Friday, 13 July 2018

Too much drift...

So we've had the white paper on the future relationship and yet again Number Ten has failed to grasp the basics. It's a repackaged version of the Florence speech and their understanding has not advanced since then.

It attempts to create a single market lite for goods while disregarding all that has been said by Brussels, afford itself the ability to align where it pleases and diverge on a whim without any of the obligations that come with an enhanced trade agreement.

The fundamental flaw in their understanding stems from the assumption the EU is playing hardball over cherry picking but will fold in the final hour. This is not going to happen. No cherry picking means no cherry picking.

The future agreement is going to have to be compatible with both EU law and WTO law. Certain conventions must be observed lest the EU be granting preferences it would have to give to others - which it doesn't want to do - and I don't blame them.

The UK may enjoy certain diplomatic recognition as a close partner but in legal terms it will be treated no differently to any other third country. That is the fundamental principle of the WTO system. We can't just pluck mechanisms out of the air to circumvent the rules.

Designing a solution to this problem is more akin with software engineering than trade negotiations. We are developing an API to a third party software system. That's what the single market is. Software with OEM hardware.

And like software engineering you can create workarounds and fudges but you can't defy the fundamentals of the system, and functions still return either a one or a zero. Either it works or it does not. To build something that works you have to understand the rules of the system.

The prime directive in this instance is that any API for the UK must safeguard the integrity of the system. It will not make a security back door in the firewall especially when the UK is seeking to diverge, inviting others to use that back door.

Moreover the EU already has an extensive API for the single market. The EEA. It comes with rights and obligations but it is a system and it is available to the UK. Since the UK has snubbed it, an FTA is the only thing in the cupboard that respects UK red lines.

That means in legal terms the UK becomes a third country and will enjoy no exception not already granted to third countries. If we want/need more than that the the EEA is the only game in town. That isn't going to change.

My feeling is that the EU is allowing too much drift in these negotiations. It should by now have concluded that the UK government does not have a grasp of the issues and the longer it drags on the worse they get. And that's dangerous.

Obviously a no deal Brexit is going to hurt the UK more than it hurts them but they are not immune from the effects either and no deal will have serious ramifications for Ireland in terms of trade and politics. It will also damage the EUs ability to operate.

The short of it being that the EU needs a deal almost as much as we do - not least because there is a political fallout if it fails. Letting the UK drift off point chasing after its own solipsistic delusions means the fallout will be greater when the EU is forced to say no.

Up to press they have given the UK all the space it needs to negotiate a domestic proposal but dropping only hints and steering suggestions all of which have been ignored. The "no cherry picking" slogans have fallen on deaf ears.

Meanwhile we're getting mixed messages with the EU parliament at odds with Barnier, suggesting an association agreement can go further than in scope. There is a lack of message discipline which only encourages UK delusions.

I take the view that the EU needs to put its foot down and lock it down to the two options - FTA or EEA. It's ultimatum time. If it doesn't then the UK will only beef up its undeliverable fiction persuading itself it is softening its own lines.

That then reinforces their perception of "EU intransigence" when yet again the EU refuses what seems, to the uninitiated, a reasonable proposition. Some may then reasonably conclude that the EU doesn't want a deal and will take is as a cue to walk out.

The bottom line is that if the UK government has not by now grasped the basics then it is never going to. Our politics is too dysfunctional, woefully under-informed and complacent. We have run out of time and we can afford no more of this pratting about.

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