Wednesday, 22 March 2017

A Fysh out of water

Marcus Fysh, MP for Yeovil, yesterday remarks on Conservative Home that:
"It is in the interests of both the UK and the EU to achieve a fully negotiated preferential trade agreement or binding framework for such between them within the UK’s two-year Article 50 withdrawal process, and I urge national governments across the EU to ensure that this happens. Were this not achieved it would be a major missed opportunity and a blow for the credibility of the EU. However, the view that the alternative is “no deal” which would be “deeply damaging” to the UK, as has been mentioned by some in the House of Commons and elsewhere, is in my view not supported by the evidence.
Somehow not having the freedom to export chemicals or pharmaceuticals is not "deeply damaging". Having to divert animal products to ports with inspection facilities is also fine apparently. No problems there. Having no permission to pick up air passengers from Schiphol seemingly doesn't trouble him either. Losing the UK aviation sector is no big deal. Having no agreements on standards and conformity - and having trucks subject to spot checks is seemingly not a big deal either. As for having tariffs on all other goods, well that's all in the game. Trashing all EU supply chains overnight is somehow abated by multilateral activity at the WTO apparently.
The negative view of the “WTO Option” fails to take proper account of the potential for a growth dividend from the UK’s service sectors if we can take a leading role in new rounds of multilateral service liberalisation via the WTO. It must be said that WTO members and the secretariat are excited and enthusiastic about that prospect. This includes liberalisation of trade in services. Renewed impetus in this area could also dramatically improve the prospects for bilateral or pluri-lateral discussions of other preferential trade agreements which the UK may undertake.
I'm not going to argue that there is scope for new rounds of multilateral talks but see, thing is, multilateral talks are, well, multilateral. Long and difficult. To get any kind of agreement you have to break off a policy area where agreements are likely such as a global agreement on tyre standards - which itself was years in the making. To suddenly find ourself cast adrift with no preferential terms for selling in the single market, with no customs cooperation, leaves us starting from ground zero. Mr Fysh does not say what we would do in the meantime.

But it seems that what you or I take to mean "no deal", ie not having a deal, doesn't mean not having a deal to Mr Fysh. He thinks it means something else.
To return to the nub of the issue about future frameworks for trade with the EU, the overarching requirement of the Lisbon Treaty is for the EU to establish or maintain close relationships with neighbouring countries, as under Article 8. Furthermore, under Article 50 the withdrawal process has to take account of the framework for trade that will replace that which exists while the UK is a member.
Not if you walk away with no deal. That's the point. Failure to reach a deal ends the Article 50 process. You then stand as a third country without an agreement of any kind. No agreements on tariffs. No agreements on conformity. No access to market surveillance systems or cooperation programmes. Nothing, nadda, zilch.

Meanwhile we lose all of our existing agreements with other countries via the EU. Any future trade agreement with the EU would be starting over from scratch in an entirely new set of negotiations after everything grinds to a halt. 

The EU is then bound by its own rules to seek close cooperation with its neighbours as per Article 8 - which is why it does have a number of comprehensive agreements on trade with them - but there is no compulsion to enter immediate trade talks and nothing that obliges extensive access. Fysh does understand that this would be a separate process after the fact.
Not to grant the UK successional arrangements on departure from the EU which at least establish mutual recognition, equivalence of assessment and conformity processes at its borders such as to maintain reasonably frictionless trade would arguably be a breach of Article 8, and for the EU to refuse to discuss these matters in parallel with discussion of the terms of withdrawal would arguably be a breach of Article 50.
This is, in a word, drivel. The EU has no obligation to drop any of its standard frontier controls. Frictionless trade doesn't happen by casually waiving inspections. It is a product of long standing systems integration from which we are pulling out. If we have no deal then all of that comes to an end and so does our European trade.

The whole point of negotiating in the article 50 process is to ensure we retain some degree of future interoperability. You either have an agreement on trade or you don't.

In this the EU cannot discriminate, but all that means is that it cannot impose any barriers that it would not impose by default to all third countries. There may be some economic merit in unilateral liberalisation on our part but the EU is not compelled to reciprocate nor can it. The single market is above all a system with rules and systems within systems - and it is far more than a system for the free movement of goods.

It doesn't seem to matter what we write or how much work we do on this subject. We are dealing with people who don't know and don't want to. We are dealing with people who don't know how the system works and have little hope of understanding it. Their frame of reference is so out of kilter with reality that there is now little left to do but watch it unfold with exasperation and dread.

"Demonising WTO framework per se is wrong from an economic point of view that's my point" says Fysh on Twitter. This gives us some clue. Fysh thinks the WTO is some kind of global free trade platform with a series of defaults on which we can operate. This is incorrect. It is a rules based system but it does not grant any special rights or privileges. It provides standard parameters for trade agreements but if you don't have a trade agreement with the EU then you do not have a trade agreement with the EU. I can't see why that is so difficult to grasp.

It would appear that Fysh confuses full and active participation in the WTO with the "WTO option" which is a wholly different ballgame. Everybody in the Brexit field seems to understand this, except for MPs. How we get to a week before triggering Article 50 and still have our law makers not even knowing what the basic constructs are I really don't know, but that is almost as big a political crisis as the one they are about to unleash on us. The system is not working.

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