Brexit: cutting through the fog

Wednesday 23 August 2017  

Guest post by Richard North.

I am finding it very hard to get excited by yesterday's excursion into cross-border civil judicial cooperation when the Government's previous position paper on continuity in the availability of goods is a show-stopper.

In its "continuity" paper, it has created a misplaced and potentially dangerous fiction to the effect that the EU might continue to recognise as valid "approvals, authorisations, certificates and registrations" issued prior to Brexit in respect of products marketed by UK companies throughout the EU.

These "approvals, authorisations, etc.", are essential elements in the functioning of the Single Market, reflecting the prevailing regulatory model in the Union, loosely known by the term "prior approval". But they don't come easy.

Basically, a huge range of products, before they can be placed on the market (within the Single Market context), must be approved in a manner specified in the relevant legislation. Conformity then guarantees access to the markets of the EEA members (EU members plus the three Efta/EEA members).

Largely, the legislation works in a permissive manner, illustrated by Directive 95/16/EC the "dangerous machinery" directive, covering things like circular saws, chainsaws and other nasties. In this, under its Article 6 – headed "freedom of movement", it states: "Member States shall not prohibit, restrict or impede the placing on the market and/or putting into service in their territory of machinery which complies with this Directive".

Thus, as in this case, the primary purpose of the legislation is not to address the specific issues related to the product – that is the secondary purpose – the means to an end. The primary purpose (the end) – as this website indicates – is to remove barriers to trade between EU/EEA members.

To level the playing field, the same criteria in the legislation are then used to set the standard(s) which imported goods must meet, before they can be placed on the market in the EEA states. But, as between intra-Union trade, and importation, there are important differences.

In the first instance – intra-Union trade – the responsibility for ensuring that products conform with the legislation rests with the manufacturers. And, where the legislation requires it (as it does with a wide range of goods), it must be tested by an independent third party, known as a "notified body". And, with certain exceptions, that notified body must be established in the EU and be recognised the European Commission.

Currently, of course, the UK is able to benefit from the intra-Union trade rules but, on leaving the EU, it will no longer enjoy what amounts to a simplified procedure. It is then that the UK becomes a "third country" and the legal responsibilities accruing to those placing products on the market move from the manufacturers to the "importer", defined as "any natural or legal person established within the Community who places a product from a third country on the Community market". (For "Community" you can now read "Union".)

When products from third counties arrive at EU Member State ports, it is then for the importer to satisfy the customs and any other authorities that the products comply with EU law, and have the necessary approvals or certification – including type-approvals from notified bodies, where necessary.

Currently, there are over 25 categories of goods to which the CE marking system applies, for which a Notified Body certificate may be required. These include: personal protective equipment; active implantable medical devices; hot-water boilers; medical devices; recreational craft; in vitro diagnostic medical devices; cableway installations designed to carry persons; noise emission in the environment by equipment for use outdoors; dangerous machinery; toy safety; and so on.

For the UK on and after Brexit day, this gets quite interesting. Where the product relies on certification from a UK notified body (approved prior to Brexit), that notified body will no longer be approved. Arguably (and it is arguable), the certificates (on which the importer will rely) will no longer be valid.

Some might argue that the certificate remains in valid for the full period for which it is issued – with the example given that such certificates do remain valid of a notifying body goes out of business. But then, under EU law, the files of its customers must be sent to another notified body (which, presumably, must be willing to accept them), or "are made available to the Member State which has notified it".

Since the UK will no longer be a Member State, it is difficult to see how that latter provision can be complied with, so the crucial issue might become whether a notified body in one of the EU-27 can be prevailed upon to hold the relevant files and make them available as required.

Certainly, it is not beyond the realms of imagination that a creative customs officer – under "guidance" from his national government or Brussels – might find technical reasons why paperwork accompanying a particular consignment might be deficient. Any amount of UK imports might thus be rejected.

It is entirely logical therefore, for the UK to seek as part of the Article 50 settlement, an assurance that all certificates, etc., continue to be recognises as valid. But that, for notified body certification, is not the way things are normally done. What usually happens is that third countries conclude Mutual Recognition Agreements (MRAs) on conformity assessment, whereby the parties recognise the certification produced by their approved testing houses.

There is a possible short-cut in the PECA: Europe Agreements on Conformity Assessment and Acceptance of Industrial Products, which were applied to candidate countries, and could be applied in reverse as a transitional mechanism for a departing country.

Thus, if the UK was playing this conventionally, it would not be messing around asking for continued recognition of certification. It would be declaring its intention to pursue a MRA on conformity assessment.

However, the UK's problem is that the CE marking regime only covers certain sectors, where there is an amount of flexibility. For other sectors, such as medicines, chemicals, pharmaceutical precursors, veterinary products, pesticides and biocides, approvals can only apply to businesses which are established in the EU. There is no possibility, under current EU law, that UK businesses could continue to hold valid approvals.

But "prior approval" also extends to the agri-food business, and also to aircraft parts, where current approvals rest on the UK's status as an EU Member State. It is certainly the case that there is no provision for approvals to be carried over in the agri-food business, and it is not easy to determine whether aviation parts approvals would survive Brexit.

As it stands, therefore, exports to the EU, to the value of anything up to a hundred billion pounds or more, each year, could be at risk. If their approvals are no longer valid after Brexit, then they will be turned away from the EU borders if entry is sought.

If our Government was taking this matter seriously, it would not have relied on a trivial, nine-page document on trade continuity, proposing the continued recognition that had already been rejected by the Commission. As each of the major sectors has its own different approval system, each with their own peculiarities, it should have done a sector-by-sector analysis, appraising the obstacles to continued trade, producing a document of some substance.

In some instances, there may be some flexibility but, in others, there will be no option but to bite the bullet – seeking approvals de novo for a wide range of products, at huge expense. There may even be a significant loss of exports over the short-term, as it may not be possible to secure replacement approvals before Brexit.

To ignore these issues, though – as the Government seems to be doing – is thoroughly irresponsible. It reduces the time our businesses have to prepare for the worst case scenarios, and risks exposing them to having consignments rejected at the borders, with all that implies in cost and chaos.

And there is more than just business to think of. Chaos at the ports could bring the flow of goods to a complete halt – import and export. If that resulted in empty supermarket shelves, that could have a profound impact on public order and the governance of this country – something we cannot allow to happen.

Mr Davis needs to go back and look again at his trade continuity document, and then tell his civil servants to do the job properly. And, while he is about it, he needs to cut through the fog blinding his department – one of those CE-marked chainsaws would be quite handy. He should learn for himself the significance of the term "third country", and what it means to a post-Brexit UK.

Failing that, of course, he could just keep us in the EEA. Many of these problems would then disappear.

23/08/2017 link

Brexit: a word of caution

Tuesday 22 August 2017  

We have made no secret of our opposition to the government's handling of Brexit. There was nothing preordained about Brexit being permanently harmful yet we are in very real danger of it becoming so. Through arrogance, incomprehension and slovenliness, this government is driving Britain off the cliff. This is unforgivable maladministration.

This prompts all the usual questions as to whether this is run of the mill incompetence or if there is a darker agenda in play. Certainly the renewed push for unilateral trade liberalisation might suggest the latter. There are forces at work who would like nothing more than to see Britain suffer from the hardest Brexit possible. 

Unsurprisingly the Institute of Economic Affairs are leading the charge. The latest paper from the IEA represents the very worst of conservative thinking on Brexit. It indicates that statecraft is no longer an instinct within the Conservative Party.

Trade is the art of making careful individual decisions designed to increase wealth and prosperity. Strategic decision making. Each of those decisions must be evaluated for the public good - not just in terms of GDP. There are political, environmental, social and defence concerns - all of which must be considered. Opting for unilateralism is an abdication from good governance.

Though this is not presently government policy, we may yet find it is the default. The latest position papers from the government are so conceptually out of kilter with reality that agreement may not be possible. Completing the process in two years was always a big ask even with the most meticulous planning possible. Now it would seem we have missed the window of opportunity.

The government is asking for the impossible. The land border in Ireland is set to become the EU’s outer frontier – and frictionless trade without major concessions from the EU is undeliverable. We are grateful, however, that the EU recognises the necessity to overcome this obstacle. This will require an agreement separate to any UK trade settlement.

It is not within the gift of the EU to override the rules concerning its outer frontier - and inclusion of exceptions in a wider trade agreement would set a precedent it cannot allow. If the UK is unwilling to accept this then we are at an impasse - and wasting time we do not have.

Arguably we have already crossed the event horizon. By now we should have seen the basic issues reaching some sort of resolution. Instead we are barely out of the starting block. Crashing out without a deal now seems probable. There is insufficient wisdom in government to realise the consequences of allowing it.

Should this happen, we default to WTO rules whereby all formal relations with the EU (and by proxy the rest of the world) come to an abrupt end. As an emergency measure we may very well be forced to unilaterally drop tariffs – not only for the EU but for all countries, as per WTO rules.

This is not “project fear”. This is a matter of observable law. Britain would lose all of its preferential trade agreements and would lose its right to participate in EU single market systems. We’d be hit by a wave of red tape virtually overnight. The EU has very specific protocols for third countries - and those are the rules with which we must comply or no trade happens. It’s that simple.

Since we do not have the people, facilities or software in place, we are looking at a major national humiliation. That likely means a lost decade of trade while we rebuild the basics - but with a permanently tarnished reputation. There is a good chance the UK would never fully recover and lost business will likely not return. It will result on austerity on steroids.

The Leave Alliance has always argued that Brexit it a process, not an event. A bespoke framework was always overambitious and even adapting off the shelf models would present us with some difficult dilemmas. The failure to acknowledge this has set us on course for calamity. Parliament urgently needs to assert itself and up its game. Unchecked, this government will ruin us.

We would urge Brexit campaigners to think carefully about backing initiatives from the Tory right. One of the most compelling reasons to leave the EU was to reignite a debate about the sort of country we want. That debate is already underway but support for Brexit has been made synonymous with support for an ultra-capitalist agenda. It has become a groupthink of its own - yet there are many other possibilities.  

We would be the last to argue against trade liberalisation, or indeed capitalism, but dogmatic A-Level economic theory is a world apart from statecraft. It is entirely consistent to be pro-Brexit while also sceptical of this government's approach - and a vote to leave was not a free licence for government to act without scrutiny. Measured criticism, divorced from the unhinged histrionics of remainers, is more necessary than ever. Leavers cannot give this government a free pass to do as it pleases. This is really no time for shallow, dogmatic right wing scriptures. 

22/08/2017 link

Brexit: camouflaging deceit

Tuesday 22 August 2017  

Guest blogger, Oliver Norgrove
The summer ahead of our Brexit trade talks was supposed to be a period symbolising some sort of progress, not a camouflaging of deceit. If recent comments and proposals are anything to go by, the government doesn’t appear to realise that the provisions of Article 50 allow only for a two year period, barring extension by unanimity. We are wasting valuable time trying to reconstruct arrangements and agreements that are provided in ready-made fashion by the Single Market.

This was made hugely apparent by last week’s hilarious position paper on proposals for future Customs arrangements, and then again today with an especially hopeful outline of the continuity and availability of goods in both the UK and EU post-Brexit. To those of us with a clue, these plans are poor attempts at hiding the cold, harsh reality that membership of the EEA offers Britain secure and comfortable trading terms.

Within the confines of the EEA, we don’t need to beg, plead and over-promise as we currently are. That David Davis thinks he can waltz into Brussels with proposals that emulate the benefits of the EEA, such as the ‘free and frictionless trade’ promised in today’s paper on continuity with trade in goods, is pure fantasy.

What is more frustrating is how blatantly the Department for Exiting the European Union is chirpsing with the idea of Single Market membership without actually admitting it. It is almost as if the EEA might actually represent an amicable, workable compromise. Not just economically, but also in standing in conjunction with domestic political interest. Brexiteers need to recognise that 52-48 is a relatively small gap that can, in theory, be closed or widened given any changes to the external political environment.

Apparent too is an arrogance which seems to ignore the legal implications of leaving a Treaty. On Brexit day, the UK becomes, by virtue of withdrawal, a third country, and thus subject to border and documentary checks not previously necessary. This is to ensure continuation of the enforcement of standards.

“The UK believes our future relationship should be built from our commonalities and longstanding trust in each other’s systems, as it does not benefit either party to ignore our unique starting point”, states the government in yet another example of our wishful thinking approach to Brexit negotiations. This treacherous road will lead only to massive political and economic disappointment. The knock-on effects for the Conservative Party could be disastrous.

Seeking not to be outdone by government incompetence, Patrick Minford, Leave’s woefully inept representative in the glamorous world of economics, is back on the scene to parade us with his stagnant, unreformed opinions about the merits of the WTO option. I have rubbished his ideas more conclusively here, but it is always worth going over the consequences of the Brexit debate’s most dangerous contribution.

In a new report by Economists for Free Trade (a concept barely addressed by tariff removal) entitled ‘From Project Fear to Project Prosperity’, Minford claims that a WTO Brexit, the hardest there is, will bring an economic boost to the country in the region of £135bn. Luckily, it has been widely discredited so far, and I imagine the same will happen when the full report is released in the autumn.

The worry here is that, since Minford nestled himself into a tiny little enclave during the referendum debate, he still retains substantive support amongst Leave voters, who (just as I did) latched onto him as a rare ally amongst both academics and economists. His influence is already there to see. I watch in despair as Leavers share news articles reporting on his (note, solitary) assertions, using them as evidence that Brexit can do no harm to the economy. The truth, though, very much lies with the reverse.

There is no economically perfect Brexit, but the Norway option is the one most capable of promoting stability and the WTO option the least. Leaving the EU, avoiding trade settlements and relying instead upon GATT/WTO rules for trade does not, contrary to Minford’s claims, create any kind of free trade cornucopia. It actually leads us down a path of holdups, excess red tape and stunted trade flows. Exactly the threat to jobs that Project Fear actually had a point about.

If you don’t believe me, take a look at how many major or productive economies trade with the EU using only the explicit terms of the WTO. The answer is none of them. And this is so for very good reasons. Becoming an independent WTO member means, firstly, that the EU will be legally required to impose tariffs upon us in accordance with our status as ‘Most Favoured Nation’ (MFN). WTO rules over discrimination are clear: duties applied to a member must be applied in uniform fashion to all.

And, no, this will not lead to retaliation. If the UK decided to respond with the imposition of tariffs on the EU, it would need to do so to all other WTO members, again for the purpose of equal treatment. An unacceptable prospect therefore posed by the WTO option is a protectionist race to the bottom. But, aside from tariffs, which aren’t the be-all-and-end-all of trade discussion, we need also mention those ever-threatening non-tariff barriers.

By opting for the WTO option and thus diverting from bilateral negotiations with the EU, the UK will not have specific agreements in place, known commonly as Mutual Recognition Agreements (MRAs), to be able to deal with documentary checks and customs holdups. Once out, we are a third country, meaning our drivers and shippers will need to provide evidence that transported goods meet agreeable standards. Here we will have huge problems. It is no wonder that so many global powers focus on trade agreements which target customs cooperation; it is such a minefield for modern trade.

But, these technicalities, important though they are, do not interest Minford and the wasteland of Leave supporting commentators and agencies. Slap ‘£135bn economic boost’ onto the BBC News website and voila, that’s all you need to spin an important story. The whole thing is a camouflaging of deceit, and there appears to be no end to it. Minford is at least a manageable problem; it is the government who will in the end look utterly ludicrous in wasting its time trying to replicate the EEA through an FTA and a series of transitional deals.

22/08/2017 link

Customs Union: a diet of red herrings

Wednesday 16 August 2017  

In talking of the EU Customs Union, today's government paper is an exercise in deceit. The substantive provisions are, in effect, seeking Single Market equivalence - although the Single Market is not mentioned anywhere. There is a refusal to acknowledge that the UK on leaving assumes formal "third country" status with the EU, for which rules are defined. This has profound implications for the UK, on the Irish border especially. 

Troublingly, there is an assumption that the EU will waive these rules and thus remove the need for customs checks at the borders. This is, in effect, a back door attempt to restore Single Market status to the UK, something the EU has already said it will not allow. The Government's paper, therefore is fantasy. It is pushing for a scenario which cannot happen and has already been ruled out by the EU.

As we have been at pains to point out, the customs union is barely relevant to border controls. Everything depends on customs cooperation, a major feature of which is regulatory harmonisation and mutual recognition on conformity assessment. Without this there is no possibility of frictionless customs. 

As to staying in the customs union, thankfully a consensus is finally emerging that we cannot stay in it. It is a treaty mechanism of the EU and if you leave the EU, you leave the customs union. It is that simple. As to what replaces it, and for how long, is another matter entirely. 

We would argue that the entire issue of the customs union is a red herring. To achieve the maximum possible free movement of goods we need mainly concern ourselves with matters of the single market. Most of the customs issues are resolved by articles nine and ten of the EEA agreement

Article 10 says "Customs duties on imports and exports, and any charges having equivalent effect, shall be prohibited between the Contracting Parties. Without prejudice to the arrangements set out in Protocol 5, this shall also apply to customs duties of a fiscal nature".

The customs union is only really an issue due to the concerns about rules of origin, but that brings us to Article 9 which says "With a view to developing the results achieved in this Agreement, the Contracting Parties will continue their efforts in order further to improve and simplify all aspects of rules of origin and to increase cooperation in customs matters".

Since the UK is likely to maintain existing tariff schedules, for the mid-term at least, there are ways of resolving such issues without any real penalty and all of this could be tied up in a UK specific protocol in the EEA agreement. A separate customs agreement is not necessary. 

While this would considerably limit the scope for trading with tariffs, the UK could still negotiate its own trade agreements with other countries on services, investments, regulations, e-commerce, food, and agriculture. We'd be out of the common commercial policy which is what actually matters to us. 

The only thing that would remain in the EU's control would be tariffs but since the EU always negotiate these tariffs down to zero, the only rational reason to reject alignment is if UK wants to impose protectionist tariffs against non-EU countries. This is not what any of us voted for. 

In effect the government has completely misread the purpose of the customs union, perhaps deliberately as a smokescreen. This could be a charade designed to scapegoat the "obstructive " EU and then jump off the cliff - to disastrous effect. 

At best the government's position paper is largely a decoy. It is completely out of sequence with ongoing negotiations, and if anything this is for domestic purposes, submitted to the EU so it can be taken as an official government position rather than the daily noise of speculation. 

Encouragingly, the document has already been eviscerated on Twitter, and though the media is still behind the curve, along with our politicians, even if there is some disagreement on terminology, nobody is convinced that this is a serious proposition. That, we suppose, is progress. 

16/08/2017 link

Legatum's disaster capitalism Brexit

Monday 31 July 2017  

The following post is reproduced in full from

According to its website, it was set up in 2009, but it does not seem to have been fully funded until recently. The Charity Commission records that the registered charity, the Legatum Institute Foundation, received over £4 million in income in 2015 - up from just under £3 million in 2014 and a mere £2,500 in 2013. 

The Foundation is registered with Company House as a company limited by guarantee. But, according to the 2015 accounts (submitted to the Charity Commissioners in October 2016), the bulk of its income comes from the Legatum Foundation Limited, a company registered in Bermuda. 

The Bermuda company in turn is controlled by the Institute's parent undertakings. One is the Legatum Institute, a company registered in the Cayman Islands. Its three current directors give their addresses as Convection Tower, Dubai Convention Centre, in the UAE. The ultimate parent undertaking is the Legatum Partnership LLP, a limited liability partnership registered in Jersey. 

The Institute itself is part of the Legatum Group, set up in 2006 by the multi-billionaire Christopher Chandler, formerly president of Sovereign Asset Management. This came after a demerger of the family business, Sovereign Global, managed with his brother Richard Chandler. Both New Zealand born, Richard Chandler is resident in Singapore. The Legatum business is based in Dubai. 

In the 2015 report to the Charity Commissioners, senior management personnel of the Legatum Institute were listed as Anne Applebaum, Giles Dilnot, Alexandra Mousavizadeh, former newspaper columnist Christina Odone and Shanker Singham, the latter acting as chairman of the Institute's Special Trade Commission, fronting most of the Brexit propaganda. 

Applebaum is firmly on the political right, having been an adjunct fellow of the American Enterprise Institute. She has an extensive career as a journalist, working for the Washington Post, the Daily and Sunday Telegraph and the Economist. She was deputy editor of the Spectator and political editor for the Evening Standard. However, she resigned in 2016, having disagreed with the director over the Institute's support for Brexit. She now works for the LSE.

Currently top of the hierarchy is Philippa Stroud, CEO of the Institute. Previously. She used to be Chief Executive of the Centre for Social Justice (CSJ), a think tank that she co-founded in 2004. Prior to the CSJ, she was Special Adviser the Rt. Hon. Iain Duncan Smith MP (then Secretary of State for Work and Pensions) from 2010-15. 

One of the directors is Toby Baxendale. He is also on its board of trustees. As to other interests, he was director, alongside co-director Steve Baker, of the now defunct Leadsom4Leader, a limited company set up to support Andrea Leadsom's Conservative Party leadership bid. 

Baxendale is also co-founder, again with Steve Baker, of the Cobden Centre, "a home for Austrian School economics in the UK". He also set up the Hayek Visiting Fellowship at the London School of Economics. He has also been a significant donor to the Conservative Party. 

The links with the Cobden Centre bring us to Perry de Haviland, supposedly independent editor of the Samizdata blog, Matthew Elliott, who just happens to be a senior fellow of the Legatum Institute. 

Elliott, founder of the Taxpayers Alliance and one-time director of Vote Leave, sits with another Legatum senior fellow Tim Montgomerie, founding editor of Conservative Home and former Timescolumnist. At the Cobden Centre, he sits on the Advisory Board with Sam Bowman, research director of the Adam Smith Institute, Ewen Stewart – a managing board member of the Freedom Association - and Douglas Carswell. 

Yet another senior fellow Legatum Institute is Danny Kruger, former chief speechwriter to David Cameron, chief leader writer at The Daily Telegraph, and director of research at the Centre for Policy Studies. 

Listed as a fellow, along with many others one also finds Graeme Leach, founder and chief economist of Macronomics, a macroeconomic, geopolitical and future megatrends research consultancy he launched in 2016. He is a visiting professor of economic policy, a member of the IEA Shadow Monetary Policy Committee and has a weekly column in the City AM newspaper. Between 1997 and 2013 he worked as Chief Economist and Director of Policy at the Institute of Directors (IoD), where he was also a main board director. 

A trustee of Legatum is Richard Briance, the Chairman of PMB Capital Limited, a newly formed merchant banking business and former Chief Executive of Edmond de Rothschild Ltd. Before that, he had been Managing Director of Credit Suisse First Boston Ltd, Vice-Chairman at UBS Ltd and Chief Executive of West Merchant Bank Ltd. 

In terms of his other political activities, Briance was a Non-Executive Director at Oxford Analytica from 1999-2010 and he has been a trustee of Policy Exchange. 

One of the key figures in the Policy Exchange was Lord (James) O'Shaughnessy, formerly Deputy Director. He then worked for the Prime Minister, David Cameron, as his Director of Policy between 2010 and 2011 and for three years (2007-2010) worked in the Conservative Party as Director of Policy and Research. He has now become a senior fellow at the Legatum Institute. 

In October 2016, The Legatum Institute sponsored a report called The Road to Brexit. The foreword was by Duncan Smith, Philippa Stroud's former boss. Also writing for the report were the MPs John Redwood, Peter Lilley, Owen Paterson and Bernard Jenkin – leading members of the "Ultras".

As well as Shanker Singham, there were two other authors, Sheila Lawlor and James Arnell. Lawlor directs the economic, education, constitutional and social policy programmes of think tank Politeiawhile Arnell is a partner as Charterhouse, displaying ultra views on Brexit. 

The picture one gets of Legatum, therefore, is of an exceptionally well-endowed think-tank with fingers in many pies and strongly networked with other think-tanks and the media. With offshore finance, though, this is redolent of foreign interference in UK politics, by a company which seems to attract dubious publicity, and critical appraisal.

The greatest concern, though, comes from reading the Legatum website. Having invested heavily in Russia and developing countries, the business speciality is moving into markets at times of crisis where assets are mispriced. With an eye for emerging trends and undervalued assets, it invested heavily in the telecommunications sector in Brazil, just after the country emerged from hyperinflation. It describes its own "investment heritage" in navigating through choppy markets, following the great financial crisis. 

The company takes great pride in its investments in Hong Kong real estate, a market which investors had fled after the signing of the Sino-British Accord, an agreement that promised to give Hong Kong back to the Chinese government. It saw assets mispriced, and noted that "opportunities arise in times of crisis".

This is a business style which has been described as "disaster capitalism", which would benefit significantly from a hard Brexit. Here, a comparison could be made with Hong Kong, where a similar situation might arise in a UK under the stress of a hard Brexit, where many traditional firms have run for cover, or relocated in the EU, leaving many assets under-priced. 

Looking also for opportunities arising from deregulation and further privatisation – especially in the NHS, with Legatum having considerable healthcare interests – hard Brexit presents multiple opportunities. This, after all, is a business that openly states that it "finds value where disruptive transitions create unique opportunities".

In this, the Legatum Institute seems to be paving the way for its "parent undertakings", engineering a "disruptive transition" for Brexit, then to reap the profits from chaos. Its task is assisted by useful fools and fellow travellers on the Tory right. What we have often characterised as incompetence, therefore, may be more sinister. There is money to be made out of a hard Brexit.

31/07/2017 link

Brexit - the first year

Saturday 24 June 2017  

It's been a year since we voted to leave the EU. And what a year it has been. Though everyone has their take on a year of Brexit, as ever there are few efforts more comprehensive than this latest work by Richard North of Priced just £4, you can buy it here...

Buy Now

24/06/2017 link

EEA is the cleanest, fastest, safest Brexit

Tuesday 20 June 2017  

We are not surprised a softer Brexit is viewed with suspicion. After all, the usual remainer suspects demand that we stay in the single market and remain in the customs union. Since they have tried every other means at their disposal to stop Brexit they have squandered their political capital. 

What makes it worse is that those MPs and personalities who argue for it have no real concept of what these terms mean or indeed how we go about it. It is entirely knee-jerk. Rather than seeing the potential merits of a such a setup they see it as a halfway house - which raises all the more suspicion that we could be sucked back in. Leavers want Theresa May to stick to her word that Brexit means Brexit and we cannot be half in, half out.

But then that is a misnomer. Nobody is half in, half out. You are either a member of the EU or you are not. Unequivocally, Norway is not a member of the EU. It just has a very sophisticated and comprehensive relationship with the EU. One might even say a "deep and special" relationship. Further to this, a customs union agreement is really just a trade deal to eliminate certain barriers to trade. None of this defeats the spirit of ending political union with the EU. 

For the Leave Alliance, we have never really been taken with the idea that there are immediate economic benefits to Brexit. We have always accepted there are substantial risks and that it is not primarily an economic proposition. With the EU being the nearest and largest regulatory and economic superpower it follows that we would require an extensive relationship with it and deep cooperation is still in our best interests. 

If anything we view Brexit as a preparation for the future. Over the last twenty years we have seen a steady growth of private and international regulatory authorities and global conventions bringing us ever closer to a global single market. When we look at the trade picture globally we see that regulation (the lack of common frameworks), not tariffs, is the biggest barrier to trade. 

It would be wrong to say that Britain did not enjoy influence in the EU but in the matter of adopting global rules and regulations Britain can be, and very often is, compelled or obliged to adopt them on the say so of the EU. While a common approach very often is in our interests, there are times when it is not - where such impositions remind us that we are only nominally sovereign.

Then with the dawn of the WTO agreement on technical barriers to trade, the EU has, of its own volition ceded the regulatory agenda to global bodies such as Codex and UNECE where we find we would have an enhanced role were we to be outside of ECJ control and out of the common commercial policy. If the trend is toward global regulation then it follows that the UK will need to be an active and independent player with its own vote and right of proposal. 

This new(ish) dynamic rather illustrates the futility of leaving the single market in that there is an ever growing convergence between the global standard and the EU standard and in many cases one and the same. The scope for deregulation is limited and largely undesirable since regulation largely serves to facilitate trade. In this respect, far from being a passive recipient of EU rules, as some assert, we would have a more active role in their creation and we would adopt them directly rather than through the EU middleman. In that respect we could have abolished roaming charges far sooner. The EU was a stalling factor.  

We should also note that in or out of the single market we will still be influenced by EU specific rules since the EU will remain a large component of our exports. Both Canada and New Zealand have recently overhauled their food safety rules to make them more compatible with those of the EU. More locally we see that Switzerland uses its national legislature to mirror EU rules and in some cases adopts ECJ and council decisions automatically as per the framework of their relationship. In that regard they have fewer powers of veto than Norway. 

It is our view that sovereingty is a much abused term and nebulous in nature. If it means anything it means having the right to say no, both in theory and in practice. We recognise that the ability to say no does not mean we always will and we recognise there will be trade offs and penalties for doing so. That choice though should rest with the people of Great Britain and Northern Ireland rather than technocrats in Brussels. 

We are of the view that events have surpassed many of the classic eurosceptic arguments, not least those matters around regulation. As painful as it was to adopt single market legislation we would not seek to repeat the pain of changing to a new regime only to find it evolves into pretty much what we have now. Moreover, we would note that the single market is not the sole property of the EU. It is a collaborative venture between Efta EEA members and the EU, and the UK's membership of it goes some way to evening out the balance of power. We would have considerable collective ability to lean on the EU to reform in ways we could not achieve as a member. 

Either viewed as a destination or a transitional mechanism there is a lot to be said for it. There is no reason why a flexible agreement like the EEA could not be evolved so that there would be no real need to leave it. We could very easily seek to expand and enhance it.

We do not view EEA/Efta as a second prize or a mitigating measure. It fulfils the requirement of being out of the EU with an independent trade policy and the restoration of the essential sovereignty that we demand. We would urge those who would like to see this outcome to present the option in a different light other than a retreat to safety. In its own right it has much going for it. 

For those hard line leavers who will accept nothing other than a bespoke trade deal, we would point out that any new relationship will eventually end up replicating the EEA agreement and we are wasting our time reinventing the wheel. 

We would also note that we will need a transitional agreement. In that, any transition that is not the EEA is a "deal" where the ECJ retains supreme authority. In other words, we dither in the EU considerably longer while we craft a bespoke arrangement, all the while being unable to pursue other trade avenues. Possibly long enough for a new government to halt the process. It seems to us that Efta EEA is the fastest and cleanest Brexit available - and we would be fools to hold out for an illusory perfection when adequate will do the job. 

20/06/2017 link


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