Tuesday, 13 September 2016

A Brexit fudge will do

There was a select committee meeting yesterday. I missed most of but I gather I didn't miss very much other than a reiteration of the governments firm commitment not to commit to anything. Nick Clegg confirms this is most likely down to a conflict between Mrs May and her cabinet.

Mrs May is said to want a single market deal whereas the Brexiteers want all the way out all at once no matter the cost. There is no middle ground here. The question is now one how far the Brexiteers are willing to go in order to have their economic wrecking spree.

It is fortunate for Mrs May that Brexit requires that we play the long game. There was never any question of an early invocation of Article 50. It was never a sensible proposition. Various departments have to gear up to handling the task and much more effort has to go into understanding the procedures we follow. That buys Mrs May time.

Day by day a new reality surfaces that shows life outside the single market is no bed of roses and the free trade fantasies of the Tory right look ever thinner. By the time Labour get their act together the consensus will be to stay in the single market. That will take a while though.

As much as the Labour party has gone into self-destruct, it has gone into hiding on the Brexit issue. It doesn't quite know which way to jump. Corbyn knows even less about Brexit than a Brexiteer, and to Owen Smith, Brexit just a convenient vehicle to drum up support for his flagging leadership bid. The left have vacated the field. The only prominent voices on the left are Chuka Umunna and Emily Thornberry. Make of that what you will. This though, will not last.

In all likelihood Corbyn will emerge as the victor. In this, he will open up new divisions. Corbyn has been largely incoherent throughout but has suggested we should "reject parts of the single market" - which means leaving it. He recognises the democratic potential of Brexit at the very least. Up with this the Labour MPs will not put. Should the Tory Brexiteers force the issue we could well see a temporary alliances between the government and prominent Labour figures. We have the makings here of a good old fashioned biff-bam showdown, the kind our media loves more than anything.

As to which way it goes, my money is on Mrs May. The problem for the Tory Brexiteers is that the facts are not on their side. A great many of our trading partners see Britain as the gateway to the single market and would rather we didn't leave it. They may be forced to redirect their business elsewhere should we leave.

Consequently they will make all the appropriate signals suggesting those "free trade deals" so loved by Brexiteers are not coming any time soon. If push comes to shove we may see outright threats that their countries will refuse to replicate various preferential agreements on any number of sectors. The EU has a raft of under the radar cooperation agreements in place of explicit trade deals which are potentially worth a great deal more to us than the free trade deals David Davis has in mind. We may struggle without.

All of this has yet to be determined by trade analysts who will have to examine official statistics with a fine tooth comb to see which of the EUs agreements are the real deal and which are PR fluff. I suspect they will come to the same conclusion I have and we will find that if we leave the single market we'll spend the next ten years looking to replicate deals we already had. This is time we could otherwise spend on looking for new avenues.

Even if we do stay in the single market our trade department will find it has little to offer that the EU does not already. If Britain wants to outplay the EU we will have to go about things in a different way and there are no signs that the penny has dropped. Liam Fox's department is running independently of DfID when really they need to be operating as one. In this game there are few silver bullets and those opportunities there for the taking will not come without considerable investment.

I make no pretence of being a trade expert but what I do know is that the pubic debate about trade is only very shallow and even the experts are talking about it on a very superficial level. While there seems to have been an awakening to the concept of non tariff barriers in recent weeks we are not seeing any real realisation of the breadth of the subject.

It's one thing to negotiate access to a particular market but when you're navigating a foreign market with its own internal rules, along with a language barrier, the administrative costs can be prohibitive. We notionally have access to Chinese markets but goods registration and certification is an expensive business making even the EUs own arrangements with China seem like a hollow victory. It is a most asymmetrical deal - and not in our favour.

To operate in foreign countries UK business will be heavily dependent on us having trade missions. In this we won't be in a position to bloat the foreign office and we will need to enlist specialist private sector business services in order to exploit foreign markets. That will be a highly speculative enterprise with considerable risk.

This is why I won't mind if Mrs May succeeds in parking Brexit. Even a fudged Brexit in name only will be sufficient. In the end the Brexiteers have blown it. They've been so obsessed with leaving the EU for so long they have ignored all the developments in the last twenty years and now they're the dog that caught the bus; unexpectedly in possession of something they never expected to catch with no sense of the purpose to which it could be put.

If they'd had a plan from the beginning and a roadmap the Brexiteers would now be calling the shots, shaping the game to their agenda - but in the end there wasn't one. Just a generic grunt against the EU while muttering something about sovereignty and free trade - without fully comprehending the meaning of either.

I have argued for a renewed focus on trade facilitation and multilateralism but the Brexiteers don't want to know. Arron Banks bought the myth of light touch regulation in Singapore, and the dunces like John Redwood believe in the miracle of "free trade". There are very few Brexiteers willing to entertain the notion that things might be a bit more complex than they appear - and there might be some good reasons why global trade has stalled which cannot be solved with simplistic nostrums.

What is needed is a spark of innovation and a new energy to how we approach trade. Brexiteers are making the right kind of noises but noise is all it is. There is no competence beneath. Just some tragically naive politicians walking confidently into an ambush by reality. And this is why we need to park Brexit.

Britain has been in stasis for forty years. We've given up the ghost on trade and it's something we no longer have institutional knowledge of. The only people getting seriously stuck in are the NGOs whose policy wonks are already in place - having read all the best executive summaries in the business. They are the ones who will shape Brexit trade policy and there's nobody there to stop them.

Meanwhile Brexit is no real democratic moment on the domestic front either. The Leave campaign wasn't a movement. Vote Leave was a corporate entity that skilfully moved in on Ukip's home turf and managed to co-opt the agenda. Largely through the ineptitude of Farage. Many suspect Vote Leave weren't even trying to win, didn't care if they did, and were just as surprised as I was that they actually did. There is no Brexit dividend of democratic reform now. There is a vague sentiment abut sovereignty and a red line on immigration. That's all.

In this regard I might even concede that now is entirely the wrong time to be leaving. Or at least the wrong way. What Brexit should have been is a removal of a barrier to the completion of a reform agenda rather than an end in itself. We should have seen a government banging up against the constraints of the EU in trying to carry out its agenda - and a determination to do something about it. Instead we've had a string of governments never bumping into EU constraints largely because they have neither the imagination or the wit to try doing anything differently.

Now we have a government tasked with leaving the EU but knows not why and does not know what to do when we have. The establishment sees no reason to change and there are no intelligent demands made of it. It is now actively resisting a hard Brexit for seriously good reasons. For sure we could pull out of the single market in order to force a crisis of governance from which something else will probably rise, but it seems like a lot of pointless, wanton destruction.

There are good reasons to leave the EU and many directions we can take. There are even attractive destinations, but if you're asking me to support a hard Brexit on the say so of David Davis and John Redwood, I'm just as happy to call the whole thing off.

A single market Brexit at the very least puts us on the outside of the EU which is a perfectly adequate safe space, and there we can tread water until somebody somewhere gets a clue. When there is a competent movement with some exciting ideas I'll be the first in line - but I'm not that keen on wrecking British prestige for the sake of keeping out foreigners and indulging Tory children. Only when we know what to do with Brexit is there any point in going the rest of the way - and since Brexiteers are deaf to ideas I won't be holding my breath.

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