Friday, 18 August 2017

Brexiters always ask for more but really want less

Having won the Referendum, Brexiters seem surprisingly unhappy and, on social media especially, as angry as ever. Whilst remainers look on aghast as the government pursues hard Brexit, some Brexiters are talking of betrayal. Nigel Farage did so as early as November 2016, and continues to do so now and it’s a sentiment shared by many leave voters according to a recent Reuters report.

For some, at least, of those voters their disappointment will arise from the lies and half-truths told by the Leave campaign. The campaign leaders repeatedly claimed that leaving the EU would be a quick and easy matter, whatever some of them now say to the contrary. That Brexit turns out to be long, complex and painful may make ordinary leave voters feel betrayed by the government; in fact they have been betrayed by the Brexiters.

However, for the Brexiters themselves something different is going on. The key to understanding these ideologues is that whatever concession is made to them they will demand another. This has been evident in the Tory party for some years. Most recently, as soon as Cameron offered them a Referendum they started agitating about the wording of the question and the framing of the response (specifically, they did not want it to be ‘yes’ or ‘no’ with ‘yes’ being ‘remain’) and the franchise (they did not want 16/17 year olds or long-term expatriates to have a vote).

They got their way on all these things, but there were bigger issues at stake. Until fairly recently (although not, it is true, during the Referendum campaign itself) Farage and UKIP were quite happy with a Norway-style Brexit (i.e. remaining in the single market). And during the Referendum campaign itself many in Vote Leave said that this was exactly what Brexit would mean. High profile examples included Owen Paterson MP and Daniel Hannan MEP. Thus Hannan (who, by the way, has blocked me on Twitter where I reminded him of this) said: “Absolutely nobody is talking about threatening our place in the single market”. These things, for all that they are denied by Brexiters now, are a matter of public record. See here and here and here.

But as soon as they had won the Referendum this was not enough. Brexit, they now insisted (£), had to mean hard Brexit – primarily leaving the single market but also any form of ECJ jurisdiction, and negotiating a Free Trade Agreement (FTA) with the EU. When Theresa May became PM she could have used the opportunity to initiate a national, public conversation about what form Brexit should take. Instead, during those long months of ‘Brexit means Brexit’ what happened was a private, internal conversation in the Tory Party from which emerged the Lancaster House speech in January declaring without any comparative analysis of the different options that Brexit meant hard Brexit.

That, as we are seeing, is proving a much more complex matter than the Brexiters asserted because of the scale of what is involved – not just regarding trade – and the time frames available, about which I written about endlessly on this blog. But now the Brexiters are not satisfied with hard Brexit anyway. Just as before, having had concessions made to them (with that on the single market the hugest of all) they are coming back for more. Thus, just today, the Institute for Economic Affairs make the case of leaving with no deal at all. And whilst this is well into the terrain of madness, in the wilder fringes of Brexiter-land it is a very moderate position. UKIP at the last election, for example, were advocating pulling out of the Article 50 negotiations altogether.

So trying to give Brexiters what they want in order to appease them proves to be pointless: whatever they are given they come back, like blackmailers or protection racketeers, with even more extortionate demands. But there is more to it than that. There is a strain amongst the Brexit ultras which actually does not want to get its way but which wants to feel victimised. The victim narrative in which an unholy alliance of big corporations, pointy-headed experts and limp-wristed liberals, the amorphous and hydra-headed ‘elite’, were ganging up on 'ordinary people' ran throughout the Referendum campaign and its aftermath. Never mind that Leave was bankrolled by millionaires and fronted by public school and Oxbridge career politicians.

And this is the reason why the Brexiters are not happy in victory and why they keep asking for more. Winning and having their demands met strips them of the victim status they wallow in. So their moment of triumph in the Referendum was also the moment of their defeat, and the reason they so assiduously seek out signs of betrayal is that betrayal is what would most readily allow a return to the comfort zone of victimhood. For the same reason, the narrative of being 'punished' by the EU is actually appealing to them. Likewise, only by constantly asking for more can they hope to reach the point where they are told they can have no more and, in that moment, again feel the masochistic thrill of being aggrieved.

The tragedy for those of us who do not share this peculiar political pathology is that we are dragged further and further away from any remotely pragmatic policy. The reason why the government is currently in such a mess over Brexit is that it is trying to do the impossible: satisfy the demands of Brexiters without completely wrecking the economy. But without wrecking the economy the ever more extreme demands of the Brexiters can’t be met. Theresa May had the chance to draw a line in the sand last year but she ducked it, choosing instead to draw red lines with the EU, and she no longer has the authority to do so. So now we are stuck, an entire nation shackled to the whims of a relatively small number of people who – like rebellious teenagers secretly wanting to be set boundaries - demand total victory whilst craving defeat.

Wednesday, 16 August 2017

What the position papers tell us about the Brexit position

The publication this week of government position papers on customs and on the Irish border has been widely reported and discussed (see, for example, here and here). Stepping back a little from that discussion, four things stand out. The first is just how complex and interlocked different aspects of Brexit are. The single market, customs union, customs cooperation, commercial policy, freedom of movement, open borders (both Schengen and the UK-Ireland Common Travel Area) - amongst many other things - are all conceptually and in some cases institutionally distinct. But they interact with each other in a myriad of ways and they developed via a variety of routes over different timescales and through an assortment of legal instruments. Thus Brexit is not a single event but a multiplicity of interlocking processes.

In that respect, the sequencing (exit terms first, then future terms) required by the EU is problematic, even though it was clear from before the Referendum that this would be the approach, so Brexiters have nothing to complain about. The reason the UK published its customs paper first and then the Irish border paper seems to have been an attempt to get the EU to recognize that it makes little sense to regard the Irish border as being within the exit terms to be settled before the customs issue is discussed as part of the future terms. The two are so intimately interlinked that this is not really possible. That is about the only point where I have some sympathy with how the government are approaching the negotiations.

However, whilst interlinked, some aspects are a matter of how Brexit is interpreted. Thus, as has been widely pointed out, it is a matter of interpretation that it means leaving the single market. On the other hand, although much less widely pointed out, it is not a matter of interpretation but inevitability that Brexit means leaving the customs union albeit that we could seek some kind of customs treaty with the EU (as Turkey does, although the form of that agreement would be highly disadvantageous to the UK). It bears saying that the Leave campaign and Michael Gove in particular claimed that, on Brexit, Britain would be part of a “free trade zone that spreads from Iceland to Turkey”. That was a highly misleading formulation, but its only conceivable meaning was that Britain would be in the single market (like Iceland) and would have a customs treaty (like Turkey).

The second thing that stands out is that (partly as a result of this complexity and the very tight timescales resulting both from the Article 50 period and the domestic pressure from Brexiters in the UK for a quick resolution) the government are really engaged in nothing more than a damage limitation exercise. For whilst the Brexiters claimed before the Referendum, and the ultras continue to claim, that there is no possibility of damage from Brexit the stakes are very high indeed. If things go wrong, then Britain will effectively cease to be a functioning economy with the possibility of major social breakdown. Thus the government plans on the customs union and the Irish border are in no way like normal government policies which at least claim to be trying to make some aspect of life better. Instead all that is being attempted is to recreate all, or as much as possible, of the status quo so as to avoid the terrible consequences of it falling apart; and through transitional arrangements to buy time to undertake this recreation of the status quo.

Thus there is no sense that all that the highly complex and expensive new customs arrangements (even if they prove workable, which many doubt, not least as the details are vague and much relies upon wild claims of untested technological fixes) will actually improve anything for anyone. In fact it is openly admitted that they will entail additional bureaucratic costs for businesses (the idea that Brexit means less ‘red tape’ seems to have gone to heaven along with the £350M a week). The only exception is the idea that because exiting the customs union will also enable exiting the commercial policy (these are separate but, again, interrelated things) Britain can make its own trade deals. That is touted as if it were some great prize, but no serious person thinks that these trade deals can compensate for the cumulative costs of Brexit including, but not limited to, lost trade. So there is no economic benefit in this, just the psychological or theological one that it somehow gives Britain ‘more control’ or ‘sovereignty’. For Brexiters that is apparently both meaningful and desirable in its own right, whatever the cost, but they should at least admit that rather than pretending that there is an economic rationale for it by implying it will unlock new vistas of international trade.

The third thing, of course, is that all of this remains an almost wholly UK focussed discussion. And it remains ‘cakeist’ in the sense of trying to retain all those aspects of EU membership which are seen as desirable by Brexiters whilst avoiding all those they dislike. As such it is unclear – and also unlikely – that the EU will go along with any of the ideas in the position papers. For the Brexiters this is a matter of EU malice or punishment – proving that the EU are not a nice lot, and in itself justifying Brexit. That is childish. It is Britain’s choice to leave the EU – and to do so in the form it is doing – and that has consequences. International relations, whether with the EU or anyone else, are a matter of realpolitik, pragmatism and power. Brexit means that Britain is choosing to change its relationship with the EU from member to third party country. This is really so obvious it need hardly be said. If Brexiters don’t like the consequences of that, tough. They own them.

To understand what becoming a third party country means, Brexiters should undertake the thought experiment of imagining that it was not Britain leaving the EU but another country – Greece, say, or perhaps more appositely Ireland. Would Brexiters then be willing to make all kinds of accommodations – including incurring financial (say, new customs facilities) and political (say, Irish peace process) costs? I think not. They would be saying to that country: the problems created are your problems, not ours, and the only things we will do are those things that protect our interests, not yours. Would that be malice or punishment? Only in some kind of boy scout view of international relations.

Even the realpolitik of negotiating with the EU would not be so difficult were it not for the relentless pressure of the vociferous and ever-present Brexit ultras inside and outside the Tory party. They are so detached from reality and so implacable in their demands that even the government’s attempts to negotiate hard Brexit are regarded as a betrayal. Since they do not have to take any responsibility at all for the consequences they are free to oppose transitional periods, exit bills, or any kind of deal at all (see John Redwood here, for example). If May thought that she had bought their loyalty by rejecting the obvious, pragmatic, compromise of soft (single market) Brexit then she failed to understand that as with every concession made to them before it just produces an even wilder new demand.

The obvious conclusion from the complexity of Brexit and from the fact that the best the government can hope for is to expend massive amounts of time and money to recreate something as close as possible to the pre-Brexit situation is to ask: why bother? Why not, at the least, backtrack to the soft Brexit that would both honour the Referendum result, be in line with what many said and believed a vote for Brexit meant, and do the least amount of damage? If the only answer to that is the wrath of the ultra Brexiters, then their very implacability negates that objection. Since they will in all events scream betrayal we might as well face up to that whilst doing ourselves minimal damage since we will also have to face up to it even whilst doing ourselves great damage. The answer to that, of course, is that the ‘we’ and the ‘us’ in this is not the country, it is the Tory Party and May’s overriding desire to prevent it imploding. And that is the fourth point that stands out: these position papers are less about the customs union and the Irish border than they are about the position of the Tory Party.



Update: For withering assessments of the position papers, see Ian Dunt on customs and on the Irish border. On the customs paper including the issue of customs union membership being inseparable from EU membership, see Oliver Norgrove’s blog.

Monday, 14 August 2017

Blog posts I did not write

Today has been frustrating in that there were two things I wanted to write about, both of which were written about by others, and more ably than I would have managed no doubt, before I had found time to set finger to keyboard.

The first was the furore about an interesting new study of voters’ preferences as to how Brexit should be undertaken which was reported by Buzzfeed last Friday. It is based on ESRC funded research conducted by LSE and Oxford academics and is a serious and important piece of work. The reporting of it, however, has been extremely misleading and in places simply inaccurate. Amongst other things, it has been reported to show that most remain voters now back hard Brexit and that 29% of remain voters support the deportation of EU nationals. The misreporting reflects a number of complexities in the research, which the authors tried to explain in a blog on Sunday and which were also explained by another very useful blog (author unknown) here. But it was most incisively explained by Ben Chu in the Independent today. His was the blog I had been intending to write and I would strongly recommend everyone reading this to look at it. Even so, the damage has been done and whatever corrections are issued it will enter Brexiter mythology as proof of public support for hard Brexit (interesting to note how Brexiter disdain for academic experts disappears when they believe that the research helps them).

My second possible topic was Sunday’s Fox-Hammond article saying that whilst they agreed there would be a post March 2019 ‘transition period’ it would be one in which the UK was neither a member of the single market nor the customs union. This is a nonsensical proposition, which categorically will not happen because it is by definition not a transition: it’s out. So what they are describing is the cliff edge that a transition period is meant to avoid. It seems to envisage a situation in which Britain somehow retains all the benefits of membership and yet has left. To call this politically illiterate would be to flatter it way beyond reason.

But this was laid bare first by Ian Dunt on politics.co.uk and later by John Springford, of the Centre for European Reform, in the Guardian, and again I recommend both of these pieces. They make some similar points about the impossibility of the Fox-Hammond line both politically and practically (e.g. in terms of the timescale for preparing customs facilities and systems). But Dunt goes on to link this to the arguments of what he (appropriately) calls the Brexit “headbangers” as exemplified by Bernard Jenkin in an interview on BBC Radio 4 today.

Jenkin regards the cliff edge of a Brexit without agreements – not just on customs but on a whole array of other things, such as flying rights - in place as a kind of recalcitrance, if not outright malice, on the part of the EU. In this, he exhibits the Brexiter mindset that I have written about in another post in which all of the arrangements that the UK benefits from as part of the EU are a kind of natural right, existing independently of those arrangements. So that whilst, for Jenkin, leaving the EU is absolutely crucial it also makes no difference to anything – or, at least, to none of the things he regards as nice or necessary. As if, somehow, Brexit doesn’t mean Brexit.

We are going to hear a lot more of this kind of “reasoning” in the coming months and years, as the inevitable consequences of Brexit are disowned by the Brexiters and attributed to the punitive EU. I actually don’t think that the Brexiters (Boris Johnson apart) are lying in the normal sense of the term. It seems more like the brainwashing found in weird religious cults.

Be that as it may, something very peculiar, dangerous and unprecedented is happening in the British polity. We’ve all had the experience of living with government policies we thought completely misguided and pursued on the basis of faulty logic and flawed evidence. But now we have Cabinet ministers and senior backbenchers saying in all seriousness things which are meaningless and nonsensical in very basic ways that go well beyond issues of interpretation or ideological dispute. The misreporting of the LSE/Oxford study can in large part be attributed to misunderstandings of complex statistics. But what the likes of Fox, Hammond and Jenkin are saying is the political equivalent of 2+2 = 5.

It is on the basis of such nonsense that Britain is being driven ever closer to catastrophe. That will most obviously be an economic catastrophe but it will also be a political catastrophe. A report on Reuters today highlighted the frustration and bemusement of leave voters that Brexit had not yet been delivered and seemed to be mired in complexity and delay. Well might they feel that, given the constant promises made to them during the Referendum campaign that leaving would be quick, easy, and painless. Now that the campaign is over, they are still being told the same thing and the disillusion and anger will grow. The central political question for the coming years is whether that anger is directed at those who tell them that 2+2 = 5 or at those who remind them that, like it or not, 2+2 = 4.

Friday, 11 August 2017

Even on holiday, the government's Brexit mistakes continue

Readers of this blog can hardly fail to be aware that I regard Brexit as a national disaster. Even so, it is extraordinary that the government seem to take every opportunity to make things worse than they need to be. That applies most obviously to the big decisions such as insisting Brexit must mean hard Brexit including the ECJ red line, triggering Article 50 without proper preparation, and then wasting months with an election. But having made those decisions the government then, in smaller matters, continually makes foolish mistakes. With the holiday season in progress there have only been such small matters on display this week, but they are indicative of the wider mess the government are creating.

Item one. On Thursday the Prime Minister’s spokesman re-iterated that the Brexit timetable remains that stated by the PM in her Lancaster House speech. That is, that she envisages both exit and future trade terms to be agreed within the two year period ending in March 2019. But every serious person knows that this is impossible, and even most cabinet ministers have acknowledged it. For that matter, Theresa May herself appears to know it. So what conceivable purpose is served by pretending otherwise? Any halfway competent leader would be preparing both the general public and politicians – and especially those supportive of Brexit – for the fact that it is going to take longer, probably much longer, than this.

We are no longer in the Referendum campaign when Leave could make mendacious claims about how quick and easy the exit negotiations would be, even lying that they would be completed before triggering Article 50 (something legally impossible). Instead, for better or for worse, we are now in what is supposedly the governmental implementation of Brexit, and that can’t be done on the basis of fantasies. It is not as if May will be able to avoid facing up to the true timescale eventually so she would surely be politically wiser to do so sooner rather than later.

Item two. On Wednesday, the Prime Minister’s office announced a ‘charm offensive’ in which diplomats and officials will explain Britain’s Brexit strategy to, especially, the EU-27 countries. It hardly needs saying that this puts the rickety cart well ahead of a horse that should in kindness be sent to the glue factory. Britain scarcely has a Brexit strategy, as it is still under dispute within the cabinet. We have failed, unlike the EU, to produce detailed position papers for the negotiations we initiated, although these are apparently to be unveiled in September. The White Paper is “riddled with contradictions”, as this excellent article from Polly Ruth Polak explains in some detail, and on key issues such as the Irish border no meaningful proposals have been made at all, as Irish leader Leo Varadkar recently lamented.

But this is not the main deficiency with the supposed charm offensive. Rather, it reveals the continuing inability of the government to understand what the EU have repeatedly made clear which is that Brexit it not going to be a matter of bi-lateral discussions between the UK and each member state. The EU-27 will negotiate as a bloc. And whilst it might be said that the ‘charm offensive’ is an exercise in communication rather than an attempt at negotiation that is a line so thin as to be meaningless: if the aim is not to have an impact upon the negotiations in some way then it has no point anyway. In fact, it is an approach which was already tried in the ‘divide and rule’ pre-Article 50 period in an attempt to pre-empt the negotiations which the EU rightly said could not occur before the triggering letter. It did not succeed then and it will not succeed now: it is completely unrealistic to expect otherwise.

Item three. Also on Wednesday, Brexit Secretary David Davis addressed one of the many thorny issues in the exit negotiations, namely that of citizens’ rights. But he did so in the most bizarre manner, saying that the terms the EU is offering to British nationals living in EU-27 countries are unfair because they do not give those nationals freedom of movement rights across the EU-27, just residence rights in that country where they reside. The unfairness, he claimed, was that this did not meet the EU principle of reciprocity because EU-27 citizens residing in the UK would continue to have freedom of movement rights across the EU-27.

This seems almost wilfully to introduce an obvious misunderstanding into proceedings which are already complex. Since the UK is choosing to leave the EU (and moreover the single market) in part in order to exit freedom of movement rules it follows that British nationals will lose their freedom of movement rights. That is true for all British nationals whether resident in the UK or in an EU-27 country. However, no EU-27 country is leaving the EU and therefore no EU-27 citizen loses freedom of movement rights within the EU-27. Reciprocity does not and could not mean that British people in an EU-27 country have the same freedom of movement rights as citizens of EU-27 countries in the UK because the British loss of those rights is entailed by leaving the EU. The issue is the residency rights of the two groups.

If the argument is that British people should enjoy freedom of movement rights in the EU-27 because EU-27 people do then that is an argument for staying in the EU, or at least the single market. It seems that Davis has not grasped that, to coin a phrase, Brexit means Brexit. Or, alternatively, that he still thinks that ‘having our cake and eating it’ is possible, in the sense that, somehow, British people could continue to have freedom of movement rights across the EU-27 whereas EU-27 people would not have freedom of movement rights to Britain. That sentiment, in fact, was often expressed by Brexiters prior to the Referendum so it is not inconceivable that Davis shares it.

The thread that links these three announcements is that they illustrate and compound the way that the Brexit government is completely unrealistic and confused about the meaning of the Brexit they are enacting and the processes, both political and legal, through which it must be enacted. It is this which feeds the widespread view of Britain’s approach to Brexit being in chaos, with some in the EU apparently wondering if this is in fact a cunning negotiating plan rather than genuine chaos. But as the ever-acute David Allen Green has pointed out in his recent FT blog, “the government looks as if it is in disarray because it is in disarray”, making repeated “unforced errors” in its handling of Brexit.

But perhaps unforced errors is not quite the right term. Errors they certainly are, but they are driven by the underlying force of the Brexit ultras. First, of course, because they set us on this crazy path without any credible plan and on the basis of breath taking lies. But, second, because they continue to urge us to even greater follies – recent examples including Patrick Minford’s call for an exit with no deal at all, John Longworth’s call to walk away if there is no deal by early 2018 and Jacob Rees-Mogg’s denial that there is any payment needed to settle accounts. Such reckless, delusional, irresponsibility is what drives us ever closer to the edge of a very steep cliff.

Tuesday, 8 August 2017

Brexit, data protection, and the myth of 'taking back control'

Yesterday’s statement from the government about the planned new UK Data Protection Bill is the first concrete example of something which has been in prospect ever since the publication of the Brexit White Paper last February. The White Paper made it clear that post-Brexit the UK would seek to maintain a great deal of regulatory harmonization with the EU, with data protection mentioned as one example (paragraphs 8.38 to 8.40).

The Data Protection Bill will be the first fruit of that. In one way, it can be seen as business as usual in that Britain needs to comply with the new EU General Data Protection Regulation (GDPR) which comes into force in May 2018 when, of course, Britain will still be a member of the EU. Yet as yesterday’s announcement made clear, the Bill will “prepare Britain for Brexit” by ensuring data transfer and its associated business can continue smoothly after leaving the EU. The reason this is necessary is that on exit Britain will be a third party nation but such nations need to demonstrate regulatory equivalence with the GDPR in order to trade freely with the EU.

This is a clear illustration of how, whether in the EU or not, the UK in practice needs to comply with EU regulations. There is a strong element of regulatory pull in any situation where a smaller economy sits alongside a much larger economy because proximity also means that – again, whether in or out of the EU – a large proportion of UK trade will be with the EU. This is so regardless of what the trading arrangement turns out to be, although of course the absolute volume of trade will be very much affected by the nature of that arrangement.

As regards the GDPR, since it has been some time in the making, Britain has had the opportunity to shape the new regulations. But once we have left we will become ‘rule takers’ – not only of any further developments in data protection regulation but also across all of the very numerous areas of EU regulation. This is so even if we leave the single market, as the government plans. In fact it is especially true if we leave the single market in that if we stayed in (as an EFTA member) we would have somewhat more scope to influence regulations than as a third party nation (albeit less than as an EU member).

Nor is the issue confined to the formulation of law and regulation. Equally important will be its ongoing interpretation and enforcement which in the EU means the ECJ, of course. But the government have, for unnecessary reasons of pure dogma, made freedom from ECJ jurisdiction a ‘red line’ (something which is causing an endless number of conundrums and disputes, from Euratom to air travel to citizens’ rights). So this creates a new problem. If UK law (in this case on data protection) follows EU law, then what happens as over time the ECJ makes judgments on the interpretation and application of the latter?

This is the force behind today’s call from Lord Neuberger, the President of Britain’s Supreme Court, for guidance from the government as to how to treat ECJ rulings after Brexit. Steve Peers, on his EU Law Blog, pointed out that the White Paper implied that EU case law would continue to be relevant to British courts post-Brexit in the same way as at the moment, but that what this meant was unclear – as it remains. In reality it is impossible to see how the UK could effectively maintain compatibility with EU regulation in the way envisaged by, in this case, the data protection legislation if over time its interpretation and application diverged by virtue of incompatible decisions in the EU and UK courts (this is one of the underlying issues I drew attention to in my recent post on the Brexiter fantasy that current regulatory harmonization makes a UK-EU trade deal easy). The likelihood is that, in practice, ECJ judgments will be applied in the UK. Indeed the government’s own formulation, both in the White Paper and in its spokesperson’s response to Lord Neuberger, that Brexit will end the “direct jurisdiction” of the ECJ seems to suggest just that: what will happen is ‘indirect jurisdiction’.

So the data protection legislation is an early glimpse of just how meaningless the mantra of ‘taking back control’ and ‘making our own laws’ really is. The reality is that – unless the plan is for complete economic autarky, and I wouldn’t put that past some of the Brexit Jacobins – the UK will have less control over law making than it had as an EU member. The data protection case is an example of how, as I wrote at the time of the White Paper, what is in prospect is the creation of a whole host of shadow regulations and institutions to mirror those of the EU. In other words, a situation where the reality is less control will be created in order to give the illusion of having control so as to assuage (what the White Paper calls) the “feeling” of having lost control by being in the EU.

Friday, 4 August 2017

Weekly round-up

Another round-up of the most interesting analysis of Brexit I have read in the last week.

Former Tory MP Matthew Parris tore into Conservative Brexit incompetence in The Times. It’s paywalled, but this tweet provides a readable version.

Philosopher Helen de Cruz wrote a thoughtful and moving meditation on home, immigration and Brexit on the Politics means Politics site.

A very acute summary of where the Brexit negotiations stand was provided by Brendan Donnelly on the LSE Brexit blog.

Signs of a move towards a degree of realism amongst thoughtful Brexiters came from Vote Leave activist Oliver Norgrove in an open letter to hard Brexiters on his blog.

Labour politician Denis MacShane’s discussion of Brexit and Foreign Policy on the Carnegie Europe site was thoughtful, if depressing.

There have been a lot of excellent things written this week about what is belatedly being recognized as the crucial issue of the Irish border, and this by Siobhan Fenton in Prospect was perhaps the best of them. Simon Jenkins’s piece in The Guardian is also worth a read.

Professor Kenneth Armstrong of Cambridge University’s discussion of Brexit ‘originalism’ on The Conversation site is – sorry for the pun – an original take on the schisms within the Brexiter camp.

My two favourite Brexit commentators wrote great pieces this week: Ian Dunt on Brexit transitional agreements on politics.co.uk and David Allen Green on the same topic in the FT. Green also wrote a very incisive piece on the Referendum question and an excellent analysis of the ‘EEA option’ both also in the FT (paywalled). These two are stand-out commentators for being invariably well-informed and on the pulse of Brexit debates, and whilst both write elegantly and sharply they are quite different in style: Green forensic and limpid; Dunt rhetorical and elegiac.

Almost undiscussed in the debates on Brexit so far has been its effect (for both the UK and the EU) on the numerous agreements, both trade and non-trade, between the EU and third parties. This piece (written a few weeks ago, but I only read it this week) by Guillaume van der Loo and Steven Blockmans on the CEPS site is a clear introduction to this very complex issue.

Pick of the week for me, for its punchy writing and neat drawing together of numerous aspects of the Brexit debacle, was this scathing polemic by Jenni Russell in the New York Times.

Recommended only because they lay bare the paucity of Brexiter thinking are two stupendously dishonest pieces. The first by Brendan O’Neill in The Spectator argues that leaver voters are heroic because a poll shows that they are happy with Brexit even if it means economic damage to the UK and to their own families, an argument which would carry slightly more weight had Leave campaigned on the basis that this would be the effect of Brexit rather than having claimed that any such damage was just ‘Project Fear’ scaremongering; the second by Daniel Hannan (he of “absolutely nobody is talking about threatening our place the single market” fame) on the ‘good news’ of Brexit in the New York Times which is tendentious and mendacious in equal measure: there is not a single line in it which could inspire anything other than contempt from anyone remotely wedded to honest debate.

Finally, anyone reading this who missed my own blogposts this week will find an analysis of the Brexiter myth peddled by Liam Fox and others that existing regulatory harmonization makes a Brexit trade deal easy, and a detailed rebuttal of John Redwood’s blogpost on the current Brexit situation. Thanks to Ceri Shields for writing to me about these posts to say that “your clean and elegant prose style is always a pleasure. People you’ll never meet out here in internet land appreciate it”. Much appreciated.

[Acknowledgements: Thanks to Polly Polak of Universidad de Salamanca, Spain, Jennifer Zerk of Jennifer Zerk Consulting and Associate Fellow of Chatham House, and Oliver Norgrove of Royal Holloway, University of London for alerting me to some of the things cited (and to others not cited). Neither they nor the institutions with which they are affiliated are, of course, responsible for any interpretation I have put upon those citations here].

Updated with minor edits 5 August 2017.

Tuesday, 1 August 2017

A reply to John Redwood

John Redwood’s blog post (“Brexit policy and how to negotiate”, 1 August 2017) may be taken to represent the views of the more hardline Brexiters about the current situation. Indeed, to the extent that he is regarded by Brexiters as one of their leading intellectual lights it may be taken as representing their strongest case. This post is a reply.

Redwood: “I am glad the PM has made clear we will end freedom of movement and have our own migration policy on exit, as I reminded people here on this blog last week”.

Response: The PM’s position on freedom of movement is not clear, in fact, as Ian Dunt’s analysis (“No. 10 announcement on free movement completely without meaning”, politics.co.uk, 31 July 2017) explains. What is clear is that with her authority diminished by the General Election result, this and other policies are a matter of dispute within the government, with different ministers openly articulating different positions.

Redwood: “She has also clarified the issue of a transitional Agreement. The UK has not asked for one. We still have 19 months left to negotiate a proper Agreement. Negotiating a transitional one would require prior consent to a full Agreement, then allowing discussion of how to transition from the one to the other. It is not intrinsically easier to negotiate a Transitional Agreement than a permanent Agreement, and requires consent to where the two parties are going during transition”.

Response: This is correct both as regards the fact that the UK has not asked for a transitional agreement and as regards the incoherence of the position of those arguing for one without any clear idea of what the end state of the transition would be. However to say that there are 19 months left is to forget that the agreement needs ratification. So there are really more like 14 months left.

Redwood: “There are those in the Opposition, the media and business who seem to want to turn the EU/UK talks into a negotiation amongst ourselves about what we are trying to achieve. This is damaging to the UK’s official negotiating strategy, as it leads some in the EU to think that if they delay and prod the UK will change its mind and offer to carry on with budget contributions, freedom of movement and the other items that so favour the rest of the EU”.

Response: This is misleading in that it is those within the Tory Party and more especially the Cabinet who are conducting this internal negotiation, precisely because there is no agreement amongst them as to what the UK’s strategy should be. In this they have been extraordinarily irresponsible (to an extent without precedent in modern British political history) since they have already chosen of their own volition to trigger Article 50 without having reached such an agreement. What we are seeing, as we have since at least 2015, is the internal divisions of the Tory Party overriding any sense of care about the national interest, as pointed out by former Tory MP Matthew Parris in a recent excoriating article (“The Conservatives are criminally incompetent” The Times 28 July 2017 [£]). What is damaging to the UK’s negotiation from an EU perspective is their dismay that the UK has no clarity or detail. It is true that business groups are trying to open up the possibility of a transitional agreement, and the reason for that is obvious: businesses are well aware that an agreement within the Article 50 period is impossible and that without a transition there will be catastrophic effects for business. That is simply pragmatic business self-interest: what is surprising is that the current Tory Party are so remote from business and so pre-occupied with pursuing an anti-business policy in the form of Brexit.

Redwood: “MPs and others in senior positions in the Labour party keep changing their minds about membership of the single market and customs union, long after Parliament has voted decisively both to send the Article 50 letter and to exit both the single market and Customs Union”.

Response: Correct. The Labour position is completely incoherent.

Redwood: “Let’s have another go at reminding people what the UK has already decided. The people voted to leave the EU. They did so with both official campaigns pointing out this meant leaving the single market and customs Union. They voted leave to take back control, especially of our money, our laws and our borders”.

Response: This is simply untrue. The Leave campaign never clearly specified that voting to leave the EU meant voting to leave the single market and the customs union. Indeed many leading Leave campaigners including Daniel Hannan and Owen Paterson explicitly said that it did not mean leaving the single market. Moreover when the Treasury put out its long-term economic forecasts for Brexit in April 2016 it explicitly identified three variants of Brexit: continued single market membership, a free trade agreement, and WTO trading. There was never any sense given to the electorate that leaving the EU meant any one thing. This is a matter of record and to deny it is simply to lie. Indeed, the whole situation that the government now finds itself in derives from the fact that the Referendum result was a vote against membership of the EU but not a vote for what should happen next. That is absolutely fundamental to any honest discussion of Brexit, as is a recognition that the country was virtually split down the middle by the Referendum and the need, therefore, to find a way forward that reflects this.

Redwood: “Remain supporters then forced legislation and Parliamentary votes to test out the will of the people. Parliament voted overwhelmingly to leave the EU. The Commons since the election has voted to leave the single market and customs union as part of that, as was always implied in the previous Parliamentary votes”.

Response: ‘Forced’ is a peculiar way of putting the fact that as a matter of law a Parliamentary vote was required, but the fact of the result of that vote is not in dispute.

Redwood: “Some Remain supporters now want to invent a Transitional Agreement, requiring the UK to go on paying budget contributions, accepting freedom of movement, and continuing to accept new EU laws. This is not government policy, and is clearly against the wishes of the people as expressed in the Referendum”.

Response: The idea of a transitional agreement comes from Cabinet Ministers, such as Philip Hammond, who may have supported remaining in the EU but now accept that the UK is leaving. Whatever its merits, it cannot be said to be either for or against the wishes of the people as expressed in the Referendum, since they were never asked that question.

Redwood: “When asked why they want this, they usually argue that the other EU member states will damage their trade with us and our trade with them if we do not accept continuing features of EU membership. It is a cruel irony that the most pro EU are the most negative about the nature and likely actions of our EU partners”.

Response: This, to be both frank and charitable, is childish. It is the UK which is choosing to leave the EU, not the other way around, and that choice has consequences for the trading relationship. Redwood and Brexiters in general need to have the courage and honesty to take responsibility for that choice. If ‘we do not accept continuing features of EU membership’ then of course we do not continue to trade on the same terms. To coin a phrase, Brexit means Brexit. The issue isn’t about any benevolence or lack of it on the part of the EU, it is just a matter of reality: if the ‘will of the people’ is for the UK to be a third party state then that is what it will be, with all the consequences entailed.

Redwood: “They are also going to be proved wrong on this as on so much else about Brexit. WTO rules work fine, if the rest of the EU really does want to damage its valuable exports of agricultural produce and cars. Their more voluminous exports will attract far more tariff than our sales to them. Under WTO rules and international law the EU cannot stop companies and individuals in its territory buying and selling things with the UK”.

Response: This is a repeat of the usual ultra-Brexiter mantra and exhibits its usual detachment from reality by invoking the car industry (see here for discussion) and the UK trade deficit (supposedly an advantage, and yet we have a services surplus so what of that?) and failing to recognize that a far higher percentage of UK trade is with the EU-27 than EU-27 trade is with the UK. But more fundamentally it ignores the fact that tariffs are not nearly as important as non-tariff barriers and that WTO rules, far from ‘working fine’ would be a catastrophe for the UK as has been repeatedly explained for example in summary by me, but also by trade experts, by businesspeople, by journalists, and by the better-informed Brexiters such as Peter North who concludes: “One can say, unequivocally, that the UK could not survive as a trading nation by relying on the WTO Option. It would be an unmitigated disaster, and no responsible government would allow it”.

Final note: There is a huge irony here. It is precisely the fact that crashing out of the EU on WTO terms would poleaxe the UK that has driven the call for transitional arrangements from those trying pragmatically to salvage something from the year-zero ideologues such as Redwood. But for those of us who want to remain in the EU those ideologues are actually helpful, in that if they are successful in driving Britain to the brink of disaster they will assist our attempts to save our country from going over it, whereas the ‘pragmatists’ because they sound more reasonable are more likely to take us all the way to disaster, albeit more slowly. Of course it would be far better for Britain if we had not been put in the current position at all, and whatever now happens the Brexiters have irrevocably damaged our country, economically, culturally and geo-politically. Still, given that we are where we are, the position taken by Redwood (and his fellow ultra-Brexiters), dishonest and absurd as it is, might just help us to avoid the worst. If the ultras can defeat the pragmatists there’s just a tiny chance that the national catastrophe of Brexit will be averted.

[Updated with minor edits and reformatting, 2 August 2017]
 

Monday, 31 July 2017

The easiest deal in history?

As the British Government disintegrates over different approaches to a ‘transitional deal’ the question of what would be being transitioned to is almost forgotten (and, rather crucially, neither that nor any transition have even been discussed with the EU yet). It should not be, because all the warring positions within the government are variants of hard Brexit in which the end point is a UK-EU Free Trade Agreement (FTA) – or no deal at all. The factions hoping for an FTA differ only about timescale in which it might be reached.

Liam Fox, the International Trade Secretary, recently opined that a UK-EU FTA should be one of the easiest in history. This is a fantasy, but it is a more complex and superficially more plausible fantasy than is the norm amongst Brexiters, so it deserves some consideration.

The reason why Fox makes this claim is that because the UK is currently part of the single market not only does it enjoy tariff free trade with the EU but also it is in regulatory harmony with the EU and, therefore, there are no non-tariff barriers (NTBs) to trade. Fox’s argument was made before the Referendum by Nigel Lawson (although subsequently he decided that a trade deal was in fact highly unlikely) and the same argument was parroted by Owen Paterson recently (although he, by contrast, was an advocate of soft Brexit before the Referendum so didn’t think a trade deal would be necessary).

Confused and inconsistent as the Tory Brexiters making this argument are, they are at least ahead of the woefully inadequate position of the Labour Party which is still talking in terms of ‘tariff-free access’ to the single market. By contrast, Fox’s position does at least recognize NTBs which are in fact much more significant than tariffs.

In a normal trade negotiation it is indeed the case that reducing or eliminating NTBs is by far the most difficult thing to deal with. So it is true that if the UK were currently a third party seeking single market membership then it would be easy to achieve because of existing regulatory harmonization. The complexity is that the Brexit situation is the other way around from a normal trade deal. The UK is a member of the single market and is seeking to become a third party. Which means that predicting ease of negotiation on the basis of existing harmonization entirely misses the point. This will be perhaps the only trade negotiation in modern times which is about diminishing rather than extending free trade.

In concrete terms what this means is that regulatory harmonization at this moment in time isn’t the issue. What is the issue is regulatory harmonization in the future. What happens when EU rules change (as, in minor ways, they do on a daily basis)? Who decides on those changes and who adjudicates in the event of disputes? The answer is the EU and the ECJ. But the UK is leaving both of these.

Brexiters might argue that ECJ jurisdiction is not a pre-requisite of other EU trade deals, that with Canada (CETA) being the most often cited. But the CETA deal is not remotely comparable to what the UK would be seeking if anything approaching the current UK-EU situation were to be replicated because it does not include services. And services are both central to the UK economy and entail the most ferociously complex NTBs.

At a deeper level, any form of single market access via an FTA is wholly different to single market membership, something which Brexiters have persistently misunderstood, as I have written about elsewhere. And one way of looking at that is that free movement of people (and goods, services and capital) is about the removal of one of the central NTBs that no FTA touches. But avoiding free movement of people is a red line for Brexiters because of the UK politics of immigration. This means that from day 1 the UK will, in fact, be out of kilter with a key part of regulatory harmonization. Understood this way, Fox's argument is just a convoluted version of the 'have our cake and eat it' strategy: trading as if a member of the single market and yet not bound by its core principles. If Brexiters have learnt anything at all yet, they will surely have learned that this is not going to happen.

So it is ironic that Fox thinks that the only barrier to a UK-EU FTA would be if politics trumped economics. Ironic because by that he means the politics of the EU, whereas in fact the barrier is the politics of the UK. First because it is those politics that have made ECJ jurisdiction and freedom of movement red lines and second because, of course, the only reason the UK is giving up the perfect trade relationship it currently has as a member of the EU is because of UK politics.

Fox’s assertion of the easiness of a trade deal is all of a piece with the claims Brexiters have been making about every aspect of leaving the EU – from trade to air travel to the Ireland border – for years. But he is out of step with what is now emerging as the dominant Brexiter narrative, namely that they had always said it would be painful and difficult for years but in some way it will be worth it. Of course, during the Referendum campaign they said nothing of the sort. It is difficult to know which is more shameless: the continued repetition of the old lies, or the hypocrisy of the new lies. What can be said is that neither will survive contact with the realities of the negotiation with the EU.

Wednesday, 26 July 2017

The German car industry and Brexit

The German car industry occupies a particular and peculiar place within the Brexiter imagination. Particular, because it is invariably cited to ‘prove’ that an excellent UK-EU trade deal is inevitable. French cheese and Italian Prosecco occasionally feature in pursuit of the same argument but less often, perhaps because Brexiters hope that referencing German cars will make some “Vorsprung Durch Technik” rub off on their threadbare case.

At all events, the centrality of German car makers to the case for Brexit was expressed repeatedly during the Referendum campaign by, for example, Peter Hargreaves, the biggest individual donor (£3.2M) to the Leave campaign:

"Can you imagine if they put up a trade barrier - and we would reciprocate immediately - just imagine the three phone calls [German Chancellor] Angela Merkel would get the following day, the chief executive of [Volkswagen], the chief executive of Mercedes and the chief executive of BMW."

The campaigning group Get Britain Out agreed, almost word for word:

“Can you imagine … Germany damaging sales of BMW and Mercedes cars to Britain? No! Trade will carry on as normal.”

And the sentiment was echoed by David Davis, now the Brexit Secretary, quoting from what seems to be the Brexiters’ scripture book:

“Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.”

There are several things that can be said about this. Firstly, it shows an extraordinary ignorance (if not downright dishonesty) about how government trade policies are made. Neither in Germany, nor anywhere else, is it just a matter of phone calls from leading manufacturers to the country’s leaders. The acid test of this is actually Brexit itself: if trade policy were made by businesses then there is no way that Britain would be leaving the EU anyway. Second, it shows a complete ignorance of how the EU does trade deals, including any post-Brexit deal with the UK, which will not be done by Germany but by the whole EU. Third, it contains a huge contradiction: Brexiters usually complain that the EU is slow and lumbering, with trade deals taking far longer than necessary. Yet they pretend that a post-Brexit trade deal would be done within a few minutes or at least that it will be the easiest trade deal in history, as Liam Fox put it last week.

But as well as occupying a particular place in Brexiter mythology, it is also peculiar because normally Brexiters insist that the key issue is regaining what they simplistically call ‘sovereignty’. Yet whereas the multiple systems of accountability within the EU are deemed to negate sovereignty, the idea that the fate of Britain should be determined in a few company boardrooms in Germany elicits no such qualms. In the strange lexicon of ‘taking back control’ it seems that ceding that control to BMW etc. is of no matter.

As the realities of Brexit begin to bite much less is now heard of the magical powers the German car industry, but it lingers on in the minds of Brexit’s more gullible and disingenuous advocates. Last Sunday on BBC Radio 4’s The World this Weekend (time limited podcast) a long report on German industry’s views of Brexit demonstrated what had been said for months: that the integrity of the single market mattered far more than accommodating Brexit. But, undeterred and apparently unaware, up popped leading Brexiter Owen Paterson to repeat the scripture that German industry would ensure a good deal (along with the other, associated, Brexiter fantasy that the UK trade deficit in goods with the EU makes a good deal inevitable). It was truly extraordinary to hear one after another German industrialist explain that the Brexiter view was nonsense and then hear Paterson repeat that view as fact, and spoke volumes for the complete lack of realism of Brexiters. Paterson’s position is especially absurd as he is one of those Brexiters who before the referendum argued for the centrality of single market membership post-Brexit and now pretends that the benefits of the single market can be magically maintained despite leaving it.

Whilst the main Brexiter fantasy about the German car industry is that it will enforce a good trade deal, it also figures along with the car industries of other countries in the fantasy that Brexit will not impede inward investment. So, unsurprisingly, they greeted the news that BMW are going to build the electric Mini in the UK with great glee. But that glee was misplaced for several reasons. First, the investment is relatively small in car industry terms, involves no new production line and the main components will be built in Germany. The key issue is where car companies decide to build all-new models. Second, it does not negate the fact that car industry investment has collapsed catastrophically as a result of Brexit, from £1.66billion in 2016 to just £332M in the first half of 2017.

The real point, however, is this. No one ever claimed that Brexit would put an end to investment in the UK, just that it would reduce it. But Brexiters disparaged these and other warnings by a kind of reductio ad absurdum. So, for example, when warned that trade with the EU would be damaged they pretended it was a warning it would cease; that inward investment would be damaged, it would end entirely; that the EU promoted peace, it meant WW3 would break out. Reduced to absurdities, the warnings could be dismissed as Project Fear.

So the BMW investment in the Mini does not in any way make the case for Brexit. It shows that some investments that would have been made were Brexit not happening will still be made even though Brexit is happening. We know that many other investments that would have been made are not happening because of Brexit. But there is not a single case – this really needs to be emphasised: not one single case – of a company that would not otherwise have done so making an investment because of Brexit.

This matters because Brexiters have now switched to arguing that Brexit will not be a disaster, or that the bad effects are in some way worth it. But that isn’t how Brexit was sold to the British people. Voters were told that there would be no bad effects and, even, that Brexit would usher in a new age of prosperity. It’s not ‘remoaners’ who have cause to moan about this, it is the millions of leave voters who were so comprehensively misled. And nowhere were they more misled than in the Brexiter lie about what the German car industry would do for them. We now know that:

“German industry has warned Britain not to rely on its help in securing a good Brexit deal, in a stark intervention that strikes a blow at the government’s EU departure plans”.

In this, as in so much else, it’s time for Brexiters to get real. No one is going to rescue them from the consequences of their lies, they alone are responsible for their lies, and they will be held to account for their lies.