Monday, 11 April 2016

Brexiteers won't get all they want, but we'll get a good deal


Quoting from the FT, "Britain should not expect an easy ride in negotiations with European countries if it votes to leave the EU, a German think-tank will say this week. In what will be a boost to the Remain campaign’s argument that securing a beneficial trade deal will be far from straightforward if the UK votes for Brexit, the Cologne-based IW think-tank writes that the UK’s negotiation position could be “considerably weaker” than is generally expected".
While many EU nations have kept quiet about their negotiating stance for fear of being accused of trying to influence the referendum, the report suggests the UK would face tough talks.
The report acknowledges the argument which Leave campaigners make that Britain’s trade deficit in goods gives many EU countries some incentive to seek a free-trade agreement with the UK. Other states, “would remain interested in keeping good political relations with a close and important neighbour,” the report says.
But it adds that this incentive to co-operate is likely to be outweighed by other considerations. Listing the “strategic misconceptions” of Britain, it notes, “the UK would rely more on market access to the EU than vice versa” and “political considerations could outweigh economic considerations, as the EU might fear that other [member] countries could follow the UK in exiting the EU”.
“As with Switzerland, the EU’s inclination to co-operate could worsen, if the UK chose to significantly restrict labour migration from the EU,” the report adds. Moreover, there would be “no free lunch” in terms of reducing the regulatory burden. The more London sought freedom from EU rules, the harder it would be to maintain market access to the union.
IW says that the short-term effects of the uncertainty caused by Brexit could damage the business environment and cause “a certain degree of financial uncertainty during an adjustment period. The uncertainty could also be more protracted.”
The report continues with the usual FUD which I won't bore you with but in the main, I would go with this assessment. We've heard plenty from Leavers about getting "a better deal than Norway" but renegotiation of core areas of cooperation requiring re-ratification at each stage is not something that can be done rapidly or without bumps in the road. If with Germany bending over backwards to beat upstarts back into place, Britain is not going to have an easy ride of it. Less so if it does prioritise the political over the economic.

If we insist on ending freedom of movement then a whole universe of cooperation agreements are dragged into the arena for debate. That is the last thing any sane government would do if they wanted to meet the two year deadline - and given the uncertainty involved in long and protracted talks, we might well expect everybody wants it wrapped up in eight months, let alone two years. The only way to keep Brexit talks simple without opening up too much for debate would be from the outset to concede on freedom of movement. That is the only way we can leave without threatening access to the single market.

Only if Britain makes massive concessions can we expect a straightforward negotiation. If any government were to seize the opportunity to open up everything for discussion, we would be faced with a gargantuan diplomatic mission, and in just about every area we would be outvoted. Ironically, the main reason for wanting to leave. But this is reality we're talking about. No British government would want to complicate matters. No civil service would recommend opening up cans of worms. We are going to end up adopting every single cooperation agreement in order to maintain access to the single market and we will adopt the entire acquis as our own.

The short of it is, if anyone thinks anything is going to be radically different on leaving the EU, they are deluded. We will be in the EEA, business will be largely unaffected and the volatility on the markets will be very short lived. Chances are the intended outcome will probably have been announced before Article 50 submission therefore avoiding panic on the scale predicted. Any uncertainty is then entirely the fault of those corporates who fail to do their homework. That's what you get for hiring crap analysts.

And while this really is going to disappoint the hardliners, they should be celebrating at this news. because we will cave on and leave most of our agreements unscathed, it means there is barely any justification for any of the scaremongering. All it does is shift us into the same position as Norway.

To my mind that is the most realistic outcome we can expect and it's actually not a bad one. A risk free exit is a huge relief, it doesn't really interfere with anybody's business, and we get control over several strategic policy areas back. Not forgetting trading indepence.

This then prompts the great and the good to trot out the usual memes about having no say in the rules, but this rather overlooks the fact that the EU does not make the rules. It adopts them form UNECE, IMO, Codex, ILO, ITU, Basel2 and a whole universe of global super regulators, NGOs and standards bodies. UNECE especially. Everything from automotive standards to town planning. The EU is a rule taker, not a rule maker and even the EU doesn't call the shots in that.

In this, it’s not even as if any real scrutiny is applied by MEPs either. Most MEPs know very little and have no real expertise. Most of them don’t even know what they’re voting for. They work to lists provided by their groups. They won’t know whether it’s ordinary legislative procedure, or whether it’s first reading in response to comitology.

To them, it’s just a vote that they turn up to, in order to press a button. As to amendments, most are for show only and get discarded. The ones that stick are the official amendments, whatever happens, on technical standards, if they come from international sources, the details can’t be changed. Very often, though, you get MEPs showboating and virtue signalling, putting in amendments for the sake of it. These are stripped out during the voting, and have no effect whatsoever.

We have no real line of defence as EU members. They say we wouldn’t have a vote at the EU if we left and all I can think is… so what? The EU is a just a redundant middleman. If we want a full independent vote, right of reservation and opt out then we have to leave the EU. That way we will have more say in the rules we get whether we adopt them directly or via the EU.

As EU members we are forced to adopt the common EU position at the top tables where it is an exclusive EU competence. That sometimes has very real implications for UK jobs and we have no say. More to the point, the EU increasingly abuses the institutions of the EU to assume exclusive competence and sabotages the appeal process.

The EU is completely undemocratic in every imaginable way and if we stay in the EU it will gradually erase us from all the top global bodies, so we then end up adopting rules largely written by corporates and rubber stamped by UNECE and the IMO etc without ever having had any input or democratic oversight. THAT is why we should leave the EU. In this regard, we need sovereignty now more than ever. That basic right to say no. That’s not an old fashioned, obsolete idea. It's that democracy thing.

This does leave the question of immigration floating in the air. This is entirely the fault of Nigel Farage for conflating freedom of movement with open borders. But Ukip will have to suck it up. A compelling report from Migration Watch suggests that even with a post-exit deal that also leaves the Single Market, EU migration would fall by about 100,000.

In other words it would only put total net migration back to near the average for the last 12 years – about 240,000 – an average that prompted calls for “border control” in the first place. So by insisting on ending freedom of movement all we do is knacker a huge part of our economy, adding a lot of costs to business while not actually achieving very much. There's just no point.

In this, there are distinct issues to immigration that need to be resolved individually. Ending freedom of movement does nothing to fix the problems and may create more. We will have to let things settle and join Efta in calling for a renegotiation of the EEA agreement later down the line along with other influences on immigration. For the duration of the post referendum period, the only concern will be an economically safe transition for both sides.

In this, suggestions that Brexit talks will not be amicable are exaggerated. They will only be acrimonious if we open up various pandoras boxes. Because that isn't going to happen, Germany will do everything in its power to help us out. They know as well as we do that a botched Brexit has serious consequences for the EU as well as Britain.

As to where that leave the Leave campaign, it does tend to suggest that immigration is a non-starter as an issue. By conflating freedom of movement with open borders we effectively make this a referendum on EU immigration where the choice is to either lose access to the single market or close the borders. If we make it that kind of binary choice we will stay in the EU, with no changes to anything.

What it does mean is that any patronising promises that we are going to save billions to splurge at the NHS are dead in the water. Not that we were ever going to save much. What we do save will be spend on foreign aid and development assistance to open up new markets - and that won't be very much since many cooperation agreements stay in place that will have to be paid for. It will take time to evolve the whole way out.

If the Leave campaign wants to win, it will have to be a bit more creative about what it means to the man on the Clapham omnibus. Pitching it as a boot up the backside to the ruling classes is really what it's about for me. If we make it about keeping the foreigners out the we are guaranteed to lose. The kipper assumption that everyone is as outraged by freedom of movement as they are is a deeply flawed assumption.

Sadly I don't think the leave side is going to listen. I have put these points to many on the Leave side and they are still convinced we can have it all our own way. Some are even angry at me for suggesting things are more complex in real life, but the anger should not be directed it at me. It shouldn't even be directed at the EU. After all, it was designed to make it nearly impossible to leave. The anger should really be directed at the bastards who did this to us in the first place. If you thought they were going to make this easy for us, you have underestimated the enemy.

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