Sunday, 17 April 2016

Britain will stay in the single market whatever happens

I'm becoming increasingly irritated by Brexit scares. One of the zombie arguments that refuses to die is the notion that the EU would punish us for leaving the EU. It rather overlooks the reality that anything made more complex for us necessarily makes things complex for them. Moreover, the one thing it wants to avoid is change. Change is messy, unpredictable and expensive. We can safely assume this will be the most risk averse set of negotiations since the war.

That said, the EU will no doubt be an uncompromising negotiating partner for a newly exited Britain. The EU would be wary of making too many concessions, for fear of establishing a precedent that other countries might want to emulate. As a result, the UK would not be offered unimpeded access to the EU’s single market unless it agreed to continue to abide by the acquis communautaire, including freedom of movement, and to make contributions to the EU budget.

The only alternative would require a lengthy negotiation to secure a free trade deal with the EU. Many say the best on offer would likely be something equivalent to the deal done with Canada or Australia, which will eventually eliminate around 98 per cent of tariffs on manufactured goods. However, the EU-Canada deal provides much more limited access to services markets, including financial services, than does EU membership. Nor does it address any of the existing peripheral cooperation agreements or technical barriers to trade. We would not accept it. It wouldn't work.

Given that there is a time limited window in which to reach a Brexit agreement, I cannot envisage any scenario where a bespoke deal is possible - or even plausible. Experienced negotiators will make it quite clear that opening up all the different boxes for negotiation will take years, would not likely reach a satisfactory conclusion and would likely stall Article 50 talks. It is for that reason, and all the other reasons outlined by the Remain camp; (that the consequences of a messy withdrawal are unthinkable), that the UK very much will swallow the lot and take what is on offer. Not least because the UK government of any stripe will not actually want to leave the single market.

Even if an idiot like Boris Johnson is in charge, the political realities dictate the shape the negotiations will take, all of which will be known beforehand by way of a scoping exercise - before the Article 50 notification is even submitted.

The UK will be presented with a stark choice. Maintain current trading conditions with no disruption or risk it all falling through. Since the risk is high we will see the government fold and take what is on offer. To smooth ruffled feathers at home we will see a degree of political pantomime to make it look better than it is. Just like they did for Mr Cameron. What this means is next to nothing changes for business and consequently the rest of the fluff in the report is just noise.

The reality is we are not going to start unbundling forty years of political and economic integration in Article 50 negotiations. All the talks will really accomplish is a declaration that on paper we are out of the EU. The peripherals, for example Erasmus, will be addressed in talks later down the line, probably as they come up for reform or renewal or if there is a new applicant. The point is, there is no rush to get it all done in one hit. As impossible as it is, it is not desirable for either, not least since the EU will not seek to devote its entire diplomatic run time to Brexit. It does have other concerns.

And so what we are looking is an initial agreement that maintains the single market and freedom of movement. From there it is a very gradual parting of ways, where continuity for trade is assured while we take years and months to uncouple.

It means that we won't be slamming the borders shut, we won't be making any savings but, mercifully, we will no longer be a subordinate of the EU and are free to make our own choices in subsequent regional and global agreements. Which is a huge part of the reason to leave.

Many have unrealistic expectations of Brexit based on a superficial understanding of just how comprehensive EU integration is. And that's not limited to the Leave side. Actual expertise on this subject is rare as rocking horse dung. It's no good wheeling in an economist or celeb like Richard Branson. Brexit is a field of study in its own right and if you haven't mastered the basics, even the likes of Christine Le Garde of the IMF have little to offer this debate.

Both sides are obsessed with the idea that it all has to be done in one go and it will all be settled at the end of Article 50 talks. This is wholly unrealistic.

There is scope for extending the negotiation period but nobody wants this dragging on because that will harm European investment. That is why we will seek to scope out the agreement before talks begin in order to keep the official negotiation as short as possible - and anything that can be deferred to a less time sensitive session will be. Only the core articles of EU membership will come up for discussion and all the peripheral agreements will be resumed under a concept in international law call presumption of continuity. Basically, if we were party to a third party agreement as an EU member then there is no practical or moral reason why we cannot continue with it. What is covered by this will be discovered in the scoping exercise and it will include most things like Erasmus and Europol.

In that regard, because the pace of change will be glacial, it will cause no more uncertainty than that of a general election or the usual background noise of cooperation agreements which few in business ever pay attention to.

The reality is that Brexit is a process, not an event - and if we have to swallow the lot in order for a safe transition then that is exactly what this or any other government would do. It means few immediate gains and few immediate losses.

But this is not important. We are not proposing to leave for the money, and the benefits that will accrue will come from our ability to act again as an independent state. It's wrong to sell Brexit as the silver bullet and the answer to all our prayers but at the same time it is wholly disingenuous to suggest it will immediately impact anything in a drastic way. It will be a lot less eventful than anybody is expecting. That is why you are best ignoring the official Leave and Remain camps because neither side has anything of value to offer.

We are not talking about a single negotiating session that severs all ties with the EU. We are talking about setting a long term process in motion that actually only begins after we have left the EU. We will be out of the EU on paper, but day one of Brexit looks pretty much the same as today.

What matters is it is then we decide which path we take and what the destination is. And it may mean we don't bother ending certain aspects of EU cooperation. It may mean we continue to side with the EU at all the global top tables and it may even mean maintaining various aspects of the CAP. But what it does mean is that we have a choice. And that is really what this is all about. The right to choose and the right to say no. And that my friends is why you should vote to leave. It's not about saving the NHS, it's not about deregulation. It's not about stopping Johnny foreigner claiming benefits and it's not about saving a few quid. It comes down to one simple word. Democracy.

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