,000 job losses. And there are plenty of five-day periods between now and the end of October to agree a workable solution. But it requires the UK side to make it absolutely clear that we are leaving on Halloween, come hell or high water. This too is credible and again does not require EU consent.
The third step is to make a Future Relationship Statement (FRS), setting out the terms on which the UK will agree to trade and cooperate with the EU. Again, this has to be done in a way that cannot be blocked.
There is only one set of trading terms that the EU cannot block. Under WTO (World Trade Organisation) rules – which almost all international trading arrangements follow – we are free to set the tariffs and product standards for trade with the EU, so long as these are the same as for all members of the WTO under MFN (Most Favoured Nation) rules, unless we have a FTA with any country or group of countries. This is the default position, so is also credible and does not require EU consent.
We can actually do better than that and offer the EU to continue trading in goods on current zero-tariff terms under Article XXIV of GATT (General Agreement on Tariffs and Trade) and in services under Article V of GATS (General Agreement on Trade in Services) – while a full FTA is negotiated. But if they refuse, we can temporarily revert to the MFN rules under Article I of GATT.
The EU will ultimately agree to a FTA. In the meantime, we need to exploit the fact that the UK has a huge trade deficit with the EU – we are net buyers of goods of around £100 billion, equivalent to 5% of our GDP. Since the customer is king – and we are the customers – it should be us who decides the quality and prices of the goods and services we purchase from not only the EU but from the rest of the world. But what the WA and PD do is to allow the EU to determine these things. The audacity is astonishing. Did the EU and our ‘negotiators’ seriously believe that they could get away with this – and not just in the short term but indefinitely?
Since we will no longer be bound by the EU’s Common External Tariff, we can lower the tariffs we set on goods that we do not produce domestically. But whatever tariffs we set, the EU will be worse off given that they sell us mostly high-tariff goods like cars and agricultural products. We would pay tariffs to the EU of around £5 billion and they would pay tariffs of £13 billion. In addition, we would save the £11 billion net contribution to the EU.
This provides a strong incentive for the EU to agree a FTA, unless they want to continue punishing us for leaving the EU, and in doing so damage the EU economy even more. Given that we have a services trade surplus with the EU of around £30 billion, it is essential that this is secured in a future trading relationship. This means a SuperCanada deal, already offered to us by the EU in March 2018.
But although there is a strong economic incentive to agree a FTA, we cannot force the EU into accepting any deal that works for us in terms of services, and, in particular, financial services. Still this does not prevent us leaving the EU on the basis of the above DS and FRS. There are enough ‘mini deals’ in place – covering visa-free travel, aircraft landing, rail and shipping agreements, road haulage licences, student exchanges, defence and security etc – for the citizens and businesses of both the UK and EU to continue visiting and trading with each other. In addition, a sufficient number of the international trade deals negotiated by the EU have been novated that we can continue trading on the same terms with most of these countries as we do now. A key example is Switzerland which accounts for more than a quarter of our trade under these EU-negotiated deals.
A number of proposals have fleshed out the details of a future relationship along the lines outlined above: A Clean Managed Brexit from Steve Baker MP, The EU, The UK and Global Trade: A New Roadmap from Professor David Collins, A Better Deal from Shanker Singham, Robert MacLean and Hans Maessen, A World Trade Deal from Economists for Free Trade, and the Howe et al report cited above. For example, Baker suggests that we should send a draft UK-EU FTA to the EU – such as the ones proposed by Shanker Singham, Victoria Hewson, Hans Maessen and Barnabas Reynolds or Dr Lorand Bartels of the University of Cambridge – rather than wait until they do the drafting – which was such a disastrous error with the WA and PD. The EU could agree such a FTA under Article 207 of the TFEU (Treaty on Functioning of the European Union) on the Common Commercial Policy on the basis of qualified majority voting.
But unless the strategy is clear about what is needed to deliver these outcomes, we will soon be back wading through the same treacle of compromise and capitulation that have been the hallmark of our negotiations over the last two years. The only strategy that is guaranteed to work by 31st October is the non-cooperative one outlined above.
The new Prime Minister also needs to demonstrate conviction and commitment – and that involves putting Parliament in its place
A credible negotiating strategy is necessary, but this will not be sufficient. The new Prime Minister also needs to have ‘conviction and commitment’, as Dominic Raab has pointed out. But Boris Johnson – the front runner to be PM – has already wavered by first stating categorically that the UK will leave the EU by 31st October and subsequently saying that this is merely ‘eminently feasible’. This change was immediately picked up by EU negotiators, one of whom told The Times: ‘Even the boldest Prime Minister for a no-deal will have to demonstrate that he has had one serious try and that means an extension [beyond 31 October]’. Another told the Daily Mail that the EU believes Johnson will end up trying to sell an amended version of the WA: ‘If people really brief Boris and talk him through the implications of ‘no deal’, I think he will really think twice’. The first view is perfectly plausible and, unless further wavering is prevented, then we are very likely to end up with the second. After all, Johnson supported the Withdrawal Agreement on the third vote. Hunt voted for it three times. Johnson’s declared position, however, is that he is seeking a FTA with the EU and clarified that he will leave the EU by the end of October ‘do or die’.
The new PM also needs to demonstrate conviction and commitment with the other group trying to block Brexit: the British Parliament. It too needs a lesson in democracy. Read our lips: we voted to leave the EU in June 2016 by a bigger majority than any vote that any individual MP has ever received. We understood the decision we made. We understood why we made it. No amount of scaremongering by the majority of MPs who oppose this decision or their friends in the civil service and CBI etc will change this.
So if MPs are still determined to block the deal that the next PM sets or try to insist that the deal is put to a ‘confirmatory vote’ – weasel words for a second referendum to try and get Brexit reversed – then they also need to be blocked. They need to be made to understand that it is the people who are sovereign not MPs. And the people are here for ever, they are not.
If this, in turn, means that Parliament is prorogued until after 31 October 2019, then so be it. Constitutional historians like Professor Jonathan Clark argue that this would not be ‘“unconstitutional”:
‘[It] would be in accord with statute law, but applied in a situation that legislators could not foresee. [Nor] would [it] be “undemocratic”, for the point at issue is the clash between two sorts of democracy, representative and direct. Whatever the merits of these two, Parliament recognised the priority of the People in legislating for the referendum of 2016. Parliament’s claim to control prerogative depends also on public opinion, and support has ebbed away as Brexit has not been delivered’.
However, prorogation might not be necessary since, in June 2019, Parliament voted down a Labour motion to block a no-deal Brexit. Indeed, Maddy Thimont Jack from the Institute of Government argues that MPs have no decisive route – such as legally binding backbench motions, emergency debates, amendments to the Queen’s Speech, or ‘no confidence’ votes – to stop a PM determined from leaving the EU on 31st October.
Only a credible non-cooperative strategy executed with ruthless conviction and commitment by the new Prime Minister will get us out of the EU by 31st October
The message needs to be clear, simple, with no compromises. Theresa May said in her resignation speech outside No. 10 that the next Prime Minister must compromise. Well just look where that got her. Time’s up for doing the same thing over and over and expecting a different result. Only a credible non-cooperative strategy that cannot be blocked by either the EU or Parliament will get us out of the EU by 31st October. And that strategy needs to be executed with ruthless conviction and commitment by the new Prime Minister. Given that both Johnson and Hunt have voted for the WA, the new PM would need to signal his conviction and commitment by appointing a Brexit Secretary who refused to vote for the WA on all three occasions. To demonstrate his support for Global Britain, his first trip abroad should be to the US to kick-start the UK-US Free Trade Agreement. There is no need to make another round of humiliating visits to Brussels or to Europe’s capitals – as Theresa May repeatedly did.
This is an extended version of a blog originally posted on Briefings for Brexit
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It’s funny, but every time one mentions ‘Article 24’ publicly – meaning (using the correct Roman numerals) Article XXIV of the General Agreement on Tariffs and Trade (GATT) which predates the World Trade Organisation (WTO) – you receive a barrage of hysterical abuse from Remainers, often with long academic titles. They are clearly terrified we’re on to something.
They say: ‘The EU would never agree to it!’, ‘The EU would not be minded to do a deal if we leave on bad terms!’, ‘You can’t do it in a no-deal situation’ and ‘We’d have to levy tariffs not just on EU goods but all good from around the world’. This last point was made on Radio 4’s Today programme discussion of Article 24 yesterday morning.
But these claims are wrong. We know they are wrong because collectively we have asked the EU: its Chief Negotiator Michel Barnier, its trade advisers and personnel, and people David has worked with for ten years on the International Trade Committee of the European Parliament doing trade deals. And together we’ve asked very senior people at the WTO and top trade lawyers too, such as the impartial Article 24 expert Lorand Bartels of Cambridge University.
Their conclusion: GATT Article 24 is not only doable, it is desirable. Here are a few facts relating to Article 24:
1) Let’s not confuse what ‘deal’ or ‘no deal’ we are talking about: we are not seeking to renegotiate the Withdrawal Agreement or attempt ratification of that deal by 31st October. Angela Merkel and other EU leaders have made it clear that ‘deal’ is not negotiable.
So this is not a deal based on the Withdrawal Agreement under EU law such as the Lisbon Treaty’s Article 50. Nor is it a trade deal conducted under the EU’s ‘Future Relationship’ or ‘Political Declaration’ provisions either with its binding legislation – it is a separate deal done under World Trade Organisation rules.
2) The World Trade Organisation makes trade rules, not the EU. There’s a clue in the title. The EU quite correctly works within the global rules system on trade via the WTO. Most EU free trade agreements incorporate WTO level agreements like GATS – the General Agreement on Trade in Services.
3) GATT was the predecessor to the WTO and Article XXIV/24 is contained within these global GATT rules which all individual WTO members – that includes the UK as an individual full WTO member, every EU member state as individual WTO members and the EU as an entity – agree to implement.
4) The whole point of the WTO is to promote free trade around the world. The WTO does not like tariffs (taxes on goods entering), quotas (a certain quantity of goods entering at a certain tariff) or barriers to trade (e.g. excessive regulation advantaging home producers or in services). So the WTO will not like it if the UK and EU return to imposing £13bn tariffs on EU goods and £5bn on British goods into the EU. It goes against the grain.
5) GATT Article 24 is there to allow two countries or blocs to move towards a free trade area or a customs union. It basically allows the two countries to level lower tariffs and quotas than what is called ‘Most Favoured Nation Rules’ (MFN). Ironically it is the very basis of the EU’s zero tariff Customs Union which took between 1957 and 1968 to actually enact.
By offering one country a better deal than other WTO members you are discriminating – you are offending the rule that everyone must be treated the same – so you must levy the same MFN tariffs to all. This is such an important rule it is actually Article 1 of GATT. But Article 24 is a specific exemption to this.
Free Trade Agreements (FTAs) are really a licensed form of discrimination where you are allowed to offer better terms to one country over all the others but only if you really free up trade – particularly getting rid of at least 90% of tariffs.
6) So given the WTO hates tariffs (it’s not happy with President Trump and others reimposing tariffs but that’s another story), then it is amenable to ways of avoiding tariffs without disadvantaging its other members.
So if the UK and EU go to the WTO jointly and say that we have agreed to move to a full and comprehensive Free Trade Agreement (what we term ‘SuperCanada’ – that is better than the EU-Canada FTA) – that keeps tariffs at zero with no real change to other members, the WTO is happy to allow us a period of time to keep tariffs and quotas at preferential rates. GATT 24 allows what are called ‘standstill’ arrangements – much remains the same and this is essentially a WTO form of a transition – but is not an interim arrangement as is often claimed.
We can keep tariffs at zero for as long as the two partners need to negotiate the full works: that comprehensive FTA. Legally this could be up to ten years, but most are two to three years to negotiate. That is GATT 24.
7) Yes, GATT 24 needs a temporary agreement between the EU and UK, but frankly it could be written on the back of an envelope. Lorand Bartels has helpfully written a one-page FTA properly that is sufficient to allow Article 24 to apply. This is a ‘basic deal’ or a ‘temporary FTA’. But it is entirely manageable and legally sound.
So to our Remainer friends – yes, you need a deal, but one or two pages of FTA is much easier than the 585-page Withdrawal Agreement to agree.
8) So why would the EU agree?
Well, the UK is the fifth largest economy in the world and the EU’s largest single market – bigger than the USA, China and India. The EU has a £96 billion goods deficit with us (we have a £13bn services surplus). Over a million German jobs alone rely on British consumers buying German goods like BMWs. Without a basic GATT 24 deal, the EU would have £13bn tariffs slapped on its goods – 10% on VWs; 12% on wine, 40% on cheese. They would suffer far more than the UK simply because they sell more to us than we do to them. The EU – particularly Germany, which accounts for nearly a quarter of all EU trade to the UK – does not like the idea of this. Better for everyone surely to keep on an even keel?
There is also the question of money. The UK may well be prepared to pay a fair contribution, if not anywhere near the £39 billion associated with the Withdrawal Agreement, but this would be contingent on such a basic deal. It is also much easier to deliver by the end of October.
In the absence of EU agreement to GATT 24, the UK can unilaterally and universally change its import tariffs, and be open to cutting all tariff rate quotas – but obviously the UK would not be able to control EU import tariff rates.
9) What about services and standards?
Services will be a part of the future trade deal but will be along the lines of ‘Mutual Recognition’ of standards or ‘enhanced equivalence’, not on a harmonisation or rule-taking basis.
10) What about all the the other non-trade elements, such as aviation flying rights?
GATT 24 is not the only basic deal needing to be done if there is no Withdrawal Agreement. It will need an accompanying flotilla of what we call ‘mini deals’.
But – good news – the EU has already quietly agreed most of these through emergency legislation. As an MEP, David has voted on 17 main pieces of legislation to keep trucks rolling, planes flying, trains running, goods flowing, fishing boats sailing, visa costs eliminated, energy efficiency maintained, social security cooperation, the Northern Ireland Peace programme running, Erasmus+ for students allowed, and other affairs. The UK just needs to reciprocate.
The reality is that much of the non-controversial elements of the Withdrawal Agreement can be agreed as separate ‘mini deals’ in exactly the same way – for example, the elements on citizens’ rights – but can be done outside the provisions of the European Court of Justice. This is the case with other EU free trade deals including Canada and Switzerland.
11) What about the Northern Ireland border and Good Friday Agreement?
Iain served as a soldier in Northern Ireland and well knows its challenges, whilst David worked on the Peace Process 20 years ago as a Government Special Adviser. There is no mention of the border in the Good Friday Agreement for a start (rather a sensitive subject!).
With Ireland only checking 1% of goods imported now and with existing trusted trader and other current mechanisms available, such as checks in factories and warehouses, even the EU admits alternative arrangements can be done with the border remaining free. No one wants a hard border. But the detail of this can await the negotiation of the bigger free trade agreement – and is part of that.
What GATT Article 24 represents is a Clean Managed Brexit – and what’s more it is deliverable by 31st October.
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If the most recent polling is to be believed, Thursday’s unintended and unwanted European Parliament elections will have been a disaster for the Conservative Party. We may well fail to have a single MEP returned. The Labour vote, too, will have been drastically reduced, as voters abandon the two main parties, principally in favour of one that has existed only for a few weeks.
The reason is obvious. Despite being told it time and again, the UK did not leave the European Union on 29th March. As soon as the Prime Minister opted to extend Article 50 and so necessitate the UK’s participation in these elections, the sense of betrayal – which had been long brewing – overflowed. When Mrs May compounded that sense by opening the door to a second referendum on Tuesday, it erupted. One by one, the 17.4 million people who voted to Leave the European Union had seen each and every promise which had been made to them since the referendum broken.
In 2015, the Conservatives promised that, if elected, we would hold a decisive referendum on the UK’s EU membership. The party was returned to government with more votes and MPs. When the then Foreign Secretary – a certain Philip Hammond – introduced the legislation to the Commons to bring that promise about, he exhorted MPs:
“…to give the British people the final say on our EU membership in an In/Out referendum… The decision about our membership should be taken by the British people, not by Whitehall bureaucrats, certainly not by Brussels Eurocrats; not even by Government Ministers or parliamentarians.”
The Government then spent £9.3 million of taxpayers’ money during the referendum campaign telling every household that: “This is your decision. The Government will implement what you decide.” After the referendum, in which more people voted to Leave than have ever voted for anything in British history, the 2017 Conservative Manifesto pledged that the UK would leave the Single Market, the Customs Union and the jurisdiction of the European Court. Page 36 said that “no deal is better than a bad deal.”
In her fateful “Charing Cross speech” this week, the Prime Minister’s “ten-point” offer starkly laid out the extent to which those promises have been reneged upon. The legally-binding Withdrawal Agreement remains unchanged, as she confirmed to me in the House of Commons this week. That means the Backstop remains, fundamentally altering the constitutional status of Northern Ireland by keeping it permanently locked to EU rules, overseen by the European Court of Justice.
The Prime Minister said that, should the Backstop be triggered, a disparity between Northern Ireland and the rest of the UK would be resolved by having Great Britain follow EU rules as well – simply multiplying the number of people sharing in the misery. In any case, we would remain aligned to EU rules for goods, severely hampering our ability to forge an independent trade policy. It was an interpretation of Taking Back Control warped beyond all recognition.
Mrs May’s decision that she was not now the person to find a new way forward was, of course, the correct one.
But her departure, and with it that of her Withdrawal Agreement, will not be enough on their own. The radical shifts in voting intention – even in long-held party allegiances – in recent weeks demonstrate that there is an accelerating appetite for genuine political change and realignment. If the Conservatives want to survive, we have to change course, deliver a genuine Brexit as we promised and demonstrate that when we make such totemic promises to the electorate, we will keep our word. We will simply not be listened to on any other issue until the UK leaves the EU and we fully take back control.
Immediate action is required on the part of the incoming Prime Minister. Of chief importance will be returning to Brussels to tell them that the current Withdrawal Agreement is dead and then seeking a wide-ranging, zero-tariff, zero-quota Free Trade Agreement, of the kind offered by Donald Tusk in March last year.
That offer initially foundered on the question of the Northern Ireland border. But the work of the European Research Group, built upon by the Alternative Arrangements Working Group alongside senior European customs professionals, has provided robust solutions to guarantee continued seamless trade based upon existing techniques and administrative processes. The Taoiseach, Leo Varadkar, has expressed confidence that arrangements can be implemented to avoid new border checks. Even Michel Barnier has now confirmed that in any scenario the Belfast Agreement will continue to apply and “there will be no hard border” using our alternative arrangements.
There is, therefore, every reason that the UK and the EU ought to be able to come to a mutually-beneficial trading relationship. If, however, the EU refuses, then the next Prime Minister must be prepared to leave without a deal. The extraordinary success of the Brexit Party is testament to the public enthusiasm for this approach. Indeed, a recent ComRes survey found that two thirds of those expressing an opinion agreed that “if Parliament rejects the Withdrawal Agreement, then Parliament has to accept no deal as a consequence”.
There is nothing to fear from this “Plan B” outcome. First of all, the arrangements for the Northern Ireland border were devised without prejudice to the nature of the trading relationship. They are available and can be effective in any event.
Secondly, “no deal” is a misnomer. What we are really talking about is a WTO deal – leaving the EU without a formal Withdrawal Agreement but instead with a series of pragmatic mini-deals.
The WTO approach has often been criticised on the basis that very few countries trade on “purely” WTO rules. It is true that many micro-agreements exist between countries without a formal trade agreement, but it is important to keep these in perspective.
The EU does not, for example, have a trade agreement with the USA, but 147 side-deals are in place. Of these, most are multilateral agreements such as the Air Transport Agreement (to which the UK is also a party) and only 31 of the bilateral agreements have any relevance to trade.
The EU also has 97 micro-agreements in place with Russia, on which it is currently applying economic sanctions. It is surely ridiculous to suppose that the EU would be unwilling to replace many micro-agreements with the UK.
Indeed, as the former Brexit Minister Chris Heaton-Harris confirmed, unilateral and bilateral preparations for “no deal” are “well advanced”. The European Commission similarly confirmed in March that its preparations for “no deal” have been completed.
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. Baroness Sugg, the then Transport Minister, confirmed this reciprocity in March when she told the House of Lords that: “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. The President of the Royal College of Paediatrics and Child Health, Professor Russell Viner, confirmed in a 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 continuing Remain campaign has made particularly alarmist claims of a country completely cut off from the rest of the world, but they are nonsense. The Chairman of the Port of Calais, Jean-Marc Puissesseau, has robustly refuted suggestions of disruptions to freight. Xavier Bertrand, President of the Hauts-de-France region, dismissed the scaremongering completely: “Who could believe such a thing? We have to do everything to guarantee fluidity.”
Sensible measures can be straightforwardly implemented in the best interests of both the UK and the EU, mitigating any potential disruption.
Most significantly of all, it is important to remember than “no deal” need not be an end state. Indeed, even without a Withdrawal Agreement, both sides can agree to a transition period maintaining our current zero-tariff, zero-quota arrangements while a new trade deal is negotiated. Under Article XXIV of the WTO’s General Agreement on Tariffs and Trade, this can be achieved by the UK and EU both agreeing to a Free Trade Agreement and notifying the WTO of a sufficiently detailed plan and schedule for it. As David Campbell-Bannerman has pointed out, such an “interim agreement” need be little more than an agreement to continue talks.
The incoming leader has, therefore, a clear remit on how to proceed. One thing is absolutely certain. There can be no further extensions to Article 50. Failure to meet the 29th March deadline has been near catastrophic for the Conservatives. Any further delay would surely prove fatal.
Any new leader must say, completely unequivocally, that we leave on 31st October at the latest, whether or not we have a new deal. We must seek to negotiate a wide-ranging trade agreement, but we must be prepared, if necessary in the interim, to go to WTO terms. We must also correct a significant mis-step by giving absolute clarity that EU citizens resident in the UK will continue to have the right to live and work here in any event.
The new Prime Minister and the new Cabinet will face a difficult task, but one which can be expressed very simply. If it wants to have any hope of bringing back the members and voters it is currently haemorrhaging, and if it wants to have any credible claim to believe in democracy, it must make good on the promises which the outgoing Government has broken. It must repair the trust which the mistakes of its predecessor have so profoundly eroded.
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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 List is a grassroots organisation of Leave voters which I founded over a year ago, to represent the voice of the electorate. We are not affiliated to any political party or organisation, but are very active as we continue to campaign for the voice of Leave voters to be heard and are advocating leaving the EU under WTO rules.
Members come from different political persuasions but are united in ensuring respect for the democratic result of the 2016 referendum. We firmly believe in leaving the EU in its entirety and also believe that our sovereignty and powers were given away illegally and unconstitutionally.
The List has also found that most of our members extensively researched the issues and knew the applicable treaties, as well as WTO principles, prior to voting in the referendum – and even after all the Project Fear, we still decided to vote Leave.
In view of the current circumstances surrounding Brexit, The List believes that Brexiteers are even more motivated today compared to how they were in the referendum. In March last year, we put together a petition to Theresa May stating the reason why we believed most of the 17.4 million voted Leave, and delivered it direct to her at No. 10 with over 1.2 million signatures.
Now we have decided to write an Open Letter to Parliament which you can view here on our new website. We are asking people to sign the letter online, and to take a copy of it and send in an email to their local MP with a link to the website where they can view people’s comments. This Open Letter demands that we leave the European Union and not be tied to any trade deal. These are two separate issues and should not be combined. By not agreeing to a ‘no deal’ or
trading under WTO rules, those elected MPs are stipulating that they will not support 17.4 million people who voted Leave; the highest vote for anything in British electoral history.
The Open Letter has recently gone live and continues to receive new signatures daily. We are hoping to reach as many of the 17.4 million as possible, and are therefore asking Leave voters and those that voted Remain but support the result, to leave their name on the website and pass the link on.
So what is there to fear from trading under WTO rules, even for an interim period? The answer is, nothing.
The WTO, established in 1995, (preceded by the General Agreement on Tariffs and Trade, established in 1947) is an international organisation aiming to reduce all barriers to trade.
The combined share of international trade of WTO members now exceeds 90% of the global trade. Most countries around the world are members, including the UK and the EU.
In 2016, UK world-wide trade accounted for 52% of goods exported (48% exported to the EU, which continues to decline, and 52% to the rest of the world). As EU members, our trade with various countries outside the EU has been dictated largely by agreements with the EU, and devised to suit them. Under WTO rules, we will be free to make our own trade arrangements with those countries, tailored more to our needs.
The WTO requires member countries to apply tariffs (taxes) on goods and services to other WTO countries equally.
Unlike the EU, the WTO does not tell countries what to do other than to keep their promises. There is no ‘confrontation with WTO officials’ as one Irish Government source reportedly claimed in a newspaper report in respect of arrangements concerning the Irish border. The WTO is a member-driven organisation and there is no WTO rule requiring governments to secure their borders. There are, however, non-discrimination rules, but a ‘waiver’ could be sought for the UK/Ireland border either based on national security, or if the EU are in agreement, the UK and Ireland could act in the interests of the Good Friday Agreement and permit no hard border between the two. These are just some suggestions which Remain-backing MPs seem to refuse to discuss.
Under WTO rules, the UK will not only be able to negotiate our own trade agreements with the world, control our borders and make our own laws, but with no more annual payments to subsidise the EU and our armed forces free of the EU command structures to boot, we will be free to paint our own future on a clean canvas.
If there are problems along the way, then we will deal with them, as we have always done, with a pragmatic and flexible attitude – for you cannot put a price on freedom.
The List believes that we, the electorate who voted Leave, should have our voices heard; about what Brexit means to us and why we voted Leave. We have all heard about “the People’s Vote” so it’s time we were heard, the other side of the story, “the People’s Voice!”
The post There is nothing to fear from leaving the EU and trading with them under WTO rules appeared first on BrexitCentral.
In the aftermath of Parliament’s rejection of the draft Withdrawal Agreement, there is a way forward for the Government which allows a smooth transition into a No Deal scenario after 29th March, if found necessary, and then allows the UK to negotiate its desired comprehensive Free Trade Agreement with the EU without having to impose tariffs or quotas in the interim. There is a mechanism to ‘manage’ a No Deal scenario; one that works within existing WTO rules, and that is not widely known about.
This is essentially an alternate transition or interim period, but within WTO rules without having to levy tariffs or (arguably) pay membership fees to the EU, but requiring some customs forms levied on the 7% of UK businesses (400,000 out of 5.7 million UK private registered businesses) that actually trade with the EU. This is the deal with the EU used by China, the USA, India, Australia and New Zealand for example.
These recommendations are based on my nearly ten years of experience as a member of the European Parliament’s International Trade Committee, working on EU trade deals such as those with Canada, New Zealand, India, South Korea, Japan and Columbia/Peru, and drawing on high level discussions I have had with senior trade representatives for the EU and the World Trade Organisation (WTO).
In the event of No Deal, there is a strong case to maintain preferential tariff and quota rates at zero between the UK and the EU for a limited period – thought to be around two years. There are a number of arguments for exemptions to what are termed ‘Most Favoured Nation’ (MFN) rules, which require the same treatment in terms of tariff rates and treatment between WTO members to avoid discrimination. They are:
1) It is to the advantage of fellow WTO members to minimise disruption between our two large markets, which would reduce knock-on impacts to their imports/exports to the UK or EU markets. WTO members have to show financial harm to justify objections to practices (or tariff schedules). Civitas calculate that £13 billion of tariffs would have to be levied on EU goods entering the UK and £5 billion on UK goods entering the EU Single Market if standard tariffs are levied under No Deal. This is one justification for keeping preferential rates of tariffs for a period whilst a full trade deal is finalised.
2) There are exemptions under National Security grounds such as over the issue of Northern Ireland, which the IEA have argued as a case for an exemption, but this is less appealing given its association with US and Russian cases for exemptions, such as over US tariffs on Chinese steel.
3) Exemptions to ‘Most Favoured Nation’ (MFN) rules under Article 24 of the General Agreement on Tariffs and Trade (GATT) 1947. This appears to be the most substantive argument. WTO rules state that preferential benefits, such as tariffs and quotas for goods which are more favourable than MFN treatment, may only be extended to another country if it is part of a customs union or a free trade area. The ultimate legal authority to grant such preferences is Article 24 of GATT , incorporated into the WTO regime when that body commenced operations in 1995.
Article 24 is helpfully the ultimate basis in international law for the existence of the EU itself as a preferential trading bloc, which grants preferential treatment to its members within the Customs Union.
If the UK accepts Donald Tusk’s offer of a free trade agreement along the lines of CETA+++ or what I propose as ‘SuperCanada’, then the UK and EU will be in the process of moving towards creating a free trade area – Tusk has offered a tariff and quota free deal plus services (whilst leaving the EU Customs Union) – so qualifies under this criterion.
There are two under-appreciated aspects of Article 24 which have direct relevance to our situation, and which provide reassurance.
Firstly, Article 24, para 3 states:
The provisions of this Agreement [i.e. the requirement to extend MFN treatment equally to all] shall not be construed to prevent:
(a) Advantages accorded by any contracting party to adjacent countries in order to facilitate frontier traffic
- This has direct relevance to the position of Northern Ireland, and our adjacent country of Ireland. Some commentators have claimed that a sensitive and appropriate management of trade which respects and upholds both the letter and the spirit of, for example, the Good Friday Agreement would be in some form an unauthorised infringement of MFN treatment. That claim is clearly untrue.
- There is also no obligation under WTO rules to erect a so-called “hard border” on 29th March. Government may continue discussions with our counterparts in Dublin to arrive at adequate and effective technological measures for the management of trade with minimal friction. You will have noticed the encouraging signs that the Irish Government already appreciates this fact. (See, for example, “Ireland has no plans for hard border after Brexit, says Varadkar”, from The Guardian of 21st December 2018)
- We can expect that there will be considerable international sympathy for measures which support the situation in Northern Ireland, and hence a reluctance on the part of third countries to lodge objections. Although given the sensitivities this should not be stressed too heavily, such an exemption falls into ‘National Security’ related actions.
Secondly, Article 24 not only authorises member states to operate lower/zero tariff free trade agreements, it also permits them to offer lower/zero tariffs pre-emptively during the course of negotiations. The relevant provision, Article 24 para 5, is worth quoting at length, with emphasis added to the critical wording:
Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of… a free-trade area or the adoption of an interim agreement necessary for the formation of… a free-trade area; Provided that:…
(b) with respect to a free-trade area, or an interim agreement leading to the formation of a free-trade area, the duties and other regulations of commerce maintained in each of the constituent territories and applicable at the formation of such free–trade area or the adoption of such interim agreement to the trade of contracting parties not included in such area or not parties to such agreement shall not be higher or more restrictive than the corresponding duties and other regulations of commerce existing in the same constituent territories prior to the formation of the free-trade area, or interim agreement as the case may be; and
(c) any interim agreement referred to in subparagraph… (b) shall include a plan and schedule for the formation of such… a free-trade area within a reasonable length of time.
(A WTO declaration, the Understanding on the Interpretation of Article 24, 1994, clarifies that the ‘reasonable period of time’ in para 5(c) will generally taken to be no more than 10 years.) I estimate based on EU trade deals to date, that a UK-EU comprehensive Free Trade Agreement could take around two years, especially given the unique reality that the UK is starting from a convergent position with the EU, with zero tariffs and quotas and with our laws and standards currently harmonised.
- If, before 29 March, the UK has reached an ‘interim agreement’ with the EU to pursue negotiations towards a comprehensive free trade deal, both sides would be permitted under WTO rules to continue with the present zero tariff/zero quota trading arrangements. There would be no disruption to the man or woman on the high street. No Deal would mean No Change, as the cost of goods would not go up.
- In the present situation the ‘interim agreement’ would not have to be an extensive document running to hundreds of pages. The schedule of items covered by the negotiations would be all goods, as already envisaged in our discussions with the EU. The plan which the document sets out would have to amount to little more than a timetable for regular meetings and an ultimate deadline, some years hence, by which point negotiations will have to be concluded.
- An ‘interim agreement’, then, need be little more than an agreement to continue talks – while also continuing zero-tariff and zero-quota trade on both sides – plus a deadline no later than 29th March 2029. I accept that the EU has so far declined to agree any deadlines (other than 29th March) but since the absence of a final cut-off point has been a major contributing reason for Parliament’s rejection of the Draft Withdrawal Agreement, perhaps the EU will now reassess that stance.
- Whilst legal challenges at WTO level might be expected from an unhelpful member, the reality is that any such challenge is unlikely to get to the WTO ‘court’ – its appellate body – for at least two years and possibly longer, and only if that body finds the UK non-compliant would any compensating actions be authorised such as tariffs. This is within WTO rules, and if any challenges arise a fully compliant Free Trade Agreement should already be in place by the time any appellate body were to meet. The EU is now under extreme pressure from EU27 industry and commerce who enjoy a £96 billion surplus with the UK.
- You will recall that the draft Political Declaration indicates the EU want to reach a comprehensive Free Trade Agreement with the UK on the basis of zero tariffs and quotas (see paras 17, page 5, and para 23, page 6) and extending to services (para 29, page 7). Those provisions are fully in line with numerous public statements made since the 2016 referendum by Donald Tusk, President of the European Council, and Michel Barnier, European Chief Negotiator – offering a CETA+++, or what I term a ‘SuperCanada’ trade deal, on 7th March 2018, 30th August and 6th October 2018.
It is significant that Heiko Maas, Foreign Minister of Germany, has already indicated a willingness to continue talks (see “Germany says EU ready to talk if UK rejects Brexit deal” on Reuters, 15th January).
This approach would continue the pre-29th March status quo in trading arrangements and patterns without interruption, justified by an explicit provision of the WTO regime. The possible grounds on which any third country could lodge an objection to this are extremely slight (unlike for schedule changes).
An ‘interim agreement’ would therefore be an important component of a ‘Managed No Deal’ outcome from 29th March. It permits trade between us and the EU to continue without tariffs or quotas under No Deal while creating a space for negotiations to be reset and recommenced on the basis of reaching a SuperCanada or CETA+++ trade treaty.
I urge the Government to now adopt this course of action, as it will mitigate the main impacts of a ‘No Deal’ Brexit and eliminate the task of having to assess and charge tariff rates on 19,753 MFN tariffs under the EU Customs Union, thereby substantially reducing friction at borders.
The post A ‘Managed No Deal’ WTO option using Article 24 of GATT can avoid raising tariffs or quotas appeared first on BrexitCentral.
Pulling the vote on its Withdrawal Agreement at the eleventh hour, the Government acknowledged what we already knew: the Backstop proposal is completely unacceptable and the Agreement stood no chance of winning the support of Parliament.
But rather than simply seeking “reassurances” on this issue – which, though a central objective, is but one of many – the Government needs to consider more boldly the possible alternative arrangements which might command Parliament’s support. The President of the European Council, Donald Tusk, offered just such an alternative in March: a wide-ranging, zero-tariff trade agreement.
That deal foundered on the question of the Northern Ireland border, but existing techniques and processes can resolve this.
This view is endorsed by the professional customs body, CLECAT. They recommend we acknowledge the present state of customs technology, using procedures based on intelligence and risk management available in current EU law. These are currently used to manage the border which already exists – for VAT, tax, currency, excise and security – and can form the foundation for continued seamless trade.
From my October meeting with Michel Barnier and senior officials, I know that a willingness exists on the EU side to explore these possibilities more fully. The meeting also confirmed that Tusk’s offer is still on the table.
Rather than cling hopelessly to the Withdrawal Agreement, the Government must return to that offer. By resolving the border question with existing techniques, we can immediately start negotiating an optimal, wide-ranging Free Trade Agreement. I have already presented the Government with a Trade Facilitation Chapter and new Border Protocol to catalyse this process.
In parallel, we must intensify our preparations for trading on WTO terms. This is no cause for alarm, and those doubting this should look to the UK’s booming exports – up by nearly £100bn since before the referendum. The latest ONS figures put exports to non-EU countries at £342bn, compared to exports to EU countries of £274bn.
Much of that boom is through expansion into new markets. Since 1998, UK goods exports to non-EU countries have grown 16 times faster than its exports to the EU.
Yet scaremongering has clouded our perception of WTO rules. We are told that just-in-time supply chains will be unable to continue across customs borders. But in reality the operation of these chains is as dependent upon non-EU goods as on those from the EU. 21% of UK automotive manufacturers’ bought-in supply chain comes from outside the EU – compared to 36% from the EU and 43% from the UK – yet the customs procedures required for that sizeable proportion do not pose an insurmountable problem.
We are told that even minor customs delays will cause unprecedented queues on the M20 and economic disaster. But Operation Stack – limiting access to the Channel Tunnel and the Port of Dover – was activated for seven months in total between 1998 and 2015, without any of the “catastrophes” now imagined.
Responding to these Project Fear claims, we must always ask: why? Why would a rules-based organisation like the EU suddenly start behaving illegally, to the detriment of its people and in defiance of international agreements? As Xavier Bertrand, President of the Hauts-de-France region, has said in dismissing fears of major disruption between Dover and Calais: “Who could believe such a thing? We have to do everything to guarantee fluidity.”
It is true that the EU has trade deals with around 70 countries, which the UK will have to novate. This process has already begun and no country has signalled an unwillingness to co-operate. But remember that many of these agreements are very small. Switzerland alone accounts for half of UK exports to these 70 countries and it, Norway, Turkey and South Korea account for over 75%. Renegotiating a small number of agreements to cover the vast majority of this trade should not be a prohibitive task.
Though not an optimal arrangement, there is thus nothing to fear from WTO rules. Its 164 members represent 98% of world trade. We must be ready to trade on those terms to smooth the transition and demonstrate that we are serious.
That way, we shall be negotiating a Free Trade Agreement with the EU on sure foundations. Realistically, of course, a full agreement will not be reached by March, but this need not pose a problem. So long as progress has been made towards an agreement by then, the EU and the UK can jointly notify the WTO as soon as possible after our exit date of our intent to negotiate an FTA. Under Article XXIV of the General Agreement on Tariffs and Trade, after notification of a sufficiently detailed FTA with an appropriate plan and schedule, we could maintain zero tariffs and no quantitative restrictions for a “reasonable length of time” (exceeding “10 years only in exceptional cases”) without violating the bar on discriminating against other nations under WTO rules.
So, rather than the Withdrawal Agreement’s choice of a transition period ending in “20XX” or a potentially permanent and definitely intolerable backstop, this proposal would provide stability and clarity for the time-limited negotiating period, delivering a zero-tariff, mutually beneficial trade agreement. That would surely command a majority in Parliament. That is the alternative. That is the way ahead.
This is an extended version of an article originally which appeared in the Daily Telegraph
The current political turmoil and constitutional crisis has so many twists and turns that it makes House of Cards look pedestrian.
Of course the real issue comes down to what happens when – rather than if – the proposed deal is voted down on tomorrow, 11th December (or even dropped).
Here there is a clear gap opening up between media reports and hard legal reality – what the actual effects are of the political manoeuvring of Dominic Grieve, Sir Keir Starmer and their merry conniving bands. There have been desperate media reports that ‘no deal’ is off the table, when it is actually remains the ‘default position’ as Andrea Leadsom told Radio 4 just last week.
Let’s assume Conservative MPs think there is enough turkey on Christmas menus not to be part of the required two-thirds majority needed to vote for a General Election, and that the EU have indeed ruled out any major renegotiation.
The bottom line is that the various options being desperately pushed by those who want ‘anything but a true Brexit’ are just not viable. There is:
- ‘Norway Plus’ – even worse that the slavish EEA, which adds back membership of the customs union, thereby killing all future UK trade deals, and with no control of immigration, no say over EU laws, and large payments;
- A ‘Second Referendum’ – with its totally confused offer: ‘tell us if this final 2,000-page deal is better than staying in the EU when we’ve already left. Oh, and by the way you will have to join the euro and lose the rebate’. Pointless too in that Leave is predicted to win again; or
- Extending Article 50 to allow more muddle time – which will either mess up the EU by landing the Brexit issue right in the middle of European Parliament elections in May or mess up all the groups, chairmanships and procedures of the European Parliament in the farcical situation of British MEPs being elected for a few months.
But all such amendments to the motion are not legally binding anyway – they can only be advisory. They might bring political pressure, but they do not have legal effect. As the Commons Chief Clerk, Sir David Natzler, confirmed: whatever MPs vote on by way of motion “has no statutory significance”, as they do not constitute “a vote on whether to accept or reject no deal.” That requires new legislation. The actual law – in the EU Withdrawal Act – states clearly that we will leave on 29th March 2019.
Given that reality, and bearing in mind how rash it is to try to indicate a way forward in this maelstrom, this is what I propose now as the best next steps:
1) Assuming the vote fails on 11th December, or is put off, I believe the Government should make a statement immediately saying that preparations for a ‘no deal’ option – better called a ‘Clean Global Brexit’ or ‘World Trade Deal’ – will go into SuperDrive. Sorry, but defer Christmas!
Where there’s a will, there’s a way: in the Falklands War, the Ministry of Defence managed to put together a task force of 100 ships in just 48 hours. We can manage this process, and thousands of civil servants have been on the case for years. Like the Millennium Bug, claims of Armageddon and planes falling out the sky gave way to nothing happening on 1st January 2000.
2) The UK should then go back to Brussels, not to renegotiate this current draft Withdrawal Agreement, but to agree a pared-down, bare bones emergency series of bilateral agreements covering only the essential ‘must haves’: aviation, customs, citizens’ rights, medical products, European Investment Bank assets etc. The beauty of this is that if one agreement falls, then the others are not lost. The DUP’s Arlene Foster has proposed bilaterals. These bilaterals could be agreed by Westminster and the EU by March, and would any sane MP or MEP dare to seek to derail any such vital preparation in these circumstances? They should hold all further Westminster business, such as the Immigration and Trade bills, that may be hijacked.
3) The UK should also formally advise the EU that it wishes to accept the offer made not once but three times by the EU: that of a SuperCanada/CETA+++ Free Trade Agreement with 100% tariff- and quota-free access to the EU Single Market plus comprehensive services (first offered by Donald Tusk on 7th March), and which we could start negotiating from the day we become a ‘third country’ – 30th March next year.
We can build on the three pages on trade in the more appealing draft Political Declaration, but drop all notion of a ‘Single Customs Territory’ – the UK must firmly leave the EU’s Customs Union and Single Market. We are in a unique position to negotiate an FTA fast – as all our laws are convergent at present and we don’t have to spend years wrangling over which tariffs to keep or get rid of, as others do.
4) Having initiated moves to agree a SuperCanada FTA, the UK and EU can now jointly notify the World Trade Organisation (WTO) that in the light of working to agree a comprehensive FTA and future Political Declaration, we are invoking Article 24 of GATT (the General Agreement on Tariffs and Trade).
This is important because Article 24 allows us to maintain the same tariff-free access to both our markets without breaching WTO discriminatory Most Favoured Nation (MFN) laws. Article 24 allows “an interim agreement leading to a formation of a free trade area” and allows “a reasonable length of time” – up to 10 years – to negotiate it.
So, we whilst we will need customs declarations under WTO, we will be able to maintain the same zero tariffs as now with the EU – the free trade area will remain. EU exporters to the UK would save £13 billion in tariffs (and our consumers too) and UK exporters £5 billion. We will also be free to lower tariffs for other trading partners as we wish – something specifically excluded in the Backstop. Nor should there be any Non-Tariff Barriers (NTBs) either under WTO agreements.
We can also enact the WTO’s Trade Facilitation Agreement which recently came into force that obliges the EU27 to adopt measures like authorised economic operators (trusted traders), which are part of the solution for the Northern Ireland border issue along with electronic declarations and remote checks away from the border.
5) As a sign of Britain’s free trade intent, we can now immediately initiate full and unfettered negotiations with international trade partners such as the USA, China and India, without these deals being torpedoed by being tied into the EU Customs Union, Chequers or the Backstop. The picture would be clear at last, and not be delayed by unending years of transition. Similarly, we will seek to build on current work to ‘roll over’ the benefits and obligations of existing EU trade deals such as that with South Korea.
6) So, on 30th March the UK can be cleanly out of the European Union and back into the world, with an acceptable and managed World Trade Deal option in place, free of years more wrangling over transitional arrangements, cost demands, alternative models and heightened business uncertainty – and with negotiations underway for a closer SuperCanada trade deal. We can reallocate much of the £39 billion payment lost by the EU to compensate UK-based companies legally in terms of R&D, regional aid and transport infrastructure – helping to stimulate our economy.
Like an operation we know needs doing, let us get on with the surgery quickly and speed up the recovery process.
This is indeed a Clean Global Brexit. Brexit could be over in a few months, rather than drag on for years on end.
And, for all our sakes – both Remainer and Brexiteer – let’s just get it done.
The post How to get Brexit back on track when the Withdrawal Agreement is rejected by MPs appeared first on BrexitCentral.
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