Brexit: an elephant in transition

Wednesday 17 January 2018  

It is heartening to see Lost Leonardo pursuing a theme similar to this blog on the inadequacies of the media and our politicians.

Referring to the Peston interview which we noted briefly yesterday, he records that we have the leader of the opposition and the lead journalist on one of Britain's leading Sunday news programmes talking "total toilet" about the most important political issue facing the country.

This, says Lost Leonardo, is not a failure to understand arcane technicalities, these are the basics, and Britain's political class, even after 18 months, has apparently failed to grasp any of them. "I'm not sure", he concludes, "how it is possible to be this out of touch".

Although it is a constant theme of this blog, the inadequacies of our political and media classes cannot be overstated. They go to the heart of our democracy and impact on the legitimacy of the entire political process.

If our politicians simply don’t know what they are doing, and the media are incapable of explaining what is happening with any deal of coherence, then the fundamental building blocks of our society are missing. It really is that bad, and therefore warrants our constant attention.

One of the most serious failures of the political process, amplified so readily by the media, is the continued presence of Alexander (aka Boris) Johnson and, in this instance, his readiness to repeat the "side of the bus" lie and even add to it.

According to this ghastly man, the UK's weekly gross contribution to the EU would rise to £438 million by the end of a post-Brexit transition period – still picking on the gross payment as the source of his putative largesse.

Even then, Johnson admits that not all the money would go to the health service. "As and when the cash becomes available – and it won’t until we leave – the NHS should be at the very top of the list", he says. This left the shadow Brexit minister, Matthew Pennycook, to state the obvious, that Johnson had no shame after parading a "bogus claim" during the referendum and now inflating it.

On the other hand, we get endless attempts to quantify the costs of Brexit, the latest one coming from Oxford Economics. This time this organisation is suggesting that the UK would still be the biggest loser from crashing out of the EU without a new trade deal – with a cost to the economy of £125 billion by 2020.

It is asserted that the EU would also suffer a "big economic hit" and although the estimated effect on the UK economy is not so very different from our own, the truth is that no one really knows what will happen – even to the extent of being within the same order of magnitude.

Everything in this context depends initially on the nature of the transition period agreed between the UK and the EU – and its duration. And about that, very little is being said – a staggering omission when the importance and the potential impact is considered.

What tends to happen in such instances, when something really important looms, is that the media come late to the party and, invariably, get it wrong. Having devoted so little time to the issues before the event, its people rarely have the depth of knowledge or the grasp of the issues to do the matters justice, whence we get the turgid sludge that is so often our fare.

Yesterday, though, we did get a mention of the transition period from the Financial Times with a front-page story suggesting that Brussels was going to take an even harder stance than had so far been suggested – although it is difficult to see how much more rigorous their approach could be, or whether it could add to the 20 December Commission proposals.

However, according to the FT, referring to as yet unseen revised "directives" drawn up by EU member states for Michel Barnier, the talks have been complicated by demanding that Britain abide by stricter terms on immigration, external trade agreements and fishing rights for the entire transition period.

Apparently, these include extending free movement rights and a special status to all EU citizens arriving before the final day of the transition at the end of 2020. They will also require British ministers to seek "authorisation" from Brussels in order to continue benefiting from EU trade deals that it would otherwise fall out of on Brexit day.

On the immigration issue, the FT is asserting that the changes are being made at the behest of Poland and other central and eastern European countries, and will limit the UK's ability to apply a new immigration system to EU nationals arriving during the transition.

Highlighting what is likely to become one of the hardest parts of the negotiation, the text also clarifies rules for setting fishing quotas. Diplomats said the language aimed to underline that Britain's share of catches in UK waters - fixed for decades under the "relative stability" quota arrangement - was not open to negotiation.

This was something we reported on recently when it appeared in the Guardian and now it seems that there will not be a special procedure to negotiate the total allowable catch in British waters. Instead, EU Member States want to restrict discussions to "specific consultations" which remain "in full respect" of EU law. The UK will only be invited to attend regulatory committees "exceptionally on a case-by-case basis".

Then, to rub salt in the wound, the Member States add language making clear that the legal effect of EU law will be the same on Britain as any other EU Member State. This will mean that the direct effect and primacy of union law should be preserved.

That, we had expected. The essence of the transition already proposed is that of the status quo where we remain bound to the EU acquis for the duration. This is the only way, short of the Efta/EEA option that we can retain full access to the markets of the EU Member States. And if we go this way, the immediate financial penalties should be minimised.

Since, under current proposals, the transitional period does not end until the end of December 2020, only in the extreme circumstances of the talks collapsing before that could we see the worst projections of Oxford Economics come to pass. Such doomsday scenarios now seem to be redundant.

It would make more sense, therefore, for the focus to be entirely on the progress of the transition proposals. So far, we have not seen any formal response from the UK government and the response in general has been so muted that we keep having to pinch ourselves to remind that the proposals have been issued.

Possibly, because the directives are subject to a near-constant process of revision up until they are approved, and they could well change again before a key meeting of the General Affairs Council on 29 January, at which they are expected to receive final sign off, the media and politicians are not taking them entirely seriously.

Thus, the only high-profile politician who seems prepared to put himself in harm's way at the moment is Jacob Rees-Mogg. He is to lead the notorious European Research Group, replacing Suella Fernandes who has been appointed junior minister in MinBrex.

Mogg has been one of the few "ultras" to make fuss of the so-called "vassal state" transition proposals, raising questions as to why the Tory right is being so quite about something which, on the face of it, goes against everything they value in Brexit.

If you Google for "Brexit" and "transition", though, very little shows up, apart from Mogg complaining that accepting the EU's proposals would mean that the UK was remaining in the EU for a further two years. That, he says, is not government policy, adding that "free movement ought to end in March 2019 not two years later".

For many years we got used to the idea that the EU was something that UK politicians didn't talk about, creating an elephant in the room of mammoth proportions. It's replacement now, however, seems to be the transition period. And if only Rees-Mogg and a limited band of his supporters is prepared to talk about it, we are really in trouble.

Come the 29 January, we will see whether the "elephant in transition" is taken seriously. One hopes it will be. The entire Brexit process is going to be shaped by it.

Richard North 17/01/2018 link

Brexit: a media desert

Tuesday 16 January 2018  

A year or more after we started writing about problems associated with customs checks at the borders, post-Brexit, we finally see in the Herald Scotland an article about customs arrangements when we leave the EU. The story in the paper is couched in terms of one of Scotland's more important industries – whisky production – about which we hear specific concerns from a leading distiller.

This leading distiller is Martin Leonard, managing director of Airdrie-based Inver House Distillers and he fears that the new customs system will be ill-equipped to deal with the huge increase in workload the UK's exit from the EU is expected to bring. We do not need to explore in any detail the nature of these concerns. The reason for us looking at the article at all is to note how the media is finally catching up with the issues, just as they cease to have any relevance to the debate.

The earlier concern was that, when we left at the end of March 2019, the customs service (HMRC) would not have the software and systems in place to handle the huge increase in workload that is expected. However, with Mrs May's commitment to a transitional process – which will give us at least 21 months of the status quo - we are no longer faced with a "sudden death" scenario once the Article 50 negotiations are complete. All being well (for the government), HMRC will have that extra time in which to prepare.

The point thus to make is that this newspaper is trailing badly behind when it comes to reporting the actual situation – something we see elsewhere. The Telegraph, for instance, is offering a travesty of a story on radioactive isotopes, based on an equally illiterate report to a select committee.

Neither bears much relation to reality, as explained on this blogpost last July. Yet that is all the newspaper can manage when it comes to informing its readers.

However, when it comes to recounting the latest twists and turns of the Ukip leader, who has split with girlfriend over racist messages about Meghan Markle, the papers leave no stones unturned. There is no limit to the amount of detail that they will entertain and the speed of their reporting despite the total irrelevance of Ukip.

What is equally relevant is what the newspapers leave out. A classic example is this, where the Tories recently tried to claim credit for reducing credit card charges when, in fact, the initiative had come from the European Union. Meanwhile, The Guardian has discovered the term of "third country" and is taking it out for a spin while having little conceptual understanding of it.

Another example is the recent news on the epidemic of fly-tipping where The Times manages to omit that much of the problem arises from EU legislation and the insistence on phasing out landfill in favour of more costly methods of disposal. The result has been a massive increase in charges which, entirely predictably, had led fly-tipping reaching an eight-year high last year with more than a million incidents in England.

This is an absolutely classic omission which typifies the fourteen years of this blog, where we have routinely noted the media's inability to report on the EU. We have watched as it has hollowed itself out, asset stripping and delegating the serious work to juniors, casually dispensing with its institutional knowledge. Its contemptible ineptitude is far from a new development. We no longer hold any expectations of it. There is no longer a distinction between broadsheet and tabloid.

We also find that television media is in a similar state of disrepair with the likes of Andrew Neil and Robert Peston, they who are paid extraordinary sums to know what is happening, and indeed influence events, still cannot come to terms with the most basic terminology. It strikes us that these people are no longer in the business of reporting news or informing. Rather they are there to produce content for its own sake.

The sole intent now seems to be the production of what is loosely called "clickbait", published solely for the purpose of starting conversations and generating readers, but not with any intent of leading the debate.

Largely, the media are simply adding to the noise. There is no obligation to bring clarity or to set standards for public discourse. And without a media capable of living up to its obligations, and a public broadcaster joining them in the race to the bottom, there is no possibility of an informed electorate nor a worthwhile dialogue between the governors and the governed.

Despite all that, though, there are occasional flashes of usefulness, as with this report in the Independent. The paper has found video footage of a Sky News broadcast from three years ago which has Alexander (aka Boris) Johnson categorically stating he would vote to stay in the Single Market.

When asked whether he would vote to leave or remain in the European Union in the event of a referendum, Johnson says he was "in favour" of staying in a Single EU trading bloc. He wanted, he says, to ensure good trade links with "our European friends and partners".

This not only contradicts his recent stance on the issue during the referendum campaign but also his comments reported recently in the wake of Farage's effluvia, where we informed us that staying in the Single Market was akin to staying in the EU.

This is wholly indicative of the almost complete inability of both politicians and media to deal rationally with the argument over the Single Market. Even in this report, we find the Independent blithely informing us that Norway "has access to the single market but must accept all the regulations of the bloc, including free movement of people into the country".

Such a level of commentary, bluntly, is pathetic – so basic and trivial that it hardly qualifies as an adult contribution. Time after time, though, we get this type of remark uncritically repeated, representing the basic knowledge level of the media. Any subtlety or detail is totally beyond the legacy media journalists.

On the back of all this, we get a report from Lord Ashcroft on the views of his latest focus groups.

Of the 31 weeks since the general election, he muses, much has happened in politics but little of it could be said to have lifted the spirits. Even then, the opposition has failed to open up the clear lead they might have expected over what has often seemed a hapless governing party, and surveys show the Tory ratings to be all but unchanged since polling day.

What we get for many is a Brexit were the story had just become "background noise". Says one respondent: "You kind of zone out of it. It's been going on for nearly two years". Another says, "I'm bored with it. I'm bored to the back teeth so I switch off. You've just got to hope they know what they're doing".

Unfortunately, says Ashcroft, evidence that the government does indeed know what it's doing seemed thin on the ground, and many of his respondents agreed. "It seems a bit shambolic", says one. "A bit patchy, a bit sketchy", says another. And then, on the generality of the news, we get: "Apart from Brexit, all I've heard recently is that the NHS is on its arse, the police service is on its arse, and the exchange rate when you go on holiday is on its arse too".

Our readers, however, don't need a focus group to convey the utter sense of boredom and frustration that pervades the study of politics. Day after day, it's been felt keenly on this blog, sapping our enthusiasm and our ability to stay on top of issues.

To ignore it though would be to distort the record. When the story of Brexit comes to be told, we must convey how the politicians and the media between them managed to turn the most interesting and important issue of the day into an exercise in applied tedium, with the media in particular creating a desert of information.

That media desert is part of the story and one, more than anything, that will probably determine the popular response to the Brexit outcome.

Richard North 16/01/2018 link

Brexit: a complete lack of self-awareness

Monday 15 January 2018  

It was in 2002 that, as the senior staff member on Ukip's European Parliament team, I started talking seriously to Farage about setting up our own think-tank in Brussels. My argument was that the debate had to be driven by the best information available and that we would need to develop a post exit strategy in order to clinch the deal.

I will not go back into the detail of that period other than to say that Farage was committed to his election strategy and all available funding went into financing his ambitions to become a member of the Westminster parliament. Research was nowhere on his agenda.

It took until 2013 for there to be any wider recognition that a formal post-exit plan was needed, leading to the botched IEA Brexit competition, judged by the malevolent Lord Lawson who managed to pick a winner who disappeared into obscurity almost as fast as he emerged.

Come the referendum, the Ukip leader and his party were completely unequipped to fight the campaign, having spent no time or effort developing an exit plan of their own. Worse still, through Arron Banks, our attempts to introduce Flexcit were rejected, following on from the stupidity of Dominic Cummings in insisting that the leave campaign should not have an exit plan.

Following the referendum, we thus found ourselves in a political vacuum, an entirely predictable state of affairs, where the fragmented "leavers" had no settled ideas of how we should manage Brexit, while the self-proclaimed leaver-in-chief departed the field and had absolutely nothing of interest to say.

Now, this intellectual pygmy is returing to the fray with a complaint, enthusiastically retailed by the Observer on its front page, that the remainers "are making all the running" in the post-referendum debate. He fears, as a result, that "our historic Brexit vote could now be reversed".

With an extraordinary lack of self-awareness, this "former Ukip leader" tells the Observer that he was becoming increasingly worried that "the Leave camp had stopped fighting their corner", leaving a well-funded and organised Remain operation free to influence the political and public debate without challenge.

And this is a man who, while actually in post as the Ukip leader, prohibited his staff from reading and remains unware of its contents or the fact that we have never, ever stopped fighting. We have been there, every day, while he prats around in America and on his ghastly LBC radio show, doing anything and everything but focus on Brexit.

Quite obviously lacking any understanding of the processes involved, he whines that the "case for a complete break from the EU was no longer being made", even by pro-Brexit MPs in parliament. Instead, he says, the Remain camp was relentlessly putting out its message that a hard Brexit would be ruinous to the British economy and bad for the country, "without people hearing the counter-argument that had secured Brexiters victory in the 2016 referendum campaign".

And there, writ large, is the ineffable inadequacy of the man. The whole point is that leavers are not putting across any coherent plan for leaving the EU, but are allowing the "ultras" free rein to promote the idea of a "hard" Brexit which could only bring economic ruin upon us.

Farage says he now has a similar feeling to the one he had 20 years ago when Tony Blair appeared to be preparing the country for an eventual entry into the euro.

Amazingly, he then tells us: "I think the Leave side is in danger of not even making the argument", then asserting that: "The Leave groups need to regather and regroup, because Remain is making all the arguments. After we won the referendum, we closed the doors and stopped making the argument".

This, to the Observer is a "rallying call" to us leavers. It reflects, the paper says, "genuine alarm among hard line Brexit supporters that too many concessions have already been made to the Remain side of the Brexit argument by Theresa May's government, and that more could follow".

Yet, when it comes to closing the doors and ceasing to make the arguments, that criticism applies most directly and with greatest force to Farage himself. Even now he has no real (or any) idea of where to go next and how to recover the situation.

However, for all of Farage's inadequacies, we cannot leave the media out of the equation. Through the entire process, it has given Farage a platform and never once challenged his lack of vision. The Forth Estate, which supposedly holds politicians to account, has spectacularly failed to put the Ukip leader on the spot. And now, uncritically, it allows him whine about the travails of the "leave" movement.

To a very great extent, though, Farage is whistling in the wind – as out of touch as ever he was. He fears there is no longer a majority in the Westminster parliament for Brexit and that a "meaningful vote" on the final deal could see it vetoed by MPs.

Despite his, the crux of the matter is that the power resides in Brussels, not Westminster (or even Whitehall). Already, Mrs May is dancing to the Brussels tune with her (so far) uncritical acceptance of the "vassal state" transition process and there is every indication that the UK will be forced into the mould set by the "colleagues".

Given the opportunity to comment on the situation – as he has been – Farage would have been better advised to question Mrs May's negotiation strategy, and her apparent willingness to concede a transition agreement which will so much disadvantage the UK.

That, of course, would require Farage to be a master of detail and, throughout the referendum campaign and subsequently, he has never shown any indication of understanding the issues.

Nor indeed has the other intellectually challenged advocate of Brexit – Alexander Johnson, who privately shares Farage's concerns that the referendum result could yet be reversed. He is warning that Brexit is still far from certain and that leavers in the government "face a big fight" to deliver it.

The "establishment" across Whitehall and the City, he says, will step up efforts to stop Brexit over the next twelve months. He also fears that Mrs May will be worn down and eventually forced to accept a bad deal by mandarins and Remain-leaning Cabinet ministers during the "trade negotiations" that start in March.

It is a measure of the man that he should make this complaint when the trade negotiations don't start until we have left the EU. But we can expect nothing of a man who apparently believes that having to accept diktats from Brussels would leave the UK as "just another Norway", making the referendum "a total waste of time". He would, he says, "rather us stay in than leave like that".

That this is the best he can offer comes as no surprise. From Johnson and Farage, during the campaign we got classic examples of how not to fight a referendum so it would be more than a little optimistic to expect sensible contributions from either of the pair right now.

Hopefully though (and most probably), their contributions are just noise. Farage in particular has been a waning star for some time and the contortions of the new Ukip leader cannot be helping his already tarnished reputation. And as for Johnson, this man is also losing influence with each passing day.

On the other hand, not just Farage but neither seem to have the faintest glimmer of self-awareness – a trait common in British politics. Were they to realise how fatuous they both sound, be might currently be enjoying a period of silence.

But since neither of them have learned to shut up, and the incontinent media will always give them a platform, we have not heard the last of them just yet.

Richard North 15/01/2018 link

Brexit: the cost of the CAP

Sunday 14 January 2018  

Booker is back today, writing about the origins of the CAP. This is something we set out in The Great Deception, a tale that helps explain the real reason why Charles de Gaulle twice vetoed British entry to the EEC in the Sixties to why Margaret Thatcher had to battle for our budget rebate in the Eighties.

The official, entirely bogus version has it that the CAP was devised by a benevolent Brussels to guarantee Europe's "food security" and to save its farmers from the kind of depression they had suffered in the Thirties.

The truth is that, immediately after the war, all Western European countries, including Britain, introduced their own farm subsidies. But by the early Sixties this was leading in France to disaster, building up unsaleable food surpluses at such an unaffordable cost that a drastic solution had to be found.

The clever French noted that the Treaty of Rome promised a Common Agricultural Policy but without giving any details. So their answer was to devise a CAP so absurdly loaded in France's favour that two other countries would not only provide a market for its surpluses but pay for subsidising them into the bargain.

One of those countries was Germany, still atoning for its role in the Second World War, and Britain, which by then had announced its intention to join the Common Market.

Clearly, the UK had to be excluded from the Community until all these arcane financial arrangements had been agreed. Otherwise, it might well have blocked such a one-sided deal.

And that was the real reason for de Gaulle's two vetoes in 1963 and 1967. Only in 1969, at a summit in The Hague, did the French finally get the agreement they wanted, at which point the UK was needed to help pay the bills. Unsurprisingly, the very next item on the agenda was to reconsider Britain's application to join.

The following year, Edward Heath was so keen to get us into "Europe" that he accepted the CAP without demur. In 1973, the year we went in, British farm incomes were higher in real terms than ever before or since. 

But so loaded against us were the financial arrangements for the CAP that, by 1979, it was clear that within six years the UK would be the largest single net contributor to the Brussels budget, of which the CAP was then taking 90 percent: hence Mrs Thatcher's five-year battle to win her rebate.

Since then, much of British agriculture has been in decline. We now import 30 percent of our food from the EU. Much of it comes from France, which continues to be the largest beneficiary of the CAP.

It may seem odd that this strange story is not better known. But the British have never really understood the bizarre form of government we have lived under for 44 years. And this, says Booker, is why we are now making such a horrifying mess of our efforts to leave it.

As much to the point, this provides another important reminder of why we need to leave the EU and why the majority of us voted to leave. Over term, the depredations of the CAP have been an important factor in turning public sentiment against the EU.

Currently Mr Gove is telling farmers that direct payments will be retained until 2024, after which the support would be replaced with a system of "public money for public goods".

That, in itself is no bad thing. We suggest as much in Flexcit on the basis that the scenery created by farmers as a by-product of their activities is of benefit to the nation yet there is no market mechanism for rewarding those who deliver the greatest value.

However, former Northern Foods Chairman Chris Haskins is not convinced that farmers are on to a good thing.

Cynics, he observes, might say that the farmers' positive response to Gove's initiative was simply one of relief. The Environment Secretary seemingly wants to put off the evil day of change for several years, giving the agricultural community more time to prepare.

There are, however, some good things in Gove's proposals. Most people would agree with the suggestion these larger farmers should not receive the full benefits of the subsidies. But, nevertheless, elimination of the existing Single Farm Payment would immediately put the vast majority of farmers into trading losses.

Environmentalist support payments are intended to bridge the gap but those cropping marginal land, which can only produce modest yields, would probably be making a loss under the new scheme. They might convert to livestock but, on marginal land, that is not a lucrative business.

Farming slightly more productive land, but with a small acreage, would result in unacceptable losses. Without the single farm payment, it would take a sizeable arable farm, with productive soil, to deliver even a small profit.

Nevertheless, Gove has not supplied an overwhelming amount of detail on his "ambitious radical programme for a sustainable agricultural environment". What farmers don't know, therefore, is how the new payment scheme, which will require time and effort from the farmer, can compensate for the loss of the single farm payment.

Furthermore, since the UK is less than 70 percent self-sufficient in food, trade deals will be necessary to ensure that food imports are maintained. But that means any new agricultural support programmes will have to be compatible with existing and new trade deals.

Such deals will also be needed to ensure that British farmers are not disadvantaged by imports but Gove will also have to ensure that UK policies do not distort competition of conflict with EU standards. And if the UK supports genetically modified foods, as Mr Gove appears to do – while the EU maintains its ban – this could become an obstacle to a trade deal.

To add to complications, a US trade deal would probably require the UK to lower its environmental standards on US imports. Yet if Mr Gove's proposals require UK farmers to comply with higher environmental standards, that could seriously disadvantage the domestic industry.

All of this is to come, presenting farmers and policy-makers with a new set of challenges that are all part of the Brexit process. Before the CAP came into force, the UK had developed a sophisticated capability. For the decades since, we have had the EU and its predecessor organisations make our policy for us – at huge cost. And now, we have to learn the lessons all over again.

And that is the lesson of Brexit. What we left we should never have joined but, since we did, we now have a mess to clean up and new systems to create. This marks down Brexit not as the end but as the start of a long process.

But there is another lesson which farming policy in particular is going to teach us. Whether we benefit from Brexit is not going to be evident just by going through the process of withdrawal. We will make gains only if we are able to formulate and implement policies which are better than those they replace.

But with no expertise and little transparency to the process (so far), all we have to rely upon at the moment is a series of vague proposals from the untested Mr Gove – a man who most surely will not be in office by the time the new policy is implemented.

Any defects in that policy will add to the already huge costs that the CAP brought us. Thus, with Brexit a chapter may be over – but damage wrought may continue for some time to come.

Richard North 14/01/2018 link

Brexit: muddy waters

Saturday 13 January 2018  

A year after the referendum I was complaining that the "Ultras" had been thrashing around so much that they had muddied the waters. And if they kept it up, I warned, Brexit could go belly-up.

But whether it's the "Ultras" or others muddying the waters, the real point is that Brexit ain't in the bag yet and, as I observed, "it ain't in the bag until it's in the bag". If we lose momentum – as we seem to be doing - we really could end up seeing our dreams drain away into the sand.

Maybe, though, what we're seeing is Brexit fatigue. The cold and the long nights of winter always have their effect and, without any positive developments to bolster our spirits, it is only natural that we're downbeat. Under normal circumstances, when the nights shorten and the temperatures start to rise, the mood might improve of its own accord.

The trouble is that this is so much more than winter blues. The substantial failings in the government's Brexit strategy are sufficient in themselves to cause overwhelming gloom, while the inability of the various campaigning groups to focus on the mechanics of withdrawal is justification for any amount of despondency.

Amid this gloom, however, there has been one bright spot in the way the Irish authorities, media and businesses have reacted, leaving their UK equivalents flat-footed by comparison. And from their media we have been able to get some inkling of how Brexit is developing.

But even that has been something of a mixed bag. The Times, for instance, is conveying the views of Julie Sinnamon, head of Enterprise Ireland.

She has it that Irish businesses are still in denial over the impact of Brexit more than 18 months after the referendum result and have failed to plan for the risks it poses, blaming "wishful thinking" for companies' slow reactions.

Irish businesses are faced with a series of existential threats greater than those affecting UK operations. One can only observe that if they are unable to confront those threats, it is hardly surprising that UK operations are failing to respond in an appropriate or timely manner.

From that, one can infer that it may take some time yet before UK business as a whole fully appreciates the nature of the threats posed by Brexit and gears up to protecting its own interests. If there are stages of denial, then over here we are in the stage that currently dominates Irish business.

We are not helped in any way by the refusal of government to spell out its precise demands (or expectations) for the future relationship with the EU. Without any firm (or any) formal relationship having been defined, there is nothing for business to plan against. It can assume that plenty of notice will be given before action must be taken.

Another level of uncertainty arises from the failure of the German political system to agree the coalition necessary to form a government. As a result, policy signals coming from Merkel have been weak and ill-defined while SDP leader Martin Schulz has been given room to speculate on the EU's future, calling for a United States of Europe by 2025.

Recent developments though, have delivered a result, with Merkel's conservative Christian Democratic Union and Schulz's Social Democrats agreeing to enter formal negotiations with a view to forming another grand coalition.

One of the first casualties of the deal has been Schulz's grandiose plans for the EU, but the parties have agreed that Germany should increase its budget contributions to the EU. They have also agreed in principle to eurozone reform.

It will be a while yet before Germany is able to form a stable government – perhaps not until after Easter, leaving some elements of Brexit hanging while the EU's largest and most powerful contributor concentrates on its domestic affairs.

Various corners of the debate, therefore, are conspiring to defer decision time of Brexit, while boiler-plate drivel from the likes of the Legatum Institute serve further to muddy the water.

What is probably meat for future historians, we have a remarkable situation where there seems to be an inverse correlation between the need for urgency and the intensity of activity. The more important and urgent it is that our politicians come to a swift conclusion on Brexit, the less they appear inclined to do so.

On the other hand, there is the question of focus – or the lack of it. The more we need to concentrate on the resolving the detailed technical issues, the more it seems the media and the politicians are prepared to dissipate their energies on distractions such as another referendum or whether Article 50 can be revoked.

This raises the question that we have mooted several times and at diverse levels – as to whether the political system (and its media handmaiden) is actually capable of undertaking anything as complex as the Brexit negotiations.

As I think more about this – in the context of the situation deteriorating rather than improving – it seems to me that we should abandon any ideas of seeing the government deliver an effective or rational Brexit. There is simply no point in seeking out something that the government is incapable of delivering.

If this becomes the vade mecum, then we could see the politics of Brexit undergo a fundamental change. Instead of devising the best possible exit plan – as we attempted to do with Flexcit – perhaps the better strategy is to assess the modes of failure which we can expect.

In anticipation of failure – which we must treat as inevitable – we then look to devising piecemeal recovery programmes which will seek to reduce the adverse effects. In other words, we do not treat failure as an abnormality which we seek to avoid. Failure becomes the norm and the primary focus of policy is the response to failure. Planning becomes a matter of predicting how government will fail and devising the appropriate remedies.

By way of an example, we can expect the government to chase after a thoroughly unsatisfactory free trade agreement, which will prove highly damaging to the UK's economic interests. Strategy thus becomes a matter of devising programmes which will overcome the worst effects of such an agreement.

One might, in this context, look to beefing up our attempts to promote multilateral sectoral agreements to reduce the impact of non-tariff barriers on high value exports of interest to the UK, thereby mitigating the damage caused by an unsatisfactory FTA which fails to reduce NTBs.

In this there is a certain amount of irony, at a personal level. It was two decades ago that I attempted to move away from my speciality of food safety but, every time I do, I seem to get dragged back. In this context, one of the advanced food safety management systems we were considering back then was the concept of failure mode analysis – now better-known as failure modes and effects analysis (FMEA).

Turning full circle, FMEA-style policy-making  could end up at the heart of Brexit planning – an attempt to gaze into the murky waters of political failure and recover something of value from the incompetence of our politicians. Expecting something useful in the first instance is probably too much to ask.

Richard North 13/01/2018 link

Brexit: the burden of reality

Friday 12 January 2018  

It is given, one would have thought, that a massive trade bloc such as the European Union (or the EEA) would not be too concerned with deciding what sort of relationships it wants with its smaller trading partners.

In the general scheme of things, the more pressing need is for the smaller partner to define the sort of relationship it is seeking, and then to prevail on the larger bloc to give it what it needs.

To a very great extent, that seems to have been the view taken by the EU in relation to the Brexit negotiations. The UK is the party that has decided to leave the EU – and also the Single Market. It is therefore, up to the UK to set out what new relationship it wants with the EU, at least as the basis for discussions from which a scheme could emerge.

This, though, it not the current view being taken by Chancellor Philip Hammond. He now seems to be of a mind that it is up to the EU to produce its own ideas of how Brexit should look, instead of "obsessing" over how to "punish" British voters for their temerity in voting (by a majority) to leave the EU.

It was, he has been saying, up to European leaders and "Eurocrats" to specify what they want from a post-Brexit trade deal instead of (supposedly) sitting back and waiting for Britain to do all the legwork.

One may take one's own view as to how appropriate Mr Hammond's stance might be on this, but it takes very little to imagine how this might go down in the couloirs of Brussels. Simply by reference to the Joint Report and the latest set of European Council guidelines, one can readily see that there is not exactly a meeting of minds.

Then, even if there was some merit in Mr Hammond's view, it is more or less a matter of certainty that the EU (whether the Council or Mr Barnier's negotiation team) is not going to take much notice of it. The intervention of the Chancellor thus does nothing more than demonstrate yet again that our politicians are completely out of touch with reality.

Yet another of those is our revered (not) prime minister, who has been roundly condemning the EU for creating new barriers to trade, oblivious to the fact that such barriers that we (the UK) will have to confront are already in existence. The problem is not that new barriers have been erected, but that Mrs May, through her rash decision to quit the Single Market, has placed us on the wrong side of them.

This is something that our political masters seem to have extraordinary difficulty understanding, which really confirms that they have a limited grasp of the realities of the Single Market and how the EU's trading systems actually work.

Once again, therefore, we have to confront our own reality – that those in charge of our Brexit negotiations simply don't have sufficient knowledge and understanding to enable them to function effectively. Nor is the opposition any better. As a result, these people are expecting outcomes which simply can't be realised.

What makes this surreal is that, as we move towards the next round of the negotiations, issues raised previously and as yet unresolved will be re-presented. If not on this round, the scope for ambiguity will be reduced and eventually we will get to the point where reality and expectations collide. From that wreckage, one presumes, an agreement of sorts will have to emerge.

However, no amount of false expectations or wishful thinking is going to make that agreement better than the EU is prepared to give, or can be allowed by Union law. The limitations which affect the process are real.

What is truly delicious about the situation – if you're minded to look at it in such a fashion – is that reality is already making a guest appearance. German government officials, it appears, have made it clear – via the Bloomberg news agency – that the UK is likely to secure a deal with the EU which covers the all-important financial sector only if the government continues to contribute to the EU budget and ensures full conformity with the acquis.

Still more writing on the wall comes with news that fishing quotas available to fishing vessels from other Member States are likely to be set by Brussels, with the Common Fisheries Policy (CFP) remaining in force for the duration of the transition period (and perhaps beyond).

This, of course, will mean that EU Member States will have a say in how the UK fisheries resource is apportioned, although the UK government will no longer be represented on the fisheries council and will not be involved in setting fishing quotas in non-UK waters.

Where Michael Gove will go with this remains to be seen but last year he was puffing himself up as the saviour of the fishing industry, claiming that the UK would "take back control" of its waters immediately after Brexit. Like so many promises made by Ministers, this is looking somewhat premature - to say nothing of forlorn.

In many senses, this sets the scene for the whole Brexit experience. When I prepared a draft fisheries policy with Owen Paterson those many years ago, we concluded that it could easily take five years fully to develop a policy to the point of implementation.

The technical aspects are difficult enough, and there are different views about how UK fisheries should be managed, but a huge complicating factor is the need to consult with and reconcile the multiple stakeholders, many with conflicting priorities and expectations. And, in view of the authoritarian approach of the EU, we could hardly impose something on the different stakeholders and ignore their interests.

So it is with whole areas of policy where, currently, the EU has the easier part of it, having established its parameters within the Treaty frameworks and no longer having to take account of the different needs – not that it ever did. Policy is so much easier when you can avoid the democratic process and retreat behind the excuse of treaty obligations.

But, while the implications of sticking with the hated CFP are absorbed, the EU is piling on the agony by setting out its preferences for post-Brexit dispute resolution. The idea of  a joint committee has been raised but, of the several options canvassed, most ensure that the ECJ takes a lead role.

Gradually, but with almost inexorable certainty, UK options are being closed down as we confront the unpleasant reality that, in the absence of a credible exit plan, the EU is making the running.

Meanwhile, Nigel Farage – the man who never troubled to have a plan and has had no serious ideas about how to make Brexit work - has belatedly pitched into the debate, supporting the idea of another referendum.

He claims another vote would end the "whingeing and whining and moaning" of remainers, a stance which has gained the backing of the ineffable lightweight Arron Banks, another one who could never bring himself to support a decent exit plan.

So it is that, following a collective failure of the Eurosceptic aristocracy to come up with anything better, all the lamentable Mr Farage can do is admit failure and call for another referendum as his idea for silencing the growing volume of concern about the way Brexit is being managed.

I suppose it is possible that he could have offered something even more fatuous, but that might have taken a bit of effort. It is much easier to go with the flow and settle on something that requires almost no imagination and nothing in the way of commitment.

But then, when just about everybody else is being forced, kicking and screaming, to confront the reality of Brexit and the consequences of being almost completely unprepared for the exit negotiations, it is entirely fitting that Farage should retreat so completely from reality and take refuge in an option than could well destroy everything he has supposedly worked for.

Rarely has a so-called "leader" been so bereft of ideas of what to do with his "victory" that he has had to hand the initiative to the enemy to exploit it. And how ironic it will be that the only opportunity we will have to "take back control" is when the EU has finished telling us what to do with our new-found freedom.

We are all aware that freedom doesn't come cheap but neither, it seems, does reality.

Richard North 12/01/2018 link

Brexit: uncertainty

Thursday 11 January 2018  

Still in court in Scotland, I found myself today listening to arcane discussions on the application of EU law to the assessment of fitness or otherwise of the produce from Errington Cheese Ltd.

What we see argued is that, in the absence of definitive scientific evidence as to the nature of microbial contamination and its potential to cause harm, we rely on the so-called precautionary principle which offers guidance as to how to deal with uncertainty – the fact that there is much information which is simply not available to us.

Much nonsense is talked about the use of the precautionary principle but, in terms of making sense the Commission Communication is actually a model of coherence, offering some sound analytical advice on the management of uncertainty.

However, while my enforced presence in court requires me to focus on such issues, it occurs to me that Brexit in this particular context, isn't so very different. The process of EU withdrawal is acknowledged to carry with it enormous levels of uncertainty which have to be dealt with in order to mitigate the risks involved.

The trouble is, as Pete writes in this joint post – constructed between us – is that, when it comes to the the technical aspects of Brexit, most people don't want to know.

Especially when we go to Twitter, the Brexit debate, instead of dealing with the practical issues, has become largely a proxy in a broader culture war where the complexity barely features. Our experience is that the detail is only ever popular when it proves a useful stick with which to beat the government, but as far as shaping the outcomes of Brexit, we might as well be talking to ourselves.

It is an odd facet of that debate, therefore, that those who are least interested in the detail tend to be the Brexiters themselves. The detail which is addressed still very much pertains to the economic argument, which doesn't really have any bearing on the culture war arguments. It's not the economy, stupid. It's all about narrative, and it is sharply polarised. There is virtually no grey area.

Pete and I both find it depressing to note that those who claim to be most motivated by Brexit show the least interest in the mechanics of it. They don't know and they don't want to. That makes our job even harder because we are very often talking to ourselves waiting for the rest to catch up.

Meanwhile, for all the volume of material that has been written on Brexit, we are still left to guess as to the eventual outcome. In some respects we know less now than we did before. As windows of opportunity are missed and options ruled out, we are left with the question of what happens next when the UK government has only a vague idea of what it wants. But then it is increasingly apparent that the EU is equally uncertain.

What we know is that there is a willingness to facilitate a trade relationship, we know the legal limitations of our choices, and the EU is guided by the principle that its own systemic integrity must be preserved while setting no new precedents that could expose it to making future universal concessions. Beyond that there is little we can put our finger on.

This is what puts us in the danger zone. Assuming that Article 50 talks are concluded and we enter into a "vassal state" interim period, there is every reason to expect that process will last far longer than two years and at some point there will be a general election. A lot can happen between now and then. Depending what happens on the domestic front, any number of possibilities present themselves.

Though remaining in the EU by then will be a non-starter, Brexit could very well be kicked into the long grass where the vassal state interim arrangement is morphed into a form of associate membership that will in effect be Brexit in name only. Precisely where we didn't want to be which is why we advocated the EEA, suboptimal though it may be. If nothing else it has the virtue of getting us out.

As to the more immediate debate, we are still waiting for the penny to drop. The nature of the transition would very well be make or break or Article 50. It all depends on how much of a fight hard liners put up. Given the parlous state of the Tory party and their natural tendency toward conformity, it would well be that all we see is bluster and the stamping of feet before caving in at the last minute.

Whether or not the EU plays hardball remains to be seen. From the diplomatic chatter and the noises on Twitter, there seems to be willingness among member states to be flexible, but there is no reason to expect that politicians from Member States are any more informed than our own when it comes to the legal limitations and though the EU may, in spirit, wish to be more accommodating, they are still going to play it by the book. It is a creature of rules.

This is where Brexiteers will have boxed themselves into a corner. Having taken no interest in the details or attempted to engage in this reality, they will not know what is happening to us or why. This will have them retreating to their comfort zone of demanding a walkout (to little avail), not least because they are unable to offer any workable alternatives. Especially after having ruled out the EEA.

In effect we are seeing our chickens coming home to roost. Having set upon this enterprise without a plan and having decided the details don't matter, the high leavers seem to have vacated the field. Apart from vague aspirations of a "Canada-plus" option, we have nothing really to go on.

Here, never more has the aphorism "nature abhors a vacuum" been appropriate. Leavers cannot be surprised if the technocrats move in and take ownership of it. The arrogance of the Eurosceptic aristocracy will be repaid in full.

What happens in the next few weeks will probably decide which way this goes. The legalities of a vassal state transition are fraught with their own stalling points, where UK red lines will melt away at the first exposure to reality. It will become apparent that we are in for the long haul and we may need an extension as well as an interim. We can only guess.

One thing that looks to be a declining asset is the prospect of reversing Brexit altogether. While the so-called "ABC campaign" may be looking for fame and glory in this respect, none other than the Daily Mail is telling us that the egregious Jean-Claude Juncker has called upon Member States to abandon hopes that Brexit will be reversed.

This is in the context of the new multi-annual financial framework (MFF) period looming, with the Commission president warning that the EU-27 should be looking for an uplift of at least one percent of the budget cap, to enable the EU to meet its expectations.

The EU is also dreaming up innovative new taxes, such as the plastic tax in order to plug the budget shortfall left by the UK's departure.

This, plus Juncker's pessimism are probably the first really tangible signs that the EU hierarchy have come to terms with the UK's departure as a permanent fixture, something which will become more and more apparent as they look towards a UK-free future and make their own plans.

With all that, Pete looks forward to February, when we might be able to see a bit of clarity and some of the fog induced by that growing sense of "Brexit fatigue" begins to disperse – or not.

At the moment, the Brexit environment is cluttered by the residual expectation that someone can make it all go away but, once we get used to the idea that we are going to leave and nothing is going to stop it, sentiment may harden and people will learn to confront the new reality.

But it's then, finally, that the impact of uncertainty will kick in. We will finally have to confront the fact that so much time has been wasted and we are no further forward in knowing our fate than when the referendum results were first announced.

Uncertainty thus will become the dominant ethos for the next year and, once we see it take its grip on the body politic, we might at last see some determined efforts to resolve the many outstanding issues. Cited as the downside of Brexit, it could eventually be the thing that kick-starts the process and makes it happen.

Richard North 11/01/2018 link

Brexit: Barnier the torch bearer

Wednesday 10 January 2018  

Up in Scotland, I'm sitting in as an expert in Hamilton Sheriff Court each day, on the Errington Cheese food safety case. I look like doing this for the next three weeks, during which period (towards the end) I will be called upon to give my own views on the proceedings.

This is not something I wanted to do and I'm acting in a pro bono capacity so it's detracting substantially from my main activity – maintaining this blog – to absolutely no personal advantage.

Thankfully Peter has was able to take up the slack yesterday, and you'll be seeing more of him in the next weeks. I'm also hoping that Boiling Frog may do the occasional post, and there's always the possibility of falling back on the time-honoured device of the open thread.

One thing that does strike me is that, with just a few days away from the coal face, Brexit begins to look like another country. Getting back into the swing of things is extraordinarily difficult as the subject seems so unreal. One begins to understand how people outside the loop, in what is whimsically called the "real world", feel about the issue.

Easing me back into the unreal world of Brexit, however, is Michel Barnier who has offered yet another speech dealing with aspects of our preoccupation, this one to the Trends Manager of the Year 2017 event in Brussels.

Barnier started off by saying that 2018 will be a decisive year for the negotiations, even if I somehow doubt that. But then, who am I to argue with the EU's chief negotiator. How could he possibly be wrong?

Doffing his cap to the historical association between the UK and Belgium, he told us that there was a time when England's prosperity depended on the wool trade, particularly with Flanders. A reduction in the supply of English or Scottish wool yarn could threaten the jobs of thousands of Flemish artisans.

Some centuries later, he said, it was an Englishman, William Cockerill, who imported the first machines for spinning wool to Verviers, in 1799, and then the steam engine to Seraing, making Liège the starting point for the industrial revolution on the Continent.

Today, he said, the UK is still an important partner in Belgium, representing seven percent of the trade in goods. But, in a very obvious barb, he noted that 68 percent of Belgian trade was with other Member States - almost 10 times more.

To Barnier, intent on promoting the EU myths, what makes our European economies strong is the Single Market. The British know this well, he said, since it was the main reason why they joined the EEC in 1972.

That's actually a bit of a stretch as it was the Common Market we joined, and that was not very much more than the Customs Union. It took until 1992 before the Single Market really got cracking, by which time we were dealing with Maastricht and looking for a way out or what was more obviously becoming a political union.

Nevertheless, for good or bad, the Single Market will still have 440 million consumers and 22 million businesses after the UK's departure. Beyond facilitating trade between members, it also helps EU-based businesses succeed in international competition, thanks to the collective negotiating power and EU rules and standards, which are often adopted worldwide.

This, of course, is why we need to be careful leaving the Single Market. Eventually, we must – but it's a matter of how and when, rather than whether. That, though, is obviously too subtle for the Muppet Tories and our own government.

Predictably, though, Barnier is all about preserving the integrity of the Single Market, which is not negotiable. But he does admit that the UK will remain an important market for the EU, and he acknowledges (something we've not heard so much about) the concern expressed by EU businesses about Brexit.

Since day one, Barnier said, he has asked himself three questions. Interestingly, these are questions which our own idiot politicians could ask, but never will. And it is the first which sets the scene: "Does the UK want an orderly withdrawal or a disorderly withdrawal and is it ready to assume the immediate consequences of its decision to leave the European Union?"

The man sort of answers that question and we can infer from it that the UK's response to the new guidelines on the transition period is part of it, as well as the Irish border and the financial settlement.

The second question is just as pointed, as he is asking what kind of future relationship the UK want with the European Union, noting That this question hasn't yet been answered. However, he says, "we can proceed by deduction, based on the Union's legal system and the UK's red lines. By officially drawing these red lines, the UK is itself closing the doors, one by one".

The British government, he notes, wants to end the free movement of persons, and has therefore indicated its intention of leaving the Single Market. It wants to recover its independence to negotiate international agreements and has therefore confirmed its intention of leaving the Customs Union. And it has said it no longer wishes to recognise the jurisdiction of the ECJ, which guarantees the application of our common rules.

Here, there is quite obviously an element of special pleading, but it allows Barnier to say that the only model possible for a long-term relationship is a free trade agreement. And, with brutal frankness, he reminds us that, however ambitious, it "cannot include all the benefits of the Customs Union and the Single Market".

That we will not get the market access we want is not a question of punishment or revenge, he says. "We simply want to remain in charge of our own rules and the way in which they are applied. As it seeks to regain its decision-making autonomy, the United Kingdom must respect ours", Barnier says.

Then, whatever the exact framework of the future relationship between the EU and the UK, businesses and public administrations must be allowed the time to prepare themselves for it. That is the purpose of the 21-month transition period although, in reality, the real transition period has already started.

The truth in that context, says Barnier, is that a trading relationship with a country that does not belong to the European Union will never be frictionless, whether VAT statements, and imports of live animals and products of animal origin, "which are subject to systematic checks at the border of the EU when they arrive from third countries".

Barnier keeps telling us this – only for it to be ignored by UK politicians and media alike. I will get some savage pleasure when this smacks them in the face and they start whingeing about it, because it's been on the cards all along.

That then leaves the third question, as to whether the UK wants to stay close to the European regulatory model or to distance itself from it. And the importance of this is that there can be no ambitious partnership without common ground on fair competition, state aid, guarantees against tax dumping and social and environmental standards.

For the first time in the history of the EU's trade relations, it is not a question of encouraging regulatory convergence but of managing divergence. And then, because future agreements with the United Kingdom will most likely be mixed agreements, in addition to the approval of the European Parliament, will require ratification by the 27 national parliaments and doubtless some regional parliaments too.

Much of that, of course, we've heard before, but each time he speaks, Barnier seems to have the knack of adding a little more. And as well as this, he injects the barb that it is the time for a new political resolve in Europe, "and this new resolve is more important than Brexit".

At the UK end of the pipeline, though, we have nothing but lack of resolve from the UK government. A May-style unshuffle and another "ultra" fanatic joining the government, leave Barnier as the bearer of the flame of rationality – even with his occasional flights of fantasy.

But not many in the UK are listening, which means that flame will have to burn brighter and longer. And then, still, most of our establishment don't get it. We're going to need a lot more Barnier speeches before we even begin to get there.

Richard North 10/01/2018 link

Brexit: the long road to democracy

Tuesday 9 January 2018  

This post will be a little bit off piste for Eureferendum, but on a day when the main news is an unremarkable reshuffle today is as good a day as any. What caught my eye was a rare piece of lucidity in The Spectator which neatly describes many of the themes I touched on over on my blog. Noteworthy for the same reason as Dr Johnson's speaking dog. Patrick J. Deneen describes the paradox of Liberalism's failure, which I feel gets right to the heart of Brexit.
In a world longing for liberty, advanced western liberalism seems to have reached a dead-end. Having promised liberation from any constraint that is not chosen by the consent of the individual, we have created nations of individualists who are now responsible to no-one in particular, but simultaneously subjects of an all-encompassing state and international order. That liberalism has succeeded. It has also visibly failed. Western liberal democracies are in a state of internal crisis: by every measure, they are wealthy, powerful, and unchallenged by any ideological contender. But an internal rot has spread as its citizens feel at once powerless amid their autonomy. Liberalism has failed because liberalism has succeeded.

A vast and encroaching political and social architecture is required to establish the conditions for such liberated people, freeing them from bonds of family, community, church, culture, and nation. The state and market together are deployed to replace actual bonds with depersonalised mechanisms that leave people at once free yet increasingly powerless. Family life is displaced by calls to individual authenticity backstopped by a welfare state that will take care of you, cradle to grave. Schooling that reinforces the formation of character is replaced with an education in non-judgmentalism, deracination and "critical thinking" without content.

Cultures must be liquefied in the name of diversity. Religious belief is weakened by appeals to individual conscience and toleration: ancient calls to self-discipline and self-limitation redescribed as "hatred" and "bigotry". Local markets are displaced in preference to a single, world-straddling market. Borders are effectively erased in the name of openness. Liberal humanity achieves perfect freedom, yet experiences this condition as bondage to forces that can no longer be governed, and which have no regard for individual dignity and self-determination.
To me, Deneen is essentially describing the post-war social order in the West, and in his article describes its imminent demise. It is especially applicable to the UK.

Brexiters are often accused of wanting to "wind back the clock" indulging in a moment of nostalgia for a rose-tinted yesteryear that never existed. This is often met with a feeble exhortation that Brexit is about the future whereupon the UK casts off the shackles of the EU to become a hyper-modern, buccaneering ultra-liberal free trade economy. Thin gruel from people who show precisely zero interest in how modern trade is conducted. They have also misread the mood of Brexit.

I would surmise that there is a strong sentiment to put things back how they were; to restore a degree of control and to have a stake in how we are governed. The modern paradigm of governance is one of a managerial state; one which shapes society for the ease of its own administration rather than being a tool of the people to shape their environment. One in which public preference is subordinate to the bottom line on a spreadsheet.

The obstacles to that "world-straddling market"; borders, local jurisdictions and other manifestations of democracy are now spoken of as "technical barriers to trade" which can be bartered away or indeed steamrollered by a supranational court, irrespective of consultation or consent, where the collateral damage is merely a sacrifice in name of the greater good.

Here we must examine the reaction of remainers in the wake of the vote to leave. We are told that the vote to leave was a protest against austerity. This is a comforting lie the left tells itself. It is a self-serving argument on two fronts. Firstly it provides the context for their response to Brexit. Rather than being a matter of economic and political restructuring, the solution is simply to pacify the malcontents with more central spending. Secondly, it absolves them of having to admit that the modern command and control paradigm does not work.

It is born of the belief that we can continue to open up markets to the ravages of globalisation just so long as the plebs are adequately mollified, failing to note that proud men in working class communities want real jobs, not EU grant-funded makework activity.

What is missing is any sense of humanity. A perpetual growth economy can maintain that "vast and encroaching political and social architecture" but in this people become pieces on a board whose livelihoods, traditions and cultures are viewed as entirely expendable.

It can create a world free of adversity, but also a world free of challenges, free of obligations, free imperatives to learn, to strive, and to grow. We are most of the way there now - and it really shows. The grand project is almost complete, with spreadsheet sociopaths now seeking to impose universal basic income, with some even mooting a national food service. I can think of nothing more horrifying; a society run in much the same way as a battery chicken farm where dependency is actively encouraged, leaving the spoils to be divided between the elites.

This, however, is where we reach the crunch. This paradigm only works if they've got their sums right. And they haven't. The system we have built is neither spiritually or economically sustainable. It has over-promised and under-delivered. The entitlements we award ourselves can only be sustained by waves of immigration and a further dismantling of anything we might call democracy. Government has failed to balance the spiritual health of the nation with the economic. One is not surprised to see a nation hooked on Prozac.

But herein we find another paradox. One man's liberty is another's prison. During the referendum I was back and forth to London a lot with The Boiling Frog. We were on a train back to Didcot where for some reason in the buffet car we ended up chatting with another passenger how asked me bluntly "How will Brexit be better for me?". That wasn't an easy question to answer - and it still isn't.

The question was couched in a purely transactional context. As in in how will it affect my finances, will my bills be cheaper, what will it make better? I didn't have an answer because my ambitions and concerns are not wrapped up in my own personal finances. Moreover, I am not dishonest enough to say that Brexit is an economic solution to any known problem.

Brexit is primarily about intangible concepts I first have to explain, and then explain why I think Brexit is the right move, also knowing that it holds no guarantees. It's a pretty weak proposition unless you know the intrinsic value of democracy - which most people don't.

Our interculator was a pretty typical sort. A commuter getting on with his life, living in his world, not especially interested in politics and only really concerned with how Brexit might disrupt his life. That, more than any class or age divide, best explains the division in the country. There are those who want to offload their obligation to follow politics and to participate in it, and there are those who do not. Some people are entirely happy for politics to do its own thing just so long as it maintains the status quo. The only time they are likely to complain is when the train fares go up.

The current paradigm is fine for men like that. If I was him I would have voted remain too. I mean, who needs the hassle? But that's problem. There is nothing that this mode of governance likes more than an emollient population that doesn't ask questions, doesn't get involved and doesn't rock the boat. They very much want to be left alone to carry on building the new global order.

That, to me, is what makes Brexit necessary. Governance is something happening to us, off radar, unscrutinised and largely in the hands of of those same spreadsheet sociopaths. If you leave them to it then you are a passenger of events and entirely at their mercy. You are trusting that they are doing the right thing by you in your interests. As with everything else in politics you have to ask, in whose interests are they working in, and what agenda do they serve?

Ultimately Brexit is about trust in institutions. For whatever complaints I may have about the EU, EU policy and its destination, what is on trial here is our establishment and what it does in our name. In respect of that, Brexit is nothing close to a remedy. The EU may very well represent all of those anti-human ends as described by Deneen, but it is our own government which will spinelessly acquiesce to it.

What makes Brexit more urgent is the the truth juggernaut steaming toward us. The one that says the system is going to collapse under the weight of the pressures placed upon it. The post-war cradle to grave welfare state is crumbling, society is fragmenting and we lack the political tools to shape our response to it. Every difficult question is kicked into the long grass while our ever more remote politics loses its grip on reality. A democratic correction is waiting.

The only thing we can say for certain about Brexit is that it puts politics back into that which has been depoliticised and transferred into the managerial domain. This has already happened. The debate over the future relationship with the EU is really one of what form future adoption of rules and regulations will take. That is not an easy question because at the heart of it is a question of values.

We do not get to choose perfect isolation and absolute sovereignty. But then at the same time we do not want to be passive recipients of rules, lest the whole enterprise be futile. That is why the distinctions between the different modes of Brexit are so important and why misunderstanding them will have major ramifications for the future.

Brexit of itself will not settle anything. As much as politics is a continuum, so is our ongoing relationship with the EU. If anything the EU will feature more in our politics in a post-Brexit world than it ever did while we were members. Ironically it is that which will make us more engaged with Europe, with more attention paid to its policies and its impact on us. There will be more debate over how we craft our response to it. Some fights we will win, others we will lose, but at least that fight will be in full view of the public.

For the next ten years or more, questions will be asked about nearly every aspect of law we have inherited. That which was passed without the application of politics will be subject to public debate. Of each entitlement we will ask whether it is still relevant and whether it reflects our values. Moreover, we will ask if we can afford it.

If anything has dogged British politics it is the residual self-image of being a superpower where we expect many of the luxuries and entitlements a superpower might very well expect. It is ironic that those who accuse Brexiters of clinging on to dreams of empire are those most reluctant to part with the last remnants of it. Though Brexit may be viewed as a political and economic downsizing, I view it more the process of bringing our governance back into line with what we are rather than what we were.

The EU has been the life support machine for that residual self-image, allowing us to operate a foreign policy akin with that of a superpower leading us to take actions which have had horrific consequences here and abroad - actions once again instigated by the vanity of the few rather than the ambitions of the many. If I were to name the most tangible of benefits to Brexit, it is that it revokes the licence from our establishment to play in the globalist sandpit. It constrains what it can do in our name and reasserts our authority over them.

To me, nothing is more important than repatriating the decision making and making it more accountable. This is why the economic arguments of remainers have largely fallen on deaf ears. This is a choice between having a remote establishment which views us as livestock, chasing its own technocratic goals on the basis of spurious and corrupt agendas - or striving for a true democracy that works in the service of the public and their wishes rather than chasing GDP.

The liberalism as described by Deneen is anti-liberty. It shatters the bonds between people, attacks the cultural norms that protect us and removes our means of withstanding those forces over which we have no control. It places the state at the heart of everything and though we nominally have rights those rights melt away when the state itself is trampling on us and imposing its will.

If Deneen is right that we at at the end of liberalism then now is the time to develop the ideas for what follows. For this we need new politics, new institutions and a new system of rights - rights which recognise that in recent decades the greatest threat to liberty is our elites and their determination to erase democracy. We once went to war to take the head of an immovable king. Now we fight to rid ourselves of an immovable establishment.

Peter North 09/01/2018 link

Brexit: hidden costs emerge

Monday 8 January 2018  

It was almost a year ago that I first warned about the implications of Brexit for the pharmaceutical industry. A review of EU law indicated that medicines which had gained their market authorisation in the UK could no longer be marketed in EU (or EEA) Member States after Brexit, putting at risk a £20 billion annual export trade.

Fortunately, from the point of view of safeguarding the business, the industry has been ahead of the game, with many enterprises seeking to transfer UK market authorisations to subsidiaries based in the EU-27, thus obviating the need to seek new authorisations.

Companies are also, we learn, setting up duplicate quality control release processes in in Europe, and transferring key technical personnel, who must be resident in the territories of EU Member States.

But, although such pre-emptive action avoids the "cliff-edge" prospect of disrupting valuable exports, the Guardian is now conveying the news that this will not be without cost.

According to GlaxoSmithKline, Britain's biggest maker of pharmaceuticals, preparing for Brexit will cost the company about £70 million which, they say, will have to be diverted from developing new cancer drugs.

This came from Phil Thomson, president of global affairs at GlaxoSmithKline (GSK), in evidence to the Commons health select committee. Crucially, he advises that something approaching the figure would have to be spent whatever the outcome of trade talks – an inevitable consequence of leaving the Single Market.

Thomson says the company has estimated that 1,700 of its products would be directly affected by a "chaotic Brexit", with new regulation processes, labs and approval systems costing "somewhere between £60m and £70m". But, he adds, "Even if we have a smooth and orderly Brexit process, and we work through with a new [free trade agreement] or a new arrangement, there are going to be costs of that magnitude anyway, but they will probably be more phased".

With a company reporting a group turnover of £27.9 billion (2016), I somehow doubt that a mere £70 million will have that much effect on GSK's overall research and development budget.

Nevertheless, it cannot be denied that this is a real cost and is only what one company has to find. For the UK industry as a whole, I estimated that the costs could reach £750 million which, even for the drugs trade is a significant amount of money and it has to come from somewhere.

A further point is that the costs being discussed are those which affect just one industry, and there will be many more. And while it suits the likes of the Telegraph to mock "project fear" predictions as "wildly wrong", such mockery neglects the steady build-up of real costs and lost opportunities.

For GlaxoSmithKline, Thomson says that his company is "going to do everything we can to minimise disruption" and that will apply across the board. Thus some of the wilder estimates of costs will not come to pass and even some expected costs may not transpire as businesses discover innovative ways to mitigate the unwelcome expenditure brought about by Brexit.

Yet, even now, some costs are speculative. Currently, the Observer is reporting that UK companies "will face" a huge new VAT burden after Brexit.

This, we are told, will affect more than 130,000 UK firms, which will be forced to pay VAT up front for the first time on all goods imported from the EU. Currently, the tax only has to be paid on goods imported from outside the EU but, with Brexit, a uniform regime will apply to all imports.

The British Retail Consortium notes that: "Liability for upfront import VAT will create additional cashflow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process".

However, it acknowledges that there are mitigation measures. These could include companies instituting a revolving credit facility, or utilising import VAT deferment. But, says the BRC, "Both measures require companies having to take out costly bank or insurance-backed guarantees, so would increase the costs of importing goods from the EU".

Then, Nicky Morgan, chair of the Treasury select committee puts things in perspective. "One of the things that has not been explored fully is the implications for tax from Brexit. As Brexit comes closer we are beginning to see the reality of how it will bite. The same businesses that are going to be hit by new customs arrangements also face being affected by new VAT rules".

The very pertinent point she makes is that the financial costs become better understood "as Brexit comes closer". This means that it will become progressively more difficult to dismiss business complaints as "project fear". As I remarked in my piece yesterday, the "ultras" in particular will increasingly be on the back foot.

The big mistake, of course, was to frame the leave campaign in terms of financial savings, with the absurd £350 million painted on the side of the battle bus. Now expectations have been raised, the fact that Brexit – in the short term, at least – incurs substantial costs – is coming as a rude awakening to some.

An obvious antidote to the gloom and doom is to look at Brexit as an opportunity. One of the great absurdities of the global trade in pharmaceuticals is that the two great giants, the EU and the United States, both require products to be submitted to their own, unique approval systems – massively increasing the costs of bringing new drugs onto the market.

But, as I report in Flexcit, removing non-tariff barriers from medicines could deliver annual savings in the order of $50 billion without fundamental changes in the regulatory system.

Elsewhere in the healthcare industry, there is $0.5 trillion tied up in inventory. Common standards applied globally could reduce obsolescence and inventory redundancy, cutting the amount of cash tied up in unnecessary stock and attendant storage costs, potentially saving $90-135 billion (USD) annually.

A concerted attempt to get agreed a single, global approval system for medicines (with regional adaptations) could save much more that this. An independent UK, as a major pharmaceutical producer, would be in an ideal position as an honest broker, to promote a global system along the lines of GHS as applied to the marketing of dangerous chemicals.

Equally, a concerted, globally-coordinated attempt to tackle the scourge of counterfeiting and product fraud could yield dividends which would more than cover the relatively minor costs of delivering Brexit. And again, an independent UK could be in the forefront of the fight.

That such benefits are not being widely aired again points to the uninspired leave campaign, with its obsession on free trade agreements – which continues to this day. Many are of dubious value and financial benefits are often unrealised. And even the most ambitious deals pale into insignificance compared with the potential savings from global agreements.

This, over the coming months and years, is where the Brexit campaign must take us. Lacking a grand vision, it will otherwise fall prey to a death from a thousand cuts, as the bad news on costs accumulates. But a vision of the future, where trillions of pounds is cut from the costs of doing business on a global scale is well-worth the short-term costs of redefining our relationship with the EU-27.

On Saturday, we had "ultras" talking in terms of a display of Churchillian "iron will". Rather, we might be talking of "blood, toil, tears and sweat", as the price of our passage to the sunlit uplands.

Small losses for no gain may be treated as unacceptable, but huge gains in prospect can make even substantial investments worthwhile. Thus, if there are major gains to be had, the unavoidable costs of Brexit can be treated as an investment.

Failing that, as the man said, we end up in tiers.

Richard North 08/01/2018 link

Brexit - the first year - New e-book by Richard North
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