Saturday, 25 August 2018

Shrill warnings from remainers are self-defeating


I've made a point of listening to Jason Hunter just recently, if only to know where the man is coming from. He knows a thing or two about trade but I don't take him entirely seriously because he's an authoritarian europhile and a little economical with the truth. Either that or he has not fully understood how the WTO works.

In the above video he asserts that the UK made it illegal to fall back on WTO rules. He says if we drop out without a deal we cannot strike any new deals with other WTO members. His basis for saying this is that the absence of border controls in Ireland, and subsequent law preventing their installation, would be in contravention of the WTO obligation to measure, control and check the value of goods crossing the border.

This is actually a mischaracterisation of the WTO which is common to both sides, where very often people assume the WTO is an authority much like the EU able to enforce its own rules. It isn't. As noted over on eureferendum, from which I quote heavily in this piece, it's not that clear cut...

Firstly we would note that a no deal Brexit is wholly unprecedented. We really are in uncharted waters. Should it happen we are up to our necks in complexity but we need to be clear on what the real issues are.

As such, the WTO relies on negotiation as its main tool and regards the treaty law as a adjunct, to be used when all else fails and then only to achieve an effect. It is not a legal authority which regards the rule of law as a sacred principle or any part of its duty implementing the letter of the law.

Reflecting this, many of the WTO treaty provisions (and their predecessors in GATT) are not actionable merely on evidence of a breach. The WTO Agreement sets the additional test of requiring the aggrieved party (or parties) to have suffered injury – known in technical terms as "nullification or impairment".

In those circumstances, where the UK is maintaining the status quo, one has to ask whether any of the erstwhile third countries are materially disadvantaged. And, if they feel they are, their option is to go through the dispute procedures, potentially taking several years before an actional judgement is made, which in any event only allows the aggrieved parties to impose sanctions which have an effect on the target county similar to the damage originally sustained.

One can easily imagine the situation where the UK will take the political judgement that it should waive WTO rules. And even if it is later found to be in breach, such modest sanctions as may then apply – some time in the distant future – are nothing compared to the damage that might otherwise have been caused.

Similarly, if the UK decides to invoke the national security exemption, its lawyers will doubtless be able to keep any complainants tied up in the minutia of international law and WTO precedents so that, by the time anything is resolved – if, indeed, it is – the crisis will have been long past.

What needs to be conveyed, and with some urgency, is that – beyond the short-term effects - the main impact of a WTO "no deal" Brexit will be to cripple our export trade with the EU – slashing the current £270 billion of goods sold to a fraction of that level, a level unknown and not possible to estimate.

For very obvious reasons, the UK will be less inclined to restrict EU imports – not only will it have less legal justification, in a country which is only 60 percent sufficient in food, it cannot afford to turn away supplies from EU Member States – and will not find it easy to source alternatives.

Crucially, this means that many of the headline effects of Brexit will not materialise – or are capable of mitigation to such an extent that they will scarcely register as much more than minor perturbations. The really damaging effects will be longer-term and far less visible, the cumulative effect discernible only from periodic trade statistics.

As with Ireland, with a modicum of planning, and the use of the Civil Contingencies Act, there is no reason at all why there should be a logjam at the ports or queues of lorries on the M20. The question is whether the government is making adequate plans. Dominic Raab seems to think that if we're nice to the EU and don't erect any barriers to their goods, they'll be nice to use and not erect any against ours. We can just carry on as normal and pretend Brexit hasn't happened.

If they have convinced themselves that the EU will play nice, a "no deal" will hold no terrors for them and they'll let it happen in the expectation that the UK can continue as before. This is actually the most terrifying of all scenarios as it means that the government will not make anything other than token preparations and will have no mitigation in place.

The point I keep making, however, is that even if we do make adequate plans and evade the immediate headline impacts, a no deal Brexit cannot stay a no deal Brexit. We will have to have some from of formal relations with the EU. The question is one of whether we do it as part of a formal exit process or whether we let it all go to hell and the grovel back to Brussels with the begging bowl. The longer term consequence of no deal is to become the "vassal state" we sought to avoid. 

Continually we hear the glib assertions from Brexiters that some consequences are so bad that neither side would let it happen, but that presupposes a level of competence which is simply not evident. But supposing they are right, what could very easily follow is a collapse of the UK's export trade with the EU and the rest of the world. The effects would be devastating but may take a few months to become apparent. That alone is reason enough to avoid a "no deal".

Tactically Jason Hunter is making a major mistake. Grave warnings over the economic impacts are not working. All they do is harden resolve. As predicted only yesterday, the response to such warnings is yet more naff scribblings from the likes of Brendan O'Neill. 

Hunter can do the rounds of every media channel confidently demolishing quarterwit Brexiters, further enhancing his wunderkind reputation among the remoaners, but it is not at all productive. This government is not going to legislate for a new referendum of any kind and if the warnings are not credible then they will allow a disorderly exit to happen.

No dire predictions will be taken seriously by leavers. The more shrill they are the less they will be believed. They won't even take it from me with a twenty year track record as a leaver. It is therefore necessary to talk up the merits of the one Brexit deal that can win over moderates on both sides. 

The continuity remain camp is making more noise than it has for two years, successfully dominating Twitter, but they haven't noticed that HMS Remain is a sinking battleship. Realists must now accept that Brexit is happening and stop self-indulgent re-fighting the referendum. We are not short of self-serving media whores. What we need is people who can progress the debate out of its current cul-de-sac. 

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