Politics: bought and paid for

Saturday 31 July 2021  



An intriguing piece of work finds itself into the Financial Times entitled: "Inside Boris Johnson's money network".

This lifts the lid on some of the financing of the Conservative Party and, in particular, the relationship between prime minister Johnson and "an adept high-society operator" installed by him "to ensure the Tory party was bankrolled at the last election, is flush today and will be well into the future".

This is Ben Elliot (pictured with Johnson), the "impeccably connected nephew of Camilla, Duchess of Cornwall," a man who once described himself as a "willing slave to the stars". He is best known for running Quintessentially, a "concierge" company that famously caters to the whims of the wealthy, telling the FT that securing services for his wealthy clients was all about "knowing the right people to contact for the right favour".

Elliot first demonstrated his usefulness to ambitious Tory politicians in 2016 when he acted as treasurer for Zac Goldsmith's unsuccessful London mayoral campaign. "Boris was so taken with how rich [Elliot] is and just how many rich people he knows", a friend of the prime minister says.

Thus, Elliot was one of Johnson’s first appointments after becoming prime minister in July 2019, when he made him the Conservative party's co-chair. Since then, he has been at the centre of the Conservatives' funding operation. He is also Johnson's counsellor, meeting regularly on the tennis or squash court.

Elliot, we are told, has quietly transformed the Party's money culture, partly responsible for raising a record £8.6 million in the first two weeks of the 2019 election campaign. This has been achieved by bringing aspects of Quintessentially's model to the Party, so that ever-larger cash donations bring ever-greater access to the heart of government.

On behalf of the Conservative Party, he manages the secretive "Advisory Board", a hitherto unknown group of elite donors that does not officially exist on any party literature. These donors enjoy frequent and direct access to the Johnson or chancellor Rishi Sunak.

Under Elliot, says the FT, the Advisory Board has become the most desirable club in the Tory party, its members granted monthly access to, retaining as its members some of the money men who had supported Johnson's rise to power.

By way of background, the FT tells us that Elliot is 12 years Johnson's junior, but they have long moved in the same social circle. In the early 2000s, Elliot regularly played poker with Ben and Zac Goldsmith, wealthy environmentalists, at Crown London Aspinalls, a private gaming club in Mayfair.

Johnson, who made the transition from freewheeling political columnist and commentator to Tory MP at about the same time, was also part of the black-tie Aspinall clique.

And you can see how the wheels of influence work, when we see that Damian Aspinall, son of the club's founder, runs an animal conservation charity that recently hired Johnson's wife Carrie as head of communications. Risk-taking, Eton and Brexit, we are told, bound the group together, the members "fiercely loyal to each other", who always look after each other.

Redolent of the 2015 "cash for access" scandal, Elliot appears to be offering access to Johnson in the place of luxury recreation.

Described as effortlessly charming, Elliot will, for example, pitch potential donors in a "mockney" accent, adopting working-class patois, before following up with a steely approach. The FT cites a Conservative HQ insider saying, "He's very forceful".

This source adds that he can be brusque with donors and Tory staff alike, we are told. "Ben squeezes the pips from the donors. His follow-ups for money are blunt, along the lines of 'You owe us the money, you promised us the money'. He's like a bailiff".

Johnson apparently "detests" asking for cash, which has given Elliot great influence over the party's finances. He has done exactly what Johnson asked him to do: he turned the Conservatives into an extremely well-funded machine that wins elections. In the year running up to Johnson’s 2019 victory, the party raised a record £37.4 million in "large" donations, well over three times more than Labour.

Central to Elliot's fundraising strategy, we are told, is networking money to power. Mohamed Amersi, a businessman who has made millions in telecom deals around the world, says he met Elliot in New York. Amersi became a "global elite" member of Quintessentially.

In 2013, Amersi and his partner Nadia flew to Scotland and made their way to Dumfries House, an 18th-century stately home set on 2,000 acres. That night, he says he and Nadia dined with the Prince of Wales. "Ben was the one who invited us to come there", says Amersi of his first meeting with the heir to the British throne.

It was also Elliot, he says, who "started seeking donations from me and Nadia for the Conservative party even before he became chair". Nadia - the Russian-born Nadezhda Rodicheva - gave £250,000 in the run-up to the 2017 election. Another half-million pounds has followed from Amersi since.

That has been enough to buy Amersi membership of the Leaders Group - a longstanding club for Tory donors who enjoy monthly lunches with ministers - but not enough, he says, to join the Advisory Board made up of the highest donors. That club, Amersi says, is "like the very elite Quintessentially clients membership: one needs to cough up £250,000 per annum or be a friend of Ben".

Some senior Tories, we learn, talk of a "250 club" of donors who have given £250,000 or more. This 250 figure certainly features prominently in the recent list of donations to the party. Eight Conservative party donors gave sums of exactly £250,000 in 2020. Three donors have given that specific amount so far in 2021.

Those who have given at least that sum in 2020 or 2021 include Lubov Chernukhin, the wife of former Russian minister Vladimir Chernukhin; hedge fund manager Alan Howard; John Gore, a theatre producer, and Rosemary Saïd, wife of Wafic Saïd, the Syrian-born businessman known for his role in the UK-Saudi al-Yamamah arms sale.

The FT then has senior Tories telling us that the most important donors are tapped on the shoulder by Elliot and asked if they would like to join the Advisory Board, described as being made up of perhaps a dozen members.

And, although there was a "Leaders' Group" where people paid £50,000 to join, Elliot has taken the concept to another level. Since December the Advisory Board has spoken with either Johnson or Sunak on a monthly basis. "It's never below that rank", says one person briefed on its activities.

Members are thought to include Lord Anthony Bamford, of JCB fame, at whose factory Johnson launched his 2019 leadership bid. Others said to be members are Alan Howard and British financier Jamie Reuben.

The FT also reminds us that some of the biggest donations secured for the party come from property companies, who would be major beneficiaries of Johnson's promise to rip up England's highly restrictive planning laws to allow more housebuilding. Donors with property interests and links to development have given the party at least £17.9 million since Johnson became prime minister.

All of this has the Guardian reporting that Labour is calling for Johnson to explain what the "advisory board" is all about. Even if this goes nowhere, what the FT has put together shows that the Conservative Party has become a tool of its rich donors. Ordinary people – the plebs – don't get a look-in. And when we look to see why politics is broken, we are that much closer to knowing why.

Also published on Turbulent Times.



Richard North 31/07/2021 link

Politics: part of the problem

Friday 30 July 2021  



On 14 April of this year, the newly-formed House of Lords European Affairs Committee set up a sub-committee on the Northern Ireland Protocol. The sub-committee immediately decided to launch an introductory inquiry into the operation of the protocol. Part of its remit was to identify solutions to the problems it had identified in the course of its inquiry.

The sub-committee, chaired by Lord Jay of Ewelme and assisted by nine other peers of the realm, interviewed 18 witnesses and collected a galaxy of written evidence. Then, on 29 July (yesterday), it published its 93-page Introductory Report. It needn't have bothered.

Its idea of identifying solutions was to observe that, in order to ensure the proportionate application of the Protocol, the UK and the EU urgently needed to agree "practical solutions in a number of specific areas". These, it turned out, had been identified by its witnesses and in dialogue between the UK and the EU in the Withdrawal Agreement Joint Committee.

So basically, all it has managed to do is trot out all the same, tired talking points, such as an "enhanced Trusted Trader Scheme" that have been chewed over ever since the negotiations started. And since they have been endlessly rehearsed without the slightest sign of agreement, it is unlikely that their mere repetition is going to achieve so very much.

However, not all is lost. The sub-committee at least managed to understand that the main burden arising from the application of the Protocol came with the EU's SPS controls. Thus it concluded that "the most significant single measures to alleviate the regulatory and administrative burden of the Protocol" would be a UK-EU SPS/veterinary agreement.

On this, it noted that the EU had suggested that a Swiss-style agreement based on dynamic alignment would remove 80 percent of checks. It also noted that the UK has argued in favour of a New Zealand-style equivalence framework.

With staggering perspicacity, the sub-committee then reported that the two sides have yet to find a compromise between their positions. How we possibly could have found this out without its timely intervention is beyond human imagination.

But, not content with this flash of genius, it then goes on to excel itself by proclaiming to the world that "it is clearly desirable to minimise the volume of checks as far as possible", then concluding that: "an SPS/veterinary agreement of any form is manifestly in the interests of Northern Ireland".

And, while it's on a roll, it goes on to "regret" that the UK and the EU have been unable to reach a compromise between their respective preferences for equivalence or alignment. It then calls on them "to intensify the search for an agreed SPS/veterinary solution, in the interests of the people and businesses of Northern Ireland".

Hurrah! The sub-committee has spoken. With its accumulated wisdom and access to the finest minds in the realm (not that it is bothered to use them), it has cone up with the definitive answer to the problem.

Paraphrased, it is calling on the UK and EU to intensify their search for a solution. Game over! We can all go home and rest in peace in our beds, comfortable in the knowledge that we have such wise and dedicated people working our behalf.

In truth, of course, this is simply a variation on the catch-all bureaucratic response to any and every conundrum. "The solution is simple", says the idiot bureaucrat. "Something must be done". In this case it is differently defined. All that has to happen is that the respective parties to the dispute must search for a solution. Pure genius.

Unsurprisingly, with such stunning conclusion, even the legacy media hasn't fallen over itself to publicise the report. But the BBC made a stab at it, headlined its web report with: "EU and UK criticised for 'flawed' protocol approach".

Its NI Economics & Business Editor, John Campbell, is obviously trying to do his best, trying to turn a sow's ear into something approximating a silk purse. He picks up on a statement of a bleedin' obvious in the report, telling that that the sub-committee has complained that the UK and EU have both taken a "fundamentally flawed" approach to the Protocol.

The noble lords, Campbell tells us, had criticised the "lack of clarity, transparency and readiness" on the part of the UK government and, just to be even-handed, had described the EU as lacking "balance, understanding and flexibility".

It was an "absolute necessity", Lord Jay said, that the UK and EU urgently worked together to ensure Northern Ireland did not become a "permanent casualty of the Brexit process". Thus says the noble lord, the political qualities of patience, dialogue and "most of all, trust", which had been seen during the Northern Ireland peace process, needed to come to the fore.

The report is saved from its own fatuity – and then only marginally so – by the kindness John Campbell who publishes the government's response. To describe it as vacuous really doesn't do it justice as a government spokesperson says they "shared the committee's concern about the significant disruption that the Protocol is causing on the ground in Northern Ireland".

"That is why", he says, "we published a Command Paper last week, clearly setting out the significant changes that are needed to the Protocol to ensure these arrangements can be sustainable for the future", adding that: "We look forward to engaging in talks with the EU to progress these proposals in the weeks ahead".

I suspect that this is the very last we hear of the sub-committee's "introductory report". But we've seen enough of it to raise the bigger question of why these people bother and, more to the point, why they so often prove to be a total waste of space.

In this particular case, one could hardly avoid noticing that the talks are at an impasse, with no common ground and not the slightest sign of agreement. The EU is saying that the protocol is the solution to the problem of Northern Ireland, while the UK government argues that Northern Ireland's problem is the protocol. You can't get much further apart than that.

Yet, here we have a group of supposedly experienced politicians, advised by a gaggle of professors and other luminaries – including, no less, Jess Sargeant, a "senior researcher" from the Institute of Government - and all they can do is come up with the very essence of clichéd drivel.

These days, this is so often the outcome of select committee deliberations that one must wonder whether the very institution is flawed. Certainly, their Lordships seem unduly influenced by prestige in the choice of their witnesses, going for the great and the good rather than people who know what they are talking about.

Hence we see Jess Sargeant confronting the problem of the SPS controls, telling the sub-committee "there is no clear alternative to the protocol that satisfies both the EU's aim of protecting the integrity of the single market and the UK Government’s aim of ensuring complete regulatory autonomy for at least Great Britain".

"Either one of those", she says, "has to give if we are to find another option, to a lesser or greater extent", thereby setting the scene for the failure of the report. With no idea of how to break the impasse, all he can do is hint at a compromise – something that is unlikely to happen.

A greater part of the problem, though, must be the poor quality of the questioning. Experienced politicians these might be, but they show no great skill in questioning witnesses, probing their knowledge and exposing their many weaknesses.

Anyone sentient should have known that a "split the difference" posture is not a solution and the witnesses should have been challenged with their views on measures which actually addressed the issues, rather than the lightweight drivel that was on offer.

I have sometimes wondered whether select committees should be structured differently so that, rather than have the politicians ask the questions – which are often as lightweight as the responses – they should employ experienced barristers to lead examinations. Additionally, the support staff need to be better equipped to draw on witnesses who can actually deliver material of value.

For the moment though, far from helping to devise solutions to ongoing problems, select committees are part of the problem – another part of a broken political system.

Also published on Turbulent Times.



Richard North 30/07/2021 link

Politics: talk now or perish later

Thursday 29 July 2021  



For the first time in a while, the Northern Ireland Protocol does not dominate the Brexit-related news and, as we approach the August torpor, nothing much can be expected from Brussels. Unless there are some remarkable (and unexpected) developments, the black hole of European politics is about to begin.

Much the same can be said of the UK scene, where one of the top stories in the Telegraph is Nicole Kidman's new hair style – unsurprising in the context of the annual report from Ofcom on news consumption, which has the most popular topics for teenagers being "music and celebrity news".

As an aside, Ofcom says that 49 percent of its sample say they use social media to get news, but the likes of Twitter and Facebook perform least well among TV, newspapers, magazines and radio for trustworthiness, impartiality or accuracy.

Only 33 percent say news found on social media is trustworthy compared with 67 percent for newspapers and 68 per cent for TV – although that has to be taken in the context of less than half the population using newspapers (digital and print) as their source of news, while less than a third of adults use print newspapers (32 percent).

At least there is some hope, though when Facebook turns out to be the least trusted of social media platforms for news, with just 27 percent of people saying it is trustworthy, and only 28 per cent saying it is accurate. As for the humble blog, so far has the genre faded from public consciousness that it doesn't rate a mention, being lumped under "other websites".

What little political comment there is currently in the online media is desultory stuff, but it is worth looking in to Rafael Behr's column, if only because he is saying something akin to what we have been writing on this blog for years.

"The 'Boris effect'", runs the headline to Behr's piece "is a symptom of Britain's decaying political system", with the sub-heading telling us: "The prime minister’s unlikely alliance of voters can hold only because nothing has broken the country’s two-party mould".

Although, he notes, in recent years, "none of the above" have soared in opinion polls, when it came to the 2017 and 2019 general elections, he writes, "first past the post and the question of who should be prime minister had their usual effect. When only two parties can credibly claim to be running candidates for No 10, votes get funnelled back down the old red and blue channels".

"In the absence of electoral reform", Behr then writes, "there is no obvious reason why the pattern will change", complaining that "it is unhealthy and unstable for the country’s two big parties to be sustained only by polarising mutual animosity and a system that suffocates political startups".

That is how, he says, "we now have a Labour party where admirers of Corbyn in exile cohabit with supporters of the successor who banished him. That is how we have a Conservative prime minister whose superpower is persuading people to overlook the fact that he is a Tory".

Few might disagree with Behr's observation that, "it suits Labour and the Tories to tell people that each is the only alternative to the other", and that it also suits them "to pretend that votes cast under those conditions indicate popular support".

But, as he rightly observes, "it insults the intelligence of everyone who held their noses in 2019 and marked the ballot paper with fists clenched in frustration at the choice on offer".

The two big political brands, he concludes, "have primacy in a failed marketplace", whence he adds: "It is not easy to envisage what the force will be that disrupts their arrangement. But that is the nature of dramatic change. It is unimaginable right up until it happens, at which point everyone agrees that it was inevitable".

An inference one could take from Behr's writing is that he favours some form of proportional representation, even if he doesn't state this explicitly. It is certainly a common enough nostrum, favoured by many pundits as an answer to our political woes.

The great problem, though, is that we still end up being notionally represented by politicians who, in the nature of the system, end up representing themselves and the political establishment, rather than the people who elected them.

A more important change, in my view, is to introduce that which is lacking into the political process – the proper separation of powers, as between the executive and the legislature. To that effect, I would see an elected prime minister, who would not be an MP and who would not sit in the House of Commons – and nor would ministers.

As for parliament, in the lower house, I would abolish political parties, and redesign the Commons chamber so that there was no divide between government and opposition benches. The split should not be within the house, but between the legislature and the executive. The former should scrutinise the latter rather than act as a terrifyingly shallow gene pool to provide ministerial fodder for the government.

As for elections to the house, I take the view that the utility of the electoral process is grossly over-rated as most people vote for the party rather than the individual. Then, with safe seats forming the majority, the general elections tends to turn on which party can best manipulate the small number of "swing voters" in marginal seats.

Where, however, the blood-lust and party loyalties can be sated by electing a prime minister, I see no absolute need to elect MPs. One alternative would be to go for a form of qualified sortition, allowing for the entry to the pool of candidates to be voluntary, dependent on satisfactorily passing an examination and meeting other criteria.

In an optimal system, each successful candidate would serve one term only but, for the "upper house", a proportion of the lower house could be elected by their peers to serve a second term in the revising chamber.

It follows from this that representative democracy has had its day, and we need to be looking at direct democracy, which we examined in the form of The Harrogate Agenda.

It has to be stressed, though, that direct democracy should only be countenanced in the context of a formal, written constitution, guarded by a constitutional court and protected from interference. After all, the purpose of a constitution is to set constraints on power, and to protect the rights of minorities. This is no less important when people have the ultimate power.

However, before any serious change can be mooted, there needs to be a serious debate in this country on how we organise our politics. Away from the political class, few will disagree with Rafael Behr's underlying premise that the political system is broken.

He is also right to hint that, at some time a "force" will emerge that disrupts the two-party arrangement. He warns that it is "unimaginable" right up until it happens, but fails to say that the unimaginable could also be messy and very violent.

Thus, be either have to imagine what change would bring about better governance, or let the unimaginable take its course, the likes of which are unlikely to be an improvement on the current mess. Basically, either we talk now or perish later. That is the choice.

Also published on Turbulent Times.



Richard North 29/07/2021 link

Brexit: sweet reasonableness

Wednesday 28 July 2021  



Just when you think the situation is settling into a predictable rut, something turns up which puts it on a different level. In this case, it is a move (or non-move) by the Commission: it has decided to pause the infringement action against the UK government, instigated for failure to implement the Northern Ireland Protocol.

The official story is that this has been done to ease rising tensions and thereby preventing a further deterioration in relations, presumably on the assumption that this will enable dialogue to continue without the prospect of a legal case hanging over the talks.

Thus, in leaden Commission-speak, the narrative is that the pause will help "provide the necessary space to reflect on these issues and find durable solutions to the implementation of the Protocol".

Just as plausible, though, is the possibility that the Commission is playing "sweet reasonableness" card, in the manner of Matthew Arnold. Doubtless, the intention will be to further to isolate the Johnson administration and to strengthen the impression that the UK is the bad kid on the block, reinforcing the legend that the "colleagues" have gone the extra mile in an attempt to make the Protocol work.

This would actually make more sense, as the UK has already rejected every move made by the Commission, sticking to its demand that the Protocol should be renegotiated, against the threat of invoking Article 16. By appearing to be extra conciliatory, the Commission loses nothing and takes the moral high ground – for what it's worth.

This goes very much with the publication yesterday of a three-page draft setting out: "Examples of flexibilities identified by the European Commission in an effort to facilitate the full implementation of the Protocol on Ireland/Northern Ireland".

Yet, the very first of these "flexibilities" is the offer of a "Swiss-style veterinary agreement" which, the Commission says, would remove most checks on Great Britain – Northern Ireland trade, even to the extent of making this a temporary agreement which could be reviewed once the UK concludes new trade deals.

But, as I pointed out a while back, there is no such thing as a "Swiss-style veterinary agreement". This is, in fact, a much broader agreement between Switzerland and the EU, of which veterinary matters are just a part.

What particularly sets this agreement apart from the very specific veterinary agreements – such as that between New Zealand and the EU – is the institutional architecture, and the integrated nature of the Swiss and EU authorities.

Not least, as I pointed out in my earlier piece, the Swiss Federal authorities have agreed to allow the European Commission to take the responsibility for overall coordination, inspections/audits of inspection systems and the necessary legislative action to ensure uniform application of standards and requirements within the Single Market.

This is on top of the Swiss authorities adopting a huge tranche of Single Market, Animal Health and Plant Health law. The EU and the Swiss also maintain a joint veterinary committee to coordinate actions, and the Swiss adopt the EU's surveillance and administration systems, including TRACES. Sharing of information is mandatory.

One only has to explore the details of the Swiss arrangement, therefore, to appreciate that its adoption by the UK would not be politically tenable. In certain respects it goes even further than the EEA Agreement and, if that was unacceptable to the British government, it doesn't take much to work out that something involving an even greater degree of integration would not exactly fly.

On the other hand, the UK proposal of a dual regulatory system applicable to Northern Ireland is equally unacceptable to the EU. This would entail the full SPS regime being applied to goods, on entry to Northern Ireland, when they are intended for export to Ireland, and no checks on items that are only ever intended to be consumed in Northern Ireland.

Since these fixed positions are apparently irreconcilable, there is a sort of logic in the Commission adopting a tone of injured innocence, seeking to position the UK as the unreasonable party.

The big mistake, of course, was Johnson agreeing to the version of the Protocol that formed part of the Withdrawal Agreement. But one can't help but feel that the Commission and the other EU institutions – guided by Michel Barnier – were equally at fault in pursuing a version which, on reflection, was always going to be unsustainable.

At the heart of this, I rather suspect, is the increasing complexity of the SPS "official controls" which have been heavily revised since the 2016 referendum. The bulk of the changes only came into force at the end of 2019 and some of the more onerous provisions have only applied since last year.

It is all very well therefore, taking the view that the parties (and in particular the UK) should have anticipated the problems but, in a very real sense, both sides have been "flying blind", with no experience of how the changes implemented would work in practice.

The irony of the UK position, though, is that even if the Commission accepted its proposals unreservedly, that wouldn't solve the problems encountered by the likes of M&S in trying to service its Irish stores from the British mainland.

This is part of the reason why I suggested a more fundamental review of the official controls. But, each for their own reasons, neither party is up to the job of rethinking the systems that have been agreed and are now subject to dispute.

To an extent, the RTE report, gives the game away. It talks of the Commission's "goodwill gesture" in response to the UK's Command Paper.

That Paper suggested that the EU should agree a "standstill" on existing arrangements, including the operation of grace periods in force, and a freeze on existing legal actions and processes, "to ensure there is room to negotiate without further cliff edges, and to provide a genuine signal of good intent to find ways forward".

But the Commission is only going half way by suspending its legal action. As becomes clear from its official statement, it is only saying that it will "carefully assess the new proposals made by the UK, in accordance with the necessary consultation procedures, both internally, and with the European Parliament".

Quite explicitly, it is ruling out renegotiation of the Protocol, instead saying it "confirms its readiness" to continue to engage with the UK, and consider any proposals that respect the principles of the Protocol".

This makes the current move little more than gesture politics. With the UK wanting major changes before it will consider implementation, and the EU wanting implementation of the Protocol without major changes, there is no meeting of minds.

Also published on Turbulent Times.



Richard North 28/07/2021 link

Brexit: on a collision course

Tuesday 27 July 2021  



Whatever could be in terms of a resolution of the Northern Ireland Protocol dispute, it is also evident that nothing rational is going to come from the present cast of actors.

As it stands, the dispute took another giant step to nowhere yesterday, when the Commission issued a statement laying out "practical solutions for medicines supply in Northern Ireland in the framework of the Protocol on Ireland / Northern Ireland, and for sanitary and phytosanitary measures".

This also marked the publication of a non-paper, a proposal aimed at sorting a glitch in the supply of certain medicines to Northern Ireland.

Maroš Šefcovic describes "these solutions" as having "an unambiguous common denominator". They were, he says, "brought about with the core purpose of benefitting the people in Northern Ireland". The solution on medicines, he adds, involves the EU changing its own rules, within the framework of the Protocol.

This concession, apparently, allows for "regulatory compliance functions for medicines supplied to the Northern Ireland market only" to be permanently located in Great Britain - subject to specific conditions ensuring that the medicines concerned are not further distributed in the EU Internal Market.

The medicines concerned here, Šefcovic explains, are primarily generic and over-the-counter products. The solution, he argues, demonstrates the Commission's commitment to the people in Northern Ireland and to the Good Friday (Belfast) Agreement, with a legislative proposal expected in the early autumn in order to be able to finish the legislative process on time.

However. this has had little impact in London. As a UK government spokesman sniffily remarked that the proposal "remains the same as the one [the EU] sent to us in late June" and does not address outstanding "issues and concerns".

While the spokesman then trotted out the usual extruded verbal material, declaring that the two sides needed "comprehensive and durable solutions", the recently ennobled David Frost said that, without a major change to the legal text of the Protocol, the government will consider triggering Article 16.

This seems to represent a step change in Frost's stance. Earlier, he was reported as restraining Johnson from using this "nuclear option", even though he believed the conditions for using it had been met.

Nevertheless, it was made very clear to Dublin that Article 16 was on the cards, with UK officials making clear that it was Johnson, rather than Frost, who was most in favour of triggering the Article. Northern Ireland Secretary Brandon Lewis, was also known to have relayed similar messages to Simon Coveney, Ireland's foreign affairs minister, and Johnson himself has had a telephone discussion with Commission president, Ursula von der Leyen.

With all that, in the context of the UK's Command Paper, it must have been clear to the Commission that, if it had wanted to resolve this issue, its current proposals were not going to do the job. If this is the Commission's final offer, the two sides are on a collision course, where triggering Article 16 now seems inevitable.

If the Commission sees this as an extreme response, it may be because they do not fully appreciate how the political climate in London is influencing matters. Specifically, the Muppet tendency in the Tory party is agitating for the Protocol to be scrapped in its entirety, even at the cost of ditching the entire Brexit agreement, including the TCA.

From that perspective, Johnson must see himself as taking the middle course. On the one hand, he is responding to the extremists in his own party and the DUP leader, who are making their positions increasingly clear.

On the other, he is trying to address the concerns of traders who are having to deal with the realities of cross-border trade, in the context where Johnson gave them the assurance that there would be border checks or additional "red tape".

There is also the view being expressed that Johnson never intended to implement the Protocol and simply intended his "oven ready deal" as a placeholder to get Brexit over the line. And if that is the case, no amount of concessions short of a fundamental renegotiation are going to satisfy the Johnson administration.

The lukewarm response of the Commission, though, could simply be that – to put it at its most elemental – nobody in the EU (Member States or Commission) cares enough to head off the confrontation. Doubtless, they are content to let the procedures take their course, in the expectation that the eventual arbitration (if it happens) will rule it its favour.

And yet, both the Commission and the Member States should by now have some inkling of the irrationality that dominates Conservative Party politics, and the streak of nihilism which verges on self-immolation. There are Tory MPs who would, in the manner of Samson, bring down the temple on themselves, in the pursuit of their Brexit ideology.

In terms of rationality – or the lack of it – one is reminded of the input of Michael Gove on the Single Market prior to the EU referendum. In April 2016, he used a speech to set out "his vision" of what the country would look like in the event of a "leave" vote, declaring that the UK would be part of the European free trade zone with access to the Single Market but "free from EU regulation which costs us billions of pounds a year". This commentary days it all.

But then, in May of the same year, just weeks before the referendum, was reported in the FT saying that the UK would quit the Single Market if the country voted to leave the EU, saying that he wanted the UK to be "outside the single market but have access to it". Full access would include paying into the EU budget, implementing Brussels' regulations and accepting free-movement of people.

This came from a bizarre interview on the Marr Show where Gove actually claimed that the Commission defined membership of the Single Market as membership of Schengen and membership of the single currency. Thus, he asserted, the Commission had it that full membership of the Single Market required you to be in the single currency.

Gove's therefore confirmed that he wanted to be outside the single market. But he also wanted to have his cake and eat it. "We should have access to the single market, but we should not be governed by the rules that the European Court of Justice imposes on us, which cost business and restrict freedom", he said.

When Marr put to him that he was saying that "we would be able to be inside – have the effect of the single market without paying any money in and without accepting free movement of people", Gove responded: "I think the British people want to vote for a deal which you describe as all the advantages and none of the pay-outs".

This represented the thinking at the highest level of the Conservative Party, where "cakeism" became a dominant theme, and still drives much of the dialogue in the Party. And with the discourse stuck at that level, combined with the tin-ear politics of the Commission, it is hardly surprising that this issue is heading towards a collision.

Also published on Turbulent Times.



Richard North 27/07/2021 link

Brexit: reframing the debate

Monday 26 July 2021  



I think it is fairly evident from my writing on this blog that I have little regard for Johnson's train-wreck Brexit settlement, or for the actions of his predecessor, Mrs May, in setting us on the path to an early withdrawal from the Single Market.

As most readers will know by now, my preference was for the UK to continue its participation in the Single Market, via the Efta/EEA route, for a prolonged transitional period. That could have lasted possibly as long as 20 years, to give industry and commerce a chance to adapt to the post-Brexit world.

The end game, though, was that we should work towards fundamental changes in the Single Market, and in particular introducing co-decision for all its participants, thus making good Delors's breach of faith during the original EEA negotiations.

By this means, the Single Market would eventually become a truly European entity devoted to managed trade, the property of all its participants. It would cease to be a tool "owned" by the EU, the primary purpose of which was to pursue political integration.

However, for no good reasons, the ambition of staying in the Single Market after Brexit was not to be. We are now confronted with the undesirable scenario of having to work with Single Market members from outside the bloc, without having secured many of the necessary changes which would facilitate trade with the UK as a major third country, sitting on the doorstep of the rest of Europe.

To that extent, the current controversy over the Northern Ireland Protocol (NIP) is not just an argument over the trading arrangements for Northern Ireland.

The deeper issue is that, through trade with Northern Ireland, and with Ireland itself – which for many firms has become an extension of the UK market – we are confronting many of the infelicities of the creaking, inflexible bureaucratic structures of the Single Market, the alternative description for which is a "regulatory union".

Although denied by many on both sides of Channel – mainly by people with a limited knowledge of the history and objectives of the EU - the Single Market label has tended to obscure its primary function.

And since that primary function was to achieve a political objective rather than facilitate trade, the regulation produced by the EU was (and still is) often badly drafted, needlessly complex and in not a few instances counter-productive (in terms of trade facilitation).

Thus, before it was ready or even properly equipped (institutionally or intellectually) – under the aegis of probably the worst prime minister in living memory, if not for all time – this government is seeking changes to the NIP when it should really be focusing on securing more sweeping changes to the Single Market acquis.

The validity of this assertion is easily tested by reminding ourselves that, had the UK as a whole remained within the Single Market (aka regulatory union) instead of just Northern Ireland, the problems currently being encountered would no longer exist – at least, not to anything like the same extent.

It follows that the ultimate solution to the problems with Northern Ireland is not to address the Protocol per se, but to broaden the scope of the "conversation" with the EU, and open up the prospect of a longer-term (and more cordial) discussion about the management of the Single Market, its structure and the utility of much of the regulation.

If this is regarded as ambitious or unrealistic, or both, it shouldn't be. By way of example, a system which devotes a 409-page regulation to specifying the forms to be used by exporters of animals and food products into the Union has to be considered all bad. This is a system in its terminal stage of bureaucratic decay.

The UK's immediate problem, therefore, is that the focus is still in the NIP with little thought being given to the broader context. And, as long as the issues are constrained by this claustrophobically narrow framework, they will probably defy solution.

Already, the Financial Times is underlining the EU's "sense of irritation at the latest British effort to relitigate the Northern Ireland protocol of its Brexit deal". Understandably, this is seen as an attempt to renegotiate a deal before it has even been fully implemented, raising "trust" issues and drawing criticism about "bad faith".

And yet, even the FT conceded that, "within the maximalist British demands there are some legitimate points". It sees these as "an overzealous EU interpretation of rules", which it categorises as "out of proportion to the threat to the integrity of the single market from British goods arriving in Northern Ireland".

The paper sees the risk as "theoretical rather than real", not least, it says, because there is as yet no significant regulatory divergence. But, in so doing, misses the point. The regulation, as they say of hastily bought pets, is not just for Christmas. It is for life. The EU has to deal not only with the situation as it is now but as it could very well become.

In an expression of political naivety, the paper goes on to say that "Brussels can defensibly argue that the UK can remove many problems by signing up to EU sanitary and phytosanitary rules", compounding the naivety by stating that this conflicts with the UK’s desire for free trade deals, but choosing to prioritise that over a solution is, Brussels might argue, Johnson's choice.

It is though, far more than that – it conflicts with the very essence of the Conservative/Vote Leave mantra of "taking back control". In the current political climate, this government (for better or worse) will not allow itself to be seen to be adopting a legal framework dictated by Brussels.

This is where the idea of ownership becomes vital. When the EEA was first mooted, Delors was talking about "a new, more structured partnership with common decision-making and administrative institutions". This, he conceded, was necessary "to make our activities more effective and to highlight the political dimension of our cooperation in the economic, social, financial and cultural spheres".

In line with the times, he referred to he referred to Mikhail Gorbachev's notion of a "common European house", which had been articulated as early as 1987. But, as an alternative, he offered a "European village", in which he saw a house called the "European Community". "We are its sole architects; we are the keepers of its keys", he said, "but we are prepared to open its doors to talk with our neighbours".

This was in 1989 and, if the need to "talk with our neighbours" was real then, it is all the more pressing now. Political discourse is a two-way street and it must have dawned on the EU by now that the post-Brexit environment has created a new reality. The status quo is no longer an option.

On the other hand, this must also apply to the UK. Currently, it wants a "Brexit standstill" which would see much of the NIP put on hold indefinitely, with border checks held in abeyance. This is about as unrealistic as the EU expecting the UK to conform with its version of a veterinary agreement.

It thus seems to me that the only way we are going to see daylight on this issue is by fresh thinking, with allows both parties to reframe the debate in a way that allows both to live with it. The idea of co-ownership of a common resource – mooted by Delors in 1989 – never really went away, and it now needs to be reactivated.

Either way, something is going to have to give. There is no possibility whatsoever of compromise in the debate as currently framed. The outcome of fixed positions will simply be a long attritional war, with no winners.

Also published on Turbulent Times.



Richard North 26/07/2021 link

Brexit: black crayons matter

Sunday 25 July 2021  



The Daily Mail's intervention in the Northern Ireland Protocol debate was certainly timely, right down to the typically lurid headline:
The EU food fiasco: 720 pages of red tape, Pettifogging rules and how the wrong colour ink can condemn a lorry of food... all captured in one delivery of M&S curry to Ireland, writes HARRY WALLOP
The piece starts with Archie Norman, the chairman of Marks & Spencer, who this week issued a cri de Coeur on behalf of British retailers who export products from the mainland to Ireland.

The backdrop the "wet" border between the Great Britain and Northern Ireland, which means that businesses such M&S "face a nightmare of red tape when they make landfall in Northern Ireland" – currently with goods destined for Ireland and, supposedly after 30 September when the "grace period ends, with goods destined for Northern Ireland.

Be that as it may, despite five years into the Brexit process, Norman still hasn't quite got the hang of things. "It's not the rules of the Customs Union that are the problem, it is the Byzantine and pointless and pettifogging enforcement" he says.

The only correct statement there – unwittingly – is: "It's not the rules of the Customs Union that are the problem". Indeed, these rules are not the problem. The Customs Union is an irrelevance to Norman's business. His people have to deal with the "official controls", which are part of the Single Market.

Then, while he might attribute the difficulties to "Byzantine and pointless and pettifogging enforcement" – which mean that "no less than 40 percent of M&S's consignments to Ireland face a delay of between six and 48 hours" – the real issue is both the rules and their enforcement. The two are inextricably linked.

One might think that the chairman of a former FTSE 100 company – and still in the FTSE 250 – might actually know what he's talking about. But then, we're used to the inverted pyramid of knowledge: the higher they go, the less they know.

Anyhow, Harry Wallop, for the Mail charts the progress of a "disastrous delivery journey" of a consignment of chicken tikka masala ready meals, from a factory in Wales. It was intended for an M&S store in Dublin, but first had to travel to Motherwell Export Centre, where five veterinarians are employed to process the Export Health Certificates (EHCs) which will permit the product entry into Ireland.

All goes well until the consignment reaches Northern Ireland, when the inspector notices that the vet who had signed the EHC for the chicken tikka masala had used a black biro on a form printed in back, despite the small print at the bottom of the certificate stating: "The colour of the signature shall be different to the colour of the printing".

Although M&S say that though "wrong ink" incidents are very unusual (everyone has been vigilant on pen colours since), we do seem to have had a spate of incidents where these gifted vets have had trouble with their coloured crayons.

Perhaps one of the reasons might be linked to the shortage of official veterinarians, and the need to employ foreign vets. But so acute is this shortage that the UK government has asked the Royal College of Veterinary Surgeons council to approve plans to reduce English language requirements for some immigrant vets (from International English Language Testing System Level 7 to Level 5). The council cravenly acceded to this request.

Thus, we have the absurd situation where these vets are being asked sign a lengthy and complex public health attestation on the EHC, written in a language that they poorly understand, where there are as many as 32 fields to be verified, taking as long as three hours to complete. When they cannot even use the right crayons, one has little expectation of their attestations having any meaning.

In reality, the whole exercise is a charade. The hapless vets are supposed to attest that the products they are signing for have been produced in accordance with all the relevant EU regulations and that they have come from an establishment implementing a HACCP programme which has been regularly audited by the competent authority – not frequently, mind you, but regularly. One presumes that the fifth year of every century would suffice.

In addition to that, the vets have to attest that the products fulfil guarantees relating to the residue plans submitted by the competent authority to the Commission, and have been produced under conditions guaranteeing compliance with the maximum levels of pesticides, and the maximum levels for contaminants laid down in EU law.

Yet this is information that neither vets nor anyone else for that matter, some 270 miles from the processing site, can possibly know. They can only take the word of the multiple food operators in the production chain, and will have absolutely no means of ascertaining whether they are being correctly advised. In fact, one would expect their informants to confirm that the products complied in every possible respect, even if they didn't – not that they would even know.

Thus, while we have the bedwetters shrieking with horror at the suggestion that this charade should be dispensed with, there should be a recognition that this form-filling exercise is a complete waste of time and effort, and an expensive one at that.

But, if employing expensive officials, to make meaningless declarations before a product can be dispatched, is a valueless exercise, what price the inspection of the product once it arrives at the border – wherever that might be?

As a food inspector, I once had a colleague who had a "thing" about M&S, resenting what he thought was their smug reputation for perfection. This is a company that employed more specialist health inspectors than the largest authority in England, and honed food safety to a level approaching paranoia. Nevertheless, my colleague in the time I knew him devoted every effort to trying to prosecute M&S for a food safety infraction. He never succeeded.

On this basis, the chance of finding anything wrong during a routine inspection at a border control post is vanishingly small. Applying risk assessment principles, one would not even try. To do so is a waste of resource – more so, when the process of unloading a vehicle and handling the food itself creates marginal but completely avoidable risks.

This farcical process might not be so bad if vets were freely available and could contribute to the safety of the foods, but neither apply. There are multiple reports of vet shortages throughout Europe, recently and longer-term. Furthermore. This is a problem that applies globally.

There are also reports on recruitment difficulties, not only of veterinarians but of their "assistants" who actually do most of the work. But what is rarely acknowledged is the reluctance of food safety professionals to work in a subordinate role to veterinarians who are most often poorly equipped to carry out enforcement work.

But our problems do not stop there. When we have the likes of Archie Norman, with all the prestige that his post conveys, together with government officials and politicians, who have little understanding of the true bankruptcy of the EU's system, there will be little immediate pressure for improvement.

Mere trimming at the edges, though, is hardly a solution. The whole system needs a fundamental re-think, which is not likely to come from the dirigiste, rule-bound European Union, which has a habit of layering complexity on complexity.

However, the difficulties being encountered – which will multiply once the UK starts to impose import checks in October – could very well be the catalyst for change. The more we hear of foreign vets with their coloured crayons, looking up the backsides of chicken tikka masala ready meals, telling us in broken English whether they are fit to eat, the less likely it is that this absurd system will survive.

Also published on Turbulent Times.



Richard North 25/07/2021 link

Brexit: a missed opportunity

Saturday 24 July 2021  



On 12 March of this year, the online newspaper iNews published an article headed: "Cadbury and McVitie's exports to EU will need 'to be signed off by vets' under new rules on food safety". Illustrated by a picture of chocolate digestives with the caption: "Biscuits could be affected".

The story, like so many in the legacy media on the technical aspects of EU regulation, was what might be described as total bollocks. It was based on a copy-out of an article in the Financial Times a couple of days earlier, which was of similar merit – as I explained in my own piece.

Both (and other) legacy media reports, in fact, had completely misunderstood the application of a new law, Commission Delegated Regulation (EU) 2012/630, the name of which rather gave the game away. It exempted certain categories of goods (such as chocolate digestives) from official controls at border control posts, and thereby released exporters from any requirement to secure veterinary certification – the exact opposite of what the papers were asserting.

But what was particularly dispiriting about the iNews report was the complete absence of any sense of outrage at the idea of qualified veterinary surgeons being employed to inspect and certify chocolate digestives. Instead, it recorded that "MPs have already highlighted a shortage of vets to carry out the additional work".

For the record, MPs had not always been so supine. In a Commons debate on 2 November 1976 on the veterinary inspection of slaughtered poultry, Liberal MP David Penhaligon concluded that "the nation could not afford to use people with six or seven years' university training to look up the backside of chickens to see whether they were edible".

Clearly, MPs were made of sterner stuff in those days, as none currently seemed to have demurred at the prospect of graduate vets peering up the backsides of digestive biscuits, to confirm to the EU that they were fit to eat – not withstanding that there was no such requirement.

Alarmingly, not only did MPs seem to be at ease with the idea, Defra was also cited by iNews, stating that it would provide support for businesses to adjust to new trading arrangements and had taken steps to increase vet capacity, then adding: "We encourage the EU to act pragmatically as part of our new trading relationship".

Yet. for all that, this was precisely an example of the EU acting pragmatically, having concluded that certain shelf-stable composite products "pose the lowest risk as regards animal health and microbiological food safety", and therefore could be exempted from the full rigour of "official controls at the border control posts".

It was this that passed my mind when I first skimmed through the Command Paper on the Northern Ireland Protocol, when I noted that the UK government was proposing the application of "risk-based and intelligence-led controls" on SPS consignments as they move into Northern Ireland.

Unfortunately, as I pointed out yesterday, the government was proposing that there should be no need for certificates and checks for individual items that are only ever intended to be consumed in Northern Ireland, a proposal which the EU is hardly likely to accept, not least because it is almost impossible to prevent leakage of goods across the Irish border.

On the other hand, had the government stuck to its point about "risk-based and intelligence-led controls" on SPS consignments – regardless of intended destination – it might have had a much stronger point, and one that could have a possibility of securing much-needed changes to the EU's entire SPS regime.

The first point the government could make is that risk assessment is notably absent from the most of the SPS "official controls" regime, and in particular the sanitary regime as it concerns products of animal origin. Inspection frequencies – with very rare exceptions – are set in stone, at 20 or 30 percent of consignments (depending on their type). No discretion is allowed to officials to reduce inspection rates (although they can increase them).

And yet, with the introduction of the Hazard Analysis and Critical Control Points (HACCP) regime into mainstream EU food safety law since 2004, risk assessment, on the basis of self-certification, is central to the implementation of EU food law. Risk assessment is also, incidentally, written into the Union Customs Code, where the inspection rates for non-SPS goods are determined by customs officials on the spot.

The second point to make is that the insistence on requiring veterinary certification for foodstuffs is not only an absurd waste of resource, and unnecessarily expensive, it is also increasingly impractical, owing to a Europe-wide shortage of vets willing (and able) to do the work.

In the UK, this has already been pointed out, and recently so in the Telegraph which headlined a piece: "Young vets 'only interested in treating cats and dogs, not farm animals'", with the sub-heading: "Farmers warn that attitude is adding to existing problem of national shortage of vets".

What applies to farm animals also applies – in spades – to veterinary certification and (especially) slaughterhouse practice, where so few UK-trained vets are prepared to do the work that we have been reliant on imported foreign vets – many with poor language skills and next to no enforcement experience.

But, while this has been a temporary (and wholly inadequate) gap-filler, this report demonstrates that the shift in the aspirations and expectations of veterinarians is affecting many European nations. The veterinary shortage isn't going to go away.

Part of the solution here could be in following the lead set by the UK which has been ahead of the field in creating a food safety specialism with its own dedicated professionals, instead of bolting-on a food safety module onto the veterinary syllabus. There is a far greater pool of perfectly capable recruits in the food safety field than can be drawn from the veterinary profession.

But the best solution of all might be to dispense entirely with official (veterinary or other) certification and border inspection, using the EU's own risk-based procedures, set out in Commission Delegated Regulation (EU) 2012/630, as augmented by Commission Implementing Regulation (EU) 2020/2235.

Here, the onus shifts to food importers, within the EU. Any food imported must be accompanied by a "private attestation", setting out full traceability details and a declaration by the importer that it conforms with relevant EU laws. An adaptation of this form and system would do much to ease the flow of SPS goods into Northern Ireland, as only goods entering the EU would require certification.

Control though, does no stop there. Although foods might be exempted from border controls, under the 2012/630 regime, the competent authorities of each member state have to perform official controls "regularly, on a risk basis and with appropriate frequency, at the place of destination, at the point of release for free circulation in the Union, or at the warehouses or the premises of the operator responsible for the consignment".

Given that all food for human consumption is already subject to stringent controls at the point of production, there is very little to be gained from rote border inspections, while official certification adds nothing to the safety of the food. Targeted, risk-based controls are definitely the way forward.

Where the UK is going wrong, I think, is in suggesting a different regime for goods intended for onwards export to the EU. A far bolder and potentially rewarding step is to take the EU's own procedures and apply modern thinking to them.

Official certification (and especially veterinary certification) and border inspections are a 20th Century anachronism. The EU should be invited to join the 21st Century and abolish them completely.

Also published on Turbulent Times.



Richard North 24/07/2021 link

Brexit: Von der Leyen rejects

Friday 23 July 2021  



Just for once, HMG is breaking the mould. It is actually coming up some ideas of its own, instead of waiting for the Commission to produce a plan. These are to be found in the Command Paper, framed in terms of "aspirations".

These "aspirations" fall short of "the alternative and more innovative solutions" previously set out during the original negotiations. The government regards them as a "compromise model" as to how things might work, "using the broad contours of the current Protocol".

Taken at face value, it means that the government has abandoned its plans – if it ever had any – of "ripping up" the Protocol. It certainly does not amount, as the Guardian alleges, to dumping it and calling for a "rewrite".

A particular area where the government wants to see change is in provisions for trade in goods, and in particular those goods brought in from Great Britain for which the final destination is Northern Ireland.

As it stands, the default position is that goods coming from the mainland are treated as being "at risk" of subsequently being moved into the Union (via the Irish border), and are subject to customs procedures as they enter Northern Ireland. The only exceptions are for goods which satisfy certain criteria, mostly to be determined by the Joint Committee – which has yet to meet on this issue.

In a fundamental change, HMG wants a system where any UK trader moving goods to Northern Ireland is required to declare whether the final destination of those goods is Northern Ireland or Ireland. Then, full customs formalities would only be required for goods going to Ireland and the UK would undertake to enforce them. Other goods would not require any customs processes.

To make this system work, all such traders would have to agree to complete transparency of their supply chains to enforcement authorities, and to openness of their shipments to controls or checks on a risk-based and intelligence-led basis.

The system would also apply to tariff burdens for traders bringing goods from the rest of the world into Northern Ireland that remain in the UK's customs territory, and would be available to businesses and individuals moving consignments in post or parcels (with no requirement for declarations or tariffs on any consignments destined for Northern Ireland consumers).

This "light touch" procedure would doubtless be popular with UK and NI traders, but one can immediately see some problems with it. For instance, while an NI traders may genuinely believe that goods sold within the province will stay there, their customers may have different ideas, buying their goods with the specific intention of taking them over the Irish border.

This is in the context of cross-border smuggling being a way of life for certain communities on both sides of the border, a practice which enforcement agencies have barely been able to dent. Arguably, it would be extremely difficult to prevent an amount of leakage under this new regime.

What will probably also alarm the Commission is that the UK government also wants this same "light touch" procedure to apply to SPS goods (other than live animals).

Thus, there would be no need for certificates and checks for individual items that are only ever intended to be consumed in Northern Ireland. The full SPS requirements of EU law would be applied for goods going to Ireland and the UK would undertake to enforce them.

Additional confidence in these arrangements, the government then says, could if necessary be provided by an appropriately designed SPS agreement, setting out where UK and EU SPS legislation provided for the same high standards, and providing a means to identify areas of significant difference where the level of risk-based controls might need to be higher.

Bearing in mind that there is no meeting of minds as to what constitutes an "appropriately designed SPS agreement", one can imagine that this would provide little consolation to EU officials.

Nevertheless, the UK government does concede that arrangements of this nature "involve risk to both sides": that goods made to UK rules move onto the EU market, and that goods made to EU rules move to the market in Great Britain.

HMG, however, believes that the risk is "manageable and acceptable", given existing strong market surveillance. It is ready to agree stronger arrangements for enforcement, including clearer rules for product labelling, extensive reciprocal data-sharing arrangements with the EU and Ireland, enhanced forums for cooperating on market surveillance and calibrating it to specific levels of risk, and awareness work with traders.

The government is also ready to put in place legislation to provide for penalties for UK traders seeking to place non-compliant goods on the EU market.

And this is not all. As well as the movement of goods, the government is seeking other changes, not least to the installation of a full dual regulatory regime in Northern Ireland. Goods, whether manufactured or SPS goods, should be able to circulate within Northern Ireland if they meet either UK or EU rules, as determined by UK or EU regulators, and should be labelled accordingly.

Of course, says the government, goods destined or produced for the EU Single Market would need to meet EU rules in full. But goods exported from Great Britain via Northern Ireland to Ireland or beyond would, under the new arrangements, need to meet full normal EU customs processes.

Possibly, though, the most egregious of all the proposed changes concern the governance of the protocol, and the institutional arrangements. Without going into detail, the UK government is proposing major changes, "making the UK and EU into a partnership of equals, both with a strong and direct interest in operating the Protocol effectively".

One can see quite why Ursula von der Leyen rebuffed Johnson's urging "seriously" to consider the proposals.

After a telephone discussion with Johnson, von der Leyen said the EU would "continue to be creative and flexible within the Protocol framework. But we will not renegotiate", thereby closing the door to immediate talks.

As I pointed out yesterday, therefore, this leaves Johnson with only one option if he is serious in seeking changes to the Protocol. He must, in due course, invoke the Article 16 safeguard measures.

Although the very idea of invoking safeguard measures brings the bedwetters out in force, this is a valid action, fully within the framework of the Protocol. It does not involve any breach of international law, as long as the UK keeps to the prescribed procedures.

Any "imbalance" created by such a move does permit the Union to "take such proportionate rebalancing measures as are strictly necessary to remedy the imbalance", but these should be seen as remedies, rather than retaliation, as they are supposed to address the perceived imbalance.

The real problems, it seems to me, will come if the issues which give rise to the safeguard measures adopted by the UK are not resolved. This will leave parts of the Protocol effectively suspended, which is not a situation the EU will be able to tolerate. It will have to look for a long-term solution.

However, if Johnson or Frost think they have offered a "compromise" solution which will eventually be accepted by the EU, they are probably going to be disappointed. While there are areas where the EU could reasonably be asked to relax its controls, these are not to be found in the Command Paper.

At best, therefore, Johnson's initiative is a lost opportunity. At worst, it is the opening salvo in a prolonged war of attrition.

Also published on Turbulent Times.



Richard North 23/07/2021 link

Brexit: ready for the Liechtenstein gambit?

Thursday 22 July 2021  



It's happened as advertised: the recently ennobled David. Frost has delivered his statement to the House of Lords to coincide with the publication of a Command Paper proposing changes to the Northern Ireland Protocol (NIP).

Considering that the Protocol is 63 pages, there is not a lot of detail to be going on with in the Command Paper – which is a mere 28-pages long, bearing the somewhat optimistic title "the way forward".

But then, in keeping with the tone set by the Great Leader, detail is not the "thing". We are dealing with principles (or the lack of them). There's not a lot of point in the government producing detail if, despite the title of the Command Paper, there is no way forward for its suggestions.

That much became evident within hours of Frost making his statement when the EU conveyed its refusal to entertain renegotiations on the protocol. This led The Times to come up with the startlingly unimaginative conclusion that Britain and the European Union are at "loggerheads", a word that conveys strong disagreement.

On balance, a more appropriate word to use would be impasse. If the EU stays firm in its determination not to talk, then the Command Paper is essentially redundant and we move straight to the next phase, without passing "go" or collecting £200 (or should it be euros?).

This phase is signalled in that very Command Paper, right up-front in Johnson's foreword. There, he asserts that it is "increasingly clear" that we cannot solve the problems encountered simply by "a rigid and unpurposive" application of the Protocol in its current form, on which basis he has "had to consider" whether invoking Article 16 is necessary.

Although he thinks use of the Article would be justified, he nevertheless concludes "that there is still an opportunity to proceed differently and to agree with the EU a new balance in how the Protocol operates", in the belief that "there is still political will to address shared problems on all sides".

Given that this "opportunity" seems illusory, the Command Paper helpfully sets out the case for using the Article, noting that it can be invoked where "diversion of trade is borne out in practice or would occur". This, according to the text is indeed the case – without any apparent qualification.

Here, the government does have a point. There has, it says, "been significant disruption to longstanding trade flows between Great Britain and Northern Ireland, and a significant, measurable increase in trade on the island of Ireland". It thus says:
The value of Ireland's exports of goods to Northern Ireland is trending far above historical levels in 2021: up by nearly 40% this year compared to the same period in 2020, and by more than 50% on the same period in 2018. Some sectors particularly susceptible to that diversion, such as food and pharmaceuticals, have experienced even stronger growth. Meanwhile, as set out above, surveys continue to underline the disruption being caused to business with Great Britain, with movements of specific commodities (such as chilled meats) seeing particular impacts.
Looking back to the time when this Protocol was agreed, one wonders whether it occurred to either party that a necessary and inevitable consequence of its implementation was going to be diversion of trade. There are no possible circumstances where that wasn't going to happen. If Brussels didn't realise this, then it cannot walk away from the mess. It too agreed the Protocol.

Furthermore, it cannot be denied that the trade diversion experienced is having "societal and economic impacts". Says the government:
…consumers face higher costs and real risks to goods supplies on which they rely; businesses face increased operating costs that put their survival in jeopardy; and, as many businesses and business organisations have made clear, if the flexibility provided by the grace periods were to be removed, there would be questions as to whether food supplies and parcel deliveries would continue without serious disruption, with significant knock-on impacts for day-to-day lives.
However, the government also sees limiting factors, which deter it from immediately invoking Article 16. They actions are limited to the specific difficulties faced, are subject to the uncertainty of an as yet untested dispute settlement process, and would be temporary (though could nevertheless persist, provided they remained strictly necessary to remedy the situation).

This last, bracketed observation is interesting, redolent of the Liechtenstein application of Article 112 of the EEA Agreement, leading to a long-term settlement incorporating an amendment to the treaty. On the face of it, the UK government is being squeezed in the same direction, with a very strong case for invoking Article 16, as drafted. If the EU doesn't play ball, then the only option left to Johnson is to pull the plug.

One wonders, in this instance, whether the EU will be quite as immovable as it makes out. Whether it was intended or not, Article 16 can be used in the event of any evidence of trade diversion, which gives the UK government exactly the justification it claims it has.

Should there be no movement from Brussels, one must thus assume that we will see Article 16 invoked. This would then trigger the so-called "Annex 7" dispute procedure which, in the first instance, imposes a one month "cooling off" period (except in "exceptional circumstances") during which "the Union and the United Kingdom shall immediately enter into consultations in the Joint Committee with a view to finding a commonly acceptable solution".

In the context, "immediate" is relative. We are heading for August when the European quarter in Brussels is a ghost town. But, with the full implementation of the Protocol delayed until 30 September, lodging the Article 16 papers in the near future would give time for full-throated talks to take place when the "colleagues" are back from their hols.

The one thing that comes clear, therefore, is that the UK has Brussels over a barrel when it comes to further talks. Either party entirely within its rights to invoke Article 16 and the EU cannot complain that UK is in breach of the agreement if it follows this route, and then works within the parameters set by Annex 7. One way or another, Brussels must come to the table and talk, either before or after Article 16 is invoked.

Despite this, we're getting a certain amount of rhetoric from Brussels, obligingly conveyed to us by the Guardian, which tells us that EU officials are exasperated by government claims not to have foreseen the changes to trade between Britain and Northern Ireland.

Be that as it may, EU officials apparently did not foresee that the Article 16 text, as drafted, would give an opening to the UK in the event of any trade diversion. The insertion of the single word, "substantial" as a qualifier would have made all the difference.

However, to use that awful cliché, we are where we are. For all that it can be applied, it is unlikely that the situation can be resolved entirely by Article 16. But, by using the Liechtenstein gambit as a precedent, the UK could use the leverage afforded by the Article to force a renegotiation.

Then, of course, we have rock meeting hard place syndrome. The EU is unlikely to be particularly enthusiastic about some of the changes the UK wants and may, under duress, come up with its own (extremely limited) proposals.

That makes it rather unlikely that we will see a resolution by 30 September, or even any time this year. The "oven ready" deal is going to look more like a Jurassic fossil before we are finished.

Also published on Turbulent Times.



Richard North 22/07/2021 link
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