Thursday, 27 April 2017

A sane Brexit is still possible

Thanks to the absurd complexity of Brexit, our future relationship with the EU will not be defined for some time to come. That means there is still everything to play for in pushing for a sane Brexit.

There are those who say the Brexit vote requires of us that we leave all EU legal constructs - and that means leaving the single market. Except that the single market is not an EU construct. It is the joint property of Efta and the EU brought into being by the EEA agreement. It is a collaborative construct that operates through a system of co-detertmination. It is, as far as I know, the most comprehensive "free trade deal" known to exist. 

Members do adopt rules devised in the EU but only through a process of negotiation and veto is allowed. ECJ decisions are considered by the Efta court when making a ruling but Efta decisions are not binding. Members are free to veto any rulings if they agree to accept whatever penalty is permitted within WTO law. It isn't ideal, but it's better than having a typical comprehensive agreement with the EU where you accept all of the rules and decisions without veto or reservation.

Insisting on hard Brexit ultimately means losing a lot of trade for no good good reason, to no possible advantage, while rejecting a trade arrangement that would repatriate all the areas of competence that matter. It would also be futile. Any trade agreement will require customs cooperation, regulatory cooperation and sizeable financial commitments. We would fail to achieve the demands of hard Brexiteers while harming our international standing and losing several privileges in the process.

Thankfully there is still time to correct our path, despite the utterances of Mrs May. Nothing as yet is a done deal. The only certainty is that we will seek an exit settlement under Article 50. Once that is agreed, we must then start talks on an FTA, which will conclude in a formal treaty some time in the future.

Between the Article 50 agreement and the FTA there is a gap which must be filled. This is the transitional agreement. Some of the treaty provisions will continue to apply to the UK - others will not. That requires a wholly separate "secession treaty" which must be agreed unanimously by all 27 EU Member States, and the UK - and be ratified by Parliament. There has been a total blackout on this and this is potentially going to be the ball-breaker. Such a complex treaty cannot be agreed in the time. We can only really speculate as to how that goes. There are several points of failure and talk of a free trade agreement is, for now, the least of our worries.

That gives us plenty of time to argue about the shape of any future relationship with the EU. Theresa May has spoken of an ambitious free trade deal. It will need to be with more than three hundred policy areas to cover. If it is to come in the form of a single agreement then it will have to borrow heavily from the EEA agreement in terms of content, structure and treaty mechanisms. There is no other way to do it.

The only question is what will serve as the intermediary body, whether it will be Efta or a court in its own right - or some other entity. In that respect it very well could be single market by another name. Just a different mode of it. By then attitudes may have changed significantly and with the inevitable implosion of Ukip the Conservative party will be at liberty to make some unpopular choices where freedom of movement is concerned.

There is still the possibility that, as the EU Commission suggested, Efta/EEA becomes the transitional agreement as there is no time or will to devise anything of a similar magnitude from scratch. If that happens then a concerted campaign could see that becoming the final settlement.All it needs is a decoy gimmick so as to avoid calling it single market membership - and that ought to be sufficient to appease the Brexiteers who will be none the wiser. So long as they call it an "FTA plus" Brexiteers will consider it mission accomplished. As will I.

Assuming we avoid an acrimonious accidental Brexit a deep relationship with the EU is an inevitability. The EU will continue to be a major influence on UK law and as a regulatory superpower that much is unavoidable. It will most likely not satisfy the hard Brexiteers since what they want is a simple free trade agreement. What they want is to simplify the inherently complex. This is neither possible nor desirable. A basic deal would ultimately eliminate a lot of trade possibilities within the EU.

More to the point the UK will be faced with some uncomfortable realities along the way as it discovers that it has no capacity to repatriate certain functions, no budget to do it and will ultimately decide there is little value in disengaging. It is likely that the EU will be amenable to this as UK funding enhances its own capabilities and influence.

With this in mind, so long as the government is repeatedly bludgeoned with the cold realities of a hard Brexit, it should have them running for cover. I have always suspected that we might well end up being boxed in by reality and though on paper we will have left the single market, in actuality we will be yet another peculiar permutation of it.

I see it as especially important to press for this for a number of reasons. Firstly, Brexit is not an economic choice. Primarily the purpose of it is to put a firm firewall between us and the EU executive. Leaving the EU should not mean ending cooperation with the EU and participation in its regulatory systems has certain benefits. What matters is the right to say no. This form of Brexit satisfies that precondition.

Secondly, there is no real point to a seismic separation. There is a certain Hotel California dynamic to this in that we have been an EU member for forty years which inevitably makes it near impossible to escape the gravitational pull of the EU and as our nearest and largest trading partner there is, on balance, no commercial advantage to doing so. We could go all out for total separation but the "freedom" we would gain is akin with the freedom you have when you are evicted and all your belongings are thrown into the street.

The assumption of Brexiteers is that we can dump the EU and rekindle a free trade renaissance. It does not work like that and it hasn't for some time. Trade around the world is influenced by regulatory systems. More than tariffs, regulation is the key issue. The pacific trade circle is heavily influence by US and Chinese regulation and supply chains gravitate toward the rule of the nearest and most relevant regulatory superpower. For Australia and New Zealand, that's China. Where global standards are not used, they tend to bed to the preferences of their largest customer. This is what torpedoes Brexiteer CANZUK fantasies.

And this brings us neatly to the final point. You would only really go to the trouble of severing deep ties with the EU if it were an obstacle to pursuing a different path. Being part of the single market is no real barrier to any of the things we would seek to accomplish. We would regain our autonomy on all of the global bodies just by leaving the EU. We are a free to influence the rules that steer other regulatory regimes and use that to our advantage.

That is about as much as we want from Brexit and about as much as we need. It gives us a bit of a reboot in terms of those policy areas we repatriate without having to wreck our exiting trade. The only reason we would go further than that is to pursue a bigger, better idea - and to be frank, the Brexiteers don't have one. Utterances about the Commonwealth or the Anglosphere sound superficially attractive but when you look at the modern arena these concepts are not realisable. The most we can really do is enhance our cultural ties - and there was never really all that much stopping us doing that to begin with.

I have been a leaver all of my adult life. I was there at the beginnings of Ukip and have been near to the centre of modern euroscepticism for as long as it has been around. In all that time eurosceptics have obsessed about leaving the EU but have utterly failed to produce an alternative or a credible blueprint for getting us there. The EU has been an object of hate to such an extent that it has become the end not the means. They have long since decided that we must leave the EU and that is all that mattered to them.

Consequently the old eurosceptic narratives have never really evolved or updated and Brexiteer thinking is much the same as it was in 1992. The John Redwoods and Peter Lilleys of this world have not in any way developed their understanding or advanced their thinking and have not grown in the slightest. Their ideas are simply not compatible with the modern world - and when you look at the old Ukip party political broadcasts they weren't really up to much then.

Now that we are leaving the EU we find that Euroscepticism 2.0 looks much the same as Euroscepticism 1.0, with the likes of Jacob Rees-Mogg and Steve Baker trotting out pretty much the same garbage about deregulation and sovereignty. This really is Jurassic Park stuff. There is still enormous potential in Brexit but it will take new ways of thinking and those who ushered in this new era are the least equipped to shape it. As is so very often the case.

Brexit will free us of a number of obligations that will allow us to reinvent and replenish politics and policy. To an extent it is already happening. It has swept away the bicycle shed politics of recent years and now we are asking real questions about our direction and our place in the world. This can only be a good thing but we should still be mindful that the EU is, for the time being, our central concern and it would be a folly to lose sight of that. To turn our backs on all of it would be to turn our backs on many of our own accomplishments. As much as that would be foolish, it would be a great pity. 

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