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.
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 wide-ranging Free Trade Agreement with zero tariffs proposed by Donald Tusk in March foundered on the supposed problems of the border between Northern Ireland and the Republic of Ireland. In response, the Prime Minister proposed in her Chequers document to bind the UK to a “common rulebook” – really the EU’s rulebook – for goods in order, she said, to ensure continued frictionless trade between the EU and the UK.
This attracted little political support in the EU because it was seen as “cherry-picking” and even less in the UK for leaving us as permanent, non-voting rule-takers. The proposals were rejected on a technical level by the professional customs body, CLECAT, whose 19,000 members handle 80% of European customs transactions. They found that Chequers “would require five to ten years before it can be applied in practice… new/non-existing systems and procedures will potentially lead to more complications.”
Reports this week suggest that the Prime Minister has now gone even further to secure a deal at any cost. Her new “backstop” proposal is for an open-ended customs union. She has ruled out customs union membership 21 times, so this would represent a humiliating defeat. The UK would have submitted to everything the EU demanded, paying them over £40bn for the pleasure and completely ceding our international trade policy to Brussels in clear breach of the Conservative Party’s manifesto commitments.
How has the Prime Minister got into this mess? Her motivation – a seamless border – is well founded, but her premise is that the only way to guarantee this is by some new, complicated customs arrangement. This is simply not true.
Firstly, only 4.9 per cent of Northern Ireland’s sales are with the Republic of Ireland, representing under 0.2 per cent of UK GDP. We should not, surely, give up our law-making capability over a wide area for the sake of that tiny fraction.
Secondly, there is already a border now – for tax, VAT, currency, excise duty and security – managed by technical and administrative procedures. These existing measures provide the foundation to maintain frictionless trade after Brexit. The Heads of HMRC and the Irish Revenue have confirmed this, saying that any additional requirements can be achieved without any new facilities at the border.
To see why, consider the range of simplifications to customs procedures and administrative obligations available under EU law. These are an ideal fit for much cross-border trade, characterised by regular, repetitive shipments – the same milk, from the same cows, from the same farm, in the same tankers, on the same roads, to the same destination. These obligations typically require only a one-off registration and, for regular trade, negligible costs of repetition. Companies already have to report all cross-border trade for VAT purposes, and the current system provides a framework for streamlining customs controls. Even small traders can – and currently do – take advantage of a voluntary registration to claim back VAT.
The agri-food sector accounts for just under half of all cross-border trade. Inspections can be necessary for these products but can, in practice, take place many miles from the physical border. I saw this myself when I visited Rotterdam, Europe’s largest port, this week. The Border Inspection Point is 40km from the docks and deals with 30,000 shipments annually from all over the world, including from outside the Single Market and Customs Union. There, 97-98 per cent of chilled or frozen meat and fish are cleared without physical inspection. Only 2-3 per cent are physically checked, based on intelligence, and 90 per cent of those shipments are cleared well within an hour.
The simplest way to avoid the need for animal checks between Northern Ireland and the Republic of Ireland is by maintaining an all-island biosecurity zone for disease prevention and public health. I visited the facility where inspections already take place for livestock shipments from Great Britain at the port of Larne. There are clear lessons from Rotterdam as to how such checks can be managed efficiently and how intelligence can minimise the need for lengthy inspections.
The Prime Minister’s convoluted customs proposals are unnecessary. Existing technical and administrative processes can ensure that a frictionless border is maintained after Brexit, not as a temporary, cobbled-together “backstop” but as a durable, long-term arrangement which allows for the wide-ranging, zero-tariff trade agreement which Donald Tusk proposed. That, surely, is the optimal solution for all sides.
The post The Prime Minister must not go for a deal at any cost appeared first on BrexitCentral.
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