Richard North, 27/08/2016  
 


Over three days earlier this weeks I have had a long and detailed exchange of e-mail correspondence with John Mills, chairman of Labour Leave, the exchange initiated by him. His main objective, according to his later e-mail, was to try to draw on my knowledge and experience to help those on his extensive e-mail list: "establish whether the Brexit negotiating position which I think most of us would favour is feasible".

This is a lengthy exchange, but I believe it to be an important illustration of the state of the debate in certain quarters. I have, therefore, reproduced it here in full for the public record, with John's permission. Initially, I had proposed making this anonymous, but Mr Mills preferred to be named. I have made minor corrections and improved the paragraph spacing, but otherwise it is unchanged apart from third party references, which have been obscured.

In the very near future, I will post a critical analysis of this exchange, which starts here:


22 August 2016

Dear Richard

In strict confidence, please find below an exchange of e-mails from influential people who, I am sure you will think, are taking much too simplistic a view about the process of disengaging ourselves from the EU.

All the same, I am sure they are right in saying that the more we can keep the negotiations simple, the better. What it seems to me we need out of all this is as short and clear a guide as possible to the simplest way as possible of achieving both of the following objectives, treated as alternatives, or why they cannot be achieved if there are compelling reasons why this is the case:
1. Your preferred choice of the UK being in the EEA, at least on a temporary basis, and thus with free trade with the EU, but out of the Single Market as far as possible. What realistically would we then be able to do about border control, payments to the EU and justiciable obligations generally?

2. Being completely outside the Single Market but with free trade with the EU at least on goods and hopefully on services, which is where I think most people in favour of Leave would like us to be - including me if it is achievable.
Would you be able to get a Monograph produced to cover these two options, cutting to the quick and keeping it as simple as possible? I think it would be greatly appreciated if you could do this.

Very best wishes,

John

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22 August 2016

John

Look at an old Bakelite telephone from the 1940s and now look at an i-Phone. If simplicity was the ultimate objective, then we should scrap our i-Phones and return to those clunking black telephones, which we used to keep in the hall.

The thing is that, just as telecommunications have become more complex, so has governance (not least you need some pretty sophisticated international governance to run the telecommunications system). If you try to simplify, you lose functionality. If you look to simplify our exit negotiations, then we risk conceding issues which, had we fought for them, we would have got a better deal.

Essentially, there isn't a quick and simple way out. The EU project is nearly 70 years old, and the UK has been undergoing the process of political and economic integration for 43 years. The EU systems are intertwined with our own to such a huge extent that it is quite impossible to extract ourselves quickly without causing damage.

Thus, my central thesis is that we plan a phased withdrawal. We extract ourselves step-by-step, in much the same way we went in. And this is the reason for electing to go for the Efta/EEA option as a first step. It was treated as a half-way house for those countries wanting to join. In my view, it has equal utility as a half-way house for those wanting to leave. It is Phase 1 of a six-point programme.

To stay in the EEA is to stay in the Single Market. The EEA is the Single Market. But it takes us outside the EU and, therefore, outside the jurisdiction of the ECJ. We will have to pay some money to continue cooperating with the EU. But then international cooperation costs money.

As to the Single Market, I am getting exceedingly weary with the likes of XXXXXXX bleating about it. Since he was first involved, we've had the conclusion of the Uruguay Round, the formation of the WTO and a huge surge in globalisation.

There are now more international regulatory/standards bodies in existence on the planet than there ever have been in the history of mankind. The Single Market is being globalised - we need to be part of that. Far from withdrawing from it, we need to be extending it, completing the globalisation process and wresting control of the Single Market from Brussels. We need to take ownership and manage it on an intergovernmental basis.

In this context, "free trade" and the negotiation of a free trade agreement with the EU to cover the longer term is an irrelevance. FTAs are dinosaur agreements with no relevance to the 21st Century. Most of "your" people are locked in the last Century. We need to move on ... until we can, there is no progress.

Best

Richard

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23 August 2016

Dear Richard

Thanks for your e-mail. I understand your frustration but if the key people are going to be won round to your point of view they need to be persuaded to do so rather than just being told that whatever they think is wrong. I agree with you that there is not a simple and quick way out but, whatever the constraints may be, the quicker and the simpler our approach is, it seems to me the more successful it is likely to be.

I know you want a phased withdrawal and maybe that is what we will finish up by having but to get there the other options – involving a cleaner, earlier break - need to be considered. If they really are not feasible, clear persuasive arguments showing that this is the case need to be advanced. Is it possible for you to set these out?

Take the WTO option, for example. I know this is not an ideal outcome but is it really impossible to envisage it being implemented, given at least two years to put whatever administrative arrangements might be necessary in place?

If WTO is possible, it seems to me that this puts us in a much stronger position to negotiate the UK being outside the Single Market – and thus no longer bound by free movement of people, our current level of contributions and justiciable by the Luxemburg court – but with free trade on goods and some sort of deal on services.

This is what I think most people want. What, in your view, would stop this happening? Of course there would be difficulties along the way but what would be the game stoppers? Are there any which, with the best will in the world, simply could not be negotiated away?

Very best wishes,

John

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23 August 2016

John

I think, before anything else, two things are needed: clarity, and (intellectual) honesty. Without both, it is not possible to have a sensible debate.

In terms of our exit, I have sketched out three broad options. These are the generally accepted "industry standard" if you like. No serious commentator disputes them, although some break down the primary categories into sub-divisions. The three options are: (1) the "unilateral" or WTO option; (2) the "bilateral" or Swiss Option; and (3) the Efta/EEA option.

In Monograph 2, I have defined the WTO Option. This is taken to be a scenario where, for whatever reason, the UK eschews any form of directly negotiated trading agreement with the EU and trades solely and exclusively within the framework set by the diverse WTO Agreements.

That is the baseline. The definition is distilled from countless papers and public pronouncements, and it the basis of my further analysis. If you change the definition (as was the effect of Mr XXXXX's comments), then the calculus changes. However, as I remarked, if you take the WTO framework as a baseline and then negotiate agreements around it, to make it more workable, it is no longer the WTO option. It becomes something different. It becomes a (weak) version of the "bilateral" or Swiss Option.

Sticking strictly to the definition, I have written Monograph 2, to demonstrate that the WTO option (as defined) is a non-starter. I am not alone arguing this, although I have perhaps written at greater length and with more clarity as to why this should be.

As regards persuading people, I am reminded of the homily: you can take a horse to water but you cannot make it drink. If like Mr XXXXX, you ignore my definition and change the framework of the discussion, then it is not possible to have a sensible argument - we end up with a debate over "chalk and cheese" that takes us nowhere.

Thus to reiterate. The WTO option (as defined) is a non-starter. Furthermore, we know already that HMG is not deliberately going to embrace it. The most likely (and probably only) scenario is that it happens by accident. My Monograph was written partly to warn people of the consequences, in the hope that this will help prevent it from happening.

Having thus completed that task, I see myself has having provided the water. I have led the horse to that water and invited him to drink. If that "horse" cares not to drink, then there is nothing I can do about it. The horse will die of thirst. Meanwhile, as I see it, I have much more water to dispense, and to more willing horses. I have neither the energy nor the inclination to waste my time on recalcitrant horses.

Very best

Richard

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23 August 2016

Dear Richard

I am probably a good deal more sympathetic to your point of view than many other people on the circulation list which you have seen but I – and I think lots of other people - still do not really understand why it is possible for China, the USA, Australia, Japan, etc., all to be able to sell product to the EU on WTO terms but it would be impossible for us to do so. I am not saying that this is the ideal option. Nor am I suggesting that there would not be difficulties, for example over recognition of standards, which would need to be overcome. The issue is whether it would be possible. Can you help me?

Very best wishes,

John

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23 August 2016

John

I've written multiple posts on the blog, and then summed up and cross-referenced the arguments in Monograph 2. I've further elaborated on the arguments in Monographs 5 and Monograph 7. The works separately and collectively point out that there is more to trade than the traditional Free Trade Agreement. For many reasons, some nations (China, USA, etc) prefer to order their trade relations using forms of agreement different to the traditional Free Trade Agreement.

When it comes to China and the USA, the networks of trade agreements are complex and extensive, relying on the interaction between the bilateral and the multilateral, with constructive and imaginative use of coordinated unilateralism as an overlay. This I have made especially clear in Monograph 7, to the extent of pointing out that the traditional FTA is obsolescent and largely redundant.

It is the case, therefore, that none of these nations rely on the WTO option. For us to enjoy the same trading relationships with the EU as are enjoyed by the US and China, we would have to see replicated exactly the same complex combinations of unilateralism, bilateralism and multilateralism. Complex, they are and poorly understood, but that does not mean these arrangements do not exist. They do.

If people do not want to entertain the notion that such arrangements do exist, and insist on arguing that the likes of China and the US trade under WTO rules, without the benefit of these complex trade agreements, then all I can do is refer them to the already published Monographs. If they are not prepared to invest the time reading them, then once again we are in "horse and water" territory.

The facts are that trade systems are extremely complex (and intricate) networks of different types of agreement, all of which - in their totality - interact to produce their current effects. They are not static, but very much dynamic, always changing and evolving.

One of the latest (although not entirely recent) changes is the inter-institutional agreement that does not, in the first instance, even involve national governments. Nevertheless, these are having a profound effect on the trading relations between nations, and have to be factored into the discussion as well.

Overall, understanding these systems requires an investment in time, and a willingness to set aside often dearly-held preconceptions. Most of what the current public debate is covering is twenty years old or more, with no recognition of how much the world has changed in the interim.

That said, we cannot have a sensible debate if those involved will not step out of their comfort zones and refuse to update their knowledge base. So far, I've written eight Monographs. The ninth is in production. People need to read them. They are based on extraordinarily detailed research and analysis by one of the best in the business.

If people don't read (and then seek to understand) the material I send them, I can’t help them. I can't help people who are intent on refusing help.

Very best

Richard

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23 August 2016

Dear Richard

Thank you for your e-mail. I have carefully read all your Monographs and it is clear from the responses which I have received from other people on the distribution list that they have done so too. I understand also that for the UK to move to trading with the rest of the EU on WTO terms would not be anything like as simple as many people seem to imagine that it would be.

What I don’t understand is why it would be impossible. Clearly there are obstacles. What I - and I think many other people - would like to have is a list of what these obstacles are and what can or can't be done to overcome them. So far, I know that you have listed mutual recognition of standards and a variety of different protocols and agreement on detailed procedures which need to be observed. These do not appear to me to be impossible to deal with. Can you please let us know what else stands in the way? I really want to know!

Very best wishes,

John

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23 August 2016

John

I have listed a number of obstacles - that's the subject of Monograph 5. Clearly, those obstacles can be overcome. That is what trade agreements are for. We overcome them by negotiating trade deals - issue, by issue, sector by sector. The point though is that the moment you start negotiating trade deals, you are no longer relying on the WTO option. You are moving into the "bilateral" option. You would no longer be trading on WTO terms.

In other words, it is impossible to trade under the WTO option, because of the huge barriers involved. The moment you start negotiating your way around the barriers, your WTO option ceases to be the WTO option and is transformed into a bilateral agreement(s).

Thus, what you are actually talking about is making a bilateral trade deal with the EU ... the so-called Swiss Option. The point then about bilateral deals is that they are as long as a piece of string. You have the Turkish deal at 55 pages and the Canadian deal at 1,598 pages. The precise nature of the obstacles depends on the scope of the agreement, and the degree of market access required.

However, we can add to this with a few other observations. Firstly, bespoke market access (bilateral) deals take a long time to finalise. It would be extremely optimistic to expect a comprehensive agreement to be concluded within five years. Since the chances of getting a time extension are slight - and there would be a political penalty to pay - the bilateral route is hazardous and uncertain. That leaves the off-the-shelf Efta/EEA option.

However, if we chose the bilateral route, there are certain basic components. Firstly, we will have to agree the scope of the agreement - the range of goods and services to be traded. Secondly, in terms of the goods and services traded, we will have to agree to match EU standards or come to an agreement on equivalence. Thirdly, we will have to come to an agreement on a verifiable system for ensuring regulatory convergence in maintained. Fourthly, we will have to agree a mutually acceptable agreement on conformity assessment. Fifth, we will have to harmonise customs procedures and/or agree on mutual recognition. Sixth, we will have to agree a market surveillance/complaints system, to monitor the functioning of the agreement. Seventh, there will have to be a dispute settlement procedure.

These are the bones of a trade agreement, none of which are dealt with in the WTO agreements. And that does not include the "peripherals" which in the UK-EU relationship, would be considerable.

Very best

Richard

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23 August 2016

Dear Richard

Many thanks for your very helpful response. To make sure that I understand what you are saying, can I please ask you to answer some additional questions?

1. I understand that the UK would not be able to fall back on the WTO option without at least some co-operation from the other EU members. Would there, however, have to be any more co-operation than there is with, say, China or the USA? If so, which of the points enumerated in your penultimate paragraph applies to the Chinese and the Americans, with which we would also have to comply?

2. I understand why the deals between the EU and Turkey (which at 55 pages sounds quite short to me) and Canada involve relatively complicated agreements but, if we are prepared to come right out of the Single Market, why would we need to have any more complicated agreement than whatever subsists between the EU and China and the USA?

3. Accepting that we may well not get the passporting deal which the City wants – although I understand that this is going to be overtaken by the "equivalence" regime in 2018 – and that we will not get full access to the Single Market on services, what obstacles do you think there are which would prevent us having access to the EU market on the same sort of terms as China and the USA which we would be unlikely to be able to overcome given a two year negotiation period?

With many thanks for your patience, which I really appreciate. I am really trying to understand the position.

Very best wishes,

John

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23 August 2016

John

We can't fall back on the WTO option - full stop. If we devise a trading arrangement in cooperation with the EU (not other members - it has to be directly with the EU) then it is not the WTO option. It becomes a bilateral agreement.

As to China, the USA, they have extensive but still limited trade with EU member states. We could copy the US relationship, but it would take time. The current arrangements have matured over time since 1993. However, even the Canadian agreement would not approach the level of agreement reached within the EEA, and Canada took seven years to negotiate.

We would still only have limited access to the EU's markets. The loss of access would be quite considerable. We export over £220bn to the EU each year, in goods and services, compared with less than £20bn goods and services to China.

What you have to appreciate with the EEA is that the individual texts of the Regulations, etc, are appended to the EEA Agreement, as amendments. Effectively, that makes the EEA Agreement about 50,000 pages long. That is what is needed to give full access to the EU's markets.

If we sought a comprehensive trade agreement with the EU, we might expect it to take five years or more.

Very best

Richard

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24 August 2016

Dear Richard

I am in some difficulty because the e-mail above does not answer the questions which I put to you in the e-mail which I sent to you yesterday. I understand that, if some measure of co-operation is required by the other EU member states to make what would otherwise be the WTO option work, this entails some bilateralism.

What I don't understand is why you think that it would be impossible to get this organised within two years, if whatever had to be agreed was kept as simple as possible. Why is it possible for China, the USA, etc., to trade with the EU without being in the Single Market or the EEA, but not the UK?

Please let me have answers to these questions.

Very best wishes,

John 

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24 August 2016

John

What is so troublesome about this exchange is your seeming reluctance to abandon the notion of the WTO option as a working solution. Yet the WTO Option is a unilateral approach. That means that, if you adopt a bilateral approach, you cannot then argue that this is simply a way of making the WTO Option work, as you seem to be doing. We are talking about two different animals. For the life of me, I don't understand why you are having such difficulty with this idea.

You then ask me why a settlement which "entails some bilateralism" would be impossible to get organised within two years. The problem in giving you a simple answer to this is that you have already restricted the framing of the question. You talk about "some bilateralism", as if you could simply bolt-on a few additions to an agreement and call it a workable settlement. That cannot be the case.

If you want a high level of market access (far more than has the United States or China), then you have no option (short of adopting the Efta/EEA option) but to negotiate a comprehensive free trade agreement. In one of my previous e-mails, I set out the basic structure and requirements of such an agreement, comprising seven core points without taking into account the "peripherals".

Given the complexity of a comprehensive FTA, it should not require much imagination to realise that this will take some time. International agreements do take time. Based on current experience, it would be unreasonable to expect an agreement to be concluded in less than five years.

You then return to the premise that whatever is agreed should be "kept as simple as possible". Yet I have already addressed this issue. A settlement with the EU, undoing 43 years of economic and political integration, and forging an agreement which will give a similar level of market access to that which we currently enjoy, is not going to be simple. This will be one of the most detailed and complex negotiations ever undertaken with the EU. To expect it to be concluded inside two years is risible.

Turning to the next issue, you then ask "why it [is] possible for China, the USA, etc., to trade with the EU without being in the Single Market or the EEA, but not the UK?" Yet the answer to that has in part already been given, and you should have no trouble answering the point yourself. It is a question of the degree of access.

Within the Single Market, the UK has an unparalleled degree of access to the markets of EU Member States. China, the US and other countries have very limited access to EU markets. Volumes of trading may be high, but penetration is narrow. For instance, by far the bulk of Chinese exports to the EU is focused on in manufactured goods. The more complex and diverse economy of the UK exports a much wider range of goods and services, and needs much wider access to the European markets.

If you wish to restrict yourself to the limited degree of access enjoyed by the US and China, then the consequence would be a savage curtailment of trade. You would have some trade, but nothing like the £220bn in current levels of goods and services. That is the crunch point ... access is graduated. You can have partial, very limited access, right through to full access. If you want a "quick and simple" agreement, the price will be limited access.

Very best

Richard

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24 August 2016

Dear Richard

Let me try once more to explain. The vast majority of the Brexit people who are on my mailing list would like us to be outside the Single Market, outside the EEA but with an agreement in place which leaves conditions for trade in both goods and services between the UK and the rest of the EU on the same basis as they are at the moment or as close as we can reasonably get to it.

They understand that there will be obstacles to getting this done and they therefore want to have an alternative available in case it proves impossible to get what might, for short, be called a free trade deal with the rest of the EU within the two year A.50 time frame. Having an alternative would be a way of putting pressure on the EU to get an agreement in place reasonably quickly and on reasonable terms.

We all know that you do not think this is the best way to proceed but it makes a big difference in terms of persuading people to your point of view if you are able to show that the alternative which nearly all of them favour is not just worse than your solution – on which there might well be a reasonable debate – but impossible.

The alternative would be to trade with the EU on WTO terms, accepting that this would involve at least some co-operation from the other EU members, so call it WTO+.

The key issue is then whether there are good reasons for believing that the WTO+ terms which the UK could reasonably be expected to negotiate would be different from and worse than those enjoyed by, say, China and the USA to such an extent that no reasonable person would go along with them It may well be the case that WTO+ terms would reduce the amount of trade the UK does with the EU – although presumably the reverse would also apply – and let us assume for the moment that this is a price which everyone would be prepared to pay.

My question to you, therefore, is not whether you think that WTO+ is a better option than staying in the EEA (we know you don’t think so) or whether it is better or worse than anything else (which may or may not be the case, and we know your views on this too) but whether it would be possible for the UK to have the same amount of access as China and the USA, and, if not, why not.

Please let me have answers on these points.

Many thanks

John

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24 August 2016

John

I would like to have the exclusive franchise for Lunar Green Cheese, with a quota of 1000 tons a week, beamed down directly from the Sea of Tranquillity by a matter transporter.

The point, of course, is that that is not possible – any more than it is possible to settle a deal inside two years that has us "outside the Single Market, outside the EEA but with an agreement in place which leaves conditions for trade in both goods and services between the UK and the rest of the EU on the same basis as they are at the moment".

It is not that there are "obstacles to getting this done" – it is impossible. There is no case in the real world where we could negotiate this within a two-year time frame.

What you have to confront, therefore – if you want to stay outside the Single Market, outside the EEA, is a severely limited agreement which will probably give us a fraction of the access that we currently have. I am not even sure that it is possible to conclude a coherent agreement within that time frame.

The nearest equivalent is the timeframe for the EEA Agreement negotiations. The process formally started with the Luxembourg Declaration of 1984 and the Agreement was signed in 1992. It came into force in 1994. The Swiss Agreements took 16 years.

The point therefore, is you are asking the impossible. It is simply not possible to get an agreement in place "reasonably quickly and on reasonable terms". If you seek speed, then you have to concede access.

You then suggest that having an alternative would be a way of putting pressure on the EU. But it wouldn't put pressure on the EU. Why would it? How could it? It is for the UK to present its proposals – the EU will then respond. The pressure is on the UK, as the price of failure impacts on the UK not the EU.

However, "you tell me that the alternative would be to trade with the EU on WTO terms, accepting that this would involve at least some co-operation from the other EU members, so call it WTO+."

Yet, in my last e-mail I wrote to you saying that the WTO option was not an alternative. I've also stated that you can't simply bolt on bits to this option and expect it to work – and nor can you call it WTO+. That name is already taken. I've also explained why the China and US schemes would not work … we have different trade structures and need wider access.

As to your next point, I have also written about the issue of asymmetric discrimination. We can open our markets to EU products, but that does not mean to say that the EU can or will reciprocate.

Thus, you conclude with the question as to whether it would be possible for the UK to have the same amount of access as China and the USA, to which you have already had an answer. I doubt, ab initio, whether it would be possible to replicate the China arrangements or indeed the US arrangements – both of which have evolved over the last 20 years. And even if we could, they would not meet our needs. Our trade structure is different – we need different agreements.

To make a final point, I am not alone in this. No end of quite sensible people have said that leaving the EU will be a complex procedure. In fact, it is not only complex, but unique. Never before has something of this scale been attempted, and nothing even close has been considered within the insanely short timescale.

For that very reason, I came the conclusion that there are very few options left to us.

Very best

Richard

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24 August 2016

Dear Richard

With the best will in the world, I just don't seem to be able to get straight answers from you to some fairly simple questions. Can I please try once more:
1. What obstacles would need to be overcome to enable us to trade with the EU on no worse terms than China or the USA, accepting that this may well leave us with less access to the EU markets than we have at the moment?

2. Which of these obstacles are so onerous and difficult that it would, in your view, be impossible to negotiate a settlement on them within a two year period?

3. After the Norway referendum in 1972, when there was a "no" vote, I am told that it took just under eight months for the Norwegians to negotiate a trade agreement with the EU. If the intention was to leave everything as it is as much as possible, but accepting that there are some things which might have to be left as loose ends for the time being, why do you think it would be not easy but impossible for a deal between the UK and the rest of the EU to be struck within two years – especially if there was a less attractive but realistic alternative for us to turn to, thus providing an incentive for everyone to come to a deal as quickly as possible. Even if we could not get an agreement on nearly everything, would it be impossible, in your view, for us to be able to secure one at least on major elements of our current trade with the EU, such as on motor vehicles.
I am not trying to trip you up or to persuade you to adopt objectives with which you disagree. I just need to understand what the problems are, what may be difficult but is not impossible and what really is impossible. I need this so that I can pass on to the mailing list clear and persuasive information which hopefully they will accept. Just telling people things are impossible – as opposed to being difficult - without explaining clearly why this is the case will just leave them unpersuaded. Please help me!

Very best wishes,

John

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24 August 2016

John

I am not being difficult – the very reverse. I've answered your questions honestly, in depth. Let me repeat. 

1. What obstacles would need to be overcome to enable us to trade with the EU on no worse terms than China or the USA, accepting that this may well leave us with less access to the EU markets than we have at the moment?

As framed, this question is unanswerable. You are trying to compare chalk and cheese. The structure of the UK economy, and its trade composition, are very different to those of China and the US. Therefore, the terms on which China and the US trade with the EU are irrelevant to the UK. Even if we could replicate their complex deals (which is almost certainly not possible), they would be of little value to us.

2. Which of these obstacles are so onerous and difficult that it would, in your view, be impossible to negotiate a settlement on them within a two year period?

If you seek to negotiate a bilateral, comprehensive trade deal with the EU, it will demand that the negotiations conform to a basic structure. I've already set this out. For convenience, the elements are numbered below. We will have to:
(1) set out the scope of the agreement - the range of goods and services to be traded.
(2) agree to match EU standards or come to an agreement on equivalence.
(3) agree a verifiable system for ensuring regulatory convergence is maintained.
(4) agree a mutual recognition on conformity assessment.
(5) harmonise customs procedures and/or agree on mutual recognition.
(6) agree a market surveillance/complaints system, to monitor the functioning of the agreement.
(7) agree a dispute settlement procedure.
Potentially, each of these could be an obstacle. It is impossible to predict, up front, which might prove onerous. That is the nature of negotiations. Often, until you are face-to-face, you can have no idea of how the other side it going to react to your proposals. This is especially so when you are dealing simultaneously with 27 other countries, each of which many have their own agendas.

Obviously, though, the greater the scope that you aim for, the more difficult and protracted. The list of products for which you may seek access runs to over 900 pages.

You can seek an en bloc agreement, which is fine if the EU accepts that. If they wish to go through the list, line-by-line, you are going to be there forever. Alternatively, you can go for a de minimis list – but that means huge sacrifices in terms of access.

Agreeing to match standards should be straightforward, as we already have a high degree of convergence. But the system we agree for ensuring continued convergence is one of the most contentious areas, and extremely difficult to satisfy. This may limit the scope of the agreement.

Mutual recognition of conformity assessment is done product by product, sector by sector. The more products you include, the longer it takes. It could take several years.

Harmonisation of customs procedures should be relatively uncontentious, as long as the UK is prepared to conform with EU systems. Drafting is a long and complex job. I can't think of any developed country which has had to do it from scratch. We will have to – we can't use the EU's procedures because we are not a Customs Union.

Market surveillance is complex – and we have to buy into EU systems. The dispute procedure is one of the most complex and contentious areas of all.

All this, however, is just the basics. You have all the peripherals and then there is likely to be considerable conditionality. Until that is spelt out, you cannot even begin to estimate how we might respond.

3. After the Norway referendum in 1972, when there was a "no" vote, I am told that it took just under eight months for the Norwegians to negotiate a trade agreement with the EU.

The 1973 Norwegian trade agreement was 113 pages long, including schedules. The substantive treaty was six pages. It was a very basic treaty, dealing with a very limited range of products, concerning tariff reductions. The treaty was replaced in 1994 by the EEA Agreement. That took from 1984 to 1992 to agree. The way that treaty is structured is that each "EEA relevant" EU law is added to the treaty as a treaty amendment. In approximate terms, that makes the Agreement, with Protocols and Annexes, about 50,000 pages.

If the intention was to leave everything as it is as much as possible, but accepting that there are some things which might have to be left as loose ends for the time being, why do you think it would be not easy but impossible for a deal between the UK and the rest of the EU to be struck within two years – especially if there was a less attractive but realistic alternative for us to turn to, thus providing an incentive for everyone to come to a deal as quickly as possible.

I really do not understand that question.

Even if we could not get an agreement on nearly everything, would it be impossible, in your view, for us to be able to secure one at least on major elements of our current trade with the EU, such as on motor vehicles.

It would not be impossible, but it would be up to the EU to decide, on the basis of a proposal we put to it. The EU might, or might not, accept a limited deal. We can't know unless we ask them.

I am not trying to trip you up or to persuade you to adopt objectives with which you disagree. I just need to understand what the problems are, what may be difficult but is not impossible and what really is impossible. I need this so that I can pass on to the mailing list clear and persuasive information which hopefully they will accept. Just telling people things are impossible – as opposed to being difficult - without explaining clearly why this is the case will just leave them unpersuaded. Please help me!

I have not said anything is impossible, without explaining why. I have explained why the WTO option is impossible. I have explained why it is virtually impossible to agree a comprehensive bilateral deal within two years. We could seek a truncated deal, but we would not know how limited it would have to be until we had put our proposals to the EU and got their responses. The cost could be politically unacceptable.

Even the Efta/EEA agreement could be very tight, in two years. We could even find ourselves having to seek an extension of time.

This has to be the last communication on this. I've spent hours answering your questions, and we seem to be no further forward than when we started.

Best

Richard

******

At the conclusion of the exchange, this was Mills's position:

1. Despite what Richard says, I just do not believe that it would be that difficult, within a two year period, to put in place whatever agreements were necessary over mutual recognition of procedures, etc., to enable the UK to trade with the EU at least on goods on no more disadvantageous terms than apply to, say, China and the USA. I accept that there may be more difficulty on some, although not all, services.

I cannot, therefore, see why the WTO option would be impossible to implement event though Richard may be right in saying, post Brexit, that the total volume of trade done between the UK and the rest of the EU would be lower than it would be without Brexit, but this would not necessarily be to our disadvantage, because of the very large trade deficit which we have with the EU.

2. I think that we have to accept that negotiating every detail of a free trade agreement with the EU with the UK outside the Single Market might be difficult within the two year Article 50 period, although perhaps not impossible if both sides were determined to keep as much as possible of existing arrangements in place. It might therefore be necessary to exclude some areas to enable most of what needs to be in place within two years.

3. I am sure that Richard is right in saying that a lot will depend on how helpful and co-operative both the UK and the EU are in the forthcoming negotiations. If both sides are determined to make the negotiations successful and mutually fruitful, this will obviously be a big help. If not, we need the WTO option as a fall-back to avoid the negotiations being dragged out to a point where we might be forced into a bad deal by time pressures and lack of progress.

I hope you will find these comments helpful. I would also like to thank Richard for the very large amount of time that he has put into providing information to us and for all the care and trouble he has taken in doing so. I am sorry if he feels upset about the fact that there are still differences between us.

Best wishes,

John Mills






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