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.
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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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The Prime Minister claims it is the ‘patriotic’ duty of MPs to vote for her non-Brexit deal. Nothing could be further from the truth.
New ComRes polling commissioned by Leave Means Leave shows that by far the public think a WTO Brexit, not the Prime Minister’s deal, honours the 2016 referendum. Just 14% of the public think May’s deal delivers Brexit, compared to 54% of voters who think it doesn’t (including 62% of Leave voters).
MPs are elected to carry out the will of the people – that is the most patriotic duty our parliamentarians hold.
Theresa May’s own 2017 manifesto said “No Deal is better than a bad deal”, and by now it is clear not only in MPs’ eyes but in the British public’s eyes that this is a bad deal. A senior No. 10 source dismissed this mantra when I put it to them last week, but if Downing Street were serious about delivering Brexit they would take Britain out of the EU on 29th March on WTO rules.
Our polling clearly shows that Conservative voters also back No Deal, with 66% saying they agreed with the statement ‘In order to get the best deal with the EU, ‘no-deal’ must be put back on the negotiation table’.
The most shocking figure from our polling is that 56% of Conservative voters agree with the statement ‘The Government seems to be in favour of remaining in the EU and has set out to thwart Brexit from the beginning’.
Any future Conservative leader may want think about this very carefully.
The truth is that those 56% of Tory voters have a point. The Government’s constant backtracking and blurring of red lines has created an atmosphere where trust has broken down.
That’s a major reason why the Prime Minister will struggle to get her deal through, because by trying to play off each side she has destroyed her own credibility. This is getting through to the public too.
When asked whether they agree with the statement ‘MPs voting to delay Brexit has pushed my faith in politicians to an all time low’, 54% of the public said yes, whereas just 24% disagreed.
This lack of trust in our political leaders, and our supposed representatives in Parliament, drips poison into the public psyche. The mood among Brexiteers since 2016 has been spiralling downwards as the Prime Minister continues to humiliate herself and her country on the world stage.
But it’s not just Theresa May causing the public to lose faith, it is the anti-democratic MPs who are using every trick in the book to frustrate Brexit. 2016 was the first time the people won against the establishment, and now after years of infighting and manoeuvring the elites are beginning to hold the upper hand. Whether that’s John Bercow giving direct advice to Remain-backing politicians on how to take over control of Parliament or Tony Blair advising the EU to frustrate Brexit, the Westminster elite are in full force in trying to betray Brexit.
The only way out of this is to leave on 29th March.
John Bercow blocking another meaningful vote means it is now Theresa May’s duty to go for a World Trade Brexit, which is the most popular option for Brexit voters and Conservatives.
It is time for Theresa May to fulfill her patriotic and solemn duty to take Britain out of the EU on 29th March – otherwise public trust in her party and the political system will continue to collapse.
ComRes surveyed 2,033 British adults online between 15th and 17th March 2019. Data were weighted to be demographically representative of all GB adults. Voting intention questions were also weighted by past vote recall and likelihood to vote and all other questions also weighted by 2016 EU Referendum results.
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As Attorney General Geoffrey Cox’s attempts to procure a legally-binding change to the backstop appear to have proven futile, the last hope for Theresa May’s deal is slipping away. Reportedly, the Cabinet already anticipates another crushing Commons defeat when the vote is held tomorrow.
As with the earlier vote in January, the Prime Minister will be outflanked on both sides. Firstly, by Remainers of all stripes who seek to press home the huge advantage May ceded to them: following the rejection of her deal, in two subsequent votes, these MPs will be able to rule out a No Deal with World Trade Organisation rules, and then seek an extension to Article 50 in the hope of bringing about a second referendum.
On the other hand, the eurosceptic Conservatives of the European Research Group, led by Jacob-Rees Mogg, have made it abundantly clear they will not vote for the Withdrawal Agreement without real movement on the backstop. In line with their ‘three tests’, the ERG rightly demands a temporary arrangement from which Britain could unilaterally exit, replacing the potentially indefinite one which would turn Britain into a vassal state. Geoffrey Cox, however, is getting nowhere fast; and for the second time, May’s deal seems doomed.
In terms of leverage over her divided party, May can no longer use the threat of No Deal to bring Tory Remainers round to her deal, after sanctioning the 13th March vote – however hard she tries. Clearly, the Government still thinks it can use the opposite threat of ‘No Brexit’, or ‘No real Brexit’, to whip the troublesome eurosceptics into line. Accordingly, the Prime Minister used her speech in Grimsby on Friday to frame her deal as the last chance for the ERG – and Brexiteers – to get something resembling what they want.
Another key player, Philip Hammond – the anti-Brexit Chancellor, as Get Britain Out has previously written about here – could hardly have been clearer about this when he warned last week:
“For those people who are passionate about ensuring that we leave the European Union on time, [the prospect of a vote to delay Brexit] surely must be something that they need to think very, very carefully about now because they run the risk of us moving away from their preferred course of action if we don’t get this deal through.”
Rightly however, the ERG are showing resolve in the face of this tactical threat. Jacob Rees-Mogg argued last week that even if her deal is rejected and MPs vote for an extension to Article 50, these votes are not legally binding. It still remains in the power of the Government to deliver Brexit on time given ‘votes in the House of Commons cannot override the law’. May could choose not to request the extension from the European Union. It is therefore possible to oppose both the current deal and the efforts to delay the satisfaction of the referendum result beyond 29th March.
Despite the tumult of the past few weeks, we must not forget that in law, following the passing of Article 50, the UK is set to leave the EU on 29th March – with or without a deal. If May is truly determined to deliver Brexit on the 29th, then there is a clear and legal route for her to do so following the likely defeat of her deal.
A WTO No Deal Brexit would ensure Britain leaves the European Union on time, in accordance with Article 50. Yet pursuing this course would not merely be an exercise in damage-limitation. The course remains attractive in and of itself. The economic case for No Deal has been made by Get Britain Out here and here.
What’s more, a WTO No Deal Brexit would firstly deliver on most of the Leave platform and, secondly, present major improvements to the Prime Minister’s deservedly unpopular deal.
Firstly, the repatriation of control over laws, money, borders and fisheries would be secured by a WTO No Deal Brexit. Only a free trade deal with the EU would be missing. On the other hand, precisely such a trade deal with the EU27 would become more likely in the event of No Deal. It has proven so elusive during the negotiations because Britain’s bargaining power has been continually squandered by the Government, ably assisted by the Labour Party.
Jeremy Corbyn has not only come out in favour of a second referendum, but has long advocated Customs Union membership post-Brexit. Whether it is attempting to tie the UK to EU regulatory standards indefinitely, or reverse Brexit completely, such measures can only have given succour to all those on the continent who have never taken Britain’s decision to Leave seriously.
However, if Britain simply Leaves the EU on 29th March, and pursues the radical free trade programme of tariff cuts on up to 90% of imported goods – as leaked from Liam Fox’s Department for International Trade last week – we could call the EU’s bluff by daring to prosper outside its institutions.
Under this ‘hard but smart’ Brexit, as recommended by the IFO Institute in Germany – one of the leading economic research institutes in Europe and regularly quoted in the German media – costs for consumers and businesses would be cut whilst Britain’s negotiating hand would be strengthened. So far, the Government’s unwillingness to present No Deal as a viable option has tied its hands in Brussels. Ironically, this lack of belief in Brexit has made by a WTO No Deal Brexit more likely.
Secondly, the significant advantages of a WTO No Deal Brexit over May’s Deal must not be overlooked, although Geoffrey Cox’s failure to secure a meaningful alteration to the backstop so far will be seen as the central reason for the Government’s likely defeat in Parliament on Tuesday. We should remember the backstop – absolutely unacceptable though it is – was never the only problem with the deal, as Get Britain Out has documented in full here.
As Sir John Redwood has recently made clear in an open letter to Geoffrey Cox, the proposed ‘transition’ period of up to 45 months marked out in the Withdrawal Agreement would turn Britain into a rule-taker with no power of reply.
This would be a fundamental challenge to Britain’s independence. The wide-ranging nature of this threat encompasses everything from business regulations and trading relationships to taxation. Moreover, the UK taxpayer would be paying at least £39 billion for the privilege.
On the other hand, a WTO No Deal Brexit would save Britain from this unnecessary expenditure, which could be better spent on domestic priorities. This Brexit dividend would also include the money saved following the immediate cessation of budget contributions to the EU. Under May’s deal these would continue.
Provided Cox was successful in his renegotiation of the backstop, leading eurosceptics were prepared to accept May’s deal. Rees-Mogg was prepared to back it because if the backstop became time-limited, and Britain could unilaterally leave the EU if no trade deal was struck during the transition, then all the above problems with May’s deal would be time-limited too.
A spirit of compromise was in the air. A willingness not to make the best the enemy of the good. Now a legal change to the backstop seems impossible – and tomorrow, barring some cosmetic alterations – exactly the same deal which was rejected by an historic 230 votes in January will, in all likelihood, be put to Parliament again.
Eurosceptics must not make a very bad deal the enemy of the best deal now available. Let’s Get Britain Out with a WTO No Deal Brexit on 29th March.
The post A WTO No Deal Brexit is now the only way to honour the referendum result appeared first on BrexitCentral.
More attention is needed to be given the tariff policy Britain must adopt on leaving the EU on 29th March. It now looks likely that this will have to be without a withdrawal agreement. However, this has the advantage that Britain can shape its tariff policy from day one.
This is a responsibility that British governments have been able to avoid during the period of EU membership. Now they are regaining that responsibility, they must seize it promptly.
Before the end of March, the Government should publish a White Paper explaining that:
- It has sought to negotiate a withdrawal agreement, but unfortunately no acceptable agreement could be reached, so while the UK remains open to agreement, European leaders have ruled out further negotiation. This means the European Treaties cease to apply to the United Kingdom on 29th March 2019. Britain’s trade with the EU will then be governed by the World Trade Organisation agreements, which govern most of Britain’s trade already.
- The WTO agreements are international law and Britain will honour them in full. It expects the EU to do likewise.
- The EU will now be obliged to apply its Common External Tariff (CET) to British exports, treating the UK on equal terms with other third countries, on a Most Favoured Nation (MFN) basis. Tariffs must be accepted as a disadvantage, but it has now become a very minor one: on industrial exports from the UK to the EU, the CET averages about 3%.
- As far as British imports are concerned, Britain will not be obliged to charge import duties; but where it does so, it must charge a rate which treats all WTO members equally. Absent a withdrawal agreement the EU must be treated on the same basis as other WTO members. Britain will inherit tariff bindings, as a result of which its import duties cannot exceed those of the European CET.
- Importantly, however, Britain will be free after 29th March to reduce or eliminate import duties whenever it sees fit (see below).
- Apart from tariffs, the rule of the WTO for all other aspects of trade is non-discrimination. Non-Tariff Barriers are prohibited by the WTO so far as they afford protection to domestic production (GATT Art. III.1). So far as they arise out of the operation of internal laws (industrial safety etc.), all such laws must be applied equally: they must accord imports treatment “no less favourable” than that accorded to products of national origin (GATT Art. III.4). They cannot discriminate against imports from other WTO members.
The White Paper will explain the application of these rules carefully, emphasising that they are tried and tested by many years of practice worldwide. It will emphasise three key facts:
(a) that most of the UK’s trade is already conducted outside Europe, most of it under the WTO rules;
(b) that Britain trades more successfully outside Europe than within it; and
(c) that most of the EU’s trading partners worldwide trade with it under the WTO rules, and do so with success.
FIRST PHASE OF TARIFF POLICY: KEEPING TRADE FLOWING
After 29th March, the immediate priority will be to keep trade flowing in an initially uncertain environment. During this phase, the Government should suspend all import duties from all sources. The WTO rules allow this, provided the suspension is on an MFN basis.
This will mean that no inbound consignments are interrupted for tariff reasons.
SECOND PHASE OF TARIFF POLICY: ELIMINATING HARMFUL IMPORT DUTIES
Then, as it becomes clear that trade is flowing smoothly, import duties would be selectively reinstated, selectively reduced and selectively eliminated. This is the stage at which Britain’s trade policy will begin to take shape. It is important to emphasise that Britain will have no freedom to raise tariffs above their CET level. It will be tied by WTO bindings not to do so. Trade policy will take the form of selective reductions and eliminations of import duty, below their present CET levels – cuts which Britain can now make (and has hitherto been prevented from making) include the following:
- Foodstuffs will be imported free of all duties. Note that this is one of the principal benefits of Brexit. The present CAP duties are very high, often above 50%. Eliminating them would bring major reductions in food prices, to the benefit of families. It would restore the traditional British policy of leaving food untaxed. Many countries in the world are exporters of food. The return of Britain as a buyer of food in world markets will be seen as a major advance towards freer trade from the EU’s protectionism.
- Clothing and footwear. Duties should be cut to a maximum of 5%. Under the EU’s CET, these currently attract duties up to 20%. Again, the UK is a substantial net importer of these items and eliminating duties on them will bring major reductions in prices, to the benefit of families.
- Automotive components, parts and sub-assemblies. Duties should be removed. These currently attract duties of around 5%. Eliminating them will help UK assembly plants relying on supplies from Europe and Japan on a “just-in-time” basis.
- Semiconductors. These attract CET duties of 12%-15%. These should be removed. British IT industries are substantial net importers of semiconductors and are currently burdened by duties intended to protect continental suppliers.
- Other industrial intermediates, materials, components, sub-assemblies etc. Duties should be removed wherever the UK is a substantial net importer.
- Other products of any kind not made in the UK. Duties should be removed.
THIRD PHASE OF TARIFF POLICY: PREPARING FOR FREE TRADE AGREEMENTS
While it is making these unilateral tariff cuts, the UK should also announce its willingness to conclude free trade agreements with any willing partner on a basis of reciprocity, eliminating all import duties in both directions. This should apply to all the UK’s trading partners worldwide, not excluding the EU.
The detail of each negotiation will of course take time to tie down. However, the WTO Agreement allows GATT (Art. XXIV) the formation of interim agreements which can be brought into provisional application, and thus given early effect. In this way, tariffs can be eliminated in advance.
Negotiating priority should be given to:
a) suppliers of products which the UK needs to buy, where the European CET is high and where the British aim is to secure more affordable prices (e.g. foodstuffs from Argentina, New Zealand, clothing and footwear from China and India); and
b) promising markets where import duties against British exports are still high (as with India and China). One may note in passing that the EU comes into neither of these categories: EU duties against British industrial exports will be low (average 3%). A free trade agreement eliminating these will be of modest value and not worth paying too high a negotiating price to obtain. Meanwhile, Britain will have no need for expensive European food once supplies are available duty-free from other more reasonable suppliers.
Thus Britain will make important tariff cuts unilaterally, and others will follow free trade negotiations. Together they will add up to a significant liberalisation and a clear declaration that Britain, on regaining the right to direct its own trade policy, intends to drive it strongly in a liberalising direction. These tariff cuts would establish Britain as once again a beacon of freer trade, to its own benefit and to the benefit of its trading partners worldwide. It is important to send this signal immediately on Britain gaining the freedom to do so.
The post Here is the tariff policy the Government should announce for 29th March appeared first on BrexitCentral.
Soon after graduate school I joined the Treasury as an economic adviser and worked alongside economists from the Bank of England and the rest of the Civil Service. We were proud to be bringing economics into the public service. Many years later in 1992 I served on the Treasury’s Panel of Outside Forecasters (‘The 6 Wise Men’) to help guide monetary policy in the aftermath of ‘Black Wednesday’ when we were driven out of the EU Exchange Rate Mechanism. The Treasury chief economist then was Alan, now Sir Alan, Budd, and the Bank’s was Mervyn, now Lord, King.
I am appalled that our equivalents today in the government have spent their time issuing antiBrexit propaganda – still hoping to reverse the referendum decision – instead of dutifully planning post-Brexit policy, so necessary with Brexit only weeks away.
THE WHITEHALL PROPAGANDA WAR AGAINST BREXIT
A few weeks ago, we had the latest Treasury and ‘Cross-Whitehall’ report, arguing that any Brexit at all, including the government’s proposed deal, would be worse than Remaining. Then the Bank weighed in with a ‘Brexit crisis scenario’, an implied forecast of how bad No Deal would be, concealed as a ‘stress test’ of whether the economy could survive it – it could! Latterly, the Bank has reiterated its forecast that No Deal would be bad, causing a likely recession, and using it as an excuse for delaying raising interest rates.
These interventions are designed to undermine our efforts to persuade the EU to modify the Government’s proposed deal by strengthening popular and MP concerns over No Deal. They aim also to persuade Parliament to back amendments delaying Article 50 and seeking another referendum. The sought-for prize in both cases is the status quo, ultimately Remain. It should be unthinkable for our Civil Service to play politics and conspire against the people’s 2016 decision so nakedly, as demonstrated in Brussels last week by the Civil Service’s chief negotiator.
This deceitfulness is bad enough but worse is that their propaganda efforts would lead to terrible economics. My message to Brits is: unlike these self-styled experts, you got this issue right. Yes, you were right to ask for your democracy back, and yes, this is also good for the British economy, contrary to all that Project Fear.
Let us remind ourselves about what Brexit means for economic policy:
- Free trade with the non-EU world, bringing down prices, boosting competition, and increasing productivity
- Setting our own regulations across the economy, to ensure the best approach to new technology, energy, and financial services – all areas central to our future growth prospects. This is in contrast to the EU’s highly interventionist, bureaucratic, protectionist approach
- Ensuring that unskilled immigration is no longer subsidised by the taxpayer at great cost to lower-income communities (£3,500 per annum for each unskilled worker) and that it stops depressing wages to the detriment of UK unskilled workers, whom businesses then have no incentive to train
- Ending paying large amounts into the EU budget
Taken together, we calculate these policies will add about 0.5% a year to our growth rate over the next decade and a half, cumulatively adding 7% to GDP by 2035.
As part of the EU, we have been unable to adopt these policies because we have lost democratic control. Reasserting it through Brexit means we can move into a post-Brexit world of better policies that will promote UK prosperity.
THE TREASURY’s ABSURD ANTI-BREXIT ASSUMPTIONS
How has the Treasury managed to argue precisely the opposite; that post-Brexit our economy will decline by 7% or more of GDP? Answer: by making absurd assumptions.
No Gains from Free Trade with the Non-EU World
First, the Treasury alleges that free trade with non-EU countries brings in trivial gains because we would reduce our own trade barriers by only a little and other countries similarly would do little to reduce theirs.
Aside from this refuting the most widely agreed principle in economics, we have practical evidence from Australia to disprove this claim. Australia too had high protection against the rest of the world but thirty years ago they did remove it and did strike free trade deals with all and sundry. Their government now estimates that free trade boosted Australian GDP by over 5%. If Australia can do it, so can we.
In fact, if we assume we get rid of the current EU protection of about 20% on both food and manufactures, the gain to UK GDP is 4%. – calculated by using the same World Trade Model now used by the Treasury. Moreover, we have further calculated that virtually all this gain could be obtained by agreeing just one key free trade agreement – i.e. with the US. This is because the huge US economy can supply virtually all of our current imports and almost all at the lowest world price.
‘War at the Border’ with the EU
Second, the Treasury assumes that we would become engaged in a sort of ‘border war’ with the EU. The Treasury alleges the EU would increase inspections and slow traffic down, that they would query whether our exports comply with their standards. And, vice versa, we would do the same to them. The Treasury assumes that such actions would be the equivalent of imposing 25% tariffs each way.
This is fantasy. Besides being against our own and their own interests, these actions are illegal under WTO Rules. This does not just mean that there could be legal action in WTO Appellate Bodies. More to the point, injured businesses in the thousands would take the offending port authorities to EU and UK courts that enforce acceptable and legal commercial practice – as defined by WTO law.
Practically speaking, such actions would represent economic suicide to European port operators. Not surprisingly these authorities, including Calais, have declared roundly they will not take any such illegal actions and inspection regimes will remain the same as they are today. And HMRC has declared a policy of prioritising flow over checks – i.e. waving through imports and worrying about any customs aspects subsequently.
No Gains from Post-Brexit Tariffs
Under No Deal initially there probably would be tariffs both ways. Until a free trade deal is agreed, each side would be forced by WTO rules either to impose tariffs on all countries, or to abolish them entirely for all. For political reasons, the UK is not likely to abolish tariffs universally in the short term.
Importantly, the Treasury has failed to acknowledge that tariffs would favour the UK – we would receive £13 billion in tariff revenue from EU exporters versus the EU Commission receiving £5 billion from EU importers (thus, a net loss to the EU).
As soon as we have agreed trade deals with non-EU countries – especially soon with the US – our home market would be dominated by lower world prices. EU exporters would not be able to ‘pass on’ the increased costs of any UK import tariffs because UK consumers would not pay the higher EU price. Similarly, EU importers could not ‘pass back’ to our exporters the EU tariffs they are paying, as UK producers would switch to selling at home. In practice, our export sales to the EU would not suffer because EU prices are raised by EU protection to the same levels as UK export prices plus these tariffs.
This means that, under No Deal, we gain at the EU’s expense. This should encourage the EU to do a free trade deal with us after Brexit – which we of course would welcome.
So in short the Treasury has it all wrong on trade.
No Gains from UK-Based Regulations
The Treasury attributes virtually no gains to us retrieving control of our economic regulations, contrary to all the evidence of damage from EU regulations. How ridiculous is that? Our own UK government saying it could not do a better job of regulation than a foreign power with an expressed aim of reducing our competitiveness!
A Mad Immigration Policy, Keeping Out Skilled Workers
To cap it all, the Treasury assumes we will pursue a self-harming immigration policy of stopping skilled immigration, which all agree we need. Again, a bad own goal.
To sum up, our own Treasury and civil service see no benefits from free trade with the rest of the world while lamenting the loss of free trade with the EU, imagines standard trade procedures as practiced all over the world will be impossible with our EU neighbours, believes we are incapable of implementing better home regulation, and thinks we will adopt an irrational immigration policy. If this is truly what they believe, we will need another civil service post-Brexit.
THE BANK’s TALK OF RECESSION FROM NO DEAL
Turn now from these crazy long term Treasury estimates to the short term threats of recession made by the Bank, backed by regular remarks from the Chancellor Philip Hammond.
As we saw during the referendum campaign, the Bank has form in predicting ‘Brexarmageddon’. Then, the short term forecast was that the uncertainty triggered by only a Leave vote would destroy consumer and investor confidence and so kill off spending, creating a recession.
Instead we have seen the UK economy continue growing fairly steadily, reaching extreme lows in unemployment and record employment. Wages are now growing faster than prices. Also the economy has absorbed a large devaluation that has had a tonic effect in improving our balance of payments. It did this with a minimal effect on inflation. Nothing here to worry about at all.
For their latest scary Brexit No Deal scenario, the Bank has again invoked a crisis based on uncertainty and plunging confidence – heavily focused on what happens with the Dover-Calais ferry route.
But No Deal – as we have explained – will not disturb the border, as that would be illegal and there are alternative ferry routes available. As for shortages of vital foods, medicines, or vital components, they depend on the same story, now discredited by the EU port authorities who are worried about losing market share to competing ports.
With border procedures changing, there will be some short run hiccups, as some firms may fail to adapt quickly. But firms will soon learn, and will get extra support and credit to tide them over.
Has investment been hit? I show below the chart of UK total business investment up to the most recent available figures.
What the chart shows – following the Financial Crisis – is the usual irregular behaviour of most economic series around a rather smoothly moving upward trend. It is true that the latest data points to a weak and declining growth of investment as shown below in more detail from the latest ONS release. This is not surprising, given the long deferral of positive Brexit prospects due to the Government’s failure to provide a clear route to Brexit and to explain its benefits.
Therefore, it is likely that some investment is being delayed until Brexit has happened; but it then will be implemented. This is the essential point about investment; that it is delayed, not lost.
One can see from these two charts that, although investment growth is weak, its contribution to the economy is fluctuating around a stable trend. Meanwhile we can see that the economy is fully employed so that demand growth overall is continuing to create jobs; growth is fluctuating as the latest GDP figures show, but this is quite normal. The fourth quarter was slower after an unusually strong third quarter – and subsequent revisions often are higher. So from the point of view of demand, the weak investment is not preventing full employment, with an economy well at the limits of productive capacity.
Of course, EU countries would love to have our results – Germany’s just announced Q4 GDP growth is half of ours, while Italy has been in recession for six months.
NEGATIVE FORECASTS REFLECT POOR UNDERSTANDING OF BREXIT ECONOMICS AND PEOPLE’S EXPECTATIONS
The truth is that ‘uncertainty’ as a factor is much overdone by commentators. Change is a continuous feature of any economy. The ‘uncertainty’ argument depends on a belief that rational market participants will somehow not be able to cope with future change thereby freezing their activities.
In reality, businesses need to make money quickly as markets are constantly changing; households need to pay bills over the foreseeable future, and having a job is the best guarantee of being able to do so. So the ‘here and now’ situation, especially with employment, dominates their actions. As for future shocks, there are many; and predicting them a fool’s game. Of course, we can insure the obvious things.
So it is the UK’s flexible labour market that has kept the economy fully employed, full of short term confidence therefore, and growing steadily – Brexit has made little difference. It is a good lesson in the importance of market flexibility.
Whatever the short-run effects of Brexit uncertainty, they soon will give way to post-Brexit reality. It is here that official forecasts fail most seriously because they do not factor in the gains explained above. The economy, particularly investment, will respond to the prospects of these gains. That is how rational expectations of the future stimulate entrepreneurs to take advantage of unfolding new opportunities. Officials do not understand this process and, consequently, do not include such effects in their forecasts. Add in some uncertainty nonsense and out pop their doom and gloom forecasts – particularly if such forecasts support a biased perspective.
What we need now is for Brexit to occur and usher in the new opportunities from free trade and better regulation.
We see here an astonishing catalogue of bad economics coming from a determination to reverse the people’s referendum decision. This from our own Ministers and Civil Service who are supposed to support policies the people have voted for. Our civil servants must now get behind Brexit and reflect its opportunities in their forecasts.
It is time that the Bank and the Treasury stopped making arbitrary assumptions that our flexible firms and households will suddenly behave like headless chickens. Instead they should assume rational expectations, by now a widely supported assumption in economic forecasting.
My advice to the British people is: make it known to MPs that you will not stand for their bad economics, stick to your previous thinking, ignore the ongoing Project Fear as you got it right and these ‘servants’ of yours got it all wrong.
The post How the Treasury, Bank of England and Civil Service have let us down over Brexit appeared first on BrexitCentral.
The List is a grassroots organisation of Leave voters which I founded over a year ago, to represent the voice of the electorate. We are not affiliated to any political party or organisation, but are very active as we continue to campaign for the voice of Leave voters to be heard and are advocating leaving the EU under WTO rules.
Members come from different political persuasions but are united in ensuring respect for the democratic result of the 2016 referendum. We firmly believe in leaving the EU in its entirety and also believe that our sovereignty and powers were given away illegally and unconstitutionally.
The List has also found that most of our members extensively researched the issues and knew the applicable treaties, as well as WTO principles, prior to voting in the referendum – and even after all the Project Fear, we still decided to vote Leave.
In view of the current circumstances surrounding Brexit, The List believes that Brexiteers are even more motivated today compared to how they were in the referendum. In March last year, we put together a petition to Theresa May stating the reason why we believed most of the 17.4 million voted Leave, and delivered it direct to her at No. 10 with over 1.2 million signatures.
Now we have decided to write an Open Letter to Parliament which you can view here on our new website. We are asking people to sign the letter online, and to take a copy of it and send in an email to their local MP with a link to the website where they can view people’s comments. This Open Letter demands that we leave the European Union and not be tied to any trade deal. These are two separate issues and should not be combined. By not agreeing to a ‘no deal’ or
trading under WTO rules, those elected MPs are stipulating that they will not support 17.4 million people who voted Leave; the highest vote for anything in British electoral history.
The Open Letter has recently gone live and continues to receive new signatures daily. We are hoping to reach as many of the 17.4 million as possible, and are therefore asking Leave voters and those that voted Remain but support the result, to leave their name on the website and pass the link on.
So what is there to fear from trading under WTO rules, even for an interim period? The answer is, nothing.
The WTO, established in 1995, (preceded by the General Agreement on Tariffs and Trade, established in 1947) is an international organisation aiming to reduce all barriers to trade.
The combined share of international trade of WTO members now exceeds 90% of the global trade. Most countries around the world are members, including the UK and the EU.
In 2016, UK world-wide trade accounted for 52% of goods exported (48% exported to the EU, which continues to decline, and 52% to the rest of the world). As EU members, our trade with various countries outside the EU has been dictated largely by agreements with the EU, and devised to suit them. Under WTO rules, we will be free to make our own trade arrangements with those countries, tailored more to our needs.
The WTO requires member countries to apply tariffs (taxes) on goods and services to other WTO countries equally.
Unlike the EU, the WTO does not tell countries what to do other than to keep their promises. There is no ‘confrontation with WTO officials’ as one Irish Government source reportedly claimed in a newspaper report in respect of arrangements concerning the Irish border. The WTO is a member-driven organisation and there is no WTO rule requiring governments to secure their borders. There are, however, non-discrimination rules, but a ‘waiver’ could be sought for the UK/Ireland border either based on national security, or if the EU are in agreement, the UK and Ireland could act in the interests of the Good Friday Agreement and permit no hard border between the two. These are just some suggestions which Remain-backing MPs seem to refuse to discuss.
Under WTO rules, the UK will not only be able to negotiate our own trade agreements with the world, control our borders and make our own laws, but with no more annual payments to subsidise the EU and our armed forces free of the EU command structures to boot, we will be free to paint our own future on a clean canvas.
If there are problems along the way, then we will deal with them, as we have always done, with a pragmatic and flexible attitude – for you cannot put a price on freedom.
The List believes that we, the electorate who voted Leave, should have our voices heard; about what Brexit means to us and why we voted Leave. We have all heard about “the People’s Vote” so it’s time we were heard, the other side of the story, “the People’s Voice!”
The post There is nothing to fear from leaving the EU and trading with them under WTO rules appeared first on BrexitCentral.
This past week has sadly brought further damaging rhetoric in the Brexit process and some who ought to be statesmanlike have been anything but.
This is surely a moment for statesmanship and for finding a way through the current impasse. We must calm things down and focus on developing a common sense solution to Brexit and the Irish border question in particular. In this context I welcome the visits of both the Prime Minister and the Taoiseach to Belfast and the meeting between both leaders in Dublin: this is the kind of engagement and leadership that is needed to help find a sensible way forward.
I recognise that the UK and the Irish Republic do not agree on Brexit itself and that many in Ireland feel hurt by the decision of the UK to leave the EU. Nevertheless, it is important we all respect democratic decisions of this nature, even when we don’t agree with them. Undoubtedly, the last two years have seen damage done to the three sets of relationships that formed the core of the Good Friday/Belfast Agreement.
The absence of the political institutions, including the Assembly and the North-South Ministerial Council, has been to the detriment of all of us. Just think how differently we might have handled this very difficult situation if such institutions had been in place to provide a forum within which Belfast and Dublin could engage and take a more considered view on all of this. Instead, the politics of cooperation has been replaced by the old ways of megaphone diplomacy.
However, we are where we are and leaders on both sides of the border have hitherto shown a remarkable capacity to overcome enormous challenges in the peace process to find our way to the common ground. In the remaining weeks leading up to 29th March, we must do so again. Whilst it is London and Brussels who take the lead in negotiations, I believe that Dublin and Belfast can play a constructive role in helping to find the solutions.
We can begin by recognising that we already occupy significant common ground.
We all agree that the need to protect the peace process and the political and institutional arrangements of the Good Friday, St Andrews and Stormont House Agreements is vital.
Secondly, none of us want a hard border on the island of Ireland or the creation of a new border in the Irish Sea. Both the Republic of Ireland and Northern Ireland do a substantial amount of trade with Great Britain as well as with each other. The Common Travel Area ensures the free movement of people across the islands and is accepted by the EU. Now we need to find a sensible solution to ensure a similar approach on the smooth movement of goods. We in the DUP are of the view that a pragmatic approach can deliver an outcome on customs and trade that does not fundamentally undermine the EU single market or the UK single market.
Thirdly, both countries want to avoid a ‘no-deal’ outcome if possible as we recognise this could have significant implications for the short- to medium-term economic stability and prosperity of both parts of the island. Building stability and prosperity goes hand in hand with building peace.
For us, the primary problem with the draft Withdrawal Agreement is the backstop. It is not only the DUP that has concerns about the backstop and our opposition to it has been supported by many from all parties across the House of Commons.
On two occasions now, the House of Commons has voted decisively to reject the backstop in its current form and to call for legally-binding changes to these potentially harmful proposals. Our position on the backstop is also supported by other unionists like Nobel Peace laureate Lord Trimble, who has said that the proposals have the potential to “turn the Belfast Agreement on its head and do serious damage to it.”
Lord Trimble is in the process of taking legal action to challenge the legality of the backstop and his case is supported by leading experts on the Good Friday Agreement such as Professor Lord Bew. For such key architects of the Good Friday Agreement to raise serious concerns about the damaging nature of the proposed backstop must surely encourage the Taoiseach and others to pause and consider other options which are capable of commanding a wider cross-border and cross-community consensus.
If the current impasse between the UK and EU over the backstop results in no-deal then it will further damage relationships between Northern Ireland and the Republic and undermine the prospects for restoring the political institutions. The absence of these institutions over the past two years has seen a re-polarisation of attitudes on both sides in Northern Ireland.
In my opinion, securing a deal on Brexit that is broadly acceptable can only improve the prospects for restoring the institutions. It may suit Sinn Fein to have a chaotic situation, but it surely can’t be in the interests of anyone else. Sinn Fein has tried to exploit the uncertainty over Brexit to raise the border poll issue, hoping to force a referendum in the near term. This is, of course, a party that was fiercely opposed to Ireland’s membership of the EU and sought to vote down each successive European Treaty. Clearly, Sinn Fein is self-serving, and its claim to act in the wider interests of the ‘Irish people, north and south’, is bogus.
The consequences of a no-deal outcome will undoubtedly impact on the economies on both sides of the border, with their heavy dependence on the agri-food sector. InterTrade Ireland commissioned the Economic and Social Research Institute (ESRI), an Irish think-tank, to conduct an analysis of the impact of Brexit on the Irish border. ESRI looked at several different scenarios, including one where trade between Ireland and the UK would be based on WTO rules. The resulting imposition of tariffs and non-tariff barriers in this scenario could result in Irish trade to Great Britain falling by 12%, British trade to Ireland falling by 6%, Irish trade to Northern Ireland falling by 14%, and Northern Irish trade to Ireland falling by 19% – resulting in a total reduction in cross-border trade of 16%.
Agri-food in particular is a sector that has expressed concerns about no-deal. A study of the impact of a no-deal Brexit on the EU’s agri-food industry has claimed that beef and cheese exports from Ireland to the UK could collapse by up to 90% with the loss of over 3,500 jobs. No amount of preparation by any government can nullify the significant economic implications outlined.
Additionally, a further fall in the value of sterling in a no-deal scenario would worsen the outcome for Irish exports to Great Britain and Northern Ireland. In this scenario, Irish trade to Great Britain would fall by 20%, British trade to Ireland would remain broadly similar (at +0.3 %), Irish trade to Northern Ireland would fall 21%, and Northern Irish trade to Ireland would fall 11% – so there would be a total fall in cross-border trade of 17%.
Despite these stark statistics, there are some who seem determined to impose the backstop. Yet the Withdrawal Agreement and backstop in their current form have been roundly rejected in the UK Parliament because they could lock us indefinitely into an arrangement that undermines the economic integrity of the UK. The backstop is designed to prevent a hard border but could ultimately result in no-deal and actually compel the EU to impose a hard border in Ireland.
Having been an MP for over 20 years and in frontline politics since the early 1980s, too many times have I seen politicians become wedded to an idea and intent on implementing it, even when they are aware of the dire consequences. Now is not a time for brinkmanship but for leadership.
I am convinced that there are better solutions than this. Whilst I am not going to be prescriptive in this article about what they may be, I am aware of several ideas, including the ‘Malthouse Compromise’, that are surely worthy of serious consideration. If the political will is there on both sides, I firmly believe we can find a solution.
The people of the United Kingdom voted by a majority to Leave the European Union. Despite this, the leadership of the EU and some in the UK have sought to frustrate the will of the people and to make it as difficult as possible for our country to Leave. The indefinite nature of the backstop would harm the constitutional and economic integrity of the UK.
The EU leaders have asked Parliament to state clearly what we want. That answer is now clear and the EU must address British concerns about the backstop if a no-deal outcome is to be avoided.
If the EU truly want to avoid harm to the peace process and to protect the political arrangements established under the Belfast/Good Friday Agreement, then they need to take account of unionist concerns as well as those of nationalists, otherwise, as Lord Trimble has said, they violate the core principles of the Agreement.
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The last seven days have been a momentous week in British politics. Big battles have been fought, political reputations tested and a frenzy I have never before experienced in my political career played out. In the end, the government motion to agree the Withdrawal Agreement was roundly defeated and Jeremy Corbyn’s no confidence motion against the Government entered – and more importantly exited – the Commons chamber as a lame duck, but seasoned with some very memorable and well executed speeches from some politicians on both sides of the House, particularly that given by Michael Gove. Before the mist of last week’s battle clears, there continues to be intense speculation and debate about what happens next.
A dangerous option has been floated. “Article 50 must now be extended to give sufficient time to find a solution to the Brexit impasse”, some say. Prima facie, some will feel this looks reasonable and measured given the scale of the polarisation over the issue and lack of an overall parliamentary majority; but is it any more than a covert and deadly mechanism to leave Brexit exposed and vulnerable to the forces who want to strangle and kill it dead?
Even amidst all the noise of the last few months, the EU still do not hold all the cards. The cards we hold are powerful ones: money, the threat of no deal and time. Under Article 50 of the Lisbon Treaty, we have two years to agree a disengagement or No Deal/World Trade Organisation rules is the default option. And time is running out.
Time is either your ally or your enemy and in this scenario the advantage to extending Article 50 would be largely to those who want to subvert Brexit. This is why the opponents of Brexit are feeling the heat from the furnaces of 29th March 2019 as it draws closer and they are desperately looking for various mechanisms to extend the endgame. An Article 50 extension is one such measure.
There is one risk in particular of pursuing this avenue that I want to highlight, one very dear to me as someone who has been involved in it for many, many years – the risk to Conservatives in Local Government.
Large scale Local Government elections are looming in May. National politicians, large lobbying organisations and the media have been loud and vocal about Brexit, but the Conservative Party membership – and particularly our Councillors – have not had that kind of exposure. They too have deep concerns and often those concerns are the opposite of the Remain- and London-dominated media and the like.
Many of them – I will say most of them – want Brexit and want it settled, even if that means an exit on WTO terms. Also, on the Conservative side, there are tens of thousands of (not necessarily ‘paid-up’) activists who are on the whole pro-Brexit and want our Government to deliver.
The voters have been quietly watching us too. Unlike big and international business, they cannot just pick up the telephone to Philip Hammond and vent their concerns. They have no such influence or privilege. Their only weapon is the upcoming Local Government elections of 2nd May and they quickly follow 29th March, what is supposed to be D-Day for Brexit. So – crucially – those elections would be taking place in the immediate aftermath of the postponement now being floated out there by some politicians and commentators.
Any obviation from leaving the EU on 29th March risks both the voters’ and our activists’ wrath. My experience as a District Councillor (12 years) and as a County Council Leader is that local election results are generally won or lost about four weeks before on national issues and the government of the day, no matter how wonderful and sophisticated the local Party/Council’s manifesto or record. National politics sets an important part of the outcome.
Local Government elections are already – and often unfairly – used as a punching bag for the electorate against the government of the day. How much more so this time with an issue of the magnitude of Brexit and the climate of distrust and outright hostility out there towards politicians for not keeping to the Referendum result and to our manifesto pledges?
The risk is not so much of Conservatives switching to Labour, but simply not bothering to turn out at all. A lady at a coffee morning in my constituency in Northampton said to me on Friday: “Looks like the politicians are making sure voting doesn’t count any more. I’m not going to bother again.”
My parliamentary colleague Nadine Dorries observes: “If we betray 17.4 million people who will view an extension of Article 50 as kicking Brexit into the long grass, how can we possibly expect them to come out and support us at the local elections?”
Brexit is huge and many at the summit of power and influence might regard the 2nd May elections – or even Local Government altogether – as far from top of their priorities. I would disagree and reflect that it would be damaging to the Conservative Party nationally for quite some time to have a disappointing set of local elections because of non-delivery of Brexit and risk creating a narrative of matters and support sliding away from us.
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