The pressing and immediate task of whichever candidate the Conservative Party elects as its new leader and Prime Minister will be to achieve Brexit and deliver the results demanded by the 17.4 million people who voted to Leave the EU in 2016.
That task requires a new start. It should not involve an attempt to renegotiate the Withdrawal Agreement (‘WA’) which resulted from Theresa May’s disastrous negotiations with the EU. Such an attempt would be futile, since the EU has set its face against any ‘reopening’ of the WA. The EU even extracted a formal commitment from Mrs May not to try to reopen the WA as a condition of the European Council decision to grant an extension under Article 50 of the UK’s membership to 31st October 2019.
And negotiating changes to the WA with the EU, and then getting the necessary legislation through Parliament in time to leave the EU on October 31st, would be quite impossible. The 175-clause Implementation Bill (still kept under wraps) is a horror story packed with contentious clauses. It effectively unrepeals the 1972 European Communities Act, and gives supreme status in our own courts to the WA and the EU laws which it would continue to apply to the UK.
The opposition parties and the Tory ultra-Remainers would make havoc opposing or delaying the Bill in the hope of again deferring our exit from the EU. Or, worse, hijacking it by inserting amendments: such as for permanent customs union membership or a second referendum. Even on the optimistic assumption that the changes to the WA were enough to bring on board the DUP and the Tory opponents of the WA, it is hard to see that the Bill would ever get through in unmolested form, let alone by October 31st.
But not having a Withdrawal Agreement under Article 50 does not mean having “no deal” with the EU.
The Withdrawal Agreement – the problem is not just the backstop
The WA (of which the Northern Ireland “backstop” Protocol is ‘an integral part’) is just a draft treaty which has been negotiated but not legally agreed. The WA would become legally binding in international law if it were ratified by the UK and the EU Parliaments. The WA contains a series of remarkable features which are detrimental to the UK and which would make ‘Brexit’ illusory:
(1) It would perpetuate the doctrines of ‘direct effect’ and supremacy of EU law over UK law (including supremacy of new EU laws on which the UK would have no voice or vote). Under these doctrines, UK courts are required to strike down Acts of Parliament if found to be inconsistent with EU law or vaguely drafted treaty provisions. The doctrines apply to the provisions of the WA itself and also would apply to any long term relationship agreement with the EU that would replace it.
(2) The WA would perpetuate the jurisdiction of the European Court of Justice either directly, or via a backdoor mechanism modelled on the EU’s agreement with Ukraine, under which the supposedly neutral arbitral tribunal set up under the WA would be bound on matters of EU law by decisions of the ECJ. Meanwhile the ECJ itself after Brexit would have become an entirely foreign court with no British judge.
(3) The WA has uniquely stringent mechanisms for breaches by the UK, which would make the UK subject to financial penalties or even to discriminatory trade sanctions. Any attempted recourse by the UK to WTO disputes procedures would be prohibited.
(4) The WA requires the UK to use ‘best endeavours in good faith’ to negotiate terms for a long term future agreement in line with the principles set out in the Political Declaration (PD).The absence of an exit clause from the backstop Protocol would trap the future Prime Minister into having to negotiate against the genuine and formidable threat of the UK falling into the backstop if it did not agree to the EU’s terms. The scope for negotiation on any future long term deal is severely reduced by the concessions that have been made by the UK in the terms of the PD.
(5) The WA has no exit clause from the backstop Protocol except with the agreement of the EU, making it unique amongst international treaties.
(6) Even in the wholly unlikely event that the EU were to agree to remove the whole backstop Protocol from the WA, the rest of the WA would still contain serious constraints on the UK and little or nothing of value. For example: (a) Its ‘long tail’ jurisdiction would lead to UK companies being subjected to State Aid or competition proceedings for many years after the UK had left the EU and after the transition period; (b) It contains an obscure clause on ‘geographical indications’ which would severely disrupt future trade negotiations with other countries.
If the WA were to come into force, even if the UK had nominally left the EU, it would still be subject to all EU laws (including new ones), the jurisdiction of the ECJ, the decisions of EU institutions such as the Commission and EU Parliament, and nor would the UK be entitled to submit ‘proposals, initiatives or requests for information to the (EU) institutions’: WA Art 128(5)(b).
Because Article 184 of the WA requires the UK (and EU) to use best endeavours to negotiate a long-term agreement which conforms to the principles set out in the PD, the UK cannot attempt to negotiate for any future agreement that departs from those principles. A failure to agree a long-term relationship in accordance with those principles will mean that the UK is locked into the backstop Protocol terms with no way out and no legal means of complaint. This constraint does not appear to have been appreciated by either Mrs May, her advisors or many of the Conservative Party leadership candidates.
But a Withdrawal Agreement under Article 50 is not necessary to leave, or for a trade deal
There is no requirement that a Withdrawal Agreement has to be concluded in order for a member state to withdraw from the EU under Article 50. Given the position we are in, any attempt to conclude a Withdrawal Agreement should be abandoned. The EU will not agree any changes and the current version will not be agreed by the UK Parliament. Instead, the future Prime Minister should concentrate on addressing the longer term relationship between the UK and the EU.
An exit from the EU without a Withdrawal Agreement under Article 50 does not mean leaving the EU without deals of any kind, unless the EU refused to enter negotiations, despite the UK’s willingness to do so.
In the absence of a trade agreement between the UK and the EU, WTO rules prima facie require that the EU must charge its Common External Tariff (CET) on goods imported from the UK and the UK must charge its standard external tariffs (those charged on imports from the rest of the world) on goods imported from the EU. Contrary to common belief, the UK is not obliged to continue to charge tariffs at EU levels – it will be free to reduce them or remove them on sectors of goods where they are not warranted. The UK Government envisaged doing so pre-29th March 2019.
Further, and contrary to claims made by certain committed Remainers, the Most Favoured Nation (MFN) principle does not require that the UK’s customs border procedures need be identical at its ports and airports and at the UK’s only land border, that between Northern Ireland and the Republic. Nor does the MFN principle or WTO rules require customs rules to be enforced by physical checkpoints on the border.
A Civitas study demonstrates that the total value of tariffs charged on UK goods imported into the EU, and subject to the EU’s CET, would be approximately 4.5% on average. This does not amount to a swingeing increase in the price of UK exported goods to the EU. The tariffs borne by UK exports would be less than half the net contributions that the UK makes to the EU budget each year.
What to propose – bridging arrangements on tariffs
The future Prime Minister should propose the continuation of zero tariffs on goods between the UK and the EU. The mechanism would be a simple temporary Free Trade Agreement, to apply until a fuller long term FTA can be negotiated and ratified. A draft (complying with GATT rules) has already been prepared by Dr Lorand Bartels of Cambridge University. This simple FTA satisfies the requirements of Article XXIV of GATT, and does not need to be satisfy the additional requirements for so-called ‘interim’ agreements under that Article.
Such an offer would be hugely beneficial to the EU, since the tariffs which would be borne by EU exports to the UK are likely to be more than double those on UK exports in the opposition direction. This is because EU goods exports to the UK are £95 billion per annum higher than the UK’s goods exports in the opposite direction, and also because EU goods exports are more highly concentrated in high-tariff sectors such as agriculture, clothing and motor vehicles.
Such a bridging arrangement would be preferable to the elaborate and highly constricting ‘transition period’ envisaged by the WA, under which the UK would be subject to all EU laws (including new laws on which it would have no vote) and could not implement any trade agreements with third countries. By contrast, this bridging arrangement would be compatible with the immediate negotiation and implementation of trade agreements with third countries such as the USA.
As for the suggestion that there would have to be a closed land border in Ireland to deal with tariffs, it must be recalled that both the Channel ports and the Irish land border are already fiscal borders for the imposition of VAT and Excise Duties on goods imported into the UK. VAT is currently satisfactorily collected by businesses filing electronic returns with periodic inspection to ensure compliance. The same process can be applied to any collection of trade tariffs (if there are any).
Overcoming regulatory barriers
As for regulatory barriers post-Brexit, under the terms of the 2018 Withdrawal Act, the UK’s post Brexit regulations relating to goods will be the same as the EU’s, unless and until divergence occurs in particular areas. Moreover, UK law (the 2018 Withdrawal Act) lays down the default rule of continuing to recognise EU goods as conforming to British standards. There will be no legal barrier against the continued importation into the UK of goods made and certified under EU standards and rules. Stories of ‘shortages’ of food and medicine are wrong.
Arrangements on regulatory recognition are normal between trading countries whether or not they are in any preferential trade agreement such as an FTA. Mutual recognition is mandated by the World Trade Organisation’s TBT and SPS agreements. Thus the EU will be under both legal and practical pressure to enter into arrangements to continue to recognise UK goods as conforming with EU standards.
As for services, the UK is a net services exporter. There are no current plans to change the rules and standards of UK-based services providers, so the EU has no rational basis on which to refuse recognition. In the financial sector, EU industries’ access to the City is important, if not vital. Under the Withdrawal Act 2018 the default position is that EU-based service providers would continue to be recognised and able to provide services to UK customers unless and until UK rules are positively changed.
As previously mentioned, a zero-tariff Free Trade Agreement is hugely beneficial to the EU, having regard to the size of the UK’s deficit in goods trade and the way in which EU goods exports to the UK are concentrated in high-tariff sectors. It would be entirely reasonable for the UK to ask in return for interim access for goods and services into the EU market for as long as relevant rules remain aligned.
In conclusion: what we have proposed is a better way forward than the WA from all angles. Nobody can guarantee how the EU will choose to react, but if they have any sense and if these proposals are pushed by a determined UK Prime Minister then they present the best chance of an optimal exit from the EU.
Martin Howe QC is co-author with Sir Richard Aikens PC and Dr T.D. Grant of Avoiding the Trap: How to Move on from the Withdrawal Agreement (published by Briefings for Brexit/Politeia)
The post How the next Prime Minister can move on from Theresa May’s Withdrawal Agreement appeared first on BrexitCentral.
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.
The post The facts about GATT Article 24 – and how it can deliver a Clean Managed Brexit by 31st October appeared first on BrexitCentral.
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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I have never felt so passionate about anything in my life. The way the public have been treated over the whole Brexit shambles is not only humiliating, it’s exasperating and embarrassing. The world is laughing at the ‘Mother of all democracies’.
As a medical doctor, television presenter and passionate campaigner, I’ve spent the last 24 years of my life fighting the system. I’ve been a vocal advocate for minority groups, patients, carers and families, ensuring their voices are heard by those in power who make decisions.
I’ve campaigned vigorously to clean up our filthy hospitals, successfully lobbied to implement new-born screening for the life-threatening condition Cystic Fibrosis, fought to improve care for the elderly in our hospitals and care homes, pushed the Government to role out the PrEP trial to protect high-risk individuals from HIV and worked with school caterers to ensure that every child in a British primary school gets at least one hot meal a day.
These are extremely important and life-changing campaigns.
But the campaign we are now fighting – to ensure the democratic will of the people is respected – is now paramount.
Having spent three years commentating on TV about the way the Government and the Opposition have been handling the Brexit negotiations, I couldn’t sit and watch the wilful fragmentation of democracy any longer.
Campaigning for the Brexit Party in the North West has been exhilarating. I’ve never been so sure that what I am fighting for is right. There is palpable and tangible anger which the Westminster elite have failed to recognise. This anger and frustration unites people across the political spectrum and all social classes.
Rallies in Fylde and Chester were extraordinary. Speaking in front of 2,000 people who are cheering your every word and sentiment is unlike anything I have ever experienced. The messages of support on social media are overwhelming. The common theme amongst them is that people are relieved that they are finally being represented by candidates such as myself wiling to put their heads above the parapet and fight for them against the establishment.
The political class has done everything it can to thwart the will of the people. We’ve heard doom-laden scenarios touching every aspect of our lives.
One of the most outrageous weapons has been the use of false information about the availability of medicines after Brexit. I’ve read time and time again that we will run out of medicines, hospitals will close and lives will be at stake. It is nonsense and it is dangerous. It is causing fear and panic.
Although we will leave the European Medicines Agency, our medicines will continue to be regulated by the Medicines and Healthcare Products Regulatory Agency (MRHA), as they are now. We already conform to European standards and it is the interests of both the EU and the UK that we continue to have regulatory collaboration.
Big Pharma is not confined to Europe. It is global and flexible. Many pharmaceutical companies have footprints in the UK, EU and around the world. Seven of the top global pharmaceutical companies have a manufacturing presence in the UK.
The majority of our medicines are generic and these are made around the world in India, Japan, Switzerland, Israel and the US. India now makes a third of the world’s generics. By 2050 it is thought that India will make half the world’s medicines.
But what about cost? This is not an issue. If we do move to trade with the EU on WTO rules, medicines will continue to be tariff-free, as they are now.
There will also be added incentive for the MRHA and NICE to become more highly aligned and streamlined, so we can make the UK more attractive to the pharmaceutical industry. We can also carve out a global regulatory role with Canada, Australia and the United States.
In summary, patients’ lives are not at risk. This fear-mongering must stop. Fortunately the public are not stupid and can see through it.
As a doctor, I know the most important commodity you can have is trust. The people were asked a binary question. Politicians on all sides said they would respect the will of the people. The public took them at their word. 17.4 million people voted to Leave. They expected us to leave. We haven’t left. The elected representatives have lost the trust of the people. The message is clear, their time is over.
Next week will be a watershed when we vote with passion and history will be made.
It is astonishing yet not surprising that the Prime Minister and others in her party have taken the local election results as a signal to tell MPs that they must now come together and vote through her deal. Do the Prime Minister and her deal promoters think the British people are fools?
How many times have we heard this before from Mrs May? How many times did she tell us we would leave the EU by 29th March? How many times has she promised to ‘break the deadlock’?
To hear her plea for support from the Labour Party which – with the exception of a few – is crammed full of ultra-Remainers and has a leadership that is tilted to the far left is extraordinary and dangerous.
How anyone could countenance such negotiations to further the appalling Withdrawal Agreement is beyond most of us. Someone needs to tell her and her supporters that it is they (not the vote to Leave) who are damaging our country and our people.
The message must be clear and as follows: “Prime Minister, you may have heard what the British people have said, but you have not listened to them. We voted to leave the EU and all its institutions: the Single Market, the Customs Union and the jurisdiction of the European Court of Justice. Your deal is rotten beyond belief, it is a betrayal of the referendum result.”
Despite this sorry saga, the media and some politicians talk of her tenacity and self-belief with a hint of admiration for her ability to resist pressure to resign. How much longer will it be and how much more damage will be done before the people in grey suits wake up to the reality that our PM and deal-backers have lost the plot?
As I said to a senior and highly-respected Conservative Member of Parliament only last week, the Conservative Party risks being obliterated if it maintains its current course.
Its only chance of salvation rests with changing the current leadership and leaving the EU now on WTO rules. To not do this would be the biggest act of self-harm for the Conservative Party in its history – not mention for the future of our country.
The local election debacle confirmed – if we needed any confirmation – that the public’s patience has worn out, to be replaced by frustration and anger at the damaging and embarrassing equivocation, indecision and inertia which has come to characterise Mrs May’s premiership.
She has clearly and quite categorically missed the point of the local election debacle. Does she really think that the ‘takeaway’ message is that we want her to get her deal through or ‘over the line’? Is this more disingenuous political rhetoric and capitulation or is she seriously in denial?
To be clear Mrs May: it is not that we want you to agree your deal or any deal merely for the sake of it, which would be Brexit In Name Only. It is that we are sick of the procrastination and betrayal; we want to leave, leave now, and leave with a clean Brexit, free of the EU and of any of its institutions and damaging directives.
There can be no face-saving departure, no resigning with dignity – as all of us would have much preferred. These opportunities passed many months ago, arguably as far back as the 2017 General Election result.
It’s time for the Conservative Party to face the facts: their leader and her willing crew believe in their deal and themselves so much that they have all gone off the reservation. It is time for them to depart now, before we all go the same way.
The Labour Party has been sidelined in the Brexit process by a Prime Minister who has persistently brought back a betrayal deal which utterly fails the British people and those in Labour who voted Leave at the EU referendum. Theresa May’s deal locks us into an Irish backstop which will break up the Union of the United Kingdom. Labour, as the ‘Party of the people’ must offer a Brexit the people want. We must end talk of a second referendum and deliver a complete and comprehensive exit from the EU. If Labour does not do this, they will risk aliening and betraying all Labour Leave voters.
Second referendum advocates – like Deputy Leader Tom Watson and nearly 90 Labour MPs – do not represent Labour Leave voters. The National Executive Committee’s decision this week “to keep the option of a ‘Confirmatory Vote’” within the manifesto for the European Parliamentary Elections betrays Leave voters within the party. We have already seen advocates of a second referendum such as Chuka Umunna leave the Labour Party because they are unwilling to recognise the result of the EU referendum and deliver on the Labour Party 2017 General Election manifesto. Labour voters do not want a divided party. They want Brexit to be delivered.
The Labour Party has a duty to deliver for the 17.4 million Leave voters and all those who value Britain’s democracy.
The only Brexit which delivers on the result of the referendum is a no-deal, WTO rules Brexit. Theresa May’s Government failed to deliver on her numerous promises to Leave the EU on 29th March 2019, as well as the people’s desire for a no-deal Brexit. Labour must not make the same mistake. They must advocate leaving the EU on WTO terms, without a deal and as soon as possible.
For far too long the Labour Party has fought Conservative governments and the EU over workers’ rights. The EU has upheld workers’ rights but did not improve them to the standard Britain wants or expects. The UK must ‘Take Back Control’ of our own labour laws so we improve workers’ rights beyond what the EU would grant. The EU has kept trade unions passive and not allowed them to protect their workers in the way they deserve. After the last recession, the millions of unemployed in Spain, Greece and elsewhere in the EU received no benefits from their trade union rights. We cannot fall into the same trap. We must break free of the EU and secure proper working rights for British workers.
Labour must advocate a Brexit which gives British business and workers the opportunities for success which EU membership denies us. We must grow our digital economy and ensure our future trade agreements are international. The world does not end at the EU’s borders. We would limit ourselves by remaining in the Customs Union and the Single Market. The growth in international trade will bring business growth, job security and a higher standard of living for British workers. Labour must protect workers by securing their jobs and improving their rights. We cannot achieve this if we are dictated to and shackled to the EU.
The EU is anti-democratic and anti-socialist and goes against the principles of the Labour Party. It takes decisions away from national governments and through the weed-like growth of the euro, it has limited the economic independence of EU members.
The UK has dodged the euro bullet, but has fallen victim to the Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP). The CAP and CFP have restricted British business and damaged the livelihoods of British workers by reducing competition and subsidising Britain’s competitors in the EU. British farmers and fishermen must have unfettered control over their own success in the future, by being able to trade with the rest of the world, on global prices, without EU quotas hampering them.
So, I repeat, the only way Labour can deliver on the result of the referendum and for the millions of Labour Leave voters is to leave the EU without a deal, on WTO terms. This would secure jobs and livelihoods for British workers within an independent economy and with global trading potential. Workers’ rights would be enhanced and guaranteed by British courts, no longer subservient to the European Court of Justice.
It is imperative we Get Britain Out of the EU as soon as possible, so we can look after our workers, build industry and move forward. The Labour Party must present a united front and give the leadership and direction which the UK has lacked for far too long by delivering a no-deal Brexit.
Life is unpredictable. A year ago, with a newborn baby, returning to politics could not have been further from my mind. Even six months ago, I still held hope that Theresa May would deliver her promise of us leaving the European Union on 29th March. She had repeatedly said no deal was better than a bad deal and foolishly I still believed she would act accordingly. One by one the straws fell. Her deal was appalling; we didn’t leave in March; she opened talks with Jeremy Corbyn and considered keeping us in the Customs Union; hundreds of MPs voted to take no deal off the table. This is not Brexit. It is betrayal.
Friends across the country cut up their Conservative membership cards. Labour Party members publicly shredded their local election ballot papers in protest at their own party abandoning them. Graffiti declared: “Don’t Vote – Act”. Democracy was dying and I felt unable to sit by and watch.
Having joined the Conservative Party in 1984, it was a wrench to leave but I could no longer support a party whose leader appeared hellbent on riding roughshod over the largest democratic vote our nation had ever seen. I couldn’t just not support it, I felt compelled to highlight that what it was doing, driven by Mrs May, was destroying it. Many Conservative friends – Leavers and Remainers who believe in democracy – have supported my decision to join the Brexit Party and stand in next month’s European Parliament election. Dozens have pledged to vote for me, despite maintaining their membership in order to have a vote for the next leader.
The extraordinary success of the Brexit Party – for which I will be fighting the East Midlands where I live – is a demonstration of just how much disillusionment in Westminster politics there is. No new party has ever previously topped the polls within a week of launching. As one neighbour said to me: “Thank you for standing here, I voted Leave but I’ve been made politically homeless.”
This is true of Leave voters up and down the country. We were promised our vote would be honoured and it has not been. It has been disregarded by remote, elitist politicians in London who believe they know better than the people who put them there. We, the people of the United Kingdom, everyone who believes in democracy must show them they are wrong. We need to change politics for good through the ballot box.
This is not a time to re-run the arguments about leaving or remaining in the European Union – we did that ad nauseam in 2016 and Leave won. Now is the time to unite behind our historic democracy, that we proudly exported across the world. Whether you supported Leave or Remain is no longer relevant – democracy is. We need to pull together to restore a belief in voting. One man, one woman, one vote: one say in how we are governed. It is not we, the voters, who have broken the pact, it is the politicians in their gilded cage in Westminster, talking in their echo-chamber, dismissing the people who make up the backbone of our country as fools. We are not – but even if we were – democracy demands that they listen to us.
Mrs May’s 2017 manifesto, upon which people voted and returned her to Downing Street, said: “We continue to believe that no deal is better than a bad deal for the UK”. As her deal is terrible, we must just leave. Leaving the EU on WTO rules is not to be feared, it should be embraced. 164 countries are signed up to WTO, accounting for 98% of world trade. Thanks to Most Favoured Nation rules, countries cannot discriminate against us just out of pique. Leaving the protectionist EU bloc would allow us to negotiate and implement free trade deals across the world – with countries which are growing rather than the stagnant and sclerotic EU.
If our parliamentarians don’t come to their senses and deliver the Brexit that they promised, I fear for the future of our democracy. The trust has nearly evaporated, but we can begin to rebuild it if they finally listen. This fight is as much about democracy as it is leaving the EU. We need to change politics for the better before it is too late. Our fight is just as important as the suffragettes and we must vote for the Brexit Party on 23rd May to ensure our country remains a truly Great Britain.
The post If MPs don’t deliver Brexit as promised, I fear for the future of our democracy appeared first on BrexitCentral.
In the below article, Patrick Minford writes in a personal capacity.
In the latest discussions on the Brexit Withdrawal Agreement and Political Declaration (WAPD), two views have emerged about the UK’s future choices. One, which I will call the lawyer view, is that once signed, the WAPD binds the UK indefinitely; this view is held by many of my friends and Brexit allies who are largely lawyers and as such tend to believe that the letter of the law will prevail. The other, which I will call the realist view, is that it can be ‘evolved’, to use a word popular with some politicians, in line with the mutually evolving interests of the two sovereign parties, the EU and the UK. The latter view is the one generally adopted in the economic analysis of international treaties, as the following quotation from a recent paper in a leading economic journal makes very clear.
At the national level, such conflicts [over payment for/usage of public goods] between individual and collective rationality can be resolved by the intervention of the government (Demsetz, 1967). At the international scale, however, there is no supranational authority that could coerce states into adopting efficient policies if they run counter to national interests. Filling the void are international agreements. Under the terms of the Vienna Convention on the Law of Treaties, a state that ratifies a multilateral treaty chooses partially to surrender its sovereignty and to subject its policies in a specific domain to the rules and prescriptions of the treaty. In so doing, sovereign states agree to coordinate their policies in mutually beneficial ways. By the very nature of sovereignty, however, the agreement is fundamentally non-binding and states can always withdraw from it. Therefore, the fact that public good provision is implemented through an international agreement should not change a country’s incentives to contribute per se — unless the treaty alters the country’s incentives to cooperate in other ways. (Wagner, 2016)
The point of economic analysis of treaties therefore is that a sovereign state only continues as a party to any treaty if it remains in its interests to do so. Therefore one must analyse treaty development over time with reference to how these sovereign interests evolve; and how at any time the sovereigns reach an accommodation based on their mutual interests. The basic reason, as explained in the quotation, is that there is no supranational power that enforces treaties in the way that a national state, with a monopoly of force, enforces domestic law.
The realist view is therefore asserting that once the UK is out of the EU, how it deals with the WAPD is a matter of subsequent choice and negotiation with the EU, which also has freedom of the same sort. Anyone supporting the lawyer view must therefore demonstrate that the WAPD remains an agreement that it is in the interests of both sides to maintain in the same form. It is not sufficient to say that because it has been signed it is indefinitely binding; this would only be sufficient if there was a supranational power that could enforce this, and I shall assume it as obvious that indeed there is no such power. In a recent posting on the Lawyers for Britain website my old friend and longtime Brexit ally, Martin Howe, argues that the Treaty of Utrecht binding Spain into Gibraltar’s status illustrates that treaties bind long-term. However, in fact this well illustrates the point about self-interest. Spain, like the UK, has had a strong interest in Gibraltar not accidentally becoming a casus belli, much as the Falklands, with a population similarly determined to remain British, became, at great expense to both the UK and Argentina. Ceaseless ongoing diplomacy on both sides to accommodate mutual complaints has found the Treaty a useful figleaf.
In the rest of this piece I will discuss what the interests of the UK and EU are and how, if at all, they might evolve, and with them the UK/EU future Treaty relationship. This type of analysis is a branch of game theory, which can involve highly complicated mathematics, as in the paper cited, but fortunately not in this case here.
Current UK and EU interests and the Withdrawal Agreement
Based on economic analysis within a rather standard World Trade model and other models described in Should Britain leave the EU? An economic analysis of a troubled relationship by Minford et al (2015) I suggest the following broad interests of the EU and the UK:
The EU: for the EU the status quo is optimal. The UK contributes 10% of the EU budget. Its food and manufacturing industries sell to UK consumers at 20% above world prices because the Customs Union places trade barriers of this tariff-equivalent value against products from the rest of the world. EU regulations prevent UK practices that would reduce UK costs and so undercut EU competition, driving down margins. Unskilled EU workers can be exported to the UK labour market where their wage is supplemented by the UK taxpayer by about 20%.
The UK: for the UK the optimal policy is abolition of protection against the non-EU; this ‘free trade’ policy eliminates the 20% premium paid to EU producers of food and manufactures and it also lowers consumer prices, pushing up productivity via trade competition. At the same time the UK would want to sign a Free Trade Agreement with the EU that keeps the current free access with zero tariffs between them; nevertheless it turns out that any tariffs or equivalent that are imposed will benefit the UK and be paid by EU traders, because UK prices of both imports and exports are set by world prices, so UK tariffs must be absorbed by EU exporters while EU tariffs must similarly be absorbed by EU importers. It follows that although the UK would be willing on the ‘good neighbour’ principle to sign an EU-UK FTA, it would strictly speaking be better off under WTO rules with no deal.
These descriptions of economic interests take no account of current political pressures. A natural question is: given its interests why on earth did the UK Government sign up to the WAPD? This effectively makes the status quo the most achievable agreement, given that the backstop endows the EU with effective veto power over anything it dislikes; under the backstop the UK effectively stays in the EU as now until the EU deems there to be an agreement.
The only way to account for this is in terms of the votes in Parliament. With a part of the Tory party led by Philip Hammond having a Remainer view of UK interests – that is wanting protection for reasons of preserving current jobs (notice not gaining the most jobs in the long term as would occur under free trade etc), following vested interests like the CBI – the Government of Mrs. May seems to have assumed that only the ‘soft Brexit’ WAPD could get through Parliament. Similarly, it assumed that Parliament would not support No Deal, because this too would sacrifice some current jobs to a free trade strategy under WTO rules; as a result the Government did not prepare for No Deal and so lost its only bargaining counter with the EU so that the WAPD failed to favour UK interests. As a result, the WAPD too cannot get through Parliament because the ERG Conservatives and DUP votes oppose it.
Now Mrs May is trying to get Labour votes to push through some even ‘softer’ WA, with a PD promising EU customs union in some shape or form. Hence the EU have not had any difficulty achieving a WAPD that favours its interests, because of parliamentary politics. Add to this that the EU was in any case determined – due to its own politics – to show that exiting countries get a bad deal, to discourage others. It is clear that the politics of the divorce situation was bound to produce a bad deal from the UK viewpoint. One does not need to go further and accuse Mrs May of being a closet Remainer, which she may well be, to account for what has been agreed.
The Economic Analysis puzzle
How those Remainer ideas took hold in the face of strong economic arguments to the opposite effect, as set out above, for the long-run gains of Brexit, is rather baffling. As I explained in a recent paper in World Economy, Remainers and their economist allies (e.g. Breinlich et al, 2016) used ‘gravity theory’ to argue that leaving the EU would be damaging to the UK and that gains from free trade with the rest of the world would be small. However, the ‘gravity models’ they used did not obey the canons of good general equilibrium modelling, in which all causal factors are simultaneously analysed for the effect of a major policy change like Brexit. All the gravity models were ‘partial equilibrium relationships’ in which trade, GDP, FDI and productivity were separately related without any overall inter-linking.
This approach was originally – in 2016 – also adopted by the Treasury; but at the end of 2017 the Treasury for this reason finally abandoned it, in favour of a full general equilibrium model, the GTAP model, bought in from the Purdue University Trade Modelling Project. This was used to reevaluate Brexit in the Cross-Whitehall Civil Service Report of that time. Given the strong Whitehall bias against Brexit the new model was given assumptions that produced similar negative results to the previous ones. These consisted of a) few and limited FTAs with the non-EU world; and b) large border barriers, even with an EU FTA, between the UK and the EU.
However, plausible alternative assumptions reverse the Brexit effect on GDP under a WTO No Deal for example from highly negative (-7%) to firmly positive (+3%).These assumptions are that the UK uses FTAs with the non-EU to eliminate all trade barriers on goods against them while also gaining wide market access; and that it signs an FTA with the EU that prevents any new barriers, or if it goes to WTO rules then only tariffs spring up at the border, other interferences being illegal under WTO obligations.
As this debate has unfolded between our critique and the Treasury, academic economists espousing the previous gravity methods have stayed strangely quiet while the Treasury dropped their methodology. Meanwhile we published another paper in which we tested a full ‘Computable General Equilibrium’ (CGE) model with gravity mechanisms against a plain Classical CGE trade model without them, to see how well each matched the UK trade facts. Using an elaborate and thorough Indirect Inference test we found that the gravity version was strongly rejected while the Classical one fitted the facts. Furthermore when we did the Brexit policies on the Gravity version the effects were much the same as with the Classical, our main tool; this was because Brexit gives gains with the rest of the world while not much disturbing our relations with the EU and so stirring up the negative gravity effects. Therefore it is clear that the anti-Brexit claims based on the gravity approach are invalid.
Unfortunately in the present fevered atmosphere, calm academic debate cannot take place; it is reminiscent of wars of religion where each entrenched side only wants to hear confirmation of its prejudices. One of the side benefits of Brexit occurring is that people may move on to normal technical discussions about optimal UK policies.
The way forward in Parliament
There are now three main parliamentary scenarios. In two of them, one or another WAPD – Mrs May’s or some even softer one agreed with Labour – gets through Parliament. The UK then leaves the EU in these two scenarios, initially for the transition period, as soon as either gets through.
In the third, there is no WAPD agreed and the possibility strengthens of a second referendum with Remain on the ballot paper, leading to either no Brexit or a renewed demand for Brexit. This third scenario is one in which Brexit uncertainty continues for a year or more, with unknown political consequences, given that the Leave voters in the first referendum would feel betrayed. This third scenario will only be welcomed by Remainers determined to reverse the democratic referendum decision. From a Brexit viewpoint, the only hopeful outcome would be a new Conservative leader and government determined to change the WAPD and get it through Parliament before exit. But how could this be achieved without an election to change Parliament’s composition? Also, what would be the odds on the Conservatives winning such an election, given the fury of the populace with the Conservatives for failing to deliver Brexit? Such hopes look forlorn.
Scenarios 1 and 2, if Brexit occurs: What of UK and EU interests post-Brexit?
In this section I ask what, given we have a WAPD as described, opposed widely by Brexiteers, is likely to occur if, as seems probable, Mrs. May steps down and is succeeded by a Brexiteer Conservative leader? Such a leader is likely to agree with my account above of UK interests. If so, what can such a leader do, if saddled with the WAPD?
Under the realist view espoused by economic analysis, this leader’s government moves to re-open bargaining with the EU. This would be done via normal diplomatic processes, in which the EU would face a possible general lack of UK political cooperation in a wide array of areas, including key ones like security and military matters; also the WTO option would be reactivated as a ‘walk away’ trade strategy, should the EU be unwilling to move away from its status quo aims.
The UK having left the EU after resolving basic administrative issues such as citizens’ rights, aviation/transport/visa agreements, there would probably be little appetite to revisit these issues; and the focus should be on the trade relationship quite narrowly. Nevertheless were it to be widened, the new government would make active preparations for a breakdown in these areas.
At the same time the UK would proceed to negotiate FTAs with non-EU countries, informing them of their aims on EU relations. These would be widely welcomed, as we already know.
How would the EU/UK bargaining go from here? We can think of the ‘game’ now as a series of proposals and counter-proposals. Start from the opening WAPD ‘proposal’ for the status quo. This violates UK interests radically, breaching its basic ‘red lines’. The UK counter-proposal is to walk away to WTO rules and No Deal. This UK counter-proposal damages EU interests radically, as we have seen: they face world prices in the UK market and tariffs in both directions are paid by EU traders. In order to counter this the EU now offers an FTA: Canada+ which consists not just of zero barriers on goods (Canada) but also the plus of mutual recognition in services where EU interests are served by free trade, given a wide reliance on UK service industries. The UK wants either Canada or Canada+ more or less indifferently as its service industries are all highly competitive around the world. As noted earlier, while No Deal gives strictly better gains, the UK is likely to agree to this proposal for the sake of neighbourly relations.
The bargaining round, which may well take a few years to play out, is therefore likely to be resolved by Canada+. We can essentially rule out any other resolution because all other alternatives leave one side unacceptably badly off – beyond its red lines – or can be improved on by one side without making the other worse off.
What I mean by ‘unacceptably’ is literally that it will not accept it in the long run, when by walking away or co-operating it can avoid it. The EU can avoid No Deal by co-operating. The UK can avoid the status quo by walking away.
All this is illustrated in the following diagram: the top line shows how the UK ranks all options, with No Deal the best; the second line shows the EU rankings, with the status quo the best. Each side’s red lines of unacceptability are marked out on each side. Any resolution must be inside these. Canada+ within these is better than Canada for the EU and an equals with it for the UK. So Canada+ gets chosen.
Notice that all this diplomacy is carried out between ‘consenting sovereigns’. Neither will bring in outsiders because no outside power has jurisdiction or indeed wants it. In so far as third parties have preferences, they tend to favour the UK as they typically want to agree FTAs with the UK. As for the WTO, it allows states to negotiate FTAs freely; and in general favours all agreements that in net terms reduce trade barriers, just as will occur under the EU-UK renegotiation.
The need for a new Conservative leader and government
In order for this new diplomacy based on the UK’s true economic interests, not sandbagged by Remainers within the tent like Hammond and Co., there plainly needs to be a new Conservative leader and government, fully seized of the Brexit case for free trade and so on. The current leadership/government has proved that it has neither the understanding nor the will to pursue the UK’s true interests. Without it changing no progress along the lines discussed here is possible.
It is now very likely that the Conservative Party will change its leadership, if only for reasons of pure survival. With the agreed extension, the Conservatives face carnage in the local elections and if the European elections take place, annihilation in those. This will inform the party of how unpopular its failure to deliver Brexit has made it. Its best hope then is for Mrs. May to go and for a new leader to chart a new direction, while making it clear that the new government rejects and regrets the old government’s failed Brexit agenda.
What are the implications of the realist view for parliamentary votes?
MPs now have some time for reflection during their Easter recess. They need to ponder the effects of their votes. Any MP that wants to avoid the chance of that third scenario of possibly No Brexit needs to consider voting for one or other WAPD. With either of them, Brexit occurs and the renegotiation can be launched under a new Prime Minister.
An ERG Brexiteer will prefer Mrs May’s original WAPD since it does not contain extra ‘soft’ commitments put in to satisfy Labour. These become yet another element to be renegotiated. In principle that too will be jettisoned; but it adds complication.
A DUP Brexiteer will remain nervous about the backstop in Mrs May’s WAPD; and could be less nervous with a softer one including a customs union because with that the backstop does not come into play. Nevertheless a DUP MP should reflect that none of these will survive renegotiation and should not therefore be unduly concerned. What it really needs from Mrs May and her potential successors is a guarantee that whatever is renegotiated it will never include differential treatment for Northern Ireland, or indeed any other devolved part of the Union. But they should feel confident on this: the Conservatives have been robustly and consistently a unionist party.
It should be noted by both these groups that in opposing any WAPD they are playing the role of ‘useful idiots’ to Remainers who want no Brexit, leading to a second referendum.
When one turns to Labour MPs and Mrs May, both involved in negotiations over a softer WAPD, they should reflect that their new WAPD causes both sides difficulties – Mrs May because it infuriates most Conservatives, Labour because it will infuriate the substantial Labour group that wants a second referendum rather than any sort of Brexit; but at the same time achieves no extra long-term ‘softness’ in the outcome, as the added-on soft elements will simply be the first to go in the inevitable renegotiation.
Reflection on all sides should therefore have the effect of terminating the May-Labour negotiation while logically inducing ERG and DUP Brexiteers to push the May WAPD over the line.
The realist view of post-Brexit affairs clearly implies that the UK, once it is out of the EU will behave like any other sovereign power and see that its foreign relationships evolve to suit its interests. So far, these have been stitched up in talks with the EU due to a Remainer group of Tories who have opposed the Government’s Brexit policies in favour of industrial vested interests, in alliance with Labour opponents, and undermined its bargaining position vis-à-vis the EU which was in any case politically determined not to agree a good trade deal. No sovereign state could put up with this sort of stitch-up in the long term. This piece has described how a new government, fully seized of the UK interest in free trade and domestically set regulation, besides control of borders and the ending of budget transfers to the EU, will have both the incentive and the scope to achieve a logical renegotiation that reaches an EU agreement tolerable to both sides.
Under this view the key aim for Brexiteers should be to get the WAPD in some form – it does not much matter what form – over the line, so that Brexit definitely happens as demanded in the referendum. Policy in the future will then evolve to meet UK interests.
I have been a lifelong supporter of the Labour Party (like my coal-mining father before me) and a Labour member for many years; I served as a Councillor for 18 years and stood as Labour parliamentary candidate against Theresa May in 2005. But I am now in the unenviable position of having written out my resignation letter from the party with a very heavy heart.
Labour – and in particular Jeremy Corbyn (who had always been a eurosceptic) – are not being honest with the British people by only looking after their own careers rather than the good of the country. I am finding this totally unacceptable and cannot continue to support an organisation that is prepared to sell its own country down the river merely in the pursuit of power. The number of Labour supporters who voted Leave who are being let down by their self-centred, arrogant and undemocratic MPs is nothing but a disgrace.
I have in the past lived and worked in southern Germany for an American international bank and loved the whole experience. However, I love Britain more and recognise that Brexit is best for the UK, albeit if not for the European Union.
Business is growing faster outside the EU than inside it. We sell approximately 43% of our exports to Europe, a proportion which has been reducing year on year. Our biggest market is outside Europe. However, as far as Germany is concerned, we are their biggest customer, even bigger than America. The majority of EU states countries export more to us than we do to them.
There are lots of other facts and figures I could quote to you, but they all add up to one thing: the EU needs us more than we need it.
So of course the EU wants us to accept the proposal currently on the table: it was provided by a group of Remainers, from Prime Minister to her civil service advisers, with input from big businesses which have their own vested interests.
I have set up and run an international company in the semiconductor industry, with suppliers from Silicon Valley in the USA and customers across the UK, Europe and parts of Asia. Of course, Brexit means there may be some disruption and extra paperwork for business, but how does that compare to having freedom and control over our own destiny and the expansion that Brexit will bring to the UK?
I find it an embarrassment, when most of the rest of the world can see the obvious benefits of Brexit, that so many of our own Members of Parliamentary cannot. They would rather promote a climate of fear and put the the interests of the EU before those of our own great country.
I would never ever go into any negotiations without the option of pulling out; so why are so many of our politicians set on giving the EU total control over us?
This is a very sad and depressing state in which we find ourselves.
It’s time to stop being so scared. Europe’s leaders have made no secret of their intentions: President Macron has gone on record to say the EU needs to work towards a European army and to fully integrate the euro. He also said that, if France were given a referendum, he was sure his people would vote to leave the EU – but he is a devotee of the EU so won’t be offering them a vote.
All I am hearing from Remainers is fear: fear of what may or may not happen, fear of any change, fear of stepping outside our own door. I wonder how the rest of the world manage to survive using World Trading Organisation rules?
I love Europe, but I love Britain more. We can still leave on 29th March without an agreement. Let’s use the £39 billion instead to support our own businesses, not Europe’s. To use a 1960s slogan, I’m backing Britain.
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