EU Referendum

Brexit: none of the above


Against my better judgement, I attempted to watch the BBC leadership debate. That resolution lasted into the third question whence I concur with the broader judgement – that the programme was "chaotic".

More to the point, not one of the candidates had anything approaching a credible strategy for Brexit, not that such a remarkable thing lies in the realms of the possible. The only option which avoids a Brexit as chaotic as the debate involves parliament ratifying the Withdrawal Agreement. And since that is unlikely to happen, no matter who is chosen, we end up on the slippery slope towards a no-deal.

That even turns Rory Stewart into a fool – the one man of the five who seemed to be committed to avoiding a no-deal, believing that parliament would block it. Despite his expensive Etonian education, he has not sussed that this is the default option which is triggered by EU law, over which parliament has no sway.

As for Alexander Boris de Pfeffel Johnson, he was all over the place, apparently favouring the "Malthouse compromise", arguing for a "standstill", and then suggesting we could rely on "GATT 24" to give us tariff-free trade until a free trade deal was agreed – notwithstanding his commitment to a no-deal Brexit.

This is a man who believes that securing a "better deal" is "eminently feasible", stressing the importance of preparing for a no-deal in order to secure one, and threatening to withhold the £39 billion "divorce bill" to help it on its way.

Bluntly, the only man worth listening to was not at the debate. This was Sir Ivan Rogers who, a day earlier, spoke to about 200 finance professionals at the Fishmongers Hall, near London Bridge, delivering a 15-page speech.

Asked to find some "upbeat conclusions", this presented a "formidable challenge", given the "denial, delusion-mongering and deception still rampant across British politics".

Sir Ivan wanted to remain "resolutely optimistic" about our country's long-term prospects, but conceded that it was "currently very poorly led by a political elite, some masquerading as non-elite", which had "great difficulties discerning and telling the truth".

He was "discouraged", he said, "by just how badly Brexit has been handled to date, and currently pessimistic that this is going to get any better any time soon" he was "worried that the longer the sheer lack of seriousness and honesty, the delusion mongering goes on, the more we imperil our long term prospects".

"It is not patriotism", he added, "to keep on failing to confront realities and to make serious choices from the options which exist, rather than carrying on conjuring up ones which don't".

For reasons that we hardly need to revisit, Sir Ivan thinks that a no-deal is now a "probability", and contradicts the blithe assumption from Johnson and his likes that the threat of a no-deal keeps anyone in the EU awake at night. It would thus be unlikely to trigger them to make a fundamentally better offer to the new prime minister than to his predecessor.

On the contrary, he is prepared to wager that the EU will conclude that its best long-term interests are served by staying basically where it is, and that it would be a fatal error for it to produce something appreciably better to a new prime minister than was ever on offer to Mrs May.

Here we then get some interesting observations from Sir Ivan to the effect that a no-deal scenario should hold a few more terrors than it does. Not least of the reasons is that it hands control of the next phase of the Brexit process to the EU-27. It will "take back control" of the precise legal framework of the economic relationship, because it will legislate without consultation with us the economic framework under which we will have to operate.

Says Sir Ivan, "It is just utterly untrue to say, as key Brexiteers continue to, that all non-member countries' trade with the EU is conducted under WTO rules, 'so what we have lost?'"

This, he tells us, "is a woeful and wilful misunderstanding of how developed countries trade with each other". Even those without an FTA with the EU have a plethora of lengthy complex negotiated legal sectoral arrangements which deliver far more access to the EU market than do WTO multilateral commitments.

The very fact that our Trade Secretary is so keen to try and rollover - unchanged - the provisions of existing EU FTAs with third countries suggests he knows the difference between WTO terms and good FTA ones, 

Thus, Sir Ivan concludes, deliberately to walk out of the deepest internal market on the planet without a replacement, looser preferential deal in place is an act of economic lunacy. We need, he says, a preferential deal, even if it is one appreciably looser and hence reduces trade and investment flows from today, because we cannot live with supranational legislation, adjudication and enforcement which EU membership entails.

No-deal, therefore, "is not a destination". It is simply a volatile and uncertain transitional state of purgatory, in which you have forfeited all the leverage to the other side. You start with a blank slate of no preferential arrangements, and live, in the interim – probably for years – on a basis that the EU-27 legislate in their own interests, without you in the room and without consulting you politically.

Thus, much of our debate about "being ready" for a no-deal totally misses the point. It is the others who will largely dictate what we have to be ready for. Yes, says Sir Ivan, no-deal can and will be "managed" or controlled to a degree. And it would be. But by the EU. A so-called "clean Brexit" is just the latest pipe dream.

Sir Ivan admits to spending a lot of time puncturing this prevalent myth of the "no deal nirvana" but then – as do we all – has to deal with the "next hoary old chestnut".

"Well OK", this goes, "it's perhaps not the ultimate destination we need: but for x years under Article 24 of GATT, we would be able to benefit from existing terms – an interim Agreement – which it would be illegal for the EU to disapply, whilst we negotiated a new Canada-style FTA".

This, says Sir Ivan, is "completely untrue". In circumstances where you leave the EU without a deal, there simply IS no interim agreement. That is the whole point. The EU is entirely within its WTO rights to say that it will treat us as a bog-standard third country, without any preferential arrangements, the day after we leave.

And if we refuse to sign a Withdrawal Agreement, there IS no interim deal. The superseding legal arrangements will simply be legislated by the EU-27. Tariffs will automatically be reapplied in the absence of an agreement.

Despite this, we hear endlessly the canard that if we lifted all our tariffs to the EU and others, the EU would be being vindictive and punitive if it failed to reciprocate. But this, as someone once said, is "an inverted pyramid of piffle". The EU could only remove tariffs on a Most Favoured Nation basis, i.e., to all trading partners, whence they would get no reciprocation.

On that basis, Sir Ivan asserts that it is "100 percent certain that they will apply tariffs to UK goods if we go no-deal. He gives us a cast iron guarantee on that.

As a coruscating indictment of the "political class", Sir Ivan notes that this is the reason why Brexiteers sitting in key Ministries responsible for key sectors have belatedly gone completely cold on no-deal. One only hears it from those pandering to a party base who do not realise for example what it does to the UK food and drink industry.

"They only do not realise that, because the political class has not had the guts to tell them", he says. "Because it would reveal that the whole proposition on how to Brexit was not thought through from the outset".

And just think how different last night's debate would have been if this has been admitted by the five candidates. They should be telling us, as did Sir Ivan, that a no-deal is not sustainable. The only route to a loose preferential trade deal lies by agreeing precisely what we are rejecting now, but with a lot more money.

But, as for the second time in three years, we see a new prime minister elected by a small group who thinks it falls to it to determine the "will of the people" – a peculiar view of liberal democracy – Sir Ivan feels we need to dispense with the fantasies and falsehoods.

This is not a solution to our woes, but at least we will then know what we are facing. And since nothing on offer by the five candidates goes anywhere towards solving Brexit, if we were to have a choice, it would be none of the above.