Tuesday, 31 May 2016

There is no ideal form of exit. So what?

Janan Genesh of the Financial Times is a name that keeps popping up at the moment. Sam Hooper is not impressed and neither am I. Though it's in an "essay" from February last year we get to the heart of his incomprehension.
The UK does too much business with the European market to pretend its regulations do not matter, and there is no way of influencing those regulations outside the club. There is nothing to envy in the Swiss or Norwegian models of co-existing with the EU. The ideal form of exit, one which preserves the UK’s market access but exempts it from market rules, will never be permitted by the EU, which has made itself inescapable for any European country.
It's a bold assertion that "there is no way of influencing those regulations outside the club". Readers of this blog will be well aware that the EU is largely a recipient of technical rules and regulations from the global level from vehicle manufacture to banking and all points between.

Codex regulations alone form the basis of food regulations for over a hundred nations. Most cars are now produced to UNECE regulations and anything to do with shipping is government by the International Maritime Organisation. Regular readers will by now be bored of reading this because this actually isn't news - unless your name is Janan Ganesh.

Not only is Norway an independent member of Codex, it even hosts the all-important Fish and Fisheries Products Committee. Thus, it is the lead nation globally in an area of significant economic importance to itself. When it comes to trade in fish and fishery product, Norway is able to guide, if not control, the agenda on standards and other matters. The EU then reacts, turning the Codex standards into Community law, which then applies to EEA countries, including Norway. But it is Norway, not the EU, which calls the shots.

In most respects, Norway has greater say in Codex Alimentarius affairs than does a UK which is isolated in "little Europe". Yet Norway is supposed to be the country that is subjected to "fax democracy" and has "no influence" over EU law. It must simply adopt all the Single Market laws coming out of Brussels – or so we are told.

And when we look at where automotive rules come from, we find our old friend UNECE looming large. Its Transport Division, based in Geneva, provides secretariat services to the World Forum for Harmonisation of Vehicle Regulations (WP.29), and has been doing so for more than 50 years.

By its own account, the World Forum incorporates into its regulatory framework the technological innovations of vehicles relating safety and environment impact. WP 29 was established on June 1952 as "Working party of experts on technical requirement of vehicles". The current name was adopted in 2000. There are currently 57 signatories to the Agreements, including non-EU countries such as Norway and the major vehicle manufacturing countries of Japan and South Korea.

The UNECE instruments, produced under the Agreements, are classic "diqules". As quasi-legislation, they have no mandatory effect until converted into laws by the territorial bodies signatory to the agreements (contracting parties). However they are laws to those who have signed the WTO Agreement on Technical Barriers to Trade (as per illustration) which has it that "Where technical regulations are required and relevant international standards exist or their completion is imminent, members shall use them, or the relevant parts of them, as a basis for their technical regulations".

That is where UNECE, Codex, IMO, ITU and the likes come into play. The EU is no longer in control of the regulatory agenda. It is redundant and it no longer makes the rules. So to put it bluntly, when Ganesh says "there is no way of influencing those regulations outside the club" he is flat wrong.

Being free of the EU means having an independent vote, the right of free association, the ability to build coalitions, selective opt outs and in some circumstances a veto. And if we wanted this post to go on all night we could dig out plenty of examples where Norway and others have used such powers to their advantage. I would argue that leaving the EU is enhanced influence in that our preferences cannot be overruled as EU members are.

But Ganesh is right when he says "There is nothing to envy in the Swiss or Norwegian models of co-existing with the EU." The Norway option would be a singularly dismal destination for the UK. But we are not proposing it as a destination. The EEA is just the mechanism by which we leave which causes the least disruption. As it happens nobody is especially fond of the EEA agreement. Dig in and you will find plenty of Norwegian gripes about it - but on balance Norway still does not want to join the EU. And there's good reasons for that.

But Ganesh shows us is his two dimensional thinking. It's not a case of wrapping up Article 50 negotiations and moving on to the next political fad. Brexit opens up a whole new realm of possibilities for multilateral initiatives not even considered by the hacks at the FT. Moreover, with the UK joining Efta, it becomes part of the world's fourth largest bloc. Large enough to lean on the EU and would have enough clout to force reforms to the EEA agreement later down the line.

It is by no means an ideal form of exit but as a starting point for a new journey it's actually more than adequate. Not too radical in practical terms but seismic in terms of what it holds for the future - as discussed on this very blog.

Though none of this can occur to the likes of Ganesh. In terms of regulation nothing exists outside the EU. The world is to him as it was in 1992. Globalisation somehow passed him by. Thus it forces him to conclude "We are a nation of 60 million in a union of over 500 million. We matter, but not enough to get exactly the kind of EU we want. Neither is there likely to be a knockout case for leaving any time soon. In these circumstances, prudence must prevail: the best reason to stay in the EU is the absence of a superior alternative. This is uninspiring, but common sense usually is."

And that's really the whole remain case. Because nothing permeates their tightly sealed bubble, and nothing that may disturb the settled narratives, they can't imagine any alternative at all. It's a dreary, soul-deadeningly unambitious resignation to the status quo under the pretence of being able to reform it - despite decades of evidence to the contrary. If that is the only reason to remain then I will vote to leave with glee.

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