Saturday, 22 April 2017

Global Britain: life beyond the EU

Wherever you look in those places where leavers gather online you will see that Brexit has become a wishing well where everybody has bold expectations of what will happen and what is possible. The assumption is that Brexit brings about absolute sovereignty and that we are stepping out of a regulated sphere and into an unregulated sphere where we can do what we want. I wish it were true but it isn't.

There is no scenario I envisage where there will be substantial deregulation save for a catastrophic crash out. In the modern world the very essence of trade is a trade-off between sovereignty and the common good. The EU is only one arena among many where we have ceded some degree of absolute control. We retain the theoretical sovereignty to withdraw but as Brexit demonstrates, withdrawal from complex systems is no simple undertaking.

We are told that Brexit is a rejection of meddlesome Brussels bureaucrats interfering with our lives. This is a deep seated narrative as old as euroscepticism itself. What we discover, though, on closer inspection is that the EU is only one part of the puzzle in a far larger nexus of international organisations and private authorities - none of which has ever seen a hint of democracy and their role is largely obscured by the focus on the EU.

Part of the reason it escapes scrutiny is that the media is not interested in it. There is political drama and the subject matter is just not sexy enough. International standards on dehydrated garlic or vehicle wing mirrors is not going to raise pulses. Insofar as anything is newsworthy from this shop it is usually corruption but then the news that government is corrupt is akin with the sky being blue.

The other reason it escapes our attention is that a lot of it is quite worthwhile and not especially controversial. Do we really need an extensive public debate about every last detail of governance?

Without much scrutiny from the outside world, nerds sitting in windowless rooms in Geneva have done more to improve quality of life and enhance trade than anything since containerisation. These can be small innovations to reduce workload or safety enhancements that extend and preserve life. This though is lost on the general public. Regulation is perceived petty interference rather than the lubrication of complex societies. We may complain that it exists but we would miss it were it gone.

Take the traffic light for instance. It's there to tell you what to do and it stops you doing things. We all hate waiting at traffic lights. The presence of them though is why we have free flowing traffic most of the time without gridlock lasting twelve hours as happens in many African cities. Think of all the time it saves.

The assumption is that regulation is designed to limit human activity whereas if you look at virtually everything the WTO does, and in more recent years even the EU, the effort has been to harmonise regulation, eliminate red tape and increase the efficiency of supply chains. Rather than being risk averse as some have it, the system simply acknowledges risk and designs systems to mitigate them. Quite a good idea if you don't want baby formula mixed with floor cleaner.

But then regulation goes much further than that. There are realms of standards setting and regulation that border on exciting when you consider the potential. Some of the regulatory conventions to bring about a global single market in digital services are set to be transformational. These really are major innovations that will bring about the next revolution in consumption and will change the face of work as we know it.

Meanwhile the self driving car and improvements in the internal combustion engine, along with electric motor efficiency have been driven by standards and regulatory demands. None of this would have happened without it. Given the choice manufactures very often would carry on making the same inefficient junk they have always made.

In energy, demand side management is a regulatory innovation which removes the need to build power-stations and eliminates many of the negative externalities of power generation. It gets the Ukippers riled because they can't have pointlessly energy hungry hoovers but just one system of standards has radically altered energy production and enhanced technological progress. Regulation adds value and eliminates costs. The downside that people moan about is the upfront costs. That's actually systemic investment which everybody always says they want to see more of!

The question is who is driving this and to whom is it accountable? There is nothing wrong with technocracy just so long as it is subordinate to politics. We have it the other way around. Politics responds to the technocracy.

This is fundamentally what is wrong with the EU. Policy agendas in the EU start deep in the bowels of the commission, often at least ten years before they get to be rubber stamped by the toy parliament. One does not vote in a government. The agenda is a constant regardless of who is returned to the European Parliament or indeed who is running member states. Ever closer union is the root command.

All the demand side management stuff was an ISO concept, adopted and improved by EU, gold plated, formulated then submitted for faux scrutiny in the parliament where MEP inputs are largely ignored or removed. The people are most certainly not in charge of the agenda nor do they get to change it. It might have been an idea to put this on pause slap bang in the middle of a financial crisis when energy bills were sky rocketing. As much as the system is not democratic, it is not responsive or self-aware.

The big question for our generation is how introduce any kind of legitimacy to it, and secondly how do you do it without destroying its many worthwhile accomplishments. It is interesting that less than a hundred days into the Trump administration that the President has rowed back on a number of pledges to drive a horse and cart through the globalist order. Somebody has patiently explained the value of it.

Then there's the real question of why leaving the EU doesn't get close to resolving this very conundrum. This is a question not yet being asked because people on both sides of the debate assume the EU is the centre of the regulatory universe. So far as most people are concerned, the media especially, Brussels is the engine of regulation and the rest of the world just does as it pleases having ultimate sovereignty.

As per the diagram above there are any number of anonymous functions in global governance, some considerably larger and more influential than the illustration implies. Not least UNECE and the WTO. To my mind these represent not only the future of trade but effectively make the EU redundant by creating the foundation of a genuinely multilateral global single market. That then begs the question as to whether the EU still serves a function.

I take the view that so long as the EU exists it will continue to exploit public ignorance of global governance taking all the credit and the blame to establish itself as the de-facto authority. It obscures the rest of it from sight while at the same time being the biggest obstacle to achieving global free trade. It is by nature a protectionist entity as Britain is about to discover first hand from the outside.

This is why as Britain leaves the EU there must be a concerted effort to raise the profile of the many international organisations that produce much of the rules we live by. Over the last two years this blog has explored the extent to which even the EU is a law taker subject to what is known as "fax democracy". Very often even the EU is not fully aware of those rules it adopts via standards bodies. For a long time we have been dealing with the middleman when in fact Geneva, not Brussels is the hellmouth of regulation.

In order to steer and speed up the creation of a global single market the UK needs to be a full and active participant and in so doing attract the attention of a largely dormant and ignorant media which for too long has been obsessed with Brussels should it even bother to report on these affairs at all.

Much noise has been made over the last year over the issue of sovereignty. Pure unadulterated sovereignty no longer exists and I rather suspect it hasn't for a long time. Nations have been bound by their agreements for as long as there have been nations. By leaving the EU we, at the very least, retake the right to say no and the right to refuse and propose regulations. We are about to enter a completely different universe of governance.

In this we need to formulate new ideas and new strategies, some of which I have outlined here, with a view to increasing our soft power and steering the agenda. In this we cannot expect that Britannia will once again rule the waves in that Brussels will still remain a regulatory superpower but by enhancing and promoting the international rules based trade system we can weaken the EU's protectionist barriers not just for our own needs but for the world as a whole. This has been done before by Australia by forging ad hoc alliances at the WTO. Helpfully, the EU is of its own volition handing ever more of the regulatory agenda to these bodies which is why we are, in the long run, better off out.

When we look at the more technical aspects of Brexit we find that the World Customs Organisation is now the lead body on a number of issues from intellectual property to seamless customs. There are WTO rules and UNECE systems all of which supersede the EU and, if expanded to become the global benchmark will ultimately (eventually) mitigate the self-imposed harm we do by leaving the single market.

Once we are outside of the EU will find we are part of a very large club of nations excluded from participating in European markets with EU member states being powerless to correct that. By forging sectoral alliances, in services especially, there is every possibility of being king maker - and the deciding vote in the establishment of new global conventions and standards.

Ultimately I am working on the assumption that the EU is life limited. Some predict imminent implosion but we see precisely that kind of speculation every single week. I think it will be with us for a while yet. What is a near certainty though is that the EU will not survive as a meaningful entity and will eventually be dismantled. Now is the time to be building a viable and non exclusive alternative to the EU.

This is, incidentally, why I do not favour ideas like CANZUK in that it's old fashioned thinking. Static unions of nations in the modern trade environment are far too rigid and with diverse economies serving different regulatory superpowers, commonality and integration is very often undesirable, implausible and ultimately pointless. Britain must retain and exploit its agility to the maximum, being able to switch alliances according to the forum and the subject matter. If we are leaving one rigid bloc there is little sense in creating another.

Britain should be working with the international community to build a genuine community of equals without a central authority promoting a technocratic agenda. Technocracy and democracy must travel hand in hand. The dismal europhile vision of a Fortress Europe is no more desirable than the shrinking vision of Britain throwing regulations on the bonfire. The WTO gives us a blueprint toward a fairer more inclusive system of trade which allows for national sovereignty - the right to say no.

One of the global initiatives presently under way is the establishment of global rules for e-commerce. Some of the key obstacles to e-commerce in the developing world include weak internet infrastructure, a lack of legal and regulatory frameworks in many countries, cyber-security, trade barriers, and a need for payment solutions.

As the linked article notes "To help ensure that developing countries can benefit from e-commerce, they need to retain the right to create trade barriers to allow new digital industries to develop inside their own borders and become more competitive, said Kwa, just as they have done in the past to protect manufacturing industries. As digital commerce grows, developing countries must be free to "help their companies deal with it." Adopting global trade rules now could take away their ability to do that, she suggested".

This is a important facet of international development where in other circumstances we see the EU using its might to force LDCs into liberalising their trade before they are ready to compete. This is often a driver of migration - which ultimately means the EU has a hand in drowning thousands of people in the Mediterranean. For a supposedly liberal and progressive entity it sure does have a lot of blood on its hands.

When we examine the history and the ideology behind the EU we find that it is built on a number of deceptions and is generally phobic of democracy. Its modus operandi is to abolish the nation state and in so doing abolish any kind of democracy and accountability. It is an anachronism. In an ever globalised world with and ever more complex and elaborate web of regulators and private authorities the nation state and that right to say no becomes ever more vital. The EU as we find it is a tyrants dream in that agendas can be injected, by NGOs and corporates alike without ever having to win the backing of the people.

This is why climate change dogma exists in every tier of the EU. This is also why the EU issue is the fault line of a culture war as a "liberal" progressive agenda, and the morality that goes with it, is imposed on peoples without their consent and without the means of redress. Voting certainly achieved little until we had our referendum.

Ultimately the debate needs to refocus on what matters. Brexiteers should cast off their phobia of regulation and embrace it for its social and commercial utility. There is nothing in wrong in principle with adopting evidence based rules for the smooth running of trade. Even the obscure and seemingly absurd regulations still serve a function. The complaint has always been an inadequate means of veto and the lack of transparency and democracy. Brexit goes some way toward restoring that balance, but as illustrated above, there is still much work to do and the fight for democracy and genuine free trade is only just beginning.

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