Tuesday, 8 January 2019

Britain needs a reboot - but Brexit is only the start

The Brexit debate is primarily surface level politics. It discusses everything from "enforced austerity" through to the EU army, the Euro crisis, and all the classic arguments about democracy and sovereignty. You know the list. Increasingly it's a meme war over subjects barely related to the UK's current status in the EU. Increasingly the EU is a proxy issue and the mechanics of it are seldom ever debated. After all, who is really interested in ship scrappage regulation?

Central to the UK dispute is a culture war between the progressive liberal consensus (and toxic marriage of media and politics) versus the plebs who've had enough of their bullshit. This is fundamentally why I am in the Brexit camp. But this isn't going to be resolved without a fight to the death and the economy will be the first casualty of war.

Brexit, especially in leaving the single market, breaks us out of a full spectrum regulatory regime evolved over forty years encompassing everything from fishing through to digital services and breaking out of it puts up a firewall between us and the EU. UK businesses are frozen out of automatic participation. Anyone wishing to trade inside the EU will have to navigate labyrinthine red tape and they can expect the cost of doing business to skyrocket.

For some businesses it is simply a matter of finding an importer on the continent and re-certifying products. They may have to rethink the logistics but continuity is not impossible. For providers of services, however, things are made a lot more difficult. Without the right to operate legally and without certifications and visa arrangements, service provision will prove impossible to maintain. Contracts will end and there will be legal disputes.

This is where Brexiters have been cavalier. They make many assumptions about trade and commerce, unaware that it is the regulatory constructs and cooperation agreements that facilitate this commerce. The ease with which we can trade now is a result of being inside what is essentially a European business operating system.

Debate about trade tends to be superficial and with headline Brexit impacts relating largely to Dover-Calais logistics, this unfortunately distorts the wider trade debate as many assume the fullest extent of trade is getting tins of beans from point A to point B. Things like intellectual property, digital rights, transferable qualifications and trade governance issues in respect of standards don't really get a look in. 

It's one thing to trust in the resilience and adaptability of the private sector but for the majority of Brexiters I talk to it's a matter of blind faith and any warning given is treated as exaggeration, problematising or simply an attempt to keep us in the EU. There is a belief system and most are completely ignorant of how the system works and have only a primitive understanding of how it all interacts.

This is really not something that can be explained in a series of tweets. Moreover, I think you have to have a particular kind of brain to be able to conceptualise multi-tiered systems. I don't say this as a boast but I'm naturally attuned to it. By trade I was a database application developer and though relational database principles to me are primary school stuff, some people just won't ever get it. People are wired differently.

When you have a system this complex, it is easy to understand why the EU doesn't allow the sort of cherry picking the UK demands. Much of the system is indivisible and it doesn't work when you pluck out the bits you fund inconvenient. I liken it to deleting library files from a computer. You think you are saving space but when you start deleting application files without knowing what they are and what they do, you soon find things just don't operate as they should. My dad certainly found this when I tinkered with his PC as a teenager. Lessons were learned. Eventually.

With trade, it gets even more complex when you take into account that every sector has multiple dependencies and impacts upon them have cascade effects. A blow to beef farming has ramifications for feed cropping. There are secondary and tertiary sectors all of which are in some way affected.

There is an assumption among Brexiters that commercial pressures and complaints from within EU member states will compel the EU to ease restrictions on UK trade but the EU is very much a creature of rules and has only limited ability to take unilateral action. Moreover, it will keenly guard its system integrity. It may ease the rules in places for the benefit of Ireland but if the UK leaves a gaping hole in EU finances it will not look to do the UK any favours. It will only act in its immediate self-interest.

Moreover, as the UK diverges from the EU regulatory system, the EU will use its own regulatory and soft power to frustrate UK efforts, especially if they feel that the UK is acting in direct competition or acting in such a way that EU regional and global objectives are in some way undermined. It has raw clout that the UK does not.

When most people conceptualise the UK becoming an independent country, they do so in a superficial way - thinking that keeping our £39bn (chump change) and making all our own laws is largely free of consequence. In reality though, becoming a distinct entity severs thousands of microfibres that link UK commerce to the rest of Europe. We are closing off our own markets to the EU and the EU does likewise. We may spout the rhetoric of being open for business but the real world practical effect of leaving the EU regulatory ecosystem is akin with turning up to work and finding your user rights restricted.

It is also assumed by Brexiters that the relaxation of border controls is just something that happens by mutual agreement. Frictionless trade, however, is the product of the regulatory system. We have not eliminated border controls, rather we have distributed them away from the borders, while toughening up our external frontiers.

The notion that we are then open to the rest of the world, is to an extent correct in that we do not have to impose the same strict frontier controls that the EU does, but then the risk of UK produce contaminating the purity of the EU market is increased thus we can expect more restrictions, inspections and delays to commerce with the continent. Even with an FTA with the EU there will be barriers to commerce.

To a large extent the critique that the toughness of EU frontier controls diverts and deters trade is entirely correct. We are about to find out first hand how difficult it is to trade with the EU as a third country. For whatever freedoms to trade we may gain from Brexit, it is difficult to envisage any combination of free trade agreements that can compensate for the loss of EU trade.

The gains from "trading with the rest of the world" a likely to be minimal since we already have, via the EU, extensive agreements with key partners. A flagship FTA with the USA is good propaganda, but will hardly compensate for losing single market participation. We are losing a wealthy consumer market on our doorstep and that is going to hurt. It is possible that the UK could, free of the EU, develop new markets for itself but it will take time and cost money. The question before us now is really one of whether we can afford the body blow of "no deal".

The warnings over no deal are widely mocked by Brexiters largely because they have been sensationalised, misreported and trivialised by the media. This gives Brexiters the ammunition they need and cause to ignore the warnings. Moreover, through cynical manipulation by the media, many Brexiters now believe that any deal with the EU is somehow a betrayal of Brexit, which has not in any way been helped by remainers who would have us stay in both the single market and the customs union. Even Theresa May's deal is described as BRINO. This very blog has (unfairly) described it as such.

On closer inspection, though, there are certain realities to take into account. The non-regression clauses are to a point neither here nor there. Interestingly the EU today announced a "new" series of measures on ship recycling. It's worth a quick look at the actual regulation. It is mainly based on The Hong Kong Convention, adopted on 15 May 2009 under the auspices of the International Maritime Organization. It's taken them this long to implement it. IMO, ILO, OECD feature heavily and is mostly based on the HKC enforced under Paris MoU and SOLAS regime.

The UK, whether we leave with or without a deal, will be independent signatories to all of these global conventions and had we never been a member of the EU we would have to construct legal instruments and rules to bring them into effect. Since we are adopting the EU acquis as part of the Brexit process, it may be some years before we revisit or reform them simply because the government will have bigger fish to fry and more urgent problems. It will take a future task force to rationalise and clean up adopted regulation.

Having the powers to interpret such global conventions according to our own designs (the global standard will be the benchmark upon which the EU judges in respect of non-regression) certainly gives us scope to develop our own markets, especially being out of the single market - and though we will have a customs union of a sort, regulatory initiatives and access to UK markets through mutual recognition etc are hugely more pertinent to trade than tariffs. Since the EU always negotiates downward and preferences are likely to be extended to the UK, the problems with May's customs deal are overstated.

We do not, as yet, know what the future relationship looks like but it is highly likely it will comprise of an FTA along the lines of Japan or Canada. That is the logical conclusion. We can also reasonably assume a form of maximum facilitation at ports and bilateral air services agreements. It won't be the single market and there will be a cliff edge of a sort but not nearly so severe and nothing that would introduce the risk of cascade failure as no deal does.

If there is one particular merit to the deal on the table, it is that we live to fight another day. The political declaration has standing and there is enough EU codified dogma to hold them to in the future, and we are certain to end up revisiting the relationship since external relations are always evolving as the Swiss experience shows.

My view is that leaving the single market is a regrettable mistake and it will have a major impact on UK trade. I do, though, understand politically why leaving it is necessary. For all that I have argued for it to soften the blow of Brexit, many of my critiques of the EU also apply to the EEA. We would need to either radically reform EEA or leave it eventually (in the worst case scenario).

The fact of the matter is that even with no deal, absolutely sovereignty is still constrained by a number of external factors and commercial imperatives will largely dictate high alignment with the EU as our nearest and largest neighbour. Brexit does not change geography nor does it make us a free agent. the question is whether there is anything to be gained from such a violent upheaval as leaving without a deal. And there really isn't.

This blog has argued that there may be certain social and political gains from such a revolutionary exit (the hair shirt Brexit) but the outcomes are no means guaranteed and there is a strong chance that the economic hardship caused by it would see us grovelling back to Brussels in no time for a deal even worse than May's. Political renewal is by no means a certainty either. The establishment could easily limp on and continue in its maladministration.

Politically, Brexit has turned toxic. The divisions highlight the sense of entitlement, snobbery and connivery of the establishment (that progressive liberal consensus) and our political class is hated more than ever. This battle is going to run and run and Brexit in any form is unlikely to bring any remedy. Only a radical reboot of politics such as the Harrogate Agenda is likely to bring the country back together. 

On that note, by March we will know one way or the other what sort of Brexit we get. On that day The Leave Alliance is all but defunct since we will have formally left the EU. Negotiations on the future relationship will certainly be worthy of discussion but that part of the process will be dry, technical detail, largely tracking that which is already in EU FTAs and bilateral cooperation agreements. 

The politics of that will likely be hyperventilation over irrelevancies where Brexiters whinge over aspects of the deal even though they appear in CETA which is what they said they wanted. March, therefore, will be the time to relaunch Harrogate Agenda activities. With Brexit in the bag, the ground for new ideas is fertile and there is every chance it can gain momentum.

If nothing else, Brexit has revealed how utterly dysfunctional Westminster has become. It and the media has failed every test along the way. These failures have brought us to the brink of no deal and may yet produce that outcome. It is intolerable that it should continue this way. It is this system that allows politicians to do this to us in the first place. If the people had meaningful control over their politics we would never have been so deep in the EU that it could have come to this to begin with.

For all the talk of new parties, it won't meaningfully impact politics if one came along. As Ukip demonstrated, the higher the monkey climbs the more you see of his arse. Sending deadbeat drongos to Westminster to do our politics is simply not a model that works regardless of the rosette they wear. Parliament already has the full spectrum of morons. Putting them all in one room and giving them the power to decide what we can eat, drink, think and say is not only stupid. It's demonstrably dangerous.

Westminster has far too much influence over our lives and increasingly involves itself in things that are either none of its business or that which ought to be decided at a local level. Westminster should concern itself mainly with defence, trade and external affairs. Health, education, taxation and much else should be done according to the wishes of the public, and to their own designs rather than those of Brussels or Whitehall. We only have a politically disengaged public because they are used to their votes and voices having no effect. Only by truly democratising and localising governance can we make our democracy truly participatory.

The culture war we see unfolding is primarily a consequence of an alien political culture imposing its ideas and values on the rest of the country. Our politicians believe they are there to rule us rather than serve us. They use our money to pursue their own narcissistic and meddlesome agendas and apart from a largely meaningless voting ritual every five years, we have no say in it. We cannot meaningfully hold them to account.

If democracy is to be meaningful in the UK then we must be governed by consent. It is that fundamental lack of legitimacy that Westminster and Brussels suffers from. Government is something done to us rather than something we have a stake in. Unless Brexit delivers meaningful change then all of this pain will have been for nothing. While Brexit is a starter for ten, it is by no means enough - but the rest is up to us.  

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