Brexit: Barnier - "that is not possible"

07/07/2017

In the wake of Mrs May's Lancaster House speech in January, I wrote that her idea of a "bold and ambitious" free trade agreement with the EU inside two years was not just difficult. "It is impossible", I said. "It cannot be done. And it doesn't matter how many times it is discussed amongst the chattering classes, it still can't be done".

Just to re-emphasise the point, in March, I wrote a whole post under the title "impossible means impossible", where I reminded people of my view, that the commitment to securing a free trade agreement (signed and ratified) within two years, was akin to a British commander addressing his troops on Salisbury Plain, telling them they were to invade Iraq the next day – but they had to walk all the way from the UK.

But then who am I? Just a mere "blogger", with the best part of 40 year campaigning under my belt and 14 years devoted to writing about the EU – with the most comprehensive published exit plan yet written under my belt. Clearly, I'm a know-nothing – not even an "expert" who knows so much more than us mere plebs.

Mostly, people like me, therefore, can either be ignored (apart from the inconvenient fact that we've had upwards of 50,000 people in a day on this site). If we persist, the bubble-dwellers excel in treating non-conformist views with utter contempt.

But then, some four years after we first started writing seriously that the "free trade" option for Brexit is a non-starter (only to have the wondrous IEA, along with Lord Lawson, reject the warning), we now have somebody else pop up and say more or less the same things.

This time, though, it just happens to be Michel Barnier, speaking in Brussels to the European Economic and Social Committee. As the chief EU negotiator for Brexit, this man has a certain status – and in this man's world, status is everything. To get a hearing, you must have status (aka "prestige"), and once you have it (or been given it by the media), the media listens.

At this event, speaking "frankly and sincerely" on the theme of Brexit, M. Barnier pulls no punches, taking his line straight out of the Flexcit playbook. "There will be no business as usual", he says. "The UK will become a third country at the end of March 2019".

The number of times we've seen the Muppets on the Booker column comments and elsewhere deny this is legion. There is nothing quite so calculated to wind up the kippoid tendency as to point out this simple fact. I even wrote a post on precisely this point, but they still don't get it.

Anyhow, here we have M. Barnier stating the obvious (and not for the first time), but this time he goes further. The UK government, he says, has defined a number of "red lines" for the future relationship. Mrs May, Davis and the rest of the motley crew, want no more free movement for EU citizens, full autonomy over UK laws, autonomy to conclude its own trade agreements and no role for the ECJ.

This, says Barnier, implies leaving the single market and leaving the EU Customs Union – and he's not wrong in saying that. But he goes on to say that, "on the EU side, we made three things very clear". The particular point he and others have been making is that "free movement of persons, goods, services and capital are indivisible", on the basis that "We cannot let the single market unravel".

Not to put too fine a point on this, however, the doctrine of indivisibility applies only to EU Member States. It does not apply to Efta/EEA states, where both Iceland and Liechtenstein have modified the "four freedoms" without causing the Single Market to unravel.

Nevertheless, Barnier lays out his pitch: "There can be no sector by sector participation in the single market: you cannot leave the single market and then opt-in to those sectors. You cannot be half-in and half-out of the single market". He then adds:

The EU must maintain full sovereignty for deciding regulations: the EU is not only a big marketplace. It is also an economic and social community where we adopt common standards. All third countries must respect our autonomy to set rules and standards. And I say this at the moment when the UK has decided to leave this community and become a third country.

That is fighting talk if ever I saw it. It's also bullshit – but never mind, Barnier probably believes it. He is, at his heart, a French politician – and they have the ability to believe ten contradictory things before breakfast. They then rest until dinner, so the end of the day count is the same. But a pre-breakfast count is so much more impressive.

However, those are his red lines, and one can almost hear the echoes of Verdun: Ils ne passerons pas. These three points, he says, were already made clear by the European Council and the European Parliament. But, he says, "I am not sure whether they have been fully understood across the Channel".

That is something of an understatement, but deserves repeating: "I am not sure whether they have been fully understood across the Channel". This is what is known as diplomacy. Barnier knows full well that they haven't been "fully understood". All he has to do is tune into the drivel filling the UK media, day after day, after day.

Thus, he says: "I have heard some people in the UK argue that one can leave the single market and keep all of its benefits", to which he adds, with disarming frankness: "that is not possible".

He then says: "I have heard some people in the UK argue that one can leave the single market and build a custom union to achieve 'frictionless trade'", to which he adds, with disarming frankness, "that is not possible".

"The decision to leave the EU has consequences", says Barnier. "And we have to explain to them, the businesses and civil society on both sides of the Channel, what these consequences mean for them". He adds: "Let me be clear: these consequences are the direct result of the choices made by the UK, not by the EU. There is no punishment for Brexit. And of course no spirit of revenge. But Brexit has a cost, also for business in the EU27".

Rubbing the salt in the wound, Barnier says that, "Whatever the outcome of the negotiations, at midnight on 29 March 2019, the United Kingdom will at the present stage be a third State, which will therefore not have the same facilities and rights as a State Member of the European Union. It's its choice. Not ours".

This, apart from anything else, is as clear a statement as any that we will not have anything like the "bold and ambitious" free trade deal that Mrs May wants". All Barnier is prepared for is travail préparatoire, with no question of concluding a deal.

As to trade in general, he reminds us that Member States benefit from a "frictionless" trade for goods because they form part of the internal market. This, he says, has made it possible to harmonise the rules or to ensure their mutual recognition by ensuring that goods lawfully produced in one Member State can be sold in all the other Member States without further formalities.

He further argues that there is little use in having no customs duties if at the same time divergent national regulations prevent products from circulating freely – thus highlighting the problem of non-tariff barriers. Only the combination of the Customs Union and the rules of the internal market allows us to trade freely, "without friction". One does not go without the other.

By choosing to leave the Union, Barnier then says, the UK moves to the other side of the external border. This not only delimits the customs union, but also the space for the adoption and application of internal market rules. That is exactly the point I made in February, using the analogy of a medieval walled city. And, as Barnier says, it's our choice."

Inevitably, Barnier concludes, "a trade relationship with a country that does not belong to the European Union obviously involves frictions". For example, economic operators from third countries do not enjoy the same facilities as the Member States on VAT returns.

For another country, he says, 100 percent of imports of live animals and products of animal origin - and this is a former Minister of Agriculture who is talking - is and will be subject to controls. There it is – for the first time from a public figure, you get what I've been saying on this blog again and again and again. What price the racehorse industry now?

Barnier goes to some trouble to emphasise this point. The border of the European Union, he says, it is one of the challenges that we must face in Ireland's unique case, without recreating a hard frontier. He adds:

On the other hand, the general sanitary and phytosanitary conditions of such exports must always be established before the export of a product of this nature from a third country to the European Union is possible. We can clearly see, if I speak frankly, the constraints that are there, especially for the agri-food sector.

He then further reminds us that these constraints apply equally to all companies that derive their dynamism from the integration of production centres in Europe within the common market.

As to the "no deal", scenario, this says Barnier, means a return to the status quo. In the case of Brexit, "no deal" would be a return to a distant past. It would mean that our trade relations with the UK would be based on WTO rules. It would be a good idea to have the customs duties of almost 10 percent on an average of 19 percent for alcoholic beverages, and an average of 12 percent on lamb and also fish, for which the vast majority of British exports go to the EU.

While leaving the customs union in any case involves border formalities, "no deal" would mean very cumbersome procedures and controls, without facilitation. This would be particularly damaging for companies operating on a "just in time" basis.

In practice, he warns, "no deal" would worsen the "lose-lose" situation which is bound to result from Brexit. Objectively, he thinks, the UK would have more to lose than its partners. He is thus entirely unequivocal. "I therefore want to be very clear", he says, "to my mind there is no reasonable justification for the 'no deal' scenario. There is no sense in making the consequences of Brexit even worse".

Whether this sinks in, I don't know. But for many months, on this blog, I've been attempting to spell out the problems and consequences of leaving the Single Market, and going for the "no deal" scenario – only to be derided or ignored. Booker has had much the same treatment, with his own management undermining him in the letters pages.

Now, chickens are coming home to roost. Says Barnier: "Business should assess, with lucidity, the negative consequences of the UK's choice on trade and investment. And prepare to manage them". Of course, most of business hasn't. With some honourable exceptions, they've had their heads in the sand – or been pursuing a far more sinister agenda.

Ironically, one of my commenters yesterday posted on my article about Grenfell Tower some detail on Cameron's Damascene conversion to the Norway option. He prefaced it by saying: "to move away from Grenfell and back to Brexit for a moment…".

I can quite understand the point, but my response was that, in pursuing the truth behind Grenfell Tower, "we never left Brexit". Forces which brought us the Grenfell disaster are the key to understanding Brexit.

Note here that Barnier refers to the UK "red line" of "full autonomy over UK laws", reflecting the Vote Leave slogan of: "Let's take back control". But what we also have to recall is that Vote Leave was not a people's campaign. It was funded mainly by a small number of very rich business people, who saw in Brexit an opportunity to promote a "deregulation" agenda for their own commercial advantage.

It is no coincidence that these same people are inimically hostile to the "Norway option". In an attempt to stop it happening, they are supporting the Leave means leave campaign, the Tory "ultra" European Research Group" and, latterly, the secretive Red Tape Initiative.

These groups are supporting their paymasters who see in Brexit profit-creating opportunities which would be limited if we were still bound by the Single Market acquis represented by the Efta/EEA (aka "Norway") option.

Deregulation, of course, can be no bad thing (although I have long preferred the term "re-regulation"). But, as we've been seeing with Grenfell, the problem can just as easily be that existing regulation is not rigorous enough, with progress held back by the EU.

Thus, while returning control of the legislative agenda affords the chance to make our own laws (as long as they don't conflict with international standard-setting), this does not necessarily imply getting rid of laws. Many should stay, and be tougher – remember horse meat, anyone?

The thing is, "Let's take back control" never did mean restoring control to the people. Whether in the EU or supposedly as an independent nation, in Vote Leave's scheme of things, we don't get a look in. In the view of its wealthy business backers, control goes to born-to-rule Tories, who will look after their friends by reducing their legislative "burdens".

In this, Monbiot does have a point, except that he just wants the control to pass from "big business" to his green NGOs. He and his likes are no more interested in giving power back to the people than are the Tory right.

Thus – even if for the wrong reasons – Monbiot has correctly identified Grenfell Tower as a key Brexit battlefield. But if the question is: "who rules Britain" (or the UK) - as between business and unelected NGOs (his preferred NGOs) – he wants his green NGOs to take the prize. Nowhere in Monbiot's scenario do the people even feature.

Our battle, therefore, is in ensuring that we have a measured exit from the EU and that when powers are eventually returned from Brussels, they go back to the people, rather than just to a different set of masters. That is why Flexcit in its Phase 6, includes The Harrogate Agenda.

For the time being, though, the "mad deregulators" are driving the Brexit agenda up a dangerous cul-de-sac. It is that totally selfish agenda which is blocking a sensible approach to the Article 50 talks and is the real reason why the right is blocking the Efta/EEA option. But, as Pete points out , deregulation is not a viable option. It isn't going to happen. Thus, if we are going to make any progress, we are going to have to reclaim the agenda, and put the "deregulators" back in their box.

And that has to be possible, or Brexit will be a disaster. But then, readers of this blog already knew that.