Richard North, 14/12/2016  
 


If anyone needs any further evidence that the Parliamentary select committee system was broken, all they have to do is read yesterday's report from the House of Lords External Affairs Sub-Committee.

Headed: "Brexit: the options for trade", its conclusions are nothing to write home about while, in getting there, it rehearses just about all the myths and errors on the EU and related issues that it's possible to deliver in a mere 87 pages.

The press release gives some indication of the joys to come, as it tells us that:
The Government urgently needs to decide whether or not the UK will remain in a customs union with the EU. Doing so would mean no border checks for goods between the UK and EU, but would restrict the UK’s ability to sign trade deals with the rest of the world.
Those who have read Monograph 16 will know just how wrong these assertions are, repeating the errors perpetrated by the April Treasury report. One has to wonder what can possibly be achieved by doing this.

Staying with this subject, for the moment, a select committee is able to take its pick of a wide range of experts, most of whom are more than willing to bask in the prestige of being able to pontificate in front of such an august institution as the House of Lords.

So it is here, where diverse witnesses produce 177 pages of evidence in which there are no less than 145 reference to customs unions. Yet not one of these "experts" seems to have cast in its proper light the relationship between customs unions and agreements on adopting common commercial policies.

Thus we find Professor Piet Eeckhout, Professor of EU Law at the University College London, wrongly tell the committee that, in a customs union the parties are required to have "substantially the same" regulations of commerce. The EU-Turkey customs union arrangements, he says, therefore require that Turkey adopts the same tariffs as those of the EU (except for agriculture) and that it concludes preferential trade agreements with the countries with which the EU has such agreements.

However, go back to Article 9 of the Treaty of Rome and we see a customs union defined as an agreement which involves the prohibition between Member States of customs duties on imports and exports, and the adoption of common customs tariffs in their relations with third countries.

Nowhere in Article 9 or the related Articles on the customs union are there any requirements to adopt common regulations or constrain the negotiation of preferential trade agreements. Such issues stem not from a customs union but from a common commercial policy – in the Treaty of Rome comprising the entirely separate Article 110 et seq.

In the case of Turkey, we see exactly the same relationships, with the agreement setting out the bones of the customs union in Article 3 with many additional references in other articles, but all separate from Article 12 which deals with the common commercial policy.

The point which emerges from this is that customs unions and commercial policies are often closely linked, and found together in trade and related agreements, but it is not the case that a customs union requires there to be such a policy. A customs union agreement can exist entirely separately.

The point about separate policies can be seen with the Caricom agreement, where the common trade policy is identified as a separate entity from the common external tariff. The CET and the removal of internal tariffs comprise the customs union component of the agreement, distinct from the common trade policy.

If we have laboured this point, it is to show that bring together a procession of "experts" to provide oral and written evidence to an august committee is no better a guarantee of providing accurate information and analysis than a lone blogger under the lash of informed readers ready to take him apart if he gets it wrong.

As to EEA membership and free movement of people, the committee relies on but a single witness, Dr Ulf Sverdrup, Director, Norwegian Institute of International Affairs. He tells us that the EEA Agreement included a "standard safety clause", Article 112, which enabled a state in certain circumstances to "move back from some of its obligations" on free movement of persons. Such an "emergency brake", he says, "should be temporary and proportionate".

Bearing these factors in mind, Sverdrup concludes: "I do not think the Article 112 strategy is designed for countries that want to be left out of the free movement of persons".

That, despite its resources and the range of potential witnesses on offer, is the best the Committee can offer on this important subject. And all it gets is a man who calls the "safeguard measures" a "standard safety clause" and miscasts it as an "emergency brake". The committee members might just as well have stayed at home and spent more time with their families.

A further indication of the poverty of the arguments rests on the number of references to tariffs – 161 in all – compared with 18 to non-tariff barriers. As with so many amateur production, the authors are obsessed with tariffs and are scarcely able to cope with the issues raised by NTBs.

On a more prosaic note, we see the committee confuse mutual agreement on standards with mutual agreement on conformity assessment, eliding these two very different concepts.

Looking at its broad brush analyses, we see it trotting out the "same-old, same old" predictable mantras, with no concessions whatsoever to the ongoing debate.

Membership of the EEA, we are told, would entail rules of origin for trade, and tariffs on some goods between the UK and the EU. It would not provide the UK with the opportunity to influence future rules regarding the Single Market, reducing national control over regulatory standards, and would mean accepting the principle of free movement of persons.

It would also mean, the Committee says, accepting the jurisdiction of the EFTA Court, and, by extension, that Court's principle of securing homogeneity with the CJEU wherever possible.

All the Committee could then offer in terms of transitional arrangements – via their witnesses - was temporary membership of the EU's customs union to enable goods exporters and importers to avoid tariffs and rules of origin.

Temporary membership of the EEA as a transitional arrangement between leaving the EU and firming up new trade terms was deemed "unfeasible" so all we were offered was advice on the need to consider "second-best solutions" before a final deal was struck.

From there, we get the epic recommendation that a transitional agreement will "almost certainly be necessary", with the Committee urging the Government to establish at the outset of negotiations a clear "game plan" for a future transitional agreement, with "specific proposals as to what form it should take".

This is straight from the school of, "the answer is simple, something must be done". And the worst of it is that none of the other committees is any better. For those in search of solutions, Parliament is not the place to look.






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