Tuesday, 30 August 2016

Polly Toynbee's Euro-myopia


A bit of a grubby article from Polly Toynbee here on the matter of exploitation at sea. What's disappointing here is that Polly turns this into a whinge about Brexit. EU good, Britain baaaad.

This is a very serious issue, under-reported and in need of serious attention. Exploitation in this industry is rife - and it extends into fishing as well. The EU has done its usual trick of taking a heavy handed approach to regulation resulting in an overall decline in registered tonnage.

According to studies carried out for the European Commission, the operational costs of a Community registered vessel could be reduced by 3.5 to 22% in the case of a containership and by 15 to 44% for a bulk carrier, by flagging out.

 European shipping faces two main threats to its future survival: protectionist policies and high costs of operation that have resulted in reduced market shares and accelerated flagging-out. So all it has done is exported the problem - as it did with ship scrappage.

The fact is that in a hyper globalised sector like shipping regional solutions just aren't going to cut it. The need global regulations and global conventions. That's where we need to be participating fully at all of the top tables in regulation. In this case the International Maritime Organisation and the ILO. Only through coordinated global action can we bring this mass exploitation to an end.

In this we often find the EUs protectionist approach and heavy handedness means it is frequently outvoted and is not a welcome influence at the IMO at all. Britain on the other hand takes the view that it's better to make some progress than none at all.

Free of the EU we are able to increase our participation on global forums and choose our own alliances. In regulatory terms Brexit means we have the right of initiative which means if the unions put sufficient pressure on the government they can press for a global initiative.

Many Guardian readers will be appalled by the conditions of Indian ship breakers and their use of beaching. There is now a set of global guidelines forming the basis of IMO regulations. This was a Norwegian initiative. And in recent times Norway is most famous for... not being in the EU.

In fact, if you're not talking about the IMO in shipping regulations then you are simply playing politics - which is exactly what Polly is doing - turning a very real issue into a convenient hobby horse for her anti-Brexit bigotry. That's a pity because otherwise she would be making a valuable contribution by exploring this issue.

If we really are sincere about tackling this then we really do need to think globally and act internationally and break away from the inward looking Eurocentric approach - which ultimately worsens these problems by exporting them to where there is no regulation at all. Only through much wider participation and consultation do we crack this and Brexit gives us the tools we need to do exactly that.

Figures from the Department of Transport show that in 2015 there was an 8pc increase in the size of the UK-registered trading fleet to 13.7m deadweight tonnes. Of these vessels, almost 58pc were container ships, 19pc tankers and 14pc bulk carriers. The data – which covers ships weighing more than 100 tonnes – revealed an end to four years of decline, with ship operators less likely to register their vessels under so-called “flags of convenience” which have less demanding regulation.

Britain has distinct advantages. Flying the Red Ensign is sign of a well maintained vessel and carries a great deal of prestige on the high seas, as well as offering global protection from the Royal Naval and support from Britain’s consular services. Brexit might well enhance this dynamic meaning preferential insurance terms for UK registered ships. That is where we can start bringing this issue back into our sphere of influence.

Brexit is an opportunity for meaningful Lords reform


Many people consider trade deals and regulations to be under the hood stuff best left to civil servants. These are ironically the same people who then complain about technocratic rule and the absence of democracy.

This though is an area that will require some further consideration. Leaving the EU does not bring an end to technocracy. All trade deals in future will be centred around ceding powers or replacing our own laws with a global standard. That means every last regulation is a trade deal in its own right right where UK businesses can either be opened up to full competition or closed down entirely.

This happens without any real public scrutiny and if there is one thing our MPs have proved it is that they are not up to the job. So I think that gives us some clue as to what to do with Lords reform.

We have heard plenty of talk about replacing the house of lords with an elected senate. I genuinely don't see the point. Were we to do such a thing we would no doubt follow the current trend of proportional representation. Just think how much that would suck. A supervisory body made up of sub-Farage creatures imposing their moronic world view on things that benefit from less democracy rather than more.

If we want a chamber full of intellectual subnormal cretins then we have the house of commons. Why do we need another one? I've heard it suggested that this would make the process more representative but if it is not the case that the commons is representative then that tends to suggest that the selection process is deeply flawed.

In terms of an upper house what we need is a higher calibre of scrutiny whereby lords have a clue what they're talking about. I think there's a solution.

Increasingly regulations are made at the global level and more often than not by NGOs, corporates and industry lobbyists. It's not as bad as it sounds in most respects but there's a certain element of pay to play about it. What matters is that the voices of British business and other lobby groups are heard. In recent years I would argue that our influence has waned.

Very often the government controls who gets to speak on international forums and not without the EUs consent. We don't even have the right of initiative whereby we can bring industry concerns directly. That changes with Brexit.

But to get the best we need to ensure UK interests are properly represented. Very often UK industry is the very last to know about upcoming regulatory changes. By the time they're making a flap about something it's already too late. It lacks an effective means of surveillance within the lawmaking apparatus.

What we need is a network of trade guilds and and associations. In recent decades we have moved away from such in favour of professional lobbyists. Not so for Germany where membership of trade guilds is compulsory. They carry as much weight as unions and it is a means by which small and medium sized enterprises can shape the regulatory agenda.

We could replicate that but ensure that trade guilds and unions over a certain size have an automatic seat in the Lords. We would want safeguards like term limits but it would ensure a formalised place for business and industry in the process. We could also do the same for NGOs.

There are those who would like to see commercial and charitable concerns excluded from the process but they always seem to find a way. Usually through cronyism. The British though have always had an unusual way of dealing with political corruption. We legalise it, formalise it and bring it into the system so it is at the very least transparent. That brings an honesty of its own where there is a generally accepted level of corruption but it is self-regulating.

Many complain that the Lords suffers from a degree of political appointeeism bordering on cronyism. I would not disagree but if they are appointments on the basis of popular movements then it is up to the members to take corrective action.

In this we would still want a people's contingent which could be made up of civil groups and former elected members. It does need experience parliamentarians. On that basis we might demand a three commons terms minimum in order to qualify.

The objective would be to ensure that the house of lords is fit for purpose in scrutinising ever more complex and technocratic measures of governance and is able to instruct trade negotiators while having a transparent means of access.

We could go as far as limiting their authority in terms of the types of laws they can vote on and by doing so we can make sure that every trade agreement is put before some kind of vote. That is not always the case. We would then have an entirely different class of upper body geared at a completely different function.

There is no simplifying the complex, nor is there any real merit in full democratisation of trade and regulatory issues. Most people are happy to leave the details to others, but Brexit has shown that business is increasingly dissatisfied with bureaucratic autocracy. This is our chance to design a modern, fit for purpose means of scrutinising rules and regulations in a way that is beyond the capabilities of the commons and is insufficiently interesting for ordinary MPs to engage in.

The house of lords has always been a means by which vested interests have access to the decision making and though centuries of tradition have corrupted the intent we should modernise and formalise that ethos rather than moving away from it. We must move beyond the infantile notion that business involvement in lawmaking is necessarily bad and instead look at ways whereby we can increase consultation and participation in a way that is accountable.

Britain will be making trade a national priority over the coming years and that absolutely depends on seeking opportunities in all of the global multilateral forums and in this we will need UK interests front and centre. We will need effective mechanisms whereby we ensure trade deals are fair and nobody is caught unaware. In order to get the best from trade we will want UK industry shaping our agreements and at present we lack the necessary institutions to ensure that can happen. If we can task the house of lords to that purpose then there is every reason to believe it can be relevant again and may lead to far better decision making.

Monday, 29 August 2016

The EU needs to tread carefully in negotiating Brexit


The popular narrative seems to be that the EU is intent on giving the UK a rough ride in order to dissuade others from quitting the EU. There is scant evidence to suggest it will other than the bombastic proclamations of politicians. I find it wise to take all such statements with a pinch of salt. The tone can turn on a sixpence as we have already seen.

There is a view that Britain cannot be allowed to pick and choose. But the EU must keep in mind that a lot of the cooperation programmes and decentralised agencies would not function without UK funding and if we were kicked out somebody else would be lumbered with the bill. Moreover, the process of a corporate scale de-merger of EU agencies is likely to bring massive transitional costs - not all of which the UK would be liable for.

It should also be noted that EU member states have a vested interest in maintaining good relations and market access. Then there is Poland which very much values freedom of movement. We are not without allies in the EU. We can also hold up a mirror to the EU and quote back some of their own rhetoric. The EU's neighbourhood policy seeks to achieve "the closest possible political association and the greatest possible degree of economic integration". Setting the EU up for an acrimonious post-Brexit relationship does nobody any favours.

There is also one other largely misunderstood aspect. Britain free of the EU becomes an independent actor on all of the global forums for trade and regulation - and we will be an agile and active participant. We will be free to choose alliances and in so doing, as a powerful economy inside an alliance, our vote becomes a deciding vote for the alliance and subsequently the deciding vote in any global agreements. Australia working through the Cairns Group was able to secure CAP concessions when we couldn't as an EU member.

The short of it is that the EU needs to consider what sort of post-Brexit relationship it wants. Britain can either be an ally or an aggressive competitor. We have more incentive to be the latter if forced to. Not everything in global trade is about market size. It's about what you bring to the table. If Britain is no longer permitted to participate in EU programmes then we can add our resources to competitors.

The EU could take a tough line because it does hold many of the cards but it also has the potential to do a good deal of self-harm in the process. Moreover anything that hurts the UK has the potential to damage Ireland which may very well be holding its own referendum in the near future.

The one thing that ensures we will take what we are given is the time constraint. There are actors on all sides dreaming up new configurations for a post-Brexit world but all of them require considerable consultation and may even require EU treaty change later down the line. Something the EU is in no hurry to do. It seems like the EEA is the one option on the table which doesn't present too many obstacles and presents the fewest opportunities for upstarts to derail what will be a very sensitive process.

This option, though, is the one that remainers routinely underrate as something which does not satisfy the Brexit criteria and lacks any meaningful control over immigration. I need not bore readers of this blog why that is not so. Leavers on the other hand - the hard liners, are fixated on obsolete ideas of regulatory independence and free trade deals. This wilful refusal to examine the EEA is a deliberate ploy to force some other outcome which is neither realistic or practical.

Whether Britain gets a bad deal or not is actually quite subjective though. To my mind a bad deal would be what the Tory right would jump at in a heartbeat. The EEA on the other hand seems to be an entirely adequate basis from which to start the process of leaving. I might even go as far as saying this will be the default option once the fog of misapprehension clears - but this will be more through luck than by judgement.

What we are likely to see is an insistence right up to the wire that there is some other way. There hard liners will rule themselves out of the process with their bogus notions, leaving it to Theresa May to push ahead with an EEA solution, not as a departure lounge but as a risk free means of shelving the matter. That's how a good deal is robbed of its value.

The EEA as a departure lounge would allow the EU to save face and allow us to get going - but if it is the destination of the Brexit process with no further development, the Tory wastrels will have squandered a massive opportunity they will likely never get again. Backbenchers are frittering away their time on fantasies while the opportunity to properly evaluate options and strategies is thrown away.

If it helps, don't think of it as Brexit


During the referendum just about every remainer uttered the words "we know it isn't perfect, but we should reform it". And that really was the downfall of the remain cause. It is the ultimate conceit. Not only was reform of the treaties and institutions not on the table there was nothing in Mr Cameron's deal that suggested the EU was being reformed and there was nothing in it that suggested powers were being returned.

There was one other further conceit. That it wasn't the fault of the EU. The blame was directly aimed at David Cameron - the subtext being that a Labour government would have got a better deal. Put simply, if a conservative prime minister is disinclined to seek a new relationship with the EU then the chances of a Labour centrist government even asking for talks would be somewhere around nil.

And so we have a double deceit here don't we? "We know it isn't perfect" they say - but they know what we know. Reform was never on the table. Our political class had no intention of seeking reform, in truth saw little wrong with it and then proceeded to spin an elaborate web of lies that reform was on offer. Add to that a torrent of scaremongering, threats and insults and it's not difficult to see why remain lost the vote.

In the end the vote to leave was an act of defiance against apolitical establishment who had laid down the law. The message was clear. Our relationship with the EU is not even up for debate nor will there be any reform of our immigration policy. But they didn't have the decency to say so outright.

But that's ultimately why this referendum is primarily about democracy. An establishment that says no to its people is one that has outstayed its welcome. And I use the word establishment rather than government because what we have is an immovable political class where the policy is the same regardless of who is the ruling party. In this, the establishment is in open defiance of all of us. After all "we know it isn't perfect" and "we should reform it".

Some would have it that Brexit is cutting our nose off to spite our face. But really it's absolutely necessary. Even a soft dictatorship is intolerable. If there is no dialogue between a government and its peoples then we simply do not have a democracy. If it takes a seismic vote to force them to come to the table then that is what the people are obliged to do.

Now that the deed is done we have their full attention. They must now listen. The majority of people think we do need a significant change in immigration policy and the majority of people think we need a new relationship with EU. Given that the EU was not minded to even debate reform and no government was inclined to ask, we are about to push the one button that compels both our own government and the EU to initiate a root and branch reform of our relationship with the EU.

In this we have certain choices. What we want is a looser relationship where the EU does not have legal supremacy and a relationship based on cooperation and trade rather than supranational subordination. There is every advantage to both sides in negotiating this. The EU gets to reform to its own agenda without the UK being a blocking influence and the UK has the more flexible relationship the people demand.

We are now in a position where there is no possibility of full divergence from the EU and we couldn't have it even if it were desirable. Irrespective of the EU we are seeing ever more interdependence and economic integration. It is neither realistic nor likely that we could put up walls to Europe. So really Brexit is about how we define that relationship and placing limits on the power of the EU.

As yet we do not know what the government has in mind. What we do know is that the Tory Brexiteers want all the way out and all at once. If you have a familiarity with the issues you know that this is not at all a likely outcome. Nobody gains from it, nobody but them even wants it and it's difficult to see how it could be achieved. So it looks like we will have some form of single market membership with some more convincing reforms of freedom of movement. Nobody wants to disrupt trade and though Brexiteers may have won the vote they lost the argument on freedom of movement. It's the most popular facet of the EU.

In this it really is time to stand up to the likes of Ukip because their conflation of freedom of movement with open borders is a lie and pandering to this lie may well mean taking a hit to our economy for no real reduction in immigration and for no real purpose. Remainers say this was always going to be a possibility - that we would needlessly take such a hit - but ultimately that is the price we pay for our establishment burying the issue for as long as they did. Ultimately it is our democracy that needs to be safeguarded over and above the economy and for me that is the priority every time.

In the past we have shed blood for democracy. And I suspect we will do so again. But this time we have won a rare and precious thing. A chance for political change without bloodshed. A clear message has been sent that we need a change of direction and that the government must listen. Now we need a constructive dialogue as to what that new relationship looks like. Reform is what the people voted for and that is what we must have. If our establishment did not want to leave the EU then they should have heeded the warnings.

What we have now is a clean slate whereby we decide the path our relations will take for the next century. It's not a disaster. It's not a calamity. It's just a democratic corrective. A change of course away from the scheming of our political class. Nowhere does it say that necessarily means "turning our backs on Europe" nor does it mean turning inward. It's just a chance to plot a course that works for everyone. If that then inspires you to work toward overturning the referendum result, then that rather makes you the bigot, doesn't it?

Sunday, 28 August 2016

Brexit is a matter of instinct


The prosecutor investigating the aftermath of the Italy earthquake says shoddy cut-price renovations in breach of local building regulations could be partly to blame for the high death toll. Three medieval towns were flattened by a 6.2-magnitude quake on Wednesday, killing 291 including three Britons. Now Giuseppe Saieva has warned that property owners who commissioned sub-standard work could be held responsible for contributing to the quake's deadly impact.

And this, ultimately is why Britain never belonged in the EU and will do just fine outside of it. When it comes down to it we are not culturally aligned. Brits do like to is and whine about regulation but on the quiet we love it. We moan - but we would moan more without the good governance we are accustomed to. We obey rules and regulations. The continentals don't. That's why they don't see it as a problem.

From banking to construction there is a laissez faire approach to the rule of law and the above is a natural consequence of it. Italy's economy suffers because of the same attitude and their complete lack of enforcement. Because we observe the rule of law and the sanctity of the contract we are the  choice destination for business. That will not change.

Like it or not, there is a massive cultural gulf between us and the continentals and any "European identity" is one that only really exists in the minds of narcissists and eurocrats. To say one identifies as European in respect of our EU membership is to have bought into le grand project - but there is no European demos at all.

Ultimately there is only a convergence of political elites. There may be technical and regulatory integration at the ports and airports which are largely the domain of the technocrats and customs officials, but it's out in the shires where we find the real measure of legal and cultural convergence. And if we're honest, it's not happening. We are fundamentally different and a supreme government for Europe is just a bad idea.

In the end the EU is just a rogue non-state actor. We don't need them. We do not need them for legal, technical or academic cooperation and we don't need anyone telling us how to run our country. There are plenty of arguments for maintaining close relations with the EU but there was never a real case for being a member. We don't need the EU instructing us in good governance. We invented it.

Brexit is not a binary choice between internationalism and isolationism. We simply recognise that there are different means to achieve the same thing that do not mean giving up essential controls - and in so doing we safeguard that which makes us unique. In that regard, the decision to vote to leave was as much instinct as anything else. It is a recognition that it is our diversity that gives us our power and homogenising Europe is a futile and ultimately undesirable pursuit - and we don't need a supreme government for Europe in order to cooperate with our allies.

TTIP is dead - but don't expect much from a UK-US trade deal


News is travelling fast that TTIP has stalled. Many, including this blog predicted it. But it's not dead. It just smells funny. TTIP as we know it was always doomed. It's shrouded in complexity and mystery and it was never going to withstand first contract with any elected assembly. If it ever something called TTIP does pass it will be progressively watered down by protectionist instincts on both sides - but that won't be the end of it.

Our technocrats know full well that something of this nature is mistrusted by electorates both sides of the Atlantic. Why they even attempted something so ambitious and visible to the public beats the hell out of me. That's not how they normally play it. The most seismic developments in international trade have been largely anonymous pacts between non state actors like UNECE.

If anything TTIP is a legacy enterprise, setting out actions for convergence between long established standards and regulations. That's actually quite tricky when the USA and the EU have a wholly different approach to regulating. In the USA the burden of risk is on the producer rather than the regulator. There is a light touch in some areas of regulation but the ever present threat of a class action lawsuit if you get it wrong is why US companies take extra care. The EU though has it that everything is outlawed unless there's regulation for it. The product of this is a wholly different culture in regulation.

In recent years though there seems to be a convergence toward the EU way of doing thing and the USA has more work to do than anyone in bringing its own standards up to the global standard. Some things though, like FDA rules, are so American in nature that there is little or no scope for harmonisation therefore the task is to work toward mutual recognition. Such is highly political and not without difficulty.

The rest though is comparatively easy. The USA has committed to adopting global regulations and standards for all new areas of legislation and the EU has been doing that for as long as there has been an EU. Mutual recognition is no biggie with the rules are essentially the same.

Having invested many man hours and several years in TTIP, the intellectual substance of it will not go to waste. In all likelihood it will be broken up into a number of less controversial partial agreements - which is what they should have done to begin with. The agenda though is still to push through harmonisation with those difficult areas which could deliver massive benefits to both sides. FDA-EMA cooperation on medicines and medical treatments is the holy grail - to create a transatlantic single market in health.

British attitudes to health though are somewhat different with the UKs national religion being the NHS. Nobody likes the idea of US corporates calling the shots - especially when US testing and approval is largely seen as bent with some justification. This is the aspect of TTIP which will be watered down or shelved. The rest will happen through a gradual process of mutual recognition agreements.

In this the UK might as well wait for the EU to complete their own agreements in that we will likely just slam them on the photocopier and Tippex out references to the EU. When everyone is using the same standards and there is no political objection to regulatory harmonisation there is no real galloping hurry.

Some however, believe that the suspension of TTIP put s the UK in a stronger position for securing comprehensive deal. It really doesn't. The NHS is not up for grabs and our market size is not sufficiently interesting to build a time consuming comprehensive agreement. We won't be at the back of the queue as Mr Obama has suggested but we won't be getting anything out of the ordinary.

But that's actually a good thing. The whole approach in global trade is to forge multilateral agreements sector by sector where wider agreements compass any states which adequately conform to international standards. It means that nations can opt in or out according to their own estimations of value.

The conversation about trade in the coming months will centre around bilateral deals simply because this is all the media really understands and it is the old habit that trade diplomats can't seem to kick. I read a remain inclined article on the Norway Option this week making a big deal of the fact Norway has only one bilateral free trade agreement. Iceland I think it was. Except of course free trade agreements on tariffs are really not the engine of trade.

The modern trade agreement appears in many different forms and are registered in many different ways. Were we to look we would find Norway has hundreds of agreements independent of Efta. These would be MOU's and MRAs bilateral cooperation agreements on aid - which are actually very much a product of trade facilitation. Moreover, there are now global frameworks whereby simply ratifying a global convention and conforming unilaterally means that you can trade without a hard coded agreement with another state.

The fact is, bilateral deals are yesterdays news. Even TTIP is a dinosaur. Partial scope agreements and multilateral agreements make the leaps and bounds in trade. In this everything is centred around the trade facilitation agenda where foreign aid is key to stimulating services exports. The entire discipline of trade has changed and because the UK has been out of it so long - and the EU so fatally wedded to protectionism by way of extending market access on licence, there just isn't an up to date conversation on trade.

My own view is that the EU has been barking up the wrong tree all these years. The USA is a tough nut to crack and even installing TTIP by stealth will take many years and we may find it an asymmetrical relationship. In all these years the EU could have modernised and sought to be more of a global player on multilateral forums. Instead it extends bilateral deals to make a series of concentric circles with the EU as the controller in the middle.

Now that we are leaving the EU we can play a wholly new game with an unprecedented degree of agility. In that we need to be looking the world over for trade facilitation opportunities and not worry too much about bilateral deals. Rather than seeking those kinds of relationships we should be looking at mechanisms to exploit that can drag both the EU and the USA out of the dark ages.

Marching orders from Mrs May


The word is that Mrs May has given her little troopers their marching orders. A Brexit plan we must have and we must have one soon. There is already grumbling on Twitter about the absence of a coherent position from the government and this is not something she can afford to let slide. Industry will be asking questions and the speculation is hugely damaging. This comes amid suspicions that the civil service will attempt to frustrate the process.

This is the foundation of an upcoming row. All the little Toryboys are salivating at the prospect of grafting their free trade fantasies on to the Brexit process without any real understanding of the technicalities or legal constraints. They think it's as simple as leaving a golf club where you give notice and stop all payments. Consequently anyone attempting to introduce them to reality is viewed as a "miffed" remainer creating problems where none exist.

The immediate problem here is that the Toryboys are absolutely correct. Most of the crowing from experts does come from remainers - and ones who are not taking the referendum verdict lying down. Even the most minor complication becomes an object of much hyperventilation - which on closer inspection proves to be no big deal. Then there are those with no critical faculties at all who incapable of distinguishing between political posturing and the real world.

In this, impartial views are few and far between. Leavers are grossly oversimplifying while remainers are unnecessarily problematising. I end up doing both depending on who I'm debating. There are those on the leave side who see the process as so simple we can hammer out a deal of over beer and sandwiches and on the flip side we have moaners who think it's all just too darn difficult. So in the absence of reliable and trustworthy expertise we are left to figure it all out for ourselves.

The problem for the Toryboys is that their vision of a buccaneering free trade Britain is not in any way compatible with reality. There may have been a window prior to the Lisbon treaty where the kind of withdrawal they seek were possible but we're talking quite a long time ago. Systems have bedded in, agreements have taken form and all the while the rest of the world has been catching up with its own patchwork of harmonisation agreements.

The Toryboys would like nothing more than to take a match to decades of established regulation, stick twos up to the EU and pretend the EU never existed. These seems to be an overall reluctance to admit that there is no WTO option and they will not let it drop. In this there are now glimmers of understanding that things are more complex than they seem but the complexities are viewed as peripheral to the main issues rather a major flaw in their thinking.

The danger of this is that without any kind of adult intervention they will freeze out all critics and label them troublemakers and then build their own parallel universe inviting those they agree with to reinforce their stupidity. It is entirely possible that they will convince themselves they have a working plan with which to go into battle and without any real injection of sanity this is what we will attempt to negotiate.

What we will find is that the EU is not so accommodating and that we don't have the leverage they thought we did and will have to go back the the drawing board halfway through the process - returning with what they should have had in the first place. That then means we are pressed for time and must negotiate an extension using our last remaining leverage. There is a very real danger that we end up with an agreement entirely on the EU's terms - the end result being the absolute opposite of what the Tory right had intended and in all probability a deal that is far worse than EU membership.

Since the opposition party are too busy obsessing over who owns the railways we cannot expect any sense from parliament. The most they know is that the single market must be protected but having taken the line that Brexit must be resisted at all costs they have forfeited their influence. Once again it looks like our relationship with the EU will be one decided for us - and once again the fault will lie squarely with Westminster. 

Thursday, 25 August 2016

There is no simplifying Brexit


Modernity simply does not function without regulations. And there is no point in regulation unless you have inspection. And if you have inspection then you have paperwork. Everybody hates it but everyone would complain if it didn't exist.

In the modern age systems for trading in goods and services are built on a collaborative basis based on science and expertise. Very little is done unilaterally now and very little gets done quickly or cheaply. There are multiple overlaps where industry management has considerable impact on trade. They are uniquely intertwined.

In fishing, for example, the aim is to ensure you can sustain stocks and ensure your methods do not damage habitats and that the externalities of that activity are not unduly negative. So we have quota systems and means of punishing overfishing. All of these have to be negotiated and codified into law and contracts.

Before you know it you have a complex system and as it gets older there are more and more legacy issues where contractual obligations can stand in the way of reform. So if you have a regional resource like the North Sea it stands to reason that you will need an inspectorate and an arbitrations system along with policy units which can monitor the effects of policy-making and feed back findings to legislators.

Just in terms of ensuring we do not threaten various species of fish we need to ensure certain net sizes are not used in sensitive areas. We also want to ensure that the industry is not unnecessarily polluting habitats. And of course the coastline is valuable to the economy in terms of leisure and tourism so the activities of maritime industry must not threaten natural assets. This is when you get policy overlaps with competing agendas and incompatible policy objectives which can lead to inter-agency rivalry, jurisdictional issues and managerial incompetence.

Then introduce European politics into the mix. Now you see the problem. Taking back control means doing a full systems analysis from top to bottom. We might decide that we want to do something a little bit differently but that would possibly impact on foreign boats who have contracts written under the previous agreements. They have acquired rights. So you either have to buy them out or schedule your modifications. That means you need a centrally administered database of all fishing contracts and the types of agreements made.

It has to be staffed. It needs contract lawyers, ecologists, inspectors, customs officials, accountants and administrators. The entire industry is worth a billion to the UK alone every year. That's before you factor in secondary services and marine engineering.

So in this the last thing you would do is ditch forty years of established policy. To unilaterally take back control without consultation or forewarning is to shaft a lot of our trading partners and break international law. So when people tell you that we can leave the EU by hammering out a trade deal they are not being at all honest with you.

If you were coming at it from scratch, having never been a member of the EU then you might be able to approach it with a degree of blue sky thinking - but in reality we have let a common fisheries policy build up over decades with a number of mixed agreements therein which cannot be unspun at the stroke of a pen.

Some people think it's just a matter of swapping over regulations to ones we like that will reduce costs - but every single regulation has been hammered out on a multilateral basis and in its own way is a binding contract between parties.

And then we have to think where we want to go with our fishing policy. We can take back our waters but we don't have enough boats to fish them and we don't have the ports anymore. The ones that are not now city urban marinas are simply not equipped to cope with modern large scale industrial trawlers. There has been thirty years of development since we scrapped the North Sea fleet. And so though we will be in control of administration and we can change for the privilege of fishing in UK waters we won't be banning Spanish trawlers as some assume.

And then if we are landing fish then they must be frozen and packed and prepared according to a common set of rules, not least hygiene rules otherwise we cannot expect to export to developed countries.

So we are now in an era of massive interdependency whether or not you have a supranational authority or not and there is no such thing as absolute sovereignty and barely any unilateralism without extensive consultation and negotiation. Acting unilaterally in a way that could affect the trade of others can result in lawsuits and complains to the WTO. This really does expose the emptiness of the "take back control" mantra.

All of this is often dismissed as technocracy, but without it we would be in a very real mess. In this there is an inherent desire among Brexiteers to simplify that which cannot be simplified. You can make it more transparent, you can bring administration closer to home and you can maybe make marginal reforms but there is no silver bullet that makes the inherently complex more easily understood - nor is there the scope for ruthless slash and burn deregulation that some believe there is. It is a rich tapestry of law where pulling at threads is discouraged.

The idea that leaving the EU means turning our backs on technocracy is a bogus one - one that has been popularised by those who believe red tape is solely an EU invention and that Eurocrats dream it up just to pass the time of day. For sure there is corruption and commercial interest at play with undue influence from lobbyists but none of that goes away just by repatriating management of our waters. Technocracy is here to stay.

It is going to take a small army of experts and bureaucrats to design a replacement for the CAP and it is going to take them years to design and years to implement. If they have the outline of a policy inside six years then that would be an amazing feat of project management. Policy does not come easy - especially when it makes demands of the democratic machinery which has other competing agendas. And then there is implementation and the costs associated with transitioning. Another clue as to why we won't be saving £350m a week.

Leaving the EU is not a factory reset on regulation and trade law. All it means is that decisions will be taken a little closer to home with UK interests more closely guarded. Fishing is a worldwide industry where fish might be caught in the North Sea, frozen, shipped to Japan for processing and flown back to Heathrow. We must have laws that govern the supply chain so we have a chain of accountability - we must have food safety laws, customs laws - and health & safety at sea is more prominent a concern than ever.

So too are workers rights. The fisheries industry is not what it was. These days a trawler won't waste time going back to port. They will offload their catch to a fleet services vessel where some processing is done in the hold by illegal foreign labour on sub minimum wages. So we are going to want to safeguard our international reputation by having fisheries patrols ans air surveillance. Food fraud and black market fish is a huge part of fish trade.

This is what we have tasked our government with. Politicians who have for many years been used to debating taxes on carrier bags and whether a lady can wear a bikini on a billboard or whether the trains should be owned by the government. We are about to cross into another realm of politics leaden with complexity and dry detail that our politicians are simply not equipped to cope with.

And so yes we are going to delegate a lot to civil servants and scientists and yes we are going to entrust much of it to evidence based policy and no there is not time in the political calendar to give it the attention it deserves. So we work on an international treaty basis whereby we enlist the International Maritime Organisation, Codex and UNECE. We exchange Brussels for Geneva.

And now that you have a glimmer of what is involved in fishing now think the same for agriculture, airline safety, space policy, medicines, Europol, banking, customs and intellectual property - to name just a few. Now remind me. What was that you were saying about wrapping up Brexit with a free trade deal inside two years? Good luck with that.

We must leave the single market - but not yet


Brexit means Brexit. And what that means is that the government has to leave behind those things the public sees as synonymous with the EU. That means ending EU budget contributions, ending EU regulations (or rather EU legal supremacy) and controlling immigration. It really means leaving the single market. And I'm all up for that. The question is how?

Obviously a hard Brexit would be unnecessarily damaging to the UK and would sour our relations with the EU. Nobody but for a few hard-line Tories actually wants that. In or out of the EU we do not exist in a vacuum and we will have to do business with the EU. So as much as anything the Brexit process is a question of designing a new relationship with the EU.

First and foremost, to ensure good relations are maintained we must abide by the law and honour our commitments and contracts under international law. There is no bonfire of red tape nor can we tear up treaties.

Then we must take into account that we have put policy making into autopilot for four decades. We are in many respects not equipped to "take back control". We have lost our institutional memory in fisheries governance. We will need time and breathing space to transition into full control. Then we must consider access to the single market. We want to maximise our access while at the same time reducing our exposure to EU rules.

Had we never been a member of the EU this would be fairly straightforward. As an advance European economy we would already meet international standards that would easily qualify as equivalent to the EU and there wouldn't be any major difficulty in obtaining a mutual recognition agreement. The problem is that we have been a member and working out which of our rules are EU rules and which are gold plated international regulations and standards. We will need a long process to discern which is which where we will more than likely find a large body of law is fit for purpose and we wouldn't change it.

But given the complexity of this task there is no change a bespoke relationship can be created in two years. This is why opinion is converging around an EEA solution with a number of add-ons. This though does not really satisfy the "Brexit means Brexit" criteria. In the first instance trade is the only thing we gain any meaningful control over.

Certainly many remainers would see this as a viable compromise and I suppose even I could live with it as trade is reason enough to leave the EU and I don't really care about immigration as an issue. I think that technological advances and the end of the war in Syria will have more of a mid term impact on immigration than any change in policy.

But really if we are going to go to the trouble of leaving the EU we should go all the way. There will be some areas where we will retain a high degree of EU cooperation and I envisage that we will always pay something into the EU budget for those functions and services we use but this will be by choice rather than obligation. It saves us replicating domestic governance for no real gain.

The fact is that in many respects the EU single market is as complete as it is ever going to be without a common language and and considerably more cultural convergence - which for the time being seems implausible. Free movement of goods is easily achieved and you don't have to be in a customs union to achieve that. A lot of that is facilitated by established physical infrastructure where erecting barriers we add cost but no value. The holy grail of harmonisation is now trade in services which is a lot more difficult to measure and regulate.

But we need to look beyond the confines of the European debate to see the rationale for leaving the single market. As a nation freed of EU control on matters of trade the UK will be seeking trade with the developing world. These are economies in need of regularisation and conformity assistance in order to participate in the global rules based trading system. Britain will be investing heavily in aid in order to facilitate that trade - promoting good governance in the process.

In this we do ourselves three major favours. By opening up new export potential for Africa we create a source of cheaper goods - in agriculture especially. That reduces domestic cost of living. The very act of doing so puts us first in the queue to sell our business and financial services - along with our innovations. We are a knowledge based economy. Latterly, by improving the economies and increasing wealth of African states we reduce the push factor of war and famine.

But if we are going to do this then there must be common standards and rules. and that is central to the whole debate. We are often told that by simply remaining in the EEA we would adopt EU rules and regulations but have no say in them. Remainers casually rattle off this mantra as though it were gospel from god. But what we're actually getting is a bundle of international codes, conventions and regulations rubber stamped by the EU.

Previously it has been the case that the commission signs up to rules and regulations on our behlaf and then instructs us to implement them with no real blocking mechanisms at our disposal. This more than anything is the rationale for leaving the EU. As much as it is a profoundly undemocratic way of doing things the EU has had a tendency to gold plate international rules as a means of protectionism.

Now though, with increasing pressure not to deviate from the global standards the EU is limited in what it can do to the the rules and even MEPs find their own amendments stripped out by the Commission. So if we are increasingly a passive recipient of top table laws it really then begs the question what on earth do we need the EU for?

By leaving the EU we retake our own independent vote an all the key global regulatory bodies and in so doing we have a system of opt outs and reservations which mean that we can keep protections in pace if we decide that the balance of trade-offs is worth it. That adds both flexibility and democracy to the system from the get go.

But some point out that there is little value in having a free vote on such bodies when they are routinely dominated by the EU and the EU has the deciding vote in nearly all instances. This is where we have to look at the long game and this is why there is no immediate rush to leave the EU single market.

Effectively our foreign policy should be to act as a recruiting sergeant the world over to the various regulatory conventions that bring about global harmonisation of trade - assisting in conformity to ensure that existing members and new accessions maximise their own clout within them. Gradually we build up a resistance to the EU's dominance in regulatory affairs. Coalescing around our already cordial relations with Commonwealth states there are major opportunities to put pressure on the EU to reduce its own protectionist rules and to reform its anticompetitive behaviours. We can bash our way through the EU iron curtain.

This happens by way of building trade alliances on a sector by sector basis. And in this it isn't market size that gives you clout. It's the resources and the leadership you bring to the table. Britain's strategy should not be to leave the single market per se - but to expand it and break it out of EU control where participation becomes entirely voluntary - and then we build up momentum for a global initiative on mutual recognition and inspection - much like Port State Control. In this, our leadership may be the deciding vote among trade coalitions.

This still means responsibility for conformity and enforcement rests with the EU for EU member states but the rest of the world falls on the WTO for dispute arbitration rather than imposing the law with an iron fist. Central to this would the UNECE as the key forum for regulatory cooperation and administration. Effectively we would be using the mechanisms and doctrines that already exist in order to bring about a global single market where the EU is no longer calling the shots. UNECE is the regional arm of the United Nations. The idea is that UNECE is replicated in the other regions, then to join together.

All of this is going to take time and could well take twenty years to bring about. But that's just as well since it will take us nearly twenty years to sort out the entangled mess we find ourselves in. It will be fifteen years or more before we have fully taken back control over fishing and agriculture and a lot of EU labour law will be with us for decades to come.

We must use that time to lay the foundations for something bigger in scope and far more imaginative, preparing the ground so that when we do formally leave the single market, there is no real noticeable effect except that we enjoy similarly open trade with a lot more countries. By this time we will have evolved regulatory systems of service for application the world over where the EU is operating to the same rules as everyone else and completing the European single market means cooperating at the global level. In that we can be both ally and friend to the EU when they're right and blocker when they're wrong.

Critics of this approach think it a fantasy and is overly ambitious. But key to this approach is that it utilises many agreements that already exists, frameworks which are already established and methods we are already practising albeit on a smaller scale. While we have been on autopilot largely disengaged from the world inside the EU there have been giant leaps in progress around the world where there have been seismic developments in global regulatory harmonisation. We would simply be following the global trend - but we would be champions of it.

As to the criticism that it is overly ambitious, I take the view that if we are going to make a success of Brexit then we cannot afford not to be massively ambitious. It's not worth our while if we're not and it would be a wasted opportunity. We have to stop seeing the Brexit process as a timid exercise in damage control and look at it for what it is: an opportunity to kick start global trade and to reform the EU from the outside in ways we never could as a member.

The fact is that the EU is not going to reform or change its ways if we acquiesce. Through a process of considered international diplomacy we can bring pressure down upon the EU to get its act together and change both its attitudes and behaviours in trade.

There are those who are never going to be satisfied with our Brexit outcome. Some will forever be wedded to the obsolete ideas of the last century, be they disciples of EU supranationalism or free trade dogmatists opposed to the very existence of regulation, but for the rest of us we will be going forward with the best of what the EU pioneered while ditching the baggage that comes with trying to build a European superstate against the will of the people.

Brexit presents us with a world of new opportunities and as much as it is an opportunity to reboot domestic governance it is a chance to move the world into a new era of trade seeking out commonalities and opportunities to liberalise our trade relations the world over. It means that we can have a targeted immigration policy that works in conjunction with our foreign policy aims and lending advantage to our natural allies rather than those imposed on us by the EU.

In order to make the best of it we have to make full use of the new found freedoms we have and start celebrating the potential of it. To simply resign ourselves to being stuck in a siding of the EU is insufficient. If academic cooperation and research collaboration is indisputably good, why should that be a bartering chip of the EU and why should it be exclusive to members of the club? Why should we not extend the invite the world over? Who says the EU gets to call the shots?

They said we would be isolated if we left the EU but it's not going to be that way. We could be isolated if that is what we choose but Britain as an island nation is instinctively outward-looking which is why EU membership is incompatible. We've never been at ease with abdicating our global participation to the EU and relationships have suffered because of it. Brexit is a chance to undo the damage and work toward the relationship we should have had with Europe all along.

Wednesday, 24 August 2016

The boil has been lanced. Now let's get on with it.

The referendum has revealed a few not-so-surprising things. Firstly that the least qualified to speak on EU issues are Tory Brexiteers. As much they're not even close to comprehending how trade and regulation works they don't want to to either. Blind adherence to an ideology is always a major obstacle to learning. But that is not to say that remainers are any better informed either. If EU ignorance were a currency we would have enough to close the deficit for good.

In this the media is not much more advanced. There are glimmers of understand here and there but there is an over reliance on received wisdom whereby bogus assertions gradually establish themselves as irrefutable articles of fact - thus the entire debate is distorted.

There are a few who have attempted to look beyond the run of the mill talking points like David Allen Green, Ian Dunt, Allie Renison and Janan Ganesh but they display their knowledge in the same way that a teenage girl shows off a new frock. You can tell it doesn't quite fit, you can see it's new to them and they have not yet found a comfortable way to wear it without looking goofy.

They are also blinded in a similar fashion to the Tory ideologues. Their quest for knowledge extends only as far as a quest for more problems. I'm not seeing very many efforts to find solutions and in fact these people go out of their way to deny the existence of solutions or casually dismiss them. The aim seems to be to create a smokescreen of confusion in the hope that Brexit can somehow be stopped in its tracks. Consequently there is more heat than light.

As Ian Dunt put its it "This is nothing less than an opportunity to reshape a country, and only the right-wing of the Tory party seem to recognise it". That to him is a reason enough to do everything to possible to stop Brexit - as a safeguard to democracy no less.

But this would actually be an affront to democracy. By all means we need a consensus on a way forward where all voices are heard - and there is every reason to believe the Tory right will be put in their place if parliament does its job - but killing Brexit would be to ignore the central message of the referendum.

In spite of dire warnings from prestigious institutes and prognostications of gloom from economists Britain still voted to leave. This really is "an opportunity to reshape a country" and that is exactly what the public wants. As Dunt has it, "basically, the entirety of British law over the last few decades is up for grabs, in a bonfire of legislation". Bring it on!

The medical profession has never been truly at ease with the working time directive - and as a contractor I detest the very idea that flexible work is being attacked from all sides. Britain more than ever needs vitality and fluidity back in its labour market. If that opens up the potential for exploitation then that is an opportunity to reignite union activism. 

Agriculture has suffered for decades from a stagnant policy where even marginal reforms to regulation have proven near impossible. We now have a blank slate on how we approach rural policy and in that there are numerous opportunities to change the way we think about the countryside. I would like nothing more than to see the devolution of agriculture and rural affairs to the local level. 

In energy I would like nothing more than to see us ditch vanity carbon targets in favour of a pro-growth agenda. Nobody thinks our approach to energy is adequate and nobody thinks it is cost effective. Again, there is no reason why energy policy could not in part be devolved to the regions. There is a huge opportunity for remunicipalisation and we can do it through energy collectives. 

More to the point the government is taking back control of trade for the first time in decades. For the first time in my lifetime there is public debate about it and again we discover the politicians have absolutely no idea how it works. And this to me underscores why we should leave. Our political class has complete abandoned key policy-making to the point where they are wholly ignorant of it. 

Our knowledge of agricultural governance has withered on the vine, our politicians don't know how the EU works and have even less idea how trade functions and so how can they be in the least bit capable of holding the EU to account? Being in the EU means putting policy on autopilot. And what do we have for scrutiny of the EU? A ragbag of intellectually subnormal MEPs you wouldn't trust with the TV remote. 

Britain has demanded a change of government. They turned out in record numbers in the most significant public ballots for decades to send a message. We want change. And Brexit very much is that change. In this we have a world of opportunities open to us. Politicians of all stripes should be salivating. But what do we have instead? Snivelling tyrants who don't trust the process enough to even have these debates. All we get from them is a torrent of petty problematising. 

I am a firm believer that there is a solution to every problem. In politics it is merely a matter of political will. Some walls mean you have to change direction. Others you just have to smash through. We know that there are complications in the Brexit process. We know that there are a number of paradoxes to be resolved. But they are resolvable. With a lawmaking machine like the EU there is always a mechanism to make things possible - not least single market access and control of freedom of movement. It can be done. It has been done. The losers just prefer to see problems. 

More than anything Brexit is an opportunity to do what Cameron failed to do. We can completely reshape our relationship with the European Union. We can have the close cooperation we seek but maintain the controls we need. I just don't see a downside.

For the time being there will be a period of uncertainty. The biggest political battles are still in front of us. We are going to pay a price for leaving the EU and it will dent the economy. That doesn't change my mind that we should never have put policy making on autopilot and if it costs us to get it back under our control then the fault lies with those who took us into such an arrangement without consultation or consent - not those who voted to leave.

Some would have it that Brexit irrecoverably damaged our standing in the world and permanently damages the economy.  It's all so final to these miserablists. The truth however is there is no limit to the opportunities that await globally. The worlds population is increasing all the time and agriculture will have to grow with it. We have the technology to turn scrubland into prime crops. We have the knowhow and we have the talent. If we turn our attention the UN sphere of international development and invest in the trade facilitation agenda, using all of the global forums, then we can be more agile, more decisive and more inventive than the EU. 

This however, is going to require a change of attitude. Impossible is a world we hear far too much from remainers. The fact is, the EU is not the only game in town and there are entirely new, hitherto unexplored modes of trade that have yet to permeate the Brexit debate. When we finally have that conversation - and open up the debate about the globalisation of trade and regulation then we will view the EU in its proper context as an inhibitor to trade rather than a facilitator of it. 

In fact that is a debate we should already be having but that of course busts wide open the debate about the viability of the EEA option - something the dishonest remainer bunch really don't want to talk about. These are people who would rather be proved right than contribute anything to the debate. 

We hear a constant drone of grumbling and complaining that Brexit will tie up government for the next decade but that is something we should be celebrating. We will be putting every area of policy under the microscope and redesigning policy for a completely new relationship with the EU and the world. We will also be forging a new relationship with the electorate - healing the rifts that brought about the Brexit vote in the first place. The boil has been lanced.

Meanwhile it now looks like Scottish independence is less like than ever - the SNP have run out of political capital and even the Tories are gaining popularity north of the border. Regressive socialist ideas are being rejected by the electorate - as are the poisonous paternalistic ideas of the Blairite left and within a few years we might well see Ireland quitting the EU. Rather than fragmentation, it looks like the British Isles will be restored to the culturally compatible union of friends that it is.

I'm not one who believes that Britain is looking ant an imminent renaissance of power, influence and free trade. I am no Hannanist. We will have to make some hard choices and trade-offs to undo the damage of EU membership. We will have to redouble our diplomatic and trade efforts and we'll be fighting to compete outside the EU - but for once we will be in control of our own destiny with vibrant debate about how we achieve it. How well we do is entirely up to us. That's why I'm sick to the back teeth of dishonest miserablist losers like Ian Dunt and those who think as he does. 

Brexit is the factory reset button on a political settlement that has become stale and is completely bereft of ideas. It is not delivering and not even the remainers think the EU is the solution. They're just petrified of change. They can't adapt to the modern era of globalised trade and globalised governance. Remainers are the dinosaurs who can't adapt to the new paradigm. They can't even acknowledge it exists and would do anything (up to and including subverting the largest democratic exercise since the war) in order to cling on to the past. 

I don't know about you but I am thoroughly sick of these saddos and morons. Brexit is the best thing that has happened to Britain for ages. I can't wait to get stuck into what will be a challenging and deeply interesting process. 

Trade will always be an imperfect system. It's time we admitted it.


I broke my cardinal rule on the blog last night. I made a passing comparison of the EU to the USSR (now edited). From the point of view of the reader, it sounds ridiculous - but in the context of what I was thinking, the comparison is valid. It is harder now for a third country with no preferential access to the single market to get goods into the EU than it was to get goods into the USSR.

That says quite a lot about how customs systems and standards compliance have evolved - and we are now inspecting at a whole new level of detail. There very much is an iron curtain - a firewall of red tape and compliance - and this is why the developing world finds EU trade frustrating. The relationship is wholly asymmetrical where the EU is wholly at liberty to export - but there is no reciprocality. On those grounds the EU, when it comes to movement of goods, is probably worse than the USSR was.

The USA is the same. Trucks entering from Mexico without the proper compliance documentation are subject to intense screening. There's actually a good example demonstrated in episode 8, season 2 of Better Call Saul at the beginning. It causes delays - it costs money.

This kind of border inspection has the potential to spoil goods, especially fresh produce. This is why the UNECE TIR convention is being adopted by a number of new countries and it forms the basis of a new African free trade area so that lorries may pass through countries without inspections. That way the only pinch points are the ports.

In order to remove the necessity for port inspections the EU has a customs union but the same effect can be achieved with a mutual recognition agreement on conformity assessment. Both parties agree that the standards and means of inspections (along with the qualifications of the inspectors) are equivalent. Such is subject to random audits.

And while this is not a free trade agreement it very much is a trade agreement and if we broke away from the EU unilaterally as the Tories propose then very soon we would be in a real mess.

As it happens the EU has a number of these agreements not just with third countries but other blocs where the EU is satisfied there is sufficient conformity. At this point it should be pointed out that a mutual recognition agreement is not necessarily a standard agreement. They are all specific to the partner country or bloc. There are some provisional agreements with African nations but they do not cover all sectors. Specific authorities have their own agreements. For instance the EU's medicines agency is working toward an MRA with the US FDA (Food and Drug Administration).

The process of trade now is to seek out new areas of regulatory harmonisation and customs cooperation. This is why my eyes roll when toryboys talk about tariffs. It's just one tiny element of trade. They seem determined to ignore the significance of regulation. To them it's just a matter of "cutting red tape". Nobody wants to be sullied by this level of detail - especially when in their imaginations we are going to have a bonfire of regulation and let the markets decide.

While you could get carried away with such radicalism, it overlooks the need for phytosanitary measures and disease control among both humans and livestock. It's also matter of quality control. You buy goods with confidence specifically because we do spot checks of formaldehyde on plastic produce. It's why we don't import cheap electronics that electrocute people.

There comes a point though, when all of this amounts to a hefty regulatory burden that slows down trade. Technical barriers to trade are increasing. The ideologue would simply take an axe to all of the technocracy - but these would be the first people to complain when Waitrose is no longer stocked full of pristine quality checked goods. So then the process of removing red tape becomes a matter of making better regulations informed by science. It becomes a matter of systems integration and harmonisation. Trade then becomes a delicate process of agreeing common standards and common data structures. And when we have world trade, it helps if there are global standards.

This of course means making multiple compromises and making broad brush agreements at a level where there is nothing even approaching democracy or accountability. The EU is one such example. The toy parliament is neither here nor there. MEPs do not get to tinker with standards and regulations. It is literally above their paygrade and ability.

So then in come the finer philosophical questions as to who decides these things and under what circumstances can they be opposed or ignored. The EU approach has been to demand uniformity throughout and demands universal conformity. And there is a lot of sense in doing it that way. But there are losers as well as winners and it raises the bar to market participation. As much as you must have expertise on how to make your product you must also make it conform to the standards and meet the shipping regulations.

Libertarians argue that this means adding extra costs that freeze out the little guys and stifles innovation and competition. They are absolutely right. But then there are positive and negative liberties. Is the "little guy" perfectly at liberty to make ramshackle electronic goods that may electrocute the user? Of course not. The market (or rather the people) demand a degree of conformity and testing. Moreover, it reduces negative externalities.

You might have notice in recent years the Fire Brigades Union opposing attempts to merge the Fire Brigade with the ambulance services - creating a uniform rescue service. But it will happen simply because incidences of house fires have collapsed by more than fifty percent in the last twenty years. We don't have coal fires, we have safe gas systems which are heavily regulated and we have electronics testing so that electrical fires are now rare. This means we don't need an extensive fire service and household insurance is now cheaper than ever.

So if the complaint is that our iron curtain prevents the rest of the world trading with us then it becomes a question of bringing the rest of the world up to global standards. This is known as trade facilitation. It is the only game in town when it comes to boosting trade. But it costs money and takes time. And even if we can secure mutual recognition agreements these systems have to mature and trade is then only as good as the physical infrastructure - the ports and the roads. This is where the major investment opportunities are and that is where we can boost our exports in services.

Underpinning all of this is a myriad of bewildering agreements of different types. There are more than ten categories of trade agreements each with their own methodologies for achieving harmonisation. Then there are comprehensive agreements like TTIP which span nearly all of them.

The truth is that the world is no simpler for leaving the EU and there are no silver bullets for getting round the technocratic burdens. It is a process of negotiation and constant evolution where the process is dry, opaque and remote. Part of the opposition to TTIP is because it is shrouded in a fog of complexity that leaves electorates suspicious of what their government is doing in their name. At the stroke of a pen industries can be wiped out in the name of the common good. One day your business is compliant. The next day it isn't.

That's actually why Brexit is ultimately necessary. Trade is becoming more complex where the bigger and more ambitious deals can do as much harm as good. The EU does not allow for exemptions and waivers. The EU is too wedded to the idea of a single uniform marketplace where nobody has a commercial advantage. They call this a level playing field - when in fact it's just a brake parachute that ensures nobody gets ahead. That is why European trade is stagnating and the EU is becoming less competitive.

In trade terms we need to be thinking more along the lines of little and often rather than looking for trade bazookas like TTIP. It really is a hare and tortoise game. Politicians like the idea of big solutions to complex questions but in reality it is a patchwork of incremental policies that bring about the biggest gains. This is why the global approach is better. Multilateral forums with no central authority as such.

The WTO approach does not insist on conformity. It allows the world to evolve at its own pace. Instead it has a system of arbitration where complaints can be brought to it if a nation can demonstrate that an action in contravention of an agreement harms their own trade. This approach allows nation states maximum sovereignty in a world where absolute sovereignty no longer exists. It formalises informality but in a less restrictive way.

The EU approach is the search for a non existent ultimate harmony - a utopian order to trade that becomes more elusive the harder you strive for it. World trade will always be chaotic. Billions of people making trillions of transactions daily with new innovations surpassing our ability to regulate and control. So what we want is systems that facilitate trade while reducing harm - which maximise profits and supply chain efficiency while protecting the customer. At the same time we must safeguard that which makes us distinctive and the system must be fair.

That is why trade regulation has no endgame. It is a continuum where the system is never complete - where every nation must speak to every other nation. Having a rogue entity like the EU commission making agreements on behalf of all of Europe means making decisions for half a billion people when it cannot possibly know who the winners and losers will be. We need to recognise that there is no perfect system and no endgame and build transparent institutions that allow nations to get the best for themselves according to their own talents and resources. We must stop looking for easy answers.

Ultimately a dogmatic and ideological approach to trade means trampling on the rights of nations - making demands for sacrifices they have had no real say in. That can never be democratic nor can it maximise trade. It can only ever enforce mediocrity. Brexit is an opportunity to change the way we do things and play the game by a different set of rules. We won't be having a bonfire of regulations but we can at least make sure that our voice is heard and that we retain the right to say no. Without that, we make ourselves slaves to a machine where the greatest crime of all is to be different. That is not a world I want to live in.

Tuesday, 23 August 2016

It's time for remainers to get real about Brexit


Ok remainers, we get it. You REALLY don't want to leave the EU. The problem is, the majority of the country doesn't agree with you and there is scant evidence to suggest they have changed their minds. And if you're objective and fair minded you know full well it is nothing to do with bigotry or xenophobia. It's about something more profound.

I know what genuine xenophobia looks like. I am pleased  and proud to say that it is rare. Some may express politically dubious views but most people are decent and when challenged they will capitulate to good sense. The notion that the UK is suddenly a hotbed of racism is completely bogus.

There's a real message in the final verdict. Remainers are aghast that regions which receive the most in EU funding turned out in high numbers to reject the EU. What does that tell you? If you take that to mean working class people are thick and voted against their own interests and that media bias meant that the message of economists didn't get through then actually it's you who's a bit thick.

Let's take Sunderland. Sixty one per cent voted to leave. Yet the North East is swimming with EU cash. We can say the same of Sheffield. Regions formerly associated with the UK's productive heavy industry. What they would call rust belt in the USA. Don't worry. I'm not going to bore you with all the clich├ęs about globalisation. These are regions with proud traditions and a history of making things - but automation and globalisation have made these towns redundant. We know all this. It bores me even to type it.

What we are told though is that we are stronger, more prosperous and more influential in the EU. Londoners evidently believe that because rich cities based on global services only get richer. Meanwhile Liverpool is turning into our own version of Detroit. For sure it has a first class container port but modern trade is all about automation and reducing headcounts in shifting produce around the world. We have made our great cities redundant along with their inhabitants.

But this isn't new. Our core industries have been gone since the eighties and early nineties. The EU has had twenty years to deliver. It hasn't. We've seen cosmetic regeneration but whatever prosperity we have enjoyed has been fuelled by cheap money and a mountain of debt. Now that party is over the fundamentals are unsound. We can't borrow and spend. We have to find ways to compete in the global economy and increase our productivity. And that is something the EU cannot deliver.

The EU is presently negotiating TTIP. They have been negotiating it for years and is nowhere near a conclusion and its future is uncertain. It's not even popular. It might not even pass. Years of trade liberalisation go up in smoke. For what? We were told that being in the EU meant that we get more bang for our bucks by way of increasing our clout. But there is scant evidence of that if you live in the North East or Liverpool or Stoke on Trent. Meanwhile we continue to import poverty.

The fact of the matter is the current economic model, underpinned by EU administration of trade, is not working. It has not delivered. If there is EU development money coming in then it is subsistence. And it's not going into the pockets of those who need it. And it is after all our money. We have seen the quangoisation of regional economic development policy and much of the money goes on corporate fat cat salaries on regeneration projects that do not deliver. Bonuses for all - unless you're one of the little people.

So enough is enough. The EU has had all the time in the world to demonstrate its sincerity. The UK has been in the no man's land of post-globalisation economics for two decades and it doesn't look like anything is going to change. We need to pull up our socks and get in the race. We need to start competing in a global marketplace. That is not going to happen from inside the EU iron curtain. We are euro-centric, complacent and overindulged, locking out the rest of the world under the misapprehension that the world owes Europe a living. Not so. The rest of the world is catching up and we need some new thinking and we need to get mobilised.

Brexit will do that. For the first time in my lifetime there is a deep and thorough debate about trade dynamics, trade politics and the mechanisms by which we can expand our trade. We have popularised trade as an issue by voting to leave. Trade and development - and how we relate to the rest of the world will dominate politics for the next decade. And that's how it should be. The debate will bring about new innovations and new ideas and new approaches and it will refocus our politicians on the matters that matter - rather than their myopic fixations like telling us what to eat.

I don't disagree that Brexit is time consuming and difficult. It may well mean taking a step back before we can go forward. It may well mean the systems of support that have maintained a subsistence existence take a hit. The fact is we are willing to take a gamble. We are willing to give it a shot.

Brexit is our chance to redefine our uneasy relationship with the EU and it will allow the EU to become what it needs to become while allowing us to think about our place in the world and how we relate to it. This is a revolution in domestic and European governance. there will be winners and losers - but all change presents opportunities. Now is the time to be thinking big. Now is the time to think beyond the confines of the EU and look at the developments in global trade while we have been in this state of economic slumber. For four whole decades Britain has retreated from the world and abdicated matters of trade and industry to the EU. Now we are playing catch up and we will realise there is a party going on with an open invite.

This blog has spoken much of the potential in Trade Facilitation - and this is something the national debate has yet to get to grips with - but as a services economy this really does open up a world of opportunity. We have to stop catastrophising Brexit and look upon it as an opportunity. It is an opportunity to bring about the relationship with the EU that we could not secure as a member. It is an opportunity to reassert our distinctiveness. And it is an opportunity to harness entirely new modes of trade and commerce in ways we never imagined.

When the EU was envisaged there was no such thing as containerisation, the Internet and smart-phones. The world is very different today. Global markets need global rules, not regional ones. That is where Britain needs to be acting as a voice in its own right. The world has moved beyond the quaint old EU. Now is the time to rethink everything we do. Brexit forces our politicians to have that debate - and it's the only thing that was ever going to. Brexit isn't a disaster. It's just a change of tack because the status quo doesn't work. There is nothing to fear. Brexit will only be a failure if remainers persist in their desire to make failure a reality.

Brexit: a storm brewing on the right


While all eyes are fixed on a possible Labour split, what isn't being taken into account is an imminent row between Tory backbenchers and the government. Bernard Jenkin, John Redwood, Philip Davies and all of the usual suspects on the Tory right insist on ending freedom of movement and leaving the single market. There are about twenty such MPs which is a handful more than Mrs May's majority. They could if they wanted bring the government down.

These are men of no knowledge. They pretend the single market is easier to leave than it is and believe that we do not need to use Article 50. They believe that we do not need a preferential agreement with the EU and can trade using only WTO rules. Right now they are drafting in just about any crank they can find to confirm this world view - and there is a small army of supporters who believe it because they want to believe it.

You can point out that you would at the very least need a mutual recognition agreement on standards and conformity assessments along with a number of other bridging agreements in order to transition out. They then call this WTO+. Except that WTO+ is actually its own concept at the WTO and is nothing to do with Brexit. More to the point, a string bag of bilateral agreements with the EU is then by definition not the WTO option. The WTO option is the baseline where no agreements exist. If you then introduce agreements with the EU then you are in fact talking about the Swiss option where you have over a hundred such agreements that took many years to hammer out.

But then if you are not intending on using Article 50 and intend to unilaterally break off from the EU then there is no legal compulsion on the EU to even enter negotiations. And having done so, we would have voided all of our existing agreements having conceded already on things we could have fought to retain. But then if we were to use Article 50 then there is only two years in which to construct this ill defined concept of bilateral agreements.

These Tories take no account of decentralised agencies and peripheral agreements or any of the binding contracts we have within them. As far as they are concerned we can just rip contracts in two without any consequence. They then tell us that the rest of the world would be keen to enter new agreements with us. They are not on this planet.

Moreover their concept of a free trade agreement is an agreement on tariffs which you all know by now is neither here nor there in terms of global trade. They claim that if the EU maintains its common external tariff then we can reciprocate. We can't. As a third country with no preferential status we are ironically bound by WTO rules that say we cannot discriminate. If we put up tariffs for the EU then they must apply to everyone. So in fact the EU very much can have tariffs - but we can't.

While I am no fan of consensus politics it is the near universal view of trade economists and political analysts that the WTO option is a non starter - something I had concluded long before they'd ever given it a nanosecond's thought. The only people who think it will fly are fools. But there's really nothing you can tell these people. They have constructed their own reality and keep it tightly sealed so that critics may not intrude.

Worse still, David Davies, the minister in charge of Brexit, along with Liam Fox also believe in these fictional scenarios and are using time we cannot afford to waste trying to construct a justification for something that categorically will not work and will probably result in the EU taking us to court while absolutely destroying our credit rating.

And to those who say it's really not that big a deal, it really is. To those people I ask on day one of walking away from the EU what happens when a lorry rolls off the ferry at Calais? They never have an answer. I can tell you want the answer isn't. The lorry does not go on its merry way through to its destination. It is sent to a compound for goods inspection. The driver must then supply proof of conformity to EU standards. And since we don't have a mutual recognition agreement on conformity of standards assessment, the paperwork supplied is simply not recognised. In short, road freight to the continent grinds to a halt literally overnight. That's what happens when you don't negotiate an agreement.

Almost certainly we could then secure an emergency agreement to get goods rolling again but this would be as a favour to the UK and we would have no leverage in securing any preferential terms or exemptions. But this is all complicated you see. And nobody wants to hear that things they think are simple are complicated. Especially Toryboys imbued with Randain ideological dogma. You can't tell such people anything at all.

I don't know how this is going to play out in parliament. It will result in a political stand-off. There is certainly no way we can invoke Article 50 until this matter is resolved and both parties will take it to the brink. In the end I believe the Tory right will blink first but they will go down fighting and force a completely pointless concession from the government than means our terms of exit will be worse. It may even result in Davis and Fox being sacked or forced to resign. What it will mean is that those spearheading the Brexit efforts will be utterly discredited and politically defeated.

Parliament at this point could well put the brakes on the process. And I wouldn't blame them. That is when Brexit will be held in question and we will see renewed calls by parliament for a second vote. The only thing on the table by that point will be an EEA style agreement whereby we pay in the same, maintain the same rules and to a large extent maintain freedom of movement. I actually have no problem with the EEA agreement in that it gives us a great deal more influence over the rules - though the media will ignore those points because it is incapable of comprehending the globalisation aspect.

By this point you can expect multiple bitter rows inside the Conservative party and a great deal of cross party conflict. It is at that point where the real uncertainties start to bite and that's when we will see market jitters. There is the possibility that such an intractable conflict could seriously distort Brexit talks. I can't predict the future but I know this mother of all rows has got to be resolved sooner or later. We have been fighting these Tories for two years now and they are quite determined that cats can bark and fish can walk. They will take their delusions right up to the wire. It was never going to be any other way.

Monday, 22 August 2016

The experts have spoken: we need to leave the EU


Above is a short clip of a Brexit protest earlier this year. It is instructive of how remainers think. Underlying the remain message is that democratic decisions should be deferred to experts. Creepy as that is, there are some haunting statements in it. One that has been ringing round my head all day is "We need experts to speak, And I have watched experts - people with PhD's in European law".

Indeed we do need experts to speak. The assumption here is that experts have not spoken and that they have not been heard. Professor Michael Dougan is one of those experts with PhD's in European law. His Youtube video has over half a million views. Similarly the LSE is broadcasting the opinions of Gavin Barrett, Jean Monnet Professor of European Constitutional and Economic Law in UCD Sutherland School of Law. I don't know if he has a PhD or not but we can say he has both qualification and prestige. I do not agree with either of them.

So who am I, a nonentity from Bradford with only a mediocre set of GCSE's to question such titans? I don't call myself a journalist. I am a blogger. One who has a particular tool which nobody else seems to have. You may not know this but the internet has websites called "search engines" and when you "search" for things you find a diversity of different views on a number of topics - which is quite useful when you consider the EU governs everything from fishing to human rights law. And in this I'm going to hazard a guess that the learned fellows named above couldn't tell an inshore trawler from a crab boat.

It turns out that the bodies representing the fishing industry remained largely neutral as there is broad disagreement in the industry as to whether the EU is beneficial. And thanks to Facebook I have the privilege of knowing one or two legal minds who are fundamentally at odds with eachother on the subject of human rights law. Just as an inner city Londoner may have different attitudes to immigration from someone who lives in Sheffield or Sunderland. And though they may be no economists, they are experts in their own life experiences.

In a subject as broad as a supreme government for Europe anybody is qualified to voice an opinion. Given that there is no fair or accurate means of weighting the validity of such opinions we have a little thing called democracy, where everybody gets a say. And a vast majority who had a vote used it. And a clear majority decided that the EU on balance is not in the UK's best interests.

In this we had a year long debate about it. Everybody knew there was a referendum coming. That's quite a long time to deliberate on the issues. Some had already made up their minds. We are told that those who voted to leave tended to be the older generation. But these might well be people who made up their minds more than twenty years ago. It's just taken this long to have a say.

And in this, the losers cannot say that voters were not given enough information. See, it turns out that that "search engine" thing I use is available to everybody who has the internet. Who knew?

We had all of the major corporates telling us that Brexit would be bad. We had a procession of global and national economic institutions telling us that Brexit is universally bad. The entire edifice of academia piled in to tell us Brexit would be a catastrophe. Their message was heard. Even the government got in on the act and sent its own prognostications to every household under the guise of public information.

The problem is that much of what they said was demonstrably false. Much of what they said was based on projections built on flawed models. Some of what they said was exaggeration. Some of what they said was pure fiction. In fact, thanks to that "google" website, many of us were able to conclude that even our academia was indeed lying to us. So it then became a question of which side deserved to win. An adversary of mine always said that the vote would come down to which side was despised the least.

In the end it was the remain side who crossed that finish line first. Everybody knows the Leave campaign was fraudulent. The fact is the in depth issues that form the basis of our objections to the EU can not so easily be communicated in sound-byte form and so a degree of simplification was necessary. We could not rely on empty platitudes. We had to argue our case in the chatrooms, forums and social media. And people of their own volition did precisely that and contributed to what has been one of the most comprehensive national debates in my whole lifetime.

By the time the vote was over, anybody who wanted to engage in a conversation about the issues had the opportunity. And nearly everyone I know made the effort. The ultimate truth is that the remain side lost the argument.

The public may not be experts in EU constitutional law - and in truth the majority of people have a very shallow understanding of what the EU is and how it works. But they are capable of deciding whether or not they consent to it. We are all very well aware that the EU has legal supremacy and the UK government is not the final word. So it became an far broader question as to whether the British thought they were getting a good deal. Wealthy London thought so. Everywhere else disagreed. Even Scotland's determination to remain in the EU represents a lack of faith in London's governing ability.

And so this was not a message to Brussels. Rather it was a message to Westminster. It was a notification to cease with the present trajectory and change tack. The fact we turned out in such numbers shows that this issue has even greater significance to the public than even a general election The public realised that this could well produce real change where a change of government would not. And so the baseline verdict is that the majority of the public want change - and they are willing to pay a price to get it.

Consequently, those seeking to subvert the verdict must explain why the largest exercise in democracy for a generation should be disregarded. Moreover, they must explain why clinging on to the status quo is better than change. After all growth as only limped along and the majority don't feel any better off for keeping things the way they are.

In the end though, it comes back to those original words. "We need experts to speak". Well, we are all experts on our own political views. And we know that we do not what to be governed by a supreme government for Europe that has not delivered prosperity or security. The experts have spoken. Now it is time for those experts to be obeyed.