Brexit: power to the people

Wednesday 22 January 2020  



In a different world, it might be of some interest that the House of Lords has approved the Withdrawal Bill, having added five amendments.

But since it is likely that these amendments will be voted down by compliant Tory MPs, this will simply trigger what is known as a "ping-pong" period between the two chambers, eventually ending up in some sort of fudged compromise.

Under normal circumstances, the Lords do have some leverage because Johnson needs to get this Bill into law before the end of the month, and the Lords can run it right to the wire if they hold their nerve.

But these are not normal times, so predictions are unwise. We will just have to wait to see what happens – idle spectators witnessing the wreckage of a system that once had some pretensions of becoming a democracy.

Oddly enough, the stresses are beginning to show, as Gordon Brown pops up with some comments on how to fix our ailing political system, proposing a "forum of the regions and nations and a council of the north" as well as a council for the Midlands.

These, he argues, should gain their funds in the same way as Wales and Scotland do, labelling this extremely modest proposal "a sort of constitutional revolution". We have been a unitary state for too long, he says. "Once we bring in nations and regions you have a very different kind of UK and Scotland, Wales and Northern Ireland would feel more comfortable".

There is something of this in The Harrogate Agenda, only we go much further in suggesting local income tax and the approval of annual budgets through the medium of local referendums. What we cannot tolerate is another layer of politicians sucking at the tit of the public purse, demanding money with menaces and telling us what to do.

This is why the most recent regionalisation movement, pushed by John Prescott, failed. We simply do not want more politicians, redistributing power between them. If there is to be a "constitutional revolution", it must involve a real transfer of power to the people.

In this sense, it really is quite wearying to see yet another politician perceive that there are flaws in our system of governance, only to come up with yet another raft of proposals which do not address the core failings. None so far have put the finger on the main defect, the failure to recognise that the essence of democracy is empowering people.

Coincidentally, we get a long whinge in the Guardian with Alberto Alemanno complaining "that the EU won't fix its democratic deficit with another top-down 'conference'".

This is a reference to Ursula von der Leyen honouring a promise she made after her appointment last year, to launch a two-year "deliberative process" tasked with overhauling how the EU works and listening to the voices of its citizens.

Alemanno's concern is that the conference is supposed to be "a bottom-up exercise where European citizens are listened to and their voices contribute to the debates on the future of Europe". What he evidently doesn't appreciate is that all the "listening" in the world will be to no avail if those listening are not required to act on what they hear.

But then, Alemanno, whose day job is working as professor of EU law at the HEC in Paris, is also the founder of an outfit called The Good Lobby, which aims to foster "collaborations between civil society and professionals (lawyers, consultants, academics)" willing to share their time and talents, "training civil society on the different ways in which we can make a change".

One of these days, one hopes, the chatterati might begin to realise that there is very little to be achieved by creating endless talking shops. Meaningful change will only be delivered when people have the power to make it happen. The trick is to enable that process without having to resort to violent revolution.

If there is an unlikely place to start looking for solutions, it might be the OECD, which at least is trying to get to grips with the way regulation works and how to make it better.

Explained in outline here, the OECD has been carrying out an assessment across all EU countries and the European Union of the use of stakeholder engagement, regulatory impact assessment (RIA), and ex post evaluation to improve the quality of laws and regulations.

With more detail provided by the OECD, we see the observation that "better regulation agendas" need "constant attention". The "set and forget", model of regulation does not work, says the OECD, just as it does not work for laws themselves.

This homes in on a particular interest of mine for, while the OECD argues for full "stakeholder" engagement before laws are made, it places special emphasis on systematic ex post evaluation of laws, leading to a review of existing regulations to determine whether regulatory goals have been achieved. This then allows for the introduction of improvements and the removal of obsolete or ineffective laws.

The issue here is that pre-legislative consultation is of limited value. Even those who will be directly affected often have difficulty visualising how new laws will work, and very often it is not until a law is in force that its faults are revealed.

In practical terms, the ability to change a faulty law is an important test of any democratic system. And it is here that not only the EU fails, but where we see a lack of flexibility in dealing with globalisation and the laws which emerge from global or regional bodies.

What we find is that, when standards and agreements are presented to national legislatures for codification as national law, texts cannot be changed and, once installed, the laws are almost impossible to change. Thus, what the OECD doesn't do, with its emphasis on ex post evaluation, is empower ordinary people.

For the next iteration of The Harrogate Agenda, however, we think we have at least a partial solution, which lies in the wider use of waivers and safeguards in international agreements, the nature of which is discussed here.

In short, our government should be constitutionally prohibited from agreeing to any treaty which did not encompass either waivers or safeguard provisions (of the nature of Art 112 of the EEA Agreement) which will permit any party to disapply specific provisions, without having to denounce entire agreements.

Where we then find that we are bound by an inappropriate or damaging law, which stems from an international agreement, the electorate should have the power to hold a referendum to demand a waiver or suspension of the relevant provisions, so that the law may be repealed or amended.

While one finds that some people manage to get extraordinarily worked up about such provisions, it is the case that both waivers and safeguards are common in international agreements, and provide vital safety valves where, otherwise, parties might feel the need to withdraw from them.

What is different here is that the people themselves are empowered to demand action, without having to go cap-in hand to the government in the hope that it might listen to their problems.

And there does lie the answer to many of our political woes. Politicians need to be aware that democracy comprises two parts, the people and power. Translated literally, democracy means people power, and without that power being thus devolved, no state can be considered to be a true democracy.

And, in the nature of things, if power is not given, it is taken. The latter is something that could be very messy.



Richard North 22/01/2020 link

Brexit: a matter of economics

Tuesday 21 January 2020  



Interestingly, The Times has weighed in on the "chlorinated chicken" controversy, arguing that a ban on produce from the United States for that reason would be "unwise and unscientific".

Whether a ban would be "unscientific" is actually arguable, but the differences in production regimes as between the US and the UK (under EU law) certainly reflect differences in regulatory philosophies which cannot be easily dismissed.

Another factor which must be taken into account is the effect accepting US produce would have on UK enterprises which export processed foods containing chicken to EU Member States. Post Brexit, those companies have to produce documentary evidence certifying that the chickens are reared and processed in accordance with EU law, which will add costs to the export process.

Additionally, they might also have to give specific assurances that their goods are US produce-free, even to the extent of having to run dedicated production lines where raw material sources are restricted and controlled. That, in turn, will add to costs and make our products that much more uncompetitive.

But, when it comes to costs, one wonders whether The Times, with its new-found enthusiasm for American chicken, has actually looked at current prices on each side of the Atlantic. Average retail prices for whole chicken in US cities (converted to sterling) stands at £2.45/kilo. On the other hand, a visit to Tesco over here will procure the same goods for £2.11/kilo while Sainsbury's will set you back £2.05.

For the US produce to reach the UK, there will be the small matter of shipping costs, which means that – on current price levels – there is no competitive advantage for American poultry.

It might be argued, however, that the US will mainly service the processing industry, but that has the problems I've already identified. And, for goods such as chicken soup and pies, the industry tends to use spent hens (laying birds which no longer produce eggs). Prices in the last few years have been low, down to 15p per bird, although I have known them as low as 5p. The United States could not possibly compete in this sector, especially as The Times tells us we also process spent hens from Ireland.

If we then turn to eggs, a dozen in the US will on average set you back £1.23 while the same dozen in Tesco (if you can get them – the standard pack size is 15) will cost a mere 96p. Moreover, US prices have been higher, peaking at £2.12/dozen in 2015.

The retail price for ground beef (minced over here) will set you back £3.52/kilo in the US, while your local Tesco wants a mere £3.30 for the hormone-free product. And for eggs and meat products both, there will be shipping costs to find.

From the look of it – if the retail pieces for these products are any guide – there is no great gain for the US in securing a trade deal with the UK. To judge from some prices, the UK might even find itself exporting food to the United States.

There, however, UK meat producers might find that they have a different set of problems to deal with. Here, much has been said (wrongly) about US food safety standards being lower than their EU equivalents, and with minced beef this is certainly not the case.

In 1994, the US Federal Food Safety and Inspection Service (FSIS) began testing samples of raw ground beef for E. coli O157:H7 and declared that any such product found with this pathogen would be considered adulterated. This was the first time a foodborne pathogen on raw product was declared an adulterant under the meat inspection law, a provision which also applies to imported meats.

In the absence of the post-slaughter bactericidal carcass washing (practised widely in the United States but prohibited by law in EU Member States), it is unlikely that such a "zero tolerance" standard could be achieved by British producers.

Where the volume warranted it, producers could of course set up dedicated plants to service the US market, but they could well confront the same issues experienced by Canadian producers servicing both the US and European markets.

Typically, there were finding that there were different markets for the different cuts but, to service one market required whole-carcass treatment which ruled out splitting carcasses to service the different markets. And without that flexibility, the trade is scarcely (if at all) profitable.

On top of that, in line with European practices, where the EU's Food and Veterinary Office (FVO) carry out audits of third country establishments, the FSIS conducts overseas evaluations to determine that meat imports from foreign countries are processed under "equivalent" inspection systems.

Agency officials also verify equivalency by visiting various foreign slaughtering and processing operations, and a plant seeking to export meat or poultry to the United States must first receive FSIS certification.

For UK producers, who will also have to undergo FVO inspections by EU officials, as well as having their operations certified as conforming to EU law, the imposition of US inspectors, could be the last straw. This will be further complicated when those inspectors ask for their own standards to be applied in order to certify "equivalence".

While the US actually imports about 20 percent of its domestic meat consumption, its main suppliers are Australia followed by New Zealand and Canada. Australia, New Zealand, Canada & Mexico accounted for 87 percent of US beef imports in 2015.

Currently, Brazil is seeking to resume exports to the United States, after the trade was suspended in June last year, which would add cut-price competition to an already crowded market.

And on that basis, it is really difficult to see the UK securing any significant volume of sale to the US in the meat and poultry sectors. And, if there is no price advantage in the US selling to the EU, one has to ask what all the fuss is about, when it comes to negotiating a US-UK trade deal that includes such agricultural produce.

Nevertheless, it is still the case that trade discussions could be on the stocks before we get down to brass tacks with the EU. That the EU is not rushing into the field was confirmed yesterday when the Commission stated that it would not be ready to start talks on a trade deal with the UK until at least the end of February.

The Commission's chief spokesman, Eric Mamer, told journalists that the Commission could adopt its proposal for the negotiation directives only once the UK had actually withdrawn from the EU, whence there was still "an institutional process" for these to be adopted by the European Council.

This, inevitably, takes time, which has the Commission saying that it will start negotiations "as quickly as we can", but it will certainly not be before the end of February, beginning of March.

But, even if the US-UK talks do get under way before the first formal session of EU talks, it should not take long for the reality of the situation to take hold. In many respects, there is little trade in certain goods between the UK and US because there is no commercial advantage from such trade, or because the practical and/or regulatory barriers are too high.

Undoubtedly, there must be some sectors which will benefit from a trade deal but, one suspects, the overall benefits might be less than expected.

And yet, with the current stance of HMG, we are rather boxing ourselves into a corner. From the man who famously told us that: "The free trade agreement that we will have to do with the European Union should be one of the easiest in human history", we now get from Liam Fox the warning that any automatic alignment to EU regulations as they change over time would be "completely incompatible" with the concept of Brexit.

He thus stresses that frictionless trade between the two sides is "simply not possible" under Downing Street's vision of the future relationship.

With the EU "busted" and a US deal potentially amounting to not very much, it does begin to look as if Johnson's heady optimism about getting Brexit "done" is a tad misplaced. The term "between a rock and a hard place" springs to mind, although that is far too laboured a cliché to use just now. We'll have to save it for later.



Richard North 21/01/2020 link

Brexit: Global Britain or Little England?

Monday 20 January 2020  



For all their rhetoric about plans to become a "global trader" once we have left the European Union, the indications are that the Tory world view is remarkably limited, with nothing even approaching a global breadth. Furthermore, this lack of vision seems to be shared by industry and the media, rendering us closer to a "Little England" than a Global Britain.

Subjectively, it would appear that the Johnson administration likes to cast itself as a global player, simply on the basis of its determination to break away from what it sees as the constraints of our membership of the EU, which opens the way for making its own bilateral trading deals with what were formerly termed "third countries".

Thus, we have the UK expected to give priority to trade relations with the US, with reports that we might even open talks with the Trump administration before formally engaging with the EU on plans for our future relationship.

Simultaneously, there are discussions about a trade deal with China, while Johnson is set today to call for "deeper investment ties between Britain and Africa at a summit for leaders of 21 African countries".

While this represents the UK's attempts to extend its reach throughout the world, its intellectual base resides with a programme of export substitution, replacing lost trade with the European Union with opportunities to extend trade with non-EU partners.

As such, this is a step back from the multilateralism which defines our current relationship with the EU, and a reversion to bilateral deals based on a largely obsolete "free trade" philosophy which stems from thinkers who established their ideas more than two centuries ago, when the world was a much simpler place.

Thus, what seems to escape the current breed of Tory trade zealots is the simple premise that trading in the world – i.e., buying and selling from foreign countries – does not necessarily qualify a nation as a major league global player. In the current environment, that would require a commitment to the much wider concept of globalisation, with serious engagement in the processes of integrating global trade systems.

However, if one is to take a cue from Sajid Javid and his comments on breaking away from regulatory alignment with the EU, this does not seem to herald a wider embrace of globalisation. Rather, it seems to presage a retreat from it, almost to a level of "Empire preference", where the UK traded only within a limited group of countries where it could control the terms of trade.

Were this to be otherwise, we would not have had Javid pressing for a broad-brush rejection of "EU rules", apparently not realising that the EU has been over recent decades one of the most prominent advocates (and practitioners) of globalisation. It is quite willingly surrendering its own standard-making capabilities in order to vest them in regional or global bodies, then adopting these standards in its own legislation.

Yesterday, I gave the example of UNECE and WP.29 in the formulation of standards for motor vehicles and parts, where the EU now works on a multinational basis with global trading partners to develop standards with global application.

No better example of this can be seen than in response to the VW emissions scandal, where vehicle emission tests were "massaged" to give far better results than could be achieved in practice. Now, we have UNECE working on global methodology to measure on-road car emissions, a process where:
The European Union, Japan and Korea are leading the development of the regulatory text that would lead to the establishment of a United Nations Global Technical Regulation on real driving emissions testing, which is expected to be adopted by 2020. The United States of America, Canada, India and China have also showed support to the initiative and are expected to participate in the development of the regulatory provisions, in a process which is transparent, data-driven and open to inputs from all parties involved.
In what is a fascinating development, we find the European Union, Japan and Korea working in partnership under the aegis of a UN body which will, in time, form the basis of EU law, but also extend to Japan and Korea through the EU's comprehensive trade agreements.

But this is by no means the full extent of process where the EU has "bumped up" its standard-setting to another level. From the sublime to the ridiculous, the EU's marketing standards for fruit and vegetables are now drafted by UNECE which works with the OECD in Paris to produce detailed codes.

By such means, we find that the EU's infamous "straight cucumber directive", is no more. It has been replaced by UNECE Standard FFV-15 on cucumbers, given legal effect in the EEA by Commission Implementing Regulation (EU) no 543/2011.

This process of globalisation has been going on a long time, and one of the best examples of evolution can be seen in the EU's approach to the classification, packaging and labelling of dangerous substances.

It was in fact the EEC which first legislated on this, back in 1967 before the UK had joined. Then, in Council Directive 67/548/EEC, it saw as its rationale for legislating, "the differences between the national provisions of the six Member States", which were seen to "hinder trade in these substances and preparations within the Community and hence directly affect the establishment and functioning of the common market".

Now, the system has gone global, known as the "Globally Harmonized System" (GHS), under the aegis of the United Nations, but implemented by the EU in Regulation (EC) No 1272/2008.

If the UK was intent on becoming a global player, therefore, it would not be looking to delink its trading legislation from the EU. Rather, it should be identifying those of global origin and endorsing those, while working with the EU and other players on continuing the process of global harmonisation, where we have an equal say in the outcome.

Furthermore, this is what industry should be asking for – with the support of the media. But, instead, one sees the UK's Society of Motor Manufacturers and Traders calling for the continued alignment with EU rules, with the CBI arguing that alignment "supported jobs and competitiveness for many companies".

Neither these industry bodies, nor the media, seem to be aware of the reach of global standards, or of the extent to which the EU has adopted them. Yet, the deeper you dig, the more you find, to the extent that as much as 80 percent of the EEA acquis might owe something to global or regional standard-setting, to say nothing of the growing body of financial regulation.

If the UK is to be a truly global player, therefore, the Johnson administration needs to abandon its vacuous rhetoric on alignment, and get with the programme. Alignment is driving the trading agenda at a global level. And if the EU has realised this, it should not be beyond the wit of the Tories to follow the same trail.



Richard North 20/01/2020 link

Brexit: culpable ignorance

Sunday 19 January 2020  



The thing about politicians who come up with fatuous and misleading statements is that it is sometimes difficult to work out precisely what we're dealing with. In some circumstances, it could be said that they are lying and in others, they might be genuinely mistaken.

There is a phenomenon, though, which we might call "culpable ignorance". This is particularly applicable to senior politicians of high rank, where they deliver statements which are manifestly wrong (or untrue), where the context is such that they should know what they are saying is wrong.

With that in mind, what does one make of Sajid Javid, the Chancellor of the Exchequer, and his latest interview with the Financial Times, in which he tells business that there will be no regulatory alignment with the EU after the end of the transition period, set for 31 December of this year? 

"There will not be alignment", he told the FT. "We will not be a rule taker, we will not be in the single market and we will not be in the customs union - and we will do this by the end of the year". Instead, Javid thus urges companies to "adjust" to the new reality.

Then, asked how regulatory divergence might impact industries such as automotive and pharmaceuticals with intricate supply chains spanning Europe, Javid came up with the jaw-dropping assertion that, "Japan sells cars to the EU but they don't follow EU rules".

If Javid genuinely doesn't know that his claim is false, then it drops immediately into the category of culpable ignorance. As Chancellor of the Exchequer, he should know that he is delivering an egregious falsehood – just supposing one accepts that a man in such a position really can be that ignorant.

As it stands, the EU rules applicable to the approval of motor vehicles have just been extensively revised, with standards currently set out in a massive 218-page tome entitled Regulation (EU) 2018/858 "on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles".

Strictly speaking, though, not even the EU adopts EU rules on motor vehicles. As it points out in Recital 48, the Union is a Contracting Party to the United Nations Economic Commission for Europe (UNECE) technical agreements on motor vehicle standards and in Regulation (EC) No 661/2009 it repealed its specific type-approval Directives and replaced them with the obligatory application of the relevant UN Regulations.

In order to reduce the administrative burden of the type-approval process, where appropriate, manufacturers of vehicles, systems, components and separate technical units are allowed to seek type-approval by obtaining approval under the relevant UN Regulations. These, the EU has adopted into its own legislation, together with a mechanism for updating the law as more UN Regulations are produced (or amended).

This is, in fact, an important development in the history of the Single Market, where the EU has delegated the standard-making authority in the motor vehicle sector to the World Forum for Harmonization of Vehicle Regulations, known as WP.29, established under the aegis of UNECE. It no longer makes its own technical rules but relies on WP.29 to do the job for it.

As regards Japan, even the likes of Sajid Javid might be dimly aware that the EU and Japan have recently concluded an "ambitious and comprehensive" Economic Partnership Agreement, with the text set out here, entering into force on 1 February 2019.

Unsurprisingly, given the extent of trade in the sector, motor vehicles and parts form a prominent part of the agreement, with the details set out in Annex 2-C, running to some 46 pages.

The central part of this agreement is that both parties recognise that the WP.29 is the relevant international standardising body for motor vehicles and parts, and that UN Regulations and general technical regulations (GTRs) are the relevant international standards.

Each party then agrees to accept in their markets any products which are covered by a type approval certificate made in accordance with UN Regulations. As long as the products are compliant with domestic technical regulations and conformity assessment procedures, in the area regulated by the relevant UN Regulation, they can be accepted "without requiring any further testing, documentation, certification or marking".

What has happened here, therefore, is that Japan and the EU have agreed to align their motor vehicle regulations on the basis of joint acceptance of harmonised UN Regulations, with the parties also agreeing to work with WP.29 in amending and extending UN Regulations.

This, for the EU, is now its standard trading model, which means that if a trading partner is looking for EU recognition of its standards, "without requiring any further testing, documentation, certification or marking", then they must adopt UN Regulations and procedures.

For the UK, this should not actually present a problem. We are founding members of UNECE and WP.29 and party to all its motor vehicle agreements and regulations. And, as it stands, we have perfect alignment with relevant EU legislation.

Apart from settling quota issues and rules of origin, therefore, the UK should not find it at all difficult to come to an agreement with the EU on trade in motor vehicles, simply by maintaining its relationship with UNECE and the adoption of UN Regulations.

If, however, we are to take the Javid line, what does that mean? If there is to be no alignment and we cease to be a "rule taker", does that mean we drop out of UNECE and WP.29, despite the fact that we take part in making the rules, and will continue to do so after Brexit?

If we do that, of course, then the only way the UK can export cars to EU Member States is if their manufacturers apply for "type approval" for each of the models they produce, which must be gained from one or other of the Member State national approval agencies, where standards and procedures must comply fully with UN Regulations.

There is no question, therefore, of UK car manufacturers avoiding alignment. Even if the UK goes to the absurd extent of producing its own, unique technical regulations, exporters would have to comply with UNECE/UN Regulations to gain access to European (EEA) markets.

There is then the further question as to what part of Javid's "new reality" companies must "adjust". Whether it is automobiles or car parts, chemicals or pharmaceuticals, or the whole raft of manufactured goods covered by the CE marking scheme, regulatory alignment is the minimum condition of entry.

On the face of it, Javid would appear to be setting up a dual-standard system, where manufacturers will have to produce to a domestic standard for sale in the UK, and then a different standard for the EEA – and for those countries which also adopt "EU rules", such as Japan.

All we are getting from the Chancellor, it seems, is incoherence bordering on the absurd. I almost liked him better in May 2016, when he wrote in favour of continued membership of the EU, in order to stay within the Single Market.

Even then, he was fully aware that – as he wrote of countries outside the EU: "Unless the exporting country submits to the importing country's rules and local regulator, access will be denied". There's no doubt about it, Javid wrote, "remaining in the EU is good for business".

Whether or not that was (or is) the case, what cannot be disputed is that this irrational pursuit of "non-alignment" with the EU certainly is not good for business. It does not make any sense and to hear it from Sajid Javid rather suggests that we have a man totally unfit for office.



Richard North 19/01/2020 link

Brexit: farming for dereliction?

Saturday 18 January 2020  



Slipped by with rather less attention than it deserved last week was the first of the government's major, post-Brexit policy initiatives – the replacement of the EU's Common Agriculture Policy with what passes for our own domestic farming policy.

This is to be achieved – in theory at least – by the 94-page Agriculture Bill which, with its own explanatory notes running to 68 pages, was introduced to the House of Commons on 16 January, under the aegis of environment secretary Theresa Villiers.

Needless to say, the noble representatives of the fourth estate could not be asked (or even arsed) to read material of such length (or complexity). Thus, Defra has obligingly produced a 700-word press release, complete with conveniently packaged quotes from Villiers.

As one might expect, it is this which became the basis of most of the press coverage on the day, spun according to the particular obsessions of the authors, the likes of the BBC, for instance, stressing that "soil" was at the heart of what it called a "UK farm grant revolution".

Sky News, however, decided that the key feature was that farmers were "to be paid to protect the environment and improve animal welfare". But this was not for the Guardian. It thought that the "Food security plan after Brexit" was the main element of the "biggest shake-up to farming in 40 years".

From a time when every major newspaper had its own farming correspondent, so far down the media agenda has the issue slipped that neither the mighty Times nor the Telegraph seems to have bothered reporting this "revolution", leaving much of the second-tier media to rely on a general purpose agency headline which told us that [the] "New UK Agriculture Bill to move away from ‘inefficient and overly bureaucratic’ CAP system".

Straight out of the Defra press release, we are thus told that the Agriculture Bill is part of a radical shift to move subsidies away from the EU Common Agricultural Policy system of direct payments, which correlates payments with the total amount of land farmed.

Instead, the legislation sets out how farmers and land managers in England will receive "public money for public goods", such as better air and water quality, higher animal welfare standards, improved access to the countryside or measures to reduce flooding.

In doing so, says Defra, it aims to move the UK one step closer towards "a future where farmers are properly supported to farm more innovatively and protect the environment".

If one was to attempt to be fair to our lacklustre media, which usually fails to step up to the plate when the analysis of anything complex is needed, one might argue that a full analysis of a highly technical 94-page Bill was always going to be a bit of a challenge.

Thus, even when we see the official NFU response, we see a fairly cautious and limited appraisal from President Minette Batters, with the promise that, in the coming days, the union "will scrutinise this Bill in great detail to ensure that it provides the policy for a thriving farming sector post-Brexit".

Despite all that, to gain an insight into where this Bill is going, though, does not actually require any lengthy study of what, in fact, is a deeply unhelpful instrument.

The main issue, in my view, is that it replicates precisely the flaws of the CAP that it seeks to replace. With the EU's policy, the problem was that there was a single "one-size fits all", top-down policy, covering a geographical area stretching from the near-Arctic tundra of Sweden and Finland, through the temperate regions of Northern Europe, to the semi-arid fields of Malta, Greece and Portugal.

And, although the climatic variations in the England are not as great (to which the policy applies), it is still the case that the hill farms of Cumbria and the Pennines, the lush dairy country of Cheshire, the fertile Vale of York and the "barley baron" territory of Lincolnshire and East Anglia, alongside the chalk downs of Southern England and the Exmoor hills, present such a vast contrast that a single policy for them all is just as inappropriate.

Yet, if ever there was to be a revolution in agricultural policy, it would have encompassed devolution, down to regional or even County Council level, setting up truly autonomous units with their own budgets, to manage their own policies. Instead, we have more of the same, with the top-down control from Brussels being replaced by top-down control from Whitehall.

And from there, if at all possible, it gets worse. While there was a great deal wrong with the CAP, over the decades is has undergone several transformations to emerge as a relatively stable system which delivers subsidies of about £3.4 billion a year to UK farmers.

The bulk of this comes in the form of direct payments, related mainly to the acreage farmed, a system which gives a high level of certainty to farmers, enabling them manage their finances in an otherwise unpredictable and risky business.

But, over a transition period of seven years, the proposal is to delink payments from the land, abolishing direct payments. The main flow of cash will then be directed to this concept of paying for "public goods", which may encompass (but are not limited to) environmental protection, public access to the countryside and measures to safeguard livestock and plants.

While this sounds fine in theory, though, the scope of such payments is vast, covering ten major headings, which includes supporting activities which mitigate or adapt farming to climate change, as well as supporting "ancillary activities", which range from "selling, marketing, preparing, packaging, processing or distributing products deriving from an agricultural, horticultural or forestry activity".

The point here is that, while the £3.4 billion or so annual subsidy is a lot of money - to which the government is still committed for the next parliament - there are about 200,000 agricultural holdings in the UK and, within the scope of this new Agriculture Bill, as many more non-farming enterprises which might qualify for financial assistance.

For instance, financial assistance may be directed at managing land or water in a way that "maintains, restores or enhances cultural or natural heritage. This may include a building, monument, site, place, area or landscape identified as having a degree of significance due to its archaeological, architectural, artistic, historic or traditional interest".

While such spending might be seen as highly desirable, traditionally it does not belong to the agricultural budget. Currently, it might be covered by funds directed at English Heritage, the National Trust and Natural England – all of which organisations will doubtless be pitching for grants under the new system.

On this basis, the new scheme not only represents an effective reduction in agricultural support, because its scope is so wide and so many more enterprises are covered, there is a risk that the funds will be spread very thinly – so thinly that the amount directed at any one sector might be insufficient to have any material impact.

Then, given that the distribution of this finance is within the gift of the secretary of state, and thus open to the ebb and flow of political whims, there is a very real danger that spending will be devoted to populist causes, which may not only change with different administrations but also become prey to volatile and changing public fashions and obsessions.

Whatever might be the outcome of that, the system seems certain to lose major elements of stability and predictability, depriving working farms of the certainty they need for financial planning and investment – quite possibly to the detriment of food production in the UK.

Now that agricultural policy is reverting to the UK, though, one might like to think that public debate might once again embrace this issue, having been rendered useless as long as the power resided with Brussels. But that would include the major media players reappointing knowledgeable farming correspondents to their teams.

Sadly, there is no sign of that happening, any more than we are likely to see the break-up of Defra, and the reinstatement of a dedicated ministry of agriculture, now that we have a domestic agricultural policy to manage. And, faced with this Agriculture Bill, we need a far more vibrant debate than we have seen to date.

As we know from experience, a derelict policy can very quickly lead to derelict farms.



Richard North 18/01/2020 link

Brexit: when the bells were silent

Friday 17 January 2020  



I can't imagine why Johnson ever thought he could "bury" Brexit, especially when he seems to be in some disarray about how he will celebrate the end of the first phase on 31 January.

But the main reason why he is unlikely to get away with it lies in his own hands or, to be more blunt, his failure to turn the next phase into a boring routine, so tedious that the media won't bother to follow it.

Having been adamant throughout the election campaign that the UK would secure a "fantastic" deal, telling everybody that the chance of no-deal was "absolutely zero", he has now admitted to BBC Breakfast television that there is a "slim chance" that the UK won't make it before his self-imposed December 2020 deadline.

Needless to say, he is keen to say that it was "epically likely" it would happen, which is about as convincing as a surgeon telling you "it won't hurt", just as he is about to saw off a limb without anaesthetic – having drunk all the whiskey to steady his nerves for the operation.

What Johnson has done therefore is inject just the necessary amount of "will he, won't he?" uncertainty to give it legs as a media story, allowing endless speculation as to the outcome of the coming talks.

It also sets the scene for a nail-biting drama in December, as the talks go to the wire, giving him a platform to announce another famous victory, artfully avoiding questions about the content.

You can see the dynamic at play when the Financial Times reports this development as "likely to cause concern in the business community", which supposedly "fears that if no deal is in place then Britain will have to start trading with the EU on WTO terms in January 2021, with tariffs, paperwork and delays at ports".

This, of course, nicely distracts attention from what should be the real concern – that Johnson, as he himself avers, is likely to get a deal, but a very poor one which will cause no end of problems in the longer term. To that extent, it is the fact that there will be a deal which should really be worrying business, given that it is most likely going to be a slow-motion train crash.

But you can also sense where Johnson is going with this, having told BBC Breakfast that, although there was it was "very, very, very likely" a deal would be done, he accepted that "you always have to budget for a complete failure of common sense". Without having to read between the lines very much, it is fairly evident that he holds himself as the reservoir of "common sense", and thus any failure will be down to the intransigence of the European Union.

That remark, however, will not have gone unnoticed in Brussels, especially as stage Irishman Phil Hogan is sounding off yet again, with another of those statements of the bleedin' obvious. This time, to an audience in the United States, he is accusing Johnson of "brinkmanship" complaining that the UK's approach to negotiations was creating "uncertainty" for business.

Once again, this rather misses the point as the problem for business is not so much the uncertainty – even if there is plenty of that – but the certainty. The entire business community can be pretty well assured that they will be something delivered on their plates, but it will most likely be a steaming pile of crap.

Undeterred, Hogan is warning that the short timeframe "puts enormous pressure on the UK system, and then of course on the EU system" to meet the deadline, and adds that it would be legally very difficult for Britain to change its mind and request an extension later on, after the 1 July extension deadline expires, even if it became clear to both sides that more time was needed.

Given the propensity of the EU to break its own rules, there must be few people seriously ruling out the possibility of a fudge. Doubtless, the best minds in Brussels are already working on a formula which might buy more time, possibly involving the creative use of vocabulary, where we get an extension by any other name which produces a "non-transition" to cover the period of the no-extension.

Nevertheless, Hogan is adamant that "We need to wake up to this reality that gamesmanship and brinkmanship is not going to work on this occasion", referring to the brinkmanship that worked last time round, if only for the EU. And if it worked once, then the EU will hardly be adverse to trying it again, right up to the point when it ceases to deny that it is possible.

The bigger problem that the EU has – even it hasn't fully realised it yet – is that Johnson probably doesn't want an extension, at any price. Worse still, he shows every sign of being entirely indifferent to the shape of an EU-UK agreement, beyond the vague aspiration of seeking an abolition of tariffs and quotas.

Thus, the only response we've had from UK officials is that Hogan's warnings, and the rest of the "noise" from Brussels, is a negotiating tactic intended to lure the UK into requesting an extension. And since that would require the UK to make extra contributions to the EU budget and to continue applying all European law for an extended period, the answer is set to remain, no thank you very much.

As this ritual dance progresses, though, the legacy media never fails to disappoint, keeping up its reputation for embracing the lowest common denominator, focusing its attention on the so-called "battle of the bongs", as Johnson sparks a surge of fruitless donations in an attempt to get Big Ben chiming on 31 January.

For so many of us who have worked decades on campaigning to leave the EU, it was always on the cards that we should look to some sort of celebration to mark our formal passage from the "evil empire".

I would have thought that a chain of beacons, from one end of the nation to the other, might have been the appropriate activity, each bonfire attended by copious consumption of alcoholic beverages, pork pies and mushy peas. Only Farage could think that a party in Parliament Square was an adequate substitute.

Once again, though – and rather ironically – the leaden blanket of uncertainty has cast its dire effect. With no way of telling until the last moment that we were really going to leave, after so many false starts it has not been possible to organise a genuine community response from the heart of England.

But, given the botched process so far, with little prospect of anything better, for most of us – including Eurosceptic die-hards - 11pm on 31 January will be a sombre moment of reflection. We may take such comfort as we can from the fact that we have achieved a lifetime's ambition of actually leaving the EU. 

But it is perhaps just as well that the bells of Big Ben will not be chiming. Otherwise, we might be reminded of the words of Sir Robert Walpole. When the bells were rung in London on the declaration of war against Spain in 1739, of which Walpole disapproved but which was compelled by popular clamour to support, he was heard to say, "They may ring their bells now, before long they will be wringing their hands".

This was the same man who, when his son offered to read history to him, remarked, "Oh, don't read history! That I know must be false". These days, politicians tend to write the histories, rather than read them, which is why we know they must be false, but who then will be there to write the history of this event, when the bells themselves were silent? 

At least Quasimodo can have no complaints, not that Notre Dame is in a position to take up the slack. Perhaps we should give him a job.



Richard North 17/01/2020 link

Brexit: trapped by events

Thursday 16 January 2020  



There seems to be something all too familiar in this current, pre-negotiation period, with the EU making all the running. And, once again, from the UK side, we get nothing but the sound of silence.

The big difference this time, though, is that the EU is not dealing with Theresa May who, for all her many faults, did actually want a deal, even if she had little idea of its nature. Here, it is having to contend with the maverick Johnson who appears to believe that his counterparts will be forced to offer him something, which he can take or leave, or even cherry-pick, as the mood takes him.

Another big difference is that, unlike the withdrawal agreement – which was strictly a matter between the UK and the EU – there is a sense of competition in this round, with the UK seemingly able to play off the European Union against the United States (and other players).

That notwithstanding, the EU is still having to go through the process of working up its own negotiating mandate, which is precisely what it is doing with its internal discussions, covering issues such as fishing, transport, energy and the level playing field.

In the absence of a similar initiative from HM Government, it is easy to fall in with the assumption that the current EU documents, and others like them, are going to set the tone of the coming negotiations – as happened with the previous set of negotiations.

But this assumes that Johnson wants a deal at any cost. It would also neglect the possibility (if not likelihood) that the prime minister believes he can float above the cut-and-thrust of the next eleven months or so, and then swoop down to launch his own distinctive deal, the nature of which will depend greatly on the level of agreement with the United States.

And if that feels more than a little nebulous, that might be because it is. Like former Soviet Union citizens who had to read between the lines of their daily newspaper, Pravda, to get some clue of what was going on in their own government, we have to read the fanboy gazette in an attempt to glean some idea of Johnson's intentions.

But that would presuppose that the prime minister has anything like a coherent plan, or even anything more than just a vague understanding of the issues, putting him in the position of being able to put a sensible deal on the table.

It is more credible to assert that he is flying by the seat of his pants, guided by an inchoate set of half-formed principles which will somehow come together at the last minute to resemble something approaching a trade policy – a "deal" sufficient to convince a credulous media that the "future relationship" talks have been a success.

Given that we might be confronting a failure – for which there are multiple gradations - his alternative, of course, is to seek solace in the blame game. And it is here that the EU seems to be going out of its way to give Johnson the ammunition he might need.

For, while from the EU's point of view, insisting on continued regulatory alignment and the adoption of "level playing field" measures is eminently sensible, it plays to the gallery of "ultras" who would like nothing better than to see Johnson walk away with a de minimis deal, transferring much of our trade interests to the other side of the Atlantic.

It is nevertheless still relatively certain that, even at the lower level of expectations, there will be a deal with the EU, even if the "bare bones" are bleached white and devoid of the slightest hint of flesh.

That alone may be enough to ward off the mantle of failure, and give the prime minister the laurels of the victor, which he can wear with confidence in the certain knowledge that it will be some time before the extent of his dereliction becomes known to the wider public.

And Johnson may well believe that he can buy enough time for a comprehensive trade deal with the US to kick in, gambling that it will give the UK the boost necessary to make up for the loss of trade with the EU. When it comes to British politicians, there is no natural limit to the unrealistic expectations which they can entertain.

Politically, though, it will be easier for him to run with this expectation, and the promise of sunlit uplands garnished with the Stars and Stripes, than it will be for him to be accused of shackling the UK to the EU "corpse", symbolised by stultifying layers of regulation and initiative-killing red-tape.

Even should the US-UK negotiations fail to deliver, though, Johnson could still get away with a relative failure on the EU front, simply because – to his target audience – it would not be couched as failure but as an act of resistance that would be worth any amount of pain and sacrifice.

Such is the uncompromising language in the EU briefings, with talk of "Union autonomous remedies", which are being described as "punishment clauses", that this will not be difficult to do. Unwittingly, the EU seems to be carving out a trap for itself, from which there might be no escape.

From the EU's perspective, though, it is difficult to see what else it can do. Affording pride of place to its Single Market, as the one achievement of consequence that it has secured in its long history, it has no choice but to defend the integrity of its creation, and thereby extract a significant penalty from the departing UK, just to demonstrate that there is continued value in EU membership.

The reality here is that, once the Efta/EEA option was closed down, there was no way the UK could participate directly in the Single Market. And, since we are, by default, emerging with something that might approximate the Swiss option – in structure if not scope – then we will suffer the same inflexibilities that the Swiss have had to tolerate, or go for the very barest of bare-bones deal.

In retrospect, we should have seen this coming. The UK government's objection to the Efta/EEA option has been the lack of formal decision-making afforded to the Efta partners – just about acceptable to the Efta "dwarfs" but completely unacceptable to a country of the status of the United Kingdom.

Oddly enough, in the early stages of what were to become the EEA negotiations, Jacques Delors held out the promise of co-decision, with the "Houses of Europe" all having an equal say in the formulation of standards. That, however, proved a step too far for the nascent EU, leaving Delors to resile on his promise, whence the EEA took on its current form.

If there is no resolution to this problem, and the demands being made of the UK are that it should tie itself in perpetuity to standards and rules over which it has no direct say in their formulation – a position even worse that EEA membership – then we have the makings of an impasse.

When the EU's "punishment clauses" could be seen as replicating the notorious "guillotine clauses" in the Swiss Agreements – where non-compliance with one provision brings down the entire agreement matrix – this is a scenario that Johnson's propaganda skills would come to the fore. He would have no problem demonising the EU's endeavours, as a precursor to outright rejection.

And, while it is early days yet, we begin to see in the new Commission President no great charismatic leader but a rather leaden bureaucrat who shows no sign of rising to the challenge of keeping the UK in the European political sphere.

With that, having failed to come up with its own plan for a new relationship with the European Union, the only thing the UK has is the dirigiste offering from the Commission which, even under the best of circumstances, it would have difficulty accepting.

Had they any self-awareness, those who rejected or ignored the Efta/EEA option (especially as modified by Flexcit), might now understand that they threw away the only chance of an acceptable resolution, with both sides now trapped by events over which they have no real control.



Richard North 16/01/2020 link

Brexit: where angels fear to tread

Wednesday 15 January 2020  



There has been a lot of noise recently on the post-Brexit fate of the UK fishing industry, and the shape of the agreement we will need to forge with the EU. However, sorting out the wheat from the chaff is extraordinarily difficult in a field that is so complicated that very few could claim to understand it fully.

One entertaining meander around the issues can be found here, published some 30 months ago after the UK government had denounced the London Fisheries Convention, of 1964 – part of the process of recovering control over our fishing grounds.

The article, which is heavy on international law, raises serious questions as to whether EU Member States (or fishing vessel owners) could gain continued access to our waters after Brexit, based on the doctrine in international law of what is known as "acquired rights".

In an area where the complications make a bowl of spaghetti look as straight as an ebony ruler by comparison, that does not apparently prevent some states making a case for the retention of "historic rights", which have the same effect but stem from a different corner of international law. Names and terminology can have a profound effect on the arguments when the lawyers get involved.

The situation, however, is further complicated by the bane of treaty negotiations, where we are dealing with an uneasy meld of international law, EU law, domestic law and multi-level politics. Boundaries are not clearly defined and responsibilities are blurred, all set against the overarching technical and practical nature of the fishing industry which itself is beyond the grasp of most players and commentators.

On that basis, it is a very brave man (or woman) who can report coherently on what might transpire from the coming trade talks, as they affect fishing, as the EU circles the wagons and starts to leak something of its negotiating position.

That said, whatever legal and political complications there might be, there are several unarguable facts which will serve to frame the discussions.

Firstly, it is a given that the majority (anything up to about 80 percent) of the fish caught in our waters are not sold to British consumers. Secondly, the bulk of fish (a similar percentage) consumed in the UK are caught in non-EU waters – and especially Norway, Iceland and the Faeroes.

Further, even if we gained absolute control over UK waters after Brexit, and were able to exclude all foreign vessels, the British-flagged fishing fleet does not have the capacity to harvest the biomass that would become available.

But, even if it could, UK vessels would be prohibited from landing their catches in the ports of EU Member States, until the UK government had lodged a fisheries management plan with the EU, and it had been approved by the European Commission.

Despite the rhetoric on "taking back control", therefore, and the desire in certain Brexiter quarters to purge our seas of "Johnny Foreigner", everybody has something to gain from allowing vessels registered in EU Member States continued access to UK waters.

Both sides, though, will be keen to leverage their positions to gain the greatest possible advantages for themselves. Thus, we see reports that the EU is prepared to offer the City of London access to its financial markets in return for the retention of fishing rights in UK waters.

However, things are not that simple. They never are. As soon as the UK leaves the EU, it becomes a third country. Not only are UK vessels then cut off from the EU market until a management plan is lodged and approved, vessels flagged in EU Member States are likewise prohibited from accessing UK waters or landing catches in EU Member State ports.

Thus, while the UK has a bargaining chip, in that it can trade access to its fishing waters for concessions elsewhere, it too needs the goodwill of the Commission to expedite approval of a UK fisheries management plan, as that serves both EU and UK interests.

But there is also the question of reciprocal access. Some UK fishing vessels traditionally fish in the waters of EU Member States, while some also benefit from access to the waters of third countries, such as Mauritius, via EU-brokered "Sustainable Fisheries Partnership Agreements". There will be a price to pay for continued access there.

Then there are also EU quota agreements with Norway and the Faeroes, for which some continuity arrangements will have to be brokered, pending the UK making its own agreements, presumably via the North-East Atlantic Fisheries Convention.

Certainly, according to the EU's own preparatory discussions, it is seeking to maintain reciprocal access to fishing waters, but secured "in the overall context of the FTA" which the EU is about to negotiate.

Nevertheless, the situation is far from straightforward as either side could easily overplay its hand. The UK might have on offer access to its waters but, on the other hand, that access is of limited value if the Commission refuses to endorse the UK's fisheries management plan. In effect, the Commission has the capability to veto any deal, outside the framework of the FTA negotiations, which it could well do if it believes that the asking price is too high.

Then, if the UK pushes its luck too far, there is always the possibility that one or other Member States might find compliant lawyers willing to take a case to the International Court at the Hague, arguing for "historic rights" or whatever other device that might get them a hearing.

And yet, if the EU demands too much, the UK could simply close down all access to vessels on the EU Member State registers, and ride out the storm until it can secure better terms.

Whether the UK has the resources to police a fisheries ban, however, is another question. No doubt the RAF's newly acquired P-8A Poseidon maritime patrol aircraft (pictured) will come in handy. To intercept rogue fishing vessels, though, surface assets are still needed, and it is unlikely that the Royal Navy has the resources to fight a full-scale "cod war".

For all that, the specific details will only get us so far, while the EU is making it clear that it has other priorities to address before it gets down to the nitty-gritty. As we heard recently from Michel Barnier, the first thing on the list is new capacity building, setting up mechanisms and institutions that will enable the EU and the UK to work together in the future.

From the EU briefing, we learn that this will include "adequate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement mechanisms in the agreement", as well as "Union autonomous remedies, that are all commensurate with the depth and breadth of the EU-UK economic connectedness".

The latter is being described as a "punishment clause" which would allow the EU to take unilateral action in the event of the UK failing to abide with the terms of the agreement and permitting uncontrolled divergence. This might have special relevance where ECJ judgements are overturned.

In the coming talks, such matters are likely to dominate the agenda, leaving little time for detailed sectoral talks. Perhaps all we can expect on fishing is some form of status quo agreement, on the back of the EU's approval of a management plan, until more substantive issues are settled.



Richard North 15/01/2020 link

Brexit: stupidity unchained

Tuesday 14 January 2020  



One of the fêted scriptures of the Tory right wing is a rather dire, to say nothing of unreadable, tract called Britannia Unchained. It purports to set out a new vision for a Conservative future, telling us that Britain "must learn the rules of the 21st century, or we face an inevitable slide into mediocrity".

Actually, though, we're already there, as witnessed by an extraordinary article in the fanboy gazette by the idiots' idiot, Steve Baker MP, chairman of the European Research Group.

This is the man who is telling us that Britain (although he probably means the UK) "should prioritise American trade talks over the EU", thereby prioritising a trade relationship which delivers £200 billion-worth of imports and exports, as opposed to the EU's £648 billion (2018 figures).

Baker justifies this idiocy by asserting that "all our ambitions to solve domestic and global problems are underpinned by the need for a strong market economy". Yet, he says, "all economies are vulnerable to threats to the global trading system". And that is why "this empowered Conservative government" must make its manifesto commitments on trade "a pre-eminent strategic priority".

Our manifesto, says Baker, pledged parallel trade talks with the EU, the US, Australia, New Zealand and Japan, aiming to cover 80 percent of UK trade with free trade deals in the next three years. "This whole-UK, whole-world policy is exactly the right approach", he adds, "and Liz Truss has done brilliantly to secure it".

Accepting the idea that Liz Truss is capable of doing anything "brilliantly" stretches credulity way beyond breaking point but, setting that aside, Baker sees "deep dangers" ahead.

He thinks that, by linking access to its markets with demands for regulatory harmonisation, the EU is making itself a "global outlier". Thus, in his view, "we need immediately to end the UK's timid Eurocentrism by negotiating simultaneously with independent, free-trading partners".

Accepting the export of EU power, he says, "would deepen our recent humiliation as we succumbed to be a mere regulatory satellite, unable to join old friends as equal partners".

What makes this so dismal a critique is that it comes from a man who has access to virtually every resource imaginable. Yet we have in Steve Baker someone who treads the earth seemingly totally unaware of the nature and extent of regulatory globalisation which has been building since the Second World War and with increasing speed over the last twenty years.

As to the EU's role in all this, I explored one of the most comprehensive expositions in a blogpost I wrote nearly five years ago, headed the "Brussels effect", reviewing a paper by Anu Bradford, a professor of law at the Columbia Law School and also a director for the European Legal Studies Centre.

The opening words of the abstract of her paper puts us in the picture, as she explains that her article:
… examines the unprecedented and deeply underestimated global power that the European Union is exercising through its legal institutions and standards, and how it successfully exports that influence to the rest of the world. Without the need to use international institutions or seek other nations’ cooperation, the EU has a strong and growing ability to promulgate regulations that become entrenched in the legal frameworks of developed and developing markets alike, leading to a notable "Europeanization" of many important aspects of global commerce.
If there is a single take-away point to be had from Bradford's 68-page paper, it is that the EU is a global regulatory superpower, Her thesis – as I wrote back in 2015 - kicks into touch many of the ill-informed posturing of those who would argue that there is any immediate regulatory relief to be had from leaving the EU.

The European Union, she writes, sets the global rules across a range of areas, such as food, chemicals, competition, and the protection of privacy. EU regulations have a tangible impact on the everyday lives of citizens around the world.

To her specific audience, she adds, few Americans are aware that EU regulations determine the makeup they apply in the morning: the cereal they eat for breakfast, the software they use on their computer, and the privacy settings they adjust on their Facebook page.

The EU, we learn, also sets the rules governing the interoffice phone directory they use to call a co-worker. EU regulations dictate what kind of air conditioners Americans use to cool their homes and why their children no longer find soft plastic toys in their McDonald's Happy Meals. This phenomenon, the "Brussels Effect", is the focus of her article.

En route to exploring this phenomenon, Bradford takes a look at the so-called "California Effect" where, due to its large market and preference for strict consumer and environmental regulations, this US state is, at times, effectively able to set the regulatory standards for all the other states.

Businesses willing to export to California must meet its standards, and the prospect of scale economies from uniform production standards gives these firms an incentive to apply this same (strict) standard to their entire production.

This effect expands to become the "Brussels effect", when firms trading internationally find that it is not legally or technically feasible, or economically viable, to maintain different standards in different markets.

Thus, when trading with the EU requires foreign companies to adjust their conduct or production to EU standards - which often represent the most stringent standards - or else forgo the EU market entirely, they tend to adopt those standards uniformly throughout their entire enterprises.

This is, I wrote, summed up in one paragraph, telling us that:
… export-oriented EU firms to seek consistent and predictable regulatory frameworks. Uniform regulations have abolished obstacles for doing business within the common market - it is more complicated and costly to comply with multiple, sometimes conflicting regulations than with a harmonised regulatory scheme. And once all European firms have incurred the adjustment costs of conforming to common European standards, they have preferred that those standards are institutionalised globally. Hence, to level the playing field and ensure the competitiveness of European firms, EU corporations have sought to export these standards to third countries.
This, I asserted, is the crunch issue. As trade has globalised, so has regulation, and when it comes to the choice of standard, firms will always opt for the most demanding, simply because it is cheaper and more efficient to work to a single standard than it is to work to multiple standards.

Yet. so limited is the understanding of Steve Baker that all this passes him by, leaving him to believe that the EU regulatory regime is a "global outlier". 

In meeting ambassadors and their teams, he tells us, "I have found categorical differences of approach. Our European partners regard our decision to leave the EU with bewilderment".

"It has been necessary", he says, "to reassure them that, overwhelmingly, Tory Eurosceptics are free traders with an expansive view of prosperity and our friendship with the world, that we reject technocracy and have faith in the collective wisdom of the people, expressed in the markets for products, services, culture, ideas and public policy".

This brings the man to assert that "our friends in Australia, New Zealand, Canada and the US are fearless in accepting our commitment to civilised values, impatient in their desire to see us become international equals" If they are bewildered, he says, "it is only because we have been hesitant in reorienting ourselves to the global outlook we have chosen. These old friends outside the EU are those we need most right now".

Baker is thus quick to call in aid the US Ambassador to the UK, Woody Johnson, who recently argued that having a trade deal with the US … will strengthen your hand when you are negotiating with your, you know, your closest geographically trading partner, which is the EU".

Woody Johnson reminds us that America is the world’s largest economy, which somehow equates with it "offering huge potential to our businesses". The Americans, Baker says, are ready to negotiate and are prioritising us. But, he is at least aware that "the window for success" is closing as the US heads into presidential elections.

And it is for that reason that Baker feels this government must fully commit to parallel trade talks, immediately prioritising the US. The day for action on US trade, he says, is the day we leave the EU.

His real problem, though, is this is all he has, arguing that when the EU demands level playing field provisions, we must agree the UK will not distort our markets artificially to secure advantages that ordinary commercial processes should yield. But, he says, this cannot mean harmonisation.

Regulatory competition, he says, "is essential to discover the best ways to secure the best outcomes for consumers, especially for the poorest, who cannot afford to game the system". We must recognise that neither socialists nor our European Commission friends will choose to accept that approach. They evidently believe in power and exporting it.

So, because the Americans apparently believe in "regulatory competition", that's why they are "our greatest friends". They too, he says, "fundamentally believe in liberty, that pioneering spirit that rises above mere materialism, along with ambition and courage and the hope that a better future is there, not merely to be discovered, but to be created through the energies of an entrepreneurial people seeking tirelessly to serve others for profit and moral sentiment".

And that seems to be the level of rhetorical BS that sustains the ERG, one so divorced from real world conditions that it is not parallel negotiations that Baker is after. He needs a parallel universe.

Global trade, and the whole process of globalisation, relies increasingly on the harmonisation of trading standards. Common standards, applied in a uniform fashion, facilitate trade, breaking down barriers. And such is the regulatory power of the EU that, if we want to be a "global outlier", all we have to do is follow Baker's advice, throwing away our EU links "to boldly start with the US as we leave the EU".

Still, as Pete points out, it gives Labour a useful stick with which to beat the Tories, just supposing they ever have a leader with the ability to exploit it.



Richard North 14/01/2020 link

Brexit: a legal trap

Monday 13 January 2020  



Today, the House of Lords is to entertain itself with the second reading of the European Union (Withdrawal Agreement) Bill 2019-20. This, when given Royal Assent, will amend the 2018 version and provide the legal template which will enable the UK to execute Brexit.

But, while it has been given a free passage in the Commons by Johnson's adoring claque of newly-elected MPs, reservations on certain details are being expressed, and may be the focus of some argument when the Bill is debated today.

One such issue came to the fore on 18 December, when it was reported that the lower courts would be given the power to roll back case law arising from ECJ judgements. This was a departure from the 2018 version where the incorporation of all ECJ case law would have left the supreme court as the only body able to overturn these decisions.

Typically, the Guardian , noting that Downing Street had confirmed the plan, wrote of it in alarmist terms, focused on its particular issues of interest. Thus it reported that the plan had "prompted concerns" that it would become easier to challenge European standards in areas such as workers' rights and the environment.

At the time, a Downing Street spokesman said: "The Bill will ensure that the supreme court is not the only institution able to consider retained European court of justice rulings. This is an important change, which will ensure that we do not face a legal bottleneck and inadvertently stay bound by EU rulings for many years".

Needless to say, this was accompanied by a dose of the Johnson mantra, with the spokesman adding: "We will take back control of our laws and disentangle ourselves from the EU’s legal order, just as was promised to the British people".

However, taking back control is not exactly the issue. What is dealt with in the new Bill (clause 26) is the level at which case law may be disapplied. And, given that case law is effectively the law of the land, this is of some importance as it can override or modify statute law.

In my own time, I've had some interesting times with case law, in particular provisions on the contamination of food. In the old 1970 Regulations, there was a prohibition on the exposure of food to contamination, failure to conform with which was a criminal offence. The Regulation, though, was modified by case law, requiring that any "contamination" had to be harmful to health.

When one of my clients was faced with prosecution for placing a tray of raw chicken carcases on the floor, partly in contact with a less than clean table leg, EHOs were confident of a conviction. However, I successfully argued in court that the primary source of contamination, in accordance with the case law definition, was the raw chicken. And while the dirt of the table leg had been unsightly, it was my experience that long-standing organic dirt has a bactericidal effect.

Thus, in my view, this was not a case of the table leg contaminating the chicken but the other way around. And since there was no intention of selling the table leg for human consumption, there was no offence.

Such is the impact of case law that one quite obviously needs to be careful about how, when, and by whom it is changed. Hence we see in today's Times the celebrated QC, David Pannick, expressing his own concern about Clause 26.

There is no question of peers trying to block the Bill, he says, but we will perform our function of scrutinising the legislation and, where appropriate, make suggestions for improvements to its content. And, he avers, Clause 26, concerning judgements of the Court of Justice of the EU, requires particularly careful scrutiny.

Setting the scene, Pannick reminds us that, when we leave the EU, much of the EU law will, for the time being, remain in our legal system - so-called "retained" law. To ensure legal continuity and certainty, he says, the Bill confirms that almost all of the EU law which currently applies in this country will continue to do so unless and until parliament or ministers amend or repeal it.

That law, as it stands, includes all judgements previously handed down by the ECJ, with the original 2018 Act stating that such judgements would remain binding on our courts and tribunals, unless it was overturned by the Supreme Court and the final court of appeal for Scottish criminal cases, the High Court of Justiciary.

Crucially, in the interests of ensuring continuity and certainty, only those courts could overturn the ECJ judgements. But Clause 26 adopts a different approach. Ministers, says Pannick, are to be given power to make regulations governing which of our courts and tribunals should, after the end of this year, no longer be bound by these judgements. Additionally, Ministers will be able to regulate the binding force of previous decisions of our own courts when they applying EU case law.

Pannick has two concerns about this. Firstly, he writes, legal certainty will be undermined as we leave the EU if lower courts are given power to reverse well-established decisions on competition law, environmental law and equal pay, among many other subjects.

Precedent – as he rightly reminds us - is vital to the integrity of our legal system. If settled case law could be overturned in lower courts, a flood of litigation would hit companies and individuals. And it will come as no surprise to learn that the main beneficiaries of such litigation would be lawyers.

You can actually imagine the situation. While case law is widely published, and available on the legal databases used by practising lawyers, that is not always the case with the decisions of lower courts and tribunals. A case, therefore, which was decided on the basis of an ECJ precedent, could be upheld in one court or tribunal, but overturned in another, bringing something close to anarchy to the legal system.

For his second concern, Pannick suggests that ministers should not be giving themselves power to regulate a fundamental aspect of our legal system – this is not something in which Ministers should interfere.

Deciding which of our courts should no longer be bound by these precedents, he says, and what test judges should apply, is a matter of principle for parliament to determine, after full debate, especially in a system that values the separation of powers between the judiciary and the executive.

Pannick then goes on to add that the parentage of clause 26 is "unknown". It certainly does not look like a child of the Ministry of Justice and the attorney-general’s department, he says, leaving us to wonder why it was inserted when the hazards are so evident.

One suspects, however, that doctrine rather than legal sense is at work. And the implications are even more profound than even Pannick indicates. When we are entering a process of negotiation where the degree of alignment will determine the level of access we are given to the Member State markets, this will undoubtedly assume that conformity with EU law includes conformity with relevant ECJ judgements.

Where, however, these judgements can be overturned by the lower courts, and even tribunals, often without the knowledge of Ministers, in a process they themselves have initiated, the EU would be entitled to take the view that the UK is no longer in a position to police or enforce any trade treaty it secures. At the very least, it might make any treaty agreement conditional on the removal of the amendments introduced by Clause 26.

Should the Clause amendments survive, the UK could in future, find its own trade agreement with the EU undermined by its own courts, and be forced to intervene to reverse their judgement, in order to preserve the integrity of the treaty.

This is not really a situation in which the government wants to place itself, as there will be, no doubt, break clauses built into any new treaty, operable in the event of non-compliance by any party. The government could find itself continually fire-fighting, just to maintain the status quo.



Richard North 13/01/2020 link
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