Thursday, 25 August 2016

We must leave the single market - but not yet

Brexit means Brexit. And what that means is that the government has to leave behind those things the public sees as synonymous with the EU. That means ending EU budget contributions, ending EU regulations (or rather EU legal supremacy) and controlling immigration. It really means leaving the single market. And I'm all up for that. The question is how?

Obviously a hard Brexit would be unnecessarily damaging to the UK and would sour our relations with the EU. Nobody but for a few hard-line Tories actually wants that. In or out of the EU we do not exist in a vacuum and we will have to do business with the EU. So as much as anything the Brexit process is a question of designing a new relationship with the EU.

First and foremost, to ensure good relations are maintained we must abide by the law and honour our commitments and contracts under international law. There is no bonfire of red tape nor can we tear up treaties.

Then we must take into account that we have put policy making into autopilot for four decades. We are in many respects not equipped to "take back control". We have lost our institutional memory in fisheries governance. We will need time and breathing space to transition into full control. Then we must consider access to the single market. We want to maximise our access while at the same time reducing our exposure to EU rules.

Had we never been a member of the EU this would be fairly straightforward. As an advance European economy we would already meet international standards that would easily qualify as equivalent to the EU and there wouldn't be any major difficulty in obtaining a mutual recognition agreement. The problem is that we have been a member and working out which of our rules are EU rules and which are gold plated international regulations and standards. We will need a long process to discern which is which where we will more than likely find a large body of law is fit for purpose and we wouldn't change it.

But given the complexity of this task there is no change a bespoke relationship can be created in two years. This is why opinion is converging around an EEA solution with a number of add-ons. This though does not really satisfy the "Brexit means Brexit" criteria. In the first instance trade is the only thing we gain any meaningful control over.

Certainly many remainers would see this as a viable compromise and I suppose even I could live with it as trade is reason enough to leave the EU and I don't really care about immigration as an issue. I think that technological advances and the end of the war in Syria will have more of a mid term impact on immigration than any change in policy.

But really if we are going to go to the trouble of leaving the EU we should go all the way. There will be some areas where we will retain a high degree of EU cooperation and I envisage that we will always pay something into the EU budget for those functions and services we use but this will be by choice rather than obligation. It saves us replicating domestic governance for no real gain.

The fact is that in many respects the EU single market is as complete as it is ever going to be without a common language and and considerably more cultural convergence - which for the time being seems implausible. Free movement of goods is easily achieved and you don't have to be in a customs union to achieve that. A lot of that is facilitated by established physical infrastructure where erecting barriers we add cost but no value. The holy grail of harmonisation is now trade in services which is a lot more difficult to measure and regulate.

But we need to look beyond the confines of the European debate to see the rationale for leaving the single market. As a nation freed of EU control on matters of trade the UK will be seeking trade with the developing world. These are economies in need of regularisation and conformity assistance in order to participate in the global rules based trading system. Britain will be investing heavily in aid in order to facilitate that trade - promoting good governance in the process.

In this we do ourselves three major favours. By opening up new export potential for Africa we create a source of cheaper goods - in agriculture especially. That reduces domestic cost of living. The very act of doing so puts us first in the queue to sell our business and financial services - along with our innovations. We are a knowledge based economy. Latterly, by improving the economies and increasing wealth of African states we reduce the push factor of war and famine.

But if we are going to do this then there must be common standards and rules. and that is central to the whole debate. We are often told that by simply remaining in the EEA we would adopt EU rules and regulations but have no say in them. Remainers casually rattle off this mantra as though it were gospel from god. But what we're actually getting is a bundle of international codes, conventions and regulations rubber stamped by the EU.

Previously it has been the case that the commission signs up to rules and regulations on our behlaf and then instructs us to implement them with no real blocking mechanisms at our disposal. This more than anything is the rationale for leaving the EU. As much as it is a profoundly undemocratic way of doing things the EU has had a tendency to gold plate international rules as a means of protectionism.

Now though, with increasing pressure not to deviate from the global standards the EU is limited in what it can do to the the rules and even MEPs find their own amendments stripped out by the Commission. So if we are increasingly a passive recipient of top table laws it really then begs the question what on earth do we need the EU for?

By leaving the EU we retake our own independent vote an all the key global regulatory bodies and in so doing we have a system of opt outs and reservations which mean that we can keep protections in pace if we decide that the balance of trade-offs is worth it. That adds both flexibility and democracy to the system from the get go.

But some point out that there is little value in having a free vote on such bodies when they are routinely dominated by the EU and the EU has the deciding vote in nearly all instances. This is where we have to look at the long game and this is why there is no immediate rush to leave the EU single market.

Effectively our foreign policy should be to act as a recruiting sergeant the world over to the various regulatory conventions that bring about global harmonisation of trade - assisting in conformity to ensure that existing members and new accessions maximise their own clout within them. Gradually we build up a resistance to the EU's dominance in regulatory affairs. Coalescing around our already cordial relations with Commonwealth states there are major opportunities to put pressure on the EU to reduce its own protectionist rules and to reform its anticompetitive behaviours. We can bash our way through the EU iron curtain.

This happens by way of building trade alliances on a sector by sector basis. And in this it isn't market size that gives you clout. It's the resources and the leadership you bring to the table. Britain's strategy should not be to leave the single market per se - but to expand it and break it out of EU control where participation becomes entirely voluntary - and then we build up momentum for a global initiative on mutual recognition and inspection - much like Port State Control. In this, our leadership may be the deciding vote among trade coalitions.

This still means responsibility for conformity and enforcement rests with the EU for EU member states but the rest of the world falls on the WTO for dispute arbitration rather than imposing the law with an iron fist. Central to this would the UNECE as the key forum for regulatory cooperation and administration. Effectively we would be using the mechanisms and doctrines that already exist in order to bring about a global single market where the EU is no longer calling the shots. UNECE is the regional arm of the United Nations. The idea is that UNECE is replicated in the other regions, then to join together.

All of this is going to take time and could well take twenty years to bring about. But that's just as well since it will take us nearly twenty years to sort out the entangled mess we find ourselves in. It will be fifteen years or more before we have fully taken back control over fishing and agriculture and a lot of EU labour law will be with us for decades to come.

We must use that time to lay the foundations for something bigger in scope and far more imaginative, preparing the ground so that when we do formally leave the single market, there is no real noticeable effect except that we enjoy similarly open trade with a lot more countries. By this time we will have evolved regulatory systems of service for application the world over where the EU is operating to the same rules as everyone else and completing the European single market means cooperating at the global level. In that we can be both ally and friend to the EU when they're right and blocker when they're wrong.

Critics of this approach think it a fantasy and is overly ambitious. But key to this approach is that it utilises many agreements that already exists, frameworks which are already established and methods we are already practising albeit on a smaller scale. While we have been on autopilot largely disengaged from the world inside the EU there have been giant leaps in progress around the world where there have been seismic developments in global regulatory harmonisation. We would simply be following the global trend - but we would be champions of it.

As to the criticism that it is overly ambitious, I take the view that if we are going to make a success of Brexit then we cannot afford not to be massively ambitious. It's not worth our while if we're not and it would be a wasted opportunity. We have to stop seeing the Brexit process as a timid exercise in damage control and look at it for what it is: an opportunity to kick start global trade and to reform the EU from the outside in ways we never could as a member.

The fact is that the EU is not going to reform or change its ways if we acquiesce. Through a process of considered international diplomacy we can bring pressure down upon the EU to get its act together and change both its attitudes and behaviours in trade.

There are those who are never going to be satisfied with our Brexit outcome. Some will forever be wedded to the obsolete ideas of the last century, be they disciples of EU supranationalism or free trade dogmatists opposed to the very existence of regulation, but for the rest of us we will be going forward with the best of what the EU pioneered while ditching the baggage that comes with trying to build a European superstate against the will of the people.

Brexit presents us with a world of new opportunities and as much as it is an opportunity to reboot domestic governance it is a chance to move the world into a new era of trade seeking out commonalities and opportunities to liberalise our trade relations the world over. It means that we can have a targeted immigration policy that works in conjunction with our foreign policy aims and lending advantage to our natural allies rather than those imposed on us by the EU.

In order to make the best of it we have to make full use of the new found freedoms we have and start celebrating the potential of it. To simply resign ourselves to being stuck in a siding of the EU is insufficient. If academic cooperation and research collaboration is indisputably good, why should that be a bartering chip of the EU and why should it be exclusive to members of the club? Why should we not extend the invite the world over? Who says the EU gets to call the shots?

They said we would be isolated if we left the EU but it's not going to be that way. We could be isolated if that is what we choose but Britain as an island nation is instinctively outward-looking which is why EU membership is incompatible. We've never been at ease with abdicating our global participation to the EU and relationships have suffered because of it. Brexit is a chance to undo the damage and work toward the relationship we should have had with Europe all along.

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