Brexit: getting down to detail

08/02/2020  


An Ipsos MORI poll commissioned by the Evening Standard is telling us that, despite Johnson asserting that Brexit is already "receding in the past behind us", most people think there is unfinished business.

Only 15 percent thought he had "completely" fulfilled his promise to get Brexit done, while 29 percent felt he had "mostly" met the pledge. Around 36 percent accepted that Brexit had been "to some extent" completed and nine percent thought he had "hardly" achieved anything, That left a disconsolate rump of eight percent who believed that Johnson had "not fulfilled his promise at all".

In some senses, this poll illustrates is the difficulty of getting coherent answers from a highly subjective question. The response must surely depend on how individuals define Brexit. And then there is also the political bias, with Conservatives exhibiting more positivity. Some 68 percent said that the prime minister had mostly fulfilled his promise and 25 percent were prepared to say that he had completely fulfilled it.

On the other hand – brainwashed Tories apart – this poll provides some evidence to suggest that most people are not taken in by Johnson's rhetoric. This presents him with an ongoing challenge as he tries to make getting Brexit "done" a fait accompli, so that he can move on to new glories.

That. however, has not stopped Jonathan Lis, deputy director of British Influence, complaining about the government's attempts to control the political vocabulary, arguing in the Guardian that the Foreign Office's "contorted language" of Brexit is a smokescreen.

Unfortunately for him, and the understanding of the general public, he has chosen to major on Johnson's alternative to a Canadian-style deal, his so-called Australian model. Like so much of the media, and others, he takes the Canadian option as a "hard Brexit" and chooses to cast "Australia" as "trading on WTO terms", or, more succinctly, "no deal".

"It doesn't matter that Australia is negotiating a free trade deal with the EU and is in any case a relatively minor trade partner on the other side of the world", says Lis. "This friendly-sounding euphemism for 'no deal' helps the government cover up what it has already done and obscures the reality of what it is about to do next".

In a burst of rhetoric, he then asks why the government thinks it can get away with promising something sunny and open such as "Australia" when the reality – he claims – "will mean a self-imposed commercial blockade".

What strikes one about this is the ignorance and lack of curiosity of the man. Although one might expect the media to drop into the easy assumption that the Australian model means no-deal, this man has less excuse, claiming as he does to be deputy director of a think-tank (not that that means too much these days).

However, it really doesn't take much effort to look up the history of trading relations between Australia and the EU, and a fairly straightforward search will readily illustrate that, while no formal free trade agreement (FTA) – as defined by WTO – exists between the parties, there is an extensive web of agreements between the parties aimed at facilitating trade.

A good source (one of many) is a report by the University of Melbourne entitled "Australia and the European Union: trends and current synergies" – financed, incidentally, under the EU's Erasmus programme.

The EU and Australia, the report says, have a longstanding relationship of over 50 years. They have had annual official dialogues for some decades and a history of sectoral agreements, with official diplomatic relationship starting in 1962.

The relationship has evolved from earlier decades of disagreements and perceptions of "a tyranny of distance", where engagement has been challenged by difficult relations at times. For some time, bilateral relations were characterised by tensions and what has been termed "Antipodean antipathy".

There were frequent disagreements particularly regarding agricultural trade and also climate policy but, the report says, in recent years the EU-Australia relationship has reached a level of unprecedented cooperation that is characterised by a multi-policy, all-of-EU and all-of-Australian government approach.

Formal trade agreements have been in place since 1994 with an Agreement on Scientific and Technical Cooperation and the European Community-Australia Wine Agreement.

Then, in 1997, the EU-Australia relationship reached a new chapter with the signing of the Australia-European Joint Declaration (DFAT 1997). This had initially been expected to have a treaty level status but concerns from the Australian government about the EU's human rights conditionality clauses resulted in a decision to downgrade the agreement to a political declaration.

A year later saw a Mutual Recognition Agreement on Conformity Assessment and further technical agreements were to follow, including further agreements on trade in wine.

The Joint Declaration was succeeded in April 2003 by an Agenda for Cooperation, which identified priorities for a partnership over the subsequent five years, including security and stability issues; education, science and technology, transport; and migration and asylum.

The year 2008 saw a new Partnership Framework, which updated and replaced the previous two major bilateral agreements. It sought to encourage closer practical cooperation in five areas: foreign and security policy; trade and investment; the Asia-Pacific; climate change, environment, and energy security; and science, research, technology and innovation.

This was followed by a Framework Agreement, which was concluded in 2017 and has been applied on a provisional basis since 4 October 2018. This Agreement has for the first time brought the relationship to a treaty level.

Bringing the chronology up-to-date, in November 2015, the EU and Australia agreed to commence a scoping process prior to the launch of negotiations for an FTA. Negotiations were formally launched on 18 June 2018.

We are told that both Australia and the EU have a strong desire to demonstrate their commitment to the international rules-based trading system and the negotiations form part of the EU's strategy to "shift…trade policy towards the negotiations of what the EU terms 'new generation free trade agreements'".

Looking at the current Partnership Framework, one already sees many of the aspects that are to be found in EU trade agreements, and especially a commitment, where appropriate, to coordinating positions in international and regional organisations and fora, including the UN and its specialised agencies, the WTO, G20, the FSB, the OECD, the World Bank Group, and several regional organisations.

We also see the parties agreeing to cooperate within the framework of the WTO Agreement on Technical Barriers to Trade and through the Agreement on mutual recognition in relation to conformity assessments, certificates and markings between the European Community and Australia.

Already, therefore, the EU is pulling Australia into its network of global and regional operations and, with the talks currently in progress between willing partners, this relationship can only intensify.

If Johnson feels that "Australia" represents a light touch relationship with the EU, he is sadly mistaken and, contrary to the view of Lis and others, even now it cannot be taken to constitute a no-deal approach. The Framework Agreement is a fully-fledged treaty which covers many of the areas that an EU-UK future relationship agreement would cover.

Nonetheless, Lis is convinced that the government is trying to control people's attitudes by exerting control over their lexicon. This, he says, is not simply an attempt to reframe voters' opinions but their minds.

It is, he asserts, seeking to confuse us with jargon, misinformation and contradictory statements, deploying slogans to anaesthetise us from its actions. We will, he believes, eventually become so exhausted that we believe the government when it tells us to blame someone else, or else stop caring altogether. This, he argues is the real meaning of taking control – but of the people, not for them.

What might be more useful, though is if Lis and his fellow travellers toned down the rhetoric and addressed the issues. At a strictly practical level, Johnson's idea of an "Australia" type of deal is fatuous and ill-considered. And since it can hardly be taken as to represent no-deal, his critics should be devoting their energies to demanding clarification.

Those who oppose Johnson's agenda should not be taking his statements at face value, or attributing unsupportable meanings, and get down to the detail. This is where the debate should be taking us.



Richard North 08/02/2020 link

Brexit: a spat in the making

04/02/2020  


I don't think I've ever read such a disjointed, badly drafted speech from any prime minister as the one delivered by Johnson yesterday. Totally lacking in gravitas, the whole thing was an embarrassing muddle.

Or, as Graham Lithgow put it, "Not to call Boris Johnson incoherent, but you'd get more sense out of a lethally intoxicated acid casualty attempting to recite the Gettysburg Address with a swarm of locusts in his mouth".

It is perhaps unsurprising that Downing Street excluded the Guardian's John Crace from the venue in the Greenwich Old Royal Naval College. A speech on the eve of vitally important trade talks with the EU, that opened with a description of James Thornhill's ceiling decorations in the Painted Hall as "gorgeous and slightly bonkers", is beyond parody.

And what can one make of the description of the UK as a "country ready to take off its Clark Kent spectacles and leap into the phone booth and emerge with its cloak flowing as the supercharged champion, of the right of the populations of the earth to buy and sell freely among each other"?

Not so very much better is the written statement to parliament, although it is written in a more sober fashion, setting out the government's proposed approach to the negotiations with the EU about our future relationship.

These contrast with the European Commission's press release, and a measured statement from Michel Barnier to introduce the Commission's recommendations on the EU's negotiating mandate.

Not hours after the delivery of Johnson's speech, we had the "take" from the Mail, headlined: "Boris Johnson slaps down Michel Barnier saying Britain will NOT obey Brussels rules to get a trade deal - after EU negotiator demands the UK commits to a 'level playing field' and gives access to fishing waters".

In a taste of things to come, the paper told us that Johnson had "brutally slapped down Michel Barnier after the EU negotiator demanded Britain signs up to EU rules to get a trade deal". The prime minister, it continued, "insisted" that there was "no need to tie the UK to Brussels regulations, or vice versa, as he condemned growing protectionism around the world".

Thus, says the Mail, "the two sides are on a collision course again, with Mr Johnson vowing he will never accept Brussels regulations as the price for a trade deal". And this after a speech in which the prime minister pointedly omitted the word "Brexit".

As to the details of both side's pitches, evaluation is probably beyond the scope of the legacy media as we know it. Instant Twitter reaction from favoured "experts" on live feeds simply doesn't cut it, and nor does the off-the-cuff reaction from a "a quick glance at both texts".

By the time the information has been absorbed and properly analysed (if ever), the media will have moved on to its next hystérie du jour, leaving behind a simplistic narrative that will probably miss most of the main points.

One thing which is unarguable, though, is Barnier's assertion in his statement that even if we do achieve a "best-in-class" free trade agreement, it will not be "business as usual". All imports of goods, or services supplied in the EU, he tells us:
… will need to comply with EU rules, be it on safety, health or other standards protecting our public policy objectives. As a result, goods entering the Union will, for example, be subject to regulatory checks. These are the automatic, mechanical consequences of the UK's choices.
We are finally getting to the point, therefore, that I made almost exactly three years ago when I asked my readers to imagine a medieval walled city, inside which the traders happily do business – with the public and between themselves – secure within the fortifications.

When a trader (unhappy with the rules and regulations) decides to move his stall outside the walls, I argued, he cannot then complain that he is no longer able to trade freely with the people still inside.

We will have two separate markets instead of one single market, says Barnier: rules of origin and customs formalities will apply between the UK and the EU; access to the EU market will be subject to certification and market authorisation and supervision activities. Specifically – despite the babbling of Shanker "Snake Oil" Singham (so popular with the legacy media), and others, "there will be no harmonisation or mutual recognition of rules".

One needs to repeat that latter point for emphasis: "there will be no … mutual recognition of rules". This means, Barnier reminds us, "that UK financial services suppliers will no longer have the passporting rights they used to enjoy under Union legislation". And it will mean a whole lot more.

Another crucial issue, which is being heavily rehearsed is the so-called "level playing field", or the "flanking policies" as I prefer to call them. Johnson in his speech declares that: "There is no need for a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar".

This, on the face of it, is the deal breaker, as the EU's recommended negotiating position states that the envisaged agreement should "uphold the common high standards in the areas of State aid, competition, state-owned enterprises, social and employment standards, environmental standards, climate change, and relevant tax matters". In so doing, it adds, "the agreement should rely on appropriate and relevant Union and international standards".

Nothing, however, is quite as it seems. In respect of competition policy, subsidies, environment and climate, labour and tax, the government's written statement is more precise than the prime minister. It asserts that "the government will not agree to measures in these areas which go beyond those typically included in a comprehensive free trade agreement".

Yet, the most favoured "comprehensive free trade agreement" is the 1,598-page Canada-EU Comprehensive Economic and Trade Agreement (CETA), which Johnson insists that he wants. On close inspection, however,this yields provisions on competition policy (Article 17.2), while the parties also:
…recognise that economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development, and reaffirm their commitment to promoting the development of international trade in such a way as to contribute to the objective of sustainable development, for the welfare of present and future generations.
To that effect, the parties agree to promote sustainable development through the enhanced coordination and integration of their respective labour, environmental and trade policies and measures. They also commit to:
…promote dialogue and cooperation between the Parties with a view to developing their trade and economic relations in a manner that supports their respective labour and environmental protection measures and standards, and to upholding their environmental and labour protection objectives in a context of trade relations that are free, open and transparent.
There is, in fact, very little difference between the scenario set out in the EU's recommended negotiating position and the fully-fledged Canada-EU trade deal. And, if it is tolerable in CETA, then the UK can surely have no objection to much the same provisions in any coming trade agreement – unless Johnson is really angling for an Australian-type deal.

The latter relies on a joint declaration rather than a treaty, augmented by a Mutual Recognition Agreement on conformity assessment and a few other instruments.

Predictably, the BBC's celebrity know-all thinks "there is no Australian free trade deal with the EU", although she is by no means the first to make this mistake. However, this supposedly non-existent agreement actually commits the parties "to pursue policies aimed at achieving a sound world economy marked by sustained economic growth with low inflation, a high level of employment, environmental protection, equitable social conditions and a stable international financial system".

For this to work for the UK, though (as we set out in Flexcit as early as 2015), the government would have to make an additional commitment, by way of the declaration, to continued regulatory harmonisation. It would also need to negotiate an agreement on tariffs plus a series of bilateral agreements on programme participation. Thus, even an Australian-style trading relationship is not an easy option.

Nevertheless, the government's "pick 'n' mix" approach has the makings of an epic spat with the EU – a gift to idle hacks who can project a biff-bam soap opera instead of dealing with the real issues. It has all the ingredients of a classic media-fest, with the evil EU and its gang of foreign villains lined up to take the fall.

Somewhere in between though, there is a need to cut through the noise and work out what actually is going on. The upside is that, when it comes to the Brexit that dare not speak its name, we are unlikely to be short of things to write about.



Richard North 04/02/2020 link

Brexit: the deed is [almost] done

30/01/2020  


I would have preferred our exit from the European Parliament yesterday to have been done with dignity. But Farage and his ghastly crew don't do dignity, preferring instead to break the EP rules by waving national flags in the chamber to accompany the Great Leader's final speech.

Farage had previously been warned (in an earlier session) against such demonstrations and the repeat, in this case, predictably drew a response from Mairead McGuinness, the vice-president in the chair. She switched off Farage's microphone, leaving him to mouth soundlessly to the chamber.

Rebuking Farage, she told him to "Sit down, put your flags away", adding: "you're leaving - and take them with you". This did not stop his MEPs raising a cheer for their leader – another tasteless, if somewhat raucous display.

When it came to the vote, 621 MEPs approved the motion to consent to the Withdrawal Agreement, 49 opposed and a mere 13 abstained. With 751 MEPs elected for this round, that means that 68 did not vote, either because of absence or for some other reason.

That provoked an outbreak of singing from the chamber, with a rather fractured rendition of Auld Lang Syne, some MPs waving EU-UK "half-and-half football scarves", with prominent union flags, the like of which had recently invoked McGuinness's ire. All that was left was a few public displays of emotional gushing by reluctant departees and it was done.

The General Affairs Council is now scheduled to declare that the Article 50 proceedings are concluded, as required by the Treaty. This will be conducted in writing today, presumably by the permanent representatives acting as plenipotentiaries.

Then, and only then, will all the formalities be complete, clearing the way for the UK to leave the Union at midnight, Central European Time, on Friday, ending our membership of 47 years and one month, respectively of the European Communities (which included the EEC and Euratom), the European Community and the European Union.

Should there ever be a United States of Europe, we are unlikely to be part of it. Even though some MEPs have pledged to "leave a light on" for our return, Guy Verhofstadt has made it clear his preference for a UK shorn of "opt-ins, opt-outs and [budget] rebates. These are conditions which, if applied, would present an insuperable barrier to a UK determined to rejoin.

For the moment, however, it is clear that any thought of returning to Brussels with our tails between our legs (or otherwise), is firmly off the UK political agenda, with the Labour leadership campaigners all refusing to include that commitment in their personal manifestos. It may be that a new Lib-Dem leader is prepared to burn a candle in the window, although who cares? It will do nothing more than attract moths for the foreseeable future.

Meanwhile, Johnson has signalled to the fanboy gazette that he will be telling the EU that he is prepared to accept post-Brexit border checks rather than allowing Britain to be a rule-taker.

Johnson, of course, is not the one who personally will have to bear the delays, disruption, costs and loss of business concomitant with accepting border checks with the EU, but he is nevertheless preparing to concede this in what is being slated as a "major speech", setting out his aims for a trade deal next week.

The man, we are told, will say that sovereignty is more important than frictionless trade. Whitehall sources have told the Telegraph that, while Johnson wants to avoid tariffs and quotas on cross-Channel trade (to say nothing of trade across the Irish Sea), he will never "cave in" to demands for alignment on regulations, despite knowing "the consequences that flow from that".

Bolstering this "hard line" stance is Sir Robbie Gibb, described as Theresa May's Downing Street chief of staff, but actually her press spokesman/comms chief. He asserts that the EU has failed to grasp that the UK's political landscape has "utterly changed" as a result of Johnson's majority at the general election.

The new year, he says, is producing the same old briefings from Brussels: that the EU will set the sequence for the coming talks; that we will have to make concessions over our fishing rights for access to EU financial markets; and that EU judges should have the final say over any trade disputes with Britain.

That this man ever had anything to do with advising Mrs May, however, illustrates the lack of knowledge and understanding that pervades even the highest level of the state.

Gibb asserts that the current Irish protocol – as a "stand-alone provision" - has the effect of keeping Northern Ireland in both the EU and UK customs areas and, he says, with these arrangements, Britain is free to diverge from EU rules when it wants. This is the biggest change that the EU does not seem to grasp.

This government, he goes on to say, wants a good trading agreement with the EU but not at the expense of UK sovereignty. With that, he avers, the EU can also choose to keep friction to a minimum for the benefit of its business as well as ours.

And then, in what amounts to the "money quote", he actually suggests that the EU "can stop playing hardball and accept mutual recognition of our standards as they do for many other countries in certain sectors, such as Canada, Japan and the US".

Even after all this time, we have people such as this who fail to understand the difference between "equivalence" and "mutual recognition of standards", the latter applying exclusively to members of the Single Market – a concession given to no third countries, including Canada, Japan and the US.

The trouble with such people is that they never step outside their own little bubbles. Had Gibb done so, he might have recorded the complaints of Canadian meat producers, which I reported in March 2017.

Here we got an understanding of how "equivalence" actually works in practice. Despite implementation of CETA, we had Ron Davidson, head of international trade for the Canadian Meat Council, saying, "We do not have what we would call commercially viable access to the European market".

More than two years later, we have an article in CBC News reporting (predictably) that the Canada-EU beef trade deal was "not working as well as hoped".

European health standards, it said, were "too costly and complicated for Albertan beef exporters", stating that: "a difference in food health standards between the European Union and Canada is being blamed for beef exports falling short of expectations, despite a promising modification to a trade agreement between Canada and Europe".

Remarkably, in 2018, Canada sent just 3.1 percent of the 50,000 tonnes of meat authorised for export each year, and in 2017 the total was only 2.3 percent. That means CETA earned only $12.7 million for Canadian producers in 2018, against a theoretical potential of $600 million in any one year.

This is by no means an isolated report, with the Financial Post later publishing a headline that complained: "Beef and pork for cheese deal sours as strict EU health rules hinder Canadian exports under CETA".

Here, we see that, despite the new opportunities afforded by the deal, pork and beef exports to Europe have hardly budged, despite being "one of the most important elements for Canada in this negotiation".

Canadian exporters filled none of their frozen beef quota in 2018, and just 1.5 percent of their pork allowance. By contrast, European cheese exporters have taken almost full advantage of CETA, filling 99.2 percent of Canada's quota for fine quality cheese in 2018 and 71.1 percent of the quota for industrial cheese.

Then, in the last few days, we had France 24 asking: "Is Canada on losing end of CETA free trade agreement with EU?"

The answer, as one might expect, is yes. But that is the reality Johnson must be prepared to accept when he sets the pace for the coming negotiations. And when his stance is endorsed by the ignorance of such people as Gibb, with Farage apparently telling us that everything will come right as German car manufacturers will insist on a good deal, we haven't much to look forward to.

They can all wave their little flags, and I suppose we'll be seeing a lot of that over the next few days. But then the reckoning will start.



Richard North 30/01/2020 link

Brexit: silence may be preferable

23/01/2020  


Columnist Martin Kettle, in a headline in the Guardian has the nerve to tell us that Brexit is not "done", so "we" have to start talking about it again.

Of course, we haven't stopped talking about Brexit and, with some constancy, have been at pains to point out that the claim of Brexit being "done" is something akin to fraud.

But then, Kettle isn't talking about us. The "we" to which he refers is the legacy media, an institution which has just spent the best part of a month bloviating about the royal soap opera, to the exclusion of just about everything else, including Brexit.

And that rather adds to the bulk of evidence demonstrating that the media really does live in a world of its own. Nothing exists outside their foetid bubble and because they have gone silent on something, that automatically translates into the generalisation that "nobody" is talking about that particular issue.

But, before we embrace the idea of the media pouring out a torrent of news about the most important domestic political issue this century, we might also call for a significant upgrade in the quality of reporting and analysis. As much of what we actually get is hardly worth reading, more volume isn't necessarily to be welcomed.

A good example of this is one of the most recent propaganda offerings from the fanboy gazette which parades the "shock-horror" headline: "EU preparing to give UK worse trade deal terms than Canada or Japan", augmented yesterday by one of those fatuous "explainers", which serves to illustrate how little its author actually knows.

In the original piece, we have Peter Foster using that irritating formula, telling us that the Telegraph has "learned" that the European Union "is preparing to offer the UK a trade deal on tougher terms than its deals with Canada, Japan and a host of other leading trade partners".

As a statement of the bleedin' obvious, this really does take some beating. Even with the paucity of media coverage, you would need to have lived on a remote desert island for a couple of months not to be aware that this was the EU's intention. How many times does a Commission spokesman have to repeat this before it's no longer news that the Telegraph deems fit to print?

But the self-important Foster hasn't finished with just this stunning "revelation". He goes on to pronounce that, "in what will be seen by industry as an unusually harsh move", the European Commission has warned EU member states that it would be a mistake to allow some UK industry bodies to be allowed to certify that goods conform to EU standards.

Confusing his terms somewhat, he makes it known that he is referring to "so-called Mutual Recognition Agreements (MRAs)", when in fact he actually means Mutual Recognition Agreements on conformity assessment – an important distinction which is necessary to avoid confusion with MRAs on standards, or even professional qualifications, all of which are very different things.

According to Foster, MRAs (on conformity assessment) "are granted to other key EU trade partners to facilitate the smooth movement of goods in key sectors". But, he says, such an agreement "could be withheld from the UK if it only seeks a basic trade deal".

Actually, that latter assertion is a matter of certainty. It almost goes without saying, as one usually finds such agreements embedded only in the most comprehensive of free trade agreements, and then with clear-set conditions.

For instance, in CETA (the EU-Canada trade deal), there are 178 references to conformity assessment, including the central declaration (Art 4.3) that the parties "shall strengthen their cooperation in the areas of … conformity assessment procedures … in order to facilitate trade between the Parties".

But this is immediately followed (in Art 4.4) by the further declaration that: "the Parties undertake to cooperate to the extent possible, to ensure that their technical regulations are compatible with one another". This is then heavily reinforced by Chapter 21 of the Treaty, on "regulatory cooperation", where we get this statement:
The Parties recognise the value of regulatory cooperation with their relevant trading partners both bilaterally and multilaterally. The Parties will, whenever practicable and mutually beneficial, approach regulatory cooperation in a way that is open to participation by other international trading partners.
When it comes to stand-alone MRAs on conformity assessment, these are in fact – contrary to the impression given by Foster – quite rare birds. Outside the framework of a single, comprehensive FTA, the EU has only agreed seven of them in its entire history. These are with Australia, Canada, Israel, Japan (now superseded by the new FTA), New Zealand, Switzerland and the USA.

Yet, apart from the Swiss agreement, these are actually pretty thin stuff, only covering a fraction of goods traded, with one exception – Switzerland. And here in the "Blue Guide" (download EN version), we find the reason why.

"The MRA concluded with Switzerland which entered into force on 1 June 2002", the Commission tells us, "is a comprehensive agreement based on the equivalence of the legislation of the EU and Switzerland".

Then making the point that "the case of Switzerland remains quite unique", it points out that the provisions of the Agreement and the harmonisation of Swiss technical regulations with those of the EU "ensure seamless market access for EU products to the Swiss market, and vice versa".

This was only possible, the Commission says, because, on the one hand, "Switzerland has an existing technical infrastructure (e.g. the public or private institutions dealing with standards, accreditation, conformity assessment, market surveillance and consumer protection) which is equally developed and deemed equivalent to the one existing in the EU".

That much could apply to the UK but, on the other hand, "Switzerland has chosen to modify its legislation in the sectors covered by the agreement, in order to align it with that of the Union. Furthermore, it has committed to maintain its legislation aligned whenever amendments to it are introduced by the Union to the applicable EU legal framework".

And there's the rub. As long as the UK is determined to make a meal out of regulatory autonomy, asserting at every possible opportunity that it intends to diverge from EU regulation, it is not going to get the EU to open its doors and offer it things such as MRAs on conformity assessment.

Never missing the opportunity to reinforce its own failures, though, the Telegraph gives the job of explaining the detail to Victoria Hewson - the IEA's Head of Regulatory Affairs and Research Associate - which she lamentably fails to do.

Even the headline is wrong, proclaiming: "In rejecting mutual recognition, the inflexible EU would violate the spirit of WTO rules", a mad assertion that suggests a complete misunderstanding of the role of MRAs on conformity assessment.

The "Blue Guide" itself points out that, where conformity assessment is required in regulations, national authorities of EU Member States may refuse to accept attestations of conformity issued under accreditation by non-European accreditation bodies not complying with the EU requirements.

However, it says, this refusal cannot be based on the sole argument of the non-fulfilment of the EU requirements by the third country accreditation body. The conformance to the EU requirements by the third country accreditation body is not a condition for acceptance of conformity assessment results.

In practice, the EU adheres to the principles of the WTO Agreement on Technical Barriers to Trade, and will accept third country conformity assessment on a case-by-case basis. What a formal MRA on conformity assessment does, therefore, is give certainty to exporters. There is no discrimination involved.

Where government-to-government agreements are in place, the Commission says, "national authorities of EU Member States will accept the test reports and certificates issued by bodies that the foreign party has designated under the MRA … in the categories of products or sectors covered by the MRA".

Hewson, incidentally, asserts that China has an MRA on conformity assessment with the EU – which it doesn't. But, this being the Telegraph, there is no need to be concerned with mere facts. Thus, back where we started, by all means let the media start talking about Brexit again – but let it first have something worth saying. Otherwise, a period of silence may be preferable.



Richard North 23/01/2020 link

Brexit: trading places

29/11/2019  


Despite continued speculation, it seems to me to be pretty obvious that, in the eleven months that Johnson is allowing for the negotiation of our "future relationship" trade deal with the EU, there isn't going to be enough time to conclude a Canada-style comprehensive trade deal, much less a "super-plus" Canada deal, or whatever the pundits want to call it.

It is also a matter of record that the Tory manifesto does not promise to secure a comprehensive trade deal with the EU, for such is any Canada-style deal. The word "comprehensive", in relation to any trade deal, is noticeably absent from the manifesto. In fact, the word is only used once in the entire document, and that refers to a review of pension schemes for women.

One can also take note of the simple fact that a free trade agreement is a variable quantity. It can be a hundred or so pages long, or it can be several thousands of pages. It all depends on where the parties set their sights.

Putting these simple facts together, we can conclude – as we have already done – that Johnson has no intention of concluding a Canada-style deal with the EU by the end of December 2020. It will not happen because it cannot happen – to achieve such a deal is simply impossible in the time. Therefore, any discussions on the impact of such a deal are irrelevant. We need to be focused on likely scenarios.

Assuming that Johnson intends to honour his manifesto commitment, we already know that he can agree a "bare bones" or de minimis treaty with the EU and get it signed in time for it to take effect when the transition period finishes, at the end of December 2020. Logic tells us that this would certainly amount to a basic agreement on tariffs and quotas, perhaps with some provisions on rules of origin and anything else that can be achieved in the time.

Some pundits argue that the EU would necessarily impose conditions before it would agree to freeing up tariffs, etc., but there is no logic in this assumption. A tariff-free deal would be to the greater advantage of its Member States so there is no reason why the EU should block such a basic treaty or complicate matters by imposing conditions.

As to the rest, one must recall that the EU made considerable preparations for a no-deal exit by the UK – as did the Member States. These and other provisions still stand and can be reactivated to fill in the gaps left by a "bare bones" treaty, in order to keep the wheels of commerce turning.

Since Barnier has already conceded that he is prepared to entertain a deal which encompasses just the "core trading arrangements", it is safe to assume that both the EU and UK are moving in this direction and this is the most likely outcome. That, in turn, renders very unlikely a no-deal scenario for the end of December 2020. Whatever the pundits say, this is not really on the cards.

Nor must it be assumed that an initial "bare bones" treaty will be the end of the matter. We know that the EU very pointedly made it clear that it would not entertain so-called "mini-deals" in the event of the UK leaving without a withdrawal agreement. But Johnson intends to leave the EU at the end of January 2020 with his version of the withdrawal agreement in place – assuming the Tories win the election.

Thus, the original prohibition on negotiating a series of mini-deals no longer stands. Furthermore, there are longstanding precedents applying to the EU and third countries – such as Switzerland and Norway – which allow for such an incremental approach to treaty-building.

Once we have broken away from the EU at the end of the transition period, therefore, we can reasonably expect the EU and UK negotiators to return to the table and conclude a further series of agreements, either as protocols to the basic treaty, or as stand-alone treaties – in a process that could last a decade or more.

Such a scenario I have already rehearsed in a number of posts, but it is worth summarising it here as it is – as I see it – the most logical outcome for our trading arrangements with the EU, and one that we should at least explore. It serves as an antidote to the steady stream of ill-informed commentary polluting this subject.

As to the consequences, we can expect a sharp downturn in the volume (and value) of goods that we export to EU Member States. Not least, we will almost immediately lose an estimated 20 percent of our trade which relies on mutual recognition of standards.

The exact volume, nobody knows, as even the Commission is guessing when it comes the extent of trade which comes under this category. Those goods most affected may be high-value, speciality food products, and things like building materials and components where use is subject to local by-laws or the national equivalent.

Obviously, services will be badly affected – the extent of which will depend on many different factors, which are difficult if not impossible to predict. But it is inevitable that we will take a substantial hit, especially if there is no reciprocal agreement on the movement of workers, rights of establishment and mutual recognition of qualifications. Business should be lobbying to have these issues placed high on the list of negotiating priorities.

In one area, we can possibly afford to be optimistic – stemming from the fact that we are already fully aligned with EU standards. This is in respect of conformity assessment, where UK notified bodies are already operating in accordance with EU law. It should be a relatively simple matter to tack on a mutual recognition agreement on conformity assessment to a basic treaty.

On this, and other matters, it would be exceedingly helpful if one of the first things a new Johnson government did was to publish a White Paper, setting out our negotiating objectives with the EU, and some idea of how we intend to proceed with negotiations.

In some ways, the incremental approach does have its advantages (even if the economic costs may be high). It cuts short the politically sensitive transition period and removes the need to pay ongoing contributions to the EU budget. Crucially, it also takes away the time pressure (and removes the talks from the headlines). Negotiators will be more able to proceed at their own pace, without agreements being forced by artificial deadlines.

Needless to say though, that is not that way our government works – not of any colour. Our political masters seems to be great proponents of "mushroom management", and it is unlikely that we will see any coherent statement of the government position.

That is especially the case with any Johnson government, as it is quite evident that we as a nation are undergoing a substantial policy change in respect of trade, dropping the European preference and moving over to an Atlanticist stance, brought to fruition by a comprehensive UK-US trade agreement.

Such a policy change is not a necessary consequence of Brexit. We could, for instance, have maintained a "Europe first" stance by adopting the Efta/EEA option. But it has been clear for some time – and increasingly so, of late – that the Tory Right is using Brexit as an excuse fundamentally to reorientate our trade policy (and much else besides).

This is far wider, with far more profound consequences than the narrow concern over the effects on the NHS (which are probably overstated), and it is a pity that Labour's paranoia has been allowed to dominate the debate. Such a profound policy change should be widely and openly debated before it becomes accepted as the way to go, and the hole-in-the-corner approach by the Conservatives is intolerable.

That notwithstanding – and in the absence of any open declarations – we must assume that a new Johnson government intends to make up for losses in European trade with increased trade from America and other third countries.

If that is the intention, then this should also be stated openly – with estimates of expected losses and the time taken to recover them from other sources. Business needs this in order to prepare. It is thus wholly unacceptable that we should be having to guess government intentions on such an important matter, and especially during a general election campaign.

Instead, I fear we are going to be subject to the same patronising, low-grade misinformation from our political masters, bolstered by the usual flow of speculative drivel from our legacy media and their favoured "experts".

We deserve better.



Richard North 29/11/2019 link

Brexit: taking shape

27/11/2019  


In the grand scheme of things, Corbyn is an irrelevance – an unpleasant little man who was never able to rise to the demands of his position or assume his place in history. But, at the moment, he is also an unwelcome distraction – dragging attention away from more important matters that will determine the fate of this nation.

However, since there is little chance that the Labour leader will get near the reins of power, the focus on his inability (or unwillingness) to control the antisemitism in his party will simply have the effect of reinforcing his undesirability and add to the reasons why he will never become prime minister. It will not change anything.

His greatest contribution to history, therefore, will have been to preside over a wholly ineffective opposition which has thus failed to have any material impact on the career of a Tory politician who, in all senses, is unfit for any office more important than a road-sweeper yet is set to lead his party to victory in December.

Meanwhile, great events continue to take shape, not least the progress of the United Kingdom towards Brexit and, in particular, the nature of the future relationship which must be negotiated once the UK has left the EU.

And here, at least – in the wake of yesterday's lecture from Sir Ivan Rogers – there has been a development in the form of a closed-door (but widely leaked) briefing to MEPs in Strasbourg by Michel Barnier, appraising them of his priorities in the coming negotiations.

Of some considerable significance, although he warns of the difficulties incumbent in concluding negotiations in the short timeframe that prime minister Johnson is expected to set, he does not rule out reaching an agreement in the time. There is no talk of a no-deal from this quarter.

From the Financial Times, which seems to have one of the most comprehensive reports, we learn that Barnier conceded that the eleven months from the UK's planned exit on 31 January until the end of the transition period would normally be far too short to negotiate a trade agreement. But, despite that, Brussels would strive to have a deal in place for the end of 2020.

For that to happen, though, the talks would have to focus initially on core trading arrangements, such as plans for duty-free, quota-free trade in goods. These matters lie within the exclusive competence of the Commission and can be agreed without requiring ratification from Member States.

In terms of priorities, Barnier also stressed that he would be seeking to ensure continued strong co-operation with the UK on security and defence. No detail has been given on how this is to be secured, but there are mechanisms which range from the informal "understanding", to the political declaration and the full-blown treaty.

In practical terms, a political declaration would avoid the need for ratification and, while not legally binding, would stake out mutual commitments and obligations which could subsequently be elevated to treaty status.

Other issues also beyond the scope of the Commission to agree are matters such as road haulage and aircraft take-off and landing rights. Barnier says that sorting these could take longer than the eleven months so the plan seems to be for the EU to rely on the unilateral contingency measures crafted by Brussels to deal with the no-deal scenario.

What seems to be taking shape, therefore, is a fudge based on a "quick and dirty" treaty which will only accommodate the basics, while the wheels of commerce will be in the hands of the Commission until firm arrangements can be made.

This differs from the no-deal scenario where the Commission has been adamant that there would be no mini-deals to keep the wheels turning. Here, the initial treaty would effectively act as a framework agreement which would be added to by way of protocols, negotiated without time constraints – possibly over a period of years.

Overall, this would very much be to the advantage of the EU. Not only would it be the beneficiary of a "bare bones" treaty, it could then set the timetable for further talks and call the shots, as the dominant trading partner.

In the longer term, much will depend on the UK's willingness to adopt the EU's so-called flanking policies, on such matters as social and environmental standards, with market access held as a carrot to incentivise the UK's agreement.

Such things, for instance, as a comprehensive mutual recognition agreement on conformity assessment could be high on the list for post-transition talks. That agreement could be a stand-alone treaty as it is between the United States and some other countries, or it could be tacked on to the "framework" agreement as a protocol – with exactly the same status.

All being well, if the UK does leave the EU on 31 January, as Johnson intends, Barnier plans to present national governments, via the General Affairs Council, with a draft mandate for trade talks in February, in the hope that it could be approved in time for negotiations to begin on 1 March. This might need a special European Council, as the first meeting for 2020 is not scheduled until 26 March.

This phased approach, which Barnier seems to concede is the way forward, might be a neat way to overcome Johnson's insistence on ending the transition by December 2020. Although the UK will take a substantial economic hit, the most obvious effects will not be immediately visible and those that follow can be disguised in government statistics for some time.

From the point of view of the new Johnson government – if the Tories win the election – they can claim their "victory" in achieving a trade agreement without resorting to an extension, and thereby claim to have honoured the manifesto commitment. In reality, they will have concluded only a partial treaty and talks will likely continue for some years – if not decades.

In many respects, this does begin to look very similar to the way Norway-EEC relations were handled in the aftermath of the Norwegian rejection of membership in 1972. This relied on a very short, basic treaty, negotiated in little more than six months, which was then expanded over a number of years with the addition of protocols.

A different way of doing things would be to negotiate a series of stand-alone treaties, more in line with the Swiss model, although the EU has never been particularly keen on this mechanism and even now is looking to revamp the whole system,

Of course, the combined experience of Norway, Switzerland and others eventually led to the EEA Agreement in 1994 and, even now, after a period of a decade or more, we would perhaps see an EEA v.2, with the UK joining forces with Efta states to forge a joint cooperation treaty with the EU. Maybe this is what it will take.

As soon as the immediate Brexit talks are out of the way, though, the EU has other fish to fry. It must attend to a long-delayed treaty of its own, which has been on hold ever since the UK's EU referendum.

Touched upon by the Telegraph, a fuller report can be found on the CNA website. It tells us that France and Germany are looking to the EU to convene another "Conference on the Future of Europe", which they believe is necessary to make the EU "more united and sovereign" across a range of challenges.

This, of course, is entirely expected and one of the many reasons why so many in the UK campaigned to leave the EU. There is never a status quo as, no sooner is one treaty laid down, there is another in the planning stage – and then another one after that, in a never-ending process of integration.

Ironically, had the UK not had its referendum and decided to leave the EU, our government would be gearing up for another intergovernmental conference, and new treaty talks. The big difference would then be that the UK would have to hold a referendum to ratify the treaty. By this means, we could still have been looking at Brexit, albeit delayed by a few years.

As it is, even with the disgusting Corbyn unable to craft a coherent Brexit policy, we are finally looking at an exit on 31 January. But, of one thing we can be absolutely certain. That is not the day when Brexit will be "done". We will have to wait a decade or more for that to happen.



Richard North 27/11/2019 link

Brexit: reality on hold

21/11/2019  


In the beginning, long before Article 50 had been invoked, many of us thought that the future relationship between the UK and the EU would also be settled in the two-year negotiation period foreseen by the Article. Thus, it was anticipated that, at the end of the negotiations, we would drop out of the EU and move seamlessly into a new relationship.

That this was not to be the case only really emerged after Mrs May had invoked the Article, the consequences of which would mean that there would have to be a gap between us leaving the EU and finalising a new agreement, during which period there would be no formal trading arrangements.

Pretty obviously, this was not a happy situation (except for those who thought that the WTO scenario was desirable), opening up a requirement for a transitional period – which Mrs May insisted on calling an "implementation" period.

Had Article 50 been thought through, perhaps the arrangements for transition might have been specifically laid out in the Treaty. But, as it wasn't, the agreement to allow a period was treated by the EU as a concession to the UK, included in the draft agreement of 14 November and endorsed by the European Council on 25 November 2018.

At a time when we were supposed to leave on 29 March, the period was set to end on 31 December 2020, with a one-off provision to extend by either one or two years. This had to be agreed by the end of June 2020, with no allowance for any further extensions. At the very latest, an agreement would have to be concluded by the end of 2022.

Why such a short period was agreed is something of a mystery. EU officials have been very explicit in their warnings that a comprehensive trade deal, along the lines of the EU-Canada trade agreement (CETA), would take "many years". Even the maximum period allowable seemed hardly long enough.

Despite extensions to the Article 50 negotiating period, with us not due to leave the EU until 31 January 2020, the transition period has not been changed, which means that the first period has been whittled down to a mere eleven months and the maximum period foreseen is now less than three years.

This, though, seems to be of no concern to prime minister in office Johnson. He has repeatedly stated that he has no intention of seeking an extension of the transition period past December 2020. In the event that he forms a new government after the general election, that means he is committing the UK to concluding negotiations on a trade agreement, from a standing start, in eleven months.

Justifying his stance, Johnson argues that our current membership of the EU means that we are already in "perfect" regulatory alignment with the EU, so that any negotiations would be quick and simple, allowing a speedy conclusion within the eleven month period.

But, while we are offered this bland assurance, Johnson has not specified the type of agreement he has in mind, nor the degree of regulatory alignment that he is aiming for at the conclusion of the deal. Furthermore, he has given no indication of what flanking policies he might be prepared to accept, such as alignment on employment law, competition policies, environment, data protection and, of course, freedom of movement.

On the other hand, Johnson remains publicly committed to the doctrine established during the referendum, pledging to "take back control of our borders, our money and our laws".

On the face of it, this creates a conflict between objectives. If the UK wants a comprehensive trade deal inside eleven months, it needs to "copy out" CETA, making only those changes necessary to accommodate specific national characteristics. But if it is content with a "best in class" free trade agreement, whereby the UK would be free to set its own regulatory standards, this will entail significant renegotiation.

According to the EU's Director General for Trade, Sabine Weyand, eleven months is not long enough for that. That leaves two likely options, a thin "bare bones" deal or a hard exit from the transition period without any deal.

Given Johnson's pre-election rhetoric, we can probably rule out a no-deal resolution, but a "bare bones" agreement might amount to little more than a tariff and quota-free agreement, plus a "rules of origin" pact and perhaps limited administrative arrangements on VAT, customs cooperation and data sharing. Even a mutual recognition agreement on conformity assessment for a limited number of sectors might be attainable in the time.

Even with these add-ons, the substance of the agreement would be thin, falling far short of a comprehensive free trade agreement, which in itself would represent a significant loss of market access to the EU. Nevertheless, for Johnson, it could still qualify as a "deal" – to be paraded in front of a gullible media, its acceptance guaranteed by compliant MPs who would constitute his working majority in the Commons.

That is possibly the greatest danger that we confront. Johnson could end up believing his own propaganda and take a "bare bones" agreement as sufficient to fulfil his obligation to settle a long-term relationship with the EU.

Obsessed with the idea of forging a trade deal with Trump's United States, he could – and most likely would – argue that any downside to the EU agreement would be more than compensated for by the riches awaiting the UK on the other side of the Atlantic.

By contrast, seeking an extension to the transition period could present Johnson with major political risks. With his campaign slogan, "Get Brexit Done", he has openly committed to avoiding any further delay in the Brexit process, stating that there is "absolutely no reason" for not concluding an agreement by the end of 2020.

In respect of the withdrawal agreement and his failure to honour his "do or die" promise to leave by 31 October, he has been able to blame an intransigent parliament for the delays. But, if he returns after the election with a working majority, he only has himself to blame if he then seeks to extend the transition period – unless, of course, he aims to put the EU in the frame.

Getting the EU to take the fall, however, seems unlikely. Both Juncker and Barnier have warned that a comprehensive trade deal would take "years" and, with Weyand joining the fray, Johnson cannot say that he was unaware of what was involved. Having already decided to finish talking by the end of next December, he must be ready to accept that the only option available to him is a "bare bones" deal.

With his withdrawal agreement, though, he agreed something which many believe is far worse than Mrs May's deal. Yet he is still quite capable of talking it up, describing it as "fantastic" and arguing that there is "no better outcome". With his slender grasp of the truth, talking up a "bare bones" deal would present him with few problems. If needs must, he would describe a train wreck as "fantastic".

And such a scenario is not at all far-fetched. Through the years, Johnson has shown that he has only a very limited understanding of the technicalities of EU membership – to say nothing of international trade. He could, therefore, easily convince himself that he had negotiated the best possible deal.

Where there would be a difference is that, rarely in his career has Johnson hung around long enough to take responsibility for his actions. Usually, he leaves others to clear up his messes. But in this instance, the effects of a "bare bones" deal would swiftly become apparent.

Should these be pointed out with sufficient force in time for Johnson to apply for an extension, he could simply tough it out and stretch out talks to the end of 2022, relying on his majority to see him through.

Articles such as this from Jeremy Warner certainly help, and even Rafael Behr is pitching in via the Guardian, asserting that Johnson's "snappy, inane slogan is the prelude to inevitable lies, betrayal and duplicity".

But if anyone thinks that mere criticism is going to deflect Johnson from his path or that he will spend next year "climbing the steep learning curve towards realisation that Britain thrives on frictionless access to the single market" – as Behr suggests – is probably in for a disappointment.

There is nothing quite so impervious to reason as a man who thinks he already knows the answers, and we now stand at risk of having such a man at the head of our government for the next five years. In the eleven months that follow the election, my guess is that we will see reality put on hold and he will go for a deal by the end of next December.



Richard North 21/11/2019 link

Brexit: miracle of the century

03/10/2019  


One of the oddest things about the media coverage of Johnson's "take-it-or-leave-it" proposal is the assumption that Northern Ireland will remain in the single market for all goods – for a period, at any rate.

That most of the media sources are saying the same thing suggests that they are working to some central crib-sheet, possibly produced by one of the news agencies, but it could even have been from a supplementary media briefing produced by the government.

As to the main government briefing, this is to be found in the explanatory note to the "UK proposals for an amended protocol on Ireland/Northern Ireland". And in that seven-page document (including the title page), there is no reference at all to Northern Ireland staying in the single market. What the explanatory note does say is that:
The introduction of a zone of regulatory compliance across Northern Ireland and the EU would remove the need for regulatory checks and related infrastructure at the border between Northern Ireland and Ireland, while enabling the UK and EU to maintain their own distinct customs regimes ((2) 6.).
However, although this is an official government document, there is an assumption which does not compute. Regulatory compliance is required of all exporters to the European Union. It is a condition of entry.

But compliance alone does not buy immunity from regulatory checks at the border. The privilege only comes with full membership of the Single Market, and that requires a lot more than just regulatory compliance. Conformity with the "four freedoms" and raft of so-called "flanking policies" is also required and - as I am continually pointing out - full implementation of what Barnier calls the "regulatory ecosystem".

It may, therefore, be rather presumptuous of the government to assume that, because Northern Ireland continues to comply with EU regulation in the relevant areas, goods are necessarily going to get free passage into the Irish Republic.

Nor is this detail a matter of pedantry. The EU has the integrity of the Single Market to protect, and it must comply with WTO non-discrimination rules. If it allows free access to goods from Northern Ireland into the Single Market, purely on the basis of regulatory conformity, then it will come under pressure from other third countries to allow the same level of access.

Needless to say, the devil will be in the detail – what may be acceptable to the Commission in principle may founder when the two sides have to get together to produce a workable system. And then there is the matter of services. The explanatory note talks only of goods, yet we know that services are a significant part of the trade bundle between the Republic and Northern Ireland – and the free movement of services will not be permitted.

This is a much understated problem. How, for instance, will the Republic authorities prevent a plumber from Northern Ireland darting over the border to service a client's boiler? This, in fact, is an issue which has been addressed on the border between Norway and Sweden, where tradesmen such as plumbers and carpenters are only allowed to take hand tools across the border. How would such restrictions be enforced on the Irish border, without a system of checks?

Furthermore, it is all very well calling for special provisions to be made for small traders – as the UK government is doing. None such apply on the border between Sweden and Norway, they certainly don't apply on the Turkish border and neither do SMEs in Ukraine get any special breaks. If Northern Irish traders are allowed special privileges, how long will it be before there are demands for equal treatment from other third countries?

We also hear nothing about the 20 percent or so of traded goods which rely not on harmonised regulation but on mutual recognition. The concession which permits free circulation of these goods applies only within the Single Market and, despite the media chatter, Northern Ireland will most definitely not be a member of the Single Market.

Taking all this into account, it is hard to see how the European Union will be able to permit the free movement of goods into the Republic from Northern Ireland, without imposing significant conditions and physical controls at the border. It will also be insisting on the ability to supervise and enforce regulatory conformity within the territory of Northern Ireland, while demanding implementation of the regulatory ecosystem.

But then, if the rest of the UK – as indeed is the case – is to go its own way, it will be imposing its own regulatory border between Northern Ireland and Great Britain. That will mean border checks carried out by UK authorities, controlling access of goods into Northern Ireland and, from there, into the Single Market. Again, one would expect the EU to impose its own conditions, including supervision and enforcement provisions, on this arrangement.

Despite this, there is probably nothing here which presents irreconcilable difficulties when it comes to negotiating a final deal, given that the UK is prepared to compromise on its ambition to regain control of its borders, and other conditions can be satisfied.

Here, one sees that the UK is seeking to rely on a trusted trader scheme, but there is an elephant in the room. Without the EU awarding "adequacy" status to the UK under its data protection legislation (which is yet to be resolved, and may take some years), the exchange of personal data required to make a trusted trader system work simply cannot take place.

But, even if such issues can be resolved, there will be a lot of detail to be addressed by negotiators which will require turning into legal prose before an agreement can be finalised. And these matters are only some of the aspects which need addressing, raising the spectre of the negotiators running out of time. With only about ten days left, it seems hardly possible that they can finalise a watertight legal draft in the time.

Then, this assumes that some of the fundamental issues can be resolved – such as the approval system which the UK government seeks to impose, and the four-year cut-off which allows unilateral termination of regulatory conformity by the Northern Ireland Assembly.

This is something which drives a horse and cart through the concept of a backstop. It passes the buck on the border question, leaving open the possibility that there will be a hard border at some time in the future, frustrating the EU's desire to settle on an arrangement which will last into perpetuity.

Another of those fundamental issues which could well prove a sticking point is the UK assumption that the EU will agree to introduce simplified customs procedures, alongside an "ambitious" temporary admissions arrangement. Both will require amendments to the Union Customs Code (UCC) but, given that the EU has only just completed extensive revisions, with the new code not fully in force, it will be extremely reluctant to countenance further changes.

Equally, the proposal on VAT assumes a degree of integration with the EU system that goes beyond Norway and exceeds that afforded to any other third country. This is unlikely to be conceded.

Looking at what is on "offer" from the UK, therefore, the proposal seems remarkably UK-centric, failing to take into account any of the sensitivities or constraints which might limit the EU's response. Something of this comes over in the letter from the prime minister in office to Jean-Claude Juncker, which is almost truculent in tone.

"Both sides now need to consider whether there is sufficient willingness to compromise and move beyond existing positions to get us to an agreement in time", writes Johnson, adding: "We are ready to do that, and this letter sets out what I regard as a reasonable compromise: the broad landing zone in which I believe a deal can begin to take shape".

It comes as no surprise, therefore, that Juncker's response is not exactly gushing with enthusiasm, even if he welcomes Johnson's "determination" to advance talks ahead of the October European Council and make progress towards a deal.

However, he also noted that there were still some "problematic points" that would need further work in the coming days, notably with regards to the governance of the backstop. Another concern related to the "substantive customs rules", while Juncker also stressed that "we must have a legally operational solution that meets all the objectives of the backstop".

The Commission was now going to "examine the legal text objectively, and in light of our well-known criteria", which could be taken as code for saying that it does not conform with those criteria.

Certainly, the vibes do not seem to be favourable, with the predominant Brussels response said to be "dismay". Barnier, we are told, fears that implementing the proposal could prevent Brussels from protecting its internal market.

With EU sources saying that the flaws in the UK's proposals are such that there appears to be scant chance of agreement by the European Council on 17 October, it looks as if Johnson might need to go back to the drawing board. But, since this is supposed to be a "take-it-or-leave-it" proposal, he seems to be on the verge of producing the miracle of the century - turning the European Council into leavers.



Richard North 03/10/2019 link

Brexit: another look at Norway

31/08/2019  


It was not so very long ago that I wrote a piece on negativity, one of several I've written on this general theme. This one concluded that, when it came to Brexit, it wasn't only parliament that was clear on what it didn't want, but without ideas of what it did want. The whole nation seemed stricken by that same, overpowering sense of negativity.

I was minded of this when reading some of the comments to yesterday's piece. There is nothing so certain to bring out the naysayers than offering a solution (or solutions) to an intractable problem.

Here, there is an interesting dynamic at play. Generally speaking, we tend to respond (with more intensity and length) to matters with which we disagree. I'm as bad as the rest, where my longer posts on this blog's comment section tend to be devoted to disagreeing with other comments (although mainly because they disagree with mine).

Posts with which we agree, and especially in areas where we have little personal commitment, we tend (and I am talking about tendencies) to let pass by. And nobody wants to be seen a toady or sycophant. Some of the more disgustingly vitriolic posts that I have had to delete from this site have been those which make quite explicit attacks on readers who have committed the mortal offence of agreeing with me.

On balance, therefore, there is a bias in favour of critical comment. If I write a piece which is critical of either people or things, I can be pretty well assured of some support on the blog. When I promote something, the naysayers come out in force while supporters tend to be silent.

This is not a tendency confined to this blog – not by any means. Most of the newspaper and political sites host huge volumes of hostile comment, so much so that one ventures a contrary opinion with the greatest of trepidation. Comment sites have become the domain of mob rule and the death of reasoned discourse.

If one is to attempt to apply reason to Brexit, therefore, there are likely to be many people who agree with the findings, but say nothing. On a day when my hit-rate might exceed 60,000, the views of maybe 200 commenters (at most) may dominate the post-publication discussion – the majority of their comments may well be contrarian, painting a completely false picture of reader sentiment.

Many of them will struggle to remain on-topic and will seek any excuse to depart from the issues at hand. With some responses, one sometimes wonders whether they've read the posts to which they are linking. In some cases, one wonders whether they've ever read the blog at all.

Nevertheless, in the final analysis – to use that dreadful cliché – reason must eventually prevail. A real world requires real solutions to practical problems and, while the politicians may beat about the bushes for ages before coming to a conclusion, even they eventually have to concede to reality or be replaced by people who will.

When it comes to the Irish backstop, therefore, reason will eventually have to prevail – simply because it must. There is no point at which an unsound doctrine can survive for all time, without something having to give. Mind you, when it comes to Ireland, what might be seen by outsiders as fairly simple matters to deal with have taken centuries to remain unresolved.

However, the backstop is not about Ireland – per se. The trouble is that explaining this gets repetitive and, after a while, one gets tired of repeating the same things. Those pushing the errors, with a wider constituency, thus start to dominate what passes for the debate – simply by dint of greater perseverance.

But right at the heart of this issue is the simple, unalterable fact that, with Brexit, what was once an internal land border in the European Union now becomes the external border between the EU and the newly defined "third country" state of the United Kingdom.

Under any normal circumstances – if there could ever be such a thing in what is a unique situation – there would be no discussion about border controls. They would apply automatically. The analogy I offered, some time ago, still stands.

You must imagine, I wrote, a medieval walled city, inside which the traders happily do business – with the public and between themselves – secure within the fortifications. When a trader (unhappy with the rules and regulations) decides to move his stall outside the walls, he cannot then complain that he is no longer able to trade freely with the people still inside.

It is not as if the authorities of the walled city have decided to impose new barriers between the unhappy trader and the rest. The walls already existed. Our unhappy trader has moved outside them.

Less easy to understand is the fact that we are not dealing with physical barriers but with tariffs and the far more important non-tariff barriers (NTBs) – mostly regulatory barriers.

In the latter event, the only way of restoring trading equilibrium is to ensure not only regulatory alignment but also full conformity with what is now referred to as the "regulatory ecosystem". As again I've pointed out earlier, regulatory alignment is only the starter for ten. We need the full package, which extends way past mere "equivalence" or "mutual recognition".

Now we come to the particular situation of Northern Ireland. If the full EU package must remain in place for there to be frictionless trade, this potentially creates trading barriers between the province and the rest of the United Kingdom – something which is politically unacceptable to a significant and influential Unionist constituency.

Thus, to avoid the creation of what amount to an external border between Northern Ireland and the rest of the UK, the rest of the UK must then adopt the full regulatory package – unless "alternative arrangements" to like effect can be agreed. And if they can't, within the time – that's where the backstop comes in.

Now, when one looks at the situation rationally, it is self-evident that there are very few workable solutions to this impasse. We are not spoilt for choice here and it is certainly the case that the fraudulent "alternative arrangements" worked up by Shanker Singham and espoused by prime-minister-in office Johnson are not a solution.

One thing that would work is the Efta/EEA option, with new, bolt-on protocols covering such matters as customs, VAT and data protection. The UK, with its past history of integration as a member of the EU, would also have to agree protocols which kept policies akin to the CAP and CFP in place. There is too much water under the bridge – so to speak – for us to walk away from these core EU policies. At the very least, we would need a prolonged transition.

Perversely – and certainly unintended – Johnson's prorogation of parliament, thus creating a new parliamentary session, has opened a new window of opportunity for the Efta/EEA option. It allows the Withdrawal Agreement to be represented to parliament as is, and allows for a workable solution to ensure that the backstop never comes into effect.

And that is why the so-called "Norway Option" must be revisited – and urgently. It is the only credible option which will resolve the Brexit impasse. And that's why it will always bring out the naysayers in force – especially those who don't want a solution at any price.

Irrespective of the chance of success - which is slight - it would be remiss of us if we didn't go the last mile to bring to the attention of politicians the one remaining prospect of a successful Brexit, avoiding the economic trauma of a no-deal. The politicians will probably ignore us – as they usually do – but they can't say they haven't been told.



Richard North 31/08/2019 link

Brexit: fantasy politics

22/08/2019  


Laid out unequivocally in the European Council (Art. 50) guidelines for Brexit negotiations is one of the core principles which set the tone for the talks.

Any agreement, the guidelines say, "must ensure a level playing field, notably in terms of competition and state aid, and in this regard encompass safeguards against unfair competitive advantages through, inter alia, tax, social, environmental and regulatory measures and practices".

In short, that means that the UK will not be allowed to negotiate an agreement which puts it in a better position after Brexit than it would have had as a full EU member, and neither can it be allowed to have greater influence over EU affairs than it had previously.

When it comes to the Single Market, these guidelines readily translate into certain unalterable requirements which would, in effect, amount to the EU's own "red lines".

Specifically, a dominant feature of the Single Market is the body of harmonised regulatory standards, and it is an absolute requirement that Member States should conform fully with those standards. Not only that – except under the most exceptional circumstances – traders wishing to export goods to EU Member States must also conform fully with those same standards.

This is the very basis of the Single Market, where huge effort is devoted to ensuring conformity, and any divergence from set standards is rigorously discouraged.

Yet, in his letter to Donald Tusk this week, the man occupying the post of prime minister blithely stated that he was seeking to ditch the backstop, with its commitment to "full alignment" with wide areas of the single market and the customs union. That, said Johnson, "cannot be the basis for the future relationship and it is not a basis for the sound governance of Northern Ireland".

Instead, Johnson has been making reference to "alternative arrangements", which he re-emphasised in Berlin yesterday, saying: "We do think there are alternative arrangements that could readily be used to address the problem of frictionless trade at the Northern Irish border and you'll have heard them before, whether it is trusted trader schemes or electronic pre-clearing. All that type of solution and more besides is what we will be wanting to discuss".

Doubtless, he has in mind "Snake Oil" Singham's Alternative Arrangements Commission and his ideas on mutual recognition – the adoption of which is the only way that frictionless trade across the border could be maintained without regulatory alignment.

And sure enough, no sooner has Mrs Merkel told the prime minister in office that she would be prepared to listen to his proposals for an alternative to the backstop – ostensibly giving him 30 days to come forward with a "practical and workable" scheme – up pops the egregious Singham in the Telegraph.

With a level of hubris which is probably only exceeded by the second Cummings, he blithely declares that the EU leaders "have got it wrong" and that there are plenty of solutions to the Irish border problem.

Then, in an extraordinary statement – even for him – Singham asserts that "it is now recognised that there will be regulatory divergence", going on to say that: "If there is any alignment to be had, it will be alignment of goals. If our aims are aligned and the regulations put in place objectively achieve them then differences in regulation should not prevent mutual recognition".

Of course, it is very far from being recognised that there will be regulatory divergence. This is wishful thinking to a very advanced degree. The essential feature of the backstop is regulatory alignment and the EU has not moved one iota from this principle.

Furthermore, if you stand back from this and consider what is being proposed, Singham is expecting the EU Member States (and the rest of the world) to conform with the Single Market's harmonised standards, while uniquely allowing the UK to set its own standards. It should then enjoy "frictionless" access to the Market which, to everyone else, is conditional on regulatory alignment.

Not only does this give the UK an unfair competitive advantage, it also puts us in a far better position than we enjoyed as an EU member. Inside the EU, we were bound to comply with EU law. Outside, Singham expects us to enjoy all the benefits of the Single Market without having to trouble ourselves with conformity with its most fundamental precept.

And should the EU actually allow such a situation, not only would it be in breach of its own principles, it would be driving a cart and horse through EU rules, and in particular the requirement to apply the same rules to all its trading partners.

Thus, should the EU allow the UK to work on the basis of mutual recognition, it would be under enormous pressure to open that concession to all its other partners. The Single Market, as we know it, would cease to exist.

Clearly, there is not the slightest chance that the EU is going to accept Singham's idiot proposal and it is to the eternal shame of the Telegraph that they give space to such a lamentable absence of realism.

Nor indeed does it stop there. Where currently the UK enjoys the benefit if mutual recognition, where there are no harmonised standards, that provision ceases on Brexit – deal or no deal. Mutual recognition of standards applies only to fully-fledged participants in the Single Market.

While variously estimated as accounting for as much as a fifth of our trade in goods with EU Member States, I cannot recall seeing any serious discussion in the media or by politicians about this loss, yet there can be little dispute that it will represent a severe body-blow to the UK.

The inability to address such points does, of course, reflect poorly on both media and politicians but there seems to be no limit to the degree to which the likes of Singham are given undisputed platforms to perpetrate his disinformation.

Despite his assertions being demonstrably false, Singham is still allowed to claim that the challenge of sanitary and phytosanitary measures, as well as the requirements for veterinary checks at Border Inspection Posts, " could be solved by moving facilities away from the border and utilising mobile units wherever possible to carry out checks".

Not anyone, it seems, in either a select committee or on the editorial staff of a national newspaper – nor even in critical trade groups – is capable of looking up the relevant EU law to show that these claims are entirely fabricated. And, as long as your lies are bold enough, the Telegraph will print them.

But where this fantasy takes us is anyone's guess. If Johnson is relying on Singham's "alternative arrangements", then he is going to come a cropper. A scheme based on lies and misinterpretations is not a sound basis for public policy, but it appears that Johnson doesn't have the wit to realise this.

Nor does he seem to understand that Merkel is not talking about reopening the negotiations on the Withdrawal Agreement. All that is on offer is another massage of the political declaration, which can hardly deliver more than we have already seen with the Strasbourg Agreement. Johnson is not going to get the backstop removed.

If there was even the slightest doubt about that, today he meets Macron over lunch in Paris, where officials warn that a no-deal Brexit is now regarded as "the most likely outcome", while Macron is taking pains to emphasise that a renegotiation at this point "is not an option".

Scrapping the backstop, he says, is "impossible", presenting the EU an unacceptable choice between protecting its internal market by reintroducing border controls at the Irish border, or preserving peace on the island.

A French official puts the issue nicely in context, saying that: "If the UK considers that having a backstop is absolutely excluded, that is its right, but in that case it limits the possibility of reaching an agreement". And it was supposed to be the British who were masters of understatement.

Macron, though, is even more forthright, pointing to a "British democratic crisis" over Brexit. "The British were asked to choose, in perhaps a simplistic way, without the government telling them how it would be done" he says.

"Many lied about how it would be done, and democracy couldn't find a majority to apply what people decided. It's unheard of, but that's what we're living. We have to help the British deal with this internal democratic crisis, but we mustn't be hostage to it nor export it".

It comes to something when we have a French president lecturing us on a "democratic crisis", but before Brexit is over, I guess we'll be seeing a lot stranger things. Fantasy politics are fast becoming the new norm.



Richard North 22/08/2019 link

Brexit: a suicide note from Number 10

20/08/2019  


Yesterday, the man occupying the post of prime minister sent a letter to the president of the European Council, with copies to each of the 27 heads of states and governments, plus a further copy to the president of the European Commission.

The content was nothing new – simply Alexander Boris de Pfeffel Johnson reiterating the points previously made. He condemns the backstop as "anti-democratic and inconsistent with the sovereignty of the UK as a state" and then proposes that it should be replaced with a commitment to put in place alternative arrangements as far as possible before the end of the transition period, as part of the future relationship.

He also deigns to "recognise" that there will need to be "a degree of confidence about what would happen if these arrangements were not all fully in place at the end of that period". And, out of the goodness of his heart, he tells Donald Tusk that "we" (presumably, the UK government) "are ready to look constructively and flexibly at what commitment might help", consistent with the principles set out in his letter.

So transparent is this ploy that, within hours, the Guardian was writing that the initiative "appears intended to portray Johnson as willing to negotiate with Brussels, even though he is making a demand for the abolition of the backstop that they have repeatedly rebuffed".

By last night "Brussels sources" were once again ruling out any renegotiation of the Withdrawal Agreement, including the backstop. "There was a two and a half year negotiating process in which the EU compromised, including on the question of the backstop", someone described as "a well-informed source" was telling the Guardian.
The withdrawal agreement is not open for renegotiation and the backstop is not open for change. A legally operable backstop to avoid a hard border remains central to the withdrawal agreement for the EU27.
And, as the momentum built up, others joined the fray, stating that the letter was a "clear attempt" to kill off any prospect of renegotiating the Brexit deal, which leaves no "room for compromise".

Another of those wondrously anonymous EU diplomats said Johnson had failed to put forward any "realistic alternatives", adding that "hope and imagination" would not prevent a hard border. By calling for the backstop to be abolished in its entirety, Johnson was effectively ruling out any prospect of the EU offering any concessions.

Earlier in the day, however, Johnson had been insisting that he was "confident" the EU would buckle and give into his Brexit demands, agreeing to renegotiate the terms of the Withdrawal Agreement.

Said Johnson, it was "fine" that Brussels was currently opposed to changing the Withdrawal Agreement as he outlined his belief that the EU will drop its "reluctance" to shift its stance when it comes to the crunch.

And with that, nothing has changed since the very start, when it has been an article of faith amongst the hard core leavers that the EU will give in at the 59th minute of the eleventh hour, as long as we threaten a no-deal and stand firm, intimating that we are fully prepared to deal with the consequences.

That, of course, is the other half of the crass stupidity emanating from Number 10 with Johnson burbling about preparations for a no-deal, saying: "I'm not pretending that there won't be bumps on the road […] but if everybody puts their minds to it, I have absolutely no doubt that we can get ready" – even though the leader of the CBI said it was impossible for companies to be fully prepared for the disruption that would happen if the UK crashed out of the EU without a deal.

The essence of his stupidity, though, is expressed in Johnson's letter, where he re-affirms that the UK is "unconditionally committed to the spirit and letter" of our obligations under the Good Friday Agreement, whether there is a deal with the EU or not.

One assumes that this necessarily means the maintenance of a "soft" border. Although we don't see Johnson make specific reference to this, he does say that his government "will not put in place infrastructure, checks, or controls at the border between Northern Ireland and Ireland", stating that "we would be happy to accept a legally binding commitment to this effect", hoping that "the EU would do likewise".

Unfortunately, what he then says has the effect of making this impossible, by declaring:
Although we will remain committed to world-class environment, product and labour standards, the laws and regulations to deliver them will potentially diverge from those of the EU. That is the point of our exit and our ability to enable this is central to our future democracy.
The point he then acknowledges is that the "backstop is inconsistent with this ambition", misinterpreting its requirement in asserting that it required "continued membership of the customs union" and the application of "many single market rules in Northern Ireland".

A careful reading of the protocol, however, will not reveal any specific requirement from Northern Ireland to stay in the EU's customs union. Rather, it requires "full alignment with those rules of the Union's … customs union", which is actually a different thing.

By shadowing the EU's schedules of tariffs agreed with the WTO – which we already intend to do – and by committing (by way of a political declaration) to conforming with the EU's common external tariff, we would be able to maintain "full alignment" with the rules of the customs union, without formal membership of the customs union.

Nevertheless, Johnson's letter declares that we cannot "continue to endorse the specific commitment, in paragraph 49 of the December 2017 Joint Report, to 'full alignment' with wide areas of the single market and the customs union. That, says Johnson, "cannot be the basis for the future relationship and it is not a basis for the sound governance of Northern Ireland".

Yet again, reference to the offending paragraph of the Joint Report shows the commitment, in the absence of agreed solutions, "to maintain full alignment with those rules of the Internal Market and the Customs Union" – which is not the same as membership.

But at the heart of the problem here is Johnson wanting to reserve the right for UK standards to "diverge from those of the EU". It is that, in his view, which makes the Withdrawal Agreement, and the embedded Protocol untenable, notwithstanding that the ability to secure "frictionless" trade demands full regulatory alignment.

Undoubtedly, in making reference to "alternative arrangements", Johnson has in mind "Snake Oil" Singham's ideas on mutual recognition – the adoption of which is the only way that frictionless trade across the border could be maintained without regulatory alignment.

If that is what he has in mind, then his initiative is doomed, illustrated by an air of unreality as Johnson blathers, "Now of course our friends and partners on the other side of the Channel are showing a little bit of reluctance at the moment to change their position".

There is simply no prospect of the EU moving away from an absolute requirement for regulatory alignment, not least because any deviation from that principle would prejudice the integrity of the Single Market. Concessions would create precedents, and require similar treatment to be afforded to all the EU's other trading partners.

The net effect of Johnson's letter, therefore, is to set in stone a determination to force the EU into setting up a hard border between the Republic of Ireland and Northern Ireland.

There can be no other outcome and it is thoroughly disingenuous for him to "hope" that the EU will be able to avoid "infrastructure, checks, or controls at the border". There is absolutely no way the EU can allow an unguarded back door into the Single Market.

It is, therefore, completely unsurprising that Johnson should have spent almost an hour on a phone call to the Irish premier, Leo Varadkar, only for the conversation to end in stalemate. A joint statement was released, acknowledging no progress over the issue of the backstop.

The prime minister in office has agreed to go to Dublin for talks with Varadkar in early September but, before that – this week - he is to see Merkel (in Berlin for dinner on Wednesday), before moving to have lunch with Macron in Paris on Thursday, ending up at the close of the week with a meeting of world leaders at the G7 summit.

Predictably, Downing Street sources are saying that they are not expecting any end to the deadlock this week, and nor should they. There will be no end to it. Johnson has just written the suicide note for the UK, ensuring that no-deal is our only destination on 31 October.



Richard North 20/08/2019 link

Brexit: trading confusion

14/08/2019  


I've been taking a back seat on the John Bolton controversy, where president Trump's national security adviser has said the UK is "first in line" for a trade deal with the US and, what is more, claimed deals could be done on a "sector-by-sector" basis, with an agreement on manufacturing made first.

According to Bolton, a bilateral agreement or "series of agreements" could be carved out "very quickly, very straight-forwardly". A trade deal for financial services and agriculture would not be the first to be agreed, he added, then declaring that "doing it in pieces" was not unprecedented.

Predictably, this reference to "doing it in pieces" has brought the pundits out in force, with the likes of BBC economics correspondent, Andrew Walker, telling us that "there is a problem with sector-by-sector trade agreements". They are not, he avers, "compatible with WTO rules", which say free trade agreements for goods should cover "substantially all the trade".

And while he concedes that there is no formal definition of that latter term, he will have us believe that a figure of 90 percent "has often been suggested". Thus does Walker maintain that, "It is unlikely a deal covering a few sectors would qualify. Other WTO members could start a dispute and would, on the face of it, have every chance of winning".

Needless to say though, in matters of trade and WTO rules, things are never quite as simple as the Janet & John pundits make out. For instance, two Sussex University academics at the UK Trade Policy Observatory, Emily Lydgate and Alan Winters, recently offered an analysis of what they thought the WTO might or might not permit in respect of a Free Trade Agreement (FTA) between the UK and the EU – a scenario that might reasonably be expected to have some application to a UK-US deal.

As one might expect, they concede the Janet & John point that, "WTO rules prohibit Free Trade Areas (FTAs) that provide tariff-free access or services liberalization in only one or a few sectors". In this sense, they say, "a narrow, sectoral approach to concluding an FTA between the EU and the UK would contravene WTO law".

However, in grown-up dealings there is always a "however". Assuming the EU and the UK were able to agree a substantially broad tariff-free FTA, our Sussex academics write, WTO rules would not prevent them from moving further to maintain the bulk of the benefits of the Customs Union and the Single Market in a few key sectors. In the abstract to their 29-page paper, they go on to say:
They could establish customs union-like conditions by coordinating external tariffs in some sectors and agreeing on relaxed Rules of Origin (RoO) administered lightly and Single Market-like access could be approximated through sectoral Mutual Recognition Agreements. Such an approach would enable continued deep integration, whose desirability has been signalled on both sides. It would fall short of current market access levels even in the selected sectors, and, in the case of tariff coordination, re-create some of the limits to an independent trade policy that Brexit aimed to remove. If the trade-off were deemed desirable, however, the approach could be reconciled with WTO rules including the 'Most Favoured Nation' requirement that equal treatment be awarded to all WTO Member States.
Without putting too fine a point on it, therefore, it would be more correct to say that, as a general rule sectoral agreements between developed countries are not permitted. But there are circumstances where parties can pursue such agreements. And even where the precursor might be the agreement of a "substantially broad tariff-free FTA", any tariff reductions required can be phased in over a number of years.

Despite this, in the popular media (even the supposedly "quality" end), Janet & John prevails. Thus we have Jeremy Warner in the Telegraph - who seems to have assumed the role of the paper's licensed Cassandra – writing that, "Post-Brexit trade policies are in danger of becoming an incoherent desperate mess".

He concedes that Mr Bolton "presumably knows his stuff when it comes to national security" but, says Warner, "he plainly has very little idea about trade". Sadly, though, in seeking as explanation as to why his "sector by sector" suggestion "falls at the first hurdle" under WTO rules, our licensed Cassandra relies on Lorand Bartels, lecturer in international trade at Cambridge University. He sternly instructs us that "you cannot normally discriminate between trading partners".

Thus we are enjoined, in relentlessly Janet & John terms:
Offer a special favour to one nation, and you have to offer it to all other WTO members. This so-called "Most Favoured Nation" principle is there to ensure that trade remains as open and free as possible.

There are, however, exceptions, one of which is a bilateral free trade agreement. But here’s the problem. The rules stipulate that such FTAs must cover substantially all trade between the two nations, usually defined as about 90 percent of it. If partial arrangements were allowed, it would open the door to precisely the sort of discrimination the rules are meant to outlaw. On the face of it, then, Mr Bolton's suggestion is a non-starter.
Lorand Bartels, of course, is the man who told us that, "the customs union is essentially what you do in order to get rid of customs border posts", despite the EEC's customs union (CU) having been completed in 1968 yet internal Community borders not being finally abolished until 1992.

Challenged on this, Bartels turned out to be a somewhat sensitive soul, eventually telling me that, "When I said the point of a CU is to get rid of border checks I meant CUs are necessary, not sufficient for this. You misunderstood".

Thus this "leading academic" was incapable of error. When he wrote: "The customs union is essentially what you do in order to get rid of customs border posts", we should have known that he actually meant: in order to get rid of them, it is necessary to have a customs union, but not sufficient.

And then there is the reality of the Single Market which, if it was extended to all products and services, could also allow the elimination of customs border posts without the need for a customs union. Things such as rules of origin could be dealt with administratively, without border inspections.

I suppose his reappearance as Warner's guru proves that you can never keep a bad man down. But what he and most – if not all - the other pundits seem to have missed is an EU press release in April of this year announcing that the European Commission had been authorised to open negotiations with the United States on two agreements.

The first was a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products, while the second was an agreement on conformity assessment. This would remove non-tariff barriers, by making it easier for companies to prove their products meet technical requirements both in the EU and the US "while maintaining a high level of protection in the EU".

As I pointed out in my own piece, reporting this development, this new initiative had followed on from the failure of TTIP, while discussions on the elimination of tariffs was being confined to industrial goods – excluding automobiles - thus avoiding the contentious agricultural chapter which brought the Doha Round to a premature halt.

This is in addition to the joint ventures between the EU and the US on International Regulatory Cooperation (IRC), all pointing to the development of extensive trade cooperation between the parties – highly discriminatory yet short of a Free Trade Agreement which would conform with the WTO's definition.

One might also note that Turkey has agreed a Customs Union (a type of FTA within WTO law) with the EU which excludes both agriculture and services, thus embodying exactly the same exclusions to which Bolton was referring in respect of a UK-US deal.

Whether one can be optimistic or pessimistic about the outcome of post-Brexit trade negotiations between the UK and the US, the problems the parties will encounter do not seem to be entirely (or at all) in the area that the self-appointed pundits would have us believe.

Perhaps the more serious obstacle is the question of whether Congress will ratify any deal agreed by the Trump administration, especially in the context of reservations expressed in the US legislature about the impact of the Irish backstop.

But then, the bigger problem yet is the absence of a trade deal between the EU and the UK, where our exports are currently more than twice the level of US trade, 40 percent of which are services. The US, for all its apparent willingness to do a deal with the UK, may be a dangerous distraction.



Richard North 14/08/2019 link

Brexit: no-deal predictions

02/08/2019  


I wonder if it is a coincidence that an "internal government document" on the potential consequences of a no-deal Brexit has been leaked to Sky News, especially as the "document" is merely a single slide from a presentation made during the May regime – apparently during the last few weeks of her tenure, although we have no evidence of a date.

The slide (pictured above) bears the header, "What this could look like on the ground" and is marked "Official Sensitive- for discussion – not government policy". It apparently sets out a worst-case scenario, with summaries covering the first day, the first fortnight and the first month and was, according to Sky News, shown to some cabinet members but not the whole cabinet.

What strikes one of the first day scenario, though, is the superficiality of the analysis. Its assertion that "trade and passenger flows from the UK to EU slows" is undoubtedly correct, although it is unlikely that this will be because of "additional process at border" – which the slide suggests.

As we've discussed before, the 31 October is a Thursday, which means that the first day of Brexit will be a Friday – then, of course, followed by the weekend. The best guess here is that most businesses will hold off sending consignments to EU destinations for the first day, and even the following week, until they get some feel for the situation.

Thus, we expect to see a drastic fall-off in commercial traffic, driven entirely by business sentiment. The residual volume will probably present little challenge to the customs and other systems in EU ports, so it is most likely that delays will be minimal.

Another oddity in the slide is an assertion that "UK vessels could no longer have access to EU waters and vice versa", with obvious consequences for the flow of trade, and particularly the operation of ferries on the cross-channel routes.

That this is considered a potential problem is actually rather strange, as shipping access to maritime states is not directly an EU competence, with rights of "innocent passage" (which includes access to ports) guaranteed by the United Nations Convention on the Law of the Sea (UNCLOS).

Maritime states are permitted to impose certain conditions covering the access of shipping to their ports. This applies very much to the ports of EU Member States, where EU law sets requirements for pollution standards and safety inspections. However, these are dealt with in a Notice to Stakeholders, with the publication of a regulation covering the continuation of ship inspections.

Nowhere is it suggested by the European Commission that mutual access of shipping to ports, as between the UK and EU Member States, might be a problem, while both the Commission and Member States are working on the assumption that ship movements will continue.

This, therefore, raises some questions as to the authority of the Sky News "scoop". If this represents the best analysis the government has to offer, then perhaps we need to be worried about the lack of grip.

Nonetheless, the day-one scenario does go on to state that UK nationals in the EU "may lose access to services and resident rights", which could possibly be true. A number of Member States have drafted laws granting UK citizens in their territories rights to remain, but most of these depend on UK reciprocity, which has yet to materialise.

And on the matter of services, those UK citizens who provide services in EU Member States may find that the cessation of mutual recognition of qualifications prevents them from working, effectively rendering them unemployed.

This is not raised by the slide, but it does deal with Northern Ireland, stating that cross-border agricultural trade would "virtually stop" with other trade slowing, while the legal basis for the single electricity market "falls away".

Here, the first of these issues is entirely speculation. In truth, no one knows what might happen in Ireland on day-one of a no-deal Brexit. It is quite possible that, for a short period, Brexit proves a non-event while the relevant authorities work out what to do. And then, the implementation of restrictions may be a slow burn, with a long period of light-touch enforcement.

It is probably fair to say, however, that trade generally will slow down. In fact, this is already happening as Irish exporters look to buyers in the EU to replace UK trade.

As to the electricity market, cross-border transmission will doubtless continue. Even without a legal base, the relevant Notice to Stakeholders points out that Commission Regulation (EU) No 838/2010 provides that a transmission system use fee is to be paid "on all scheduled imports and exports of electricity from all third countries which have not adopted an agreement whereby it is applying Union law". This will apply to the UK, providing a mechanism – albeit less flexible – for the continued trade in electricity.

Then the slide confronts security issues, noting that UK law enforcement will be "working via non-EU security channels". Once again, this is already happening as the UK is being progressively excluded from Europol and is increasingly reliant on Interpol. The erosion of capabilities, though, is likely to be a slow burn and will probably not materialise as a major issue on day one.

Finally, for day one, the slide notes that there will be "volatility of currency and financial markets". Given the current slide in the value of the pound, this is almost certainly going to be the case, and may prove to be the dominant feature of a no-deal Brexit.

This brings us to the first fortnight, where the slide asserts that we could potentially see consumer panic and food shortages, "even in areas which are not directly affected at the border".

Given that panic buying could at any time strip stocks from the shelves, giving the impression of shortage even when there are adequate supplies, this dynamic could be a feature of Brexit at any time, even in the lead-in to 31 October. This is something over which the government (and retailers) have no control and much will depend on public sentiment.

In addition to this, we also get told that there could be possible friction at sea between UK/EU fishing vessels. This, though, I doubt, as vessels flagged with EU Member States will not be permitted by EU law to fish in UK waters unless there has been an agreement on fisheries management plans between the EU and the UK. A re-run of the "Cod Wars", therefore, is – in my view – low down in the order of risks.

More likely is the slide's assertion that unlawful data transfers may lead to enforcement action by EU regulators, leading to disruption of [data] flows. In fact, this is one of the understated risks of a no-deal Brexit, the impact of which could be colossal – bearing in mind that it usually takes much longer than a fortnight for EU regulators to act.

And then there is "continued volatility of currency and financial markets", together with the "potential for disruption of debt markets". These possibilities are undeniable.

Coming then to a month post-Brexit, the slide suggests that small businesses in Northern Ireland may face distress, and there will be potential law and order challenges. UK nationals may be unable to meet new EU Member State residency requirements and may start returning to the UK, or asking the government for help. And, on the domestic front, the heightened policing resource may prove unsustainable and operational gaps will "continue to emerge".

All of these are realistic possibilities, as will be sterling settling at a lower level, with near-term business disruption, leading to calls for support through operation Kingfisher – the government's "secret" Brexit bailout fund.

If anything, though, the slide shows just how difficult it is to predict the effects of a no-deal Brexit, or to rank the effects in terms of seriousness. One could also suspect that the authors had not read the European Commission's Notices to Stakeholders.

However, with the situation changing as Johnson is prepared to throw money at mitigating the effects of a no-deal, the most powerful take-away from this exercise is how poorly informed ministers were of the consequences. And this is likely to be the current state. The higher up the tree they go, the less they seem to know.



Richard North 02/08/2019 link

Brexit: preparation is a cruel hoax

30/07/2019  


If one takes a cold, hard look at the current situation, we have to conclude that we're in the Tipperary scenario – to get there, we wouldn't start from here.

Probably, the only way we could have secured an orderly Brexit was for MPs to have ratified Mrs May's Withdrawal Agreement. Once parliament bottled it for the third time, and the Tories decided to go for a new leader, it was effectively game over. A no-deal Brexit was the inevitable destination.

Arguably, though, there was still one potential window of opportunity. A new prime minister could have approached the European Council to ask for another extension. He could then have used the additional time to broker cosmetic amendments to the political declaration, and then perhaps to call a snap election, creating a mandate for the "new" position, which parliament could not ignore.

However risky that might have been, it would have held the promise of a solution to the Brexit impasse. But, instead, by committing to Brexit on 31 October, the current occupier of the post of prime minister has closed down his options.

Not only do the terms of the current extension specifically exclude using the time to renegotiate the Withdrawal Agreement, the European Union – even with the best will in the world – could not handle the mechanics of new negotiations and conclude a revised deal by 31 October. This is simply not possible.

For Johnson thus to declare that he is willing to negotiate with the EU, as long as it removes the backstop, rather misses the point. For the EU to conduct negotiations with the UK, it must follow the Article 238 procedure set out in the Treaties, the steps of which simply could not be concluded in the short time available.

It would help, therefore, if Johnson – perhaps for the first time in his life – told the truth about something and admitted that his "no ifs, no buts" policy leads inevitably to a no-deal Brexit.

Short of a change of heart where he applies for a last-minute extension, there is no other possible outcome. His precondition that the EU should remove the backstop is a red herring. And his assertion that the odds of a no-deal were a million to one, is of no value: He posits that this requires "sufficient goodwill and common sense on the part of our partners", when what he actually means is that the EU should concede something it has already said it will not.

As well as a first-time venture into the realms of honesty, it might also help if a man to whom the words "f**k business" came so easily, applied them to the source of all our troubles and simply said, "f**k parliament". No-deal is the default option under Article 50 and there is absolutely nothing parliament can do to stop this administration sitting on its hands and letting the clock run down.

With the position clearly stated, acknowledging only the inevitable, the media might also stop its tedious speculation and focus on the one event over which there is any certainty – that we are leaving the EU on 31 October without a deal. Then we can concentrate on the consequences of this outcome, giving the media hackery time to find out what exactly is involved – assuming that any of them are capable of learning.

That would also save us from being patronised by the likes of Dominic Raab (pictured), in his unlikely guise as foreign secretary. Currently, he is taking us for fools by asserting that the UK would be better able to negotiate with the EU after no-deal Brexit, and secure a "good deal". He also asserts that a "stubborn" Brussels would be to blame if the UK crashed out on 31 October.

Taking the last point first, we can see where Raab is going with this, and it very much seems to be part of the Johnson strategy to blame the EU for not doing something it cannot do. But then, in this propaganda game, one doesn't expect the Johnson administration to dally with the truth – given that he even knew what it was.

As to Raab's assertion that the UK will be in a better position with the European Union if it crashes out at the end of October, the man actually seems to believe that a no-deal scenario could provide more leverage when arguing for a free trade agreement and in resolving long-standing issues such as the Irish backstop.

How precisely this works, Raab doesn't seem to specify in any detail. All he can manage is the argument that we would be an independent third country and thus "less subject to effectively the demands of the EU as we are now".

Unsurprisingly, it didn't take EU officials long to intervene and reject the foreign secretary's thesis.

Apart from anything else, one can expect in the immediate aftermath of a no-deal exit, a certain amount of diplomatic frigidity – possibly extending to a full-blown war of words as the two side get stuck into an acrimonious blame game. This could hardly be conducive to calm talks on the future relationship between the UK and the EU.

In fact, says one senior diplomat, a no-deal departure "would mean the complete breakdown of political relations". He doesn't think there would be much trust on the EU side with the Tories, or with Johnson. "Eventually", he says, "we would get around it because we are pragmatic, but this would be really, really bad, because of all the rhetoric around blaming".

Another diplomat, who actually spoke before Raab's intervention, argued that all contact would cease after a no-deal Brexit. "Our phones will not be connected at that time … I don't think they will be connected to someone who has reneged on their obligations", he said.

But what could turn out to be the real "killer" is that the EU would undoubtedly demand preconditions to any talks. If the matter hadn't already been settled, citizens' rights would be high on the agenda. Then the EU would require commitments on the financial settlement and an agreement on the Irish backstop.

In other words, the UK would be no better off in terms of securing a settlement than it is now, with the added proviso that, if the UK was seeking some form of trading agreement, it could well be looking to four or five years before talks were concluded. There would be little incentive for the EU to expedite matters.

What is missing, therefore – as always – is any sense of reality. In the years between leaving with a no-deal and concluding a free trade agreement, the UK would be in a third country no-man's land, where our exporters would have to confront both MFN tariffs and the full range of non-tariff barriers. A substantial reduction in the flow of exports to EU Member States would be an inevitable consequence.

Still, though, the government and even the CBI is maintaining the fiction that we can somehow prepare for our new status as a third country.

For sure, businesses can address certain paperwork issues, such as the preparation of customs declarations, but we cannot prepare for such issues as sanitary and phytosanitary checks at EU Member State borders. These will be conducted after Brexit, but will be entirely outside our control – our exporters will simply have to conform with whatever regime is imposed upon them.

Nor can firms prepare for the fact that the service elements of trade currently conducted will be very difficult to pursue, made especially difficult where mutual recognition of qualifications lapse. It will be very hard to move personnel freely about the continent in order to deliver services.

Perhaps of greatest significance, no business will be able to prepare for the major change in status that comes with us leaving the Single Market. Whereas a UK enterprise can at the moment ship goods to EU Member States without formalities, after Brexit they will find that their goods come under customs supervision when they enter the EU, and can only be released for circulation by an importer, who must be an entity established (and resident) in the European Union.

This change has scarcely, if at all, been discussed in the UK but the change to requiring goods to be placed in charge of an EU-resident importer represents a major barrier to trade, and an active disincentive to EU buyers. For instance, while currently a UK exporter to the EU retains legal responsibility for standards conformity, post-Brexit the importer becomes liable, with significant cost and legal implications.

To that extent, much of the preparation for a no-deal Brexit rests not with UK businesses but with either authorities or businesses in the EU. Bearing in mind we have no control over these processes, we are increasingly in the hands of others, upon whose goodwill we will have to rely. So much for taking back control.

With the Commission no longer monitoring – nor seeking to prevent – barriers to trade between the UK and EU Member States, we can also expect individual states (and businesses) to introduce hurdles which will give them a competitive advantage and make it more difficult for UK businesses to trade.

This will be especially the case for the 20 percent or so of products where there are no EU harmonised standards, and mutual recognition of standards falls away. UK enterprises will suddenly find themselves having to conform with a raft of local standards that many of them didn't even know existed. And without that knowledge, they are hardly in a position to prepare.

In short, a no-deal Brexit is a leap in the dark and there are very severe limits on the amount of preparation that can be done. For the main part, we will not find out where the problems lie until after we have left, by which time it will be too late. Talk of "turbocharging" Brexit plans, therefore, is little more than a cruel hoax.



Richard North 30/07/2019 link

Brexit: under the radar

13/07/2019  


In 1998, the EU and the US signed a broad Mutual Recognition Agreement, which included a Pharmaceutical Annex providing for anticipated and limited reliance on each other's Good Manufacturing Practices (GMP) inspections.

The year 2017 marked the entry into operation of the agreement, which entailed the EU and the US recognising inspections of manufacturing sites for human medicines conducted in their respective territories.

This agreement strengthened the reliance of the two blocs on each other's inspection expertise and resources. Initially it applied between the US Food and Drug Administration (FDA) and those EU Member States that the FDA had assessed.

This had been gradually extended to all EU countries and now the regulatory authorities in all 28 EU Member States have been recognised by the FDA. Meanwhile, the EU made the same determination about the FDA in June 2017.

This is according to a European Commission press release which now celebrates the unique milestone, with the FDA having completed the very last of the capability assessments of the 28 EU competent authorities, bringing Slovakia, the last outstanding EU Member State, into the fold.

This, says the press release, brings to fruition five years of close transatlantic cooperation, in a process that started nearly 20 years ago, indicative of the sort of timescale on which these agreements operate. Since May 2014, we are told, teams from the European Commission, EU national competent authorities, the European Medicines Agency (EMA) and the FDA have been auditing and assessing the respective supervisory systems.

As a result, the batch testing waiver will also start to apply. This means that the statutory "qualified persons" in EU pharmaceutical companies will be relieved of their tasks of carrying out quality control on products imported from the US, when carried out already in the United States.

This, of course, lies outside the framework of WTO Agreements and is one of dozens of detailed sectoral agreements which help facilitate trade between the US and the EU Member States – without which transatlantic trade would be a fraction of its current level.

The importance of the Agreement cannot be over-estimated. Together, Europe and the United States account for more than 80 percent of global sales of new medicines. The full implementation frees up resources in industry and in public authorities on both sides of the Atlantic, and substantially reduces the costs and complications of trading in pharmaceutical products.

Fortunately for the UK, it is included in the current deal and, on 14 February 2019, the UK and the United States signed a continuity deal which would keep the agreement in force, in respect of the UK, after it had left the EU. Ironically, the deal was signed by now ex-ambassador Sir Kim Darroch.

As reported at the time, this was further evidence that the EU Member States and the US do not operate under WTO rules, with the agreement facilitating around £7.7 billion of UK exports to the US annually - nearly 18 percent of total UK goods exports to the US.

This is despite quarter-wits such as James Delingpole and many others averring that "the vast majority of the UK's trade with countries outside the EU is done on WTO terms", compounding his own stupidity by telling us that "it would be illegal for the EU to impose punitive tariff barriers on the UK, much as it might like to" – "punitive" in this case meaning MFN tariffs.

However, it doesn't stop there. The pharmaceutical industry is a strategic sector in which EU-US regulatory cooperation is much more advanced than in most other sectors. And it is to be extended further. The MRA implementation work is now to continue with a view to expanding the operational scope to veterinary medicines, human vaccines and plasma-derived medicinal products.

Obviously, there are procedural and resource limitations which will dictate the speed with which the extensions will take effect. And while, in the UK-US Agreement there are update provisions, there is no specific (or any) guarantee that the UK will be on top of the list when it comes to arranging the pre-cursor assessments.

But even if the UK is eventually to benefit from enhanced regulatory cooperation in the pharmaceutical field, the EU has already stolen a march on the UK with a joint statement in June 2018 between Commission President Juncker and US President Donald Trump on entering a new phase of trade relations.

Some see this as a sort of slow-motion TTIP, where the parties have already started negotiations, against a pledge to work towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.

Even with its continuity agreement with the US, therefore, the UK is going to be playing catch-up with the EU, which is already streets ahead in its negotiation strategy. And it cannot help that the UK will be starting afresh with a new ambassador leading our efforts by what is said to be a demoralised workforce, with overstretched departments working "at cross purposes".

It says something though that, even as of yesterday with the vacuous Johnson still prattling about tariffs, the European Commission itself says that, given the low average tariffs (under three percent), the key to unlocking the potential for US trade "lies in the tackling of non-tariff barriers (NTBs)".

Here, of course, the EU and the US have developed and continue to develop opportunities for regulatory cooperation – the key to reducing NTBs. The parties are engaged in a continuous dialogue through the Transatlantic Economic Council (TEC), which was set up in 2007 as part of a framework agreement – a formal trade cooperation treaty.

Nothing like this will exist between the UK and the US after Brexit, so before the detailed international work of regulatory cooperation can begin, the UK will have to negotiate something similar, setting up the appropriate bodies with the necessary staff and resources. This cannot happen overnight, and it then takes time to develop smooth working relations.

Already, the EU and the US, under the aegis of the TEC, have set up three subordinate forums: the Transatlantic Legislators' Dialogue; the Transatlantic Consumer Dialogue; and the Transatlantic Business Dialogue. They also facilitate formal consultations with civil society on both sides of the Atlantic.

Pundits tend to underestimate the importance (and value) of such arrangements, yet institutions such as the TEC are the main mechanisms by which continued, if unspectacular progress is assured.

And these days, with the EU-Mercosur agreement already attracting protests, it seems as if the days of the "big ticket" free trade deals could be drawing to a close.

Rather, we expect to see progress though technical, under-the-radar deals such as the now fully implemented pharmaceutical MRA. In a process known as unbundling, the parties negotiate separate, sectoral deals which, when finally linked, have the economic effects of a full-blown trade deal, without the histrionics and the build-up of opposition.

Through the three years of the Brexit debate, however, such aspects have scarcely been discussed, with the trade wonks largely obsessing about conventional deals – oblivious to the fact that the world is moving on.

In this context, the EU – in a thoroughly unspectacular way – is streets ahead of the UK. If anything the gap is set to widen after Brexit, with inexperienced British officials – and clueless consultants and advisers – stuck way down on the learning curve, barely understanding what is going on.

And, with the Oaf as the head of the UK government, things can only get worse.



Richard North 13/07/2019 link

Brexit: lacking in credibility

06/07/2019  


Events in Northern Ireland are taking shape, and not for the good. There is intense energy being expended to railroad the province's business community into accepting the findings of Shanker Singham's Interim Report from his Alternative Arrangements Commission (AAC), with Tory MP Greg Hands leading a charm offensive aimed at convincing businesses that the "alternative arrangements" are a credible substitute for the backstop, and can form the basis of a new plan.

What has clearly not registered on the mainland – and with the legacy media – is the extent to which both Tory leadership candidates are relying on this "snake oil" solution as the magic bullet to solve the Irish border issue, the strategy being to gain the acceptance of a baffled and harassed business community. It is being told that "alternative arrangements" are the best thing since the invention of sliced bread, even though it has expressed continued reservations over the viability of this scheme.

Latest into battle is the British Irish Chamber of Commerce which has published its own views following its attendance at a briefing by Prosperity UK, when the basics of the "alternative arrangements" were reviewed.

Confronted with a dense, 200-page report – the aim of which is to confuse and obscure – the Chamber was obviously at a disadvantage in trying to analyse something which has been given a largely easy ride by MPs, and which the legacy media have failed to dent. The "professionals" have sold the pass, and now it is being left for local business leaders to take up the slack, on an issue which should be at the centre of a huge national debate.

Nevertheless, the Chamber has raised a few technical points, starting with the proposal for a UK-Ireland SPS Zone, as it was acknowledged that this creates the biggest problem for any solution to be viable.

Unsurprisingly, Chamber members were concerned that the AAC was "over-simplifying the problem" and that there was "an over-reliance on goodwill and derogations from the EU". And right up-front this simply shows that the Chamber, under the combined weight of the BS, and the pressure to treat the AAC as if it was a responsible player, is almost completely out of its depth.

The Chamber is perfectly right in pointing out that problems are being over-simplified, but the assertion that is "an over-reliance on goodwill and derogations from the EU" is misplaced. Goodwill in the implementation of SPS rules is simply not an issue, while there are simply no "derogations" on which the AAC can rely.

As we have seen, the claimed exemptions on siting of remote Border Control Posts cannot apply to the Irish border, while the supposed permission to create mobile inspection units is pure fabrication.

One thing that did emerge, though, which has been given nothing like the attention it deserves – the issue of split loads of agri-food goods requiring different certificates and checks for transport. It was mentioned that one company trading across the border would need to have 35 vets on site every night to certify products under the proposed scenario.

The next concern raised on the impact of a UK-Ireland zone, where there was supposed to be "deemed equivalence" with the EU. This is one of Singham's obsessions – his stock "get out of jail free" card which is his answer to all and every regulatory issue. Whenever divergence is raised, his solution is that the EU should treat our different regulations as equivalent to theirs.

Chamber members rightly query whether such an equivalence would be granted. In fact, they say, any break between Irish regulations and those of the EU would likely result in increased checks and controls for Irish agricultural goods entering the EU market.

If there are any doubts about this, all Irish officials need to do is look at Canadian experience in the wake of CETA. As far as the EU is concerned, "equivalent" effectively means the same. This is no cheap access ticket into the EU's Single Market.

In fact, the whole issue of equivalence is a dangerous distraction. Endless times, M. Barnier has made it clear that we cannot enjoy the same rights and benefits of the Single Market once we are outside it. Any concession which allowed the UK equivalence would put it in a better position than members, affording it the rights of access without the obligations.

Other concerns raised were the potential for increased smuggling and the costs of implementation, with the Chamber worried that the proposed solutions would require significant investment from businesses in training staff, implementing new IT systems, securing customs guarantees or contracting external customs agents.

However, Singham's Alternative Arrangements had not been costed and it has been reported they could cost £13 billion annually. It should be noted, said the Chamber, that under the current backstop, businesses on the island of Ireland would see no increase in cost for cross-border trade as there would be no additional customs or regulatory requirements in this scenario.

This then brings us to the "tiered trusted trader programme", with concerns about how it would work in practice. Yet, to my mind, too much ground has been conceded on a scheme which is fundamentally flawed and provides no solution to the Irish border question.

In May last year, for instance, the Irish Independent had Carol Lynch, a partner in BDO Customs and International Trade, look at the difficulties in acquiring "trusted trader" status.

It is, she said, "a very comprehensive and time-consuming process", taking "six months to prepare an application and put in place the required procedures". Following the application, she said, "it can take another six months to actually obtain authorisation. Due to this you would need to start this process a year before you require authorisation".

There is the question of getting the EU to recognise UK schemes, normally done on the basis of mutual recognition. For the scheme to work on a cross-border basis into the Republic, the EU must accept our systems, all of which depend on the exchange of electronic data. Yet, for that to happen, the UK must gain the status of "data adequacy", under the EU's General Data Protection Regulation, something which is by no means automatic and is far from being assured.

This is something of an "elephant in the room", as we do not yet have a data adequacy agreement with the EU and there are no indications that one will be forthcoming. Yet, without free flow of information, a trusted trader scheme cannot work.

On a broader front, the Chamber has also noted the AAC's "over-reliance on MRAs (Mutual Recognition Agreement) with the EU based on deemed equivalence rather than alignment". The point has been raised that while the EU has included such arrangements in deals with Japan and Canada, it is less likely to do so with a significant economy in close geographic proximity such as the UK due to the unfair competitive advantage that may result for UK businesses.

It was also stated that any such MRAs are likely to have stringent "level playing field" measures (similar to those included in the backstop) on areas such as State Aid, Competition, Taxation, Environment, Labour and Social Protection. It was accepted that this is likely to be one of the more significant challenges for the UK in the negotiations of such a package.

What is missing from the AAC report, though – and from consideration by the Chamber – is a proper distinction between MRAs on conformity assessment and those on regulatory standards. While MRAs on conformity assessment are necessary and acceptable to the EU, mutual recognition of standards applies exclusively to Single Market members. It cannot apply to the Irish border.

As I have recently pointed out, this will leave as much as twenty percent of cross-border trade without the cover of agreed standards, requiring UK exports to conform with local rules at the point of entry into the market.

Many food and agriculture products rely currently on the mutual recognition principle. Post-Brexit we are faced with the prospect of many UK products traded across the Irish border having to comply with Irish regulatory standards. And not only does this raise regulatory complications, it has significant implications for the scale of cross-border checks. Where no EU harmonising standards exist for a product, Irish officials will have to check UK goods entering Ireland for conformity with relevant Irish law.

Yet, even without this, the British Irish Chamber's view of Singham's proposals is that, "no matter how genuine the initiative" (not), "they lack credibility in the reality of how all-island trade actually works". There is still a way to go, but this is a start. I shall be back.



Richard North 06/07/2019 link

Brexit: as good as it gets

25/06/2019  


Asked, in effect, during an interview by the BBC's Laura Kuenssberg why the EU would renegotiate the Withdrawal Agreement, despite having unequivocally declared it would not, Alexander Boris de Pfeffel Johnson, had this to say:
First of all, don't forget, that as I say they got the Brexit MEPs they don't particularly want. They want us out, they've got the incentive of the money. They've also got to understand, Laura, is what has changed and what will be so different is that the intellectual capital that had been invested in the whole backstop had really come from the UK side. We were committed to it. We actually helped to invent it. We were the authors of our own incarceration. Take that away. Change the approach of the UK negotiators and you have a very different outcome.
Taken on its own, this is gibberish. It lacks coherence and meaning. In order to understand what the man is saying one has to delve into other parts of the interview, and reconstruct his statements, assembling the bits in an attempt to work out what the man actually means. But, before we go there, Kuenssberg asks what happens if that isn't enough. Johnson replies:
… the other tool of negotiation that you should use, not only the incentives of getting this thing done, moving it over the line, getting the money across and all the rest, but you have the extra incentive of course that the UK will be ready to come out as you know on WTO terms.
This is the best the man can offer, in a soft-focus interview where he is in control and has every opportunity to state his case on Brexit. And still he can't make himself clear. But if – as we are forced to do – we dip into the rest of the interview, we can perhaps distil some of the clarity that we need, that Johnson is unable to deliver.

At least the first point is relatively clear. The European Parliament elections have sent them 29 "Brexit MEPs" that they don't [particularly] want. This, supposedly, provides an incentive for the EU to renegotiate the Withdrawal Agreement – presumably because it gets the UK "out", notwithstanding that a no-deal Brexit on 31 October achieves the same effect, without the EU having to do anything.

On that basis, I think we can safely dismiss this as a credible argument for a renegotiation. If we wanted to be kind, we could assume that this is just a make-weight, on which Johnson places no great reliance. But this brings us to the second point.

Re-ordering this somewhat, it would seem that the key to Johnson's argument is that the UK will be changing its approach to the backstop. For what he has in mind, though, we have to go elsewhere in the interview.

To recap separately, by way of background, the current joint EU/UK approach to avoiding a hard border between Northern Ireland and the Irish Republic is to keep both in a common customs area – with Northern Ireland obeying the rules of the customs union – while also maintaining cross-border regulatory conformity.

Johnson, however, wants to take a different approach. And for details of that, we must rely on what he calls "a very good report just today by Shanker Singham and many others looking at the modalities of how to do this".

This is something, Johnson tells Kuenssberg, "that had been worked on extensively for the last three years". There are, he says, "plenty of checks that you can do away from the border if you had to do them without any kind of hard infrastructure at the Northern Ireland frontier".

If we then look at this report (which Kuenssberg probably has not read), we see that Singham et al set out their stall in such a way as to preserve the right to regulatory divergence in the future, relying either on "deemed equivalence" or mutual recognition to allow "as near as possible frictionless trade between the UK (including NI) and the rest of the EU including IE".

This is absolutely classic Singham moonshine, but clothed in dense verbiage which conceals what would otherwise be a very obvious lack of understanding of how the EU Single Market works.

Recognising that, despite all their best efforts, some border checks would be necessary, the Singham "team" postulate that "mobile inspection units with associated technology" could be provided "to manage and perform inspections of goods and customs documentation at locations away from the border". And this would be supported by "intelligence-led market surveillance through the use of advanced analytics".

To all intents and purposes, this is MaxFac in taffeta, a scheme which – even if the EU could be prevailed upon to accept – could not, according to a leaked Home Office memo, be in place before 2030.

Contrary to this received wisdom, however, Singham et al believe what they are now calling "Alternative Arrangements" (in capitals) "should be up and running within three years". Relying on this absurd assertion, Johnson burbles:
Let me tell you, there are abundant, abundant technical fixes that can be introduced to make sure that you don't have to have checks at the border. That's the crucial thing. And everybody accepts that there are ways you can check for the rules of origin, there are ways you can check for compliance with EU goods and standards, of our goods standards.
It would thus be fair for us to deduce that the central point of Johnson's case for a renegotiation is the Singham et al report, which he expects the EU to entertain and accept, thereby dropping the backstop from the Withdrawal Agreement.

Resiling from the commitment to the financial settlement, he thinks "creative ambiguity about when and how that gets paid over" will bring the EU to the table whence, on the premise that the Singham et al report is a credible option, a new implementation (aka transition) period will be granted by the EU so that all the outstanding issues can be "tackled on the other side of 31 October", after we have left the EU.

And all this becomes possible because Mr Johnson is prepared to take the UK out of the EU "on WTO terms", this being the decisive point which will have the "colleagues" abandoning their commitment to the Withdrawal Agreement, and reopening negotiations. And these renegotiations, affording us the luxury of a backstop-free transition period, will be concluded (and ratified) by 31 October.

Perhaps the single thing that is most damning about this approach is that the EU has already made specific concessions on "alternative arrangements", as part of the Strasbourg Agreement of 11 March 2019, from which this joint statement emerged. In this, it was agreed that the UK and the EU would work to agree by 31 December 2020 that "alternative arrangements" could render the backstop unnecessary.

In that event, it was further agreed that a "specific negotiating track" would be established as part of the overall negotiations on the UK/EU future relationship, to "lead the analysis and development of these alternative arrangements", with "a view to assessing their potential to replace, in whole or in part, the backstop solution".

This is about as far as the EU is prepared to go, and for that to be implemented, the UK must first ratify the Withdrawal Agreement. It is not within the realm of practical politics that the EU can now be expected to prejudge the outcome of agreed joint deliberations and accept unreservedly the views of the Singham "team", on the basis of assurances by a new prime minister, thereby abandoning the backstop.

But that, in a nutshell – when one cuts through the burble about "positive energy" - is what Mr Johnson is proposing. And in best blackmailing style, it is backed up by a threat of withholding the financial settlement , plus a commitment to leaving under WTO rules if his demand is not met.

It does not take a genius, political or otherwise, to realise that this will not fly. So obvious is this that even the Financial Times understands it, citing a tweet from David Lidington at the weekend, stating: "Erm, the Implementation Period is actually part of the Withdrawal Agreement. It's in Part 4 of the Agreement, articles 126 to 132. No Deal exit = no Withdrawal Agreement = no Implementation Period".

Against his pledge to "come out of the EU at Halloween on 31 October", that can only mean one thing: under a Johnson premiership, we must face up to a no-deal Brexit.

Whether, of course, Johnson honours his pledge, when faced with the realities of an EU which stands by its oft-stated policy, is anyone's guess. This is a man on whose word no one can rely, pointed out by Max Hastings who cites an observation made in 1750 by a contemporary savant, Bishop Berkeley: "It is impossible that a man who is false to his friends and neighbours should be true to the public".

So, despite another fruit salad of verbiage from Johnson, we are no further forward. A better-prepared and more skilled interviewer might have brought this out, but then it is the BBC we're dealing with.

Even then, to get the full flavour of the interview, we had to rely on the transcript. Those who watched only the edited broadcast would have even greater difficulty following the thrust of the argument. But, in what passes for political debate, this is as good as it gets.



Richard North 25/06/2019 link

Brexit: ignoring the constraints

24/06/2019  


One can completely understand the legacy media homing in on the personality issues attendant on the Tory leadership contest. These remain in the comfort zones of the hackerati, and relieve them from the responsibility of addressing policy issues – which are quite clearly beyond their capability to deal with.

As good an example of this as any is the Liam Fox interview on the Marr show, where Fox is talking complete gibberish about Jeremy Hunt's plans for Brexit.

All one has to do is recognise a few key, unalterable elements. The first is that EU officials have made it abundantly clear, in terms that are beyond equivocation, that there will be no renegotiation of the Withdrawal Agreement.

The second, inexorably linked with the first, is that in the absence of either the parliamentary ratification of the Withdrawal Agreement, an agreed extension to the Article 50 period or the unilateral revocation of the Article 50 notification by the UK government, we drop out of the EU on 31 October without a deal.

Thirdly, the "colleagues" have also made it clear that they are not prepared to consider an Article 50 time extension for the purpose of reopening negotiations on the Withdrawal Agreement. This necessarily follows from their determination not to entertain renegotiation in the first place.

Once one factors in these elements, and treats them as unalterable, the consequence of planning to leave by 31 October – as set out by both leadership candidates – becomes abundantly clear.

Since neither will be seeking to re-present the Withdrawal Agreement to parliament for ratification, neither have indicated an intention to revoke the Article 50 notification or intend to seek a time extension, and since neither will be able to renegotiate the Withdrawal Agreement, it follows as night follows day that we will drop out of the EU on 31 October without a deal – regardless of who is chosen to become the new prime minister.

Yet, despite this, Jeremy Hunt (according to Dr Fox) seems convinced that the "colleagues" will entertain a renegotiation, while Alexander Boris de Pfeffel Johnson is dwelling in the outer reaches of Cloud Nine. From his own lips, he talks of disaggregating "the elements of the otherwise defunct Withdrawal Agreement".

Johnson would thus cherry-pick parts of the Withdrawal Agreement, reserving the payment of the £39 billion and then negotiating a Free Trade Agreement "in the implementation period", after we’ve come out on 31 October. Meanwhile, he is relying on GATT Article XXIV to deliver tariff-free trade with the EU.

This situation reminds me of a story my then best friend told me, many years ago just after he had graduated from university and got his first job with a firm which designed and installed air conditioning systems for office blocks.

He had encountered a situation familiar to anyone who has had the unenviable task of planning utilities for a building, where the architects – as they so often do – leave insufficient space for the essential functions.

These were the days when "blueprints" really were blueprints, and my friend found himself in a desperate meeting where, against an impossible deadline, all the designers had been called together to resolve a problem of where to put essential plant in a space that simply wasn't big enough to contain it.

Gazing at the blueprint, my friend told me he had a sudden moment of inspiration. He stabbed his finger on the plan at what appeared to be an unused area, which seemed more than sufficient to accommodate that plant. And, for a moment, he was the hero of the hour, until a kindly and more seasoned colleague pointed out that he had located the plant outside the building, suspended twenty floors above the adjoining street, resting on nothing but thin air.

Apart from that, my friend said later, his was a perfectly reasonable idea which actually solved the problem – an observation that has stayed with me for my entire working life. It doesn't matter how complex any problem might be, if you ignore the constraints, anything is possible. The insoluble ceases to be, and the difficulties simply melt away.

This, it seems, is what our leadership candidates are doing. Hunt, on the one hand, ignores the constraint concerning the renegotiation and assumes that, despite everything that has been said on the matter, he can waft over to Brussels and renegotiate the deal. And if you ignore the fact that the deal is not open to renegotiation, this is a perfectly reasonable stance.

As for Alexander Boris de Pfeffel Johnson, his determination to ignore the constraints is somewhat more extravagant. For a start, he assumes that elements of the Withdrawal Agreement can be disaggregated. They can't. The Agreement comes as a single, unalterable package – a question of all or nothing.

But Mr Johnson, apart from anything else, wants to take out the financial settlement – which immediately voids the Agreement. And without the Agreement, there is no "implementation period" giving the continuity that the UK needs while our future relationship with the EU is negotiated.

As for Article XXIV, if we were to enjoy the "implementation period", we wouldn't need it, which rather points to a discontinuity in the thought processes of Mr Johnson – something that does not really surprise.

In his discussion with Andrew Marr, however, Dr Fox points out that, if we leave the European Union without a deal, the EU will apply tariffs to the UK. "You can only have exemptions as described", he explains, "if you already have a trade agreement to go to. And clearly if we leave without a deal it's self-evident we don't have that agreement. So Article 24 doesn't hold in that circumstance".

Back in Muppet land, though, Iain Duncan Smith and David Campbell Bannerman have already conceded that point about Article XXIV, stating that:
… if the UK and EU go to the WTO jointly and say that we have agreed to move to a full and comprehensive Free Trade Agreement (what we term "SuperCanada" – that is better than the EU-Canada FTA) – that keeps tariffs at zero with no real change to other members, the WTO is happy to allow us a period of time to keep tariffs and quotas at preferential rates.
We can, this pair says, "keep tariffs at zero for as long as the two partners need to negotiate the full works: that comprehensive FTA. Legally this could be up to ten years, but most are two to three years to negotiate".

Yet, back in the real world, there could just be a few slight glitches. In this scenario, the UK has just walked away from the Withdrawal Agreement (and the political declaration that goes with it), thus refusing to pay the financial settlement.

This is at a time when the newly appointed Commission has just started work, with its own pressing priorities. Yet it is supposed that it will drop everything to draw up a proposal under Article 218 for trade negotiations with the UK, and present this to the European Council. The Council will then post-haste issue a mandate for the Commission then to conduct urgent talks with the UK to conclude in principle a free trade agreement.

With this concluded in record time, the Commission must then draw up an interim agreement, with a plan and detailed schedule, which must then be approved by the European Council and the European Parliament, before in turn being approved by the contracting parties of the EU, all so that the UK can trade tariff-free with the EU.

And since the original trade negotiations can't be conducted until the UK has left the EU, somehow all this is supposed to happen after 31 October, yet allow for tariff-free trade without a break.

Even should the EU be inclined to open up negotiations – and that cannot be taken for granted – it would be many months, if not years, before the EU was ready to put an interim plan on the table. As always, the Muppets are living in a parallel universe.

But then, if possible, it gets worse, with the pair asserting that services and standards, "will be a part of the future trade deal but will be along the lines of 'Mutual Recognition' of standards or 'enhanced equivalence', not on a harmonisation or rule-taking basis".

Yet mutual recognition, as I have already pointed out, is not a practical proposition, and neither is "enhanced equivalence". How can anyone possibly think that the EU will tolerate either from the UK, giving it an easier ride than its own Member States, from which it demands full harmonisation where applicable? The idea is absurd.

What we are seeing, therefore, is the political equivalent of suspending plant in thin air, twenty floors above street level. Both candidates are ignoring the constraints, fabricating fantasy solutions that simply cannot be implemented. That the media is not pointing this out tells its own story.



Richard North 24/06/2019 link

Brexit: mutually assured distraction

18/06/2019  


For my Sunday post I did a treatment on the no-deal scenario, an issue which has featured prominently in the ongoing leadership contest.

But, although prominent, in terms of its impact on the debate, the thing we lack is any serious discussion about the consequences, while the "ultras" and their apologists purposefully gloss over the detail, making out that no-deal is a tolerable option for the UK.

A good place to start, though, would be the advice given by the Department for Business, Energy & Industrial Strategy, and in particular its recently amended guidance note entitled: "Placing manufactured goods on the EU internal market if there's no Brexit deal".

However, a crucial thing about the entire Brexit debate is that so many of the important details reside in arcane technical repositories of this nature, which are generally meaningless unless you already know what you're looking for, or can place the information in its broader context.

The section to watch in the BEIS guidance comes under the sub-heading "Non-harmonised goods", where we learn of the distinction between harmonised goods – where there are EU regulations setting common standards – and the non-harmonised goods, where there are no formal EU-wide standards.

In this latter event, free circulation of goods under the aegis of the Single Market relies on the "mutual recognition principle", through which means any goods which can be legally sold in the producing country can be freely sold anywhere else in the EU, without having to apply local standards.

We should remind ourselves, however, that this principle was not initially part of Community law and was not part of the original Treaty of Rome. It emerged from a ruling from the much-maligned ECJ, in the now famous Cassis de Dijon case of 1979, cemented in by Case 113/80 of 1981.

And, while people like snake oil salesman Shanker Singham have been pushing this as the answer to all our woes when we leave the EU, anyone who thinks that this is an answer has been cruelly misled.

In fact, those UK businesses which currently rely on mutual recognition are going to be in for a very hard time. Simply put by BEIS, "after the UK leaves the EU the mutual recognition principle will not apply to UK non-harmonised goods placed on the EU internal market".

Thus, companies which currently produce goods in accordance with UK law and can – in theory - export them anywhere in the EU without the need to deal with any other regulatory system, will no longer be able to do so.

Post Brexit, UK companies will have to ensure that their goods not only comply with UK law, but also with the separate regulatory systems of the countries to which they export. This can only increase costs and can make export to some markets uneconomic.

Optimistically, BEIS suggests that they will have to meet the requirements of the first EU country to which they are exported but, in practice, they will have to conform with the rules of the Member States in which they are sold.

The products most affected are items such as childcare articles, clothing, textile and footwear, furniture, jewellery, sports accessories and firearms. But mutual recognition also applies to EU-regulated products, where elements are not covered by specific measures. Examples are foodstuffs (and especially manufactured foods) and food supplements, food contact materials, fertilising and construction products.

What makes this a big issue is the scale of the trade involved. The Commission estimates that non-harmonised sectors represent around 20 percent of the total value of market sales of manufacturing sectors (€1,158 billion out of €5,690 billion). Furthermore, around 87 percent of the enterprises operating within the sectors are micro enterprises (i.e. with less than 9 employees). Around 11 percent are small and medium enterprises (i.e., with a number of employees between 50 and 250).

In cash terms, for the period 2008–15, the average annual value of intra EU exports of non (or partially) harmonised products has been equal to €335 billion, which represents 18 percent of the value of intra-EU exports.

Unfortunately, the Commission does not break down the figures by nation, but if we assume that the UK roughly parallels the rest of the EU, then Brexit puts at risk something like 18 percent of our exports of manufactured goods to EU Member States, affecting a high proportion of micro enterprises and SMEs.

Clearly, Brexit will not automatically cut off this trade, but it will make life much more difficult for UK traders. And things can only get worse. The Commission has long acknowledged that the mutual recognition system does not work as well as it might. Traditionally, the EU has relied on a 2008 regulation but, to improve matters, this will shortly be replaced by Regulation (EU) 2019/515, which takes effect from 19 April 2020.

This new regulation aims substantially to improve the functioning of the mutual recognition system. Of special interest is an innovative appeals process which allows individual enterprises to sidestep refusals of national authorities to recognise their products.

Once the UK leaves the EU (if it ever does), we will be totally outside that system and unable to benefit from any of the measures aimed at facilitating intra-EU trade. That this places us at a competitive disadvantage scarcely requires saying, but we should also note that the scale of the disadvantage will increase with time, as the new regulation bites.

The worst of it is that, even should we subsequently agree a free trade agreement with the EU, there is no guarantee that the mutual recognition principle will be applied universally – or at all.

When I wrote a piece in October 2016 on mutual recognition of standards, I pointed out that even the EU-Canada Agreement only allowed for cooperation in this area on a case-by-case basis. There was no question of any blanket application of the principle.

Looking at the bigger picture, this is just one small element of our trading relationship put at risk by a no-deal Brexit. Had we sought to remain with the EEA, it would have been retained, incorporated into the Agreement by virtue of Annex II Part II (page 214), following EEA Joint Committee Decision No 126/2012 - with the exception of food and animal products. It is one of the many things the government has thrown away in rejecting the Efta/EEA option.

Sadly, this does not prevent the likes of Alexander Boris de Pfeffel Johnson making crass assumptions about gliding through a no-deal Brexit without suffering serious consequences.

There are those, for instance, who suggest that preparation for a no-deal can somehow reduce the impact, but how does any amount of preparation reduce the impact of being excluded from the mutual recognition system? The fact is that many companies which have built businesses which utilise the principle will find trade that much harder.

And while mutual recognition is only one of the many facets of the EU trading system where we will be locked out, the way the detail is glossed over tends to obscure the handicaps we face. Not for nothing does one have to urge attention to detail, while it obviously suits vacuous politicians (and the media) to avoid detail for the same reason.

Distracting people from the detail will only go so far. This "mutually assured distraction" will succeed only until we are confronted by the practical consequences. Then the serious questions will be asked – and there won't be any easy answers.



Richard North 18/06/2019 link

Brexit: on the brink of madness

09/06/2019  


For what it's worth, Mrs May is no longer leader of the Conservative Party, her resignation having taken effect last Friday.

And while the contest for her replacement as leader, and ultimately prime minister, doesn't formally kick off until Monday, it has already been running some weeks and – in the case of the "turd-giver" – some years.

It goes without saying that the Telegraph is pulling out all the stops to back its favourite son, with today's paper running a lengthy supportive article telling us that he has won over "top Eurosceptics" with a "clean, managed Brexit" pledge.

This magical "conversion" (as if they didn't already support him) apparently happened in a meeting with Eurosceptic grandees last week, when Johnson told them that Theresa May's deal was "dead". He thus gained the endorsement of Steve Baker who says he will now put his "complete faith" in Johnson rather than stand in the contest himself.

Priti Patel, the former International Development Secretary, has also decided to back Johnson, asserting that only he could "deliver Brexit and restore trust in politics". At least two grandees are preparing to follow suit, convinced that the "turd-giver" is best-placed to rescue the Conservative Party from the electoral obliteration they fear it faces if it fails to deliver Brexit.

As to Johnson's master plan, it seems that he has adopted the report published by Corporal Baker on 5 June, from which he has taken the title, to label his "pledge". It is claimed that the plan is backed by "a host of senior Brexiteers". This includes Esther McVey, a rival candidate, to whom one can add Gavin Williamson and Owen Paterson. But, no matter how many people support it, there can be no doubt that this plan is completely irrational.

A notable feature of the plan is that it argues that the UK should leave the EU without the Withdrawal Agreement. And, "without prejudice to the UK’s departure from the EU by 31 October", the UK "could consider proposals from the EU to revise the draft Withdrawal Agreement and Political Declaration to meet the criticisms made by Parliament".

Perhaps "irrational" is too gentle, too neutral a term. "Barking mad" might actually be more appropriate, as the Baker/Johnson "plan" relies on the EU delivering substantial post-exit revisions to the Withdrawal Agreement - despite Barnier, once again warning that the EU will never renegotiate the Agreement.

Furthermore, even if there was the slightest likelihood of the EU accepting any amendments – which there isn't – the changes suggested in the Baker/Johnson "plan" would be wholly unacceptable to the EU, not least because it incorporates some of the more unrealistic ideas from snake-oil salesman Shanker Singham, who has heavily influenced the draft.

For openers, the Baker/Johnson duo assert that the Government "must not consider the UK to be liable for the estimated £39 billion payable to the EU under the Agreement", with Johnson directly threatening to withhold the money, yet they want the EU immediately to agree to a "temporary trade deal".

Despite having been told that there will be no transitional period without the Withdrawal Agreement – of which the financial settlement is part - they then demand that "any transitional period" must be without the continuation of the European Communities Act, in whatever form.

Effectively, what they are seeking is Single Market access without any commitment to regulatory alignment and, just to emphasise this point, they demand that "mutual recognition should be provided for across all topics based on outcome equivalence".

This latter point is a particular obsession of Singham, which the EU will never allow. Yet, no matter how many times this particular piece of stupidity is knocked down, it pops back up like a Weeble, as if nothing had ever happened.

Collectively, this group of inadequates are retreating into their own private fantasy where, having decided that we should exit on 31 October on "WTO terms" – amounting to a no-deal Brexit – the EU will immediately agree a new deal. And this will be on far better terms than we have already been offered, conclusion of which would actually be an improvement on what any Member States currently enjoys.

If there was any justice – and sense – in the Brexit debate, the brink of madness should rule Johnson out of the leadership race before it officially starts. But, even then, he is not getting it all his own way. This weekend, he is under attack from allies of Dominic Raab, who are marking down the former foreign secretary as "a controversial face from the past", which the voters don't want as prime minister.

Raab's supporters cite a recent YouGov poll which found that more than half of those questioned (53 percent) thought Johnson would make a bad prime minister – more than for any other contender. As the same poll suggested that more voters (26 percent) saw him as a good potential PM – more than any of his rivals – this rather confirms his status as a Marmite politician. It makes a mockery of any idea that he is unifying figure.

Oddly enough, Rory Stewart claims to be the only contender with more positive than negative ratings, placed equal first with Johnson in the overall ratings.

Already, though, Johnson is attracting less favourable publicity, with Peter Oborne in the Mail taking a dim view of his prospects. However, critic-in-chief for the moment is Matthew Parris, who uses his column in The Times to declare that Johnson's premiership "will fall apart in a year".

Taking note of prevailing sentiment, he writes that, "colleagues know the party favourite is a lazy, untrustworthy do-nothing but seem determined to vote for him anyway". In detail, he says:
That he's a habitual liar, a cheat, a conspirator with a criminal pal to have an offending journalist's ribs broken, a cruel betrayer of the women he seduces, a politician who connived in a bid for a court order to suppress mention of a daughter he fathered, a do-nothing mayor of London and the worst foreign secretary in living memory… such truths are apparently already "priced in" to Mr Johnson. One just hopes the actual electorate are informed that his rascality is already "priced in" and they’re not to bother their little heads with such horrors.
It really does say something of contemporary politics that a prominent columnist in a leading national newspaper can write in such terms about the leading contender for the Tory leadership, without the slightest fear of a libel suit.

Parris's thesis is that Johnson could lose a vote of no confidence in the Commons as he headed for a no-deal Brexit but could (just) win a general election later in the year and come wobbling back, Weeble-like, into Downing Street before Christmas. But then Parris gives him less than a year in office. His colleagues, Parris says:
know he’s lazy. They know he's untrustworthy. They know how he tries to wing things for which he ought to prepare. They look at the £700,000 he has earned since he quit government, much of it on the national and international speaking circuit, and wonder. They know he ducks. They know he makes conflicting promises. They know he skates on thin ice.
"And in their hearts", he concludes, "they have no confidence in Boris. But they're scared. They think he may possess a kind of magic. The magic, my friends, will fade". Why though we have to go through this process of electing him in the first place is anyone's guess. The nation cannot afford the Johnson madness, or the elemental stupidity of his colleagues and supporters.



Richard North 09/06/2019 link
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