Wednesday, 13 July 2016

Treasury Committee: further thoughts

I've actually learned quite a lot today. What I know about trade is largely theoretical drawing on the experience of trade officials found in snippets from various texts. Today we learned from two elite technocrats a few of the political realities. I feel at liberty to disagree with them on some points because what we are proposing to do has never been done. Brexit is completely without precedent and there are multiple logic traps that even the best can fall into. Trade officials are used to engineering trade deals. The nature of Brexit is engineering a reversal. The differences are slight but significant at the same time.

As far as opinions go, though, what we saw was a selection of pretty much the best there is. What is now clear to me is that theoreticians like us lacking any practical hands on experience can all too often take some consequences at face value and interpret law too literally, forgetting that politics can take over and fill the gaps. By that I mean pragmatic politics - ignoring the letter of the law in the greater good.

The remain side have also been guilty of that in assuming accession to the WTO can only be done one way, but we learned today that the nature of the WTO is to overcome hard scripted laws by agreement and find ways to facilitate trade. Had we seen this kind of testimony beforehand the referendum debate would have looked a lot different.

And that troubles me. Why did this committee in particular seek out the testimony of know-nothings like Arron Banks, Patrick Minford and Dominic Cummings while neglecting to consult serious voices? Simply it was about demolishing the case for Brexit rather than illuminating the debate. In that regard our MPs failed us. And today they failed us again by indulging in the Iraq debate while only five MPs bothered to turn up to listen to some of the most compelling evidence yet submitted.

And though I have had some of my arguments confirmed, that we will be more agile in trade talks without EU caveats holding us back and that TTIP is dead in the water, we will have to work doubly hard to compensate for any loss of EU trade or trade from EU extended agreements which cannot be easily replicated for the EU. We do not as yet know what all these are and will have to examine all of them on a case by case basis.

We are looking at either an extremely risky path or a safe one which will likely see no real change in budget contributions and not much in the way of reduced immigration. These are points I have made time and again but to hear dispassionate post-referendum observers making the same points really hits it home. The hard fact is that there are no sunlit uplands to Brexit. There is no renaissance of global trade to be had in the short to mid term. The benefits as promoted by the official campaign are simply untrue. All of them. And constitutionally that could prove to be quite poisonous later down the line.

Now I am starting to think that the chance of seeing Brexit benefits inside fifteen years are slight and if we manage to secure a deal that does not massively disrupt the economy and damage our international standing then it will be a small miracle and a massive achievement. In the short to mid term I think the benefits are mainly cultural and morale related. To get the full benefits of Brexit we will have to push ideas into the mix that are simply not being explored presently. As I say, MPs are not nearly serious enough about what lies before us. They have a blissful naivety of what Brexit entails and precisely what they have got us into.

If we cannot plant new ideas into this impenetrable system then Brexit could even be a lame duck. A lot of hassle and expense and a recession to simply get back to the levels of growth we are presently experiencing - which are negligible. The only difference being that we are out of the EU with a much bigger civil service. I still think though that's a good thing and even if there is no net profit then it still had to be done. We had to have that democratic correction to undo what was done in our name. If politicians did not want us to pay this price then they should never have done this to us without our consent. Taking us in on the proviso that it would be too scary to come out was their hubris. It backfired spectacularly.

The problem we have is that some of the ideas we set out in Flexcit are not as technocratic as some believe. Flexcit is a fundamentally different approach to trade focussing on the WTO trade facilitation agreement, using vehicles like UNECE. Some of these ideas were casually dismissed today because our experts see these options as destinations rather than the beginning of a journey. That is really when we need to part ways with the pure technocrats and start demanding they turn their wits to what we can do rather than what we can't.

There has been some debate before and since the referendum on the usefulness of experts. We have seen some complete disregard for any kind of expertise which is both healthy and unhealthy depending on the context, but the approach of politicians is to see expertise as the master and not the servant. That is the culture we have to challenge; turning politics away from the timid can't-do attitude to something a little more spirited.

In the meantime we desperately need the entire nation to wake up to the enormity of what lies ahead. Politics is not properly engaging in it and has yet to comprehend the fact that this goes far beyond trade and regulation. Collectively we are not even off the starting grid.

Meanwhile we have seen David Davis appointed as Brexit minister, and we see an article from him with some very vague ideas and without reference to the fact we have to unpick 43 years of integration. He ventures that Article 50 could be triggered before the beginning of next year. I believe this to be a naive position and he is coming at it from a position of complete ignorance. These eurosceptic MPs have never been confronted with the realities before. Pre-referendum it was easy for them to dismiss complexities as remain hysteria. Now they are about to find out what is and what isn't a possibility.

I am still of the view that an EEA based interim solution is absolutely essential as a departure lounge, not least because moves to leave the single market will see major disapproval from Scotland. That is a complication we do not need. Bearing in mind that the very suggestion of leaving the single market will trigger market fluctuations. I have argued that we shouldn't be slaves to the markets but we should still be mindful of them.

I am unconvinced by the case of a liberal free trade zone based on selective commonwealth lines as some proposed, especially since from a regulatory perspective it deviates from our main export market when widening global trade probably will not compensate for any loss of access to the single market any time soon.

In that regard the other trade experts contradict themselves. The option does allow for some selective divergence and deregulation but I think the merits are overstated and I don't think they will necessarily result in a more competitive economy as added regulatory complexity and the transition involved is sure to cause headaches. 

I think for now we need safer more familiar moves and slow the process down to a pace we can manage. Keep in mind we have closed down much of our domestic competence and the talent we draft in is not necessarily going to be working in the UK interest.

Moreover, the reason many would have us leave the single market is not out of any genuine impression that it is better for the economy. Mostly it is a smokescreen excuse ending of freedom of movement which I believe would be a serious mistake. I don't have objections to Efta level controls on it but to give up on it completely would be a terrible shame.

Some believe ending single market membership will lead to a more egalitarian globally focussed immigration system but we know that will not happen. It will be taken as a mandate to further close down freedoms. It is better to expand on the freedoms that exist rather than close them down.

I expect we have a very long road ahead of us with much more detail to hammer out. It is going to require even closer scrutiny than was given to the arguments during the referendum. It is deeply troubling that our MPs are not up to the job and not treating the issue with the necessary seriousness, and all the harder for me to have to peel away from it in order to earn a living. As blogger The Boiling Frog asks, "Why oh why are unpaid bloggers having to make the running in this most important of issues regarding the UK's role in the world in the 21st century?"

The media will scarcely mention today's events. Again it is reduced to Boris Johnson, cabinet reshuffles and all the usual fare for our media who think it's business as usual. At what point do they start taking their obligations seriously? 

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