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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In April, Prosperity UK, the politically-independent not-for-profit organisation, launched its Alternative Arrangement Commission, co-chaired by Nicky Morgan and Greg Hands. The cross-party Commission will seek to explore practical and detailed Alternative Arrangements relating to the Irish border, deliverable in a timely fashion and ultimately clear a path for the UK to leave the EU. The work builds on the Brady Amendment which commanded majority support in Parliament as it proposed to replace the Northern Ireland backstop with Alternative Arrangements.
I am pleased to be one of the Commissioners, taking evidence from border and trade experts. Last week, we heard from members of the Technical Panel: Frank Dunsmuir, a logistics and licensing expert; Lars Karlsson, one of the best-known customs leaders in the world and former Director of the World Customs Organisation; Hans Maessen, a customs and business advisor; and Shanker Singham, a leading trade and competition lawyer.
Whilst I was a Minister at the Department for Exiting the EU, I visited several of our ports and borders to see first-hand the challenges – and opportunities – presented by Brexit. Whilst, of course, Brexit will involve change at some level at many of our borders and ports, there is every reason to see how new systems can be implemented in a way so as to minimise friction. And this is the case at the Irish border.
No one wants a “hard” border – and rightly so. No-one on either side of the debate wants to violate the Belfast Agreement or upset the lives of those living near the border. Nobody is seeking to create a climate for violence. That is why the UK has guaranteed that it will not introduce border posts and checks, HMRC has said that it will not need physical infrastructure at the border “in any circumstances” and the Head of the Irish Revenue has said that he is “practically 100% certain” that there will be no need for new customs facilities along the border.
Much of the evidence has been well-documented already and it is clear that existing technology and administrative procedures can enable any customs formalities to be carried out electronically and physical checks to be carried out away from the border. There is, of course, presently a border between the two countries for tax, VAT, currency, excise and security; these are managed using technologies without infrastructure at the physical border.
Administrative procedures and existing technology will enable customs formalities to be carried out electronically and any physical checks (of which few would be needed) can be carried out elsewhere.
So far the Commission has taken a wide variety of new evidence. I was encouraged to hear how countries like Brazil, Australia and Dubai are using away-from-the-border arrangements such as sophisticated Authorised Economic Operator schemes. The UK already has AEO in place but with a very low take-up by businesses and traders. By incorporating a multi-tier Trusted Trader system with incentives and benefits for different types and size of business, both friction can be eliminated at the border and intelligence on contraband goods can be enhanced. Inland declarations can be made so that checks at the border are avoided.
With regards to sanitary and phytosanitary matters (SPS), whilst the Union Customs Code states that goods must be cleared at a border, there exist several precedents where away-from-the-border exceptions have been made to facilitate trade such as San Marino and Andorra (which are microstates outside of the EU, land-locked by EU Member States and enjoying special exemptions when it comes to EU customs rules).
Given that 4.9% of Northern Ireland sales are with the Republic (accounting for less than 0.2% of UK GDP) compared to 20.3% with Great Britain, we need to also keep this issue in perspective. The vast majority of sales is internal to Northern Ireland and, when combined with sales to Great Britain, Northern Ireland sales within the United Kingdom make up 85.3% of its economy.
Prosperity UK’s work on this matter will be invaluable in identifying solutions and I hope that the next Prime Minister will consider its conclusions seriously.
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It is now clear that there is very little support in Parliament for the Prime Minister’s Withdrawal Agreement. The most important objection is the so-called Irish backstop in Protocol 9 which essentially keeps Northern Ireland in the EU indefinitely and binds the UK into a customs union from which there is no release unless the EU says so – which it would have little incentive to do. Even under our present terms, we can leave if we choose.
Other options such as another referendum, or some version of “Norway” are for various reasons unworkable. It is equally clear that neither side wants a “no deal” scenario. However, if a solution could be found that preserves the transition period and most of the Withdrawal Agreement, it must be considered, for the sake of continuity, good relations with the EU and the island of Ireland.
This week, I – along with Robert MacLean and Hans Maessen – have laid before policy-makers an alternative that we believe would remove those aspects of the Withdrawal Agreement which are unacceptable, and yet retain the genuine progress achieved to date. This is not to say that there is nothing else in the Withdrawal Agreement which is objectionable, including its one-sided structure. However, in the spirit of compromise, we do not pursue those matters, but offer a solution to the heart of the problem. This, we believe, solves the Irish border issue on a permanent basis, enables a backstop to exist on a basis acceptable to all reasonable stakeholders and builds on the EU’s offer to the UK of an advanced Free Trade Agreement with regulatory cooperation, customs facilitations and Irish border facilitations. This is part of a bigger project to propose the real legal text of a Free Trade Agreement between the UK and EU.
First, the proposed backstop needs to be replaced, with an alternative based on a basic Free Trade Agreement in goods and agri-food, with a chapter on Customs and Trade Facilitation, and Irish Border Facilitations, which would in due course become part of the ultimate comprehensive Free Trade Agreement which the UK and EU will seek to negotiate, with some additional provisions for regulatory cooperation, and stand-alone dispute settlement mechanisms. Our proposed backstop could last for a fixed period, say ten years – on any view long enough for a comprehensive Free Trade Agreement to be negotiated between the UK and EU. In other words, our backstop can function as a front-stop, should the need arise, unlike the EU’s, which gives them no incentive to release the UK from de facto EU control. Since the backstop is the ultimate permanent arrangement, there is no loss of negotiating leverage for the UK to remain in it, nor is it a threat.
Contrary to what the Government has claimed, this does not involve the use of “magical” new technology but existing customs facilitation procedures already in use across the world. It avoids a hard border – which in any event all sides have pledged to do – respects the Good Friday Agreement and removes the challenge to the territorial integrity of the UK posed by the creation of “UKNI” in the existing Withdrawal Agreement, aptly described as “a new country”. From the EU point of view, it enables a smooth UK withdrawal and avoids an attempt to exercise jurisdiction in the territory of a non-Member State.
We also believe that, if the current flawed and legalistic process is allowed to hit the buffers, there is an opening for a more political solution driven by European heads of state, since neither side wants a no-deal outcome. Naturally, the UK Government must prepare for no deal, since there is always the possibility of no deal, through no fault of the UK. The UK Parliament cannot control the actions of the EU and therefore for the UK Parliament to decree that there shall be no deal is pointless; it is also extremely damaging, as it tells the EU that the UK will accept any deal. We must become serious negotiators and understand that being prepared for no deal is a way of ensuring a better deal for both the UK and the EU.
We must also be prepared to push back against the fear and risk-aversion, and ask for what we want, presenting a draft Withdrawal Agreement to back it up. We have done altogether too much negotiating with ourselves.
From an EU point of view, any failure by the EU to reach a deal acceptable to its nearest neighbour, closest ally and largest third-country market will have enormously adverse political and economic consequences, within the EU and around the world. There are significant and powerful economic forces at play, and not all are in the EU’s favour. For example, one aspect of the EU’s very large favourable balance of trade with the UK – now seriously at risk – is the EU’s need to maintain its high market share in UK markets for its agricultural exports. The farm lobby is the most powerful in Brussels, and in Member States. The EU must know that no responsible UK government could, or would need to, allow no deal to mean food price inflation, and that we would have to either apply a third-country tariff of zero for certain agri-foods, or open the relevant trade quotas to other countries (on a first come, first served basis). Irish beef farmers, French beef and dairy, and Bavarian dairy farmers would lose market share almost instantly and this will have a massive impact on them. For the UK, lower food prices could well be the unexpected bonus of the rejection of the present Withdrawal Agreement.
While there will no doubt be those who say that what we are offering is not enough to save a very bad deal, there will also be those who say it is too much for the EU to accept. But our aims are straightforward: to put on the table the necessary changes to the Withdrawal Agreement, a concrete future framework for a trade agreement that builds on their offer to us and, shortly, the full text of such an agreement, specifically noting what the EU has already agreed in other contexts. Let us lift our eyes to a higher vision of what this relationship should look like, instead of the myopic approach all sides have adopted thus far. Let us also recognise that it is impossible to determine the full conditions of our withdrawal, without knowing much more about the future relationship. Indeed, that is the inherent illogic of the EU’s negotiating mandate, which is partly responsible for the current predicament, but that cannot politically bind us at this late stage.
Nonetheless, we have produced a concept of what the Alternative to the Withdrawal Agreement might look like. We strongly advise the Government to present this to the EU immediately, along with a clear framework of a Trade Agreement, the full legal text of which we will also shortly table. Since this builds on what has already been offered, there is very little reason for the EU to reject it. We badly need to show our peoples on both sides of the Channel and the Irish Sea that we have momentum and are moving towards a good resolution. We have a huge responsibility: future generations will not forgive us if we fail them.
As explained, the text we will shortly circulate essentially replaces the proposed common customs territory with a Free Trade Agreement and comprehensive customs and trade arrangements that can serve as the backstop, or if you prefer, front stop, in Ireland. Some changes may be necessary to the Political Declaration, in order to conform to our changes to the Withdrawal Agreement, but most of it can stand, as can much of the Withdrawal Agreement, for example citizens’ rights and financial matters, subject to the money being based on benchmarks and milestones related to progress on the free trade agreement. Some issues, such as Geographical Indications, belong in the future trading arrangements, rather than the Withdrawal Agreement. The UK must also be able to negotiate its WTO modification by itself without having to consult with the EU, and then be free to operate in the WTO as an independent player. We have also turned the non-regression clauses into the sorts of mutual disciplines you would see in a typical Free Trade Agreement and ensured that they are mutual. We have provided that the transition period may be extended by agreement but there is no need to provide for extension now. Deadlines in trade negotiations are important, and concentrate negotiators’ minds. We see no reason to prolong business uncertainty for years.
The changes we have outlined allow a deal to the benefit of all European citizens to be reached before 29th March 2019.
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It is often claimed that a no-deal Brexit would cause chaos at UK ports, with long delays at critical bottlenecks such as Dover and motorways turned into vast lorry parks. Indeed, we are told that any weakening of our ties with the EU would inevitably disrupt supplies of time-sensitive goods, such as fresh foods and medicines, and cripple businesses that rely on complicated cross-border supply chains. Fortunately, all these warnings have more than a dash of ‘Project Fear’.
Let’s start, though, with the element of truth. There are some potentially valid concerns about the non-tariff barriers (NTBs) that would be erected if the UK exits in March 2019 without a deal. These include logistical barriers, such as delays caused by physical customs and regulatory checks, and additional administrative hurdles, including the need to comply with ‘rules of origin’ and new licensing requirements for vehicles and drivers.
Most attention has focused on Dover, which handles 17% of all UK trade in goods worldwide. According to evidence compiled by the House of Commons library, Dover processes up to 10,000 incoming and outgoing freight vehicles a day. Currently, 99% of these originate in the EU and are processed in around two minutes, but checks on non-EU trucks typically take 20 minutes. The UK Freight Transport Association has estimated that an additional two-minute delay, on average, could cause a 17-mile queue on both sides of the Channel.
These risks obviously need to be taken seriously. Indeed, the Government is already beefing up contingency plans to keep the M20 flowing in the event of any future problems at Dover, and recommending that suppliers add to precautionary stocks of critical goods, including medicines. Car makers have also suggested that they might reschedule planned maintenance shutdowns to coincide with the period of maximum risk.
Nonetheless, fears that ‘no deal’ would result in substantial disruption at ports (or Eurotunnel) are exaggerated. The key point is that they assume a significant proportion of lorries crossing the Channel would be subject straightaway to the same checks as those from non-EU countries. This is very unlikely, for three reasons.
The first is legal. It has been argued (notably by Economists for Free Trade) that new UK-EU NTBs would be unnecessary, and even illegal under WTO rules, given that exports from both sides will still be made to the same standards immediately after the UK’s departure from the EU. Others have countered that some additional checks would still be required, or else the parties would be in breach of the WTO’s Most Favoured Nation principle. But there is at least broad agreement that checks could be limited. There is certainly no legal requirement to inspect every vehicle, or to carry out every check at the border itself. It is also not as if there are currently no checks at all.
The second is economic. Even French officials have stressed that it would be in their country’s own economic interests to minimise any additional delays. In particular, they have dismissed fears of a Calais ‘go-slow‘ and suggested that as few as 1% of UK lorries would be subject to a physical check (my own crude calculation is that an additional two-minute delay, on average, would require at least 10% of UK lorries to be subject to a 20-minute check).
The third reason is practical, and may well be decisive. Put simply, neither the UK nor the EU has the physical infrastructure, or enough officials, to check every vehicle anyway, or even a significant proportion. In this respect at least, the lack of preparedness could actually be a blessing in disguise.
A more pragmatic approach could also help solve other problems. For example, in the absence of any alternative arrangements, UK haulage companies would no longer be able to operate in EU countries under existing EU rules. This is much the same as the problem facing the aviation industry: if no mitigating action is taken, ‘lorries cannot be driven’, in the same way that ‘planes won’t fly’.
However, the EU has already made a reciprocal offer to the UK in respect of air traffic rights and the validity of aviation safety certificates in the event of ‘no deal’. The EU has continued to take a tough line on road transport, but an important precedent has been set. A similar solution could presumably be found if existing rules on road transport would significantly disrupt trade from which both parties derive large economic benefits.
What’s more, any initial disruption should be short-lived. For example, border delays could be reduced in future by the sort of ‘maximum facilitation’ (MaxFac) proposals that many have already suggested as a means of reducing the costs of customs clearance. The recent parliamentary testimony from customs experts Hans Maessen and Lars Karlsson should be required reading here (and for those who still believe membership of a customs union is the only way to avoid a hard border in Ireland).
Crucially, too, any problems created by a ‘no deal’ in March 2019 do not have to be permanent. Leaving on WTO terms could simply be an alternative stepping stone to a comprehensive free trade agreement that would keep any additional frictions to a minimum, rather than the standstill ‘transition period’ and Irish backstop proposed in the current Withdrawal Agreement.
Of course, I’m not suggesting we should dismiss the concerns of UK businesses entirely. Leaving the EU in March without a deal would clearly create a lot of challenges. But there are also many good reasons why even the initial disruption at ports should be much less than feared.
It seems fair to say that the draft withdrawal agreement agreed between negotiators and published this week has not been universally welcomed. In particular the Protocol on Ireland/Northern Ireland has been the source of much criticism. In a detailed briefing by the Institute of Economic Affairs, I described how, if it were to come into effect, this Protocol would effectively rule out an independent trade policy for the UK, and would throw up serious trade barriers between Great Britain and Northern Ireland.
It’s worth reminding ourselves of why this Protocol was thought to be necessary. Our government agreed in December last year to guarantee that there would be no physical infrastructure or related checks and controls at the border between Ireland and Northern Ireland. In order to achieve this they conceded that, unless they could put forward alternative solutions, Northern Ireland would stay in alignment with the rules of the customs union and single market in all areas necessary for north south cooperation, the all-island economy and protection of the Belfast (“Good Friday”) Agreement. It was also stated in the Joint Report that the UK would not allow new regulatory barriers between Great Britain and the United Kingdom. The EU’s interpretation of that was a draft agreement under which, “unless and until” other terms were agreed that would meet the objectives for the Irish border, Northern Ireland would remain in a customs union and regulatory area with the EU. This is what the backstop is.
The facilitated customs arrangement and common rulebook of the Chequers plan were an attempt to provide the alternative arrangement that would mean the backstop would never be activated. When Chequers was roundly rejected by the EU, and the Prime Minister declared after the Salzburg summit that no prime minister could accept the EU’s terms, the negotiators went back into their tunnel and reformulated the backstop so that Northern Ireland and the rest of the UK would be in the same customs territory, and Northern Ireland would retain EU regulations on goods “unless and until” a new agreement could be reached. Mrs May is now satisfied that this is something that a British prime minister can sign up to.
Some of us have long been convinced that keeping the Irish border free of infrastructure could be achieved by way of legal, technical and technological solutions. European customs experts Hans Maessen and Lars Karlsson have confirmed to the Northern Ireland Affairs Committee that this can be done. But the EU negotiators and the Irish government have been adamant that the requirements of EU law mean that only a customs union and regulatory harmonisation on goods can achieve this, as even with a free trade agreement with zero tariffs and quotas, the risk of goods that have not been duly declared for customs purposes or that do not meet EU regulations might cross the border cannot be tolerated. Except, it now transpires, for fish. Because under article 6 of the Protocol, fisheries and aquaculture products will be excluded from the customs union arrangements (and therefore fish caught by British and Northern Irish boats would be subject to tariffs) unless an agreement between the UK and the EU on access to waters and fishing opportunities is reached. But by the EU’s own reasoning, the exclusion of even one product would require a full customs border, to ensure that that product isn’t smuggled in undeclared. Now Irish government and EU negotiators could be forgiven for assuming that the British negotiators will concede on this as they have on almost everything else, and sign away fishing rights to the EU. But they might not, and then we would need a hard border wouldn’t we, and the Protocol would be for nothing? Or could it be, that for fish, as for everything else, it is possible to manage a customs border without physical interventions, and the EU is prepared to take the risk of having to do so in order to leverage access to UK territorial waters.
It is often overlooked that as well as being by far the biggest market for goods sent outside Northern Ireland 64% of goods brought into Northern Ireland come from Great Britain, with 12% from Ireland and 59% of its external sales are to Great Britain, as against 12% to Ireland. In seeking to preserve frictionless trade with Ireland, the Protocol, if it were to come into effect, would introduce costs and formalities for the vastly more significant trade within the UK. As former Brexit minister Suella Braverman noted in her resignation letter, customs professionals are clear that this could have been avoided. It’s time to start listening to them.
The post The Irish protocol in the withdrawal agreement rules out an independent trade policy appeared first on BrexitCentral.
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