Saturday, 27 May 2017

The conservative Brexit cult

This last week, Conservative Home have been reinforcing their WTO option scriptures. It makes you wonder just how sick these people are that they go to such lengths to manufacture such poison. The latest effort is jaw-dropping. They assert that "Were the UK and EU unable to agree to a high-quality bilateral free trade agreement (FTA), it would be bizarre  – and could only be attributable to bloody-mindedness by the EU."

Oh really now? Not in any way would it be attributable to the fact that the PM and her team have only a very slender idea of how the system works and a gaping lack of comprehension as to what is actually achievable. It's true the EU has set out a firm set of negotiating principles, but this more a statement of the facts of life. It is we who are petitioning them for a free trade deal. They have two objectives. Firstly that the loose ends must be tied up and that they are not left counting the cost of the UK's departure. Secondly is the integrity of the single market, ensuring that its own rules are upheld.

Almost immediately this government comes unstuck in seeking to renegotiate the negotiating framework, expecting that the EU can and will risk an FTA without certain assurances. As to trade, the EU has to work within its own constraints and if there are going to be special concessions it is for us to provide those assurances first. May is unknowingly playing with fire already, wasting precious time in the process.

The authors assert that "were this to happen and the UK and EU were unable to reach agreement on an FTA, the papers in the series on this site over the past week have shown that it is likely that it would be the EU and not the UK that would be most disadvantaged by this". This is the kipperish assertion that they need us more than we need them. Even for Conservative Home I am surprised to see such a lack of sophistication. Climbing further into the ConHome piece we see one of their favourite smoke and mirrors tricks.
Over the years, successive negotiations have not only drastically reduced most tariffs, but also brought effective new disciplines into force for trade in services, intellectual property, technical barriers to trade and product conformity assessments, and agricultural trade and subsidy policies.  Almost every trade issue now disciplined by intra-EU rules has a counterpart in rules found in a WTO agreement.

For practical purposes, it is only necessary to focus on the rules that would apply – and barriers to trade that would exist – in UK-EU goods and services trade based only on WTO obligations.  Many areas covered by the WTO, such as intellectual property and sanitary and phytosanitary measures, impose on members an absolute obligation to apply them on the basis of both national treatment and MFN, so the UK need not be concerned about possible discriminatory regimes being applied against it.
They were doing so well until that last sentence. When it comes to standards the EU subscribes to those agreed as the benchmark at the WTO, but the issue is one of conformity assessment and registration. Take for example cosmetic products. The way the regulatory system works is that cosmetics may only placed on the market by a "responsible person". This must be "a legal or natural person" designated within the Community. Within the EU, that "responsible person" is usually the manufacturer.

EU manufacturers, though, may designate, by written mandate, "a person established within the Community as the responsible person who shall accept in writing". But, where the manufacturers are established outside the Community, they are required to designate a person established within the Community as the "responsible person". They cannot hold this position.

Imposed on "responsible persons" are key duties, including ensuring compliance with the regulations. Specifically, they must register their products on the Cosmetic Product Notification Portal, having carried out safety assessments for each cosmetic. The ingredients used have to be lodged on the Cosmetic ingredient database (Cosing) which facilitates the identification of cosmetics ingredients and their labelling.

Roughly the same dynamic applies to chemicals. As to what happens to airline certifications and animal produce is a whole other ballgame. Put simply, dropping out of the EU without a deal means the databases get wiped and our inspectorates cease to be recognised.

This is not to say that we cannot trade with the EU, only that producers have to go through the process of re-registration with all the costs therein. When you chuck tariffs and rules of origin into the mix the costs are such that EU importers start to look elsewhere for suppliers. To say this is offset by the depreciation of sterling is pretty thin gruel. Businesses would have to acquire the in house expertise and systems would have to be developed to cope with it. That's difficult at the best of times but especially so on the date the treaties cease to apply with little or no warning. We are already looking at a crunch with customs IT being unable to cope - and there is no way to predict every last outcome.

By way of mitigation, ConHome invokes the WTO Trade Facilitation Agreement. They assert that
Post-Brexit, "the introduction of border controls and customs checks, should they occur, would also interfere with the UK’s trade with its former EU partners". Indeed they would. To a massive extent.

They say the TFA "cuts red tape at the border to facilitate easier trade with new provisions to expedite clearance of goods; availability of information on rules and procedures; automation and e-services; disciplines on fees and penalties; and harmonized processes and standards. All of these new rules will considerably mitigate the delays and costs of border procedures".

The word missing at the end of that sentence is "eventually". Thus far implementation of TFA is in its infancy with many of the systems involved being experimental, being applied to one or two trade routes in Ghana or Kazakhstan. This is not so easily superimposed on Calais, bearing in mind the volumes of traffic, the time it would take to develop and implement the necessary software and the other impediments to trade that third countries experience.

To make full use of TFA instruments you would still need a period of transition - but this is lost on the Toryboys. In nearly every post in their series on the WTO option they make the case that there is no cliff edge and that the WTO option is practically inconsequential, assuming all these mitigating instruments just fall out of the sky on day one.

It might even help if these people read their own work. In Mark Wallace's dismal effort he says the WTO Option "is not the apocalyptic landscape that some here in the UK portray it to be. It would be odd if it were such a dire prospect, given that vast numbers of people around the world live and thrive in exactly this system".

Christopher Howarth in this same series says "The US trades with the EU under WTO terms, but that does not mean that the US has no agreements with the EU. The US, as with other non-EU states, has a mutual recognition agreement for goods standards to facilitate cross-border trade. EU/US Mutual recognition has now been extended to the insurance market, something that would interest the UK".

This is a contradiction in terms. If the USA has an MRA with the EU then by definition is does not trade on WTO terms alone, as proposed by ConHome, thereby contradicting the idiocy of Wallace.

They then assert that if the UK and the EU did not reach agreement on an FTA, which addressed these issues, then "EU exporters would also face similar impediments should the UK decide to impose them". And that's the next big question. What exactly is the UK's default policy on day one? Hitherto now the treatment of third countries was a matter of upholding EU law since we are in the EU. We have no protocols of our own. WTO frameworks do not a customs system make.

In this we should remind ourselves that the UK is almost dependent on imports for food so if we want to keep supermarket shelves fully stocked then we will have to apply a very liberal regime to EU imports and by so doing would have to apply that to all others as well. The EU though is not in a position to unilaterally make exceptions for the UK.

What we are looking at here is a Toryboy propaganda effort, blinding their readers with bullshit, having only a vague comprehension of what is involved and how the system works. They take their readers for idiots, which to be fair is a pretty safe bet, but even looking at their own material they cannot deny that there most definitely is a damaging cliff edge to a no deal Brexit. You have to go to some Olympic mental gymnastics to make the case that it doesn't. More to the point this doesn't even begin to tackle the volumes of issues not directly related to trade in goods or what happens to the UKs credit rating - or what happens when half of our statute book is nullified overnight.

The short of it is that if you wanted a to operate on a goods and services only basis you would still need to meticulously plan for it and do it over a number of years. As much as that is not desirable, to do it overnight would be a total catastrophe.

What ConHome is actually saying is that there are means by which we can rebuild our customs systems from scratch but at no point do they address what happens in the meantime and whether we can ever regain that trade after EU importers have found substitutes. This is some pretty evil intellectual dishonesty at work.

When you are looking at this level of derangement at some point you have to realise that you're dealing with a cult. They are talking about concepts they have only a passing familiarity with where they have gone to extended lengths to cherry-pick for a narrative that suits their ends.

My post is only a cursory effort since no matter how many times you dismantle their arguments they will still lie through their teeth. The amount of energy required to refute bullshit is a magnitude larger than it takes to produce it and at some point you just have to marvel at the absurdity of it. In any case, I expect we shall probably find out soon who is right since the staggering lack of competence on the front bench will likely bring about these circumstances - not least because they take the likes of ConHome seriously. Should that day arise, they will blame anybody but themselves. That's what it means to be a conservative these days.

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