Greek referendum: no singing from the fat lady

Monday 6 July 2015  

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You have to smile at the Commission statement in response to the early results from the Greek referendum.

On the other hand, the Guardian reports that Greece has "delivered a landslide no vote to the eurozone's terms for the country remaining in the single currency on Sunday night, unleashing a seismic political shift that could derail the European project".

"The verdict", it says, "confronts the EU's leadership with one of its most severe crises of confidence and leaves Greece facing potential financial collapse and exit from the euro".

But we've been there before, as I recall joining others in the clamour during 2009, when we were all so certain that we were going to see a collapse of the euro.

At the time, it was also fashionable to call in aid Friedrich Nietzsche, and his famous quote: "That which does not kill us, makes us stronger". And, in the end, the crisis did not kill off the euro. It emerged from its trial of fire, and since it was not dead, one assumes it came out stronger.

Thus, I'm not buying "Grexit" and I'm not even putting money on the Greeks leaving the euro. The "colleagues" have proved resilient in the past, when in far greater peril, and I don't see them buckling now.

One can never rule out either event, so I will readily concede the possibility – especially by accident. But, as it stands, I don't think that either is likely. And if that puts me out of line with "mainstream" sentiment, it wouldn't be the first time. But just at the moment, I don't hear a fat lady singing.

Richard North 06/07/2015 link

EU Referendum: a serious non-crisis

Sunday 5 July 2015  

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Hyperventilation is very much to fore, with all sorts of alarmist predictions over the fate of Greece and the euro. But, as we pointed out, the reality of the Greek economy is that it is totally insignificant in the grander scheme of things. A mere 1.8 percent of the eurozone economy is not going to bring the euro down.

What people also forget is that the EU works on the basis of the beneficial crisis. The political will for complete economic integration was simply not there when the euro was launched, so it was always going to fail. It was meant to. Only through a series of crises could each necessary additional step be legitimised – and this is just another step.

But, before the next treaty which brings a greater degree of economic governance, Greece must be brought back into line. Only then will it be given any relief. This is a country where the government is not only corrupt, and the élite families make the mafia look like amateurs, but the people themselves have been corrupted.

But whether or not Greece drops out of the euro (and I rather suspect it won't), it is not going to give Mr Cameron any breaks. The procedural way out for Greece to leave the euro is to invoke the Vienna Convention on the Law of Treaties.

Article 61 permits a country to invoke the impossibility of performing a treaty as a ground for terminating or withdrawing from it, something which could apply to Greece. However, it could be argued that the "impossibility" arises from Greece's own breach, which would invalidate the Article. In treaty law, though, things tend to mean what people want them to mean.

Whichever way they play it though, there is going to be no opportunity for Mr Cameron to play games as this drama runs its course. But the sooner it's over the better, and we can get back to the main event.

Richard North 05/07/2015 link

EU Referendum: widening the research base

Saturday 4 July 2015  

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I've been doing a bit of thinking. Instead of always reacting to the Europhile arguments, we should be taking the initiative and breaking open their claims with some in-depth studies of our own. But we can only do this is we can get past the basics and start focusing on these instead of rehearsing ancient arguments.

With some powerful minds, such as Dominic Cummings, now in play - and with Owen Paterson beginning take control of the agenda - I am at last a little hopeful that we can see an end to some of the internal squabbling, and the next few weeks could be pivotal. If some semblance of unity is possible, it will be these people, with the ExCom (as we much now call it), who will make it possible.

But our own group, the Referendum Planning Group (RPG) will also have had an important part to play. Niall Warry, of The Harrogate Agenda, Edward Spalton of the CIB, Robert Oulds of the Bruges Group, and Anthony Scholefield, with his Futurus think tank, have all been putting in a massive amount of unpaid work, all directed at making an effective campaign happen.

That said, we will continue to see creative tensions, and it is the constant flow and exchange of ideas on this blog which gives me so much encouragement and inspiration. That's even (or especially) when I'm dealing with my own "black dog", or in throat-ripping mode with the sheer frustration of trying to overcome the obstacles and push the agenda forward.

But what brings all this to a head is a piece in yesterday's Financial Times, one picked over on twitter, as it is another of those FUD pieces on the car industry, this one headed: "German carmakers raise fears over Brexit".

The article itself has carmakers worried about disruption of supply chains, and then lets Matthias Wissmann, president of the VDA, the German carmakers' association, tell us that:
Britain would no longer be part of the single market. And questions of regulation would have to be negotiated, as we do now with Switzerland, between the UK and the EU. This could lead to difficulties on both sides.
This is entirely typical of the genre but, if the Eurosceptic community were united behind a determination to continue participation in the single market after we leave the EU, then this sort of claim, by now, would have withered on the vine. Instead, in the face of so many Eurosceptic factions which actually want us out of the single market, we are left with the weary task of shouting from the margins that we can maintain the single market, and none of the manufacturers' concerns would materialise.

Furthermore, when it comes to regulatory issues, we know full well that the bulk of vehicle regulation is now coming from UNECE, and the WP.29 agreements, to which both the EU and the UK are contracting parties. There is little chance under any circumstances, therefore, that we will lose regulatory convergence, so there would be few "questions of regulation" which would arise.

Given the Flexcit scenario, therefore, the effects on the car industry if Britain left the EU would be neutral – and that applies to continental car-makers as well.

However, over term, we have seen endless propaganda from the pro-EU press, such as in the Guardian and the Financial Times, with a thoroughly dishonest report commissioned by the SMMT arguing that "Europe is fundamental to the current and future success of the UK automotive industry".

When I was researching for this piece, though, I started to get a glimmer of a different vision which, far from supporting this claim, actually completely contradicts it. The UK car industry could very well be much better off outside the EU. Leaving would not be neutral but actively beneficial.

Nevertheless, the essence of this argument is complex. As it stands, the volume market in Europe is vastly over-supplied and competition is high, while car owners, taking advantage of improved manufacturing standards, are keeping their cars longer. As a result, there is enormous price pressure and, while production is expanding, overall profitability is poor.

For the industry, there are different ways of addressing this, but one way is to take advantage of the EU's single market (which for tariff purposes also includes Turkey) and move production to low-cost plants in eastern or central Europe of to Turkey. This is a trend which is expected to continue. It is even happening with high end production.

On the other hand, a way Britain can improve national revenue is to re-shore component manufacture, as we see from the Telegraph which tells us that only about a third of the parts that go into cars made in Britain are sourced here. By comparison, we are told, the figure in Germany is about 60 percent.

The German situation is presented as if this was a good thing, and efforts are being made to grow the UK supply chain. But one gets a clue from this report from the European Centre for International Political Economy (ECIPE) that it is not such a good idea.

ECIPE sees that lack of globalisation as a bad thing, partially explained by EU tariffs on car components and manufacturing equipment. Tariffs, it says, have more prohibitive effects on car supply chains due to the low margins and the vast number of technologies and components that are involved.

Given the variety of components and the vast number in each car (up to 30,000), it is unlikely that components are best sourced from one country or even one region. Tariffs put EU manufacturers "in a disadvantaged position".

Rather than protecting EU components and machinery manufacturers - since the R&D efficiency in the EU on average is lower, and better technologies are available from subcontractors abroad – we end up paying more for less-advanced components.

By leaving the EU, we are able to widen our sourcing and take advantage of the global supply chain. The net result is that we are able to make better, cheaper cars, improving our competitive position. And there is good evidence that, by transferring work to global suppliers, competitiveness improves. It also improves access to emerging markets - if we buy components from emerging markets, they tend to be more inclined to buy our cars. 

What we lose in low-value component production, therefore, we gain in increased sales of finished vehicles and improved profitability. It is the need to improve profitability which is the greatest challenge and, if the UK industry can do that, we stand a better chance of keeping indigenous production. If plants are profitable, there is less temptation to move them to low-cost production centres.

Absolutely to nail this case would vastly strengthen the "no" campaign, but instead of doing this type of ground-breaking research, we and others are constantly having to devote our energies on revisiting the same issues, and going back to fight the same battles, all because there is no agreement on the basics.

Essentially, therefore, there is an urgent need to settle the basics, so that we can widen our own research base, and start doing real damage to the opposition. But if we keep getting dragged back to rehearse the same old arguments, instead of moving on, this ain't going to happen.

As for the scaremongering on the car industry, the evidence indicates that we are more like to lose our industry than keep it, if we stay in the EU.

Richard North 04/07/2015 link

EU Referendum: an eight-stage programme

Friday 3 July 2015  

If you want to qualify to the highest level in music, through the examination board of the Royal Schools of Music, there are EIGHT stages. Yet, to undo 40 years of economic and political integration, some people think SIX stages are excessive.

Richard North 03/07/2015 link

EU Referendum: old politics to the fore

Friday 3 July 2015  

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Having taken no end of hassle from multiple sources for not being a "team player" – or words to that effect – in the anti-EU movement, it must by now occur to even the most ardent proponents of unity that Euroscepticism, and therefore the "no" campaign, has something of a problem.

It was only a couple of days ago that Lord Tebbit was commenting on this essential problem and now, from the other side, we have Lord Hannay making similar observations. But this follows on from my earlier piece on 2 June – exactly a month ago – when I wrote of the shambles in the anti-EU movement which, if anything, is further now from a unified stance than it has ever been.

Even yesterday, I heard reports of plans for a coup within the parliamentary Conservative Party to wrest control of the agenda from the recently formed Exploratory Committee, while it is an open secret that there are major differences between various factions in Westminster. With Farage mocking the lack of unity, there is not the slightest possibility of there being agreement.

If it wasn't for the fact that the putative "yes" campaign was almost as divided, and certainly its equal in incompetence, our multiple bidders to lead the "no" campaign would be in even more serious trouble than they are now.

The great difficulty for us, though, is that why a "yes" campaign can maintain a level of incompetence and still win, we can't. Already behind in the polls, and fighting against our own government and the representatives of the biggest trading bloc in the world, the default position of the "no" campaign is that we lose.

Putting this in a different way, in order to win the referendum, we are going to have to run an inspired campaign. And since Euroscepticism – with the possible exception of the anti-euro campaign – has a record of unmitigated failure, what went before becomes an unreliable guide as to how we should fight the coming campaign.

In short, if there is to be any chance of winning, we must try something different. And while that has inherent risks, innovation is less risky then following the tried and test route. In that direction lies certain failure.

However, there is another element here, which I am increasingly beginning to perceive as a crucial issue and one which over the next few weeks may dominate arguments on the planning process and the shape of the campaign. This is the mistaken belief that the referendum can be fought on the same lines as a general election.

Understandably, political pundits are homing on the similarities, and relying on their experience of campaigning to suggest ways of fighting the referendum, but they are being caught out by failing to realise that there are crucial and irreconcilable differences.

The interesting thing here is that it wasn't always this way, but a facet of campaigning that emerged with Blair's "New Labour" revolution. Up until then (although we can argue about the timing), we were dealing with conviction politics, where political parties held certain fixed principles.

In this political environment, the job of campaigners was simply to sell the party message. But, as Labour was perceived increasingly to be unelectable, it ditched its principles (as in Clause 4) and reinvented itself. Focus-group driven, the strategy became to find out what messages the electorate (and in particular the "swing voters") wanted to hear, and to give them precisely those.

This was possible because party leaders were in control and could define their manifestos. They were able to dictate what should be laid in front of the public and what should be hidden from sight.

If this can be described as "new", conviction-free politics, later to be adopted by David Cameron who has long since abandoned traditional Conservatism, it may still prove the winner for general elections. But it is not going to work for referendums – at least, not this referendum. This one has to be fought on "old politics" lines.

The essential difference in this "old politics" model is defined by the inability to change the message to suit the audience. We were putting to the public the question of whether we should withdraw from a supranational, treaty-based organisation called the European Union. Attendant on that, there are certain fixed events and consequences which cannot be changed.

The first of these fixed points is that the initial period of an Article 50 negotiation is set by treaty for a period of two years, a period which can be extended but only with some difficulty in a process that is uncertain and carries considerable hazards.

Planners, therefore, need to work on the basis of concluding negotiations within a two-year period. Yet, we learned yesterday, for instance, that Mercosur and the EU appear set to reach a formal agreement on tariffs and are close to concluding talks on a trade deal which have been ongoing since 1999 – 16 years so far to cover less ground than the Article 50 negotiations will be expected to agree on.

To agree at all, therefore, is going to take some inventive concessions if there is to be an acceptable outcome. There is no room for messing here. The reality of the treaty provisions cannot be altered. The message is unchangeable – to get through the process, we are going to have to accept a sub-optimal deal. There simply isn't time to negotiate an ideal solution.

Another unchangeable message is that, in order to win a referendum, we are going to have to preserve our participation in the Single Market. And, in order to achieve that, we will have to concede freedom of movement.

These two issues alone will have to define the way we fight the campaign, and there is no scope whatsoever for taking the easy way out and offering voters something more palatable. Old-fashioned skills will have to be re-learnt – the art selling political realities as they are, and not how you would like them to be.

Neither is this the extent of the differences. In a general election, a party can win office with a vote, in percentage terms, in the mid- to high-thirties. To win a referendum, we need more that fifty percent of those who vote, preferably on a high turnout. And to win convincingly, we need to be in the seventies.

Then, in general elections, we see the bulk of the campaigning energy focused on swing voters in marginal seats. In this fight, we have to carry the nation with us. Every vote counts, no matter where it comes from. That alone demands a different strategy. 

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Most of all, though, the campaign is about confronting inconvenient truths, and providing convincing answers to them. Lord Hannay avers that we haven't "heard a cheep from the Eurosceptics about how they would propose to support British agriculture or Britain's poorer regions or how Britain's scientific research would fare in the absence of the substantial net benefits our universities get from the EU's research programme".

Like the rest of his ilk (and much of the Eurosceptic community), he ignores Flexcit. This Hannay has to do in order to assert that: "Perhaps those questions are just too difficult to answer, or perhaps the Eurosceptics cannot agree on the answers to give".

He's actually right on the second part, and he's also right when he says: "But answers there would have to be if we withdrew". The strategy of the diverse Eurosceptic groups at the moment, in the absence of answers, is to ignore the problem and/or to deny the consequences of their choices - like, for most of their choices, we see repeats of the scenes above, as trade grinds to a halt. Or they seek weak, anodyne non-solutions around which the movement could coalesce, in the hope that the difficult questions will not be raised.

The trouble is that Hannay is right. Answers will have to be given, and if we don't raise them, the opposition will. There is no possibility of a fudge, and no opportunity to alter the political realities to produce more palatable messages. We either grasp the nettle, or give up now and stop wasting our time.

This is "old politics". Then as now, they don't compromise, and they don't take prisoners.

Richard North 03/07/2015 link

EU Referendum: FUD-proofing required

Thursday 2 July 2015  

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In an obscure journal, we get another example of the steady drip-drip-drip of FUD coming from the pro-EU scare industry. This time it is Peter Gowers, CEO of the Travelodge hotel chain, who warns that the "hospitality industry must wake up to the potential dangers posed by Britain voting to leave the European Union".

Gowers is, of course, worried about freedom of movement within the EU, which might be seriously circumscribed if we withdraw. It would massively affect the £126bn tourism industry, adversely affecting nine percent of the UK economy.

If we adopted Flexcit, or a variation thereof, there would be absolutely no problem. The visa-free movement of people from the EEA area would continue, with tourism unaffected by our withdrawal. 

On the other hand, if we were to allow the WTO option to go ahead, or any settlement which excluded free movement provisions, we would be looking at very substantial damage to an industry which, as the UK's third largest employer, give jobs to 3.1 million people (2013), accounting for 9.6 percent of total employment.

As it stands, anyone who works directly in the tourist industry, or is closely related to someone who does, might have good cause to fear a "no" vote in the referendum, potentially driving six million or more (including relatives and dependents) into the "yes" camp. Those are votes we can ill-afford to lose.

A coherent "no" campaign, therefore, needs to have a serious, and well-thought-out response to claims that the tourism industry would be put at risk. After all, a case could be made that the UK stands to lose far more through job losses and other economic damage that it stands to save through stopping EU subscriptions.

But, the moment we seek to assure voters that freedom of movement will be maintained, up pops the vexed question of immigration. Somehow, we need a system which can distinguish between genuine visitors, and unwanted immigrants. That, in turn, requires a serious and sophisticated policy response, to achieve something which no current government has so far been able to achieve - real reductions in immigration. 

Here, even walking away from the EU's rules on free movement is not necessarily an answer. While it can be argued that it is a necessary condition for us regaining control of immigration policy (as respects the EU), no one but the wildest of optimists would argue that it was, in itself, was sufficient.

On the other hand, there is a credible alternative argument to be made. Firstly, we could accept the specific freedom of movement provisions of the EEA agreement, shorn of the horizontal agreements which have been added later, that give rights to dependants. Then, we could instigate administrative reforms to the Borders Agency, and implement a raft of measures to reduce "push" and "pull" factors.

By this means, we could achieve an effect comparable to that which could be gained by removing freedom of movement agreement, thereby retaining preferential access to the Single Market.

This, however, is not a certain outcome, but if we are to address the FUD – not unreasonable in the case of tourism – then we have to have some answers. That means a properly argued exit plan, with the authoritative backing of any official "no" campaign.

Those who would argue otherwise need to tell us how they would protect us form the FUD. How is the "no" campaign to counter accusations that hundreds of thousands of jobs are at risk, and millions of pounds, if we pull out of the EU? 

Among the things we need to know is how, if freedom of movement is removed, we would deal with the epidemic of "overstayers" who traditionally comprise a significant component of illegal immigration.It is all very well "closing the borders" to immigrants from the EU, but if there is then visa-free entry from the continent – and a substantial "black" economy - the only result will be a massive surge in illegal immigration from the 32 million who visit our country each year.

In any credible "no" campaign, such issues can't be ignored, and answers can't be delivered "on the hoof". And nor have they been satisfactorily addressed by other sources. If we revert to "free movement of workers", which the original EEA agreement encompassed, then there will be no provision for free movement of people and we will have to revert to reciprocal visa arrangements.

That will, of course, will create no end of stresses, as the EU has made it crystal clear that it is in no mood to make any concessions on the fundamentals. We are not going to get cosy little deals, as between New Zealand and Australia. If we want reciprocity, we are going to have to buy into the whole freedom of movement package. We cannot assume there will be any compromises or half measures. To do so provides the illusion of a solution which is simply not there to be had.

The issues we have to confront, therefore, necessarily make for a complex, difficult and uncertain future. But seeking simple mantras and easy answers isn't the way forward. Complex issues are complex, by definition. We can only go so far in offering simple solutions before we lose touch with reality.

Therein lies the rub. The purpose of a political campaign is to communicate a message. But to complain that the message is complex and difficult, and thus to call for a change of message, is to defeat the object of the exercise. That is like a PR firm being engaged to sell soap and deciding instead to sell bananas because it is easier.

So yes, we have a problem. In the coming campaign, single market access and freedom of movement will be inextricably linked. Any solution will be extremely difficult to present in a clear, decisive way that will satisfy all comers. But there are solutions to be had, and with some inventiveness, we can find a way of selling them.

On the other hand, ignoring the problem, or selling bananas instead of soap, is not going to solve anything. We know what the problem is. We need to deal with it.

Richard North 02/07/2015 link

EU Referendum: Flexcit for dummies

Wednesday 1 July 2015  

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It has been put to me that Flexcit, with its six-stage structure, is too complex for the tender flowers of Westminster. These darlings can only handle one idea at a time, and can only read a maximum of two pages, as long as the text is double-spaced and in bullet-point format.

Seriously, these are the people who would have us believe are capable of running the country, and of building policies that are supposed to keep the machinery of government functioning.

Interestingly, though, this seems to be a one-way problem. A well-structured document of 419 pages is far too difficult to read, but us plebs are supposed to suck up 1000 pages of error-strewn, inchoate garbage and, presumably, come back for more.

However, for those tender flowers for whom even an 800-word, two-page summary is just too difficult, here is Flexcit in a nutshell, written with homage to the style of Joyce Grenfell.

We start with a thing called the European Union, but we can't use horrid words like "supranational treaty organisation". We will call it "Europe". It isn't Europe, of course - that's a continent. So when we talk about Europe, we don't actually mean "Europe", but the European Union.

Now, in order to leave "Europe", we have this thing called a Treaty. Yes, a "treaty", dear, not a treat. It's not your birthday. That's a name for a thing that grown-ups who run countries make. It means they promise to be nice to each other, or nasty in a nice way.

And in this Treaty thing we have another thing called an "Article". Actually, there's lots of these article thingies, but there is one very special article called Article 50 which we want the people in charge of the country to play with.

Yes, dear, I know this "Article" isn't actually an article. No, you can't pick it up, suck it ... or throw it out of a pram. I don't know why it's called an article – it just is. It means a lot of words strung out in a particular order, which lets you do special things.

Look, I'm telling you, the words have to be in that order. If they were in a different order, they wouldn't be Article 50. They might not even be an Article. They could be an order for ice creams. But as they stand, they make up Article 50, and that's our "get out of jail free" card.

Yes dear, I know we said it was an Article. So no, it can't be a card as well. That's just a figure of speech. And no, we're not in jail, as such – although a lot of people think we are. Believe me, we're not in jail. I've been in jail, and "Europe" is not a bit like it. You can get ice cream in Europe. Well, yes, you can get ice-cream in jail as well, but not as many flavours. So it really is different.

Anyhow, with this Article 50 thingy, we can get out of Europe. We give the nice men (yes, and there are some mummies as well), our Article 50 "card" and then talk about leaving for two years, and then we get out.

No, we can't just leave. Don't be silly. And no, we don't talk all the time for two years – this isn't like Mummy and Daddy having a row. We still get to go to bed, and we have to have our dinners, and we even get holidays. And yes, if you insist, we do have plenty of time to use the potty. Yes, number twos as well.

So, what do we talk about? Not that's really quite difficult. You know I said we have this Treaty thing? Well, that is what keeps us in Europe and in order not to be in Europe we have to have another, different Treaty thingy. We just call an agreement, although it is a treaty really - that's what treaty thingies really are.

Now, when we are in Europe, we can sell them lots of ice creams, and they can sell us lots of motor cars – yes, just like daddy's, except his comes from Japan. No, Japan isn't in Europe, dear. Yes, mummy's iron comes from Europe as well. If we just left Europe and didn't have a new treaty thingy, mummy couldn't do any more ironing. Your clothes would be all wrinkly and scrunchy, and that wouldn't he very nice.

So, for mummy to keep on ironing, we absolutely must have this brand new treaty. Only then can we keep selling ice-creams to Europe. Yes, we could sell them cars as well, only they like their cars better.

Right. Now there's a tiny problem here. The nice people in Europe won't give us this nice new treaty unless we promise to let lots and lots of the nice people from Europe come to England (yes, and Scotland, dear, except I don't think any of them want to go there), so they can take our jobs and fill the doctor's, and so all their nice little boys and girls can go to your nice school.

Look, let's not get into an argument here. If we want to sell them ice-creams, we have to let them come here, so you'll just have to put up with having classes in the playground and waiting for your dinner.

But, we do need to make sure that too many people don't come. If we don't,  all the schools and hospitals will be too full and you'll have to wait until supper time to get your dinner. What's more, that nice Mr Farage won't be able to drive to Wales on a Friday evening.

Well, that's why we need stage two of Flexcit. In stage one, we work out how we're going to leave Europe and still sell them ice-creams – yes and irons, as well. In stage two, we work out how many people we will let into England and how we stop too many coming in. And no, dear, I don't think they'd let us just send them to Scotland.

So, we have two stages now. But we need another one. Why? Because there are some horrid people in Europe called bureaucrats – no, bureaucrats, darling, not burrow-cats. No, they're not cats, darling. There's an "r" in there, crats, as in bureau-crats.

Alright, don't cry. We'll call them burrow-cats. And yes, I'm quite sure they look like the meerkats on television. Ok, we'll call them meerkats, then. These meerkats make rules for ice-creams and things. When we were in Europe, we had our own meerkats, and they helped make the rules, but if we leave Europe, our meerkats go home and only their meerkats make the rules.

Yes, it does, matter. If they make all the rules, we could end up with nothing but raspberry ice-cream and no strawberry ice-cream. And daddy's car might have to have pink tyres instead of black ones. No, he wouldn't like that very much … although mummy might.

And that's what stage three of Flexcit is all about. We have to get all our meerkats together, so we can all make the rules together, their meerkats and our meerkats, just like we used to do before we left Europe, only in a different way.

Just different, dear. These are the things grown-up do, they make rules – you know: when you go to bed and how much pocket money you get. And they make rules about ice-cream as well. And in stage three of Flexcit, we ask UNECE to do it. No, not Eunice, dear, UNECE, U-N-E-C-E.

Well, I'm sure Eunice would make a jolly good job of it, but she's gone to her granny, so we'll have to ask UNECE to do it. No, she isn't a "she", she's an "it". Yes, you're quite right, it's an "it".

Where were we? Right. Now we come to stage four. In this stage, we look at all those things that we messed up while we were in Europe – you know, things like fishing and farming, and energy and all the rest of those things.

Well, we mess them up with policies, dear. So in Europe we have policies for little fishes in the water, and we have policies for all the little baa-lambs you saw in the field yesterday. And yes, we have policies for daddy's car.

No, they're not like wing mirrors. No, you don't stick them on. Think how silly baa-lambs would look if you stuck policies on their ears. Those are ear-tags, dear, not policies. Stop being silly. We put them on because of European policies.

Please, can we now move on? We get rid of all those silly European policies, and make our own. I'm quite sure they won't be silly, because our own meerkats will make them. Then our MPs will insist they are really clever policies, not like the silly ones we get from Europe.

What are MPs? Well, they're the people who … oh, never mind. And yes, I'm afraid the baa-lambs will still have to wear ear-tags. But they'll be British ear-tags, not European ear-tags.

So, we've now got four stages of our lovely Flexcit, but we now have to have another one. You see, while in Europe, those horrid European meerkats make all the rules for us when we want to buy and sell things to countries outside Europe. Yes dear, we sell ice-creams all over the world.

So now, under stage five, our nice meerkats will make all the rules for selling ice-creams to other countries in the world, so we can sell lots more ice-creams to lots more people. Don't worry dear, they'll still be plenty left for you.

And that brings us to stage six. That's all about those naughty MPs who took us into Europe in the first place, and let all those nasty foreign meerkats make all our rules for us. So we want some new rules to stop our MPs ever taking us into Europe again. Then our meerkats can keep making rules to keep our ice-creams nice and cold, and none of those nasty European meerkats will ever get a look in.

So, that's what Flexcit is all about. Six-stages: one to leave and trade; two to stop too many people coming; three, common rule-making; four, new policies; five, global trade; and six, to stop the buggers doing it again.

Yes, dear, we know we shouldn't say "buggers", but they really are buggers, and that's why we need Flexcit. Simples, really.

Richard North 01/07/2015 link

EU Referendum: meetings galore

Wednesday 1 July 2015  

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Two meetings in the stifling heat of a crowded London yesterday, both devoted to the coming "no" campaign – although the issues are very far from settled. Meanwhile, Normal Tebbit thinks it's starting to look unlikely that there will be a single organisation campaigning for a "no" vote. At present, he says, there is too wide a spectrum of opinion to make that possible. 

He could be right, although our Referendum Planning Group (RPG) is trying to make things happen, while the Exploratory Committee (ExCom) is banging heads together in the hope that agreement can be reached. But then there is Arron Banks and his "going global" group and, of course, Ukip to contend with. No one knows which way they will jump.

The only optimistic note I can muster is the thought that the "yes" campaign is probably as divided and certainly as incompetent as some of our groups. And while Mr Cameron has some good advisers, he has some very bad ones, and himself is not master of his EU brief. 

Oddly, the driving force behind this entire campaign is ignorance. In fact, it's a race to find who has the stupider arguments. One is constantly taken aback not by how much people know, but by how little. Even the basics of Article 50 are a closed book to some, yet they feel qualified to pronounce on strategy. That's without knowing the legal and technical constraints of the negotiations that must follow a successful referendum.

In that madhouse of the Westminster bubble, though, there is still that naïve belief that they are at the centre of the game. There is still no real appreciation of the democratising power of the internet, or the fact that there is a huge and increasing constituency out in those tacky little provinces, who are better informed than the centre.

We've already seen this with the media, where it is quite evident that even senior journalists do not have a grasp of the basics, while think-tank gurus make fundamental mistakes, betraying their limited grasp of the way things work. And the more they produce - the longer their tomes - the more of their ignorance they reveal.

Nor, it seems to me, is there a proper understanding of the nature of a major referendum such as this.  The contest is not a general election, but I don't think that point has really sunk in. This is not a case where political parties take centre stage. Neither is the government master of events, much less the media and their handmaidens, the pollsters. 

The essence of a referendum of this importance is that the politicians have been forced to release their already tenuous grip on the reins of power. They have handed the decision to the people. Whether they appreciate it or not, this is where the people have been given the opportunity to tell their masters what they really think. Many are beyond the reach of political manipulation, and will no longer take their guidance from the centre.

The point here is that the old aphorism of "information is power" is actually true. People used to come to the centre because that's where the information was. You had to gather together, in the coffee houses and meeting rooms, to know what is going on. But, as the flow of information has become decentralised, the centre not longer has the monopoly, and can no longer control the flow.

It is now my rooted belief that, once ordinary people realise how little their masters understand of the way we are governed, and how little control they actually have over the processes, things will change even more than they have. Power relies on illusion - it always has done. 

For the moment, the centre is still playing its games in the belief that it is in control. But they parade on a stage to which the rest of the nation is largely indifferent, where the writ of the illusion no longer runs. The centre is no longer in charge - because it is no longer master of its brief, because it can no longer control the flow of information. The only thing is, it doesn't yet realise it. 

And on this, I shall ruminate further.

Richard North 01/07/2015 link

EU Referendum: no default option

Tuesday 30 June 2015  

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Having already dealt with the persistence of Ruth Lea in insisting that WTO rules are the default option in the event of us leaving the EU, it is easy to forget that such myths can have long half-lives, making them extremely dangerous to the cause.

We thus recall CBI President Mike Rake asserting in May that: "No-one has yet set out a credible alternative future to EU membership. The current alternatives are not realistic options … ", whence Lea elected to address his claim by way of an "open letter" (extract illustrated above). Unwisely, she declared that, if the UK left the EU, "the UK-EU default relationship would be under the WTO rules, by which many countries, including China, very successfully conduct much of their trade".

Despite the obvious fatuity of this message, and the attempts at rebuttal, we still see repeats on Twitter, in Eurofacts, in the Better off Out magazine and in multiple other outlets. This blog, it seems, is the only site attempting to bring sense to the debate and, against the constant repetitions of Lea's myth, we are struggling to make ourselves heard.

But what is perhaps more disturbing is that lack of debate – from both sides of the divide - over what is quite plainly a suicide option that would bring trade with the EU screeching to a halt. In fact, right across the board, one sees an almost complete lack of appreciation of the adverse effects of the "WTO option".

Even the prestigious Bertelsmann Stifung, which reported on the implications of this option back in April of this year, came up with an incredibly anodyne analysis of what it called the "deep cut" scenario, where the "United Kingdom exits the EU and there is no trade agreement between the EU and UK".

This, said Bertelsmann, means that "non-tariff barriers to trade would be introduced/ increased by dismantling exemptions from existing trade agreements and tariffs would potentially be introduced between the EU and UK". However, it then goes on to say:
While prevailing WTO law requires a country to levy MFN tariffs against its trade partners if they do not have a free trade agreement, there really is no reason why – if a Brexit does happen – the United Kingdom would have to return to the non-tariff barriers from before it joined the EU. After all, the acquis communautaire has been implemented into UK law. But uncoupling from the EU's regulatory coordination and harmonization process – a key demand of the UKIP and other Euro critics – would gradually lead to a build-up of new non-tariff barriers to trade.
This apparently plausible argument, however, is seriously flawed, so much so that it tends to demonstrate that German think-tanks are no more knowledgeable than their UK equivalents, and just as prone to error.

In this case, what we are seeing is the same error as exhibited elsewhere - the failure to understand that entry for third country goods to the EU's Single Market requires surmounting two basic hurdles. The hurdles would have to be surmounted by importers of UK goods, once the UK had left the EU.

On the one hand, there is the requirement for regulatory conformity (achieved either by harmonisation or mutual recognition of standards). On the other, there is the separate requirement for products to undergo conformity assessment and for there to be a formal means of providing evidence of conformity. And it is this latter requirement which is being neglected.

The point here is that all the UK assessment systems and bodies, which are currently recognised under EU law by virtue of our EU membership, ceased to be recognised. The documentation and certification that they produce will not be valid, and will not be accepted by the authorities in EU (or EEA) Member States.

Furthermore, in law, the UK on leaving the EU without concluding a trade agreement will formally assume the status of a third country. An indication of what is required when there are formal agreements in place comes from the US. What our list will look like, when there no agreements in place, is very difficult to say, but it is self-evidently the case that our exporters are not geared up to producing the level of paperwork required.

However, if you want a quick guide to the requirements for demonstrating conformity assessment, it is here, which deals with the general principles and concepts behind the EU's "New Approach" laws and directives – essential reading for any putative third country (i.e., British) exporter - and the importers of British goods.

There is, in this, an interesting twist to the procedures related to the "New Approach", in that many of the goods can be released by Customs, for circulation in the internal market, on the basis of self-certification. But, if there are no Mutual Recognition Agreements (MRAs) in place, self-certification is not recognised. The responsibility falls on the importer, which must have a representative resident in the EU. This would add costs and delays to imports from the UK, making them less attractive than goods sourced from within the EEA, or from countries which have trade agreements with the EU.

Even when British goods were able to gain access to the Single Market, therefore, they would most often carry a cost penalty that would make them less competitive than other products.

Now, in what is a complex field, nothing of this has to be taken on trust. The EU is nothing if not generous with its information, setting out copious details on the Europa website. What most readers will particularly enjoy are the eponymous SAD guidelines, which spawn thousands of additional pages of guidance. And, as this guideline indicates, without mutual recognition, any exporter is going to have a hard time getting products into the Single Market.

The "bible" however, goes by the name of the Blue Guide. It sets out the broad requirements, making reference to the need for conformity assessment, and outlining how the status of different countries affects their ability to export. Then, the whole system is given legal "teeth" by Council Regulation (EEC) No 2913/92 of 12 October 1992, as amended, otherwise known as the Community Customs Code.

Of this 88-page document, Article 79 in particular applies, setting out the terms for "release for free circulation" of goods from third countries - the technical term for customs clearance. This, the Article tells us, "shall entail application of commercial policy measures, completion of the other formalities laid down in respect of the importation of goods and the charging of any duties legally due".

The important thing to understand from this is that it is a negative procedure. Customs officials may not admit goods unless they conform with the requirements. With intra-community trading, there is a presumption of conformity. With third country goods, valid documentary evidence of conformity must be provided. If it is not furnished, the goods cannot be admitted. It is as simple as that.

From there, it gets doubly interesting. You might have thought that the procedures for dealing with goods, in the event of the documentation proving inadequate, might be well-established. But that is not the case. The procedure I sketched out in my earlier blogpost is based on my personal experience as a port health inspector, and my work as a one-time consultant, when I was involved on behalf of clients on legal issues relating to rejected imports.

However, as this press release makes clear, after all these years of a Customs Union, there is no standard procedure applying throughout the EU. Remarkably, each of the 28 countries have their own way of doing things. To resolve this, the Commission has proposed a new directive which, as it stands currently, is still going through the legislative procedure.

Make no mistake, though, if the UK drops out of the Single Market and the attendant treaty system, and does not replace it with a new and comprehensive agreement, trade with Member States will be severely disrupted. Then, given how fragile the physical system is, it would take very little to bring the whole structure crashing down.

Therefore, people who are currently promoting the "WTO option", by whatever name it is called, must be brought to recognise that there is no "default option". We can either negotiate a settlement under Article 50 or trade goes down the pan. Helpfully, on page 6 of this document, the Commission sets out the criteria it expects to be fulfilled, before there can be a trade agreement which gives near neighbours access to the Single Market. 

With that, I hope we can begin to focus some minds on the real world, and bring some sense into the putative "no" campaign. If we do not, we stand a very real risk of losing the referendum, and we will deserve to do so.

Richard North 30/06/2015 link

EU Referendum: les grandes lignes

Monday 29 June 2015  

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Sometimes jobs that should be quick and easy take a surprisingly long time. For instance, an attempt to find the latest figure for Greek GDP yields a variety of sources and a wide range of figures. We get the European Commission tell us it's €182 billion (2013), while the figure from Wikipedia (after conversion gives us €216 billion (2014).

Eventually, I found the Greek government statistical site (80 percent funded by the EU), and managed to track down the GDP figures – not that easy as the downloads are, irritatingly, in … er … Greek. Anyway, €182 billion for 2013 checks out. And the figure for 2014 drops to €179 billion. I'll go with that.

The point of my search was to draw information to make a series of comparisons. First, I wanted the EU and the eurozone as a whole. Those, according to Eurostat (another site I hate), are respectively €13.9 and €10 trillion. Then I wanted Germany, which is €2.9 trillion (all 2014), and then – out of left field - the turnover of the Volkswagen group. That's €202 billion for the same period.

Now we're in a position to make those comparisons. The Greek economy is 1.3 percent of the EU economy. It's 1.8 percent of the eurozone economy. It's only one sixteenth of Germany's economy and slightly less than that of the Volkswagen group (less than half the size of Walmart). Even the Irish economy is bigger (€185 billion).

This illustrates, with brutal clarity, quite how insignificant Greece really is – from an economic stance, at any rate. Mrs Merkel could, if she so desired, buy Greece from petty cash and still have change – not that she, or anyone in their right mind, would want to.

Sooner or later, their own insignificance will dawn on the people of Greece and their government. And, when push comes to shove, the people don't want to leave the euro and certainly don't want to leave the EU. Before it became a member of the EU and then the single currency, Greece was already a failed state. Without EU intervention, the state would have collapsed.

Thus, in February 2012 - when the circus was in full cry - I was warning people to keep their eye on the ball. Basically, they needed to ignore the "noise", the distractions, and focus on les grandes lignes - the main events.

Currently, I think the main function of the continuing Greek soap opera is to serve as a distraction, keeping people from watching events elsewhere too closely. Whatever the short-term outcome (and I've totally lost interest in what it might be), the situation will eventually come right, but only when the "colleagues" get their new treaty in force, scheduled for 2025 at the latest.

The fact that treaty change is back on the EU agenda proper is impossible to conceal, even if the legacy media are doing their best to ignore it, having almost totally succumbed to the hype over the Greek superdrama.

Despite this, Mr Cameron's current game plan is certainly coming clear as the Sunday Times reports on a "leaked note of a conversation" between him and another leader. This revealed that the prime minister has a "firm aim" to "keep the UK in the EU". He has "deliberately not produced a lengthy shopping list" of requests.

It seems like only yesterday when Cameron was pledging to achieve "fundamental" reform, which was to be finalised "in a new treaty". But last week he conceded defeat: no new treaty before the referendum. The game is changing before our very eyes.

One of the few politicians on the ball is Owen Paterson, who states for the record that Cameron's approach of relying on "valueless" promises of future treaty change is "not good enough". He accuses the Prime Minister of missing "an historic opportunity" to change Britain's relationship with Brussels.

Taking Cameron at his own valuation, Paterson notes that the "historic opportunity" to change the nature of the EU would have required "full-on treaty change". This, though, is beyond the scope of Mr Cameron. He is having to content himself with promises from the other 27 members of changes in the treaty to come.

Putting himself out on a limb, in comparison with the rest of the Party, Paterson dismisses this as "not good enough". He says that: "The prime minister is asking for very little of substance to change. He said we would get fundamental change. We're hearing now that he didn't even ask for it".

What readers of this blog have known for a long time is now being admitted at a high level in political circles, where there is the dead weight of inertia to overcome. "He is not trying to regain the power for Britain to make our own trade deals", confirms Paterson. "He is not trying to end the supremacy of EU law. He is asking other European countries what they will give him, which is no way to conduct a negotiation".

No one in the least expects the Prime Minister to change tack. The die is cast. This allows Dominic Lawson to observe that it is dawning on even the most loyal of Conservative Eurosceptics that Cameron’s promise to them of "a fundamental renegotiation" of Britain's relationship with the EU is a chimera.

Given this, Paterson adds that "some in the cabinet and many in the Conservative party" would be likely to vote "no". There is still the statutory caveat of "unless the prime minister changed tack", but the battle lines are firming up.

Once the dust has cleared from the Greek distraction, even the legacy media might begin to see the shape of Mr Cameron's new strategy. Fortunately, this has been well-signalled, and he has extremely limited room for manoeuvre. Thus, by focusing on les grandes lignes, we already have a fairly good idea of what is coming and how to deal with it.

What we most need now, though, is for our own side to scale down its attempts to lose the referendum. Then we might have some chance of winning, as Mr Cameron runs out of room.

Richard North 29/06/2015 link

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